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Oral Answers to Questions
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Paul Farrelly (Newcastle-under-Lyme) (Lab)
1. What representations he has received on broadcasting rules on political impartiality in television news.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
Absolutely none.
Paul Farrelly
I thank the Secretary of State for that precise and illuminating reply. He will know that the British public value the political neutrality of TV news in this country, so will he confirm that the Government have no plans to change the rules governing political impartiality on TV news, and that they will expect broadcasters on digital terrestrial television to conform to those rules in the future?
Mr Hunt
I can confirm that we have no plans to change the impartiality rules, but we will take no lessons on impartiality from the Opposition. There are two people responsible for impartiality in British broadcasting: the head of Ofcom and the head of the BBC Trust. One is a former Labour councillor and the other is a former Labour special adviser.
Mark Pritchard (The Wrekin) (Con)
Does the Secretary of State agree that the BBC also needs to remain neutral on international politics, and that, if it is to be believed about its position on Israel, it needs to publish as a matter of urgency the internal report that it commissioned on its apparent anti-Israel bias?
Mr Hunt
I thank my hon. Friend for his question, and he is absolutely right that impartiality needs to apply across the board. I am well aware of his concerns about the issues surrounding the publication of the independent report into the BBC’s coverage of Israel, and I am very happy to raise those issues with the BBC Trust if he would like to supply me with any new information that he has about them.
Kelvin Hopkins (Luton North) (Lab)
I agree entirely with the question from my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly), but there is another matter on which news broadcasts are not neutral: they have a degree of imbalance on matters relating to the European Union. Will the Secretary of State seek to ensure that in future broadcasters reflect the nation’s view on Europe, not their view?
Mr Hunt
I very much welcome the hon. Gentleman’s question. The BBC Trust recognised in a report that it published, entitled “From Seesaw to Wagon Wheel: Safeguarding Impartiality in the 21st Century”, that the BBC was behind public opinion on issues such as Europe and immigration, and the BBC recognises that it must ensure that that does not happen again. However, as Culture Secretary I have to be very careful not to direct the BBC in any way editorially, because in a free country that is a beacon for democracy it is very important that the national broadcaster be independent of the Government. However, that is not to say that the hon. Gentleman’s point should not be addressed in the appropriate way.
Simon Hughes (Bermondsey and Old Southwark) (LD)
2. What steps his Department plans to take to increase the level of participation in sport.
Toby Perkins (Chesterfield) (Lab)
3. What steps he plans to take to increase levels of participation of young people in sport.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Hugh Robertson)
Since taking office two months ago, the new coalition Government have already taken three steps that will increase participation by young people in sport. The first step is to increase sport’s share of national lottery funding to 20%, which was envisaged when the lottery was set up; the second is that my right hon. Friend the Secretary of State has announced plans for a new Olympic-style school sport competition; and the third is that we have asked sport’s national governing bodies to increase to 30% the amount of money that they commit to grass-roots sport from their broadcasting deals.
Simon Hughes
I thank my hon. Friend the Minister for a positive answer. The borough of Lambeth and my local borough have an excellent sports action zone, promoting sport at all ages. Will the Minister take further steps both in the short term to ensure that, now the school holidays have started throughout the UK, all ages are encouraged to get used to doing some sport, and in the medium term to ensure that we train and recruit many more sports coaches throughout the UK?
Hugh Robertson
I can absolutely give the hon. Gentleman that assurance. A key part of the new whole-sport programme, which the previous Government introduced, was to ensure precisely that sports’ governing bodies devoted a far greater proportion of their funding to grass roots; that the funding was targeted at precisely the sort of voluntary schemes that he mentions; and that a crucial part of that was funding for extra coaches, who will be vital to drive any form of participation that we get off the back of the 2012 games.
Toby Perkins
I am glad to hear that the Minister has some ideas on increasing youth participation in sport, but, as someone who has coached young people in rugby for the past five-and-a-half years and as a parent of a sports-mad child, I have to say that the idea that over the past 10 years there has not been any encouragement for competitive sports always seems quite ridiculous. Does he agree that the tabloid myth that there is no support for competitive sports is an insult not just to the previous Government, but to all those PE teachers who give up so much of their time and to all those people who voluntarily coach young people in sport?
Hugh Robertson
It would be fair to start by thanking the hon. Gentleman for his contribution to grass-roots sport over many years as a rugby coach in his own area.
The question of competitive sport is a difficult one, and it is clearly something that, as a new Government, we put at the heart of our sports policy. [Interruption.] If the hon. Gentleman looks at the figures for competitive sport in schools, he will see that it is an area that needs attention and that everybody would agree we need to work on. We have highlighted that and put in place a plan to address it.
Iain Stewart (Milton Keynes South) (Con)
Last Friday, I had a meeting with people at the National Badminton Centre, which has its headquarters in my constituency in Milton Keynes. They have ambitious plans to extend participation in the sport, but a problem they often encounter is that sports halls built for sports use are increasingly rented out for non-sports uses. Will the Minister look into that as a matter of urgency?
Hugh Robertson
I thank my hon. Friend for that question. In fact, the people there said the same thing to me when I went to visit about a year ago. When I looked into this, I found that the problem is that a village hall can be used for a variety of uses, so to try to screen it out for badminton means no dog show, no village fete, and none of the other things that take place in village halls. This is about the sensible division of time in the way that village halls are used. I can only promise my hon. Friend that I will look into it.
Mr Gerry Sutcliffe (Bradford South) (Lab)
Over the past 13 years of a Labour Government, £5 billion was spent on sport, and that increased investment increased participation. After 10 weeks of this new Government, we have already seen the Building Schools for the Future programme cut, with 11% of that money due to be spent on new sports facilities; we have seen free swimming cut; and we are now seeing that they are prepared to drop the target of 2 million people participating in sport, which was one of the Olympic legacies. What discussions did the Minister have with the Department for Education before the decision was taken on Building Schools for the Future, and what is he going to do about the sports facilities that need to be improved and would have been improved under that scheme?
Hugh Robertson
There are two obvious things to say in answer to that question. First, we are dealing with an economic inheritance that we did not create but that was left to us by the Government of whom the hon. Gentleman was a member. Secondly, the Secretary of State has a regular series of meetings with his counterpart in the Department for Education at which these matters are discussed. We have already increased the share of lottery funding to 20%, and that is a huge improvement. Under the hon. Gentleman’s stewardship, the amount of money that sport governing bodies were committed to giving to the grass roots in their broadcasting deals was 5%; in three or four months’ time, when our changes have gone through, it will be 30%—a huge increase.
Graham Jones (Hyndburn) (Lab)
4. What recent discussions he has had with the BBC on the level of the television licence fee.
Mr Peter Bone (Wellingborough) (Con)
6. If he will bring forward proposals to reduce the television licence fee by 25% over the next four years.
Kevin Brennan (Cardiff West) (Lab)
8. What his plans are for the future level of the television licence fee; and if he will make a statement.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
We have had absolutely no discussions with the BBC about the level of the licence fee under the next settlement.
Graham Jones
The Secretary of State has said that a huge number of things need to change at the BBC. Will he tell the House what he means by that and provide a list of the changes that he thinks are in order?
Mr Hunt
I have been very clear that in its use of licence fee payers’ money, the BBC needs to be on the same planet as everyone else. We are tackling a huge deficit as a result of the economic legacy left by the last Government. As we are having to be careful about every penny of taxpayers’ money we spend, so the BBC must be careful with every penny of licence fee payers’ money that it spends.
Mr Hunt
My hon. Friend will know that we are committed to a strong BBC that focuses on producing great TV and high-quality news. He is absolutely right. There has been a trickle of stories about BBC pay and expenses, particularly BBC management pay; lots of people at the BBC do not have high salaries. The BBC must look at what happened to Parliament when we lost the trust of the public because we did not handle our own expenses correctly, and it must be careful not to make the same mistakes.
Kevin Brennan
Licence fee payers will have found last night’s broadcast of “Sherlock”, produced by BBC Wales and written by the excellent Steven Moffat, first class and great value for money. Earlier, the Secretary of State took pains to name the chairman of the BBC Trust and his former political affiliations, along with the chairman of Ofcom. By doing that, was he trying to call into question their impartiality in the work that they do, and if not, why did he bother to say it?
Mr Hunt
I, too, watched “Sherlock” last night and thought that Martin Freeman and Benedict Cumberbatch did a brilliant job. It was a very good example of the BBC at its best, investing in new programming.
I am not in any way calling into question the impartiality of the two gentlemen I mentioned earlier, but the Opposition should not preach lessons on impartiality when they were so careful to put people of their own political affiliation in charge of so many Government quangos.
Jo Swinson (East Dunbartonshire) (LD)
Does the Secretary of State understand the concern of many of my constituents and others across the country following the report in The Daily Telegraph of his comments on the BBC? They feel that its high-quality programming is something to be supported and celebrated, not least the excellent independent news coverage that is free of the influence of commerce, or indeed Rupert Murdoch.
Mr Hunt
I agree with the hon. Lady about the importance of the BBC spending money on high-quality programming. That is what the coalition Government believe is one of the primary roles of the BBC. I also agree with her that one thing that has made British broadcasting some of the highest-quality broadcasting in the world is that we have a mix of funding streams, including the licence fee, advertising-funded programming and subscription-funded programming. That is why we are happy with that structure and intend to continue with it.
Alun Cairns (Vale of Glamorgan) (Con)
In the context of reducing the licence fee, what consideration has the Secretary of State given to encouraging the BBC to sell off some of its assets, possibly including Radio 1 and some of its other services?
Mr Hunt
We have no plans to ask the BBC to sell off Radio 1. There may be possibilities in the case of some of the BBC’s commercial assets, such as BBC Worldwide, and we await any proposals that the BBC may have. However, we are committed to a publicly funded, publicly owned national broadcaster as a benchmark of quality in the broadcasting system. We believe we are one of the few countries in the world to have competition at the quality end of the broadcasting market as well as the popular end, and we want that to continue.
Stephen Timms (East Ham) (Lab)
Policy on broadband is a joint responsibility of the Secretary of State’s Department and the Department for Business, Innovation and Skills, and he has indicated that he will dip into the licence fee to support the roll-out of high-speed broadband. Can he confirm that any new funding from that source will not be available until 2013 at the earliest, which is three years late, when Labour’s phone levy would have been generating £150 million a year in three months’ time, not in three years? Given his aim to reduce the licence fee, can he give any assurance that that level of funding will be available even three years late, and given the complete absence of significant new funding for high-speed broadband, is he embarrassed that his pre-election promises on high-speed broadband have so quickly turned to dust?
Mr Hunt
Let me confirm a few things that the right hon. Gentleman ought to be aware of, given that he was a Minister responsible for the matter. The first is that the money that his Government had allocated to ensure that everyone in this country could access broadband at a minimum speed of 2 megabits per second was less than half the total cost of doing that. That was why, when we examined the situation, we decided that we would honour the pledge but would not be able to do so by 2012 and extended it to 2015. As in so many areas, his Government simply did not leave enough money in the pot.
Dr Julian Huppert (Cambridge) (LD)
5. What recent representations he has received on sections 9 to 18 of the Digital Economy Act 2010.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
Ministers and officials have had recent meetings with copyright owners, consumer organisations and internet service providers, at which the matter has been raised.
Dr Huppert
Is the Minister aware of the deep concerns held about those sections of the Act among internet service providers such as BT and TalkTalk, among members of the public such as those who went to the Open Rights Group conference on Saturday, and among creative content providers? Given that the Act was rushed through in the dying days of the last Government, will he ensure that there is proper scrutiny of not just the details but the principle of those sections, which many of us oppose?
Mr Vaizey
I am aware of the concerns that the hon. Gentleman mentions. It is important to emphasise that the technical measures in those sections would not come in until at least 2012, and that this House and the other place will have a chance to debate the matter in full under the super-affirmative procedure.
Pete Wishart (Perth and North Perthshire) (SNP)
What representations has the Minister had directly from those who actually work in the creative industries—the 1.8 million people who depend on the sector for their jobs and the 250,000 whose jobs are at risk from illegal downloading? What does he have to say to them?
Mr Tom Watson (West Bromwich East) (Lab)
7. What representations he has received on the appropriateness of regulation of media ownership.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
I have had no representations from anyone on cross-media ownership.
Mr Watson
If News Corp is successful in buying the remaining 61% shares of BSkyB, the control that it exercises over UK mass media will be greater than that of any individual in any other advanced industrial country, including Berlusconi’s Italy. The law in the US and Australia would prohibit such a takeover. Is the Secretary of State concerned about the lack of plurality of ownership in the UK media? What is the estimated tax loss if the merger takes place?
Mr Hunt
I cannot tell the hon. Gentleman what the estimated tax loss will be—I do not know whether there will be a tax loss. There are big tax gains from having a plurality of players in the British media market. The particular decision that he mentioned is a matter for my right hon. Friend the Secretary of State for Business, Innovation and Skills, who is responsible for determining whether to invoke the public interest clause about the merger. He will make a decision in due course.
Mr John Whittingdale (Maldon) (Con)
Does the Secretary of State agree that the relatively low price for which Richard Desmond has acquired Channel Five is a further indication of the continuing difficulties affecting all traditional television companies, and that it also shows that successful companies are likely to have to operate across several different media in future? Given that, does he have any plans to look again at the current rules that govern cross-media ownership and cross-promotion?
Mr Hunt
I thank my hon. Friend for a thoughtful question, as ever, on the topic. He is absolutely right that media companies of the future will have to operate on different platforms. That is why one of my first decisions was to accept a recommendation by Ofcom to remove the regulations on cross-media ownership locally to allow local media operators to develop new business models that let them take product from newspapers to radio to TV to iPods to iPads and so on.
We do not currently have any plans to relax the rules on cross-promotion. Indeed, the regulations on taste, decency and political impartiality on Five remain extremely tight, but we are aware of the need to lighten regulations in general because, if we are to have a competitive broadcasting sector, we must have one in which independent players can also make a profit.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Secretary of State knows that Richard Desmond and Rupert Murdoch have huge pornography empires. Does he share my concern that children have increasing access to pornography on television? What can he do about it? It is a curse, and I hope that he shares my desire to do something about it.
Mr Hunt
The hon. Gentleman makes an important point. Our real concern on this side of the House is about the sexualisation of young people in particular; we take a liberal view of adults’ ability to make decisions about what they see on television. I do not want to pretend that there is an easy answer, because traditional linear viewing, which allowed the watershed, made it possible to be much more definite about what would be seen by children and what would be seen by adults. To answer the hon. Gentleman’s question directly, we have no plans to relax any of the taste and decency regulations for terrestrial broadcasts.
David Mowat (Warrington South) (Con)
9. What progress has been made on implementation of the proposals set out in the coalition agreement to give the National Audit Office full access to the BBC’s accounts.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
I had a brief meeting with the chair of the BBC Trust last month. My officials are now working with the BBC Trust to ensure that the commitment is achieved by November 2011, as announced in the Department’s structural reform plan, in a way that preserves the BBC’s editorial independence.
David Mowat
The move by part of the BBC from London to Salford has been good value for the licence payer, good for the north-west and will be good for the BBC. Does the Under-Secretary agree that it would be useful for the National Audit Office to consider moving further functions of the BBC from inside the M25 to the north-west, particularly Salford?
Chris Leslie (Nottingham East) (Lab/Co-op)
Is there any real justification for not opening up the BBC accounts to the National Audit Office and the Public Accounts Committee, especially given that one of the Secretary of State’s reasons for cutting the licence fee was deficit reduction? I am not sure whether the BBC accounts would rack up against the public finances in quite that way.
Mr Vaizey
Forgive me, Mr Speaker, but I am not quite sure what point the hon. Gentleman is making. It is a coalition Government commitment that the National Audit Office should have full access to the BBC’s accounts by November 2011 in order to ensure value for money and public accountability.
Fiona Mactaggart (Slough) (Lab)
10. What plans he has for the future of Creative Partnerships.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
Creative Partnerships is funded by Arts Council England and as such, decisions on its future are a matter between that and Creativity, Culture and Education.
Fiona Mactaggart
The Minister does not sound as enthusiastic as the teachers and head teachers in my constituency are about this wonderful programme. Can he do more to publicise the achievements of Creative Partnerships? The case report that his Department semi-released a week ago without any real promotion concluded not only that Creative Partnerships improves learning and achievement, but that through research, it improves the capacity of creativity to do more to help children to learn.
Mr Vaizey
As the hon. Lady may know, I am a passionate supporter of both music and cultural education in the round. We could do more to make such programmes more coherent, so that they work in a more joined-up fashion, but as I said, the future of Creative Partnerships and how it works is very much a matter between it and Arts Council England.
Damian Collins (Folkestone and Hythe) (Con)
Does the Minister agree that because Arts Council England set up a separate body to deliver that programme—Creative Partnerships—and even if much of the work on the ground and delivery is excellent, we need to be careful how many tiers of management are involved? Creative partnerships are possible through local authorities and some excellent private sector organisations that do a lot of work with the community, such as the Creative Foundation in my constituency.
Mr Vaizey
I am grateful to my hon. Friend for his well-made point. As I said, I feel very strongly that we need to bring some coherence to the sector. Many very good initiatives are happening on the ground, and it is important that we join them up as much as possible to make them as effective as possible.
Mr Ben Bradshaw (Exeter) (Lab)
Successive Labour Culture Secretaries achieved settlements in every comprehensive spending review from 1997 onwards that were significantly better than the Whitehall average, arguing successfully that culture has a special role in our national life; that for every £1 we invest, we get £2 back; and that spending in any case is tiny—less than the annual underspend in the NHS. Are the Minister and his colleague the Secretary of State even bothering to make those arguments with the Treasury? What has happened to the Liberal Democrats manifesto pledge to protect spending on arts and culture? Is that just another example of the Lib Dems having no influence whatever on the Government?
Mr Vaizey
We work very closely with our Liberal Democrat colleagues. As the shadow Secretary of State is aware, the economic state that the previous Government left us in has left us with some very tough decisions to make. I can assure him that the Secretary of State and I, and all colleagues in the Department, are making effective arguments. Since the right hon. Gentleman makes his point so effectively, could he now give a guarantee that the Opposition—
Mr Speaker
Order. The Minister’s answer is always of interest to hear, but it is not for him to be posing questions to the shadow Secretary of State.
Mr Bradshaw
I note that there is not even a Lib Dem Front-Bench spokesman in the Chamber at the moment, although I am partially reassured by what the Minister has to say, because of course his Government have been described by senior Conservatives as the “Brokeback Mountain” coalition. That happens to be one of my favourite films, but as I am sure he is aware, it does not end well. One of the cowboys is killed in a homophobic attack by backwoodsmen, and the other lives out a sad, lonely life on a trailer park. Which is which in this coalition?
Chris Heaton-Harris (Daventry) (Con)
11. Whether he plans to bring forward proposals to exempt from the provisions of the Licensing Act 2003 live performances at small venues; and if he will make a statement.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose)
I am delighted to reassure my hon. Friend that the Government are committed to the principle of trying to reduce the burden of red tape on live music performances. We are currently evaluating a series of options, and hope to bring forward whichever of them comes out best in the business case.
Chris Heaton-Harris
I wish to press my hon. Friend because I would like a date or time scale for the removal of these measures, which were introduced in the Licensing Act 2003 and which have been so detrimental to live music.
John Penrose
I am afraid that I cannot give my hon. Friend a precise date, if only because the devil is in the detail. I can only assure him that we are working through these measures as quickly as possible. A number of stakeholders—as the jargon has it—have to be consulted, and today I had meetings with people from the Local Government Association and Local Government Regulation in order to ensure that all the relevant people have been consulted. We will do it as fast as we can.
Mr Jim Cunningham (Coventry South) (Lab)
12. What factors he took into account in reviewing English Heritage’s decision to list Coventry market.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose)
In deciding to retain Coventry market on the statutory list, I took into account the architectural and historical interest of the building, as set out in the Planning (Listed Buildings and Conservation Areas) Act 1990.
Mr Cunningham
I am surprised by the Minister’s answer, because if architectural design were taken into consideration that building would not pass muster. Is he aware that that scheme means that hundreds of millions of pounds of modernisation money now cannot be spent in Coventry city centre? Will he meet a delegation to consider this further?
John Penrose
I sympathise with the hon. Gentleman, who took the trouble to write to me in advance laying out some of his concerns. My problem is that economic considerations are not part of the factors that I am allowed to consider under the 1990 Act. I can reassure him that the fact that the building is listed as grade II does not mean that it cannot be touched. In fact, there are many examples every year of listed buildings at grade II that are altered, and in some cases pulled down, for economic reasons, depending on the decision of the local planning authority.
Stephen Gilbert (St Austell and Newquay) (LD)
14. What steps he is taking to increase provision of superfast broadband in Cornwall.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
Unlike the previous Government, this Government are committed to the roll-out of superfast broadband in rural areas as well as in cities, and not just at speeds as slow as 2 megabits, but at very fast speeds. Cornwall will be an important part of that process.
Stephen Gilbert
I welcome the Government’s commitment to roll out superfast broadband across the UK, but can the Secretary of State give me an assurance that we will not have a digital divide between roll-out in urban areas and roll-out in rural areas such as Cornwall?
Mr Hunt
We will do everything we can to avoid that digital divide. The importance of superfast broadband is not just economic; it is social. The reason for that is that every year 7 million jobs are advertised on line, and 90% require internet skills. So for remote, rural and deprived areas it is incredibly important that they are part of the revolution. That is why we are committed to tackling rural broadband provision at the same time as broadband provision in our cities.
Mark Menzies (Fylde) (Con)
15. What recent discussions he has had on the legacy for the north-west of the London 2012 Olympics.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Hugh Robertson)
I have regular discussions on maximising the legacy benefits of the games for the UK as a whole. The north-west stands to gain from a wide range of opportunities created by the games through businesses winning games-related work, increased tourism and cultural events. For example G R Formby Heavy Transport Ltd, a firm in my hon. Friend’s constituency has won work in the Olympic Deliver Authority supply chain.
Mark Menzies
I am sure that the people of Fylde will be pleased by my hon. Friend’s answer. What measures is he taking to ensure that schools and youth groups in the north-west have affordable access to the games in London?
Hugh Robertson
The first and obvious point is that 1,263 schools and colleges in the north-west are already registered for the London 2012 education programme. That is a process that will continue. It is part of highlighting the two years to go celebrations tomorrow and it is a process that we will continue as we move closer to the games.
Mr Andrew Turner (Isle of Wight) (Con)
16. If he will have discussions with industry representatives on promoting the use of superfast broadband on the Isle of Wight.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
The Isle of Wight does not have good or consistent broadband coverage and this Government are determined to sort it out.
Mr Hunt
My hon. Friend is right to talk about the importance of superfast broadband and not just low-speed broadband for somewhere such as the Isle of Wight. We have said that we are committed to having the fastest superfast broadband network in Europe by the end of this Parliament, and we are doing everything possible both to stimulate private sector investment in our broadband network and to have a coherent strategy for dealing with rural and remote areas such as the Isle of Wight. We are happy to work closely with him to ensure that the Isle of Wight is part of that success story.
Ian Murray (Edinburgh South) (Lab)
17. What recent discussions he has had with the BBC on the level of the television licence fee.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
I do apologise, Mr Speaker.
I have had no discussions with the BBC about the level of the licence fee.
Ian Murray
The Secretary of State will be aware that there is an ongoing programme of savings totalling £1.9 billion in the current licence fee period. What impact will that have on the Government’s decision with regard to the level of the licence fee?
Mr Hunt
I am delighted that the BBC has started to talk about making savings, but it needs to go further. The BBC needs to understand that the world in which licence fee payers are living is one of severe and constrained finances. Licence fee payers would like that to be reflected in the BBC’s approach to matters such as executive pay and remuneration, executive pensions, and a whole range of other areas. We want a strong BBC, but a strong BBC is one that is in touch with the feelings and the mood of the people who pay for it, and they are the licence fee payers.
Bob Blackman (Harrow East) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
I shall make a brief statement, if I may, to start proceedings. First, because of my Department’s responsibility to take its share of reducing the deficit inherited from the previous Government, we have announced today plans to rationalise or merge a number of arm’s length bodies for which we are responsible. As part of that, we have said that we are considering the abolition of the UK Film Council and the Museums, Libraries and Archives Council. That does not reflect our commitment to the Government’s or the lottery’s investing in UK film, or Government support for the sectors represented by the Museums, Libraries and Archives Council. However, in the constrained circumstances in which we find ourselves, we want to ensure that every penny is used on front-line services, not on back-office and bureaucracy.
With permission, Mr Speaker, I also want to mention that tomorrow marks the date from which there will be exactly two years till the 2012 London Olympics opening ceremony. I am happy to report to the House that the construction of the project is on track, and I believe that it will also be delivered within budget. It is because I want to maintain the cross-party support for that important project that I can today announce that there will be Liberal Democrat and Labour representation on the Olympic board, and the Labour representative will be the right hon. Member for Dulwich and West Norwood (Tessa Jowell).
Mr Speaker
Order. Doubtless the Secretary of State was seeking to be helpful to the House, but in the light of the impromptu statement that he has just made, I will probably allow modest injury time.
Bob Blackman
We are all looking forward to the 2012 Olympics. However, this is a very difficult time for football fans—after the World cup and before the season starts—so what lobbying has the Secretary of State been doing and what action has he been taking to bring the World cup back to England?
Mr Hunt
I thank my hon. Friend for his excellent question. I have met five members of the FIFA executive committee to tell them personally that England is the best possible place to host the World cup in 2018. More than 1 million people watch or play football every week in this country, and we have the best football infrastructure in the world. There is no doubt at all that we would deliver the best World cup possible in 2018, so I thank my hon. Friend for his support.
Ian Lucas (Wrexham) (Lab)
T3. Will the Government’s Shott inquiry consider the media pressures in north Wales and, in particular, the failure of the BBC to provide any local radio in Wales or support the developing media network within the country?
Mr Hunt
The Shott inquiry will certainly be looking at that, but it will also look at the chronic failures in local media throughout the country. The situation is tough for local newspapers and local radio stations and, unlike many countries, we have virtually no local TV in this country. For rural areas such as north Wales, we believe that local media have an important role to play. That is why, unlike the previous Government, we are doing something about the problem.
Mary Macleod (Brentford and Isleworth) (Con)
T2. Will my right hon. Friend join me in praising Brentford football club community sports trust for its work in the community, involving more than 27 sports and 30,000 children, and explain what plans he has for developing the big society model to create more opportunities for sport for young people across the country?
Mr Hunt
I am very happy to praise the work of that organisation, which I visited with my hon. Friend before the election. I can personally attest to what a brilliant job it is doing. I think that it involves more than 50,000 young people every year across four London boroughs, and it has a brilliant role to play. I hope that restoring the lottery to its original four pillars as one of my first acts as Secretary of State will make more funds available for such projects and for their important work.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
T4. Guisborough and Skinningrove in my constituency suffer from bad TV reception, and certain channels are unobtainable. Both areas are served by relay transmitters rather than masts. Will the Minister confirm the date for digital switchover in both communities, and provide details of the funding of the switchover? Will he also give me a guarantee that the residents of those areas will be able to receive all Freeview channels once the process is complete?
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
By the time digital switchover ends in 2012, everyone in the country should be able to receive at least 15 Freeview channels, but I would be happy to meet the hon. Gentleman to discuss any particular problems in his constituency.
Julian Smith (Skipton and Ripon) (Con)
T5. Last week, Dr David Harrop, a dentist from Grassington in the heart of the Yorkshire dales, wrote to me to say that he felt completely left behind by all the advances in the internet. Does the Secretary of State agree that connecting rural communities with high-speed broadband is vital for setting up businesses and for work? Will he meet me and my North Yorkshire colleagues to work out how North Yorkshire can be at the forefront of his superfast broadband revolution?
Mr Hunt
I am happy to meet my hon. Friend and his colleagues from Yorkshire; I have already met colleagues from Norfolk. I agree that superfast broadband can create jobs in fields that we cannot possibly predict, including home education and telemedicine, and we are anxious that those benefits should be shared throughout the country.
Hugh Bayley (York Central) (Lab)
T6. The Government’s change of policy on regional development agencies required Yorkshire Forward to cancel an investment of £5 million in the refurbishment of the National Railway museum’s great hall and one of £1 million towards the restoration of York minster’s great east window. If the Government do not want Yorkshire Forward to invest in heritage, will the Secretary of State or the Minister responsible for culture come to York over the summer to discuss other ways of supporting those important institutions, and to meet people from other important heritage organisations in the city?
Dr Thérèse Coffey (Suffolk Coastal) (Con)
T7. My right hon. Friend the Secretary of State has already mentioned the fact that the Olympics will be launched two years tomorrow. I am sure that he also enjoyed the various events that were held recently in constituencies across the country, including Xtremefest and the disability showcase in Ipswich. One concern that has been passed to me by many of the volunteers who help with sport across the country is that they are put off by the excessive health and safety regulations and the increasing requirements for insurance. Will he assure me that he will have words with his colleagues in the Cabinet about how we are preventing people from doing the right thing?
Mr Hunt
My hon. Friend makes an important point. I have already had a meeting with Lord Young to discuss how we can look at the burden of health and safety regulation on volunteering in general. A particular concern is the rule that requires two people to take children to sporting activities in minibuses. We are worried that that is putting off schools taking people to sports events in other places. My hon. Friend is absolutely right, and we are looking at that matter carefully.
Derek Twigg (Halton) (Lab)
I am sure that the Front-Bench team will agree that it is important to increase participation in sport at school, and that playing fields have an important role in that. During the review of capital expenditure on education, was the Secretary of State consulted on the proposal to review the regulations relating to school playing fields? If he was consulted, what did he say? If he was not consulted, why not?
Mr Hunt
We are working closely with the Department for Education on a number of projects to do with school sport. In particular, we want to ensure that proper protections are in place for school playing fields. That was a failing of the previous Conservative Government and of the previous Labour Government, and we want to put it right.
Mr Philip Hollobone (Kettering) (Con)
T8. May I praise my right hon. Friend for helping to expose some of the excessively large pay packages at the BBC, and ask him when something is actually going to be done about this matter?
Ian Paisley (North Antrim) (DUP)
Given the Minister’s unilateral decision to close the UK Film Council, will he outline what discussions he had with the council and its members and when those discussions took place? Will he also outline what direct support and ambition the Government have for film making in the United Kingdom?
Mr Speaker
I think that that was a triple question, but I know that the Secretary of State is dextrous enough to provide a single reply.
Mr Hunt
We have not announced a decision, but we have said that we are considering such action because we want to hear everyone’s views. The UK Film Council spends £3 million per annum on administration. We want to ask whether that money could be better used to support film makers.
Rehman Chishti (Gillingham and Rainham) (Con)
When is the Shott review likely to report back on the creation and viability of local television?
Duncan Hames (Chippenham) (LD)
1. What representations the House of Commons Commission has received from new hon. Members on Parliamentary Information and Communications Technology’s policy that ICT equipment is allocated only to the permanent office of an hon. Member.
Duncan Hames
It is a very serious matter when Members of the House are denied the tools to provide an efficient and effective service to their constituents, at home in their constituencies. Will the hon. Gentleman please consider removing that obstacle to Members, recognising that those such as me who did not rush into taking out office leases saved the taxpayer money and should be entitled to the IT provision available to other Members?
Sir Stuart Bell
I sympathise with the hon. Gentleman. If there are special circumstances in any case PICT will be prepared to consider an alternative approach. Under its current approach, each and every Member ought to have a permanent office, either in Westminster or their constituency, before they order equipment. That ensures that the equipment ordered is suitable for the space being occupied, and it avoids the need to relocate often heavy equipment and to set it up twice.
Mark Menzies (Fylde) (Con)
2. What assessment he has made of the effectiveness of the early-day motions procedure.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
The procedure for early-day motions is a matter for the House. Despite their variable quality, the opportunity provided by EDMs to raise any issue in the House is valued by many hon. Members. I understand that the House authorities are considering measures to reduce the associated costs.
Mark Menzies
I thank the Minister for his response. I and many colleagues are increasingly concerned that the EDM procedure is being abused by outside interests and lobbyists, at considerable cost to the taxpayer and to Members’ time. What steps is he taking to ensure that that does not continue?
Mr Heath
I know that a number of hon. Members share the hon. Gentleman’s view. Ironically, perhaps, the concerns about early-day motions are expressed in early-day motion 432, which sets out a similar view to his. The problem is that many of our constituents are led to believe by campaigning organisations that EDMs have an efficacy well beyond what we in the House know to be the case. The matter will have to be considered by the House authorities and Committees, but he makes an important point.
Chris Bryant (Rhondda) (Lab)
Early-day motions are an important way for the House, and particularly Back Benchers, to show interest, concern and dedication to a particular cause. I urge the hon. Gentleman not to make it more difficult for Members to sign early-day motions—I know that there are difficulties deciding which to sign and which not to sign—but to make it easier. Currently, we can table a question online, but we cannot add our name to an early-day motion online. Surely that facility could be introduced.
Mr Heath
In the past financial year, a total of 2,531 EDMs were tabled, with 120,158 names added. Clearly, the obstacles are not insuperable, but the hon. Gentleman raises an important point, which he has raised with me previously and which I have taken up with the House authorities. I hope that we will soon make progress on the matter.
Dr Julian Lewis (New Forest East) (Con)
Had it not been for the availability of the EDM procedure, I would not have been able quickly to gather 249 signatures for an EDM that helped in considerable part to change the law so that the mad decision of three judges that our home addresses should be revealed to anyone who asked for them could be stultified and reversed. May I suggest gently to my hon. Friends and other hon. Members that if they are so shy about saying no when asked to sign an EDM, they have the option of simply informing the Table Office that they do not sign any EDMs, and informing their constituents of the same? Those of us who want to make use of the procedure can then continue to do so.
Rachel Reeves (Leeds West) (Lab)
3. If he will take steps to ensure that no major Government policy announcements are made when the House is not sitting.
The Leader of the House of Commons (Sir George Young)
The Government make major policy announcements to the House in the first instance when it is sitting. However, the demands of modern government make it impossible to avoid making any announcements at all when the House is not sitting.
Rachel Reeves
The Minister for Housing, the right hon. Member for Welwyn Hatfield (Grant Shapps), made substantial policy announcements on Friday that could just as easily have been made on Thursday or today. What assurances can the Leader of the House give us that until Parliament returns in September there will be no announcements that can wait, especially given that it is returning early in September? The House needs to be able to scrutinise legislation properly.
Sir George Young
It is precisely because the Government want to keep the House informed that there are 32 written ministerial statements on the Order Paper today. We have brought forward announcements that might otherwise have been made in August in order to keep the House fully in the picture. I am not aware that any substantial policy announcements are to be made during August.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Will my right hon. Friend look favourably on a request that when consultation is announced over the summer—as it is in one of today’s written ministerial statements—a certain amount of injury time will be allowed to enable those of us who wish to take soundings from our constituents to do so adequately, and subsequently to respond?
Sir George Young
I think I am right in saying that the Government have set out guidelines in best practice to assist the consultation process, and I hope that the process to which my hon. Friend refers observes those guidelines, and that she will have an opportunity to consult her constituents in good time before it ends.
Ms Rosie Winterton (Doncaster Central) (Lab)
Will the Leader of the House ensure that when the Government have made up their mind about their policy on rape anonymity, it will be communicated when the House is sitting, especially given that there is another leak in today’s papers suggesting that the Government have reversed their stated position?
Sir George Young
The right hon. Lady knows that no legislation on rape anonymity is planned for the current Session, but of course the Government will make their views on the issue known at the right time. Before she waxes too indignant, let me remind her that the then Prime Minister announced at last year’s party conference—when the House was not sitting—substantial changes of policy on a national care service and a referendum on the alternative vote.
Mr Andrew Turner (Isle of Wight) (Con)
4. If the House of Commons Commission will bring forward proposals to reduce parliamentary recording unit charges for small independent broadcasters.
Sir Stuart Bell (Middlesbrough)
We have already taken action. In anticipating new licensing arrangements due to come into effect in August 2011, we have decided to stop charging copyright licence fees to broadcasters for the material that we hold.
Sir Stuart Bell
I am aware that the hon. Gentleman has had discussions with the parliamentary recording unit. He has been very diligent, and I congratulate him on that. As he knows, the principles and level of charges were originally set out in 1993 by what was then the Select Committee on Broadcasting and have thereafter been reviewed at official level. The technical duplication charges, to which the hon. Gentleman did not refer but which I know he understands, will be reviewed during the business planning for the new broadcasting arrangements that will be introduced in August 2011.
Diana R. Johnson (Kingston upon Hull North) (Lab)
5. What steps he plans to take to provide for pre-legislative scrutiny of proposed Government legislation.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
The Government will continue to publish Bills in draft for pre-legislative scrutiny as opportunities arise. We have already announced that three Bills—on parliamentary privilege, House of Lords reform and defamation—will be published in draft.
Diana R. Johnson
During last Thursday’s business questions, the Leader of the House told me that pre-legislative scrutiny was “not possible” for all constitutional Bills in the first term of a Parliament. Has the hon. Gentleman had an opportunity to read the words of Professor Robert Blackburn, Professor Robert Hazell and Peter Riddell, who say that there is no justification for rushing through without pre-legislative scrutiny the Fixed-term Parliaments Bill when we return in September, other than the political expediency of the two coalition partners?
Mr Heath
Well, that is their opinion. It is perfectly clear that it is not possible for Bills to be produced in time to allow full pre-legislative scrutiny in the first 10 weeks of a new Government when those Bills are to be debated in the very near future; I would have thought that that was obvious to any Member of this House. We are clearly committed to using pre-legislative scrutiny whenever possible, but I repeat that it is clear that, with a new Government and a new House of Commons, there will be new Bills that cannot go through that procedure.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
The Deputy Leader of the House will be aware that in the previous Parliament many Bills were almost totally rewritten during their passage through the House. In due course, after the Government have had time to write their Bills, will the Deputy Leader of the House be able to say that pre-legislative scrutiny will be the norm, and not the exception, for a Bill in this Parliament?
Mr Heath
The hon. Gentleman makes the important point that what is most important is that Bills are written correctly and are made right first time, rather than having them rewritten, as was so often the case under the previous Administration. [Interruption.] We hear protestations from Opposition Members, but may I remind them that in the 2009-10 Session only five Bills were submitted for pre-legislative scrutiny and in the 2008-09 Session there were only four, whereas we have already announced three.
Mr Graham Allen (Nottingham North) (Lab)
The Deputy Leader of the House referred to someone’s opinion about pre-legislative scrutiny. What does he think of the opinion that all Bills should be given 12 weeks of pre-legislative scrutiny? That was the opinion of his right hon. Friend the Leader of the House, writing to the Liaison Committee last week. Is it not a travesty of the processes of this House that my Select Committee on Political and Constitutional Reform has only been able to squeeze in a maximum of three sessions to look at two very important Bills? Will the Deputy Leader of the House not cite past precedent, but try to set future precedent to do this job properly?
Mr Heath
I hope that the hon. Gentleman’s Committee will do an excellent job in looking at those Bills as they are taken forward. The critical period is between Second Reading and Committee, when Members consider amendments that they may wish to table. I hope that his Committee will take full advantage of that period by having as many sittings as he requires in order to do that work.
Mr Philip Hollobone (Kettering) (Con)
6. How much it costs to print early-day motions in 2009-10.
Sir Stuart Bell (Middlesbrough)
The cost of publishing early-day motions, including printing, staff time and technical support, was approximately £1 million in the financial year 2009-10. Printing alone accounts for some £776,000.
Mr Hollobone
Taxpayers will be shocked by the figures that the hon. Gentleman has just read out to the House. Should this not offer scope for huge cost savings and, hopefully, be another nail in the coffin of the wretched EDM system?
Sir Stuart Bell
I am grateful to the hon. Gentleman for his remarks, and he will be happy to know that from the start of this parliamentary Session older EDMs have not been reprinted weekly, saving 2.5 million sheets of paper and up to £300,000 in printing costs per year.
Mr David Hanson (Delyn) (Lab)
I confess that I have been here for only 18 years but I have not yet seen an EDM debated. Would it not be a good idea for us to pick four or five EDMs for debate in the course of a year and therefore, through the Backbench Business Committee or the Leader of the House, vent those issues and make the system better value for money?
Sir Stuart Bell
I am grateful to my right hon. Friend, but I cannot add to the points made by the Deputy Leader of the House and the hon. Member for New Forest East (Dr Lewis). As my right hon. Friend will no doubt know, this is a matter for the Procedure Committee or the Backbench Business Committee.
Robert Halfon (Harlow) (Con)
Would it not be a good way to save money to publish EDMs just on the internet and not print them on the Order Paper?
Sir Stuart Bell
That is an interesting point. In 2007 the Procedure Committee said there should be no electronic tabling of EDMs without stronger authentication than that in place for questions.
Sir Stuart Bell
My hon. Friend asks why. The Procedure Committee said there should not be such electronic tabling unless
“significantly stronger authentication than is currently required for parliamentary questions can be guaranteed”.
The Procedure Committee went on to say that it cannot therefore
“recommend the introduction of e-tabling for EDMs.”
I am happy to answer the hon. Gentleman’s question, and my hon. Friend’s question from a sedentary position.
Hugh Bayley (York Central) (Lab)
7. Whether the House of Commons Commission plans to seek the views of hon. Members on ways of reducing the running costs of the House.
Sir Stuart Bell
The Commission will seek the view of Members in the normal way through the Finance and Services Committee and the Administration Committee. I am pleased to see on today’s Order Paper the submission of names to the will of the House for both those Committees. The Commission will also welcome the submission of views from individual Members, which should be sent to the secretary of the Commission.
Hugh Bayley
I understand the need for the House to cut its costs, but I am worried about the size of the cut in respect of Select Committee travel, because it will undermine the ability of Parliament to scrutinise the Government. Will the Commission seek savings in other areas which do not have a direct impact on how Parliament does its job? For example, at a time of widespread public concern about public sector bonuses, will the Commission examine what impact the bonus scheme for senior staff of this House has had on their output and productivity?
Sir Stuart Bell
I am grateful to my hon. Friend for his question. On the cuts in the Select Committee budgets, I am afraid that we are not able in this House to distinguish between one set of expenditure and another. The cuts announced recently are for this year only and are in response to the general financial stringency being applied to the public sector in the current year. Following scrutiny by the Finance and Services Committee last December, the Commission agreed to a reduction of 9% over three years and will consider the position for future years in the autumn. My hon. Friend’s point about bonuses will be included in that review.
Taxibus Services (Plymouth)
Alison Seabeck (Plymouth, Moor View) (Lab)
The petition is against the withdrawal of the taxibus services in Plymouth from Glenholt down through to the city.
The petition states:
The Petition of residents of the Plymouth, Moor View constituency and others,
Declares that the petitioners are unhappy with the decision to withdraw the taxibus service that serves the residents in the north of Plymouth; notes that residents in St Budeaux and Weston Mill use this bus to access their GP surgery, dentist, shops and other community facilities; and further declares that the withdrawal of this service will cause major inconvenience to residents.
The Petitioners therefore request that the House of Commons urges the Government to encourage local authorities to support local taxibus services to avoid these vital public transport services being removed.
And the Petitioners remain, etc.
[P000847]
Free Swimming (Wakefield)
Mary Creagh (Wakefield) (Lab)
I rise to present a petition on free swimming.
The petition states:
The Petition of Mrs Priscilla Whisker and residents of Wakefield constituency, and others,
Declares that HM Government’s decision to cut the previous Labour government's free swimming scheme from 1 August 2010 will make it more difficult for under 16 and over 60 year olds to access swimming facilities in Wakefield; further declares that the scheme was part of the 2012 Olympics legacy to get more people involved in healthy activities; further declares that there are high levels of child obesity in Wakefield; and further declares that the cuts will disproportionately affect the health of poor people in Wakefield.
The Petitioners therefore request that the House of Commons urges HM Government to recognise the value of encouraging young people to take regular exercise and to learn to swim; to recognise the important health benefits of swimming to children and people over 60; to reconsider the cuts to the Swim 4 Free local authority grant support; and to reinstate the Swim 4 Free grant support to local authorities from 1 August 2010.
And the Petitioners remain, etc.
[P000848]
1GOAL For All Campaign
Derek Twigg (Halton) (Lab)
I rise to present a petition on the 1GOAL For All campaign.
The petition states:
The Petition of staff and students at Halton Lodge School and their friends, relatives and others in their community,
Declares that the petitioners support the 1GOAL For All Campaign to use the power of football to contribute to securing universal primary education by 2015 (Millennium Development Goal 2); notes the progress that has already been made towards this goal, with 40 million more children in school since the Millennium; further declares that the petitioners are appalled that 72 million children across the world are still denied the opportunity of schooling; further notes that sport can be used to champion education, which gives people the tools to help themselves out of poverty…The Petitioners therefore request that the House of Commons agrees to any motion expressing support for the 1GOAL Campaign and urges the Leader of the House and the Backbench Business Committee to consider scheduling a debate on progress towards achieving Millennium Development Goal 2 (Universal Primary Education).
There are 452 petitioners.
Following is the full text of the petition:
[The Petition of staff and students at Halton Lodge School and their friends, relatives and others in their community,
Declares that the petitioners support the 1GOAL For All Campaign to use the power of football to contribute to securing universal primary education by 2015 (Millennium Development Goal 2); notes the progress that has already been made towards this goal, with 40 million more children in school since the Millennium; further declares that the petitioners are appalled that 72 million children across the world are still denied the opportunity of schooling; further notes that sport can be used to champion education, which gives people the tools to help themselves out of poverty; and further declares that Halton Lodge School has used the opportunity afforded by World Cup 2010 to engage with the international campaign founded and chaired by Her Majesty Queen Rania of Jordan, by watching and reading 1GOAL material, by producing artwork to raise the profile of the Campaign, by holding a 1GOAL school assembly and by opening the school for parents to watch the first game (France v South Africa) of the World Cup 2010 recently held in South Africa, an event which has raised the hopes and aspirations of millions of young people across Africa.
The Petitioners therefore request that the House of Commons agrees to any motion expressing support for the 1GOAL Campaign and urges the Leader of the House and the Backbench Business Committee to consider scheduling a debate on progress towards achieving Millennium Development Goal 2 (Universal Primary Education).
And the Petitioners remain, etc.]
[P000849]
Wind Farm (Puriton, Somerset)
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)
The petition states:
The Petition of the residents of Woolavington and others,
Declares that they are concerned about plans by EDF Energy Renewables to develop a new wind farm at Withy Farm near Puriton; about the implications for local residents of noise from the turbines; the intrusive nature of the wind turbines and any possible additional power lines associated with them on the unique landscape of the Somerset Levels; and the potential damage to wildlife and their habitats.
The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to take the impact on local communities and the landscape fully into account when considering plans submitted for the siting of wind farms and the provision of energy generation through renewable sources.
And the Petitioners remain, etc.
[P000850]
Blandford Community Hospital (Dorset)
Mr Robert Walter (North Dorset) (Con)
I present a petition in the name of the Blandford community hospital in Dorset.
The petition states:
The Petition of Mrs Jacqueline Stayt and Mrs Josephine Seath, residents of the North Dorset community and others,
Declares that they are concerned about the future of Portman Ward at Blandford Community Hospital, Dorset.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Health to encourage NHS Dorset to consider seriously the impact on the local community of proposed cuts to services at Blandford Hospital, in particular the proposed closure of Portman Ward, and to ensure that decisions affecting the hospital's future reflect the concerns and needs of patients, staff and the community at large.
And your Petitioners remain, as in duty bound, will ever pray.
[P000851]
Ian Tomlinson
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
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Emily Thornberry (Islington South and Finsbury) (Lab)
(Urgent Question): To ask the Attorney-General if he will make a statement on the decision not to prosecute any police officer in connection with the assault and subsequent death of Ian Tomlinson?
The Attorney-General (Mr Dominic Grieve)
I thank the hon. Lady for her question. I wholly understand the reaction of the public and of this House to the news that the Director of Public Prosecutions considers that he cannot bring a criminal prosecution following the Independent Police Complaints Commission’s investigation into the death of Mr Ian Tomlinson in April 2009. No one who has seen the pictures of his treatment that day could fail to be disturbed by them. The facts were rightly and thoroughly investigated by the IPCC. In recognition of the strong public interest in understanding how that decision had been reached, last Thursday the Director of Public Prosecutions, who has responsibility, independently of Government, for the decision, made a detailed and lengthy statement explaining it. The statement is available on the Crown Prosecution Service website, and I have also asked for copies of it to be placed in the Library.
Once the IPCC has concluded its report, an inquest will follow into the death of Mr Tomlinson under the direction of Her Majesty’s coroner. The Metropolitan police will also consider whether disciplinary or any other action should be brought. It has to be remembered that the detailed statement made by the DPP did not purport to set out any defence that the suspected police officer would have advanced had the case come before a criminal court; it only centred on the evidential issues faced in any prosecution.
From the outset, the CPS and the IPCC approached this case on the basis that there may be evidence to justify a charge for manslaughter. Expert evidence was obtained with a view to establishing the cause of death. After the original pathologist, who was appointed by Her Majesty’s coroner, provided a second statement about his findings, the factual basis on which the other experts had given their opinions about the cause of death was seriously undermined. The CPS concluded that there was no realistic prospect of conviction for manslaughter.
It is not appropriate practice in possible homicide cases to bring a charge for a lesser offence such as common assault while there remains a prospect of a prosecution for manslaughter. But once it was clear that a charge for manslaughter was not going to be possible, the CPS turned to consider whether proceedings could be brought for assault occasioning actual bodily harm. In law, a charge of assault occasioning actual bodily harm can be brought in respect of quite minor injuries. However, to bring a measure of consistency to charging decisions in assault cases the CPS applies charging standards. In the case of the G20 demonstration, for example, after a police officer struck a woman twice with his baton causing a similar level of injury, the CPS brought a prosecution for common assault applying exactly the same guidance. That officer was of course recently acquitted by the courts.
I understand the dismay of the House at the outcome of this case, which is that a prosecution will not be brought for any offence. That outcome was reached after an independent investigation of the facts by the IPCC and independent and thorough consideration by a senior and experienced Crown Prosecution Service prosecutor, with the added benefit of advice from independent leading counsel under the oversight and with the approval of the Director of Public Prosecutions. I have seen nothing to make me doubt the seriousness and propriety of the decision-making process in this case.
Emily Thornberry
Does the right hon. and learned Gentleman believe that if a member of the public had launched an unprovoked attack on a police officer that was immediately followed by the officer’s death, and if that incident was on film, a pathologist of highly dubious professionalism would have been appointed to investigate and that that pathologist would have been allowed to throw away samples that could have proved the link between the assault and the death? Does he also agree that it would be highly unlikely, even if one were to leave aside the evidence in connection to the manslaughter, that there would be no action on the assault?
We have all seen the film. The man was clearly assaulted. We have also, have we not, read Nat Cary’s evidence in which he says that there is an area of bruising consistent with being hit with a baton? As Nat Cary says, if that is not ABH, what is? How can the CPS have taken 15 months to come to no conclusion? It is not going to take any action. I suggest that that would not have happened if the tables had been turned and this shows that there is no equality before the law. If the right hon. and learned Gentleman agrees, what is he going to do about it?
The Attorney-General
I should say at the outset that I think that the first part of the hon. Lady’s question is based on a slightly false premise. The appointment of a pathologist is a matter for the coroner, not for the CPS. The first pathologist appointed in this case was appointed by the coroner—he has the power to do that. The hon. Lady will be aware from what was said by the DPP and from what I said a moment ago that much flows from that appointment. It is clear that a report was produced that provided an indication to lead to further reports that looked as though it might lead to showing a causal connection between the assault and the death but that subsequently a further factual statement from the pathologist first appointed by the coroner entirely undermined the basis on which any further expert view could be taken of the case by other pathologists. That is at the root of the problem.
As for the hon. Lady’s suggestion that in some way this case would have been treated differently had it involved the death of a police officer, I have no reason to think that that is the case. It is right to say that when the matter was first drawn to the attention of Her Majesty’s coroner, it might not have been apparent at that stage—because the video evidence had not become available—that this was not a sudden death on the fringe of the G20 demonstration rather than something that was intimately linked to it, as became clear when the video evidence became available.
Maria Eagle (Garston and Halewood) (Lab)
I should like to thank the Attorney-General for the elaboration that he has given. It seems to me that the decision not to prosecute appears to rest on the divergence of medical opinion between the three pathologists who have conducted post-mortems, creating evidential problems for the DPP when considering the likelihood of proving a causal link between the push and the blow that, as we have all seen, were struck at Mr Tomlinson and his subsequent death. However, is it not the case that the decision of medical authorities to charge Dr Patel, the first pathologist, with 26 counts of misconduct is materially important?
The public will find it difficult to understand how the opinion of a doctor facing 26 charges of misconduct before the General Medical Council can in effect muddy the evidential waters in this very serious case to such an extent that a prosecution cannot proceed in a case where the public interest is not served, as I think the right hon. and learned Gentleman would probably agree, by such a decision.
Prosecuting authorities, of course, are rightly independent, but what powers of supervision does the Attorney-General have over their decisions? In view of the GMC’s charges against Dr Patel, has the Attorney-General asked the DPP to review his decision about whether to bring charges, given that the other two pathologists—Dr Cary and Dr Shorrock—agree that Mr Tomlinson’s death was a result of internal bleeding from blunt force trauma to the abdomen? If not, will he now do so?
I am sure that the Attorney-General agrees—and would say again—how important it is that justice is seen to be done, freely and fairly, with all being equal before the law. The unfortunate circumstances of this case do not appear to show that at present.
The Attorney-General
As for the hon. Lady’s last comment, I entirely endorse what she says. On her earlier comments, I am not in a position to make a judgment on the misconduct allegations that may pertain to the pathologist, Dr Patel, which I understand arise out of other matters. Neither am I in a position to comment on questions of expertise. As I tried to make clear a moment ago, this is about an issue of fact. Dr Patel carried out the first post-mortem examination, which included certain conclusions about blood in the abdominal cavity. Subsequently, he factually retracted those statements, or altered them markedly, putting a completely different complexion on what conclusions could be drawn from the evidence and whether, in particular, any connection could be made between the blow that one can see being struck on the video, the fall that followed and the actual cause of death. I understand that that lies at the root of the Crown Prosecution Service’s difficulties in this case.
The hon. Lady also asked about my powers of supervision and superintendence. I have those—they are my ability to ask questions. As she might appreciate, I have certainly had an opportunity to do that, but this is not my decision and I have not been in a position to review the evidence. As I said earlier, I have no reason to think, from anything I have heard, that this matter was not most conscientiously and fully inquired into with a clear desire to see justice being done. The decision is potentially open to being reviewed by means of judicial review—that could happen if someone wished it to take place—but I want to make it clear that on the basis of what I have been told and what I have discussed, but not on a review of the evidence, it seems to me that the CPS has acted with complete propriety in this matter and in trying to take it forward.
Dr Julian Lewis (New Forest East) (Con)
Does my right hon. and learned Friend accept that the CPS might have acted with complete propriety but that its actions have nothing to do with the delivery of justice in this case? Does he understand that to allow the findings of a pathologist who has previously found a victim of the Camden ripper in 2002 to have died of natural causes resulting from heart disease to trump the considered verdicts of two other pathologists is far from satisfactory? Is he more understanding than I am of the fact that the Director of Public Prosecutions can take the view that the findings amount to an irreconcilable disagreement between experts rather than between two experts and one incompetent who ought to be disregarded?
The Attorney-General
I fully understand my hon. Friend’s concerns, but at the risk of repeating myself, I must restate the key point. This is not just a disagreement between experts: it is about a key matter of fact that had to be established at the outset, which has been left completely unclear. On the basis of the facts as now stated, it does not lend support to there being a causal connection between the blow and the death. That might be a profoundly unsatisfactory state of affairs, but I simply say that the CPS has to go with the material that is available to it, and it cannot manufacture it or wish that something different had happened from what actually happened. From that point of view and bearing in mind my responsibility in this matter, in seeking to answer the House’s questions properly, I repeat that the CPS seems, from what I have been told, to have acted with complete propriety in investigating this matter.
Keith Vaz (Leicester East) (Lab)
The Attorney-General might recall that at the instigation of the hon. Member for Carshalton and Wallington (Tom Brake) the Select Committee on Home Affairs held an inquiry into the G20 riots and made passing comment on the case of Ian Tomlinson. Two recommendations were put forward, one of which concerned the use of untrained officers. The other involved the Committee’s concern about the prospect that communication between the police and the public at that time, and the tactics that were used, might undermine public confidence and trust in the police. Have those two recommendations been addressed? If not, will the Attorney-General write to me and let me know what progress has been made?
The Attorney-General
I think the right hon. Gentleman will understand that those questions fall slightly outside the remit of my area of responsibility. My right hon. Friend the Home Secretary is sitting on my left, however, and I am sure that is a reflection of the seriousness with which she takes the entirety of the matters that the right hon. Gentleman has just expounded. I hope very much, therefore, that my right hon. Friend will be in a position to answer the question that he raised.
Tom Brake (Carshalton and Wallington) (LD)
It is important not to prejudice any further action, but does the Attorney-General agree that to avoid the impression of a cover-up it is also important that the CPS considers all the evidence that will be presented at the inquest and whether it warrants taking action against the officer then?
The Attorney-General
The hon. Gentleman makes a perfectly good point. As I indicated, the matter is not at an end. There will be an inquest and there is the IPCC report to the Home Secretary. If it were, indeed, the case that further evidence emerged, I have not the slightest doubt that the CPS would wish to consider it.
Glenda Jackson (Hampstead and Kilburn) (Lab)
The issues causing my constituents concern are, first, the seeming failure of the Metropolitan police ever to learn from their past mistakes and, secondly, that the CPS seems to have endowed the medical evidence with undue weight and ignored the other manifest evidence that was in the public domain. If there is to be an inquest, will the family of Mr Tomlinson be afforded any kind of financial support by the Government, given the swingeing cuts that have been introduced to the legal financial service?
The Attorney-General
On that latter and final point, I have to tell the hon. Lady that it is a matter for my right hon. and learned Friend the Secretary of State for Justice. As she is aware, provision is available to help families in certain inquests and that matter would have to be considered. It would also have to be considered by the Legal Services Commission to which application would be made.
May I return to this point: I do not think it is a question of the application of undue weight on anything? The responsibility of the CPS is to apply the code and test of Crown prosecutors as to whether there is a basis on which a prosecution can be brought. In a case of prosecution for manslaughter, that is not possible for the reasons I have already given the House and the hon. Lady. In a case of assault occasioning actual bodily harm, if the CPS were to depart from its own standards and guidelines, which have, I think, been in existence for some 15 years—I seem to recollect they were introduced following some criticisms that there were excessive variations in when assault occasioning actual bodily harm was charged or not—that decision could be open to criticism and challenge.
Mark Pritchard (The Wrekin) (Con)
Is it not time that coroners were issued with new guidance that they should not appoint pathologists when there is a direct and/or present relationship with the police force they are investigating?
The Attorney-General
My hon. Friend raises an interesting question. Normally, as I understand it, that is a matter for the discretion of the coroner. It may be that one of the matters arising from this case that needs to be considered is how pathologists are appointed by coroners in all cases.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
Does the Attorney-General agree that a key element in upholding the rule of law is people’s confidence in the rule of law? Does he also agree that a number of issues associated with this case have tended to undermine that confidence both for the tragic Tomlinson family and for the community as a whole? The question of the pathologist’s competence has been touched on, but there is also the chequered history of the policeman involved—at one point, he was actually discharged from the Metropolitan Police Service. There is also the question of the length of time it took the CPS to finish the inquiry, which has meant that no prosecution of any kind may be brought. Does the right hon. and learned Gentleman agree that all of us in the House who are committed to upholding the rule of law have reason to be concerned about what has happened in this case?
The Attorney-General
I certainly endorse the hon. Lady’s final comment. Yes, and I hope I made it clear that there is something profoundly unsatisfactory about a conflict of evidence arising on facts and matters of this kind. Some matters the hon. Lady raises are not within my province, but there may well be some lessons to be learned, and as I indicated previously, this matter is at least not yet completely at an end. That having been said, prosecutors have to see that the law is observed, but they have to act within the law and on the evidence. They are constrained by that; indeed, that is one of their responsibilities and duties. The fact that the evidence ends up unsatisfactory and that the matter cannot therefore be taken any further does not mean that they have not done their job properly.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Does the Attorney-General accept that, whatever may be the normal practice, there was nothing to prevent the CPS from bringing a simple assault charge while other matters continued to be investigated? Does he also recognise that the urgency of creating a system of genuinely independent medical examiners, as recommended after the Shipman case and by the Justice Committee, is confirmed by aspects of this case?
The Attorney-General
The right hon. Gentleman raises the question of whether an assault charge could have been brought while the investigation continued. I say simply that it could have been. The difficulty that might have arisen is that if that assault charge had been taken to conclusion through the courts during the period of the investigation and subsequently the material on which a manslaughter charge could have been based became apparent, it might then have been impossible to proceed with the manslaughter charge. I do not think that that matter can simply be overlooked.
I did not fully respond to the point put by the hon. Member for Hackney North and Stoke Newington (Ms Abbott) about the timing. I simply say this: there was an IPCC inquiry first of all, which took some months. By the time the Crown Prosecution Service got the material in this case, time had already gone on a fair bit. In those circumstances, I do not take the view from what I have seen that the CPS was in any way dilatory in trying to bring this matter to a conclusion.
Jeremy Corbyn (Islington North) (Lab)
Does the Attorney-General understand that a lot of people view his remarks today and his response to my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) with utter consternation? As my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) pointed out, this is a question of justice and of seeing justice to be done. If we are to have any confidence in the judicial system and in the ability of the Government or the CPS to mount a prosecution, something must happen in this case where a wholly innocent man was killed in broad daylight on the streets of London and no action appears to be imminent on this matter.
The Attorney-General
As I said, anyone who saw the video of what happened must be seized with very serious concern about the matter. That is a view that I entirely endorse. Therefore, for the same reason, I am extremely unhappy, as I am sure everyone in the House is, that we should be in the position that we are in today with such a complete lack of clarity in the matter. There may well be lessons to be learned overall, but I came to the House to answer for the CPS, which had to take the material available to it and act on it. As I said before, I do not believe there is anything in what I have seen of how the CPS has conducted itself in this matter to make me think that it was not seeking throughout to try to ensure that justice was done in this case. I hope that the hon. Gentleman will be able to accept that.
Mr Peter Bone (Wellingborough) (Con)
Does the Minister agree that the liberty of every citizen in this country relies on the separation of powers, that members of the public should not be tried by television and the media and that the CPS has looked at this properly and reached a proper decision?
The Attorney-General
My hon. Friend does make an important point—in this country, we have the presumption of innocence and it is also right that we only prosecute where the code test is passed and there is a credible basis on which a prosecution can be brought. Those are onerous burdens for the CPS, which it has to discharge impartially, free of political control and fearlessly. I have not the slightest doubt that in this matter that is what it has sought to do. The fact that the outcome is unsatisfactory—from the House’s viewpoint and that of many, particularly, I might add, the family of the deceased, for whom everyone in the House must have the greatest sympathy—does not, in fact, undermine the validity of what the CPS was trying to do.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Does the right hon. and learned Gentleman accept that, on the CPS’s lack of proceeding against the officer, one aspect that causes concern is his alleged chequered history? According to press reports, he left the Met under a cloud, was re-employed as a clerk, successfully applied to Surrey constabulary for a position and then transferred back to the Met. Can the right hon. and learned Gentleman advise us, to his knowledge, whether that aspect of Metropolitan Police Authority recruitment policy is being examined as part of the process in respect of the prosecution, and whether, if there is a lesson for the Home Office on inter-constabulary transfers, that matter will be brought to the attention of the House?
The Attorney-General
The Home Secretary is sitting on my left, and she has had the opportunity of hearing the hon. Gentleman. As he will appreciate, the points that he makes are again outside the remit of myself as a Law Officer and, indeed, of the Crown Prosecution Service, but I fully accept that they are perfectly pertinent.
Anna Soubry (Broxtowe) (Con)
Would my right hon. and learned Friend be able to assist in this way: cases involving causation are always difficult, but did the Crown Prosecution Service consider two other charges available to it, neither of which would have been time-barred, namely affray and misfeasance in public office?
The Attorney-General
So far as affray is concerned, I am not aware of whether it was considered, and it does not immediately spring to mind as appropriately reflecting what happened in the case. So far as misconduct in public office is concerned, the matter can be looked at, but the test for misconduct in public office is quite clear: it should not be used as a substitute to get around a substantive offence being brought. For those reasons, the CPS took the view that misconduct in public office was not an appropriate charge to bring, and in that it is certainly backed by all precedent.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Is it true that the coroner, Professor Paul Matthews, refused to allow two IPCC investigators to attend the first post-mortem and failed to advise Mr Tomlinson’s family about their rights in relation to the second post-mortem? If so, how can any of us have any confidence in his ability to conduct an inquest that will have such a crucial bearing on any future decision by the CPS?
The Attorney-General
As to the latter point about the family, I am not in a position to comment. As to the first, on whether the coroner insisted that a post- mortem go ahead with Dr Patel only, I think that I am in a position to confirm that that is what he did.
Policing in the 21st Century
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for the Home Department (Mrs Theresa May)
With permission, Mr Speaker, I would like to make a statement about a consultation paper that I am publishing today. Entitled “Policing in the 21st Century: Reconnecting police and the people”, it sets out the most radical reforms to policing in at least 50 years.
For this Government, police reform is a priority, not just because we inherited the worst public finances of any major economy, but because for too long the police have become disconnected from the communities that they serve, been bogged down by bureaucracy and answered to distant politicians instead of to the people. Crime remains too high, too many families and communities suffer from antisocial behaviour and barely half the public are confident that important local issues are dealt with. Meanwhile, the challenges that we face have changed. Terrorism, the growth in serious and organised crime and cybercrime all require new approaches that cross not just police force boundaries, but international borders.
First, we will transfer power back to the people. We will introduce directly elected police and crime commissioners by 2012. The commissioners will set the police budget, determine police force priorities and have the power to hire and, where necessary, fire their chief constable. To help the public hold their local police to account, we will publish local crime data and mandate local beat meetings so that people can challenge the performance of their neighbourhood policing teams.
Secondly, we will return professional responsibility to police officers. Front-line staff will no longer be form writers; they will be crime fighters, freed from bureaucracy and central guidance and trusted to get on with their jobs. We have scrapped the policing pledge. We have got rid of the confidence target. We will restore police discretion over charging decisions for particular offences. We will limit the reporting requirements for “stop and search” and we will scrap the “stop” form in its entirety.
Thirdly, we will shift the focus of Government. As the Home Affairs Committee noted during the previous Parliament, the previous Government tried to micro-manage local policing but failed to support forces effectively on national issues, so we will build on the work of the Serious Organised Crime Agency to create a more powerful national crime agency, which will tackle organised crime and protect our borders. We will phase out the National Policing Improvement Agency and scrap Labour’s plans for a statutory police senior appointments panel. We will discuss with the Association of Chief Police Officers the way forward in its role as a professional leadership body.
Fourthly, we will make the police more efficient at force, regional and national levels so that front-line local policing can be sustained. To this end, we are already consulting separately on police procurement regulations to get better value for taxpayers’ money.
Fifthly, we will unleash the power of community pride and civic responsibility, so that people can come together to cut crime. We will therefore look for a cost-effective way to establish 101 as a single police non-emergency number so that it is easier to report crime and antisocial behaviour. We will also do more to encourage active citizens to become special constables, community crime fighters and members of neighbourhood watch groups.
There is nothing inevitable about crime. That is why we are determined to press ahead with these reforms, which demonstrate our determination to undo the damage of the Labour years, put the people back in charge, and rid our communities of crime, antisocial behaviour and disorder. I commend the statement to the House.
Alan Johnson (Kingston upon Hull West and Hessle) (Lab)
The statement should be entitled, “Policing in the 21st Century: How to make the job harder”. As usual, the Home Secretary trots out her infantile drivel about the last Labour Government, probably written by some pimply nerd foisted on her office by No. 10.
The Home Secretary said that she aims to undo the damage of the Labour years. That damage was recorded in the Home Office’s statistics on 15 July. Here it is: overall crime is down by 50%, violent crime is down by 50%, property crime is down by 55%, the murder rate is at its lowest level since at any time over the past 20 years, and the chance of being a victim of crime is at its lowest level since records began in 1981—21.5%, down from its peak of 40% under the Conservatives. That is the damage that she is seeking to undo—the kind of damage that any Government would be proud of.
The Home Secretary is about to have her budget cut by at least 25%.
Alan Johnson
Thanks to us, the hon. Lady says from a sedentary position. I remind her that we were making the police a priority and guaranteeing the funding for record numbers of police officers.
Last week’s report by Her Majesty’s inspectorate of constabulary and the Audit Commission made it plain that any cuts above 12% were bound adversely to affect front-line policing. Soon we will learn how the Government plan to restrict the use of the DNA database and CCTV, and thus make it harder for the police to catch criminals. Today we have the final part of the triple whammy—structural upheaval through the imposition of elected commissioners and the abolition of the Serious Organised Crime Agency. Perhaps the Home Secretary can tell me which chief constables, which police authority chairs or even which local authority leaders support the replacement of police authorities by a single elected commissioner. Sir Simon Milton, when he was the Conservative head of the Local Government Association, said that:
“there are already people elected at local level to represent the community and be advocates over a range of services—they’re called councillors”.
Is not the Home Secretary setting up, in Sir Simon Milton’s words,
“a parallel and potentially conflicting system with a competing mandate”?
Sir Hugh Orde has said:
“Every professional bone in my body tells me”
that having elected commissioners
“is a bad idea that could drive a coach and horses through the current model of accountability and add nothing but confusion.”
The Conservative chair of the Association of Police Authorities has said that the idea appears to be driven by dogma, and Richard Kemp, the leader of the Liberal Democrat group on the Local Government Association, has said that the vast majority of the 3,700 Lib Dem councillors—a figure soon to be drastically reduced at the next election—oppose an elected commissioner. Does the Home Secretary not think that the narrower the remit of the position, the weaker the case for having the occupier of that position decided by ballot?
How will the Home Secretary safeguard the operational independence of the chief constable? As the APA has pointed out, police authorities have done a great deal over the past few years to ensure that the public understand their role and that police authority members are properly equipped and trained to operate effectively. There is a clear argument for enhancing and increasing the role and responsibility of local government, so that local councillors have a clear mandate for holding the police to account. That is the route that we should be taking, rather than this unnecessary, unwanted and expensive diversion. Can the Home Secretary tell me whether the LGA is right when it states that the elected commissioners will cost £50 million? What is her estimate?
The coalition agreement talked about refocusing the Serious Organised Crime Agency, not eliminating it. That organisation was formed only four years ago, and the structural upheaval then took years to settle down.
Alan Johnson
It was our structural upheaval, I agree completely, but that is what occurs with any reorganisation. To put people through another structural upheaval four years later is simply madness.
In 2006, SOCA was wrongly described as replicating the FBI, and reports over the weekend gave the same description. Does the Home Secretary think it is accurate? She will be aware of Sir Paul Stephenson’s John Harris memorial lecture recently, which rejected the FBI option. Sir Paul set out a model built upon SOCA, not upon replacing it, and his national federated model has much to commend it. Why is the Home Secretary not pursuing that alternative?
The Child Exploitation and Online Protection Centre does fantastic work. To build upon that work, we were moving it away from SOCA to be a non-departmental public body. Will the Home Secretary continue that process, and if not, why not?
Will the dedicated border force replace the UK Border Agency, and how many jobs will be lost as a result of these initiatives in SOCA, the UKBA, the National Policing Improvement Agency and elsewhere?
We have yet to hear a word from this Government about how they plan to cut crime. All we have heard is how they will cut officer numbers, prison places and police powers. Today, the Home Secretary has managed to reannounce at least three decisions that we had already taken in government. She says that she will mandate beat meetings to challenge the performance of neighbourhood policing teams, having scrapped the policing pledge drawn up by chief constables themselves to provide exactly that mandate.
The Home Secretary inherited the Department when crime had fallen substantially, public confidence in the police had never been higher and public concern about antisocial behaviour had never been lower. She says she is pursuing bold policies; in fact she is pursuing bad policies. I was pleased to see the Government’s U-turn on anonymity for rape defendants; elected commissioners need to go the same way.
Mrs May
I have to say to the shadow Home Secretary that I find his complacent attitude in relation to what has happened over recent years rather surprising. As far we are concerned, we do need to fight and cut crime, but our streets can never be too safe and we will not be complacent about the antisocial behaviour and crime that still blight the lives of too many people in this country.
The right hon. Gentleman talks about the damage that is being done, but I will tell him when damage is done to policing in this country. It is when, as Her Majesty’s inspectorate of constabulary reported last week, at any one point an average of only 11% of police officers are out on our streets. It is when the average police constable is spending only 14% of their time on the streets and 22% in filling forms. The Labour Government did that damage over 13 years.
The right hon. Gentleman mentioned the DNA database. It is extraordinary that he is still willing to defend a Government who wanted to put innocent people’s DNA on the database, but were not willing to ensure that they had the DNA of all the people in prison on that database.
The right hon. Gentleman asks who supports the decision to have directly elected commissioners and elected representatives of the people. He will find some support from the following quote:
“we will legislate to strengthen the democratic link with the public by introducing local, directly elected crime and policing representatives.”—[Official Report, 17 July 2008; Vol. 479, c.435.]
Those are not my words, but those of the right hon. Gentleman’s predecessor as Home Secretary, the right honourable Jacqui Smith.
The right hon. Gentleman talks about the need to publish figures. Of course, we will in due course publish figures in relation to the police commissioners as well as the business case for the national crime agency. He mentioned its role and the need for it. Only two weeks ago in the Police Foundation lecture, the Metropolitan Police Commissioner, Sir Paul Stephenson, raised the need for us to strengthen the tasking and co-ordination of response to serious organised crime. That is what the national crime agency will do. It will also deliver our commitment for a border police force and strengthen our ability to protect our borders.
On the shadow Home Secretary’s comments about cuts in budgets, I simply refer him to two things. First, he seems to have forgotten that, in the words of the former Labour Chief Secretary to the Treasury, “There is no money left.” Secondly, it would be helpful for the House to know that yesterday, on Sky News, the shadow Home Secretary confirmed that, in a Labour Government, he would have cut police budgets.
Mr Speaker
Order. A great many hon. Members wish to take part, but there is important business to follow and there are real pressures on time. Single, short supplementary questions and brief replies are therefore required.
Tom Brake (Carshalton and Wallington) (LD)
Does the Home Secretary agree that the checks and balances that apply to elected police commissioners must be strong enough to stop populist politicians turning policing into their personal fiefdoms?
Mrs May
I think that everybody in politics aims to represent the people and their views. The point of directly elected commissioners is to replace bureaucratic accountability with democratic accountability. However, the hon. Gentleman is right that checks and balances need to be in place. That is why we will introduce the police and crime panels, drawn from local authority representatives and independent members, with powers to look at the commissioner of police’s plans in their area and to raise public concerns if they wish to do that.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
I will leave aside the fact that the Government came to power promising to stop constant reorganisations but have done nothing but reorganise. Will the Home Secretary confirm that SOCA in its current guise is being abolished and that the intelligence function, which is crucial to dealing with, for example, the cybercrime and e-crime that she mentioned, will go with it? Does she therefore propose to enhance the role of the excellent police e-crime unit in the Met, or to transfer the powers to that amorphous body, the NCA?
Mrs May
The right hon. Gentleman’s assumption that SOCA’s intelligence-gathering capability will be abolished is completely wrong. We intend to build on and harness the intelligence-gathering expertise that has been built up in SOCA in the past few years as part of the serious organised crime command in the national crime agency.
Given that, in November 2003, the right hon. Gentleman’s proposals included changing police authorities so that they would be wholly or partially directly elected rather than appointed, I am sorry that he has not supported our proposal for directly elected commissioners.
Nicola Blackwood (Oxford West and Abingdon) (Con)
Given that the Home Affairs Committee found that SOCA managed to seize only £1 from organised crime gangs for every £15 of its budget, will the Home Secretary reassure us that her proposals for the national crime agency will be more effective in cutting not only crime, but waste?
Mrs May
I am happy to give that assurance to my hon. Friend. SOCA has built up expertise in intelligence gathering, but we need to do more. We need to put more focus in this country on fighting serious organised crime, which is what the command within the NCA will be able to do.
Hazel Blears (Salford and Eccles) (Lab)
The Home Secretary will know that effective policing in this country is absolutely dependent on good intelligence at every level. How will she ensure that the relationships between local authorities and the police, which are essential not only for neighbourhood policing, but for that golden thread of intelligence that goes all the way through to tackling terrorism, are maintained under her proposals?
Mrs May
I thank the right hon. Lady for her question and for raising the point about the golden thread that runs through policing. It is absolutely essential that we retain that golden thread from local neighbourhood policing all the way through to the work done at national level to fight serious organised crime, terrorism and so on. However, one of the points of introducing directly elected police and crime commissioners is to ensure that someone in each force has a direct responsibility to the people, which will ensure that they represent the needs of the people in local policing.
Mark Reckless (Rochester and Strood) (Con)
The Home Secretary has done what the Opposition failed to do—she has stood up to the vested interests and put the police under democratic control. Since she does not envisage allowing directly elected individuals to direct particular investigations, will she assure the House that she will not sign up to a European investigation order that would allow political appointees in other member states to do precisely that?
Caroline Flint (Don Valley) (Lab)
I thank the right hon. Lady for clarifying that the Government intend not to abolish SOCA, but rather to build on it. How will she ensure that efforts are made locally and regionally, whether by elected commissioners or chief constables, to focus on serious organised crime, so that the national agency can perform appropriately and for the benefit of the whole country?
Mrs May
I am grateful to the right hon. Lady for raising that important point. Of course, individual police forces will still have a responsibility to deal with serious organised crime, but we need to strengthen that national co-ordination and tasking in relation to such crime, which is why we are bringing the serious organised crime command into the national crime agency. However, we are also looking at imposing strong duties of collaboration among police forces to ensure that, when collaboration across force boundaries is necessary to deal with issues such as serious organised crime, that does indeed take place.
Mr Mike Hancock (Portsmouth South) (LD)
Will the Home Secretary give an assurance to the House and police forces in England and Wales that they need not fear that they will be forced into amalgamations because of the changes, and that we are not going to resurrect the Labour party’s proposals from its last term in power?
Mrs May
I am grateful to my hon. Friend for raising that point and for enabling me to put absolutely clearly on the record that this Government will not try to impose mergers on police forces. If police forces voluntarily wish to merge and come forward not only with a strong business case, but with clear indications that such a merger is supported by the local communities, we will of course look at that, but we will not, unlike the previous Government, try to impose mergers on forces.
Keith Vaz (Leicester East) (Lab)
May I welcome a number of the Home Secretary’s proposals today that are in keeping with recommendations made by the Select Committee on Home Affairs last year? I was going to say that she nicked the name of our last report for her White Paper, but I will be generous and say that she borrowed it. She is right about SOCA, and clearly, £79 million on National Policing Improvement Agency consultants is far too much, but will she give the House an assurance that, whatever the reorganisation entails, front-line policing will not be affected; that the number of officers on the front line will remain the same; that our fight against terrorism will be as strong as it has been over the past few years; and that we will not give in to the serious organised crime gangs?
Mrs May
I thank the right hon. Gentleman for his questions, for the work that the Home Affairs Committee has done under his chairmanship and for the issues that it has identified, to which I referred in my statement. I can confirm to him—and it is clear in the document—that our work on counter-terrorism is a good example of forces coming together and working together, and we have no plans to change the arrangements that are in place. In relation to front-line policing, this Government want to strengthen it. We want to slash the bureaucracy and get the police where they should be—out on the streets.
Mr Robert Buckland (South Swindon) (Con)
In setting up the new national crime agency, will my right hon. Friend ensure that it does not make the same mistakes as its predecessor bodies in setting artificial targets for the confiscation of the proceeds of crime, which have often led to inappropriate and wasteful proceedings?
Mr George Howarth (Knowsley) (Lab)
Can the Home Secretary tell the House whether she has had any independent assessment made of the likely impact of these proposals on crime rates?
Nadhim Zahawi (Stratford-on-Avon) (Con)
Can my right hon. Friend confirm that for elected commissioners to work in the court of public opinion they will have to have real teeth? I am pleased to hear that they will have the powers to hire and fire. Will she confirm that those powers will not be watered down in the legislation?
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Is the Home Secretary aware that while concern about the impact of crime will always be great among our constituents, in my constituency the police—led by Inspector Damian O’Reilly and his colleagues—have great achievements in reducing crime levels and improving detection rates in several categories? Does she accept that, if those achievements—achieved with the support of the Labour Government and Manchester Labour council—deteriorate in any way, it will be her cuts and her reorganisation that will be held responsible?
Mrs May
I of course commend the work that is being done on the ground by individual police officers, such as those whom the right hon. Gentleman mentioned. This Government want to strengthen the fight against crime. He returns—as did the shadow Home Secretary—to the issue of cuts. Her Majesty’s inspectorate of constabulary reported last week that it thinks that it will be possible to find 12% budget cuts in the police force without affecting front-line policing. The reason that we are having to look at the sort of spending cuts across Government that we are—[Interruption.] Labour Front Benchers may groan, but they know that it is their fault: it is the legacy of the last Labour Government.
Mr David Nuttall (Bury North) (Con)
Does the Home Secretary agree that having directly elected police commissioners will help to improve the public’s trust and confidence in our police force by ensuring that the police listen to local people?
Mrs May
My hon. Friend makes an important and valid point. We need to restore that confidence and the link between the police and the public—the link that has sadly been damaged over the years by the increased bureaucracy and imposition from the centre under the last Labour Government. He is right that our proposals will increase the public’s confidence.
Sammy Wilson (East Antrim) (DUP)
There will be concerns about the possible disruption of activities against organised crime as a result of the changeover from SOCA to the national crime agency. What contact has the Home Secretary had with regional assemblies across the UK and can she give an assurance that the formation of the new agency will not mean a downgrading of the fight against crime in regions such as Northern Ireland?
Mrs May
We certainly wish to ensure that the fight against crime is in no way downgraded; indeed, the whole purpose of our proposals is to help to strengthen the fight against crime across the UK, as I have said in answer to a number of questions. The directly elected police commissioners will relate to England and Wales, and both the Minister for Police and I have had discussions with the Welsh Assembly.
Mr Julian Brazier (Canterbury) (Con)
In welcoming my right hon. Friend’s excellent statement, may I urge her to consider extending control to the Crown Prosecution Service? We saw in the earlier statement the difficulties that we have with the uniquely British system of having a prosecution organisation that is wholly independent of accountability.
Mrs May
I thank my hon. Friend for raising an important point. As their name suggests, the police and crime commissioners will have a responsibility that goes wider than simply the police force. We are looking at how they can work with, for example, community safety partnerships in local areas. However, we also envisage looking at the possibility of extending the remit of police and crime commissioners further in the criminal justice system. Indeed, my right hon. Friend the Minister for Police is looking at that with both the Home Office and the Ministry of Justice.
Paul Goggins (Wythenshawe and Sale East) (Lab)
May I press the Home Secretary for an answer on the Child Exploitation and Online Protection Centre, which has established itself as a world leader in protecting children and finding perpetrators? All the evidence points to the need for an independent organisation focused on child protection. Why does she want to shoehorn CEOP into the national crime agency?
Mrs May
There is no suggestion of shoehorning anything. The right hon. Gentleman is absolutely right that CEOP has built up a significant reputation through the important work that it has done. I pay tribute to CEOP and Jim Gamble for everything that they have done in that area. However, we are not talking about shoehorning it into anything. What we are talking about is greater co-ordination across a range of activities under the national crime agency, and CEOP will be part of that.
Mr Aidan Burley (Cannock Chase) (Con)
May I congratulate the Home Secretary on her commitment to looking for a cost-effective way of re-establishing the single non-emergency number, 101? May I also urge her to undertake to build on the pilots already established in Hampshire and elsewhere, and roll out the number nationwide as quickly as possible, so that the general public can have a quick and easy way to report crime and antisocial behaviour, and an alternative to the overloaded 999 number?
Mrs May
I thank my hon. Friend for making an important point. Let me take this opportunity to put on record my thanks to him for the work that he did at an early stage of the introduction of the 101 number pilots. The 101 number is an important development, and we will do all that we can to ensure that we introduce it cost-effectively.
Caroline Lucas (Brighton, Pavilion) (Green)
Can the Home Secretary explain how having elected police commissioners will genuinely be a step forward for democracy when it is likely to lead to senior police officers being chosen not for their ability to do the job, but because of their party allegiance?
Mrs May
As the hon. Lady will know, the question of party allegiance does not arise in relation to chief constables, because members of the police force are not able to be members of political parties. We are absolutely clear that chief constables will retain their operational independence. It is important that they and the police in this country are able to operate without fear or favour, and we will maintain that. However, according to a Cabinet Office survey conducted under the last Labour Government, at the moment, only 7% of people in this country know that if they have a problem with the police, they can go to their police authority. We will clearly be ensuring democratic accountability for the police at local level through the introduction of police commissioners, although I am sorry that the hon. Lady has such a jaundiced view of the views of the British people.
Graham Evans (Weaver Vale) (Con)
As a special constable who served in the Cheshire constabulary, I welcome my right hon. Friend’s statement about increasing the number of special constables. Does she agree that these unpaid volunteers are an excellent and cost-effective way to fight crime?
Mrs May
I am grateful to my hon. Friend for raising the issue of special constables. I thank him for what he did as a special constable and place on record the thanks of the whole House for the work that all special constables do in helping the fight against crime. They play an important role, and we intend to encourage more people to take it on.
Robert Flello (Stoke-on-Trent South) (Lab)
Many of the improvements that the Home Secretary has talked about are already happening on the ground in Stoke-on-Trent, thanks to people such as Inspector Sharrard-Williams. Recently, however, the House might have seen a man who runs the British National party claiming that he has 1 million followers—that is, 1 million people voting BNP—in the UK. What happens when the BNP stands for one of these commissioner posts, as will happen, and gets it?
Mrs May
This is something that the hon. Gentleman and his colleagues have raised on a number of occasions, and I will give him two answers. If he looks at the voting record so far, he will see that the British National party has never managed to get more than 15% of the vote in an election. But let us set that to one side; I actually believe in trusting the people of this country.
Rehman Chishti (Gillingham and Rainham) (Con)
I welcome the Home Secretary’s statement as a way of empowering communities and making our streets safe. With regard to unnecessary bureaucracy, what steps are being taken to review the work of the NPIA, which costs millions and achieves nothing, according to some senior police officers?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Neither the Home Secretary nor I would want to comment on ongoing investigations, but I hope she will agree that the Northumbria police force recently faced a huge and complex challenge and that it responded to it admirably, with the support of police forces across the north. Will she explain to me and my constituents how this top-down reorganisation, combined with cuts in central and local funding, will enable the Northumbria police force to rise to such challenges in the future?
Mrs May
The hon. Lady is absolutely right to say that I would not want to comment on the ongoing investigations into the recent work of Northumbria police in relation to Raoul Moat. I would say, however, that that was a good example of how a police force can bring in resources from elsewhere. It brought in resources from across the country, including from the Police Service of Northern Ireland, the Met and other local forces, in response to a very difficult situation involving a callous murderer, Raoul Moat. I would say to the hon. Lady that we are not imposing a top-down reorganisation; we are talking about restoring democratic accountability, which will enable the link between the police and the public to be restored.
Amber Rudd (Hastings and Rye) (Con)
What effect does my right hon. Friend expect the national crime agency’s border police force to have on the number of illegal immigrants, which the previous Government estimated to be around 700,000?
Mrs May
I thank my hon. Friend for her question. It has been a long-standing concern of ours that we need to strengthen our border protection through the introduction of a border police force. We will do that within the national crime agency, which will enable the work of border police force, bringing together the work of the UK Border Agency, Her Majesty’s Revenue and Customs and other agencies, to link in with the work of the serious organised crime command. That will not only strengthen our ability to protect our borders in the way that she suggests, but will enable us to protect this country against serious organised crime.
Helen Goodman (Bishop Auckland) (Lab)
What is the point of the Home Secretary giving a paean to police community support officers when she is overseeing a programme of cuts that has resulted in Durham constabulary announcing last week that it would have to remove 200 such officers?
Mrs May
I believe neighbourhood policing to be an important part of our police landscape. The work that can be done at local level by warranted officers and PCSOs forms an important part of the golden thread that runs from neighbourhood policing through to national issues. The hon. Lady mentioned cuts in police budgets. The in-year cut in police budgets this year is less than 1.5% across the country, and we all know why. This will probably be a cause for groans from Labour Members because they know what the answer is: those budgets have been made necessary by the legacy of economic mismanagement by the previous Labour Government.
Christopher Pincher (Tamworth) (Con)
Last week, Staffordshire police authority announced the appointment of its first full-time chief executive, with a salary of £85,000. Does my right hon. Friend agree that the people of Staffordshire would rather have more influence over policing priorities than see the appointment of another unelected, unaccountable and expensive bureaucrat?
Mrs May
The whole point of the structure that we are proposing is that, after May 2012, there will be directly elected police and crime commissioners who will set the budget and the strategic plan for the police, and ensure that the decisions being taken are in line with the interests of the people and with fighting crime.
Yvonne Fovargue (Makerfield) (Lab)
Given the amount of sensitive information to which the elected commissioners will have access, will they undergo security clearance before standing for election? What would happen after the election if they were elected without the appropriate level of clearance?
Robert Halfon (Harlow) (Con)
Is the Home Secretary aware that the chief constable of Essex has said in a written statement that the opportunities presented by elected police commissioners include the potential for less cost, less bureaucracy and greater public clarity? Will she agree to meet the chief constable with me, and to support local people who believe in local democracy for local policing?
Mrs May
I am grateful to my hon. Friend for reporting to the House the comments of the chief constable of Essex, whom I would be delighted to meet. We have been meeting chief constables across England and Wales to discuss the proposals, but I would be happy to hear what he has been able to do to fight crime and reduce bureaucracy in Essex.
Alex Cunningham (Stockton North) (Lab)
The Home Secretary has not addressed the effect of police budget cuts on her ideas. Does she not agree that elected commissioners are already doomed to fail, as thousands of neighbourhood police and thousands more police community support officers, for instance in the Cleveland police force, are removed from the communities they have served so well?
Mrs May
No, I do not agree that that is the implication of what we are doing. I suggest that the hon. Gentleman speaks to the shadow Home Secretary, who, when challenged during the general election campaign to guarantee that there would be no cuts to the number of police officers under a Labour Government, simply said that he could not make such a guarantee.
Mr Peter Bone (Wellingborough) (Con)
I thank the Home Secretary for making the statement now, because in past years such announcements were made during the recess when the House could not question a Minister. The UK Human Trafficking Centre in Sheffield is closed and has been incorporated into SOCA, which is now being closed and will become the NCA. Are the Government still committed to combating human trafficking?
Mrs May
Yes, we are indeed still committed to combating human trafficking. Setting up the national crime agency, with not only the serious organised crime command but the border police force and increasing broader protection, will, I believe, enable our fight against trafficking to be even stronger.
Nic Dakin (Scunthorpe) (Lab)
Will the Home Secretary tell us how much directly elected police commissioners will cost?
Mrs May
I have already referred to that question, which was raised by the shadow Home Secretary. We will in due course publish figures about the cost of directly elected commissioners. As I have said elsewhere, the introduction of directly elected commissioners is not an attempt to make savings; it is a long-standing commitment, which we believe is necessary to reconnect policing and the public.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Will my right hon. Friend assure the House that these commissioners will not have a new paid bureaucracy created around them? Instead, might they be assisted by an unpaid advisory board?
Chris Williamson (Derby North) (Lab)
Did the Tory party not claim to be the party of law and order in the past? Is the Home Secretary not embarrassed to be the first Tory Home Secretary to set out to undermine the police with the proposed cuts? Does she agree that gimmicks are no substitute for substance?
Mrs May
The police have been undermined by the way in which Whitehall has set them targets, and by having to look constantly to Whitehall in relation to what they do. Instead, they should respond to the needs of people in their local area. We are strengthening the ability of police to fight crime, slashing bureaucracy and enabling police officers to get out on to the streets, where the public want to see them.
Mary Macleod (Brentford and Isleworth) (Con)
Does the Home Secretary agree that the 101 phone number is an important tool in understanding real levels of crime, and that it is also effective in helping police officers to know where to tackle the problem areas in the community?
Mrs May
My hon. Friend makes an extremely valid point. The 101 phone number is important, and that is why we are considering introducing it nationally. The information that we will make available about crime at street level will also be important in helping people to tackle crime locally.
Emma Reynolds (Wolverhampton North East) (Lab)
Does the Home Secretary accept that there will have to be a reduction in the number of front-line police officers as a result of the additional cost of directly electing police commissioners?
Mr Philip Hollobone (Kettering) (Con)
I declare my interest as a special constable serving the British Transport police.
Given that half of all crime is committed by 10% of criminals, may I urge my right hon. Friend to consider that one of the best ways of promoting policing in the 21st century would be to ensure that persistent and prolific offenders served their full time in jail?
Mrs May
I commend my hon. Friend for his work as a special constable with the British Transport police. The work that they do is often forgotten, but it is an important part of the fight against crime and the job of keeping people safe.
I think that what we need to do to protect people from crime is ensure that when offenders have served their time, we can reduce the likelihood of their reoffending.
Chris Leslie (Nottingham East) (Lab/Co-op)
Is the Home Secretary embarrassed about the fact that she has not even had time to figure out the cost of the separate police commissioner apparatus? What on earth has she got against good old-fashioned democratic local government as the best way of holding the police to account?
Mrs May
I have absolutely no embarrassment in coming to the House and making it clear that what we will do is restore democratic accountability to the police through the direct election of commissioners. The hon. Gentleman speaks of local government. As a former councillor, I believe that local government is an important part of the strength of government in this country, but I also believe that most people do not know what their police authority is, or that they can consult it with a problem relating to their policing. Now they will have an opportunity to vote directly for the individual who will be their police commissioner.
David Tredinnick (Bosworth) (Con)
I congratulate my right hon. Friend on going for it and introducing directly elected commissioners. They have been very successful in other parts of the world, particularly the United States. However, has she thought about the situation that might arise if a directly elected commissioner had one policy and she had another, based on the national interest? How would that situation be resolved?
Mrs May
I thank my hon. Friend for raising that prospect. One of the purposes of directly elected commissioners is to be responsive to local needs. Of course it will be necessary to ensure that the collaboration between police forces that I referred to earlier can be undertaken when necessary, and that will also involve ensuring that national policing issues are addressed properly. However, it is not the Home Secretary who should determine what happens in regard to local policing—which is what happened under the Labour Government—but the directly elected commissioners.
Graham Jones (Hyndburn) (Lab)
The cost of elections in Lancashire is expected to be at least £1 million. Given that the Home Secretary has just said that there is no money, can she tell us whether they will be paid for by the Treasury or by Lancashire taxpayers?
Barry Gardiner (Brent North) (Lab)
Now that her right hon. Friend the Justice Secretary has explained that crime fell under Labour because of a rise in living standards, by what measure does the Home Secretary estimate that crime will rise as a result of cuts in public services, the rise in VAT and rising unemployment? Will the direct election of commissioners mean higher living standards for anyone other than the commissioners themselves?
Mrs May
That was a slightly convoluted question, if I may say so. I believe that directly elected commissioners will ensure that the police forces in their areas are responsive to local needs rather than being responsive simply to the bureaucratic imposition from Whitehall, as they were under the Labour Government.
Glenda Jackson (Hampstead and Kilburn) (Lab)
Notwithstanding the Home Secretary’s response to her hon. Friend the Member for Bosworth (David Tredinnick), who gave the example of directly elected commissioners in the United States, is it not the case that, far from crime falling there, the United States has vastly larger crime totals than we do and vastly overcrowded prisons? Is it not also the case that once elected, the directly elected police commissioner tends to spend the next three years campaigning for re-election rather than tackling crime? Is that really the model that the Home Secretary wishes to introduce to this country?
Mrs May
I neither accept nor recognise the picture the hon. Lady paints of what happens with directly elected commissioners in other parts of the world. Labour Members who are so against directly elected commissioners should ask themselves two questions. First, why then do they support the arrangements we have in London, where the Mayor is directly accountable? Secondly, why was it, therefore, that in 2008 the then Labour Home Secretary brought forward proposals for directly elected police representatives?
Steve McCabe (Birmingham, Selly Oak) (Lab)
If the Home Secretary will not tell us how much this is going to cost or where the money is coming from, will she at least tell my constituents in Selly Oak that she is not planning to pinch it from their hard-pressed police budgets?
Mrs May
I have answered the question about—[Interruption.] No, I have made it clear that we will publish figures in due course. As the hon. Gentleman will know, all Departments are going through the spending review at the moment and the budgets and other figures will be revealed later this year.
Ian Paisley (North Antrim) (DUP)
Given that 80% of the Northern Ireland public are aware of their police authority and Policing Board, has the Home Secretary any plans to replicate the mechanisms adopted in respect of the Policing Board for holding a chief police officer to account, namely having elected, as well as appointed, officials on the board who have regular monthly public meetings holding the chief of police to account? Is that not a better way forward than directly electing commissioners?
Mrs May
We did, of course, look at the arrangements in Northern Ireland, but what we propose to introduce in England and Wales will include a directly elected commissioner and a police and crime panel, which will be drawn from local authority representatives and independent people who will be able to ask the commissioner of police to appear before them and explain what has been happening in their area.
Chris Bryant (Rhondda) (Lab)
The inevitable logic of what the Home Secretary has said this afternoon is that we should be electing not only police commissioners but the local chief prosecuting officer. Indeed, it seemed from what she was saying earlier that she was moving in that direction. Surely the last thing people want in any of our constituencies is more party political interference in the policing of this country.
Mrs May
We are not talking about party political interference in policing. The picture the hon. Gentleman has painted does not accurately portray what I was saying earlier about directly elected commissioners. The directly elected commissioners will be called police and crime commissioners and they will have a wider role than simply looking at what is happening in relation to their police force; they will be looking at crime more generally and working with community safety partners. We are, however, absolutely clear that the operational independence of the police will remain.
Emily Thornberry (Islington South and Finsbury) (Lab)
As I am the final questioner, may I take the opportunity to ask two central questions? First, how much will these initiatives cost and, secondly, by how much will they cut crime?
Mr Speaker
I am grateful to all hon. and right hon. Members, including the Home Secretary whose pithiness enabled more than 40 colleagues to ask questions on the statement; that was very welcome.
Points of Order
Kris Hopkins (Keighley) (Con)
On a point of order, Mr Speaker. You will be aware of the recent Westminster Hall debate in which we were reminded that one party with representatives elected to this House still refuses to take up its seats yet claims its allowances and expenses. May I ask you to make a ruling as to how we can bring this shameful activity to an end? Do you not agree that it is an affront to Members who believe that it is a privilege to serve and debate in this House, and that it is not, as some others believe, possible to be an associated Member of the Houses of Parliament?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order, and I respect the fact that there is concern about this issue in some sections of the House. First, I am of course aware that there has recently been a Westminster Hall debate on the subject—on 30 June if memory serves me correctly. Secondly, this is a matter for the House. The hon. Gentleman might be aware—and other Members will certainly be conscious of this—that a resolution of the House regarding the use of facilities and the ability to claim expenses that touched on precisely the matter that is of concern to him was passed on 18 December 2001. If the House wishes at any stage to consider this matter again and to debate and vote upon a resolution, it will, of course, be entirely open to the House to do so. This is, therefore, a matter not for the Speaker but for the House. I hope that is helpful.
Kate Hoey (Vauxhall) (Lab)
Further to that point of order, Mr Speaker. I welcome what you have just said, which clarifies matters. It might be worth my pointing out that there are Members on both sides of the House who share this concern and would like to see this measure come back to the House, as those of us who voted against it last time might find ourselves in the majority this time.
Mr Speaker
I am grateful to the hon. Lady for that. As she is well aware, she has helpfully underlined and reinforced the point that the hon. Member for Keighley (Kris Hopkins) has just made. It is always a pleasure to be in agreement with the hon. Lady.
Caroline Flint (Don Valley) (Lab)
On a point of order, Mr Speaker. On 8 July, I received a written answer from the Under-Secretary of State for Justice, the hon. Member for Reigate (Mr Blunt), assuring me that this week a report would be published on research and statistics
“relating both to false allegations of rape and to other relevant issues.”—[Official Report, 8 July 2010; Vol. 513, c. 428W.]
I have two unanswered written questions, in which I was pursuing whether or not the Government would be making legislative proposals. However, I read in The Sunday Telegraph that an
“MoJ source said: ‘We will certainly not be legislating’”
on this issue, and that the Government do not plan to publish the evidence, about which they certainly responded in their answer of 8 July to my question. Although I welcome a U-turn by the Government on this issue, is it in order that they have failed to come to the House to tell us comprehensively what they intend to do on this proposal and how they intend to move forward and let Members on both sides of the House receive information at first hand, rather than through the press?
Mr Speaker
What I would say in response to the right hon. Lady is that the timing of Government statements to the House is a matter specifically for the Government. I hope that I have understood the right hon. Lady correctly with reference to the questions that she has tabled, and what I would say is that if she has not received answers—or, at any rate, substantive answers—to questions, I would very much hope that substantive answers will be forthcoming before the House rises for the summer recess. I very much hope that Ministers from the Ministry of Justice have heard—if they have not heard, I hope that they will hear shortly—precisely what I have just said. That approach seems to me to be conducive to the good conduct of business of the House.
Kevin Brennan (Cardiff West) (Lab)
On a point of order, Mr Speaker. During questions the Secretary of State for Culture, Olympics, Media and Sport made reference, in answer to my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly), to the political affiliations of the chairman of the BBC Trust and the chairman of Ofcom. Subsequently, in answer to a supplementary question from me asking whether or not he was calling into question their impartiality, he went on to claim that a number of appointments to non-departmental public bodies under the previous Administration had been made in a politically biased way, despite the fact that proper procedures had been put in place for public appointments during the previous Parliament. Given your ruling that when Ministers speak from the Dispatch Box they are speaking on behalf of the Government, can we have a statement from the Government on whether or not they believe that public appointments made under the previous Administration were made for political reasons and were not made through the proper public appointments procedures, which were set up and in place, and on whether they have confidence in those public appointments?
Mr Speaker
It is always a pleasure to hear points of order from the hon. Gentleman. Something tells me that at least in part of his point of order—I will be generous and say “in part”—he was seeking to continue an earlier argument. That in itself would not constitute a point of order and might almost risk becoming disorderly. What I would say, which may be of interest to him and to others in the House, is that when reference is made to individuals outside this place, such reference should be made with care, restraint and circumspection. I hope that that is helpful to the hon. Gentleman.
Bills presented
Local Referendums Bill
Presentation and First Reading (Standing Order No. 57)
Zac Goldsmith presented a Bill to make provision about binding local referendums; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 3 December, and to be printed (Bill 66).
Recall of Elected Representatives
Presentation and First Reading (Standing Order No. 57)
Zac Goldsmith presented a Bill to permit voters to recall their elected representatives in specified circumstances; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 3 December, and to be printed (Bill 67).
Academies Bill [Lords]
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
19:25 - The Committee divided: - Ayes: 229 / Noes: 303 - Question accordingly negatived.
19:39 - The Committee divided: - Ayes: 227 / Noes: 310 - Question accordingly negatived.
21:00 - The Committee divided: - Ayes: 319 / Noes: 222 - Question accordingly agreed to.
21:13 - The Committee divided: - Ayes: 223 / Noes: 315 - Question accordingly negatived.
21:59 - The House divided: - Ayes: 0 / Noes: 0 - Question accordingly agreed to.
Dr John Pugh (Southport) (LD)
I beg to move amendment 8, page 3, line 11, at end insert—
‘(1A) In the case of a member or members of a governing body objecting to an application under subsection (1), there shall be a ballot of the parents of children enrolled at the school, subject to regulations laid down by the Secretary of State.’.
The First Deputy Chairman of Ways and Means (Mr Nigel Evans)
With this it will be convenient to discuss the following: Amendment 78, page 3, line 11, at end insert—
‘(1A) Before making an application for an Academy order, the governing body shall consult relevant parties on whether to make such an application.
(1B) The Secretary of State shall issue guidance as to how governing bodies should conduct such a consultation with parents, pupils, teaching and non-teaching staff and their representatives, neighbouring schools and the local authority and such other parties as he may think appropriate and such guidance must also specify the information to be made available to consultees in relation to the proposed arrangements for Academy status.’.
Amendment 4, in clause 5, page 4, line 11, leave out ‘such’ and insert—
(a) the local education authority,
(b) the teachers at the school,
(c) the pupils,
(d) the pupils’ parents,
(e) such persons as in their opinion represent the wider community, and
(f) such other’.
Amendment 18, page 4, line 11, at end insert ‘including the local authority for that area.’.
Amendment 77, page 4, line 14, leave out ‘may take place before or after an Academy order, or’ and insert ‘must take place before’.
Amendment 9, page 4, line 14, leave out ‘an Academy order, or’.
Amendment 86, page 4, line 14, leave out subsection (3).
Amendment 10, page 4, line 15, at end add—
‘(4) Consultation on Academy status should not be led by any member of a governing body who may benefit financially as a result of conversion to Academy status or whose salary, terms or conditions may be affected by such conversion.’.
New clause 1—Reversion of Academies to maintained status—
(1) This section applies to any former maintained school which has been converted into an Academy under section 4.
(2) The governing body must make arrangements for the holding of a ballot of parents under this section if at least 10 per cent of the parents of pupils at the Academy request it to do so.
(3) The purpose of a ballot under this section is to determine whether the parents of pupils at the Academy want the Academy to be converted into a maintained school.
(4) If the result of the ballot is in favour of conversion, the Secretary of State must—
(a) revoke the Academy order, and
(b) take such other steps as he considers necessary to convert the Academy into a maintained school.’.
Dr Pugh
When were elected this May—God, it seems years ago—we all knew that there was some prospect that politics in this place might never be quite the same again. Many of us, frankly, welcomed that. The huge and welcome influx of new Members gave us all hope that things could possibly be different. That, along with the odd arithmetic of this place and the challenging nature of the country’s problems, seemed to dictate that the way ahead would be through rational consensus and for a while—all too short a while—it appeared that tribalism and command-and-control politics were dead; the Chamber and Committees would be important and policy would have to be evidence-led, much to the disappointment of the media, whose preference is always for a good scrap.
What do we have with amendments to the Bill, however? We have the spectacle of Ministers who have already told us that they will accept no amendment, period, and the sight of Whips new and old cracking their knuckles off-stage and perfecting basilisk-like stares in the mirror, persuading people not to vote for amendments such as amendment 8 and others that, it could be argued, align with the spirit and improve the detail of the Bill. Paradoxically, they are doing that because they assume that is how coalition politics work. I say paradoxically, because the amendment-denying Ministers in front of us, whose agents the Whips are, seem to be the most mature, civilised and benign advocates of the new politics. I personally cannot associate myself with the recent comments made by my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron); nor can I afford to drink in the Boot and Flogger. I am simply moving an amendment with which the Committee should be comfortable and, frankly, which any Member of any party can and should be free to support.
In the event of a governing body being divided, amendment 8 obliges a school to hold a ballot if a governor or a minority of governors object to an application for academy status. It therefore provides a restraint on a motivated group of governors misrepresenting or riding roughshod over parents’ wishes.
Mr Evans, you might recall that under Mrs Thatcher, in the Education Reform Act 1988, a parental ballot was an essential precondition of the change to grant-maintained status in any school. There were votes across the country on those matters. Sadly, subsequent Governments seem to have lost interest in the views of parents and, in my view, have disempowered parents, with one exception. Tony Blair insisted that the change from grammar school status required a parental ballot and that condition survives and is effectively incorporated in this Bill.
Can anyone in this Chamber give me an argument for why grammar school parents should be balloted before the status of their school changes and parents of children at other schools should not? I am at a loss to find such an argument. Why should grammar school parents have a right that primary school parents, comprehensive school parents and special school parents do not have? Will anyone agree with the former and present me with a good argument for voting against the latter?
Andrew Percy (Brigg and Goole) (Con)
Presumably, the reason is that a change from grammar school to non-grammar school involves a change in admission arrangements for the cohort coming in the new year. With an academy, the admissions code remains the same and all that effectively happens is that the school organisation changes.
Mr Mike Hancock (Portsmouth South) (LD)
Does my hon. Friend accept the suggestion that there are to be no ballots because most of them might be lost if parents knew all the facts? That situation is being avoided simply by not making provision for a ballot in the first place.
Dr Pugh
My hon. Friend suggests a cynical intention on the part of Ministers and I hesitate to endorse that. People must reach their own conclusions as to whether such an intention is present.
Is anyone going to give hon. Members a good reason to vote against my amendment, which would not even give parents the same rights as the parents of children at grammar schools but would be conditional on a governor objecting to proposals? I cannot for the life of me see why anyone would vote against it, but I suspect that nearly 300 will.
Let me be clear that I have no prejudice against grammar schools. I went to three of them—expelled from none, I hasten to add—and I taught happily at an ex-direct grant, independent school for 15 years. I am agnostic about educational structure and this is just a matter of logical consistency. In our debates on this issue, the hon. Member for Epping Forest (Mrs Laing) has called on the Opposition to
“acknowledge that parents should be the people who have the greatest say in their children's education”.—[Official Report, 19 July 2010; Vol. 514, c. 43.]
The hon. Member for Peterborough (Mr Jackson) has accused Labour of not trusting people
“with the education of their own children.”—[Official Report, 19 July 2010; Vol. 514, c. 118.]
And the Minister has claimed that he wants to ensure that parents are “happy with the quality” of educational provision. The hon. Member for Altrincham and Sale West (Mr Brady) has assured us that
“the Conservative Front-Bench team takes the view that parents should have more choice”.—[Official Report, 21 July 2010; Vol. 514, c. 444.]
They are all wise and experienced politicians who must know, as we all do, that governing bodies can sometimes splinter, be out of touch or be monopolised or taken over by cliques, particularly given the current chronic shortage of governors nationally; it is quite difficult to get people to become governors. Governing bodies also can and might misread parental opinion.
There is a general concern, which I share, about people who are temporarily and contingently nominated as the governors of a state school being entitled unilaterally to change the status of an asset that is paid for and financed by the whole community without the consent of that community or its elected representatives. Setting that concern aside, however, changing the status of a school without allowing the parents of children at the school a decisive voice is extraordinarily hard to justify, especially given the discretionary and entirely unspecific nature of the consultation arrangements in the Bill. The only motive that I can see for opposing my amendment, other than the dishonourable motive that my hon. Friend the Member for Portsmouth South (Mr Hancock) has suggested, is a relative indifference to parental wishes.
Mr Hancock
Does my hon. Friend agree that if the possibility of a ballot taking place arose, it should not be just the parents of children at the existing school who were allowed to vote? It would have to be wider than that and take in the parents of children in feeder schools, as they would be the major beneficiaries, and if not them, the wider community as a whole. As we have argued time and again in our debates on this issue, secondary schools are a focal point in many communities and offer more than the teaching of children.
Dr Pugh
I am arguing simply that we should be at least as permissive as Baroness Thatcher was in 1988. My hon. Friend argues that we should be more permissive, but the Government are arguing, and anyone who votes against my amendment will clearly be convinced by that argument, that we should be less permissive.
Amendment 9 would delete the words “an Academy order, or”, the effect of which would be to ensure that consultation on academy status would have to occur prior to the order being made. It is good common sense and, in essence, it is supported by the Chair of the Education Committee. As he said on Second Reading:
“The Government’s concession in clause 5 at least makes governing bodies consult those whom they deem appropriate, but it is blunted by the fact that they do not have to do so prior to applying to the Secretary of State and because they can do so even after they have been issued with an academy order. Those consulted in such circumstances would have good grounds for feeling that they were participating in a charade.”—[Official Report, 19 July 2010; Vol. 514, c. 49.]
I do not think that it is our business in this place to encourage charades.
I am aware that, from time to time, it suits Members to parody, simplify and stereotype their opponents. The last Government are characteristically portrayed by the current Government as an unmitigated disaster and, in return, Labour Members portray the Government as an unmitigated evil. If people want to live in a world of hyperbole, that is fine—if a little wearisome—but let us conduct a simple thought experiment. Let us imagine a Government—any Government—different from ours, who propose to allow a public institution to change its character. They agree that the institution must consult people about the change, but they allow consultation only after the irreversible change has happened. Would Members back such a Government? Would they applaud them? What would be the point of consultation? What would that process do for public cynicism about public service consultation—already significantly eroded by the pseudo and sham consultations organised by the previous Government? But on the coalition side of the Chamber, how many quotes—showing our previous attacks, time and again, on sham consultation—do we want dragged up and used against us? At least those consultations did not take place after the event. Why do we want to invite comparison with the twisted politics of a communist plebiscite?
Is the only reason why we support the provision that the Government are proposing it? I notice that no one has said that post-hoc consultation is a cracking idea. It cannot be a case of “my Government right or wrong”. That is not a good basis for a working democracy. It will not help the Government if we vote for indefensible nonsense. It will not help the Government if we vote, but compromise our beliefs in the process. Inconsistency and duff arguments will not help the coalition in the long or short term.
Amendment 10 is genuinely probing. It makes the obvious and, for me, slightly unkind point that the last time schools were given greater financial freedoms under local financial management, which I have always supported, nearly every governing body was presented with a paper from the headmaster showing that his salary should go up because the headmaster down the road would be getting a significant increase. We saw salary inflation across the headmaster class, so headmasters may have something to look forward to from new academy status. Of course, they may not think in those terms, and I am sure that the majority do not, but the point is pretty obvious to all of us—imagine asking MPs to consult on a change that might possibly result in improved salaries. The concept of declaration of interest has some relevance in these provisions, so it is important that consultation is led by those who have none.
I acknowledge that I have not shown a lot of enthusiasm for the Bill, but despite that and despite my doubts as to its cost and effects, I am not seeking to derail it. I do not wish to cause trouble. Free schools and academies are in the coalition agreement. All I hope I have done is to make a case for good sense, which I think most people are up for, the primacy of the Commons Chamber, which I think most of us support, and the right of parents to be taken seriously. I hope rational beings on both sides of the Committee will see their way to supporting the amendment.
Caroline Lucas (Brighton, Pavilion) (Green)
I want to speak to new clause 1, on the reversion of academies to maintained status, and amendment 4, on consultation on conversion to an academy. I shall concentrate the majority of my remarks on new clause 1, and will speak only briefly to amendment 4, as consultation has been pretty much covered in our previous debates.
I tabled new clause 1 because there is no provision in the Bill for academies to revert to maintained status. That means that all the potential problems that the Bill would permit—such as restrictive curriculum, discriminatory admissions and employment policies—would be made permanent at the point of conversion. The Government admit that problems are likely. I have cited this before, but it bears repeating that the Minister responding for the Government in a debate in the other place stated:
“I fully accept that if you trust people things do go wrong, but that is the direction that we want to try to go in.”—[Official Report, House of Lords, 7 July 2010; Vol. 720, c. 299.]
It beggars belief that the Government would not want to guard against certain things going wrong, so is it really necessary to give schools complete freedom over admissions, curriculum and employment just to show that the dedicated people running our schools are trusted? I would argue not. The public are funding these schools, so on their behalf we must ensure that children are protected from indoctrination, that they are taught key subjects and that their staff are fairly treated. But given the Bill’s failure to make proper consultation mandatory when schools convert to academy status, it is crucial to have a mechanism for parents to say that they want their schools to revert to maintained status if, as an academy, things do go wrong.
The Government want academies to be like private schools funded by the state, yet if things go wrong at a private school, parents have more recourse than parents of children at an academy as envisaged in the Bill. For example, if a private school behaves in a way that a parent does not like, the parent can stop paying the fees, withdraw their child or pay for their child to go somewhere else. There is no comparable control in the Bill for parents of children in academies. For example, it may well not be practical or possible for there to be the surplus capacity necessary for children to be pulled out of one academy and be sent to the next state-funded school of choice.
If parents see things going wrong in schools and believe that the Government’s complete trust has been misplaced, surely they should be able to do something about it. The amendment is designed to provide a remedy to parents as a group—if, for example, an academy failed to teach key subjects or sought to impose religious beliefs on pupils. The amendment means that where 10% of the parents of pupils at an academy request it, the governing body must make arrangements for the holding of a ballot of parents to determine whether they want the academy to be converted back into a maintained school. If the Government are in favour of decentralising, as they constantly say they are with their big society rhetoric, why do they not want to let parents have the power to act if they decide that an academy is not better and if they want the school to go back to being a maintained school?
Mr Edward Timpson (Crewe and Nantwich) (Con)
On the practical aspects of the amendment, as opposed to the principle that the hon. Lady has already articulated, will she explain why she arrived at the 10% figure as a threshold before a ballot is triggered? As to the ballot itself, once the mechanism is in place, what majority would apply to the ballot—50% or more—before academy status could be withdrawn?
Caroline Lucas
I am grateful that the hon. Gentleman takes the amendment sufficiently seriously to want to know such a level of detail, which is very encouraging. It seemed to me that 10% was a reasonable threshold, but I would be delighted to discuss the issue in more detail with other Members who might want a slightly higher threshold—I would not have thought we would want to make it lower— and I am equally open to suggestions as to the necessary majority. Perhaps a simple majority would not be enough and a two thirds majority might be better. At the moment, however, I am using the amendment to set out a basic principle.
Vernon Coaker (Gedling) (Lab)
I think that the hon. Lady’s amendment puts forward a good point. However, does not the intervention from the hon. Member for Crewe and Nantwich (Mr Timpson) highlight the problem with the process that we have to go through in that the hon. Lady could have the most brilliant idea ever and be like Cicero in presenting it, but it would make no difference at all because there is no Report stage for the Government to consider her point and table appropriate amendments?
Caroline Lucas
I am very grateful to the hon. Gentleman for coming to the rescue. That was an exceedingly good point, which completely reinforces the fact that we are being forced to rush the Bill through at breakneck speed for no better reason than, presumably, the Secretary of State wanting to put a notch up and say that he has managed to achieve something before September. That is not a good way to make decisions. We should be going through the Bill line by line, making proposals and hearing the Government’s response so that we are able to create the best possible legislation. We are being railroaded into a charade that is not designed to get the best piece of legislation on to the statute book, and that is what we should be getting.
Mr John Redwood (Wokingham) (Con)
It was a pleasure to hear the hon. Member for Southport (Dr Pugh) looking back with such fond nostalgia to those democratic, halcyon days of the Baroness Thatcher of Kesteven. I did not know that he cared quite as much, but it was a wonderful trip down memory lane. I have a lot of sympathy with the hon. Gentleman in usually favouring democratic solutions and thinking that consultation is good and voting better, but sometimes the best can be the enemy of the good. What we have from Ministers is the opportunity for schools that so wish to obtain greater freedom to serve their pupils, parents and the wider community by having more to spend of the money that is properly theirs in the educational budget, and greater freedom to decide who they employ and how, and what they do in the classroom.
The Bill does not, as the hon. Member for Brighton, Pavilion (Caroline Lucas) suggests, set up some kind of complete freedom, whereby iconoclasts can seize control of a school and ignore all kinds of standards and requirements; those schools will still be within the state sector, monitored and regulated, and they will still need to achieve standards. There will be a great deal of interest from the local community, but there will still be the national regulatory scheme, too, so the hon. Lady was just trying to shock the Committee and is not living in the real world.
Caroline Lucas
Is it not the case that, if one gives academies the right to choose their own curriculum and opt out in so many respects from the local authority, one is giving them exactly those freedoms? I do not think that anything that I have said is designed to shock; my remarks exactly reflect the Bill. It will give academies incredible freedoms that other schools do not enjoy, and it will have huge ramifications for the rest of the local authority, as academies drain resources from it and from other schools. That is why consultation is so important.
Mr Redwood
That is a completely different argument from the one that the hon. Lady made in her speech, in which she said that these schools would be free of all checks, balances, regulation, inspection and control, and that they would go wrong. She seemed to be implying that we were giving schools the freedom to do badly. That is a particularly fatuous argument, because parents have considerable influence through governors and through their own voice, and they would take a great deal of interest. The number of pupils applying to go to the school would drop off very rapidly if the kind of disaster that she envisaged in her remarks came true, so I do not see that happening. I think that a combination of national regulation, the framework of law and local pressure would, on the whole, be benign.
Now the hon. Lady is arguing a rather different case—that these academies are going to be so successful, because they have all these excellent freedoms, that they will attract more and more people from the local community at the expense of the other schools in the area. I wish it were so. I do not think they will be that successful and take all the pupils from the local area, but if they are very good, I welcome the fact that more people will want to send their children there. That is a benign pressure to place on the other schools in the local area. It may be, however, that some of the more traditionally maintained schools act as the beacon that she would like to see.
Caroline Lucas
To clarify my point, I am talking about the fact that these schools will drain resources away from other schools. That is already happening in my constituency with the existing academies established under the previous Government, and it will happen even more under the new Government’s proposals. I am talking about resources coming out of other schools because academies will essentially outsource things such as special educational needs provision and other co-ordinating methods that were usually undertaken by the local authority. That means that the local authority will have less money to perform those same roles.
Mr Redwood
The main mechanism by which academies could take more of the money would be by their being extremely popular and attracting more pupils, because most of the money follows the pupils. That is a thoroughly benign pressure. If these academies are going to take off and develop extremely good standards and reputations, they will attract more pupils and get more money, which they will need because they are teaching more pupils, and the other schools will need to pull their socks up. If the outcome is not as successful as that, the hon. Lady’s worries should fall away. Surely she must accept, however, that we need some challenge and improvement in the system, and that there is nothing wrong with choice.
Why is it that someone like the hon. Lady does not trust anybody other than the state and is never prepared to give anybody any freedom to initiate, innovate, change and improve? Cannot she see that we desperately need to raise school standards, and that we need to do something to try to make that happen? Her system was tried for 13 years, and it did not work.
Bill Esterson (Sefton Central) (Lab)
The right hon. Gentleman’s point about trust is unfortunate, to say the least. Governing bodies do not always get these things right, and that is why some kind of mechanism needs to be in place. The amendments are trying to achieve that and to remedy some of the problems caused by our not having enough time to do the job properly in Committee.
Mr Redwood
I have said that I love democracy, and it is often a good idea to give more people more votes. However, let me deal directly with the issue. Parents are not without powers or influence in this situation; if they were, I would immediately sign up to the amendment tabled by the hon. Member for Southport. I suspect, however, that Ministers will argue, like me, that it would be a nice addition but is unnecessary because there are other checks and balances in the system.
Let us consider those elements. First, there is an elected local authority that will have a lot of influence and control over these schools. Its voice will be heard because it has considerable influence over the appointments of the very people who will be making this proposal or decision for each school. The local authority often has members on the governing body, and the governing body has parent representatives. If the parents became alarmed by the way in which the head teacher and the senior governors were moving, they would presumably make their voice heard through the parent governors or use their ability to change those governors to make the point.
Pat Glass (North West Durham) (Lab)
The evidence suggests that it takes seven years for a school to gain or lose a reputation, so it is not correct to say that the parents have this power to change things immediately. That is not going to happen—it will take a long time, and in the meantime children will lose out.
Mr Redwood
That may well be the case generally, but not in this situation. Changing to an academy is a one-off event of some significance in a school’s life, so parents would be well aware of it and the school would communicate with them. If the parents were alarmed, I am sure they would make their views known. I know that parents of children in my local area are well attuned to what is happening in their local school, and if they are alarmed by something that is going on, they soon raise it. They can do so directly with their councillors, with their MP or with the school’s governors.
Mr Mike Hancock
I understand and accept entirely the right hon. Gentleman’s point about the checks and balances being in place once a school is created, but the amendment is about whether people should have a choice about such a school being set up. Is he saying that the parents of potential pupils at such a school should not have a say in whether it should change its status? He is perfectly right about what happens after the event, but this is about what happens before the change.
Mr Redwood
If an entirely new school is being set up, it is up to the people putting forward that proposition to make their own decisions and canvass the marketplace to see whether people are likely to go to it. If there is a proposal to change a school’s status, parental opinion is very important, but I suggest that under the system set out in the Bill, which develops the current system, there will be plenty of opportunity for parents to make their views known. They can do that directly by talking or writing to the head teacher or governors, or they can get different people on to the governing body if they are really worried.
My experience is that people care desperately about the education of their children, and if they thought that the head teacher and the small group in the governing body who were trying to steer a change through were getting it wrong, they would make their views known very strongly. I suspect that the head and the governing body would moderate their stance or back off if they felt they had lost the confidence of their pupils and parents.
Dr Pugh
The right hon. Gentleman is sketching out various alternatives to a more democratic arrangement. I understand his argument, but is he not also making an overwhelming argument not to proceed in September? All the things that he asks parents to do cannot be done, because the parents are on holiday and the school is shut.
Mr Redwood
It cannot be done on that short a time scale—these things will take a bit of time to go through. As soon as schools want to make a proposal, they will have to put in an application, and of course they will notify parents at that time. It is quite possible for them to do so by e-mail or post in the school holidays, and the schools will be back in September, when there will be opportunities for the dialogue to continue.
Mr Iain Wright (Hartlepool) (Lab)
The right hon. Gentleman is being most generous in giving way. May I point him to paragraph 7 of the explanatory notes accompanying the Bill? It states:
“The Secretary of State expects that a significant number of Academies will open in September 2010 and for the number to continue to grow each year.”
As the hon. Member for Southport (Dr Pugh) says, there is simply not the time to consult in the way that the right hon. Gentleman suggests.
Mr Redwood
I think hon. Members are making obstacles where none need occur. Changes will go speedily only if the local community is happy. As soon as it gets out that a school is considering academy status, the local community will be engaged. There are local newspapers, local websites and all sorts of ways to do so, and the usual school grapevines will be in operation.
Opposition Members protest far too much—we all know they hate freedom, and they do not believe that free people can mobilise themselves in a good cause. I can assure them that people can do so very quickly if need arises. They should not be so afraid of the idea that their local schools might want a bit more freedom and a bit more of their own money to spend. It is dreadful that they believe that all their local schools need so much control from the centre that they want ever more regulation and control from Whitehall of the kind that Labour Governments meted out, and continued or increased control from local education authorities in the hope that one day there will be more Labour authorities to exercise it.
Surely it is high time that we set free the schools that wish to be set free. I can assure the Committee that should groups of parents not wish a change to academy status to happen, they will mobilise quickly and democracy will work. It is still alive and kicking.
Alex Cunningham (Stockton North) (Lab)
I, too, would like to consider the serious lack of consultation required before establishing an academy, as outlined in clauses 3 and 5. I share the concern of not only other hon. Members, but teachers, parents and other stakeholders, who fear that they could be excluded from the whole process at the whim of just over half a governing body—that could be five, six, seven or eight people—intent on establishing an academy.
Mr Redwood
Why does the hon. Gentleman think that there will be so many schools with governing bodies and head teachers that are completely out of touch with their local parents and want to ride roughshod over them?
Alex Cunningham
That is straightforward. Parents have always made good decisions when electing parent governors, but they have to be able to make bigger decisions, and I believe that they should be consulted.
The Government have chosen to ignore genuine concerns about the Bill. That is not new politics, but old politics of the worst type. Rushed legislation makes bad law. In the words of the National Association of Head Teachers, legislate in haste, repent at leisure. I therefore hope that the amendments that would compel governing bodies to consult parents, among others, will be supported.
Dan Rogerson (North Cornwall) (LD)
I welcome you back to the Chair on the third day of our Committee proceedings, Ms Primarolo.
My hon. Friend the Member for Southport (Dr Pugh) presented a strong argument, which the Minister clearly needs to answer, on whether the Bill currently goes far enough in giving those who care about the future of their school the opportunity to be involved in determining it. My hon. Friend set out the case for a ballot and looked back to the previous Conservative Government’s decisions about grant-maintained status, which he looked to as a model. Like other hon. Members, he acknowledged that our noble Friends in another place debated consultation at length, hence the provision, which should have been included from the outset, for consultation. The hon. Member for Stockton North (Alex Cunningham) mentioned it, and it has improved the Bill a great deal.
My hon. Friend referred to the parents of children who currently attend the school as the electorate in such a ballot. As my hon. Friend the Member for Portsmouth South (Mr Hancock) pointed out, many other interested parties may wish to be part of it. I therefore think that amendment 8 is a very useful tool for prompting a discussion on who should be consulted and how.
We are considering a series of amendments, which examine consultation and votes in detail. The hon. Member for Brighton, Pavilion (Caroline Lucas) tabled a new clause, which would allow for a reversion to maintained status if there were a trigger. She set out a 10% threshold on that. We could make some sort of hybrid amendment that sets out a 10% threshold of parents to trigger the kind of ballot that my hon. Friend the Member for Southport mentioned, or adopt a model based on the amendments tabled by the Opposition, which are more specific on who should be consulted and how that should happen. The debate is therefore important.
Vernon Coaker
The hon. Gentleman makes a perfectly reasonable point, but the problem is that we cannot amend the Bill unless we win a vote. That is the problem with this process. Frankly, we all feel immense frustration. His point is exactly right, but we cannot amend the Bill.
Dan Rogerson
The hon. Gentleman has made that point on a number of occasions—this afternoon and previously—but the fact remains that it is a question not just of whether we amend the Bill, but how we do so. That is what we are debating. When the Minister responds, he might say what the guidelines are for consultation on aspects of the Bill following debates in another place.
Amendment 8, which was moved by my hon. Friend the Member for Southport, is quite specific about one group of people who will be affected and who may take an interest.
Sammy Wilson (East Antrim) (DUP)
I take the point that the hon. Gentleman and others have made on the importance of consulting parents, but surely the Bill already ensures that they will be consulted. Clause 5 is clear that people “must” be consulted. It is also clear that people refers to “such persons as” the governors “think appropriate”. Surely to goodness no one would suggest that parents do not fall under the phrase,
“persons as they think appropriate”.
Dan Rogerson
The hon. Gentleman made that point in an earlier debate on another group of amendments. He is absolutely right that the Bill, as amended—amendments that were pressed for by my noble Friends in another place—would highlight parents as an obvious, key group for consultation. The question asked in amendment 8 by my hon. Friend the Member for Southport is whether there should be a ballot.
Who should trigger such a ballot? There may be some sympathy for the proposal of the hon. Member for Brighton, Pavilion for a reversal ballot—she suggests that 10% of parents could trigger such a ballot, but my hon. Friend said that an approval ballot should be triggered by one governor. However, one would have thought that even if a governing body, who might have signed up to academy status after a discussion lasting for a considerable period, decides to go for academy status, people outside that group may want a ballot. There are therefore problems with his proposal.
Sammy Wilson
Whether the threshold of one governor or 10% of parents is used to trigger a ballot, does the hon. Gentleman see the danger of a type of guerrilla warfare against a school? Ten per cent. of parents or one governor are very low thresholds. They could keep the debate going on for ever, which only introduces uncertainty on the school’s status.
Dan Rogerson
As a seasoned political campaigner, the hon. Gentleman is well aware of the possibilities that are open to anyone at that point.
Dr Pugh
I do not want to accuse the hon. Member for East Antrim (Sammy Wilson) of complete nonsense, but the gist of amendment 8 is a procedure for dealing with an objection. If a governor disagrees, there would be a ballot. The ballot would decide on that objection, and that would be the end of the matter. The hon. Gentleman said that a governor could keep the debate going for ever, but they cannot do so. That is not what the amendment proposes.
Dan Rogerson
My hon. Friend is right that amendment 8 sets out such a procedure, but the question is whether we should adopt it and whether it will allow everybody who might want a ballot to trigger one.
Dan Rogerson
I should like to make a little progress, after which I will happily give way to the hon. Gentleman, who I hope will contribute to the debate on this group of amendments.
The key question is this: do we feel that there is enough consultation provision in the Bill? There is also an issue of timing, to which my hon. Friend the Member for Southport and others referred when speaking to amendment 9. Is it possible to have meaningful consultation after an application has been made to the Secretary of State? In the debate in the other place this issue was addressed, and, as I recall, it is the signing of the funding agreement that makes things final. Therefore, should consultation reveal that everyone in the wider community is horrified by the idea of the school becoming an academy, there would be the option not to proceed. In other words, before the final funding agreement is signed, the application could be withdrawn and the process stopped at that point. There is a misunderstanding about when the point of no return is reached. It is not when the application is approved, but when the funding agreement is signed.
Mr Mike Hancock
I hope that my hon. Friend does not find my intervention unhelpful, although he might—[Laughter.] Does he agree that the amendments tabled by my hon. Friend the Member for Southport (Dr Pugh) go to the heart of the old Liberal adage about giving people a choice and a chance to have their say? Anything short of support for that would fly in the face of many of the things that we have stood for over the years.
Dan Rogerson
Against my hon. Friend’s possible intention, that was a helpful intervention as it gives me the opportunity to repeat the point that the amendment is about one particular group of people who would be involved in the vote, not others who would also be affected—a point that he made in an intervention on my hon. Friend the Member for Southport. It is therefore important that the consultation should be as wide-ranging as possible, but it should take place before the final funding agreement has been signed. It is in that period that a meaningful consultation can take place because there is something to consult on.
Mr Redwood
If there were a good head teacher in a good school who recommended a transition to academy status, a ballot called with a 40% turn-out and 21% of the parents said no to academy status and 19% said yes, would the head master have to resign? Could the head teacher be lost because his proposal had been rejected?
Dan Rogerson
We are moving into uncharted territory with the suggestion of motions of no confidence in head teachers and legislating on that point. It is an interesting point.
I hope that the Minister can tell us how the consultation process will be supported and how it can move forward. I hope that he can reassure the Committee—as those in the other place were reassured—that consultation will be meaningful and allow everyone to have their say. Hon. Members have already raised concerns about the time scale over the summer for those who wish to take early advantage of these measures, and there are schools which do want to take this route. I would be interested if the Minister could say how we can ensure that that consultation is meaningful in those instances.
Amendment 9 is an important one in the context of consultation. It is possible to have that consultation after the application has been made. Amendment 9 would require the consultation to take place between the application and approval by the Secretary of State. It is fair to say that there may have been some discussions already between the Secretary of State and the Department and the schools that started this process before the Bill was introduced. It is possible theoretically therefore that approval could be given quickly. The amendment would narrow the window for consultation between the application being made and being granted by the Secretary of State. If that happened in a short space of time, there would be no time for consultation. We need the consultation to be able to proceed until the signing of the final agreement, which is the agreement that creates the academy and concludes the process.
Dr Pugh
Does it not follow that trying to get academy status by September must be nonsense? Can my hon. Friend sketch out an indicative timetable that includes application, the funding agreement—which is irreversible—and, somewhere in the middle, consultation, bearing in mind that it is only six weeks until September?
Dan Rogerson
I suspect that my hon. Friend has posed a problem not for me, but for the Minister to answer when he replies to this debate. He is right: as I have already said, the Committee will need some reassurance that those consultations can take place over the summer for schools that wish to proceed quickly.
For the reasons that I have outlined, this is an important debate for the Committee to have. My hon. Friend is to be commended on moving the amendment in his customarily considered way. For that reason, it should be treated as a probing amendment by the Minister, rather than one on which the Committee should be divided, because it would not actually achieve the aspirations that many hon. Members have outlined, and which others will perhaps outline later in this debate.
Roberta Blackman-Woods (City of Durham) (Lab)
I would like to speak to amendment 4, and to support amendment 78, on the process of consultation, and amendment 77, on the timing.
I have grave concerns about the Bill. I cannot understand why the provisions are being rushed through for no identifiable reason other than political expediency. The Bill seems to seek completely to undermine the role of local authorities. It seems to be unaware of—indeed, antagonistic towards—the crucial role that those authorities play in planning for special educational needs, equalities, fair admissions, and so on. From my 25 years of being a governor, I know the importance of the local education authority in supporting schools, so it should be quite clear that I am not happy with the Bill. However, it is simply disgraceful to try to force through a re-designation of maintained schools to academies, bringing about a change in governance, curricula and admissions, and a possible loss of amenity to a local community, albeit without any meaningful consultation with them.
Amendment 4 seeks to outline a range of people and groups who should be consulted. They include—obviously—teachers, parents, other local authorities, pupils, potential partners to academies, and the wider community.
Julian Smith (Skipton and Ripon) (Con)
Proposed clause 5(1)(c) in amendment 4 lists the pupils. Would the hon. Lady not agree that consulting with pupils aged 11—or, if we give academy status to primary schools, five or six—might be a little stretching for them at that point in their educational cycle?
Roberta Blackman-Woods
The hon. Gentleman makes an interesting point. I have some experience of consulting on an academy—albeit not the sort of the academy proposed by the Bill—and I can assure him that pupils find it very easy to grasp what the change of their school to academy status would mean. However, his point is valid in that there must be a given length of time for a consultation to take place, so that the arguments for and against an academy in an area can be properly explained to everyone concerned. However, the Bill completely overrides any meaningful consultation process.
Bill Esterson
There are many professionals with good experience of how to consult effectively with children. Exactly the same point that the hon. Member for Skipton and Ripon (Julian Smith) has just raised—the point about why children should not be consulted—was raised with me when I was dealing with the establishment of academies in Medway a couple of years ago. However, it is a completely spurious point, as I think my hon. Friend would agree, because even much younger children have good insights. The question is how we go about consulting them, not whether we should consult them.
Roberta Blackman-Woods
My hon. Friend makes a valid point, which demonstrates the lack of seriousness among the Government parties about consulting those in the community. They simply have not thought through how to consult particular groups.
Mr Timpson
When talking about consultation in the education of children, does the hon. Lady recall that the previous Government introduced provisions in the Children, Schools and Families Act 2010—which went through Parliament in the previous Session—relating to the education of home-educated children. Those provisions imposed far more draconian checks and balances on how parents who educated their children at home were to do so. However, there was no consultation by the previous Government when they introduced those provisions, so there has been no consistency from her party on the issue.
Roberta Blackman-Woods
I am quite sure that the previous Government were setting precise and specific standards for home education, because it is really important to ensure that children’s education is protected when they are being educated at home.
I shall return to amendment 4. It is important that time should be given to consulting all the relevant groups in an area that will be affected by a new academy. I find the Liberal Democrats’ position on this issue rather confusing. The academy that we were hoping to establish in my constituency has been stopped by the Government. It was supported by the local authority, in partnership, and backed by the university of Durham. It had huge support in the local community. It took some time to work through with the local community what the arrangements would mean, but once that had been adequately explained and they had asked their questions of the relevant partners and got the answers, everyone was clear about the way ahead. The parents and teachers were also very clear that they wanted an ongoing relationship with the local authority. If the Bill goes through unamended, as seems likely given the parliamentary process that is being adopted, it will be impossible for parents to have their points heard or to maintain their desired relationship with the local authority. I therefore urge hon. Members to support amendment 4 and amendment 78, so that proper consultation arrangements can be put in place.
I also want to speak to amendment 77, which relates to the timing of the consultation. When I first read clause 5, I thought that there must be something missing. Surely no one could be suggesting that it is appropriate to consult after an academy order has been made. That is clearly ludicrous. When I discussed this with people in my constituency at the weekend, they suggested that we should perhaps applaud the Government for being up front and honest about the fact that they were not going to hold consultations or pay any attention to any consultations that were held. Obviously, if a consultation takes place after an order has been made, they are not going to pay any attention to it. So perhaps the Government are just being honest in clause 5, and saying that, as they are not going to pay any attention to any consultation, it does not matter whether it takes place before or after an academy order is made.
The Minister of State, Department for Education (Mr Nick Gibb)
Did the hon. Lady not hear the answer given my hon. Friend the Member for North Cornwall (Dan Rogerson), which is that the academy order is not the final moment in the conversion process? The final moment involves the funding agreement, which takes place after the academy order is made, so there will be plenty of time for the consultation to take place.
Roberta Blackman-Woods
I did hear that answer, but many of us fear that, at that point, the process will already have gone too far in a particular direction for it to be stopped. In any case, the Government should adopt best practice, but it is not best practice to carry out a consultation when all but the very last stages of a decision process have already been completed. It would be more honest of the Government to admit that this clause had been inserted in the other place, that they did not want it in the Bill in the first place, and that there is no intention whatever to consult outside the governing bodies. Significantly, they should also admit that no attention will be paid to the outcome of any consultation exercise. This is not what the Government should be doing; it is not good practice.
Andrew Percy (Brigg and Goole) (Con)
I should like to speak to amendments 8 and 9 and new clause 1. I shall possibly touch on amendment 4 as well. Over the past few weeks, it has been interesting for me, as a new Member, to listen to Labour Members telling us that a figure of 51% is the correct one in any decision. Today, however, I think it was the hon. Member for Stockton North (Alex Cunningham) who told us that using a figure of 51% was an unacceptable way of coming to a decision. I am interested that their consistency on one argument does not necessarily carry over into another.
There are some sensible reasons behind amendment 9, in that one would probably want a consultation to have begun—and possibly even finished—before making an academy order. I suspect that as schools move along this route, that will indeed be the case. Today, however, I have been struck by the lack of confidence in our governing bodies and our head teachers. It has been staggering to listen to that. I sit as a school governor and I was until recently a school teacher. Perhaps I am judging hon. Members unfairly, but they seem to be giving the impression that governing bodies are educational asset strippers who want to move forward as quickly as possible without any consultation with parents. As a governor and someone who has worked as a teacher, I do not recognise that portrayal of governors as some kind of strange being.
Lisa Nandy (Wigan) (Lab)
I take the hon. Gentleman’s point about Members not taking governors’ commitment seriously. I want to reassure him that that is certainly not the argument that many of us are putting forward. The point about governors, of which I am one, is that they have a strong duty to take into consideration the impact of changes on the children in their school. They attach the utmost importance to that duty. We are also asking them to take into account the impact of the proposed changes on the wider community, but they will be able to do that only if they consult the wider community. Many of us are concerned that that will not happen unless such a requirement is incorporated in the Bill.
Andrew Percy
I thank the hon. Lady for her intervention. Amendment 8 does not mention the wider community; it simply mentions parents. We also now have community governors to represent the interests of the wider community. So it is untrue—sorry, it is incorrect to suggest that governors do not take into account the role of their school in the community. In fact, over the past few years, one of the great moves forward for most schools is that they now recognise their position at the centre of the local community, and no longer see their responsibility ending at the school gate or the perimeter fence. Most schools now work incredibly hard to build links with their communities.
Lisa Nandy
I accept that most schools see their role as being at the heart of their community, and I am grateful for that. The problem arises when a school does not see that as its role, and that is what many of these amendments are seeking to address.
Andrew Percy
I suspect that the hon. Lady and I will have to agree to differ on this point, otherwise we will end up bouncing backwards and forwards. Head teachers, teachers, governors and those who have attended a governors’ training course are generally well aware of their responsibilities beyond the boundary fence of their school.
Sammy Wilson
Does the hon. Gentleman not agree that any school that wants a long-term future and wants to attract the necessary intake of pupils to maintain its position will have to take cognisance of what is going on in the community, because without community support it will not get a supply of pupils?
Andrew Percy
My hon. Friend makes that point better than I could. That is precisely why I am making the point today that governing bodies are not full of educational asset strippers. They consist of people who care deeply about their schools and communities and who will not change the governance arrangements of their school without proper consultation with parents, pupils and the wider community. We should pay respect to the people who serve as governors. They are dedicated individuals who understand their responsibilities full well, and they will not proceed without proper consultation.
Mr David Ward (Bradford East) (LD)
There seems to be a view that a particular school serves a community, but in many areas the reality is that it serves different communities. A catchment area will include a range of different communities, not all of which might be represented on the governing body.
Andrew Percy
The hon. Gentleman makes the point that I was going to make about amendment 8, which limits consultation on the ballot to the parents at the school at the time, taking no account of the wider community or communities. One of the biggest problems that I have with the suggestion of a ballot for parents is this: given that orders can take up to a year to go through, who do we ballot? Do we ballot year 11 parents? Do we ballot year 6 parents from feeder schools? Do we ballot people who might be thinking of having a child at some point? The impossibility of drawing a correct boundary around those to be balloted is the weakness of the ballot process.
Having served as a local councillor who has been through the Building Schools for the Future process, I would like to ask Labour Members who propose ballots this question: where were our ballots on the proposal to merge schools? Where were our ballots on the proposal to close schools? Where were our ballots on the proposal to move ahead with academies, put forward by the previous Government? Such ballots did not exist, and the Government were right not to call for them. Proper consultation with the governing bodies, involving consultation with parents and schools, was the best course of action.
The same applies to health services. In my area, a number of health services have been lost. Trusts have become foundation trusts, and their governance arrangements have changed, but we had no ballots on those proposals either.
Ian Mearns (Gateshead) (Lab)
The hon. Gentleman makes a cogent argument for the retention and strengthening of the strategic role of the local authority in education provision, which seems to run against the logic of establishing academies across the piece.
Andrew Percy
The hon. Gentleman will probably be disappointed, as I was about to move on to that point. Labour Members have said a great deal about the role of the local authority, and of parents in relation to it, in control of schools. In the area I represented as a councillor, when parents were up in arms about proposals to close our primary schools, the local education authority was in no position to fight such proposals or to act as a guardian for our local schools, because there is no genuine control by the local authority over education. The surplus places legislation and the Ofsted framework come down from central Government. It is a fallacy that parents are continuously engaged with their LEA about the structure of education in their area. The theory might look and sound good, but the reality is different.
The Bill gives parents a choice—I limit my comments here to maintained schools that become academy schools—to vote with their feet. The hon. Member for Southport (Dr Pugh) wants parents to vote in some form, and I suggest that providing a range of different education facilities in an area enables parents to decide not with a tick in a box but with their feet.
My concerns about new clause 1 echo many of those put forward by my hon. Friend the Member for Crewe and Nantwich (Mr Timpson). We might end up with the strange situation in which 10% of parents are continually unhappy with the governance arrangements and go back for a second, third or fourth bite at the cherry. That is the problem with a 10% threshold, or a 30%, 40% or 49.9% threshold—
Andrew Percy
I am pleased that the hon. Gentleman has come round to the idea of having a 55% rule in certain circumstances.
With the ballots proposal, the risk is that we end up with vexatious and frivolous requests for ballots.
Caroline Lucas
The hon. Gentleman’s points underline the fact that we do not have time to discuss the amendments properly. He focuses not on the principle of providing some way for academies to revert to maintained status, but on whether the threshold should be 10% and whether there will be vexatious uses. It is not beyond the wit of mankind to devise ways of further amending the proposal to ensure that it is not put to vexatious use. Will he focus on the principle of the amendment, and say whether he agrees with it?
Andrew Percy
As someone who has been a teacher, I hope that governing bodies will have a way not only to move in one direction but, potentially, to move back.
Dan Rogerson
I agree with the hon. Gentleman that such mechanisms are important, but would he be satisfied with the current provision that at the end of seven years, if the agreement is not renewed, the school would revert to maintained status?
Andrew Percy
My hon. Friend has, I hope, allayed some of the fears of the hon. Member for Brighton, Pavilion (Caroline Lucas). Should the measures not succeed, or should the school not be happy with the position, the Bill would provide a route back.
We should trust governing bodies and governors to do their job. They are dedicated people, education professionals, well-intentioned parents, and well-intentioned people from local communities. They will not steamroller ahead against the wishes of parents and the wider community. They will take on board seriously the views and aspirations of local people. The weakness of not having a range of education provision is that we deny parents and pupils a choice over the curriculum that they want to follow. We end up with parents choosing between school A and school B, which are identical. There is nothing wrong with some competition, with giving parents the choice and with allowing them to vote with their feet. I urge the Committee to vote against the amendments.
Lisa Nandy
I want to speak particularly to my amendment 86, which is a probing amendment designed to understand the Government’s reasons for not including in the Bill consultation with key groups, including the wider community, prior to a school seeking academy status.
Previously, when maintained schools converted to academies, the local authority was obliged to consult widely. Although there was no legal requirement for public consultation where a new academy was to be established, the local authority at least had to be consulted. I am worried that that is not being replicated in the Bill. Despite some progress, the current wording on consultation is inadequate, requiring consultation only with
“such persons as they think appropriate”.
It is of the utmost importance that parents, pupils, staff and the local authority are consulted.
We have already talked a little about the importance of consulting children. I want also to draw attention to the United Nations convention on the rights of the child, which successive Governments have supported, and which sets the standard by which we expect children to be treated in this country. Part of that is about talking to children and listening to their views on matters that affect them. Few matters could affect children more than that currently under consideration by the Committee.
The changes will impact on all the groups to which I have referred, including the wider community, children who are not currently at school, children who are going on to school, and children who are at other schools. I will not rehearse the arguments that were advanced on Second Reading, but it is important to consider those in the context of the amendments.
The Government have said that they are committed to giving parents a greater voice. The National Governors Association has said that, in that case, it would like to see consultation with parents as part of that principle. I reiterate the point I made earlier that governors have a strong duty to put the children in their school first. I would like a provision for prior consultation with the wider community to be included in the Bill. That would mean that, before taking the decision to seek academy status, the governors were in command of the full facts. That cannot be controversial, and I cannot understand why the provision is not in the Bill.
Several groups have raised the concern with me that the wording of the Bill is so broad as to leave governing bodies open to legal action should they not carry out consultation with groups in a way that is considered proper. Will the Minister consider that in his response, as I would hate to see that happening to governing bodies? As a school governor, I would find it extremely worrying to find my school in that position.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does it not strike my hon. Friend as odd that, while the Government are proposing to allow local communities to engage in consultation and to vote on planning permission for residential developments, they are proposing no such consultation when it comes to the impact on the future of a school and the implications of that for the whole community?
Lisa Nandy
That brings me to a point that was raised with me by the TUC. The Government’s concept of the big society appears to feature the involvement of more and more people in the services that they own as members of the community, but this proposal, like some of the other measures that have been pushed through, seems to be directly at odds with that principle.
Andrew Percy
Would the hon. Lady care to comment on the previous Government’s conversion of schools to academies, and their school closures? Does she believe that there was proper consultation with parents and pupils then, and does she feel that there should have been ballots?
Lisa Nandy
I believe that we can always do better when it comes to consultation, but I also believe that the standard being set in the Committee today marks an extraordinarily low point in the history of consultation. I think that we should move on from what was done by the previous Government, and ensure that there is more consultation, not less.
Let me emphasise to the Minister that schools are at the heart of their local communities. If there is no consultation with the people who will be affected by the Bill, schools will drive a wedge between themselves and their communities, and I believe that we have an obligation to prevent that from happening. My amendment seeks to establish why the Government do not wish to ensure that the views of the community inform the decisions of schools. I should be grateful if the Minister could answer that question.
Mr Mike Hancock
You will be pleased to know, Ms Primarolo, that I spent most of the weekend trying to pronounce your name without embarrassing myself or you. That is as near to pronouncing it correctly as I can get. I apologise for my rudeness to you last week when I could not pronounce it.
It is a pleasure to follow the hon. Member for Wigan (Lisa Nandy). Is it Wigan? It was on the annunciator screen, but I missed it. It moved so quickly. You know how unaccustomed this place is to things moving quickly, Ms Primarolo, except on the annunciator screen. Anyway, it is a pleasure to follow the hon. Lady, and I had more than a degree of sympathy for what she had to say.
I hope that Members will give serious consideration to some of the issues raised by my hon. Friend the Member for Southport (Dr Pugh) and others, including the hon. Member for Brighton, Pavilion (Caroline Lucas). She made a very good point. The only point on which I disagreed with her was the percentage business: I did not think that that was helpful to the debate.
I am disappointed that the right hon. Member for Wokingham (Mr Redwood) has left the Chamber. He seemed to be digging himself gradually into a deeper and deeper hole, and taking interventions to save himself from burying himself. He appeared to be saying that everyone else could be right, but parents would have to be wrong. Parents could not be trusted to make a decision as important as this, because they might simply get it wrong. Well, who is to say that anyone else is going to get it right?
I should be interested to know what is wrong with giving people an opportunity to discuss and to make a decision. I shall explain shortly why I think that is important, but let me deal first with the notion that the amendment, or something like it, cannot be accepted because there is not enough time. Nothing in the rules of the House suggests that the business cannot be changed. If the Government were minded to accept the amendment, a Report stage could, if necessary, be arranged for tomorrow afternoon. Nothing in the rules states that the summer Adjournment debates must take place at a particular time on the last day before the recess, as long as they do take place. The business could be changed so that both Report and Third Reading could take place tomorrow. There would be nothing to prevent that, if good will existed in relation to bringing parents into the debate about academy status.
Mr Hancock
I see that the hon. Gentleman is itching to intervene. At our age, I think I should allow him to do so, so that he need not struggle to rise too often.
Mr Sheerman
The hon. Gentleman is more deeply rooted in his community and his constituency than almost anyone I know, but I hope he will not mind my saying that he is slightly missing one point. Under the last Government, Building Schools for the Future and academies were not just about improving schools, but about transforming the communities in which they sat. That was at the heart of what the last Government were doing, and that is what the present Government seem to be missing. Transforming the community is what a great school does.
Mr Hancock
I agree. As I said in my intervention on my hon. Friend the Member for Southport, it is not just about the parents of children attending a school; it is about the wider community having a say. Academies were supposed to be at the very heart of the community, and they were supposed to be seven-days-a-week establishments offering a range of activities that the whole community could embrace. If that is what we will have, we should share it with the population and encourage them to become involved; but to suggest that we can create academies from scratch by September is pushing against a door that has already been slammed in our faces. It might be possible in the case of schools that have partly completed the process, but I think it highly unlikely that any academy created from scratch could succeed. I do not even know whether the governors would meet between the passing of the Bill and the time at which it would be possible to begin the process of setting up an academy.
How quickly will the Government be able to agree on the financial basis? What will happen to the role of local authorities that have already budgeted for the coming year? What will happen to the existing budgets in schools? That brings me to a point at which I have to declare an interest yet again, Ms Primarolo—Primarolo—[Laughter.] It is difficult for a person who has had a speech impediment for 60 years and then mastered it when someone comes along with a name that contains a P and an R too close together, with an O at the end. I am trying to fight this as best I can. I hope you will bear with me, Ms Primarolo. Are you looking for inspiration from above?
I was thinking about a problem that local authorities face. I must declare an interest at this point: I am a member of a local authority that is a local education authority. This morning we were discussing what to do now. We already have one academy and, as I have said, it is a pleasure to see the transformation that is taking place particularly in the parents, who were heavily consulted, and the pupils. Everyone is optimistic and looking for an improvement in the school’s academic record in one year. So even though I am against this measure, I have seen how it can start such a process.
As I said, this morning we on the Portsmouth executive were discussing what to do now in respect of the legislation before us. How will we deal with the other schools? Will we try to talk to them about having a federation? Should we think about helping one school? We have a very good single-sex girls’ school but it is sometimes difficult to see where its future will lie. I would very much like for it be maintained, but we also have a single-sex boys’ school that is not in such a good state of health, and the question therefore arises of how we work with them. I do not want local authorities to be left with a rump of schools that are difficult to manage.
We asked other questions, too. How do we cope with staff? How do we cope with low achievement in schools? How do we maintain parents’ confidence that their children will get an equal share of the resources? The Government did not address that problem during our discussions last week but it is fundamental, because if parents are not going to be involved in the creation of an academy they really ought to be told what the effects will be on those children who will not be fortunate enough to get into an academy.
I ask the Minister to talk about the confidence that the Government have to be able to give to parents in order to be sure that all of them believe their children will get equal opportunities at school. Under the Bill in its current form, there is a degree of unfairness that could easily and very quickly be exposed in cities such as mine—densely populated urban areas with schools very close together where it is difficult to regulate catchment areas fairly and properly because people live so close by. Where schools are located is also an issue in this respect. Some of them came into existence as secondary schools somewhat late in the day. We had to build two new secondary schools in our city in the last 10 years to cope with the rising numbers of children, and we had to build them where we could, rather than in the right place, so to speak. We had to build them on the available sites which were not necessarily in the right areas. That also makes the catchment areas issue very difficult.
Parents therefore rightly have a number of fears, and teachers certainly do too. The amendments before us are about making sure that parents have the opportunity to know both a lot more than is currently available about what an academy can achieve and the downsides of academies. The Minister would be foolish in the extreme if he were to suggest that some parents would not want the downsides of an academy to be explained. That is particularly the case in respect of parents of children who are not fortunate enough to get into them. What will happen to the rest of the children?
I hope the Minister will also respond to the points raised by the hon. Member for Wigan and my hon. Friend the Member for North Cornwall (Dan Rogerson). My hon. Friend asked two or three questions that are worthy of a specific on-the-record comment from the Minister, because this Committee needs and demands that. We cannot allow legislation to be passed so quickly without proper scrutiny and with questions left unanswered. The Government cannot have it both ways. If they are not prepared to give us the time to scrutinise the Bill properly, they should be able to put a sustainable and maintainable position on the record by saying, “This is the way it’s going to be.” Anything short of that should be seen by this House and the country as totally unacceptable.
The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
I call Vernon Coaker.
Vernon Coaker
Thank you for calling me to speak, Ms Primarolo. It has been an interesting debate so far and, clearly, more Members wish to contribute to it.
The Government are in a mess on consultation. There are all sorts of worries and concerns on both sides of the Committee about consultation and what it actually means in practice for both local communities and individual schools across the country. This is a live issue for the Government, because we are supposed to be in an era of new politics, which is about localism—involving, talking to and empowering local people and communities—yet the Government are unclear about what that means in respect of schools.
Under the Bill in its current form, a governing body and head teacher can, effectively, apply to become an academy and be fast-tracked through that process if they are outstanding, and it is the Secretary of State who makes the final decision. This is therefore a hugely centralising measure that completely bypasses the local community, the local authority and anyone of influence in a local area. The Government can state clearly in the Bill that that is not their intention and they do not wish that to happen.
I take on board the point that there are many good governing bodies and that we should not impinge on individual governors and head teachers who work extremely hard, but they operate on the basis of what they consider to be best for their individual school whereas it is incumbent upon us here to pass laws that not only look towards the interests of individual schools but address such issues within the context of the education system as a whole. The Government’s intention is that thousands of schools will become academies and hundreds will be fast-tracked through the process but, as I said last week, I think we will simply be taking a leap in the dark, with no real idea where this will end up.
The Minister must tell us how many schools have applied to become academies and how many he anticipates will be academies in September 2010. The press release that the Department for Education sent out at the beginning of this process on 2 June told us 1,000 schools had applied for academy freedoms, but that is not what it meant to say. It meant that 1,000 schools had expressed an interest in that, but where are we now in this regard? Where have those schools got to in respect of consultation? Who will they be talking to in August? Which governors are consulting which local authorities? Which governors are talking to which parents? Which governing bodies are talking to which communities? What consultation is going on, given that the Secretary of State has expressly told this House that he wants as many outstanding schools as possible to be fast-tracked to academy status in September? “Not a clue,” is the answer from the Government. Any reasonable and rational person would say it is difficult to have such consultations when schools are on holiday. I accept that—we all accept that—but in that case the Government should not set out as one of the Bill’s policy objectives that large numbers of schools will become academies.
The Government have not stated what consultation they expect the schools that are being fast-tracked to academy status to be involved in. They have not set before the Committee what the process will be by which they as a Government monitor that, other than to say that there is a point of contact at the Department for Education. What on earth does that mean—a phone call, perhaps, or the odd letter, or a couple of e-mail exchanges? What evidence will be collected to ensure that the measures in the Bill—even the measure on this limited consultation—are followed? The issue of legal challenge was rightly raised. There will be a legal challenge if the Department cannot give adequate explanations—other than what it has given so far, which is extremely woolly—in respect of even the limited consultative process in the Bill, with the pre-commencement later on in it. If it cannot do that, there is a real problem.
Pat Glass
I wonder whether my hon. Friend agrees with me about what is happening in a school that is outside but close to my constituency, which may affect children in my constituency. The head teacher and a small number of governors have made an application for academy status and it is being fast-tracked, but the head teacher is retiring on 31 August. Does my hon. Friend agree that this is contemptuous, not only to children and to parents and to the local community, but to the new head teacher who is due to take over a school which is going to change in character and is not going to be the school to which he applied? That is what is happening as a result of this Bill being rushed through this House.
Vernon Coaker
I agree with that. The point that we have made on numerous occasions is that even if the Government think that this is a good Bill—they clearly do—and are determined to push forward with it, the rush to put the legislation in place will have unintended consequences of exactly the sort that my hon. Friend describes. I am not trying to be smart when I predict that individual Members from across the House will have individual schools coming to them about problems with this process and the adverse consequences that it is having for their area, and that will be as a result of having rushed this legislation through.
Mr Gibb
May I help the hon. Gentleman by saying that schools that do wish to convert this September must have submitted their applications by 30 June, so there will be time before the beginning of the schools’ summer recess for consultation to take place? In addition, the consultation is not required to terminate by September; it can go on through the autumn until the funding agreement is signed. So there is plenty of time, both before the summer and after it, for this important consultation to take place.
Vernon Coaker
I am afraid that the Minister is just asserting things; there is no fact in what he just said. How many schools are going through this process? What are they actually doing to consult? Are they sending a letter to every parent? Are they holding parents’ meetings? Are they going out into the community? Are leaflets being sent round? Are other schools involved in this? Are other governing bodies involved? Is the local authority involved? What does what the Minister has just said mean? The reality is that none of us knows.
Mr Mike Hancock
In view of what the Minister has just said, is the hon. Gentleman not slightly mystified, as I am, why the Government cannot tell us the number of schools that have indicated since 30 June that they want to start this process? Surely the Department ought to be able to make that information available to the Committee.
Vernon Coaker
Absolutely. The point that the Minister missed was that the Secretary of State has made great play of the fact that some schools will become academies not by Christmas or through the autumn, when the consultation is going to be by, but by September 2010; the whole reason we are rushing this Bill through is that the Secretary of State was telling us that all these schools were queuing up to become academies by September 2010. The Minister may have been saying in his intervention that a lot of schools signed up by 30 June, because the process takes three months, and they have therefore started the consultation. We do not know what that involves, but it carries on in August and can go on “through the autumn”—those were the Minister’s own words. So why are we rushing this legislation if the consultation can go on for longer? We could have slowed down a bit and improved the Bill, accepting some amendments that hon. Members have proposed. The Government would have thus achieved their objective with a much-improved Bill that would have allayed some of the concerns that have been raised, notwithstanding the fact that Labour Members would have opposed it in any case.
I hope that the Minister will tell us the exact number of schools that have applied, not the number that have expressed an interest—I hope he will give the exact number for primary schools and secondary schools. I know that this is not going to happen in special schools until 2011 and I cannot remember whether that is also the case for primary schools, but it certainly will happen in secondary schools. How many schools are actually applying? How many of that number does the Minister expect to open in September 2010? I hope he will outline for us exactly what consultation process those schools will be expected to have gone through and that he will explain to the Committee how the Department is ensuring that that has taken place, so that when the Secretary of State decides whether to give an academy order he can say, “These are the criteria I used.” The Committee deserves to know that, but we have so far been given no answer..
Mr Redwood
Can the shadow Minister explain why he thinks so many head teachers and governing bodies might want to drive something like this through against the wishes of the local community and parents or without bothering to find out what their views were? I would have thought that the first thing any head teacher would do when considering this would have been to ensure that they had support.
Vernon Coaker
What we are saying is that we are legislating for a process and we expect it to set out exactly what should happen. It is for the Government to determine what that process is. At the moment, they have no real idea about it. I also say to the right hon. Gentleman that what we are also trying to do—this is the point made by the hon. Member for Portsmouth South (Mr Hancock)—is find out how many of the 1,000 schools that the press release says have applied will become academies in September. The Minister has failed last week and this to give a categorical answer to the question of how many academies the Department expects to open in September. I, too, will be interested to hear that answer.
Mr Redwood
I am sure that we will all be interested in that answer. However, the shadow Minister has given me no answer on the point that I asked. He is not saying that he knows of lots of head teachers and governing bodies foolish enough to try to drive this through against local opinion. Can he not understand that the whole idea of localism is that we need to trust these people more and give them more scope to act? They will decide how to consult and how widely they need to consult depending on the mood.
Vernon Coaker
But who will decide? It will be the head teacher and the governing body of the school. The right hon. Gentleman tells us not to worry because some consultation will take place, and he asks what head teacher would drive this through against local opposition. I just say to him that if parents—if all of them—are so important, why does the word “parents” not appear in the Bill? I ask him that to test him, because none of us can find a reference to them and I find that astonishing. He asks what head teacher would possibly go against the wishes of parents and against the wishes of anybody, but why is the word “parents”, which the right hon. Gentleman has just prayed in aid when he said that the Government were all for localism and for people empowering the local neighbourhood, not contained in this Bill? There may be one or two such references but I cannot find them.
Mr Redwood
Sometimes things are so obvious that when one trusts people they will do the obvious thing. Of course these people will want to carry the local parents with them because otherwise they will lose their school.
Vernon Coaker
I make a prediction to the right hon. Gentleman and to some of the hon. Members on the Government Benches who are saying “Hear, hear”. I predict that the Government will produce amendments in the Bill that they are introducing in the autumn to clarify the situation and that hon. Members will, at some point, be writing to the Minister asking whether he could intervene in respect of particular schools in their community where it looks as though the consultation has not taken place and other schools start complaining about the schools that have been fast-tracked to academy status. As the right hon. Gentleman knows, because he has been here longer than I have, when we legislate in this House, we do so in a way that lays out the process that we expect to be followed in order for a process to happen. The process in this Bill is confused, and people do not know what it is supposed to be. He knows as well as I do that confused legislation provides the opportunity for judicial review. All I am saying is that the fact that this reference is not in the Bill is astonishing.
Mr Ward
I wonder whether the hon. Gentleman is as concerned as I am about the proposals on consulting parents. Unless we receive some advice to the contrary, it appears that under clause 1(6)(d) up to 49% of the pupils in a new school do not have to be
“drawn from the area in which the school is situated.”
Vernon Coaker
The hon. Gentleman is absolutely right about that. Of course what Lord Hill said in another place was that if we were to consider the grammar schools that become academies, we might find that that area is significantly broader. What that “area” meant was very difficult to define.
My hon. Friend the Member for Huddersfield (Mr Sheerman), the former Chair of the Select Committee, drew attention to the fact that the Government are not averse to ballots because they have introduced them for local planning decisions. Of course, the Minister will know, as we heard in the statement that took place before our discussions in Committee started today, the Government are introducing ballots for locally elected police commissioners. The principle of ballots, such as that proposed by the hon. Member for Southport (Dr Pugh), is something to which the Government are not opposed.
We think that we should lay out the details that are set out in amendment 78 rather simply leaving it to people to do what is appropriate. Parents should be consulted and, as many people have said, it is essential that the pupil voice should be heard. In answer to an earlier question from a Member on the Government Benches, of course that would be done in a way that is appropriate. The amendment refers to guidance that should be given to schools on how they should consult pupils.
What are the teachers and non-teaching staff going to come back to in September? The Minister needs to answer the question about what is happening with the TUPE negotiations about the transfer of teaching and non-teaching staff for those schools that want to become academies.
Sammy Wilson
The shadow Minister is making a point about the form of the consultation. In fact, if he examines the remarks he is making now he will see just how difficult it will be to be prescriptive about the form of consultation, even though that is what he seems to be seeking. One would consult pupils in a different way to teachers, and parents in a different way to teachers, too. It might not be possible to get them all under one roof. Is he seeking a prescriptive method of consultation or is the fact that the Bill makes it clear there should be consultation on a question mentioned in the Bill and that it must take place with the appropriate people not sufficient detail for him?
Vernon Coaker
I do not think that it is sufficient. The hon. Gentleman is right: of course one would consult teachers, non-teaching staff and pupils differently. That is why our amendment states:
“The Secretary of State shall issue guidance as to how”
that is done. Of course the consultation will be carried out in different ways, and that is why we have included the word “guidance”.
On the need for consultation with neighbouring schools, the Bill does not require good and outstanding schools that become academies to partner schools that are in difficulty or need support. I know that in the other place it was believed—many of my hon. Friends believe it too—that such a provision should be on the face of the Bill. Merely stating that they should engage in such consultation is not sufficient. Many of us have made the point time and again that the complete elimination of local authorities from this situation is not acceptable at all.
Let me talk about amendment 77. The Chair of the Select Committee, the hon. Member for Beverley and Holderness (Mr Stuart), was quoted by the hon. Member for Southport. If hon. Members think that I am making too much of the idea that a consultation should take place before, not after, the giving of an academy order, they should listen to what the Chair of the Select Committee said during one of the debates last week—it bears repeating. On the subject of consultations that took place after an academy order was made, and not before, he said:
“Those consulted in such circumstances would have good grounds for feeling that they were participating in a charade. I ask those on the Government Front Bench to consider that.”—[Official Report, 19 July 2010; Vol. 514, c. 49.]
In his reply, the Minister needs to explain why it is not a charade and why the Chair of the Select Committee is wrong or misguided in making that comment. Is he wrong? Has he got it wrong? Does he not understand the process? Of course he understands that the making of an academy order comes before an academy agreement is signed—everybody understands that, and we have all read the Bill. We are saying that the discussion of, and consultation on, an academy order—by the way, I can find no example of what an academy order would actually be—should take place before it is made and not afterwards. Perhaps the Minister—in answer to the Chair of the Select Committee, if not to me—can tell us what an academy order will contain. What will it look like? What will be in it? Will we have the opportunity for some sort of consultation on what an academy order should be?
Andrew Percy
I agree with the shadow Minister that there should always be a way back, but I fail to understand the following fact. When his party were in government, there were plenty of forced mergers and forced school closures through the transforming our primary schools programme and the surplus places legislation. There were thousands of names on petitions against irreversible school closures. Where were the democracy and localism in those decisions?
Vernon Coaker
There are two points. I shall come back to the local point in the moment, but all the way through these discussions—the hon. Gentleman, to his credit, has been in the Chamber for many hours of the debate on the Bill—I have pointed out significant and substantial differences between the academies programme pursued under the last Government and the academies programme and model proposed by the Bill. Our model concentrated on areas of educational underperformance and social disadvantage. That was the key driver for the use of the academy model. The Bill turns that on its head and says we will allow schools that are doing well under the current system to become academies, with all the worries and concerns that have arisen.
I know that the hon. Gentleman has been involved in this area and has worked hard in his constituency on the issue of school reorganisation. However, in virtually every circumstance in which academies have been agreed—that includes the 200 that were agreed and the number that were to go forward in September with secondary school reorganisation attached to educational transformation—the local authorities were key partners in those decisions. Some of those decisions were difficult. We have not tabled the amendments to say that any of this is easy, that there is a panacea or that someone can wave a magic wand to bring about school reorganisation in way that is never controversial or painful. We are saying that under our model, local authorities and local partners were specifically included. There were still difficulties, and sometimes tough decisions had to be made, but local authorities and local decision makers were involved. The way that the Bill is drafted specifically excludes those people from being involved other than in the way that a wish list of good practice would say that they should be involved.
Ian Mearns
Does my hon. Friend accept that under the previous Government’s academy proposals, the local consultation that took place was subject to an adjudicator’s ruling in the last instance if that was necessary?
Vernon Coaker
I was going to make that point: schools adjudicators have been involved almost as a final route of appeal. I know from my experience as a Minister—if the hon. Member for Brigg and Goole (Andrew Percy) becomes a Minister he will find this out—that even when one thinks a decision is right, it can be completely thrown out of the window because the schools adjudicator prevents something from going ahead. That happened to me a couple of times in relation to the closure of a school.
Julian Smith (Skipton and Ripon) (Con)
Does the Minister accept that there have been examples of Labour-held local authorities being given the opportunity to set up academies but rejecting it without consulting parents at all? I refer specifically to the offer by Goldman Sachs several years ago to set up an academy in Tower Hamlets. The local authority there gave parents not a jot of consultation.
Vernon Coaker
Some local authorities have been a problem, but not just Labour authorities—Conservative local authorities have also stood in the way of academy development. One pays a price for local democracy and involving local authorities: sometimes it means that people pursue educational options in their area that one does not agree with. That is the point I was making when I asked the Minister whether localism is fine only as long as it goes along with the Government’s policy objectives.
There are all sorts of unanswered questions about consultation, many of which the hon. Member for Portsmouth South has laid out. What happens to local authorities? What happens to the money? What happens regarding special needs? Who is vetting the consultation that takes place? Who knows what is going on? How will the school funding proposals that have been published today affect what is going on? There are all sorts of issues to be discussed.
Bill Esterson
May I take my hon. Friend back to the primary capital programme and the democracy in that process, which the hon. Member for Brigg and Goole (Andrew Percy) asked about? In the Tory-run authority in which I was the opposition spokesman on children’s services, there was a lot of opposition to some proposals and only a thorough consultation process brought up that opposition and showed the flaws in the plan. The council rejected them and the adjudicator, whose role my hon. Friend the Member for Gateshead (Ian Mearns) has mentioned, had to get involved. The checks and balances were in place in that process as they were in the School Standards and Framework Act 1998.
Vernon Coaker
My hon. Friend makes a self-evident and good point, and identifies some of the problems regarding the difference between what happened before and what will happen under the Bill’s measures. There are a huge number of questions that the Minister needs to answer.
On consultation, it would help if the Government and the Minister answered named day written questions, including a large number that are specifically relevant to this whole process and our discussions on consultation. I have 11 named-day questions for last Monday that have not yet been answered by the Department. Not all of them are relevant to this debate—[Interruption.] The Front Benchers are now debating who is responsible; I am afraid that it involves both Conservative and Liberal Democrat Ministers. Some of those questions are specific to today’s debate on consultation, so for the Department to talk about consultation, procedure and correct processes when I still have not received the answers to questions for which the named day was last Monday—[Interruption.] The Minister says that I have had a holding response: on Monday 19 July, for 11 of my questions, I received the reply, “I will reply as soon as possible,” from him and his colleagues. I do not know whether anyone else has experienced this problem, but given that the measures are being pushed through Parliament at significant speed, all hon. Members need the answers to their named day questions so that information that might inform our discussions is available.
With that, I shall simply say that we will support amendment 8 if the hon. Member for Southport pushes it to a vote, and I give notice that we would like to put amendment 78 to a vote.
Bill Esterson
I want to talk about consultation in relation to my experience as an opposition spokesman for children’s services, particularly in relation to pre and post-decision consultation and three academies that the council pushed through. The Tory-run council in Medway decided not to consult until decisions had been taken, which caused consternation and all sorts of problems with the wider community, not just parents. I think that was a precursor to what is happening with this legislation. It was only the involvement of the then Ministers with responsibility for schools standards, including my hon. Friend the Member for Gedling (Vernon Coaker), that enabled us to have proper consultation before decisions were finally taken and to ensure that the assurances that the local community sought were addressed. My concern is that the proposed measures will cause what happened in Medway to be repeated across the country.
Dan Rogerson
Will the hon. Gentleman confirm that the situation he describes happened under legislation that was pushed through by a Labour Government and that the Bill does say—thanks to amendments that were passed in another place—that consultation must take place?
Bill Esterson
I confirm that it happened under the legislation—that was why the checks and balances were eventually put in place. The point I was making is that the Tory-run council in Medway tried to push things through using the same procedure that will be introduced by the Bill. The hon. Gentleman mentions the amendments that were made in the other place, but, like many hon. Members, I have grave concerns that leaving it to the governing body to decide not just who to consult but whether to consult is a fundamental problem that will not be overcome by any checks and balances further down the line.
My experience and that of many people in Medway shows that allowing consultation at any time up to the signing of an academy agreement will not work and will make the process completely inadequate. That is why the amendments are so important. If they are not accepted, not only Members, but schools, children, staff and parents across the country will regret the lack of a requirement for the sort of proper consultation that is detailed in many of the amendments and that was in the 1998 Act. That guidance on how to consult different groups is extremely thorough and works extremely well when it is followed.
Andrew Percy
I am failing to get my head round the arguments of Opposition Members. There was plenty of consultation—admittedly under the previous Government—on Building Schools for the Future and on transforming our primary school agenda, and it threw up thousands of names on petitions from parents who did not want their schools closed, yet their schools were still closed. Where was the consultation? The failings the hon. Gentleman is outlining are exactly those that took place under the last Government.
Bill Esterson
Consultation is not a referendum; it will not necessarily produce the answer that the majority are pushing for, but there is a fundamental difference between holding a consultation and not holding one at all. The problem with the Bill is that unless the governing body agrees, there will be no consultation at all.
Andrew Percy
I think I heard the hon. Gentleman correctly and that he was saying that the Opposition are arguing that they want consultation simply so that they can say they have had it, but they are not all that bothered about the outcome.
Bill Esterson
The hon. Gentleman is trying to put words into the mouths of many Members. I think he is talking a load of nonsense on that point, but it was a nice try.
One of my concerns about leaving it to governing bodies to decide about consultation is that they, understandably, feel that it is their duty to support head teachers. Sometimes, however, the head teacher gets their own way through strength of personality and the governing body may not apply the degree of scrutiny and challenge that it should, although I am not saying that is always true because many governing bodies work extremely well in genuine partnership with their head teacher. The reason I support the amendments proposed by the hon. Member for Southport (Dr Pugh) is that the situation I described, together with the potential for financial benefit for head teachers, could create the possibility for conflict of financial interest, which would be wholly undesirable. There is concern about the potential for financial gain for head teachers and the lack of scrutiny in some governing bodies, although by no means all—I stress that point. It is important that we get the legislation right at this point, before things go wrong, rather than rushing it through with the danger that such problems might arise.
The hon. Member for Portsmouth South (Mr Hancock) and the former Chair of the Select Committee, the hon. Member for Huddersfield (Mr Sheerman), made important points about schools being a key part of their community. Although governing bodies are representative of certain parts of the community, they do not represent the wider community, which is why the provisions of the School Standards and Framework Act are a good guide. The fundamental problem with the Bill is that if consultation is not held until after the initial decision, it will be apparent to the local community that there has been a fait accompli. The danger is that once the train has left the station, it will be very difficult to put the brakes on.
Mr Gibb
This group of amendments deals with consultation. We have always made it clear that we expect schools to consult on their proposals for conversion to academy status, which is why we were happy to amend the Bill in the other place to put that provision on the face of the legislation. As Lord Adonis said, during the passage of the Bill in the other place,
“it is very unlikely that an academy proposal will be a success if it does not have a very wide measure of support from the parental body, the staff body and the wider community.”—[Official Report, House of Lords, 21 June 2010; Vol. 719, c. 1230.]
As a result of persuasive arguments put in the other place, principally by Liberal Democrat peers, the Government tabled the amendment that led to clauses 5 and 10. I pay particular tribute to Baroness Walmsley for her determination to put consultation on the face of the Bill.
Amendment 8 would require that if any member of a school’s governing body objects to the school’s application for academy status, the parents of children at the school must be balloted. The purpose of the Bill is to allow schools that wish to do so to apply for academy status. The Bill is permissive rather than coercive. The arrangements for governing body decisions are set out in the School Governance (Procedures) (England) Regulations 2003, which state that every question to be decided at a governing body meeting must be determined by a majority of votes of those governors present and voting, and no decision can be taken without due discussion. Furthermore, at least a third of the membership of the governing bodies of all maintained schools is made up of parents. That means that the views of parents will clearly be considered during the governing body’s discussions. In addition, clause 5 requires a school’s governing body to consult on its proposals to convert to an academy. In practice, we believe that means that parents will be consulted and will have the chance to make representations about the proposals.
Dan Rogerson
The Minister is setting out his vision for the Bill and talking about the role of governing bodies. We did not have the opportunity to reach that clause last week because time defeated us. Is he able to confirm whether he has looked at the issue of how many parent governors there should be on future academy governing bodies?
Mr Gibb
I am happy to do so. We shall be coming to the relevant clause later in the debate, but I have been persuaded by my hon. Friend’s arguments, and as a result of his representations, and those of other people, we intend to amend the model funding agreement to raise the number of parents on governing bodies from one to a minimum of two.
Requiring a ballot of all parents of pupils at the school would unduly politicise the process.
Vernon Coaker
I welcome the concession the Minister just made. The Committee has run very well without being churlish about such things, and there are many other aspects we agree with, but that is an important step forward.
Caroline Lucas
At the risk of being churlish, why is the democracy such an issue? The point was made that if you were to—[Hon. Members: “He”]—if he were to have a proper election, it would—I am sorry. A moment ago, the Minister said that if you were to increase the governors—
Mr Gibb
I think I have taken the hon. Lady’s point. Requiring a ballot of all parents of pupils at the school would unduly politicise the process and would enable those who are ideologically opposed to academies—I do not accuse the hon. Lady of that—to use the process either to agitate against the proposals or to try to delay the implementation of the decision. That would place unnecessary burdens on the governing body of the school.
Amendment 10 relates to the financial interest of governors. I reassure the Committee that there are restrictions on people taking part in the proceedings of governing bodies of maintained schools. They are clearly set out in the well-known School Governance (Procedures) (England) Regulations 2003, which provide that where there is a conflict between the interests of any governor, associate member or head teacher and the interests of the governing body that person must disclose the interest, withdraw from the meeting and not vote. If one of those individuals has a financial interest in any matter, he or she must disclose it, withdraw from the meeting and not vote. If there is any dispute as to whether a person must withdraw, the other governors must decide on the matter.
There are important safeguards that apply both before and after conversion to academy status. They mean that there is no need for an amendment specifically to disallow a governor from leading the consultation, as under existing law governors cannot participate in decision making on issues that concern their remuneration or benefit. That is a fundamental principle of charity law, and all academies are charities. I can also confirm that the model articles of association ensure that no governor can make any financial gain in his or her role as a governor.
Nicholas Soames (Mid Sussex) (Con)
Will the Minister clarify that, by and large, these proceedings and procedures have worked very well and have presented very little difficulty in this regard?
Mr Gibb
Yes, my hon. Friend makes a very good point. The type of people who become school governors are motivated by one issue only—the school of which they are governors; they want to raise standards and are concerned about that school.
Several amendments—including amendments 78, 77, 9 and 86—would require the governing body of a maintained school to consult on their proposals to become an academy before applying for an academy order. Clause 5 requires, as I have said, that the governing body of the school
“must consult such persons as they think appropriate”
on the proposed conversion. The consultation may take place before or after an application for an academy order has been made in respect of the school or after an academy order has been granted. This will allow each school to determine when it has sufficient information on which to consult and at what point during the application process it wishes to do so. Schools are, after all, in the best position to determine when and how consultation should best take place, and they may not want to approach parents or others until they have firm proposals.
The only requirement is that the consultation must be held before the funding agreement is signed, since at that point the school will be legally committed to the conversion process. Academy orders, though a step along the way, are not irreversible and we therefore believe that there is still value in a school consulting after an order has been made. At that point, the school is in no sense bound to convert, so it is not the case that any consultation of parents or others would either be not meaningful or too late, as the hon. Member for Gedling (Vernon Coaker) suggested it would be in last week’s debate.
Mr Gibb
Of course, and it is up to the school to decide. I was going to come on to the guidance later. It is published on the departmental website and it sets out precisely what guidance the governing bodies should adhere to. It states:
“It will be for the Governing Body of the school to determine who should be consulted, although schools should consider involving local bodies or groups who have strong links with the school.”
It sets out various elements such as: information on the school’s website, a letter to all parents explaining the proposal, a meeting for parents, a newsletter for parents and asking for views from parents to be sent in writing to the school.
Ian Mearns
My hon. Friend the Member for Gedling (Vernon Coaker) pursued this issue earlier, when he spoke about the ability of schools in the list to go ahead and become academies in September. If the Bill is passed—we assume it will be, given the parliamentary numbers—orders will be made and consultation will have to take place before the funding agreement is in force. If schools are to become academies in September—assuming this idea has not been completely abandoned—it means that the consultation will happen all through August. Is my understanding correct?
Mr Gibb
It is possible for an academy order to be issued in September, while the details of the funding agreement are still being negotiated. These things are very complicated, and it might take several weeks after the academy order is issued before the funding agreement is signed, so the consultation process can continue after the academy order has been issued.
Mr Iain Wright
We really need clarity on this very important point. As I mentioned earlier, paragraph 7 of the explanatory notes states:
“The Secretary of State expects that a significant number of Academies will open in September 2010”.
Is the Minister now suggesting that academies will open without a funding agreement being in place?
Mr Gibb
The school can continue with an academy order made. That is the point. The academy order can be made in September, but the funding agreement might take several additional weeks afterwards—[Interruption.] No, the school will be open; children will be able to attend a school and an academy order will have been made.
Sammy Wilson
I thank the Minister for giving way and for his further clarification of the purpose and usefulness of consultation after the order has been made, but does he not accept that once an order has been made, many of those who might have had an interest in the consultation might well deem that there has been a done deal so that the consultation is meaningless? I say that despite the Minister’s assurances today, because the flag locally will be whether or not an order has been made to declare a school an academy.
Mr Gibb
I am grateful for that intervention, as it enables me to repeat that the deal is not done until the funding agreement is signed. That has always been the case: it was the case under the previous Administration and it is the case today. It is the funding agreement that is key.
Let me turn my attention to amendments 78, 4 and 18, which seek to prescribe with whom the school must consult. The Government believe that the individuals who lead schools—the governors and the head—are best placed to make decisions about their schools. They are the ones who know the local area, the local circumstances of the school and how it relates to other schools in the area. We do not intend to be prescriptive over whom schools should consult, as schools will have different views and the level of information they want or can make available at the time of consultation will depend on the point at which they do it. If they consult at the very beginning of the process, they may consult only on the principle of conversion itself. If they consult at a much later stage, they may want to consult on a wide range of additional matters—the curriculum, governance arrangements or a specialism for the academy, for example—on which they may by then have firmer views.
We trust the school to determine how to consult and whom to consult, and we do not intend to provide an inflexible checklist, which would not, in itself, ensure that consultation were any more meaningful. This includes consultation with the local authority, as amendment 18 would require. We do not intend to give local authorities a role that could, in some areas of the country, undermine the Government’s policy—as we know, this has been the case in the past. We do not want to provide local authorities with an opportunity to delay or frustrate applications via the consultation process. The Department’s website, as I mentioned earlier, includes guidance on good consultation practice.
New clause 1, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas), would allow schools that have become academies to return to maintained status if 10% of the parents of the pupils at the academy vote in favour of it. Of course, the academies programme is about freedoms and lack of prescription, so an academy could choose, if it wished, to run itself like a maintained school. The academy could willingly act in such a way that for all intents and purposes, it would be a maintained school, operating with all the restrictions and requirements that apply to them—including the academy buying back services from the local authority and choosing not to use its curriculum or staffing freedoms. Therefore there would be no need for it to change its status for it to be run in a way that is equivalent to a maintained school.
We expect all schools that apply to become an academy to be fully committed to the academies programme. Before becoming an academy, the governing body of the predecessor school will have taken account, as I have said on numerous occasions, of the views of the parents and pupils at the academy.
Let me deal briefly with some of the comments made during the debate. My hon. Friend the Member for Southport (Dr Pugh) raised the issue of the new politics, which he said that he, like me, supports. I believe that the coalition involves discussion, concessions and change, which we have seen during the passage of the Bill. The coalition is delivering the kind of politics demanded by the public. Today, the coalition has delivered its promise to introduce a pupil premium. The Minister of State, my hon. Friend the Member for Brent Central (Sarah Teather) has today tabled a written ministerial statement announcing a consultation process on the implementation of the pupil premium.
My right hon. Friend the Member for Wokingham (Mr Redwood) took us back to the halcyon days of Lady Thatcher, which I know he likes to do from time to time, as do we all. My right hon. Friend is absolutely right that we need to trust teachers and head teachers and that we need to give parents a genuine choice that will serve as a powerful force to raise standards.
My hon. Friend the Member for North Cornwall (Dan Rogerson) is right to point out that it is the funding agreement that is the key and the binding moment in the conversion process towards academy status. Schools wishing to convert in September had to apply by 30 June and we expect that those schools most keen to convert in September will already have embarked on consultation. That is what the Department has advised. There is nothing to stop such enthusiastic governing bodies from continuing to consult through July and the summer holidays, and it is inconceivable that they will have kept such matters from parents, when parents are represented to the tune of one third of governors on such bodies.
My hon. Friend the Member for Brigg and Goole (Andrew Percy) is absolutely right that the governors of a school, particularly the parent governors, take their responsibilities very seriously. They care deeply about the school and would not take forward the process of acquiring academy status without taking into account the views of the community, whether or not a particular part of the community were represented on the governing body.
The hon. Member for Wigan (Lisa Nandy) made the important point that schools are at the heart of the local community, and we agree that they should be, which is why the funding agreement specifically states that academies should be at the heart of the community and share facilities with it. She also raised the issue of the risk to governing bodies of a legal challenge, but clause 5(1) requires them to consult those people whom they think appropriate, and to a large extent, therefore, it is up to the body to decide whom it should consult. Provided that its decision is reasonable, it is unlikely to face a legal challenge.
The hon. Member for Gedling asked for the number of schools that have applied. Those that want to convert in September must have applied to do so by 30 June, but that does not mean that others will not also have applied by that date, and we do not believe that all those that have applied will necessarily be in a position to convert by September. We want to ensure that the process is right, and we will not allow conversions until all issues have been resolved.
The hon. Gentleman also asked where we are with the TUPE negotiations. Employers of staff at schools seeking to convert will be at different stages, depending on when they intend to convert, but TUPE requires the consultation on the transfer of employment to be sufficient, and it will apply outside the Bill in any event. Any proposed September convertors will have been advised to begin a TUPE consultation some time ago, at the outset of their consideration of the application.
Finally, the hon. Gentleman asked about the details of the academy order. It will state that a named school will convert to an academy on such date as is specified in the funding agreement. It is a very short document, and with those few remarks I urge hon. Members and my hon. Friends, when asked, to withdraw their amendments.
Dr Pugh
I shall say a few words before putting amendment 8 to the vote. Ministers have been fairly quiet throughout the large part of this debate, and I cannot be alone in sensing a certain embarrassment about some aspects of this legislation and the manner in which it has been pressed.
My hon. Friend the Member for Portsmouth South (Mr. Hancock) said to me during my earlier contribution that the real reason for weak consultation and no balloting is that it is all about making the establishment of academies easier, and at the time I said that that was uncharitable. Having listened to the counter-arguments, however, I am not sure that he was not after all right and me a little naive.
The ministerial argument against ballots was that they would politicise, but one does not need to be very bright to realise that that is a general argument against any ballot, any time, any place. The right hon. Member for Wokingham (Mr. Redwood) suggested that we would know the parental view from informal soundings, and to some extent that is correct, but he was unable to explain how that could happen before September, when schools are closed for the holiday. Indeed, if that is such a good, sure-fire method, why do we persist with ballots before changing a grammar school’s status? People were completely unable to answer that, or why primary, secondary and special schools should not have the same privileged legal position.
No one answered the comments from the hon. Member for Beverley and Holderness (Mr. Stuart), the Chair of the Education Committee, even though they were repeated. I shall repeat them again: he described the consultation arrangements as appearing like a charade. I recall working for a boss who used to listen to his heads of department, gather them all around, very carefully solicit their views and conclude by saying, “I hear what you say.” After that, he would do precisely what he wanted to do in the first place.
The hon. Member for Brigg and Goole (Andrew Percy) suggested that parents will be able to vote not necessarily by ballot but with their feet. I describe that as the Burmese school of democracy: “If you don’t like it, you can get out and go somewhere else.” He was quite right that governors generally and usually have a good awareness of and good contact with parents, and that they are likely to know quite a lot about how they might feel and react, but the clear point is that that is not invariably the case. Were it invariably the case, every grant-maintained ballot would have been won, but many were lost. Indeed, the hon. Member for Sefton Central (Bill Esterson) and I come from an area where all the grant-maintained ballots were lost.
If Members wish to disempower parents, if people in this Chamber genuinely believe in post hoc consultation, and if they object to rational amendment in the Commons, they should vote against my amendment. I can do nothing about that, but if they think differently I should like them to agree to amendment 8.
Question put, That the amendment be made.
Vernon Coaker
I beg to move amendment 82, page 3, line 11, at end insert—
‘(1A) An application under subsection (1) shall be in such form and shall contain such particulars as may be prescribed in regulations.’.
The Second Deputy Chairman of Ways and Means
With this we may take the following: amendment 81, in clause 4, page 3, line 34, at end insert—
‘(3A) The Secretary of State shall publish criteria which he will apply in deciding whether to make Academy orders, which shall be in such form and shall contain such particulars as may be prescribed in regulations.’.
Amendment 83, in clause 4, page 4, line 3, leave out subsection (6).
Vernon Coaker
I will be interested to hear why the Minister thinks that the amendments are unacceptable. Before that, it is important to say that, in the previous debate, there was a massive change in Government hope and expectation for their flagship academies policy. They have retreated from claiming that hundreds of new academies will open in September to saying that hundreds or a large number of academy orders will be agreed. The Secretary of State did not outline that as part of a flagship Government policy, which was for significant numbers of new academies to open. The policy is chaos, confusion and a complete shambles. Hon. Members of all parties will find it unbelievable that we now have a Government commitment to a significant number of academy orders, with consultation to follow. Significant progress has therefore been made as we have exposed the flaws in many aspects of the Bill. However, a Minister coming to the Dispatch Box and admitting that the Government’s aims and objectives will not be realised is astonishing.
I do not want to take up too much of the Committee’s time on the amendments. I should simply be grateful if the Minister explained why he thinks that they are unacceptable.
Mr Gibb
The amendments would collectively have the effect of increasing the burden of regulation associated with the academy conversion process. They propose several sets of regulations as well as a requirement that academy orders be made by statutory instrument. Hon. Members will recognise that that would take the Government’s policy in the opposite direction from our proposals. We want to deregulate when regulatory burdens are not only stifling innovation, but costing time and therefore money to achieve compliance. We want to give schools freedoms to allow them to focus on raising standards. Adding bureaucracy to the process is the last thing that we want.
Amendments 81 and 82 would introduce regulations that prescribed the contents of applications for academy orders and the criteria that the Secretary of State applied when deciding whether to make them. We do not believe that it is appropriate to regulate the contents of applications for academy orders. The Department already provides clear guidance on its website about the conversion process and the various steps that a school needs to take. The website also includes an application pro forma, which covers all the necessary information to enable a decision to be made. The Government have made it clear that they will apply a rigorous fit and proper person test in approving any sponsors of an academy.
The Secretary of State will consider applications from schools that wish to become academies and, in each case, confirm whether he is content for the conversion proposal to proceed to the next stage. If he is, he will make an academy order. In doing that he will, of course, take account of the relevant information before him, but he expects to approve most applications from outstanding schools. Those schools will make up the first wave, and we will publish the criteria for other applicants—the next wave—on the Department’s website.
Before issuing an academy order, the Secretary of State will undertake checks to ensure that the school is in a position to become an academy. That is important because academies operate with greater autonomy than other schools and need to be in a secure position to do so. We will check whether there has been any significant change since the school’s last outstanding Ofsted rating.
Mr Mike Hancock
Does my hon. Friend anticipate the criteria being changed from those that are currently applied to the raft of academies that is going through the process and the academies that he expects to go through shortly? Will the basic criteria be changed for future academies? He suggested that they would be published, but how different will they be?
Mr Gibb
The criteria will be different because the fast-tracking is confined to schools that are graded outstanding. When they have gone through the process, we will relax the criteria to enable other schools to do so. My hon. Friend will recall that the Secretary of State sent letters to all schools in the country. The criteria that I just mentioned apply to fast-tracking. There will be different criteria for the process once the first wave has gone through.
Issues that the Secretary of State will check include whether the school has a substantial budget deficit, whether there are PFI arrangements relating to the school and whether the school is already part of reorganisation proposals. Depending on the outcome of discussions, that may have a bearing on whether and when the Secretary of State can approve an outstanding school’s progression to the next stage. When an academy order is made, the Secretary of State must give a copy to the governing body, the head teacher and the local authority. If the application is rejected, the Secretary of State is required to inform the governing body, the head teacher and the local authority of his decision and the reason for it. It will therefore be transparent and clear why and when a school will be permitted to convert and when it will not.
However, the first stage of the process—the academy order stage—is just that: it permits a school to convert, but does not require it to do so. We need to be clear that, for many proposals, the greater detail and the final stage of the process will come later, when the Secretary of State decides whether to enter into a funding agreement with a proposed academy. It is only on signing the funding agreement that the conversion becomes legally binding. We therefore believe that prescription of the form and content of academy orders in secondary legislation is unnecessary and too bureaucratic.
An academy order is the means whereby a school’s conversion into an academy is enabled. The intention behind amendment 83 is that an academy order be made by statutory instrument, which would have to be laid before Parliament. Academy orders are intended to be the legal means whereby an individual school converts to academy status. They will contain key pieces of information that are pertinent to the conversion, but are highly specific to the circumstances of each school. It would not be a good use of Parliament’s time to require each order for each and every school to be tabled. The use of the negative resolution procedure would also be highly disruptive to any school, since the period of 40 days during which the order could be prayed against in this House or the other place would leave the school with no certainty about whether the conversion could go ahead.
In any event, the hon. Member for Gedling (Vernon Coaker) will be interested to know that the Lords Delegated Powers and Regulatory Reform Committee issued a report on the Bill, dated 17 June. I am sure that he knows it well, given that he has been so assiduous in scrutinising the Bill and all the accompanying documents. As he predicted, it states about the provision:
“this seems to us to be reasonable. Each order affects only one school and there is provision for those affected to be provided with copies. We agree… that these Orders are not really legislative in character and we see no reason why Parliament would want to have any control over them.”
For those reasons, I urge the hon. Gentleman to withdraw the amendment.
Vernon Coaker
It is a very good job that the Minister has persuaded me that statutory instruments of any sort—negative or affirmative—are unnecessary, otherwise he would not be able to announce academy orders in September. I intend to ask leave to withdraw the amendment, but I return to a point I made earlier. I provoked the Minister at the beginning of this debate, but in both this debate and the debate on the previous group of amendments, I note that he has not put any figure at all on the number of schools that he expects to become academies. That now seems to have gone down to almost nought, because the aspiration now is to introduce large numbers of academy orders.
Jon Trickett (Hemsworth) (Lab)
I beg to move amendment 54, in page 3, line 34, at end insert—
‘(3A) An Academy order must include provisions which make available for community use some or all of the school’s facilities.
(3B) Such provisions shall not be fewer and on less advantageous terms than those which have been available prior to the application being made for an Academy order.
(3C) Such provisions may be made by means of a contract or contracts with a local authority or other non-profit making or commercial body.
(3D) “Local authority” in this section means a county, district, unitary or parish council.’.
I welcome you to the Chair, Mr Hoyle. I think that this is the first time I have served under your distinguished chairpersonship, to use a gender-neutral phrase. Notwithstanding the fact that you and I come from different sides of the Pennines, I am sure that you will exercise justice and mercy if I happen to cross the line from time to time—if that is possible between people from different sides of the Pennines.
Amendment 54 is a probing amendment, and a similar proposal was discussed, albeit briefly, in the House of Lords, where the Minister prompted more questions than he gave answers. I shall be brief because I know that we have other important matters to debate tonight.
We now know that the Government have effectively given the Secretary of State the power to change the status of schools by order—by fiat or administrative measures—notwithstanding the fact that we seek some form of accountability to local communities, which the Government have denied. Members of the House will know that I was against academies and that I voted against them when they were introduced by my own party. However, at least the previous Government had the merit of saying that schools should be accountable and responsible to local communities, and that their facilities should be as widely accessible as possible.
The concept of the extended school—a school that reaches out into the community, and a community that reaches into the school—was very much at the heart of Labour’s schools provisions. It occurred to me that I should like to know what will happen to schools’ assets that are associated with that community provision. The idea of the extended school is that the school is a facility for the whole community. After all, in the African phrase, it takes a whole village to educate a child—sometimes it takes a child to educate the village, too—so the interaction between the community and the school is important, and lies at the heart of modern educational thinking.
I am pleased that over the years of the Labour Government, many schools in my area developed a series of community activities, and I shall highlight two—I am sure that every hon. Member could talk about what happens in schools in their areas in the same way. At Minsthorpe community college, a gym provided by the Labour Government, the Labour council and the college is open to everybody. A brand new sports hall that was built at the cost of millions of pounds in 2009 is also open to the community at subsidised cost. The college might become part of the Olympic preparations, because it is an Olympic-recognised site, which is a very proud achievement for our whole community. The school also has AstroTurf, which is used by local football clubs, a training and conference centre, beauty training, adult education, and crèche facilities on site and in the local village of Upton. The youngest pupil at the college is three months old, and the oldest is 80 years old. That is the school’s range of provision.
Hemsworth arts and community college has also had millions of pounds spent on it, and it opens every single day in one form or another. Cherry Tree House, a multi-agency drop-in centre, is available to the whole community, the police, the health service and others, and an on-site sports centre is open all year. There is an Ofsted-registered day-care nursery, an adult education learning programme, and a programme of arts that works with all kinds of community groups, which use creative skills that were unimaginable even a few years ago in Hemsworth. There are outreach programmes with local Churches, the skills centre and so on and so forth. That is a description of two schools, but I am sure that every school in every community provides similar facilities.
By tabling amendment 54, I am asking the Government: what do they intend to happen to all that community outreach? I propose that there should effectively be two further aspects to the Bill. First, there should be no less provision to the community than there is on the day of transfer, and secondly, those provisions should be available on at least the same advantageous terms as they are now, meaning that there should be no increase in price or decrease in accessibility. It is a simple proposal.
Tens of thousands of people use community schools in my constituency and throughout the country. The question is: what will happen to those community facilities? After all, they were provided not by the school, but by the whole community, through council tax and central taxation. The Bill ought to make it clear that that community provision should continue—that should be the underlying philosophy of the nature of the relationship between educational institutions and the people who live in a community—and that the pricing should not change.
Paragraph 33(e) of the Government’s proposed model funding agreement allows the academy to
“charge persons who are not registered pupils at the Academy for education provided or for facilities used by them at the Academy”.
I guess that the Minister will say that that is simply a measure to give academies a legal power to charge. However, there are fears, including in the schools that I mentioned and among the people who use them, whom I represent, that fees will increase rapidly, and that the community will be seen as a cash cow. Like many other right hon. and hon. Members, I represent many deprived communities. They, too, are seriously worried about the intentions of some academies.
I mentioned that a similar proposal was debated in the Lords. Lord Wallace of Saltaire, speaking for the Government, said:
“We therefore entirely agree with my noble friend”—
who moved the amendment—
“that it is important for a school to be at the heart of its community and that it should, as far as possible, encourage the community to make use of school facilities in the evenings and at weekends. The place to impose obligations on an academy is through the academy arrangements—either the funding agreement or the terms and conditions of grant. We therefore resist the imposition of this in the Bill but entirely sympathise with the intentions of the amendment.”—[Official Report, House of Lords, 28 June 2010; Vol. 719, c. 1620.]
I guess that the Minister will say the same thing.
There are two ways to deal with this community access issue. One would be for the thousands and thousands of academies—if that is how many are eventually created—to each have their own funding agreement, which would have to be policed separately. If constituents come to my surgery and say that the fees that they used to pay to do French or learn IT, or to use the sports or beauty facilities, have suddenly tripled or quadrupled, where will I turn if the amendment is not accepted? I will have to turn to the Minister and his civil servants, who will have to look at the funding agreement and make a separate enforcement order. This is not releasing schools from red tape, as was suggested a few moments ago by the Minister. It is nationalising the education system and the schools because, instead of schools being accountable to the local authority, or regulated under an amendment of the type that I propose, the Minister will have to take separate enforcement orders for every academy. How can that be the case for a Government who claim to believe in freeing up institutions and the education system?
If the Government are determined to go ahead with the system proposed in the Bill and if they agree with the philosophy that schools should be part of their communities, it would be simpler, more direct and cheaper to put something in the Bill so that each principal and governing body of an academy will understand from the beginning that they have taken over community facilities that the council helped to build, that they have inherited pricing structures, and that they have to honour them. The amendment is not an earth-shattering one, but I want to test the Government’s commitment to their expressed desire to release people rather than bind them up in red tape. The Minister’s answer in the other place opened up a Pandora’s box of national control over an education system that we have always been proud of it being administered locally. The Bill is a reversal of that trend.
Mr Mike Hancock
It is a pleasure to serve under your chairmanship, Mr Hoyle. This is the first time that I have had the honour of speaking when you are in the Chair.
I congratulate the hon. Member for Hemsworth (Jon Trickett) because he makes a very important point. We have had a helpful debate on all the issues over the three or four days of consideration of the Bill, and it has been remarkable how much common ground has been found, even by those who are diametrically opposed to the idea of academies. Several of us have seen the merits of some of the issues, and the debate as a whole has been fair and frank. I suspect that the Minister has also found some of the comments helpful in framing the final form of the legislation and the detail that is provided to future academies.
I support the amendment, because the effect of a large secondary school on the social fabric of a community—with possibly an increased role in the future—is important for social cohesion. I had hoped that we would consider new clause 2, tabled by my hon. Friend the Member for North Cornwall (Dan Rogerson), because that talks specifically about the importance of social cohesion. If that obligation were in the Bill, there would be no going back on the school’s commitment to the community. I have been a governor of schools where the local authority put in money for community facilities—such as a nursery—and bit by bit those services, which were additional to the school, disappeared, because of the weight of numbers. First, we lost the community room, and then the nursery. Those community facilities are not paid for by the education budget, but by the general rate fund—and in large council estates by the housing revenue account—but the pressure of numbers at the school means that they are lost to the community.
The Minister of State, Department for Education (Sarah Teather)
He was talking to his wife.
Mr Hancock
Yes, I was a bit thrown by that. I do not know if there was a domestic going on—
The Chairman of Ways and Means (Mr Hoyle)
Order. Perhaps the hon. Gentleman could stick to the amendment.
Mr Hancock
The amendment is very important because it places pressure on the Minister to spell out exactly what he believes social cohesion should mean, how schools can be best used and whether any concession will be made by the Government in this area. I hope that there is, and I expect that the hon. Member for Hemsworth feels the same.
If academies come into being, the chances of local authorities—which may have “bought into” new schools in the past—to buy facilities in schools will be remote and will not happen very often. It will be important for academies to start to sell themselves to the wider communities, saying what is on offer and inviting people to use it. We do not want to start with the idea that the use of facilities will be restricted. I would hope that Ministers will give us a concession tonight that would lead people to believe that schools will have a newly awakened sense of their responsibility to make a greater effort to bring the community in.
Dan Rogerson
I apologise to you, Mr Hoyle, and to the Committee for not being here for the start of the debate on this group of amendments. I was startled by the efficiency and economy with which the Committee dealt with the previous one.
I welcome the fact that the hon. Member for Hemsworth (Jon Trickett) has raised this issue. It is right that people should look to their local schools for more than the education of young people—or even the education of people throughout their lives. In constituencies such as mine, the rural primary schools are at the heart of the small villages and offer much in terms of facilities and a focal point for much of what happens in the community. In the towns and bigger urban areas, secondary schools offer a similar facility, as my hon. Friend the Member for Portsmouth South (Mr Hancock) said. I completely understand the concerns that the hon. Member for Hemsworth has raised, on behalf of his constituents and people across the country watching this debate, about facilities that they are accustomed to having access to, for a whole range of purposes, perhaps being affected.
I do not have an academy in my constituency, so I bow to the experience of hon. Members who do as to how academies can continue to be at the heart of their communities. However, I would hope that we could have a response from the Minister to the issues raised by the hon. Member for Hemsworth, to reassure people that there will be something in the funding agreement—as we have heard, Government spokespeople in the other place suggested that that would be the way forward—if not in the Bill itself, to ensure that there is a duty on those schools to continue to engage with their local communities.
We have provision in the Bill not just for the transition of existing maintained schools into academies, but for new schools. We have already had a debate about whether some capital resource might be available to help those schools get under way. I hope that that could be kept to a minimum and that where people come forward wishing to provide those services, they would bring with them the determination to provide such facilities themselves. However, if there is a drawdown of money from the state system, as it were, the relevant duties and responsibilities must lie with those people, because they will be wanting to make a contribution to the education of young people in their communities, and I would hope that they should also be at the heart of those communities.
Amendment 54 seeks to place that commitment in the Bill, particularly with regard to facilities. I hesitate to get into a debate on the new clause standing in my name, which my hon. Friend the Member for Portsmouth South mentioned—we may reach it this evening; I am not sure—but there are related issues, which I hope you will permit me to mention, Mr Hoyle, that go wider than just the facilities. My hon. Friend referred to social and community cohesion, on which I hope the Minister will have had a chance to reflect.
With regard to the use of the facilities that the hon. Member for Hemsworth has set out in his amendment, there is a concern that if schools that are considering going down that route are to be held in law to be responsible for providing them following a change, they might seek to reduce such facilities or run them down. I hope that they would not, because all schools, whether they are undergoing the process or not, will want to be at the heart of their communities. However, behind the amendment is a concern that a school might wish to restrict access a little. My concern is that accepting the amendment as drafted, with all the caveats that the hon. Member for Gedling (Vernon Coaker) will no doubt raise on Report—perhaps I can cut in now, before we get there—will mean that schools would be encouraged to run down the community activities that they offer, because they would want to keep to a minimum what they would have to do afterwards. The amendment might therefore have the opposite effect.
Also, the courts would presumably then become the final arbiter of whether a school was keeping its swimming pool open—if it had a swimming pool—for the same number of hours as it had been a little while ago. We could have schools repeatedly going back to court. I know that that is not the intention of the hon. Member for Hemsworth. I am merely saying that his amendment is a chance to probe the Minister’s intentions and insist that, wherever possible, we should have as much in the guidelines or the funding agreement, which is probably the way to do things, to reassure people that schools will continue to be at the heart of their communities, no matter how they receive their state funding—whether through a maintained set-up or the newer, academies option.
I hope that the Minister will indicate his support for that, but also place on record the fact that it will apply to any new academies, as well as to those formed by existing schools transferring across.
Mr Iain Wright
May I begin by saying what a pleasure it is to serve under your chairmanship, Mr Hoyle?
I will be brief, because my hon. Friend the Member for Hemsworth (Jon Trickett) and the hon. Members for Portsmouth South (Mr Hancock) and for North Cornwall (Dan Rogerson) have said all that needs to be said about amendment 54. I welcome the amendment, which was tabled by my hon. Friend. He has rightly expressed the concern about the risk that community facilities—provision that could and should be used by partnering schools or the wider community—could be stopped as a result of an academy order. All three hon. Members who have spoken in this debate have said how important such facilities are to social cohesion.
A further point is that in times when public finances are tight, the potential saving from having extended schools with those provisions is immense. There could be savings to the NHS, from having that social network in place, to the Home Office and police budgets, from early intervention, or to the social care budget. Those savings could be huge, and they all stem from the idea of an extended school that opens out into the community, providing an open and collaborative range of offers. However, there is nothing in the Bill that might safeguard that. I am concerned about that, which is why I welcome the amendment. I know that it is a probing amendment, as my hon. Friend said. However, I hope that the Minister can reassure the Committee that what is in the Bill will safeguard what is available for the community, because the whole of society can benefit as a result.
Mr Gibb
Amendment 54 seeks to ensure that each academy order contains provisions that make the school’s facilities available for community use once the school has converted to an academy. We agree on the importance of schools being at the heart of their communities. We would want to encourage the community use of school facilities. That is why the model funding agreement, which has been made available in the Libraries of both Houses and on the Department’s website, requires academies
“to be at the heart of their communities and to share their facilities with other schools and the wider community”.
That could include a wide range of initiatives—for example, making the school’s sports facilities available for local groups to use, offering adult education after hours, and engaging staff in outreach work across other local schools. It is clear from the provisions in academy arrangements that we are committed to academies being a central resource to their local communities. That is also borne out by our expectation that all outstanding schools commit in principle to working in partnership with a weaker school, as part of their applications to become academies.
However, it would not be appropriate for every academy order to make such provision. Academy orders are intended to be the documents that confirm a school’s conversion, and will contain key pieces of information pertinent to the conversion, depending on the circumstances of each school. We believe that the place to impose obligations on an academy is through the academy arrangements, in either the funding agreement or the terms and conditions of grant. That is consistent with the approach of the previous Government.
The hon. Member for Hemsworth (Jon Trickett) talked about the gym and the sports facilities in his local school, and asked whether it could be made a requirement that there should be no less provision to the community than existed at the date of the transfer. He wanted to put that in the Bill, which I have explained would be excessive. He also raised the issue of the fees charged for those sports facilities. Again, his fear is that an academy would raise those fees in order to raise further funds for the academy or the school. However, all the issues that he has raised are issues for the funding agreement. There is no reason why those facilities cannot continue. If the issue is shared facilities between the school and the local authority, these will be subject to discussion as part of the conversion process. On the wider issue of charging, charging that is allowed is limited, as he knows, and will be equivalent to the money that maintained schools are also entitled to raise for out-of-hours-type activities.
I suppose that the issue at the back of the hon. Gentleman’s mind is the concern that somehow academies will be less community-minded than the maintained schools that they replace—that somehow they will gouge out those facilities used by local residents or the out-of-hours evening classes that they attend. I see no evidence from the academies that I have visited around the country that that is their attitude. They are just as much a part of the community as the maintained schools that they are replacing.
The hon. Gentleman should be assured, certainly on the basis of the statements that I am now making to the Committee, that it is not the Government’s intention that academies should become islands unto themselves, charging the maximum that they can to raise funds for their facilities. They will continue to be part of the community, concerned about the community, and wanting to share their facilities with the community.
I want to turn now to the points raised tangentially by my hon. Friends the Members for Portsmouth South (Mr Hancock) and for North Cornwall (Dan Rogerson). They both raised the issue of community cohesion. It is our view that the funding agreement will already include that requirement, using the phrase that I have just read out about being at the heart of the community and sharing facilities with the community. I am also able to help my hon. Friends by adding to the funding agreement an explicit requirement that academies will be required to be at the heart of their communities, to promote community cohesion and to share their facilities with other schools and the wider community. I hope that, in the light of those few words and the arguments that I put forward earlier, the hon. Member for Hemsworth will withdraw his amendment, which he described as a probing amendment.
Jon Trickett
I am grateful to the Minister for the way in which he has presented his case to the Committee, and I do not wish to press the amendment to a vote. He has had the opportunity to put the Government’s views on record, and they will no doubt form part of any future debate when academies begin to operate. I predict, however, that the monitoring system he is introducing will be more expensive, more bureaucratic and more top-down than the present system of accountability of schools to their local communities through the local authorities, and that is deeply regrettable. With that, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Iain Wright
I beg to move amendment 79, page 4, line 8, at end add—
‘(8) Before making an Academy order in respect of a maintained school under this section, the Secretary of State shall consult with—
(a) the local authority,
(b) any other local authority who would in his opinion be affected by the making of an Academy order,
(c) teachers and other staff at the school and their representatives,
(d) parents and pupils of the school and the other schools in the community, and
(e) such other persons as the Secretary of State considers appropriate.’.
The Chairman of Ways and Means
With this it will be convenient to discuss new clause 7—Social cohesion—
(1) Before a school makes an application for an Academy order or an Academy arrangement with an additional school the relevant local authority must be asked to assess the impact of Academy status on—
(a) admissions in the local authority area where the school is situated;
(b) funding between all publicly funded schools in the local authority area where the school is situated; and
(c) social cohesion in the local authority area where the school is situated.
(2) The impact assessment in subsection (1) should be made with regard to any existing policies the local authority or local schools forum have in relation to (a), (b) and (c).
(3) Before making an Academy order or an Academy arrangement with an additional school the Secretary of State must have regard to the impact assessment in subsection (1) made by the local authority.’.
Mr Wright
With this amendment and new clause 7, we return to a subject that we have discussed time and again in this brief Committee stage. One of the most fundamental weaknesses of the entire Bill is its wholly inadequate provision for consultation. Clause 4 sets out the process for the Secretary of State to consider and approve an academy order. It also sets out the criteria by which an application may be considered. The two criteria are that the governing body has applied or that the school is eligible for intervention. This provides no role for the local community or for parents to ask for intervention, however. Time and again this afternoon, the point has been raised about the lack of consultation for local stakeholders, especially parents. We believe that local authorities, communities, teachers, trade unionists and, most importantly, parents should have a role in calling for intervention.
Inherent in the Bill is a massive risk of creating a two-tier system that will divide rather than unite communities, and that will set deprived communities against affluent neighbourhoods. As I said in Committee last week, the Bill could ensure that the most important relationship was between the individual school and the Secretary of State, rather than between the school and its local community.
We have just been discussing amendment 54. One of my concerns is that the Bill, as it stands, is a highly centralising piece of legislation whose focus is firmly on the school and the Secretary of State, rather than on the wider area. There is also a risk that the Secretary of State intends to use the freedoms that academies allow to give only successful, prosperous schools the flexibility and resources to thrive. Those freedoms could well be provided at the expense of the vast majority of schools, which could face cuts to support services and experience severe disruption. The fragmentation of our schools system would be a real step backwards for social progress and social cohesion.
Amendment 79 would ensure that, before making an academy order in respect of a maintained school, the Secretary of State would be obliged to consult the local authority, teachers and other staff at the school, parents and pupils of the school and the other schools in the community, and any other such persons who are considered appropriate. In addition, he would have to consult other local authorities that might be affected by an academy order. This is most common, although not exclusively so, in London, where pupils in a particular school may be drawn from a wide variety of local authorities. Demand for places at a school in a particular local authority, especially a popular school, can affect the demand, and hence the viability, of schools in other boroughs. Surely the Minister accepts that it is right for those affected local authorities to be consulted as well. Proposed new subsection 8(b) would ensure that any other local authority that might be affected by the making of an academy order was consulted. For those reasons, we believe that amendment 79 offers an important means of injecting more challenge, scrutiny and consultation into the proposed legislation.
We believe strongly that local authorities have a strong role to play in helping every child to succeed. They do not, and should not, run schools, but they can provide a strategic function, and commission provision across an area that is relevant, suitable and in keeping with the local authority’s vision for the shape of their economy. Local authorities can ensure that local services are of a high quality and meet the needs, ambitions and aspirations of children and young people. The actions or, at times, inactions of local authorities can also be held to account by local people in a truly democratic fashion, as a means of securing effective, efficient and fair local public services.
We on the Labour Benches and, I suspect, some on the Government Benches, believe that local authorities are best placed to facilitate partnerships across different schools and drive forward improvement and rising standards. I said “I suspect”, but it is fair to say that all Liberal Democrats subscribe to that view. I quote page 37 of their 2010 general election manifesto, which states:
“Local authorities will not run schools, but will have a central and strategic role, including responsibility for oversight of school performance and fair admissions. They will be expected to intervene where school leadership or performance is weak.”
We can all agree with that sentiment. I can more or less agree, too, with the next bullet point in their manifesto:
“We will ensure a level playing field for admissions and funding and replace Academies with our own model of ‘Sponsor-Managed Schools’. These schools will be commissioned by and accountable to local authorities and not Whitehall”.
That is an important commitment, on which every Liberal Democrat Member of Parliament was returned to the House. It is important that the Committee has the opportunity to vote on the matter, so that Liberal Democrat Members can support their manifesto commitments to a level playing field on admissions and funding and on social cohesion. On that basis, I give notice that I want to test the Committee’s opinion with regard to new clause 7.
Ian Swales (Redcar) (LD)
What did the hon. Gentleman think about the provisions under discussion when the Labour Government introduced academies? As far as I know, none of the provisions apply to the current academy system.
Mr Wright
I do not want to return to the Second Reading debate, but the purpose and definition of academies under the Bill differ fundamentally from those of the academies introduced by the Labour Government. We gave freedoms and flexibilities to poorly performing schools in deprived areas. The Bill is a completely different kettle of fish, and I think that the hon. Gentleman agrees with me.
Under new clause 7, before a school can make an application for an academy order—or arrangement with a free school—local authorities would be asked to assess the impact of such an order or arrangement on admissions, the funding between all state-funded schools and social cohesion in an area. As the hon. Member for North Cornwall (Dan Rogerson) ably articulated, social cohesion with regard to education is vital. There is a huge risk inherent in the Bill that social cohesion will be threatened and compromised. The new clause addresses that.
Andrew George (St Ives) (LD)
The hon. Gentleman makes a strong case, referring to Liberal Democrat party policy. In new clause 7(1)(a), he refers to the admissions policy and the impact on admissions to schools. Were he successful in getting the new clause accepted, what would he envisage as the best solution in circumstances in which, inevitably, parents will be disgruntled that their child is unable to gain admission to a local school?
Mr Wright
In my constituency, parents want to get their children into certain popular schools. It is important that the local authority sets out a clear procedure by which admissions will be considered, that there is a good appeals process, and that the schools adjudicator is part of that process. It is important that local authorities are in the driving seat: not running schools, but with borough-wide thinking on admissions. The approach has worked well and can continue to do so.
Earlier today, my right hon. Friend the shadow Secretary of State for Education and the shadow Schools Minister, my hon. Friend the Member for Gedling (Vernon Coaker) wrote to every Liberal Democrat Member, expressing the wish that we work together to amend and improve the Bill by supporting new clause 7. If Liberal Democrat Members feel that they must support the Bill as a whole in keeping with the coalition agreement, I can understand and respect their position, but I hope that there can be cross-party support for new clause 7.
Dan Rogerson
How could I resist the opportunity to respond to the hon. Member for Hartlepool (Mr Wright), who has thrown his glove across the Floor of the House to land at my feet?
The hon. Gentleman is obviously pining for the day on which there is a Liberal Democrat majority Government—[Interruption.] I look forward to working with the hon. Gentleman. Given the way in which his party has conducted itself in opposition, he and his hon. Friends may well be working towards such an arrangement even now.
Let me say, in all seriousness, that the hon. Gentleman is absolutely right to suggest that if the Liberal Democrats had been the majority party, we would have proceeded with the sponsor-managed schools option. However, we are not in that position. As the hon. Gentleman pointed out, we are in a coalition Government with a coalition agreement, and it is clear that some policies emanate from one partner in the coalition and some from the other. That is the way it works in coalition agreements all over the world, in countries where arrangements such as this are far more common than they have been in the United Kingdom, at least for several decades.
I do not think that academies are the answer. I did not think that they were the answer when the hon. Gentleman’s party was in charge of the policy, and I do not think that they will necessarily be the answer for all schools now. However, following the coalition agreement, the Bill contains a series of provisions enabling communities, where there is a will, to allow schools to adopt academy status. It remains to be seen how many will take up the option and what use they will make of it. Amendments were made in another place, notably with regard to the provision of additional schools—which I know concerned the hon. Gentleman in earlier debates—and assessments of the impact on the surrounding area.
Consultation is vital. We have already engaged in a full debate on that issue, and I shall not go over the ground again. I will say, however, that the hon. Gentleman spoke of commitments by a political party in a set of circumstances prior to a coalition agreement which has been published and is available for everyone to examine and discuss. Believe me, people in my constituency and others have been discussing it, and we have had many debates on it. That should not come as a surprise to the hon. Gentleman.
I had the honour of serving in the last Parliament, when the hon. Gentleman stood at the Government Dispatch Box ably standing up for—it must be said—the sometimes slightly dodgy policies that his party was producing. He must have seen us sitting on the Opposition Benches below the Gangway—where his hon. Friend the Member for Gateshead (Ian Mearns) is sitting now—talking to some of his hon. Friends who were then sitting on this side of the Committee. They were sorely tempted to join us. Lord McAvoy, as he now is, would have been there, casting his eye over Labour Members and making sure that that did not happen.
It could be said that we are now in similar circumstances in terms of the way in which this place works, but it can only work, and a Government can only work, when there is an agreed programme. We have an agreed programme, and the Government are proceeding with it. However, I am pleased that the Minister was willing to listen—as was his noble Friend Lord Hill—to Members of our party and our side of the coalition, and to other noble Lords and hon. Members, and to make provision to allay some of the concerns that have been raised.
Vernon Coaker
Let me explain why we consider new clause 7 so important. Subsection (1)(c) refers to
“social cohesion in the local authority area where the school is situated.”
Under the Bill, as part of the funding agreement, if a pupil is excluded from an academy during the year, the academy will keep the funding as if the pupil had not been excluded, but the local authority—or someone else—will have to provide the funding for that excluded pupil somewhere else. It is because of such provisions in the Bill that some of us consider an impact assessment to be vital. Otherwise, when a pupil is excluded, the academy will keep the money and the pupil will become the responsibility of the local authority, which will have no funds with which to carry out that responsibility.
Dan Rogerson
I understand the hon. Gentleman’s point, and I am sure the Minister will want to respond to it in respect of how the funding agreement will work as the academies come into being. However, the hon. Gentleman said earlier that he thinks that academies are a good thing and that if Labour had continued in government, they would have increased in number. [Interruption.] Well, the issue of variance that has arisen between the Government’s proposal and that of the hon. Gentleman is how the academies come into being. Until now they have undoubtedly had an effect on their local area, but there is an issue of critical mass, as many Opposition Members have said: there must be a tipping point at which there is a sufficient number of academies to have a particular effect on the local authority. That would have happened under the hon. Gentleman’s vision for expanding the number of academies as well as under the Government’s, so that is a separate question; it is a question about how many academies we have and what effect they have collectively.
I was tempted to rise and respond to the question of whether the model under discussion is the same as that which the Liberal Democrats have advocated throughout history. It is not of course, but real progress has been made in that the Government have now introduced a Bill that includes a provision to allay a lot of the concerns that many of us have raised, but which also opens a way for communities that feel they want to go in this direction.
I am concerned that scare stories are being told that everybody will want to go for this in a big rush, but I do not think that will be the case. I think that many governing bodies, schools and groups will want to—[Interruption.] Well, the Secretary of State has talked about the huge amount of interest in this programme and I am sure that that is true, but I think that many people will want to see what happens and how things develop before deciding whether to take advantage of the provisions.
Andrew George
My hon. Friend has said that his concerns have been allayed. He will have heard my intervention on the hon. Member for Hartlepool (Mr Wright) in respect of the impact of these proposals on the admissions policies of each of the academies and what will happen when parents are unable to find a place in their local school which happens to be an academy—from whom they can seek redress in those circumstances if they have a justifiable reason to take the matter a stage further. I wonder how my hon. Friend might allay my concerns, given that his concerns in respect of the admissions policy have been allayed. This point is particularly important if we bear in mind the fact that the first academies are likely to be the outstanding schools—those that all pupils would wish to go to.
Dan Rogerson
My hon. Friend raises an important point. He has intervened on both the hon. Member for Hartlepool (Mr Wright) and me, and he will no doubt want to raise his question with the Minister when he responds—indeed, the Minister may well wish to do address it in any case. When talking about fears being allayed, the particular point I was addressing was to do with community cohesion, which is very important. It is about the way in which the existing maintained schools, the new academies that have transferred over and other new school provision that is offered will interact and relate to the surrounding community. There has been a bit of progress on that, which I welcome.
On the tempting invitation from the hon. Member for Hartlepool to support the Labour amendment, I must say that their conversion comes a little late on some of these issues. As my party colleagues, my hon. Friends the Members for St Ives (Andrew George) and for Redcar (Ian Swales), have already said in this brief debate, in respect of how the relationships emerge most of the provisions were in existence and operation under the previous academies programme. I do not think there is any huge difference therefore. The only difference is that this is someone else’s academy programme, not that of the hon. Gentleman.
Mr Gibb
Amendment 79 would require the Secretary of State to consult all those listed in the amendment before making an academy order in respect of a maintained school. As I have mentioned a number of times, clause 5 already requires the governing body of a maintained school wishing to convert to academy status to consult on its proposals. That provision was included in the Bill in response to concerns raised in the other place and in order to demonstrate the importance that this Government attach to consultation. I believe, therefore, that it is unnecessary and inappropriate, not to mention impractical, for the Secretary of State to consult on those same proposals. It should be the school’s decision to become an academy, except in those cases where the school is eligible for intervention. It is our aim to reduce any unnecessary bureaucracy surrounding the academy conversion process, and I believe that potentially duplicating consultation would fall into that category.
We have made it very clear that we believe that schools are in the best position to determine how best consultation should take place. That includes deciding who should be consulted, although some guidance is provided on the website as to who is consulted, and when and how that should be done. We do not intend to provide an inflexible checklist, such as that proposed in this amendment, which would not, in itself, ensure that consultation was any more meaningful.
New clause 7 would mean that before a school makes an application for an academy order or an academy arrangement with an additional school, a local authority must be asked to assess the impact of academy status on admissions, on funding between all publicly funded schools and on social cohesion in the local authority area where the school is situated. It would also mean that before making an academy order or an academy arrangement with an additional school, the Secretary of State would be required to have regard to the impact assessment.
Clause 9 requires the Secretary of State, when deciding whether to enter into academy arrangements with an additional school—an entirely new or “free” school—to take into account the impact of such a school on the existing schools and colleges in the area. We believe that requiring the local authority to consider the impact of an additional school as well is unnecessary and will simply result, again, in the duplication of work. The clause does not include provisions for the Secretary of State to assess the impact of schools that convert into academies. We are clear that schools should convert “as is”; in most cases, it will be the same head, the same staff, the same parents and the same children in the school, but with additional freedoms to innovate and raise standards. Furthermore, the requirement for converting schools to consult means that those other schools in the area may have the chance to make representations on the proposed conversion. Where schools convert “as is” we do not believe, therefore, that the nature of the change is such that there is any need for an impact assessment.
Andrew George
The Minister will have heard my two interventions about the availability of an appeals process where an admissions policy excludes potential pupils from a school before they have been able to gain admission to the school. Under the current arrangements, in most areas the parents can appeal to the local authority if they feel that the decision is unacceptable. What arrangements will apply where an academy has been set up?
Mr Gibb
My hon. Friend will know that the admissions code will apply just as much to academies as to maintained schools, that the admissions appeals code will also apply just as much to academies as to maintained schools and that the co-ordination arrangements will apply too. So the local authorities will hold the ring on admissions in the same way as they do at the moment.
Mr Iain Wright
I may be pre-empting what the Minister is going to say. He has been talking about existing maintained schools converting to an academy, using the phrase “as is” and he mentioned that schools would have the same head, the same estate and so on. New clause 7(1) states:
“Before a school makes an application for an Academy order or”—
this is the point on which I seek clarification—
“an Academy arrangement with an additional school”.
That refers to a free school. Will the existing arrangements still apply in respect of a free school too? Could the Minister provide clarity on that?
Mr Gibb
I shall seek to do that during the rest of my speech. If I do not get round to the hon. Gentleman’s point, I shall write to him.
We believe that the impact of an increase in academies and the freedoms they provide will lead to improvements in standards across the education sector as the best heads and the best schools drive improvements and expertise. The noble Lords were concerned about schools changing their age range and the Bill was amended to allay those concerns. Subsection (4) of clause 9 makes it clear than when a maintained school becomes an academy under the current school closure processes, further to the Education and Inspections Act 2006 and not further to an academy order, when the age range is not like-for-like, the school would be classed as an additional school, so the Secretary of State would be required to evaluate the impact. That would include, for example, an academy created as a result of the amalgamation of two or more schools or an 11-to-18 academy that replaced an 11-to-16 maintained school, if that involved a closure rather than a conversion. Any school wishing to add a sixth form would need to follow the relevant statutory provisions.
The answer to the question whether the admissions code and the appeals code will apply to free schools, too, is yes, it will. The problem with the Minister’s opening remarks—
Mr Gibb
Sorry, the shadow Minister. It is all very new.
The problem with the shadow Minister’s speech in moving the amendment was that it was written, I think, before he heard of the Government’s intention to put in the funding agreement an explicit requirement to promote community cohesion. On top of that, it already requires academies to be at the heart of the community. He cited the Liberal Democrat manifesto commitment that local authorities will not run schools. That is a view common throughout the coalition and we also agree that local authorities should be the champion of parents and pupils, championing school improvement and challenging rather than defending underperforming schools. In an old politics kind of way, he is trying to drive a wedge into fissures in the coalition where no fissures exist—and he is doing so unsuccessfully.
The point made by the hon. Member for Gedling (Vernon Coaker) about excluded pupils is wrong. He alleged that the funding for an excluded pupil stays with the academy. The funding follows the pupil when the pupil is excluded and that is a requirement in the academy agreement.
With those few words, I hope that I have persuaded Opposition Members and those elsewhere to withdraw their amendments.
Mr Iain Wright
I apologise to the Minister on the subject of the concession that he has made on social cohesion and community cohesion in the funding agreement. I had meant to mention that, but I was wrapped up in helping Liberal Democrats. I apologise; that is a welcome concession.
The hon. Member for North Cornwall (Dan Rogerson) went so far in tempting me to think that he does not agree with academies, but then he pulled back considerably. He mentioned, rightly, that coalition—like all politics—is a question of compromise and negotiation, but I think that the Liberal Democrats are getting a bit of a raw deal in the coalition agreement when it comes to education policy. I will readily admit that today there has been the announcement on school funding and the pupil premium and I am pleased to see the Minister of State, the hon. Member for Brent Central (Sarah Teather), on the Treasury Bench. I pay tribute to her for pushing that forward.
In every other sense, the emphasis has been on Conservative party policy, with an emphasis on free markets. There has been a rush to the markets and a lack of consultation with and consideration for the wider community that is at odds with what the Liberal Democrats want. I shall still provide the hon. Member for North Cornwall and his hon. Friends, who seem readily poised to join us in the appropriate Lobby, with the opportunity to ensure that the commitments that were made in the Liberal Democrat manifesto in the general election, only a matter of weeks ago, can still be fulfilled.
I am not content with the Minister’s explanations in terms of new clause 7. I think it is very important and I will want to press that to a vote, but I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 ordered to stand part of the Bill.
Clause 5 ordered to stand part of the Bill.
Clause 16
Pre-commencement applications etc
Question put, That the clause stand part of the Bill.
Mr Gibb
We have had an interesting week of debates on the Bill, and I thank all hon. Members who took part, particularly my hon. Friends the Members for Penrith and The Border (Rory Stewart) and for South Basildon and East Thurrock (Stephen Metcalfe), who made their maiden speeches during these debates. I should also like to thank the Minister of State, Department for Education, my hon. Friend the Member for Brent Central (Sarah Teather), for her help, and the right hon. and hon. Members on the Opposition Front Bench for their careful and thorough scrutiny of the Bill.
I thank officials in the Department for the long hours that they have spent on the Bill during its passage through the other place and this House, and for their support of my right hon. and hon. Friends. We should also thank the Chairs of the Committee: Mr Evans, Mr Caton, you, Mr Deputy Speaker, and Ms Primarolo, whom my hon. Friend the Member for Portsmouth South (Mr Hancock) lovingly referred to as “Miss P”. I am grateful to my noble Friend Lord Hill, who skilfully steered the Bill through the other place just days after being appointed a Minister, and to my hon. Friends and noble Friends who have improved the Bill and the model funding agreement in both the other place and this House.
Throughout the process we have been keen to listen to concerns, particularly, though not exclusively, those of our partners in the Liberal Democrat part of the coalition. Amendments in the other place have given children with special educational needs greater rights to admission to academies than existed in previous academies legislation, and new requirements for funding for low-incidence special needs have been added. New duties to consult have been included in clauses 5 and 10, and the Secretary of State will now be obliged by statute to take into account the impact on other schools of any new school established under the Bill. That is now in clause 9.
My noble Friends have added greater parliamentary accountability through an annual report to Parliament, which will also enable us to analyse issues of concern to my hon. Friend the Member for North Cornwall (Dan Rogerson), such as the viability of primary schools that opt for academy status. He made a compelling case for increasing the number of parent governors, so as I mentioned earlier, the model funding agreement will be changed to increase the number from one to two. Opposition Members have successfully ensured that the funding agreement includes a requirement for looked-after children to have a designated member of staff.
Bob Russell (Colchester) (LD)
Will the two parent governors be elected by other parents or appointed?
Mr Gibb
My understanding is that they will be elected, but if I am proved wrong I will write to my hon. Friend.
After 22 hours in Committee and nine hours on Report in the other place between 7 June and 13 July, and after 19 and a half hours of Second Reading and Committee in this House, not including this afternoon and evening, we finally reach Third Reading of a Bill that, in the words of my right hon. Friend the Secretary of State,
“grants greater autonomy to individual schools…gives more freedom to teachers and…injects a new level of dynamism into a programme that has been proven to raise standards for all children and for the disadvantaged most of all.”—[Official Report, 19 July 2010; Vol. 514, c. 24.]
I shall start by saying what the Bill is not about. It is not about a “full-scale assault” on comprehensive education—a ludicrous claim by the shadow Secretary of State in The Guardian on Saturday. We believe in comprehensive education and are committed to it, and the Bill will strengthen it. Nor is it about scrapping the admissions code, another spurious claim about the Government’s education policies by the shadow Secretary of State. We are committed to fair admissions through the code, and all academies will be bound by it through the model funding agreement.
Nor is this Bill about the creation of a two-tier education system. Two tiers are what we have today—the best performing state schools and the worst. The independent sector, which educates just 8% of children, is responsible for 44% of all A* grades in GCSE French. It educates just 10% of 16-18 year olds, but is responsible for 35% of all A grades in A-level physics.
The Bill offers all schools the opportunity to acquire the kind of professional freedoms that have proved so successful not only in the independent sector, but in the city technology colleges and in academies. After 20 years of independence, CTCs are among the most successful schools in the country. On average, in those schools, 82% achieve five or more GCSEs at grades A* to C, including English and maths. In those academies that have been open long enough to have had GCSE results in 2008 and 2009, a third have GCSE results that improved by 15 percentage points compared with their predecessor schools.
There have been 1,958 expressions of interest from schools in all parts of the country. Of those 1,071 are from schools graded outstanding by Ofsted. Many of the heads and governing bodies of those schools are hungry for the freedoms in the academies legislation that the previous Administration introduced. They are in a hurry to have them by September and, for those schools that are ready and able, so are we.
We are in a hurry because we do not think that it is right that 40% of 11-year-olds leave primary school still struggling with reading, writing and maths. It is not acceptable that nearly three quarters of pupils eligible for free school meals fail to get five or more GCSEs or equivalents at grades A* to C, including English and maths, or that 42% of those eligible for free school meals fail to achieve a single GCSE above grade D.
I know that there are some concerns among hon. Members of all parties about the future role of local authorities if all schools become academies. However, I should point out that there are 203 academies out of 3,300 secondary schools and some 17,000 primary schools. It will be many years, if at all, before all those schools acquire academy status. The Bill is permissive, not prescriptive or mandatory. We see a new and stronger role for local authorities emerging over the years as champions of parents and pupils, challenging rather than defending underperforming schools. My right hon. Friend the Secretary of State has established a ministerial advisory group to take that forward and written to all education authorities seeking views.
The Bill is the first step in the coalition’s ambitious plans to raise standards in all our schools. We want parents not to have to worry about the quality of education that their children will receive at their local school. We want behaviour in all schools to be as good as in the best. That is why we are clarifying and strengthening teachers’ powers and abolishing the statutory requirement for 24 hours’ notice for detentions. We want a teaching profession with renewed morale and confidence, no longer struggling under the yoke of monthly Government initiatives and ever-demanding bureaucratic requirements.
The Bill is about trusting the professionalism of teachers and head teachers. It is about innovation and excellence, about giving parents a genuine choice and children the opportunity for a better future. It is a short Bill, but its impact will be long lasting. I commend it to the House.
Ed Balls (Morley and Outwood) (Lab/Co-op)
It is customary to commence a Third Reading debate with congratulations to hon. Members of all parties on the excellence of their speeches; to departmental officials and external advisers on the cogency of their briefing, and to you, Mr Speaker and your Deputies on your conduct of the proceedings. Tonight must be no different. Therefore, on behalf of the shadow Education Ministers and all Labour Members, I commend all those who have taken part in the debates, with a special mention to my hon. Friends the Members for Gateshead (Ian Mearns) and for North West Durham (Pat Glass) for their contributions, as well as—the list is only partial, from the speeches that I have heard—the hon. Members for Brigg and Goole (Andrew Percy), for Beverley and Holderness (Mr Stuart), for St Ives (Andrew George), for North Cornwall (Dan Rogerson), for Portsmouth South (Mr Hancock) and for Bradford East (Mr Ward).
However, normally those tributes are paid after weeks of post-Second Reading scrutiny—after many days of Committee deliberations and hours of scrutiny on Report. Those weeks of debate in Parliament are important because, although consensus may not be reached on every point, everyone can feel that they have raised issues, aired concerns and had their say. Not so with this Bill. In the opinion of my hon. Friends and I, and many outside experts, the flawed and rushed provisions in the Bill risk ripping apart the community-based comprehensive education system that we have built in this country over decades. We fear that the Bill will make things worse for our schools, our children’s futures and the cohesion of our communities, yet it has been railroaded through from Second Reading to Third Reading in just seven days, with just three days in Committee, and following unprecedentedly constricted debates in the other place.
There has been no time for proper debate or scrutiny, no Report, and no amendments have been allowed, and hon. Members on both sides of the House have had no opportunity to correct some of the Bill’s worst excesses. Three weeks ago, we had the unedifying sight of the Secretary of State having to apologise twice to the House because of his rushed and discourteous handling of his school buildings cancellation. It is a pity that he has not learned that rushing through unfair or ill-thought through policies does him no credit.
As I said on Second Reading just seven days ago, the Secretary of State was clearly fearful of what proper parliamentary scrutiny would throw up about the Bill. As the hon. Member for Southport (Dr Pugh) said earlier from the Government Benches, “We have the spectacle of Ministers who have already told us that they will accept no amendment, period, and the sight of Whips new and old cracking their knuckles off-stage and perfecting basilisk-like stares in the mirror.”[Hon. Members: “What?”] I have no clue what that means, but it sounds very bad to me. If the hon. Gentleman were in the Chamber, I would be happy for him to intervene to tell us. He is a Liberal Democrat, so clearly, among those on the Government Benches not only the Chair of the Select Committee on Education is deeply critical of the handling of the Bill.
The Opposition are very proud of the biggest school-building programme since the Victorian era, of the best generation of teachers we have ever had in our country, and of the hard work of children, parents and teachers. That has delivered the biggest increase in standards for many years. We have gone from fewer than half of schools not reaching the basic standard to just one in 12 over the past 10 years. It is our firm view that the Bill will create an unfair, two-tier education system, and gross unfairness in funding. Standards will not rise but fall, and fairness and social cohesion will be undermined.
Chris Skidmore (Kingswood) (Con)
The right hon. Gentleman mentioned that he is proud of bringing up a new generation of teachers. The Bill is principally about handing power back to teachers to set up good new schools. Why is he running scared of that?
Ed Balls
The most important issue is standards, not structures, and the Bill is all about structural change that cuts out consultation with teachers, governors, parents and communities, and that undermines the ability of people to ensure that their local area has a proper spread of schools. The fact is that the Bill is a complete free market free-for-all. That is why I am critical of it.
There have been some words of reassurance and promises of reviews to come, but none of any substance. The explanatory notes to the Bill state:
“The Secretary of State expects that a significant number of Academies will open in September 2010”,
but we now know—we heard it this afternoon—that such are the rushed provisions of the Bill and the lack of substance to those expressions of interest, no academies at all will open this September. We are rushing this through purely to have orders agreed by next September. This is just an attempt to bounce the coalition partners into agreeing before they wake up to exactly what is going on.
I shall explain that in more detail. What has become abundantly clear in the short time that we have had to debate this Bill is that, by dropping any pretence at consultation and clearing away the role of the local authority entirely, the Secretary of State has made it possible, through this legislation, to divert billions of pounds from existing school building, the Building Schools for the Future programme, into the creation of new, additional school places through the setting up of new, free market schools, even when there are already too many school places, creating a chaotic free market.
Chris Skidmore
The right hon. Gentleman is right that it is standards, not structures that are important, so I find it hard to believe his new obsession with the BSF programme, which he never had the money for in the first place. But he did not answer my first question: why is he running scared of allowing teachers to set up schools? Why is he running free—I mean scared—of giving teachers that freedom?
Ed Balls
I am not running free, or even scared. I support new schools where we need new schools, but I have been to the Brunel academy and seen the huge boost to the aspirations of the children in that part of Bristol from the first ever BSF programme. I also went to Knowsley last year and opened a new BSF school. I asked two year 9 pupils what they thought of the school. They said that they never thought that anybody would think that they were sufficiently important to have a school like that built for them. That boost to aspiration, hope and expectation has been taken away from 700 schools and from 700,000 children all around the country, and that is why I am critical of this Bill and that decision. This is paving legislation for the new free market schools.
I wish to remind the House of the amendments that have been rejected by the Government in the few hours that we have had to debate this Bill because of the no amendment rule—
Mr Mike Hancock
Like the shadow Education Secretary, I think that this Bill is a threat to comprehensive education. But I thought that his Government’s Bill on academies was also a threat to comprehensive education. What is the difference now?
Ed Balls
The only similarity between our policy on academies and the new policy on academies is that the Secretary of State has pinched the word “academy” and attached it to the new schools he wishes to establish. Our academies were set up in the most disadvantaged areas, not the most affluent areas. They were set up with the agreement of local authorities rather than to avoid any role for local authorities. They taught the core parts of the national curriculum, including sex and relationship education, rather than opting out entirely from the curriculum. They had an obligation not just on looked-after children, but to co-operate to stop competitive exclusions in an area, and that has been entirely removed by this Bill. There was a requirement for our academies to have a sponsor, and that has been removed. We had a requirement for proper consultation with the community, also removed. Our academies programme was about tackling disadvantage. The new policy is about encouraging elitism and enabling the affluent to do better. That is why it is so deeply unfair.
Gavin Barwell (Croydon Central) (Con)
The right hon. Gentleman has just said that the academies that the previous Government set up were in disadvantaged areas. In the London borough of Croydon, he approved two academies in two of the most affluent wards in the borough.
Ed Balls
The fact is that our academies were disproportionately set up in disadvantaged communities. They disproportionately took in more children on free school meals than the catchment area required, and they achieved faster-rising results than the average. That was social justice in action; what we are seeing with this Bill is the opposite. The freedoms and the extra resources in the Bill are going to outstanding schools, not schools that need extra help. They are going to schools that have more children from more affluent areas, fewer children with free school meals, and fewer children with special needs and disabilities, even though they will get pro rata funding. That is not social justice being put into action; it is social injustice. That is why the Bill is deeply offensive to people on the Opposition Benches and, I think, probably to many on the Government Benches as well.
Ed Balls
If the hon. Gentleman looks at the facts over the past decade, he will see that of the 20 local authorities that had the biggest increase in results, half were in the poorest 10% of boroughs in the country, all of which were in London. The London Challenge programme and our academies focused on tackling disadvantage. Of course there is a long legacy of social division and inequality in our education system. We were addressing it; the Government are going to re-entrench it. That is the difference.
Let us look at the amendments that—[Interruption.] The Secretary of State, who chose not to participate in this Third Reading debate—[Interruption.]
Mr Speaker
Order. Let me say that we have 15 minutes left to complete our consideration of Third Reading. We do not have enough time to go back to 1931 and Ramsay MacDonald.
Ed Balls
It would have been better if the Secretary of State had contributed to this debate, given that it was so truncated. The only thing that I will say, Mr Speaker, is that in 1931, Ramsay MacDonald cut public spending to try to get us out of a recession. That caused a depression, and I am afraid that he ended up going into a coalition with the Conservatives. In that debate the Liberal Democrats opposed the cuts that were being made; unfortunately, this time they are propping up the coalition. However, I did not raise the issue of Ramsay MacDonald, Mr Speaker, so I will move on.
Let me look at the amendments tabled that have been rejected. First—
Mr Speaker
Order. Let me gently say to the shadow Secretary of State—this is a point often not fully comprehended on either side of the House—that contributions to Third Reading debates have to be on the remaining content of the Bill, and must not focus on matters that have been excluded from it. But I know that the right hon. Gentleman will reorient his remarks readily.
Ed Balls
In that case, Mr Speaker, I will make no reference to the fact that a requirement that the admissions code should attach to such schools was excluded from the Bill, nor will I refer to the fact that parental consultation could have been strengthened, but that that was ignored.
Let me come to the substance of the Bill as we find it. The thing that worries me most is this—
The Secretary of State for Education (Michael Gove)
That Unite backed Ed Miliband.
Ed Balls
The right hon. Gentleman makes his jokes, but as Secretary of State he is, in my view, presiding over the most profoundly unfair piece of social engineering in this generation, and in the end he will be ashamed of what he has done this evening and over these past few days. That is my strong view. The contemptuous way in which he has treated the House of Commons in recent weeks is a matter of great shame to him as well.
In any case, the Liberal Democrats appear to have completely forgotten their manifesto, which declared that
“we will ensure a level playing field for admissions and funding and replace Academies with our own model of ‘Sponsor-Managed Schools’. These schools will be commissioned by and accountable to local authorities and not Whitehall”.
However, the Bill entirely removes any role for local authorities. We are told now by the Schools Minister that there will be a new ministerial advisory group. However, the fact is that cutting out the role of the local authority will mean that there will be no check on the pressures for free market schools to lead us not just to massive unfairness, but to what we fear will be much greater social segregation in the coming weeks, months and years. I fear a new education social apartheid arising from this Bill.
I am very fearful, and that is why I say to Government Members that this Bill is the greatest threat to our state education system in 60 years. It is a Bill of great significance, but it has been rushed through in a way that is an abuse of Parliament. As I said a moment ago, I think that the Secretary of State should be ashamed of himself. This evening we challenge the coalition, Conservatives and Liberal Democrats alike, to put a halt to this deeply ideological, free market experiment before it is too late, and to vote against the Third Reading of the Bill.
Gavin Barwell
I spoke in the Second Reading debate and sat through most of the Committee stage because one of the main issues in my constituency is standards in schools, particularly secondary schools. The former Secretary of State, the right hon. Member for Morley and Outwood (Ed Balls), approved a number of academies in the London borough of Croydon, often in schools with a deprived pupil cohort that were in affluent areas. That catchment could change over time as the schools improve. He was right to do that, but the question that I want to ask Labour Members is why they want to limit to underperforming schools the improvements that the academy programme has delivered. Why should not good, satisfactory or outstanding schools also seek to improve? In my borough, one third of parents who choose to send their children to a state primary school do not go on to send them to a state secondary school in Croydon. They look to selective schools outside the borough and to schools in the independent sector. I would have thought that Opposition Members wanted improvements in schools right across the board in my borough, to give parents the confidence to send their children to local schools.
In Croydon, we had the Harris city technology college. It was one of the original CTCs, and it is now the Harris academy Crystal Palace. More than 500 parents wanted to send their children there this year—more than twice as many as to any other school in our borough. We also have schools such as the Coloma convent school, Archbishop Tenison’s high school and Wolsey infants school. These are outstanding schools that want to take up the opportunities that the Bill offers.
The shadow Secretary of State spoke of the importance of spreading opportunity in disadvantaged areas. Wolsey infants school is in the middle of the town of New Addington in my constituency—one of the most deprived parts of London. It is an outstanding school that is doing a fantastic job for pupils from a deprived background, and it wants to take on the additional freedoms that academy status will offer. Why do Opposition Members want to deny that school that opportunity?
Beyond those outstanding schools, we have Shirley high school and St Mary’s junior and high schools. They are good or satisfactory schools that have also expressed an interest in taking on the opportunities that academy status offers. Why should they be denied that opportunity? Why should it be reserved solely for a certain class of school?
We also have to accept that there are local authorities that are not as progressive as my own, and that do not take action to deal with underperforming schools. Indeed, the shadow Secretary of State took a great deal of action when he was Secretary of State to push councils into taking that kind of action. The Bill will give freedom to parents who have been told, year after year, that there is no place for their child in the schools that they want them to go to. It will give them the opportunity to find a place for their child in a satisfactory school. Local authorities should be doing that already, and those that are taking the right action and driving up standards have absolutely nothing to fear from this legislation, but it will give an option to parents who have not been given that opportunity, year after year.
I am conscious that other hon. Members want to speak in the debate, so I shall draw my remarks to a close. I welcome the debate that we had in Committee, and I paid tribute earlier to the hon. Member for Gedling (Vernon Coaker) for his contribution. I disagree with him about primary schools, and with his point about surplus places being a bar to academies being set up. He was right, however, to raise the issue of special educational needs. We have had a long and detailed debate, which has added something to the Bill. I shall be grateful to see the Bill pass into law because it will drive up opportunities for pupils right across my constituency.
Glenda Jackson (Hampstead and Kilburn) (Lab)
I was interested to hear the contribution of the hon. Member for Croydon Central (Gavin Barwell). He spoke eloquently of the freedoms that will be presented to the schools in his constituency, but he markedly failed to give details of what those freedoms would be, as indeed has the Bill. One of the freedoms is said to relate to expansion. We all have schools in our constituencies that are oversubscribed. However, the capacity for expansion, which would enable parents in my constituency to send their children to schools with very high standards, was completely sabotaged by the Secretary of State cancelling the Building Schools for the Future programme, so capacity is still an issue.
I was interested to hear the Minister of State, Department for Education, the hon. Member for Bognor Regis and Littlehampton (Mr Gibb), making a direct comparison between comprehensive state education and the independent sector. I was having a conversation with a parent only this weekend, and she told me that, in the school that her children attend, there are only 18 children in every class. If the Government are so committed to raising standards in the state sector so that they meet and pass those of the independent sector, why are they not spending their time and energy putting the necessary funding into the state system so that those class sizes could become the norm rather than the exception?
The central issue is that the Bill has nothing to do with freedom for all our people; it has to do with exclusion, not inclusion. The failure to consult on these proposals across a wide range of people in the community will mean that more and more children, certainly in my constituency, will be excluded from the best that already exists. The best that already exists is from a system that was funded by my Government, and that acknowledged the need for wide consultation across the community, with services presented to all schools from a local authority, which is essential to those standards. The proposal of the Minister and the Government, however, will sabotage those standards. As I had occasion to say on Second Reading, and as I have continued to say, we will not only see standards go down in our state sector as result of the Bill, but we shall see centrally, and most reprehensibly, serious social division, of which he and every member of his collaborationist Government should be ashamed.
Dan Rogerson
I extend my thanks to all hon. Members who participated in the debate, to the Minister, who has done his best to listen and take on board the issues raised, and to the hon. Members for Hartlepool (Mr Wright) and for—famously—Gedling (Vernon Coaker), who have led ably for the Opposition.
I am delighted to say that the Bill is better than when it started out. Clearly, in another place it was altered to reflect some of the concerns generated there and outside. During the Committee stage in this place, we have heard, on the record, that there are no extra sources of funding for the academies above and beyond the money that will go to the local authority for them; that the role of the Young People’s Learning Agency with regard to monitoring will be clarified; and that there will be wide consultation, the intent of which will be explained, which is helpful. The Minister has also generously pointed out that the role of parent governors will be strengthened.
Bob Russell
Does my hon. Friend agree that it is disappointing that the Minister was not able to say whether parent governors would be elected or appointed? The other issue is that existing comprehensive schools can have as many as eight elected parent governors, whereas under the Bill the number is only two.
Dan Rogerson
My hon. Friend has made his point to the Minister and the House as is his wont.
The progress that occurred in the other place on the impact statement has been crucial. Tonight’s discussions about community cohesion have also been important. The hon. Member for Hemsworth (Jon Trickett), who is no longer in his place, made some useful points on that, and I was delighted to hear the Minister’s reassurance.
It is nice to see the shadow Secretary of State for Education in his place. He was not here for most of the debate—someone was, because they wrote his speech for him. As a comprehensive-educated boy, I can point out to him that a basilisk is a mythological reptile that can freeze someone with its breath or stare. That point aside, it is clear that he has not listened to the debates too closely. For some of us who do not have the widening of the number of academies at the top of our political agenda, the explanation of the Government’s thinking has reassured us about a Bill that, with some welcome safeguards, allows that in places that are keen for it to happen.
Andrew Percy
I was not planning to speak on Third Reading, but I want to respond to a couple of points made by the shadow Secretary of State, particularly relating to Labour Members’ concerns about special educational needs and inclusion. We should always use temperate language, and although debate on the Bill has been interesting and measured on both sides of the House, the extreme language used—we heard some recently from the hon. Member for Hampstead and Kilburn (Glenda Jackson)—about social division, apartheid and exclusion has been incredibly unfortunate. As the Bill has progressed, we have received assurances from Ministers about the content of funding agreements with regard to social inclusion and SEN. It is incorrect to suggest that only Labour Members are interested in those issues. Many Members have raised concerns and received assurances from Ministers.
The Bill has been improved in another place, and welcome assurances have been received from Ministers. Ultimately, we should accept that parents will be given a choice, and it is for parents and governors to take the Bill forward and make what they can of it. The suggestion that schools will, in some way, do something bad for their community is a nonsense.
Question put, That the Bill be now read the Third time.
The House divided: Ayes 317, Noes 225.
Business without Debate
Delegated Legislation
Administration
Environmental Audit
European Scrutiny
Committees
Mr Speaker
With the leave of the House, we will take motions 8 to 12 together.
Ordered,
Human Rights (Joint Committee)
That Dr Hywel Francis, Dr Julian Huppert, Mrs Eleanor Laing, Mr Dominic Raab, Mr Richard Shepherd and Mr Andy Slaughter be members of the Select Committee appointed to join with a Committee of the Lords as the Joint Committee on Human Rights.
Northern Ireland Affairs
That Mr Joe Benton, Oliver Colvile, Mr Stephen Hepburn, Lady Hermon, Ian Lavery, Naomi Long, Jack Lopresti, Dr Alasdair McDonnell, Ian Paisley, Stephen Pound, David Simpson, Mel Stride and Gavin Williamson be members of the Northern Ireland Affairs Committee.
Procedure
That Mrs Jenny Chapman, Mr Roger Gale, Mr James Gray, Tom Greatrex, John Hemming, Mr David Nuttall, Andrew Percy, Bridget Phillipson, Jacob Rees-Mogg, Angela Smith, Sir Peter Soulsby and Mike Wood be members of the Procedure Committee.
Public Administration
That David Heyes and Jon Trickett be added to the Select Committee on Public Administration.
Regulatory Reform
That Heidi Alexander, Mr David Anderson, Andrew Bridgen, Jack Dromey, Lilian Greenwood, Ben Gummer, John Hemming, Gordon Henderson, Andrew Jones, Ian Lavery, Brandon Lewis, Andrew Percy, Mr Robert Syms and Valerie Vaz be members of the Regulatory Reform Committee.—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)
Finance and Services
Standards and Privileges
Adjournment of the House (27 July)
Petitions
Alison Seabeck (Plymouth, Moor View) (Lab)
The petition is against the withdrawal of the taxibus services in Plymouth from Glenholt down through to the city.
The petition states:
The Petition of residents of the Plymouth, Moor View constituency and others,
Declares that the petitioners are unhappy with the decision to withdraw the taxibus service that serves the residents in the north of Plymouth; notes that residents in St Budeaux and Weston Mill use this bus to access their GP surgery, dentist, shops and other community facilities; and further declares that the withdrawal of this service will cause major inconvenience to residents.
The Petitioners therefore request that the House of Commons urges the Government to encourage local authorities to support local taxibus services to avoid these vital public transport services being removed.
And the Petitioners remain, etc.
[P000847]
Mary Creagh (Wakefield) (Lab)
I rise to present a petition on free swimming.
The petition states:
The Petition of Mrs Priscilla Whisker and residents of Wakefield constituency, and others,
Declares that HM Government’s decision to cut the previous Labour government's free swimming scheme from 1 August 2010 will make it more difficult for under 16 and over 60 year olds to access swimming facilities in Wakefield; further declares that the scheme was part of the 2012 Olympics legacy to get more people involved in healthy activities; further declares that there are high levels of child obesity in Wakefield; and further declares that the cuts will disproportionately affect the health of poor people in Wakefield.
The Petitioners therefore request that the House of Commons urges HM Government to recognise the value of encouraging young people to take regular exercise and to learn to swim; to recognise the important health benefits of swimming to children and people over 60; to reconsider the cuts to the Swim 4 Free local authority grant support; and to reinstate the Swim 4 Free grant support to local authorities from 1 August 2010.
And the Petitioners remain, etc.
[P000848]
Derek Twigg (Halton) (Lab)
I rise to present a petition on the 1GOAL For All campaign.
The petition states:
The Petition of staff and students at Halton Lodge School and their friends, relatives and others in their community,
Declares that the petitioners support the 1GOAL For All Campaign to use the power of football to contribute to securing universal primary education by 2015 (Millennium Development Goal 2); notes the progress that has already been made towards this goal, with 40 million more children in school since the Millennium; further declares that the petitioners are appalled that 72 million children across the world are still denied the opportunity of schooling; further notes that sport can be used to champion education, which gives people the tools to help themselves out of poverty…The Petitioners therefore request that the House of Commons agrees to any motion expressing support for the 1GOAL Campaign and urges the Leader of the House and the Backbench Business Committee to consider scheduling a debate on progress towards achieving Millennium Development Goal 2 (Universal Primary Education).
There are 452 petitioners.
Following is the full text of the petition:
[The Petition of staff and students at Halton Lodge School and their friends, relatives and others in their community,
Declares that the petitioners support the 1GOAL For All Campaign to use the power of football to contribute to securing universal primary education by 2015 (Millennium Development Goal 2); notes the progress that has already been made towards this goal, with 40 million more children in school since the Millennium; further declares that the petitioners are appalled that 72 million children across the world are still denied the opportunity of schooling; further notes that sport can be used to champion education, which gives people the tools to help themselves out of poverty; and further declares that Halton Lodge School has used the opportunity afforded by World Cup 2010 to engage with the international campaign founded and chaired by Her Majesty Queen Rania of Jordan, by watching and reading 1GOAL material, by producing artwork to raise the profile of the Campaign, by holding a 1GOAL school assembly and by opening the school for parents to watch the first game (France v South Africa) of the World Cup 2010 recently held in South Africa, an event which has raised the hopes and aspirations of millions of young people across Africa.
The Petitioners therefore request that the House of Commons agrees to any motion expressing support for the 1GOAL Campaign and urges the Leader of the House and the Backbench Business Committee to consider scheduling a debate on progress towards achieving Millennium Development Goal 2 (Universal Primary Education).
And the Petitioners remain, etc.]
[P000849]
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)
The petition states:
The Petition of the residents of Woolavington and others,
Declares that they are concerned about plans by EDF Energy Renewables to develop a new wind farm at Withy Farm near Puriton; about the implications for local residents of noise from the turbines; the intrusive nature of the wind turbines and any possible additional power lines associated with them on the unique landscape of the Somerset Levels; and the potential damage to wildlife and their habitats.
The Petitioners therefore request that the House of Commons urges the Government to take all possible steps to take the impact on local communities and the landscape fully into account when considering plans submitted for the siting of wind farms and the provision of energy generation through renewable sources.
And the Petitioners remain, etc.
[P000850]
Mr Robert Walter (North Dorset) (Con)
I present a petition in the name of the Blandford community hospital in Dorset.
The petition states:
The Petition of Mrs Jacqueline Stayt and Mrs Josephine Seath, residents of the North Dorset community and others,
Declares that they are concerned about the future of Portman Ward at Blandford Community Hospital, Dorset.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Health to encourage NHS Dorset to consider seriously the impact on the local community of proposed cuts to services at Blandford Hospital, in particular the proposed closure of Portman Ward, and to ensure that decisions affecting the hospital's future reflect the concerns and needs of patients, staff and the community at large.
And your Petitioners remain, as in duty bound, will ever pray.
[P000851]
Hospital Car Parking Charges (Hereford)
(13 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Jesse Norman (Hereford and South Herefordshire) (Con)
I am very grateful for the opportunity to bring before the House this important issue, which is of great local concern in Hereford, where a campaign led by Sarah Carr has resulted in a petition of more than 1,400 signatures against hospital car parking charges. It is important to emphasise that this issue is not about a “little local difficulty”. On the contrary, it shines a bright light on the huge cost and inflexibility of the private finance initiative and raises some profoundly important long-term public policy issues about the management and financing of the NHS. It is a case study of the foolishness and self-serving incompetence of the last Government.
These charges are expensive and unfair. They affect hospital patients and their families at a very vulnerable and difficult time in their lives. They particularly target frequent users, such as those visiting in-patients and those suffering from cancer, and they are socially regressive, falling relatively harder on the poor than the rich. Nationally, patients are estimated to pay more than £100 million a year in these charges.
But the problem of car parking charges does not end with Hereford hospital—quite the contrary. The trust would like nothing better than to reduce or scrap the charges for those affected, but it cannot because its hands are almost completely tied by the hospital’s PFI contract.
To see why, we need to step back a little. Hereford hospital was started in 1999 and was one of the earliest projects undertaken through the PFI. It was built, and is currently owned and managed under a 30-year contract, through Mercia Healthcare. Mercia is a special-purpose company that is 75%-owned by Semperian, a large PFI firm that is based in the City of London, and 25%-owned by the French industrial services giant, Sodexo. As well as being a shareholder, Sodexo acts as the contractor for car parking, among other things, which it in turn subcontracts out to CP Plus. Other non-clinical services are contracted out, including maintenance to WS Atkins.
The total cost of the project has been about £93 million. In return the hospital trust pays a unitary sum every year, currently about £15 million, which covers all costs—both capital and services. Governing all that is a huge legal contract that seeks to cover every eventuality that could arise between the two sides over its 30-year life. But there is little transparency in the contract as to how much different services cost or what margin is being charged on them. Instead, there is massive inflexibility.
This is how the contract works. A consultant who wants to put up a shelf in her office cannot do it herself or get the odd-job man in—after all, the trust does not own the hospital; instead, she has to use the in-house PFI contractor at unknown but doubtless significant expense. The contract allows up to 12 weeks for a quotation to be supplied and up to 12 more weeks for the work to be completed—six full months from when the original need arose. Even that is not necessarily the end of the matter. The contractor will also insist that some items be treated as capital items—as permanent additions to the infrastructure. and charged for in every subsequent year of the life of the contract.
A recent low point was reached with the installation of a new TV aerial in the consultants’ staff room at the hospital. A “changes” notice was raised and sent to the contractor, WS Atkins in that case. Twelve weeks later, it was costed at the princely sum of £819 plus VAT, or a grand total of £963—almost £1,000 for a TV aerial! That is the reality of public contracting in the UK today.
It is significant that later PFI contracts contained some financial safeguards for the NHS, which included automatic efficiency savings of 3% a year and the right for a hospital to put services out to public tender periodically. However, the Hereford contract contains neither of those safeguards; any efficiency savings go direct to the PFI consortium. Yet including savings of only 3% a year would reduce the cost of services by 60% in nominal terms over the life of the contract. That is a lot of lost medicines, lost hospital care and lost surgery.
The car park is managed not by Mercia or by its contractor, Sodexo, but by Sodexo’s subcontractor, CP Plus, in effect creating a treble mark-up on the deal. The hospital trust has little influence, knowledge of underlying costs or legal scope to negotiate changes to the contract. There are no automatic efficiency savings, and the contract cannot be re-tendered until 2029. The PFI consortium is thus sitting on a huge revenue stream, paid for by the taxpayer. My fear is that the contract is costing the taxpayer millions of pounds too much over its life.
Is it any surprise that the citizens of Herefordshire are paying so much for car parking, or that so little progress has been made to fix the problem, despite the trust’s best efforts? Is it any surprise that cost inflation in the NHS has been running at twice the national level?
Let us take stock. The issue of car parking charges is a matter of public concern. Every year, thousands of vulnerable people are affected by the charges in Herefordshire alone. We must have a solution.
It is well known that PFI contractors have done very well over the years from the huge wave of spending that has taken place in the NHS. I therefore ask Sodexo and Semperian to sit down again with the hospital trust, open up the books, sharpen their pencils, pass on some efficiencies and work with the trust to craft a new agreement. For myself, I shall not let the matter rest until they do.
However, the deeper issue, here as elsewhere, lies in the impact of the PFI itself. It is almost as though these contracts were deliberately designed to impede public transparency and public accountability. The point is not to blame those who originally negotiated the Hereford contract; they were rightly delighted that the new hospital was being built, in a county traditionally starved of public investment. It was one of the earliest deals of its kind, and as with any new market it took time to develop the knowledge and safeguards of the public interest that existed in later deals.
But if we look more broadly, we see some staggering ironies. The PFI was used to protect the last Government’s much-vaunted fiscal rules, only for the same rules to be spectacularly smashed anyway, as their spending boom gave us the longest and deepest recession on record. Secondly, the early PFI consortiums were actively encouraged by the Government to take on service provision so that their debt could be put off balance sheet. The result has arguably been to impose hundreds of millions of pounds of unnecessary costs on the NHS, while the Office for National Statistics has started to look at bringing the same debt on to the national balance sheet anyway. You could not make it up, Mr Speaker. Thirdly, the PFI has put car parking and other services beyond the scope of public accountability, while the structure of the contracts prevents hospital trusts from having the very information they need to renegotiate the contracts themselves.
This cautionary tale raises a vital wider question. At a time of fiscal crisis, should PFI projects be exempt from contributing to the public purse? I would argue that they should not be exempt. They should contribute to our national economic recovery like everybody else.
There are some £210 billion-worth of outstanding PFI capital assets in this country at the moment. A McKinsey study last year suggested that for the NHS alone, a reduction in interest charges of just two or three one hundredths of 1% could save £200 million. Anyone who thinks two or three hundredths of 1% is a lot should bear in mind that since July 2007, the base rate has fallen a full 5.25%.
“Are these not commercial contracts?”, it might be asked. Of course they are, and I am not for one moment suggesting that those contracts should be torn up. But the Government do not lack influence in this area. They have many points of contact with the different consortiums. For example, Semperian alone has stakes in 106 different PFI or public-private partnership projects, while Sodexo has stakes in 11 of them.
Moreover, many of the investors in these organisations are themselves public authorities. The largest investor in Semperian, with an equity stake of more than 25%, is Transport for London. It and other public bodies may themselves wish to support fairer treatment of PFI hospitals, rather than make huge sums at a time of national austerity.
Finally, some PFI providers are looking to expand abroad in search of future growth. They will not wish to be faced with criticism at home about the high cost of their services, while they seek new markets overseas. So I would call on the Government to use all these levers to encourage PFI providers to rebate some of their gains to the taxpayer. There is a direct precedent for this in the voluntary code that was introduced a few years to encourage PFI providers to share refinancing windfalls with the taxpayer.
I will close on a more positive note. The use of assets in many PFI hospitals remains far below international best practice. But over the longer term, there is clear scope to open up current deals, to relax some of the restrictions, to make better use of hospital assets and to remit more value to the public purse. The contractors will get what they are owed, but the taxpayer could benefit still more. That, I suggest, should be the thrust of Government policy in this area, and I greatly look forward to hearing what the Minister has to say on this issue. I would, of course, be happy to work with him to win a fairer deal for the taxpayers of Herefordshire and elsewhere if the need arises.
The Minister of State, Department of Health (Mr Simon Burns)
I begin by congratulating my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) on securing his first Adjournment debate—on the effect of NHS PFI costs on hospital car parking charges in Hereford.
Let me provide a little background on the trust before discussing my hon. Friend’s specific points about car parking. As he will know, Hereford Hospitals NHS Trust is the main provider of acute services across Herefordshire and for parts of Wales. The trust offers a wide range of services, including a dedicated cancer unit, which forms part of the three counties cancer network. I understand that funding has now been secured in partnership with Macmillan Cancer Support to develop a new cancer unit.
The most recent Care Quality Commission outpatient survey, released in April this year, showed that 19 out of 20 patients—95%—attending the Hereford hospital out-patient department rated the care they received as either “good”, “very good” or “excellent”. It also found that 89% of those asked stated that they were treated with dignity and respect at all times. This is very much to the hospital’s credit, and I pay tribute to the hard-working staff at Hereford hospital. It is through their dedication and expertise that my hon. Friend’s constituents benefit from such a high quality of care.
My hon. Friend has raised the important issue of parking costs at Hereford hospital. The quality of care inside the hospital is excellent. However, the service provided outside the hospital presents a real and pressing concern for patients, visitors and members of staff.
The Hereford county hospital development was, as my hon. Friend mentioned, part of the previous Government’s first wave of private finance initiatives. The County hospital PFI contract lasts for 30 years, from 2002 until 2032. In some respects, the Hereford contract differs from later PFIs, which utilised a standard form developed following the experience of earlier agreements.
In 2005, car parking charges for the period 2006-15 were agreed between the trust and Mercia Healthcare and incorporated in the main PFI contract through a legally binding variation, as my hon. Friend mentioned. Although Mercia owns the car parks, CP Plus operates them on a day-to-day basis via a subcontract with Sodexo, which runs all food and facilities management services on the site. I am told, unfortunately, that the cost to the trust of buying back the car parking element of the contract to 2032 has been calculated at some £7 million, a sum that my hon. Friend will agree is deemed prohibitive by the Hereford Hospitals NHS Trust.
The contract also switched car parking charges from pay and display to pay on exit. That change was introduced to discourage people using the hospital car park when shopping in Hereford city centre, cutting the number of spaces available for patients and visitors to the hospital. The hospital offers concessionary parking for different types of user. For example, a range of discounts is available to those who use the car park frequently, to the disabled and to a wide range of people on benefits or low incomes. In addition, when the length of stay exceeds certain local waiting targets, the cost of parking is reduced to the target wait. For example, if initial treatment is not given within four hours at accident and emergency, the cost of parking is reduced so that a patient pays only for four hours. Also, parents of children staying overnight in the hospital have their parking costs discounted to the two-hour rate of £3.
However, there is a real issue about people not knowing that those concessions exist. Although they are clearly displayed on the trust’s website, the internet, as my hon. Friend will probably appreciate, is not usually the first place to look for information when one drives into a car park. The clear and prominent display of the discounts and concessions available is a common complaint of patient groups throughout the country and one with which I have a considerable sympathy. I am told that the current car parking charges are in fact a little lower than those originally agreed with Mercia and reflect the trust board’s decision to subsidise the tariff by 50p an hour over the past two years. The annual cost of that subsidy is £88,502.
The strategic health authority has informed me that the trust board has taken a number of measures to ensure that car parking charges are reasonable. It has committed to reducing progressively the costs of on-site parking for patients and, eventually, to eliminating those costs all together. To pay for the reduction, charges for visitors and other users will be increased in line with the existing 10-year tariff plan. The trust is also investigating alternative transport initiatives to encourage staff and patients to use public transport.
The strategic health authority informs me that Hereford Hospitals NHS Trust is reviewing its car park policy. The aim is to develop proposals for charges and concessions for patients’ parking at the hospital, covering the hourly rates charged to patients and the availability of revenue to develop alternative arrangements. The review will also consider the range and appropriateness of current concessions. The trust hopes to complete its review of car parking charges by the end of this month, and the next increase to car parking charges, now due, is on hold pending the outcome of it. I also understand that the trust has already agreed a package of measures to improve car parking arrangements for patients receiving chemotherapy. These include the allocation of further free car parking spaces and better advertising of concessions.
Individual patients and advocate groups such as Macmillan Cancer Support and the Patients Association regularly raise the issue of car parking charges. Macmillan has highlighted how a lack of awareness among users and the poor promotion of concessions by some trusts lead to low take-up among long-term patients. We are giving those concerns serious thought. The Department of Health recently conducted a consultation on car parking charges, and I can assure my hon. Friend that we aim to publish a response to that consultation in September.
Unfortunately, though, whatever one’s views might be on the subject of NHS car parking charges, given the dire state of the public finances it is simply not possible to abolish them. Within a very difficult economic climate, this Government are committed to delivering health care outcomes that are among the best in the world. As part of this, power is being devolved to the front line like never before. As my hon. Friend will appreciate, when we came into government in May we inherited a deficit of £155 billion. Some tough decisions are having to be taken because my right hon. Friend the Chancellor of the Exchequer rightly makes it a priority to reduce the huge debt that we inherited, which is causing so many problems for our general economic well-being.
I am sure that my hon. Friend will appreciate that, as I said, it is simply not possible to abolish car parking fees at the moment, because the ethos of our policy towards better provision of health care, as outlined by my right hon. Friend the Secretary of State for Health in his White Paper last week, is that we believe that it is crucial to put patients at the forefront and the centre of health care. We must have bottom-up provision of health care that meets local needs to improve services and ensures the finest quality health care that the health service can provide in such a way that we do not have politicians and bureaucrats dictating a top-down approach.
Gavin Williamson (South Staffordshire) (Con)
Does my hon. Friend agree that many of the problems that we face in Hereford and in many other towns across the country are down to poorly negotiated private finance initiatives agreed by the last Labour Government?
Mr Burns
I am grateful to my hon. Friend for making that cogent and powerful point. As we have all found out since we came into office, the economy was left in a dire state, and we are now having to pick up the pieces, as we did in 1979, to sort out the mess that the previous Government left us. That is the challenge that we are facing, and that is why we are having to take some tough decisions for the general better welfare of the economy as a whole and the people of this country, as tends to be traditional when we come to power after a Labour Government.
Where car parking charges make it difficult for staff to do their jobs properly, where they damage patients’ access to services, or where they prevent family and friends from visiting, hospital trusts have a responsibility to look again at their charges and policies. As my hon. Friend knows, a review is currently under way at Hereford hospital. I trust that he and all his constituents who are concerned about the level of car parking charges at the hospital are contributing to that review and ensuring that their views and concerns are known as regards the impact that those charges may be having on them. I also believe that it is crucial, not only in Hereford but throughout the country, that greater publicity and prominence be given to the fact that some people may qualify for a reduction in car parking charges due to their individual circumstances. That must be drawn to the attention of the client group that might benefit, because one suspects that too often, there is too little publicity and awareness of those discounts, which would provide genuine help to those who find car parking charges genuinely onerous to pay for.
James Wharton (Stockton South) (Con)
I should just like to have it recorded in Hansard as a point of important note that while we are talking about the people who are the most disadvantaged by the charges that are so often levied in hospital car parks, not a single Opposition Member is here to hear the debate. I hope my hon. Friend agrees that that is an important point that should be recorded and registered.
Mr Burns
I congratulate my hon. Friend, who has certainly succeeded in achieving what he intended. No doubt tomorrow, when Hansard is published, his cogent point will be marked. The only disappointment is that as there are no Opposition Members here, they will not be aware of his intervention, but I am sure he will use his skills to ensure that his point is given a wider audience.
Matthew Hancock (West Suffolk) (Con)
Before my hon. Friend concludes, will he address the point about renegotiating the PFI? Will he take up the offer of my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) and try to squeeze some more value out of the PFI, and to help? He has made an eloquent case about how tight the money is.
Mr Burns
I thank my hon. Friend for that extremely helpful intervention. I am grateful for his kind offer for me to try to intervene and use my good offices to facilitate a renegotiation. It is late at night, but I do not want to be churlish and I do not want to upset my hon. Friend. However, gone are the days when politicians and bureaucrats sitting in Whitehall interfere and micro-manage local health services. The Government’s vision, new policy and ethos is for a localised health service, responding to local needs, not hamstrung by interfering Ministers, including—I know that my hon. Friend will find that difficult to believe—me. I must therefore say that it is a local matter, which would have to be taken up and sorted out locally, though, from my extensive knowledge of the position, I would not, were I a betting man, put a considerable amount of money on the suggested course of action being adopted.
Having said that, during a review of car parking at the hospital, it is important that all those with an interest or a concern about the charges play a full part. Ultimately, as I hope that my hon. Friend the Member for West Suffolk (Matthew Hancock) will appreciate, it is for the NHS trust to manage its car parking to suit best the needs of its patients, the visitors and staff.
However, I hope that, given the campaign of my hon. Friend the Member for Hereford and South Herefordshire and my hon. Friends in the surrounding constituencies, who have played their part not only in recent months but for a considerable time in representing their constituents and trying to get a good deal for them, they will continue to open dialogue with the local trust and do all they can to pursue the matter and ensure that they get a better and fairer deal, which is mutually satisfactory to the trust, the PFI and my hon. Friend’s constituents.
Question put and agreed to.
Petitions
Intensive Care (West Sussex)
Anti-Social Behaviour (Croydon)
Cosmetics Testing on Animals
Human Trafficking
Policing (Croydon)
Written Ministerial Statements
(13 years, 9 months ago)
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Consultation on Business Finance Issues
(13 years, 9 months ago)
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The Secretary of State for Business, Innovation and Skills (Vince Cable)
Coming into the recovery, the Government’s focus is on creating the conditions for balanced and sustainable growth in the private sector. In order that UK business can finance this growth, we are seeking to address the challenges and risks faced by businesses in ensuring that they can access the finance they require.
At the heart of these challenges is ensuring stable financial conditions for business. The coalition Government have taken decisive action to tackle the fiscal deficit, which is the first priority for restoring business confidence. But businesses also need sustainable and secure sources of finance for investment. Unless the financial system is reformed it may fail to deliver the finance that is vital to this task.
Today, I am publishing a Command Paper, jointly written with my right hon. Friend the Chancellor. This discussion document sets out lessons learnt from the past and some of the challenges ahead. We would like to encourage businesses, investors and lenders to participate in this consultation as it will inform the Government’s future response to the issues raised.
In “Financing a private sector recovery”, we state that the Government would like more diverse sources of finance available. The paper explores a broad range of options, including trade finance, greater application of the mutual model, more use of equity and a responsible return to securitisation. The paper also addresses the success of existing Government schemes, such as the enterprise finance guarantee, and whether they should be improved or extended.
But it is emphasised that industry and market-led solutions are the preferred response to any market failures. Only where appropriate will Government assist in providing solutions, in conjunction with business.
The paper is being published today on BIS’s website: www.bis.gov.uk/businessfinance. The deadline for responses is 20 September 2010.
Regional Development Agencies (Board Members)
(13 years, 9 months ago)
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The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I would like to announce my decision to offer continued terms to 19 board members whose first term of appointment finishes on the 13 December 2010. I have also decided, following approval from the Commissioner for Public Appointments, to offer extensions to a further 21 board members who are finishing their second or third term in office. The names of the board member are:
RDA | Board Member | Position Serving | Term Completed |
|---|---|---|---|
Advantage West Midlands | |||
Angela Maxwell OBE | Business | First term | |
Jas Bains | Voluntary/Community | First term | |
Sue Prince OBE | Business | Second term | |
Gerard Coyne | Trade Union | Second term | |
Diane Rayner | Local Authority | Second term | |
East of England Development Agency | |||
Stuart Evans | Business | First term | |
Paul Burall | Local Authority | Second term | |
Sheila Childerhouse | Voluntary/Community | Second term | |
Karen Livingstone | Trade Union | Second term* | |
Marco Cereste | Local Authority | Third term1 | |
East Midlands Development Agency | |||
Michael Seals MBE | Business | First term | |
Ann Cartwright | Voluntary/Community | First term | |
Steve Brown | Business | Second term | |
Gary Hunt | Local Authority | Second term | |
Jonathan Collins | Local Authority | Second term* | |
Geoffrey Stevens | Local Authority/rural | Second term | |
Prof Philip Tasker | Education further/higher | Second term | |
Northwest Regional Development Agency | |||
Anthony McDermott MBE | Local Authority | First term | |
Susan Williams | Local Authority | First term | |
Prof John Brooks | Education further/higher | First term | |
Peter Allen MBE | Business/rural | First term | |
Peter Hensman | Business | Second term** | |
Joe Dwek CBE | Business | Second term*** | |
John Merry CBE | Local Authority | Second term | |
One North East | |||
Graham Thrower | Business | First term | |
Prof Christopher Higgins | Education further/higher | First term | |
Gill Hale | Trade Union | First term | |
Ian Dormer | Business | First term | |
Alison Thain OBE | Business | Second term | |
Ian Brown | Business/rural | Second term | |
Bob Symonds | Local Authority | Second term | |
South East England Development Agency | |||
Keith Riley | Business | First term | |
Dr Dolores Byrne OBE | Business | First term | |
Imtiaz Farookhi | Business | Second term | |
Southwest Regional Development Agency | |||
Brian Robinson | Local Authority | First term | |
Ellen Winser | Business | First term | |
Nick Buckland OBE | Business | Third term1 | |
Yorkshire Forward | |||
Mark Lovell | Business | First term | |
Mark Kirk | Local Authority | First term | |
Linda Pollard OBE JP DL | Business | Second term | |
*Extension granted for a year from December 2009. **Extension already granted for six months until June 2011. ***Extension granted for a year from December 2009. 1The Commissioner has granted extended terms up until December 2011 when the board member will have served the maximum 10 years in office. |
The coalition Government have made the decision to support the creation of Local Enterprise Partnerships to replace RDAs. Final closure of RDAs is likely to be completed by 31 March 2012 following legislation. On that basis the decision was made not to continue with any further board member recruitment. The continued terms for board members are necessary to ensure; i) that the RDA chairs are able effectively to manage their board membership up until closure, and; ii) that membership does not fall below the minimum requirement of eight, as stated in the Regional Development Agencies Act 1998. The board members have a valuable role to play in helping manage the abolition of the RDAs and the transition to the new arrangements, in which their skills and experience will continue to be a valuable asset.
I have placed biographies of the board members in the Libraries of both Houses. I can confirm that the continued terms have been made in accordance with the Commissioner for Public Appointments code of practice.
ECOFIN
(13 years, 9 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
The Economic and Financial Affairs Council was held in Brussels on 13 July 2010. The following items were discussed:
EU financial supervision
ECOFIN agreed a revised position on the Commission’s proposals to establish a European Systemic Risk Board and three new European Supervisory Authorities. The Council:
Reaffirmed its December 2009 agreement that supervision should remain national, that the proposed EU roles in mediation and crisis should be subject to safeguards to protect member states fiscal responsibilities, and that EU direct powers over firms should not override national supervisors’ discretionary decisions.
Rejected demands by the European Parliament (EP) for an EU resolution fund and EU supervision of cross-border firms.
Reaffirmed that the European Banking Authority will be based in London.
Sought to limit and tie down the role suggested by the EP for the European Supervisory Authorities in banning products. As a result, the Council agreed that such powers would:
be specifically agreed by Council and EP in legislative proposals;
be subject to a sunset to require the authority to regularly reaffirm its decision;
include an appeal procedure requiring a qualified-majority vote to support a ban if a member state requests it.
The presidency will now take forward negotiations on the basis of the new mandate, and will seek to find agreement ahead of the September EP plenary vote. The UK supports this new ECOFIN consensus, and looks forward to a swift agreement with the EP and the establishment of the bodies by January 2011.
Programme of the Belgian Presidency
The Belgian presidency presented the ECOFIN work programme for the next six months.
Follow up to the European Council:
Commission communication on “Reinforcing economic policy co-ordination”
The Commission presented its paper as a contribution to the ongoing work on economic governance. The UK believes the paper provides helpful input and agrees that robust national frameworks are an important part of the solution—independence of national statistical and fiscal authorities is key, as shown by the creation of the Office for Budget Responsibility. Further work will continue by the European Commission, with ECOFIN returning to this issue in September.
Broad Economic Policy Guidelines
Following initial agreement at ECOFIN and the European Council in June, the broad economic policy guidelines (BEPGs) were formally adopted. The Government are content with the text, following additional language at the June European Council making clear that country-specific recommendations under the BEPGs
“shall be fully in line with relevant treaty provisions and EU rules and shall not alter member states’ competences, for example in areas such as education”.
Stability and Growth Pact
The Council adopted a raft of decisions on excessive deficits including launching excessive deficit procedures for Bulgaria, Denmark, Cyprus and Finland. In addition, the Council noted that since December 2009, effective action has been taken by Austria, Belgium, the Czech Republic, Germany, Spain, France, Ireland, Italy, the Netherlands, Portugal, Slovakia and Slovenia. Following the emergency Budget on 22 June, ECOFIN agreed that the UK is also now taking effective action to further increase the size of fiscal consolidation in 2010-11 and significantly strengthen the planned pace of deficit reduction over the medium-term.
Adoption of the euro by Estonia
Following discussions at the June ECOFIN and European Council, euro-area member states voted to adopt regulations which confirm the introduction of the euro in Estonia on 1 January 2011.
AOB: Report on EMU public finances
The annual report on public finances in the European Monetary Union was presented to Ministers. The report covers consolidation strategies and the link between macroeconomic imbalances and fiscal policy.
Financial Regulation
(13 years, 9 months ago)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government have today published a consultation document outlining the coalition Government’s proposals for reforming the framework of financial regulation in the UK. This builds on the statement I made in the House on 17 June 2010.
“A new approach to financial regulation: judgment, focus and stability” sets out in more detail plans to overhaul the UK’s financial regulatory framework, including providing the Bank of England with control of macro-prudential regulation and oversight of micro-prudential regulation.
The UK banking system is emerging from the most serious financial crisis in over a hundred years. Despite making three authorities—the Bank of England (the Bank), the Financial Services Authority (FSA) and the Treasury—collectively responsible for financial stability, the UK’s “tripartite” system failed in a number of important ways. For example, it failed to identify the problems that were building up in the financial system; to take steps to mitigate them before they led to significant instability in financial markets; and to deal adequately with the crisis when it did break.
The document describes the future arrangements for the framework of financial regulation that will address these failings head on. These include proposals to create an independent Financial Policy Committee in the Bank of England and a new prudential regulation authority as a subsidiary of the Bank. In addition to the proposed changes to macro and micro prudential regulation, the consultation document sets out in more detail plans to create a dedicated consumer protection and markets authority (CPMA), with a primary statutory responsibility to promote confidence in financial services and markets.
The document also sets out details of proposals for approaching future financial crises. One of the failings of the UK system currently is the fact that no single institution has the responsibility, authority or powers to monitor the system as a whole, identify potentially destabilising trends and vulnerabilities, and respond to them with concerted action. The document outlines how the Government intend to rectify this.
The document presents a range of issues and questions for consultation. The Government will, on the basis of this consultation and continuing policy development, present more detailed proposals—including draft legislation—for further consultation early in 2011.
The Government intend to introduce legislation to implement their proposals in mid-2011, and in my statement to this House on 17 June 2010 I committed to ensuring the passage of the necessary primary legislation within two years.
A copy of “A new approach to financial regulation: judgment, focus and stability” has been deposited in the Libraries of both Houses and published on the HM Treasury website.
G20 Framework for Strong, Sustainable and Balanced Growth
(13 years, 9 months ago)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
As part of the next phase of the G20 framework for strong, sustainable and balanced growth, HM Treasury has today submitted a new national template to the International Monetary Fund (IMF), setting out its national policy frameworks, programmes and projections for the medium term.
This is in accordance with the updated mutual assessment process agreed by G20 leaders at the Toronto summit, in which G20 countries will provide information on any policy revisions made since the beginning of the year and the IMF will update its analysis of how these national and regional policy frameworks fit together.
Copies of the document are available in the Vote Office and have been deposited in the Library of the House.
Counter-Terrorist Asset-Freezing Regime
(13 years, 9 months ago)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government take the threat of terrorism seriously. However, measures taken to counter the threat of terrorist activity must be done in a fair and proportionate way.
The previous Government undertook to report to Parliament on a quarterly basis on the operation of the UK’s counter-terrorism asset-freezing regime. We believe this is essential to ensure transparency and accountability of the regime and we will continue to report to Parliament each quarter. There is a clause to this effect in the Terrorist Asset-Freezing etc Bill.
This report covers the period April to June 20101
Asset-freezing designations
In the quarter April to June 2010, the Treasury gave no new directions under the Terrorism (United Nations Measures) Order 2009.
During this quarter, the EU added five people to EC Regulation 881/2002, implementing the UN al-Qaeda and Taliban asset-freezing regime established under UNSCR 1267.
As of 30 June 2010, a total of 202 accounts containing just under £360,0002 of suspected terrorist funds were frozen in the UK.
Reviews under the Terrorism Orders
The Treasury keeps domestic asset-freezing cases under review and completed nine reviews in this quarter. From these nine reviews, six persons had their designations revoked.
Licensing
Maintaining an effective licensing system is important to ensure the overall proportionality and fairness of the asset-freezing regime, whether the individuals concerned are subject to an asset-freeze in accordance with a UN or EC listing, or domestic terrorism legislation. A licensing framework is put in place for each individual on a case-by-case basis. The key objective of the licensing system is to strike an appropriate balance between minimising the risk of diversion of funds to terrorism and meeting the human rights and humanitarian needs of affected individuals and their families. Licences contain certain appropriate controls to protect against the risk of the diversion of funds for terrorist finance.
Thirteen licences were issued this quarter in relation to eight persons subject to an asset-freeze under the al-Qaeda and Taliban and domestic terrorism regimes.
In addition, five general licences were issued. General licences cover both the al-Qaeda and domestic terrorism regimes, and are important in ensuring an effective and proportionate licensing regime by removing the need for individual licence applications in specific areas. These general licences are accessible on the Treasury’s website:
http://www.hm-treasury.gov.uk/fin_sanctions_general_licences.htm
Proceedings
The previous Government committed to reporting on proceedings taken for any offences under the asset-freezing regime. We agree that it is important to continue to report on proceedings for accountability and transparency, and we will therefore continue to do so.
In the quarter April to June 2010, no proceedings were taken for breaches of the prohibitions of the Terrorism Orders or the Al-Qaida and Taliban (Asset-Freezing) Regulations.
Developments
The Terrorist Asset-Freezing etc Bill: The Government have introduced and published new terrorist asset-freezing legislation. This was reported in the previous written ministerial statement that I laid on 15 July 2010, Official Report, column 36WS.
1The detail that can be provided to the House on a quarterly basis is subject to the need to avoid the identification, directly or indirectly, of personal or operationally sensitive information.
2This figure reflects account balances at time of freezing and includes approximately $58,000 of suspected terrorist funds frozen in the UK. This has been converted using exchange rates as of 21/07/10. Future fluctuations in the exchange rate may impact on the contribution this sum makes to future totals of suspected terrorist funds frozen.
IMF Poverty Reduction and Growth Trust
(13 years, 9 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
The Government have today finalised an agreement to lend up to the equivalent of $2 billion (approximately £1.3 billion) in special drawing rights to the International Monetary Fund’s Poverty Reduction and Growth Trust. Copies of the agreement have been deposited in the Libraries of both Houses.
Fire Service College (Key Performance Indicators 2010-11
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
The following key performance indicators have been agreed for the Fire Service College as part of the 2010-11 business planning round and performance against them will be reported in the college’s annual report and accounts:
Achieve an operating profit before interest.
Achieve 90% UK Fire and Rescue Service delegate satisfaction for achievement of learning objectives.
Achieve 75% UK Fire and Rescue Service delegate satisfaction for learning experience.
Achieve a reduction in fixed staff costs compared to the Financial Year 2009-10.
Achieve a net reduction in staff sick absence days compared to the financial year 2009-10.
These indicators reflect the fundamental purpose of the Fire Service College, which is to deliver cost effective safety critical operational, leadership and command training, and professional development to the UK Fire and Rescue Service by applying consistent national standards, in order to enhance Fire and Rescue Service capability, operational effectiveness and safety.
Removing Planning Barriers (Schools)
(13 years, 9 months ago)
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The Secretary of State for Communities and Local Government (Mr Eric Pickles)
Today I am underlining our commitment to supporting the creation of new free schools through the planning system.
The new Government are committed to decentralising power, including over planning. Localism should involve both devolving power down to local councils, and going further by devolving power and opportunity down to community groups, neighbourhoods and individual citizens. Our free schools policy is an example of localism and the big society in action—by empowering individuals to come together to improve the educational choices for their children in their local community.
The Secretary of State for Education outlined his proposals for new free schools on 18 June. Teachers, parents and charities will have much greater freedom to set up schools which respond to local needs. We want to encourage competition and innovation, to address the imbalance of opportunity in education and enable schools to develop their own identity. Our approach will increase choice and drive up standards across the country and provide a real opportunity to transform the lives of disadvantaged children.
We know that many individuals and organisations are passionate about improving standards in education, and they will want to take advantage of the new freedoms. But we do not want to squander the opportunities that they represent, for lack of suitable school premises. Neither do we want to strangle proposals with red tape, by putting them through a lengthy and ponderous planning process. So we want to make it easier for promoters of schools to build new premises, or find and if necessary adapt buildings suitable for the needs of a school.
We are already giving a strong message to local planning authorities that they must be more responsive to the needs of their own area. We are empowering them to take more responsibility for planning decision-making, by removing centralised targets and streamlining national planning policy. We are also encouraging them to take a more proactive and positive, collaborative approach to development at the pre-application stage. The best authorities work with applicants to identify the key issues and how they might be resolved, before the planning application is submitted. In this way, they have the opportunity to work with development promoters, to bring about imaginative, but practical solutions, which will benefit their local community. This is what we would like to see happening with new free schools.
It is important, however, for local planning authorities to have a clear policy framework for the decisions they take locally. Through this statement, therefore, I wish to underline that, in determining planning applications, local authorities should:
attach very significant weight to the desirability of establishing new schools and to enabling local people to do so;
adopt a positive and constructive approach towards applications to create new schools, and seek to mitigate any negative impacts of development through the use of planning conditions or planning obligations, as appropriate; and
only refuse planning permission for a new school if the adverse planning impacts on the local area outweigh the desirability of establishing a school in that area.
Local planning authorities and the Planning Inspectorate should take this statement into account as a material consideration when determining planning applications, where it is relevant to do so.
If a local authority nevertheless refuses permission on this basis, the Government will ask the Planning Inspectorate to deal swiftly with any appeal that is lodged.
We shall shortly be consulting on changes to the use classes order to reduce unnecessary regulation and make it easier for buildings currently in other uses to be converted to schools.
These changes to the planning system will allow school promoters to be confident about moving their proposals forward quickly. We expect them to work collaboratively with local authorities to take advantage of the opportunities to benefit local communities, while ensuring sustainable solutions.
This statement sets out our policy approach to support the establishment of new schools until the proposed new national planning framework is in place.
This statement applies to England only.
Departmental Arm's Length Bodies
(13 years, 9 months ago)
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The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
DCMS is responsible for a number of sectors which people are passionate about. From sports through to television, and live music through to museums, DCMS and its public bodies make a real difference to the quality of people’s lives.
Despite being one of the smaller Government Departments, we are responsible for a network of more than 50 public bodies.
In my first few months as Secretary of State I have made it my priority to examine our network of public bodies critically with the aim of improving accountability, transparency and value for money.
In line with the commitments set out in the coalition document, I have been applying the Government’s agreed tests to each of our bodies: does it perform a technical function?; Does it need to be politically impartial?; And does it act independently to establish facts?
This forms part of the work being undertaken across Government, and led by the Cabinet Office, to restore proper accountability for activities funded by public money. Public bodies which do not meet one of the three tests outlined will be bought back into Departments or devolved if their function is necessary or abolished if not. This work will reduce the number of public bodies, increase the transparency and accountability of the remaining few, and ensure more effective delivery of public services.
As a result of this review, I am today announcing my intention to make a number of changes. This will include:
the abolition of the UK Film Council;
the abolition of the Museums, Libraries and Archives Council;
the merger of UK Sport and Sport England;
the merger of the National Lottery Commission and Gambling Commission1;
the abolition of the Advisory Council on Libraries and the wind up of the Legal Deposit Advisory Panel.
the abolition of the Advisory Committee on Historic Wreck Sites and the declassification of the Advisory Committee on National Historic Ships; and
declassifying the Theatres Trust so it can act as an independent statutory advisory body.
Further work will be done in discussion with the bodies concerned and other interested parties over the summer to finalise the details and timing of these proposals.
Where bodies are to be abolished we will look to transfer key functions to other existing bodies so as to continue to support our sectors and preserve the necessary expertise. In the case of the Film Council, for example, this will include its current responsibilities for the distribution of lottery funding for films, which will be maintained, as well as support for the certification process which is critical to the film tax relief, which will also be maintained. We will maintain a strong relationship with the British Film Institute.
We will also continue to explore further opportunities to improve the accountability and coherence of our public bodies landscape.
We are looking closely at our responsibility for Heritage and the Built Environment and so are currently considering the role and remit of English Heritage, the Heritage Lottery Fund and the National Heritage Memorial Fund. Additionally, we are considering the role of the Commission for Architecture and the Built Environment and exploring opportunities to consolidate its functions. We will also be discussing with the Church of England the merits of declassifying the Churches Conservation Trust so it has greater operational freedom.
In addition, we have reviewed the status of the two public bodies set up to help us deliver a successful games in 2012—the Olympic Delivery Authority and the Olympic Lottery Distributor—and have concluded there is no need to change our existing plans to wind up these organisations following the games.
The Olympic games provide a huge opportunity to boost inbound and domestic tourism and we continue to explore the best way of realising our ambitious goals in this area. As part of this we are considering the status, role and functions of Visit England and Visit Britain. A final decision will be made on this in the autumn as part of the spending review.
Any necessary legislative changes will be made through the Cabinet Office Public Bodies Bill, which is due to be introduced in the autumn.
Where proposed changes have implications for the devolved Administrations in Scotland, Wales and Northern Ireland we will work closely with them to finalise proposals.
1Subject to a business case.
Exercise Joint Warrior 4-15 October 2010
(13 years, 9 months ago)
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The Minister for the Armed Forces (Nick Harvey)
Joint Warrior is a bi-annual tri-service major exercise with invited NATO and allied nations and usually takes place over a two-week period in the spring and autumn. Its aim is to provide high-quality joint collective training and pre-deployment training in a multi-threat environment for participating units and their staffs. Each unit will operate from various bases in the UK and abroad but specifically there is an increase in air and land activity across Wales, Scotland and the border regions of England, as well as an increase in maritime activity in the north and west of Scotland.
These exercises are routine and I therefore wish to update the House that it is my intention to continue to write only to individual Members who raise specific concerns.
Joint Warrior is a complex exercise which requires careful planning and co-ordination to minimise the possibility of environmental damage. I would like to reassure the House that in order to achieve this, the exercise planning teams will continue to work closely with local authorities, various national rural agencies, landowners and other interested parties.
Collective training is a key priority for defence. It is a vital component in the UK armed forces ability to be able to generate forces at the right time, with the right skills and in the right numbers and Joint Warrior has the additional benefit which also gives UK forces the ability to train and operate with other coalition countries. The next exercise, Joint Warrior 102, commences on 4 October 2010 and a press release will be issued for public information.
School Funding
(13 years, 9 months ago)
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The Secretary of State for Education (Michael Gove)
Today I have launched a consultation on our proposals for school funding in 2011-12, including more detailed proposals for a pupil premium as announced in the document “The Coalition: our programme for government”.
A good education is the key to improving young people’s life chances so that they go on into adulthood with the skills and confidence for success. This is particularly important for pupils from a deprived background yet it is these pupils that are being let down the most by the school system.
Over the past decade, the gulf in achievement between the rich and the poor has widened, while the attainment gap between fee-paying schools and state schools has doubled. Just two out of 57 countries now have a wider attainment gap between the highest and lowest achieving pupils.
Young children who are in the bottom 20% of attainment in the Early Years Foundation Stage Profile are six times more likely to be in the bottom 20% at key stage 1 than their peers. For disadvantaged pupils, a gap opens at KS1 and increases over time. Pupils entitled to free school meals (FSM) are only a third as likely to achieve five good GCSEs as their peers.
These gaps persist through to higher education. A pupil who has been entitled to FSM is less than half as likely to go on to study at university as their peers. In the last year for which we have data, out of a cohort of 600,000 pupils, 80,000 pupils were eligible for free school meals, and of those, just 45 made it to Oxbridge.
Addressing this disparity is a top priority of the coalition Government and it is for this reason that we are implementing a pupil premium, to ensure that extra funding is targeted at those deprived pupils that most need it.
The coalition document specified that this will be:
“a significant premium for disadvantaged children from outside the schools budget”.
The consultation sets out our proposed methodology for allocating the premium, including options on the best deprivation indicator to use. This money will not be ring-fenced at school level as I believe that schools are in the best position to decide how the premium should be used to support their pupils.
We are also using this consultation to set out our proposals for possible additional support for service children, as set out in “The Coalition: our programme for government”. Furthermore, I have included proposals for additional support for looked after children, who have consistently low attainment but are often not picked up by deprivation indicators and so would not benefit from the pupil premium.
The consultation document also outlines our intentions for school funding for 2011-12. We will continue with the current methodology for the distribution of school funding to allow for a clear and transparent introduction of the pupil premium, but we also recognise that the funding system could be more reflective of pupil characteristics and so we intend to review the system for funding schools beyond 2011-12.
In addition, from April 2011 we will require all local authorities to implement the early years single funding formula, in order to improve fairness and transparency in the system and to support diversity of provision.
Copies of this publication have been placed in the Libraries of both Houses.
Home Energy Efficiency Scheme (Regulations Amendment)
(13 years, 9 months ago)
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The Minister of State, Department of Energy and Climate Change (Gregory Barker)
Today I am announcing that the Government will be amending the Home Energy Efficiency Scheme Regulations. The Government are committed to the current budget and this amendment regulation is intended to ensure the scheme for this year is delivered within the planned resources. The amendment regulation obliges the scheme manager to refuse further new applications at the point when all resources available for any given year have been awarded. The amendment will ensure that the scheme can provide measures for all customers whose applications have been accepted and that it can manage the Warm Front budget effectively in advance of the spending review outcome. The scheme currently operates a control strategy to manage the process between application and installation of measures to ensure that expenditure is kept within the available budget. In the event that the budget becomes fully committed before the end of the financial year, we will ensure that the installation of heating and insulation measures for successful applicants will be fully delivered.
Evidence Check: Homeopathy (Government Response)
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Health (Anne Milton)
We are today laying before Parliament the Government’s response (Cm 7883) to the House of Commons Science and Technology Committee report “Evidence Check: Homeopathy”, which was published on 22 February 2010.
Complementary and alternative medicine, including homeopathy, have a long tradition, and very vocal proponents and opponents. The Committee’s report sets out evidence and opinion on each side, with a strong focus on efficacy as being one of the main criteria by which it would expect national health service decisions to be made.
The Government welcome this report. We remain of the view that the local national health service and clinicians are best placed to make decisions on what treatment is appropriate for their patients. We expect local clinicians to make decisions on what is best for their patients taking account of safety, evidence of clinical and cost-effectiveness (where it exists) and the availability of suitably regulated/qualified practitioners.
We remain committed to providing good quality information available about complementary and alternative treatments so that clinicians and consumers can make informed decisions if they are considering such treatments.
Today’s publication is in the Library and copies are available to hon. Members from the Vote Office.
NHS White Paper (Supporting Information)
(13 years, 9 months ago)
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The Secretary of State for Health (Mr Andrew Lansley)
Today I am publishing two further supporting documents to the national health service White Paper, “Equity and Excellence: Liberating the NHS” (Cm 7881) which was published on 12 July.
The first document, “Regulating Healthcare Providers”, provides further detail on the principles of the policies set out in the White Paper, and seeks views from the public and external partners on some of the questions arising out of them.
The White Paper set out a vision for a national health service centred around the needs of patients, focusing consistently on improving quality of care. One of the fundamental features of the proposals is to free providers from political interference and to establish a stable, transparent regulatory environment.
“Regulating Healthcare Providers” therefore sets out proposals to free providers from central Government controls and to develop Monitor, the current regulator for foundation trusts, as an independent economic regulator for health and adult social care.
Under our proposals, all remaining NHS trusts will become or be part of a foundation trust, free from the state’s operational control and not subject to the Secretary of State’s direction. We will create an environment where staff and organisations enjoy greater freedom and clearer incentives to flourish. All providers should be able to compete on a fair playing field, so that they succeed or fail according to the quality of care for patients and the value they offer the taxpayer.
Monitor will be responsible for regulating all providers to promote efficient, financially sustainable service provision. It will operate independently of Government so that providers have confidence in a stable, rules-based system—without the risk of political interference—to make long-term investments in services. Monitor will have powers to license providers of NHS services and core functions to regulate prices for NHS services, where needed, to promote competition, and to support service continuity.
The document seeks views on a number of questions by 11 October.
Today, I am also publishing the report of the Department’s review of its arm’s-length bodies.
The publication, sets out our proposals for arm's-length bodies in the health and social care sector. These proposals form part of the cross-Government strategy to increase accountability and transparency, and to reduce the number and cost of quangos.
The Government’s proposed reforms of the NHS, set out in “Equity and Excellence: Liberating the NHS”, will establish more autonomous institutions, with greater freedoms, clear duties and transparency in their responsibilities to patients. Power will be devolved to the front-line. Liberating the NHS will fundamentally change the role of the Department and those bodies accountable to it. Changes to the arm’s-length body sector must reflect these wider reforms.
There is also an economic imperative for change. The Government have guaranteed that spending on health will increase in real terms in every year of this Parliament and are committed to increasing the proportion of resource available for front-line services, to meet the current financial challenges and the future costs of demographic and technological change. This means that we need to make significant cuts in the costs of health bureaucracy. Over the next four years, the Government will reduce NHS administrative costs by more than 45%, freeing up resources for front-line care.
The review has assessed arm’s-length bodies in light of both the current financial challenges and the strategy for the NHS set out in “Equity and excellence: Liberating the NHS”. Only those functions which need to be carried out a national level to support the Department’s clear objectives should remain in the sector. Functions that are better delivered by other parts of the system should be devolved to the right level, and organisations that carry out these functions should be abolished. Shifting functions from public bodies back into the Department, or to those who are closer to local needs and are independent of the state, will ensure more direct accountability to local people, Parliament and Ministers.
By ensuring that functions are delivered in the right place, the sector will be streamlined to cut costs and remove duplication and unnecessary burdens on the front line. The review will achieve a significant reduction in the number and cost of public bodies.
The Department will impose tight governance and accountability over the cost and scope of its remaining arm’s-length bodies. In future, arm’s-length bodies’ independence will be exercised within the confines of clear and agreed functions. This is in line with the Government’s wider commitment to increase transparency and accountability.
The report details the proposals for each of the Department’s bodies. Where changes require primary legislation, these will be enacted through legislation which will be introduced in this Parliament.
Proposals for the General Social Care Council (GSCC), the regulatory body for social workers, are included in the report. My predecessor issued a written ministerial statement on 4 November 2009, Official Report, column 41WS about the publication of the Council for Healthcare Regulatory Excellence’s (CHRE) report and recommendations on the General Social Care Council (GSCC) function relating to conduct. As part of its response to CHRE’s report the previous Administration announced that the GSCC would report on its progress to Ministers at the end of March. This report has now been received and is published today.
While the GSCC has made good progress over preceding months, the reality is that the costs of maintaining an independent regulator for social workers are prohibitive and we therefore propose to transfer the function of regulating social workers to the Health Professions Council, which will accordingly be renamed to reflect its remit.
These publications will be of interest to anyone working in the health and social care sector, to taxpayers, and to people who use health and social care services.
Copies of today’s publications have been placed in the Library and copies are available to hon. Members from the Vote Office.
“Regulating Healthcare Providers” can be viewed at:
www.dh.gov.uk/en/Consultations/Liveconsultations/DH_117782
The report of the arm’s length bodies review can be viewed at:
www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_117691
Office of the Health Professions Adjudicator
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Health (Anne Milton)
The Government have been considering the case for proceeding with work surrounding the Office of the Health Professions Adjudicator (OHPA).
OHPA was established in law in January of this year, but is not yet operationally active. It was anticipated previously that, from April 2011, it was to take over from the General Medical Council (GMC) the role of adjudicating on fitness to practise matters relating to doctors and, in due course, take on the adjudication role in relation to other health professionals from the remaining health regulators.
Having reviewed the case for OHPA the Government are not persuaded that the creation of another body is necessarily the most appropriate and proportionate way forward in terms of adjudication. We believe that steps can be taken to strengthen and modernise existing systems within the GMC to deliver substantially the same benefits as OHPA. The learning from these steps can then be reviewed and, in due course, applied to the other health regulators. We intend to consult with external partners on this approach shortly.
Healthier Food Mark and Government Buying Standards (Food)
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Health (Anne Milton)
Over the last two years, the Department has been developing a scheme to improve the nutritional content and sustainability of food served in the public sector, provisionally known as the Healthier Food Mark. The Department has been working across Government on this, and particularly closely with both the Food Standards Agency and the Department for the Environment, Food and Rural Affairs (DEFRA). Two pilots, involving over 70 organisations from across the public sector, have been completed.
I am announcing today that the Healthier Food Mark will not be taken forward as a discrete scheme. Instead, the considerable body of evidence and learning from the development of both the nutrition and sustainability criteria will be used to help develop Government buying standards for food procurement in the public sector.
Government buying standards ensure that the public sector procures sustainable goods and services. They are mandatory for central Government Departments and their Executive agencies and are promoted to the wider public sector. The Government buying standards for food will take account of the evidence gained from the pilots of the Healthier Food Mark. DEFRA, working with the Department of Health and other Government Departments, will assess the costs and benefits of a number of options for criteria to be included in the Government buying standards for food to address both nutrition and sustainability. The standards will be consulted on in the autumn.
English Language Requirement (Migrant Spouses)
(13 years, 9 months ago)
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The Minister for Immigration (Damian Green)
On 9 June 2010 my right hon. Friend the Secretary of State for the Home Department announced the introduction of a new English language requirement for migrants applying to come to or stay in the UK as a spouse or partner. I wish to inform the House that I am today announcing that this requirement will come into effect on 29 November this year.
Non-European migrants joining a British citizen or non-European national settled in the UK will have to demonstrate a basic command of English as part of the visa application process unless they are a national of a majority English-speaking country. The new language requirement will apply to spouses, civil partners, unmarried partners, same-sex partners, fiancé(e)s and proposed civil partners and will be compulsory for people applying from within the UK, as well as visa applicants overseas.
Migrant spouses and partners will have to demonstrate English language ability at A1 level of the common European framework of reference (speaking and listening), the same level required for skilled workers admitted under the skilled tier of the points-based system. Applicants will be required to provide evidence with their application that they have passed an acceptable English test with one of the UK Border Agency’s approved test providers.
Speaking English promotes integration into British society and broadens opportunities. The new rules will help ensure that migrant spouses are able to participate in British life from the outset and integrate more easily into wider UK society.
We are reviewing English language requirements across the immigration system with a view to tightening the rules further in the future. We will inform the House of our conclusions in due course.
Independent Police Complaints Commission (Annual Report 2009-10)
(13 years, 9 months ago)
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The Minister for Police (Nick Herbert)
I am pleased to announce that today my right hon. Friend the Home Secretary and my hon. Friend the Exchequer Secretary to the Treasury are publishing the annual report of the Independent Police Complaints Commission (IPCC). Copies of the report have been laid before the House and will be available in the Vote Office.
This is the sixth annual report from the IPCC. The report covers the work of the IPCC during 2009-2010 and includes a discrete chapter on the discharge of their responsibilities in respect of Her Majesty’s Revenue and Customs.
National DNA Ethics Group (Third Annual Report)
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
I am pleased to announce the publication of the third annual report of the National DNA Database Ethics Group on 29 July 2010. The group was established on 25 July 2007 to provide Ministers with independent ethical advice on the operation and practice of the National DNA Database (NDNAD).
I welcome the consideration given in the report to a number of important issues. The Government share the concerns of the group to ensure the effectiveness of the database and its ethical operation. Merely building as big a database as possible is neither effective nor does it achieve the proper balance between the rights of the individual and the needs of the state. I believe that the Government’s commitment to introducing the protections of the Scottish model achieves that balance and we are committed to introducing legislation to give effect to that, which I hope will address the key concerns around the database
The report can be viewed from 29 July on the website of the independent Forensic Science Regulator and I am arranging for copies to be placed in the Library of the House.
UK Border Agency (Annual Report and Accounts 2009-10)
(13 years, 9 months ago)
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The Minister for Immigration (Damian Green)
The “UK Border Agency Annual Report and Accounts 2009-10” has been laid before the House today. Copies will be made available in the Vote Office.
Judicial Appointments
(13 years, 9 months ago)
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The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
I am today announcing my agreement that salaried mental health judges with suitable experience can be selected to chair Restricted Patients Panel cases in the mental health jurisdiction.
These cases involve patients who are detained in hospital by virtue of a restriction order imposed by the Crown Court or by virtue of being transferred from prison by direction of the Secretary of State. The convention, since the implementation of the Mental Health Act 1983, has been that the tribunal judge chairing the panel will always be a circuit judge, a retired circuit judge or a recorder QC. However, the convention came about at a time when there were no full-time judges in the mental health review tribunal and was designed to provide assurance when this power was first transferred from the Secretary of State to the tribunal that an experienced member of the judiciary would be involved in decisions on whether to direct the discharge of a patient.
There are now full-time salaried judges within the jurisdiction with the necessary experience. Circuit judges and recorder QCs will continue to deal with the majority of cases but authorising some of the salaried mental health judges will increase the pool of available chairs to hear the cases.
Civil Litigation Funding Arrangements
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I am today announcing the Government’s intention to consult in the autumn on implementing Lord Justice Jackson’s recommendations on the reform of funding arrangements in his report, “Review of Civil Litigation Costs: Final Report”, published on 14 January 2010. We will be consulting in particular on the reform of conditional fee agreements (CFAs) which should lead to significant costs savings, while still enabling those who need access to justice to obtain it. The Government are therefore taking these proposals forward as a matter of priority.
Lord Justice Jackson was appointed by the then Master of the Rolls in January 2009 to review the rules and principles governing the costs of civil litigation and to make recommendations to promote access to justice at proportionate costs. Sir Rupert’s independent and comprehensive report makes a broad range of significant recommendations for reducing costs in the civil justice system in England and Wales. The Government are very grateful to Sir Rupert for his report.
CFAs have played a role in giving access to justice to a range of people. However, high costs under the existing arrangements have now become a serious concern, particularly in clinical negligence cases against the NHS Litigation Authority and in defamation proceedings.
CFAs are a type of “no win no fee” agreements under which lawyers are not paid if they lose a case, but can charge an uplift on top of their base costs—otherwise known as a “success fee”—if they win. Success fees allow lawyers to cover the costs of cases they take on which do not succeed. The success fee can be up to 100% of base costs. After-the-event (ATE) insurance can be taken out by parties to a CFA funded case to protect them against the risk of having to pay their opponent’s costs if they lose. Under the current arrangements, success fees and ATE premiums can be recovered from the losing opponent in addition to the base costs.
Sir Rupert recommends significant changes to the current arrangements for CFAs. He proposes abolishing the recoverability of both success fees and ATE insurance premiums; this would require primary legislation. In addition, to assist claimants to meet the cost of the success fees for which they would now be liable, he also recommends an increase of 10% in the level of general damages for personal injury, defamation and other tort claims; and a regime of qualified one-way costs shifting in specified proceedings, including personal injury and defamation.
Our consultation in the autumn would also seek views on other related recommendations on funding arrangements such as whether lawyers should be permitted to enter into damages-based agreements (DBAs) or “contingency fees” in litigation. DBAs are also a type of “no win no fee” agreements which allow a lawyer to take a percentage of the claimant’s damages for taking on the claim. DBAs are commonly used in employment tribunals but are not permitted in litigation before the courts. This consultation will take account of any relevant legal aid reform proposals on which we will also be seeking views in the autumn, as previously announced.
Work is also progressing on a number of other areas covered by Sir Rupert’s review, but will not form part of the Government’s consultation in the autumn. The Government are considering the recommendations on fixed recoverable costs in the fast track, and on referral fees. The Legal Services Board is looking at the issue of referral fees, and their conclusions will inform the Government’s position. We will also consider Lord Young of Graffham’s conclusions from his “Review of Health and Safety Law and the Compensation Culture”. Separately, the Civil Justice Council will consult over the summer on a voluntary code of conduct for third party funders, as recommended by Sir Rupert. Third party funding is an arrangement whereby a party not directly relevant to the proceedings agrees to fund the case in return for a share of the damages awarded.
A range of judiciary-led costs and case management work has been continuing since Sir Rupert’s report was published. For example:
more robust costs management is being piloted in defamation cases and in mercantile, technology and construction cases;
a streamlined process and scale costs in the Patents County Court will come into effect in October 2010;
there will be a pilot of assessing disputed costs under £25,000 on the papers rather than at a hearing, in Leeds, Scarborough and York county courts from October 2010; and
a pilot to speed up and reduce the costs of expert evidence (through “concurrent evidence”) started in June 2010 in mercantile, technology and construction cases at the Manchester Civil Justice Centre.
A judicial steering group is considering the priorities for further implementation of these recommendations.
Senior Salaries Review Body Report
(13 years, 9 months ago)
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The Leader of the House of Commons (Sir George Young)
On 31 March 2009 my predecessor informed the House, (Official Report, column 58WS) that the then Prime Minister had written to the Senior Salaries Review Body (SSRB) on 13 February 2009, inviting it to undertake a fundamental review of parliamentary pension arrangements and to make recommendations. The review was commissioned in response to the Government Actuary’s advice that the cost to the Exchequer of accruing benefits was likely to rise above 20% of payroll, the trigger point recommended by the SSRB for such a review.
The SSRB delivered its report to the former Prime Minister earlier this year. Today, the Government are publishing it in full. The report recommends some significant changes to the parliamentary pension arrangements, including:
Changing the basis of pension accrual from final salary to career average;
Increasing the normal pension age from 65 to 68;
Restricting the rate of indexation to the lesser of RPI or 2.5%;
Standardising the accrual rate at 1/60th of salary per year of service and the member contribution rate at 5.5% of pay; and
Benefits already accrued on a final salary basis to be frozen and uprated in line with RPI.
Taken together, the SSRB estimates that this package would reduce the underlying rate of Exchequer contribution to 10.5% of payroll.
The SSRB’s report provides helpful and thoughtful advice and a timely input into the current debate on public service pension arrangements. We are grateful to the SSRB for its work and for its willingness to tackle this matter thoroughly and independently.
In taking matters forward, we need to be mindful of developments that have taken place since the SSRB carried out its work:
1. The House has legislated to make the determination of hon. Members’ allowances and, from 2012-13 their salary and pensions, independent of the House. The independent determination and administration of these matters through the establishment of the Independent Parliamentary Standard Authority (IPSA), is a crucial part of the process of restoring trust in Parliament.
2. As stated in the coalition agreement, the Government have committed to consulting IPSA on how to move away from the generous final salary pension scheme for Members of Parliament. IPSA is due to take over responsibility for Members’ pension arrangements in 2012-13, as originally recommended by the Committee on Standards in Public Life in November 2009 and provided for in the Constitutional Reform and Governance Act 2010.
3. We have established, under the chairmanship of Lord Hutton, an Independent Public Service Pensions Commission and asked the Commission to make recommendations aimed at ensuring the ongoing affordability, sustainability and fairness of public service pension arrangements.
4. The Chancellor of the Exchequer announced in his Budget statement that, from April 2011, the consumer prices index (CPI) will be used for the price indexation of all benefits, tax credits and public service pensions.
The parliamentary scheme is not included explicitly within the scope of the Hutton Commission’s review. However, the Government strongly believe decisions about the parliamentary scheme should be informed by the Commission’s recommendations in respect of public service pensions more broadly, and that the SSRB report should be available as evidence to the Commission.
We will therefore await Lord Hutton’s recommendations on public service pensions. However, in the specific case of MPs, there is broad party political acceptance that the current final-salary pension terms for Members of Parliament are not sustainable and that reform is needed. We anticipate that the current scheme for MPs will end. We propose to consult IPSA on these matters and to make a further statement after Lord Hutton has published his findings.
Billy Wright Inquiry
(13 years, 9 months ago)
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The Secretary of State for Northern Ireland (Mr Owen Paterson)
I am pleased to announce that the report of the Billy Wright Inquiry, chaired by Lord MacLean, will be published on 14 September.
In my written statement to this House on 6 July, Official Report, column 8WS, I set out the steps that would need to be taken before publication of the Billy Wright Inquiry report. These included a checking process which would enable me to meet the obligations on me in relation to article 2 of the European convention on human rights and national security. I can confirm that this checking process has now been completed and I have received advice from the checking team which confirms that there is nothing in the report which, if published, could breach article 2 of the European convention on human rights by putting the lives or safety of individuals at risk, or put national security at risk. I am therefore satisfied that the report can be published in full and I have advised Lord MacLean of this.
However, given the time needed for the panel to finalise the text and to print the report, it will not be feasible to publish the report to Parliament before summer recess. I have therefore written to Lord MacLean asking him to retain custody of the report over the recess.
The report has not been shown to me or to any other member of the Government, or to any officials except the five members of the team who carried out the checking process. I have not been briefed on the contents of the report; nor have any officials other than those in the checking team.
As with the publication of the Bloody Sunday Inquiry report, I intend to consider giving advance sight to those who were designated as Represented Parties by the Inquiry, to their legal representatives, and to some Members of this House. I intend to discuss this with the Speaker of this House in due course.
Chief Electoral Officer for Northern Ireland (Report 2009-10)
(13 years, 9 months ago)
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The Secretary of State for Northern Ireland (Mr Owen Paterson)
The Chief Electoral Officer for Northern Ireland is responsible for all aspects of electoral administration in Northern Ireland, including the conduct of all elections and referendums, as well as electoral registration. Section 14 of the Electoral Law Act (Northern Ireland) 1962—as amended by section 9 of the Northern Ireland (Miscellaneous Provisions) Act 2006—provides that the Chief Electoral Officer must submit an annual report to the Secretary of State. The annual report of the Chief Electoral Officer for Northern Ireland for 2009-10 has been laid before Parliament today. Copies are available in the Library of the House.
Interim Report on Salt Supply and Use
(13 years, 9 months ago)
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The Secretary of State for Transport (Mr Philip Hammond)
For two winters in a row, severe weather has caused significant disruption for transport in this country. The cost to the economy and the disruption to the public has been significant, and there has been a level of dissatisfaction and confusion about the response by Government at both local and national level. This is unacceptable and must be resolved before the next winter season. An independent review of the transport sector’s response to last winter was commissioned by my predecessor as Secretary of State and I have asked David Quarmby CBE, who leads it, to continue that work.
The review panel’s interim report is being published today; and I am grateful to David Quarmby, Brian Smith, Chris Green, and those who have supported them, for their thoughtful and forthright analysis and recommendations. Copies of the interim report have been placed in the Library of the House.
The interim report concentrates on actions that can be taken by local and national highways authorities, salt suppliers, Government and others to improve resilience of the highways network for the coming winter as well as some longer-term actions. There is much in this report on which all of these groups will want to act urgently to ensure that disruptions to highway networks are minimised in the event of another severe winter.
For my part, I have tasked my officials to take forward, as a matter of priority, the recommendations relating to the Department for Transport and the Highways Agency.
I welcome the recommendation that the Highways Agency should build up a strategic salt supply of last resort for 2010-11, given the particular re-stocking challenges for local highway authorities for this coming winter. I have instructed the Highways Agency immediately to consider how arrangements could be implemented to source a volume of imported salt to establish and manage national strategic stockpiles of up to 250,000 tonnes.
In taking action to create strategic salt reserves for the 2010-11 winter season, the Highways Agency will clearly need to take account of the constraints imposed by the availability of salt from overseas and immediate storage facilities. It is important, as the review makes clear, that local highway authorities do not treat the possibility of such a supply as absolving them from the need to make appropriate provision for their highway networks. I urge local highway authorities to take forward the recommendations that relate to them.
The experience of last winter has shown that adopting standards and methods which reduce the utilisation of salt without compromising effectiveness will both reduce vulnerability to salt supply problems and reduce the cost to the local highway authority. It is therefore vital that authorities share best practice across the sector and my Department will discuss with the UK Roads Liaison Group how best we can support this aim for this winter and in the longer term.
Although highway authorities have a duty, as far as practicable, to keep their highways clear of snow and ice, it was clear from last winter that many members of the public were keen to show community spirit in clearing the footways outside their property. It was equally clear, however, that many were uncertain of their rights and liabilities if they were to act in this way. The interim report recommends (as does a recent report by the Local Government Association) that the Department for Transport should produce a brief guide to help the public understand this area of the law. I have tasked my officials to produce this by the end of October, not in the spirit of laying down what people should or should not do, but in the spirit of empowering those who wish to act in a neighbourly way.
The review panel’s work is not at an end. As well as undertaking further analysis to support longer-term actions to improve resilience in salt supply, they are also turning their attention to other transport modes. I look forward to receiving their final report, which they intend to publish in the autumn, in due course.
High Speed 2 (Exceptional Hardship Scheme)
(13 years, 9 months ago)
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The Secretary of State for Transport (Mr Philip Hammond)
The Government are committed to the establishment of a high-speed rail network as part of their programme of measures to create a low carbon economy. However, in developing plans for a new high-speed line, both I and my predecessor as Secretary of State for Transport have been mindful of their potential impact on those who live on or close to the proposed line of route.
It was for this reason that the previous Government launched a consultation on a potential exceptional hardship scheme to provide assistance for those who have been most severely and immediately affected by the preferred route option for a new line between London and the west midlands set out in the recent report by HS2 Ltd. This consultation closed on 17 June. Around 4,500 responses were received. This statement sets out my response.
It is clear from the responses to the consultation that there is overwhelming support for a scheme to be introduced to provide assistance for those most severely affected by HS2 Ltd’s proposed line. I can therefore confirm that an exceptional hardship scheme will be introduced, and that it will be open to applications from Friday 20 August.
The introduction of the scheme recognises the unique nature of the proposed line, which is only the second high-speed rail project to be considered in the UK and which differs significantly from its predecessor in terms of its design, operation and potential market. It should therefore not be taken as setting any precedent for future infrastructure schemes.
Respondents to the consultation also made many suggestions as to how the terms of the scheme might be altered. I have considered these and have made the following changes from the scheme put forward for consultation. First, the scheme will be widened to include owner-occupiers of agricultural units and commercial properties with an annual rateable value not exceeding £34,800; this brings it in line with the blight provisions under the Town and Country Planning Act 1990. Secondly, the scheme will also be able to cover properties recently inherited following a bereavement and repossessed properties that the original owner urgently requires the bank or other lender to sell to realise some value.
A number of respondents asked for the scheme to be extended to properties over tunnelled sections of the proposed line of route. It is my view, however, that any blighting effects over tunnels are likely to be limited, and this is reinforced by the additional information note on the effects of tunnelling which HS2 Ltd has published on its website today. However, I accept that there is a need to make special provision in relation to properties close to the proposed entrances and exits of tunnels. I have therefore decided to extend the scheme to cover these properties.
Finally, I have decided that the panel which makes recommendations to me on applications to the scheme should have a majority of independent members, although this will not be the case for the shadow panel announced in my written ministerial statement of 27 May 2010, Official Report, column 15WS.
In other respects, the scheme will operate as set out in the consultation document. In particular, the scheme will apply only to properties on or in the vicinity of HS2 Ltd’s route option 3. HS2 Ltd’s report makes a clear recommendation and it is therefore my view that assistance of this kind should be focused on this route, where the blight impacts will be most severe. It is also my conclusion that, to minimise the risk of blight spreading as a result of a scheme of this kind, it should be limited to those who have a pressing need to sell and who would otherwise experience exceptional hardship.
A large proportion of consultation responses also raised issues in relation to longer-term provision to address blight. If a decision is taken following public consultation to proceed with a new high-speed line and to safeguard the route that it would follow, statutory blight arrangements would come into force covering those properties which would have to be acquired in order to build or operate the new line. However, many respondents suggested that additional provision would be needed to cover those properties which would not have to be acquired but which might still be seriously affected by the construction or operation of the line. Respondents also made a number of proposals for how such provision might be structured. I am aware that provision of this kind has been made in respect of a number of previous schemes in both the public and private sectors.
I am mindful of the importance of appropriate longer-term arrangements to assist those who would be most seriously affected by a new line. I agree that some additional provision over and above the statutory blight regime will be needed to achieve this, and it is therefore my intention that this should be put in place, if and when a decision is taken to safeguard a route.
The specific issues raised in response to the consultation, particularly in respect of the different models for operating such arrangements, are complex and require detailed consideration. I have therefore asked my officials to provide me with further advice on options for the terms and conditions of such additional provision and how it should operate. I will report to Parliament on my proposed way forward in the light of the spending review outcome and before public consultation on the Government’s strategy for high-speed rail and the route of any new high speed line.
I have placed copies of the analysis of responses to the consultation and a list of frequently asked questions about the scheme in the Libraries of both Houses.
Marine Aids to Navigation
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Transport (Mike Penning)
Following my request for comments on the report by Atkins consultants entitled “Assessment of the provision of marine aids to navigation around the United Kingdom and Ireland” in June 2010 (10 June 2010, Official Report, column 35WS), I have received replies from 18 organisations and individuals. I wish now to inform the House of the steps the Government intend to take to ensure the continuing delivery of a high-quality aids to navigation service to ensure the safety of all of those using our seas, which also minimises the burdens on those paying light dues.
The Atkins report makes some 52 recommendations covering technical matters, corporate governance, efficiencies and synergies, light dues charges, the general lighthouse fund and Anglo-Irish issues. Key recommendations include:
creating a general lighthouse authority joint strategic board to drive efficiencies;
using an annual target reduction calculator (RPI - x%) for GLA running costs;
developing a timetable with the Irish Government on the financing of the Commissioners of Irish Lights, setting out an incentivised financial model which retains the all-Ireland body while allowing its costs within the Republic of Ireland to be covered wholly from Irish sources; and
changing the structure and scope of light dues.
In the light of the responses received, the Government have decided to endorse the formation of the joint strategic board with the clear objective of co-ordinating and directing work between the three general lighthouse authorities to achieve maximum efficiencies and improvements in the delivery of aids to navigation. To take the work of the joint strategic board forward as quickly as possible I have asked Chris Bourne, a non-executive director of Trinity House, to act as chair of the board. In his role as chair of the joint strategic board Mr Bourne will take an independent and impartial view of the issues, and will report to me on the board’s achievements. His extensive shipping background and knowledge of the work of the general lighthouse authorities make him an excellent choice for this role. In the longer term, the Government will look at the appointment of a chair for the joint strategic board from outside the three general lighthouse authorities.
The Government have also decided that it is right, particularly in current economic circumstances, to ask the general lighthouse authorities to deliver reductions in their running costs below the level of inflation and welcome the commitment by the general lighthouse authorities to delivering this challenge. The precise target will be agreed with the general lighthouse authorities alongside the development of their corporate plans and budgets for 2011 to 2014 that are submitted to me for consideration in the autumn.
In this difficult economic period the Government also wish to provide long term stability and reassurance, both for light dues payers in the level of charges they face and for the general lighthouse authorities so they can plan effectively with budgetary stability. The responses received to my request for comments on the Atkins recommendations suggest that there is little appetite to make major changes to the structure and scope of light dues payable by ships visiting our shores. I do not therefore intend to change the basis on which light dues are currently charged, although I will continue to work with all interested parties to seek an equitable means of ensuing that all those who benefit from the provision and supervision of marine aids to navigation by the general lighthouse authorities pay towards their provision where it is viable, practicable and economic to do so.
The Government also believe a solution needs to be found as soon as possible to the imbalance of funding for aids to navigation in the Republic of Ireland. I have written to the Irish Minister of Transport; it is my intention to conclude a negotiated agreement with the Irish Government and to implement that agreement as quickly as is reasonably possible thereafter.
Renewable Fuels Agency (Annual Report and Accounts 2009-10)
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Transport (Norman Baker)
In accordance with paragraph 14 of the schedule to the Renewable Transport Fuel Obligations Order 2007, the accounts of the Renewable Fuels Agency for 2009-10 and the report of the Comptroller and Auditor General have been laid before Parliament today.
Accounting for the Delivery of Welfare
(13 years, 9 months ago)
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Jobcentre Plus annual report and accounts 2009-10 will be laid before Parliament today. They will be published electronically on the Department’s website later today.
The annual report section provides a summary of Jobcentre Plus’s performance against the business priorities and targets stated in the 2009-10 published business plan. The accounts provide a summary of Jobcentre Plus’s administrative and employment programme expenditure for 2009-10.
Copies will be available in the Vote Office and the Printed Paper Office shortly.
Independent Living Fund
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)
The trustees of the Independent Living Fund took the decision to close the fund to all new applicants as of June 2010. This decision was taken to ensure the fund remained within its £348 million budget. This followed the decision in March to write to local authorities announcing that from 1 May the fund would only be able to accept new applications from disabled people in paid work of 16 hours or more, in line with the existing priorities set out in its governing trust deed.
We have considered the circumstances that led to the decision to restrict eligibility and then to close the fund to new applicants. A combination of factors contributed to this situation. The uncertainty and sensitivity of financial forecasting assumptions and a short-notice film reduction in the fund’s 2010-11 budget implemented by the previous Administration led to the trustees’ decision to restrict eligibility for the fund. The previous Administration failed to approve this decision—which enabled the ILF to live within their 2010-11 budget—until March 2010. The confusion and uncertainty caused by this chain of events is unacceptable.
The ILF has now put in place a more robust methodology for forecasting future expenditure and has safeguarded the support allocated to the 21,000 existing recipients of the fund. I have asked the Department and the ILF to ensure that all the lessons are learned from this situation and that appropriate procedures are put in place to ensure that the fund’s budget remains on track.
Further compounding the situation was the failure of the previous Administration to take a principled and strategic decision about the future role of the fund. This was despite a comprehensive and independent review of the fund published in 2007 which recommended that the ILF should retain NDPB status until 2009-10 at which point a decision should be made, based on the presumption of the full integration of the funding stream into personalised budgets.
The coalition Government are committed to ensuring severely disabled people receive the support they need and, working closely with the trustees, we will consider and settle the long-term future of the ILF as part of the forthcoming spending review.
Grand Committee
The Deputy Chairman of Committees (Lord Colwyn)
My Lords, before the first order is considered, I remind noble Lords that, in the case of each order, the Motion before the Committee will be that the Committee consider the order in question. Motions to approve the orders will be moved in the Chamber in the usual way.
Health and Social Care Act 2008 (Consequential Amendments No. 3) Order 2010
(13 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, this order makes a consequential amendment to the Water Industry Act 1991. The amendment is required as a result of the implementation of a new registration system under the Health and Social Care Act 2008, which set out a system of registration for providers of health and adult social care that the Care Quality Commission operates. To manage the registration process, providers are being brought into the new system in stages. The dates for these stages are set out in the Health and Social Care Act 2008 (Regulated Activities) Regulations 2010.
As of 1 April this year, all NHS providers were subject to the new system of registration. It will cover private and voluntary healthcare providers, and adult social care providers, from 1 October 2010. The providers are registered under the Care Standards Act 2000. Therefore, on 1 October, certain provisions of the Care Standards Act will be repealed. One of these will be the definition, in Section 2 of the Act, of an “independent hospital in England”. A previous order—the Health and Social Care Act 2008 (Consequential Amendments No. 2) Order 2010—made a number of consequential amendments to primary legislation using this definition. Unfortunately, an amendment to the Water Industry Act 1991 was missed, so this order is necessary because of that omission. Anyone who buys, or has bought, the earlier order will be entitled to a copy of this order free of charge.
A further order, subject to the negative parliamentary procedure, has been laid today and will make the necessary amendments to secondary legislation. Schedule 4A to the Water Industry Act 1991 contains a list of premises that should not be disconnected for the non-payment of water charges, including,
“an independent hospital within the meaning of the Care Standards Act 2000”.
As the definition of “independent hospital” in the Care Standards Act 2000 will no longer be applicable in England, this order makes a consequential amendment to the definition in the Water Industry Act 1991. It replaces the current cross-reference to the Care Standards Act 2000 with a new definition of an “independent hospital” for England. This new definition covers the same kinds of premises that were previously covered, but does not rely on a reference to the definition in the Care Standards Act 2000. The definition for Wales remains unchanged. I commend this order to the Committee.
Baroness Thornton
I thank the Minister for explaining this small order arising out of Section 162 of the Health and Social Care Act 2008. I suppose that I should apologise to the Committee for the earlier omission, which is why we are here. Section 162 is a part that confers power on the Minister to ensure that the Act is in compliance with existing legislation, and indeed that is what the Minister explained in a more than adequate fashion.
I confess that I was not sure that I could see the necessity of this order until I realised that the healthcare facilities mentioned can have their water cut off as a result of non-payment. Can the Minister confirm whether this has happened in the interim period?
The key matter on which I should like further clarification is the definition of an “independent hospital”. I think that I heard the Minister confirm that this covers the public, private and charitable sectors, any one of which may be providing healthcare as listed in new paragraph (5). Am I right to assume that this does not cover care homes or nursing homes, and that they are covered elsewhere?
Finally, I am relieved that body piercing and tattooing parlours are exempt from the order. I also wonder whether chemical peels, which are fashionable now, are covered under paragraph (5)(e)(iii) and (iv) for the purposes of this order.
This order is otherwise perfectly straightforward and I support the Minister in moving the Motion.
Earl Howe
My Lords, I am grateful to the noble Baroness for her questions. The first point to make is that we are in time with this order, because the operative date is 1 October, so there is no retrospective element. There is therefore no question of any hospital having fallen between two stools, so to speak, as regards water disconnection. I am not aware that there has been a problem on that front.
The noble Baroness asked about the definition. Schedule 4A to the Water Industry Act 1991 lists a number of premises that are not to be disconnected for non-payment of water charges. These include, among other premises, NHS hospitals, premises used to provide medical or dental services by registered practitioners, children’s homes, schools and care homes. These premises will continue to be protected from disconnection for the non-payment of water charges. No changes are being made to these parts of the schedule.
The noble Baroness also asked whether chemical peels were excluded under new paragraph (5)(e). As that procedure is not counted as surgery, chemical peels are not included and therefore do not receive protection from disconnection under paragraph (5)(e).
Baroness Hussein-Ece
I should like to ask my noble friend a couple of questions. I understand completely the need for this order. It is a sensible step and an important one to ensure that the establishments mentioned do not suddenly have their water cut off. However, I want to ask what penalties are in place for water companies that do not follow these regulations and how are they enforced. Further, what review mechanism is in place if other establishments need to be added to the list in due course?
Earl Howe
My Lords, as regards the penalties, I am going to have to write to the noble Baroness because, as she will understand, those are a matter for another department. I know that I am here to speak for the Government as a whole, but I am afraid that I do not have that information in my brief. On a review of the list of those premises that are exempt from disconnection, again, I will write to her.
Electricity and Gas (Carbon Emissions Reduction) (Amendment) Order 2010
Lord Marland
That the Grand Committee do report to the House that it has considered the Electricity and Gas (Carbon Emissions Reduction) (Amendment) Order 2010.
Relevant Document: Second Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)
My Lords, the carbon emissions reduction target, known as CERT, requires the larger energy supply companies to meet household carbon emissions reduction targets. The amending order before the Committee will extend the supplier obligation policy framework to December 2012 and significantly refocus it over that period. It will act to drive investment and secure jobs in energy efficient industries, ensure that households and the UK more broadly save energy and money, and reduce carbon emissions.
Before I turn to the detail of the order, let me remind noble Lords of the critical role I believe energy efficiency has as part of the transformation to a low- carbon society. UK households spend £20 billion on energy each year, mostly on electricity and gas, and account for 30 per cent of all the energy consumed in the UK, thus directly contributing to climate change the energy used to heat our homes. Energy saving measures are therefore a win-win. They help to increase our energy security by reducing our reliance on imported fossil fuels, they provide environmental benefits by delivering carbon emissions reductions and local air quality improvements, and they support fairness by providing hard-pressed families with a simple means of saving money and protecting against cold, inefficient homes. They provide further economic benefits by creating employment opportunities in the manufacturing and service delivery of energy-efficient technology.
The UK’s housing stock retains substantial opportunities to improve its thermal efficiency. That is why we are putting in place our radical and ambitious green deal, to be established through legislation in the forthcoming Energy Security and Green Economy Bill. The green deal will be a game changer. It will take a long-term approach to energy efficiency, unlocking capital investment and transforming the landscape for home energy efficiency improvements. However, it is imperative that we maintain and, where possible, quicken the pace of energy efficiency investment and activity immediately while we develop and implement the longer-term green deal.
I know that there is a good deal of consensus around the importance of the issues that the order addresses, and I welcome that fact. The refocused and extended CERT will set suppliers a new, challenging carbon emissions reduction target, will focus the scheme on driving insulation measures and will help low-income households get an improved share of investments. It will act as an important bridge to the future, building momentum as we put in place the arrangements for the green deal.
I turn to the specific amendments that we are making with the order. In doing so, I thank those people and bodies who responded to the public consultation process across the spectrum of interested partners, including energy suppliers, the insulation industry and local authorities as well as environmental and fuel-poverty groups. Their contributions have been crucial in forming our decisions.
We will extend CERT to the end of 2012, increasing the target by 108 million lifetime tonnes of CO2 and setting a new overall target of 293 million lifetime tonnes of CO2. This increase equates to just over a 3 per cent cut in household greenhouse gas emissions in 2013. Given how far advanced suppliers are in meeting their existing targets, we will allow suppliers to start work against this new target immediately to ensure that customers’ access to energy efficiency measures is not interrupted.
We will act to stamp out the mistakes of the past by introducing a complete ban on the subsidy of halogen and compact fluorescent lamps, and will focus instead on installed measures. Through this order, we will require over two-thirds of the increase in the overall target to be delivered through professionally installed loft, cavity wall and solid wall insulation. This will provide the insulation industry with confidence to invest and will ensure that all customers who want to make a real difference to their energy bills and carbon footprint have cost-effective opportunities to do so. That means help for some 3.5 million households from insulation measures.
To ensure an equitable distribution of measures, and in the light of the rising blight of fuel poverty, we are creating a new obligation for those households that have the greatest need. Low-income pensioners, families with children and the disabled will form a super priority group. Further, each benefiting household will be required to receive a heating or insulation measure. That means an estimated 600,000 such measures professionally installed in the most vulnerable homes, and over £400 million focused on helping the very poorest. Additionally, we will provide vulnerable households with continued support for microgeneration measures under CERT, such as heat pumps and solar water heating.
Our building block for targeting these vulnerable households is the energy rebate scheme, now aimed at a subset of pension credit claimants. We expect up to 250,000 pensioners on low income to receive a rebate worth £80, meaning up to £20 million under this scheme. These vulnerable households can go on to be targeted with supplier offers under CERT.
Overall, the CERT extension will have a significant positive impact on fuel poverty, with approximately 175,000 households expected to be provided with measures that provide them with a long-term solution to fuel poverty. Many more households will receive measures that will protect them from falling into fuel poverty.
In summary, the reshaping of the scheme that this order represents will help deliver a step change in insulation rollout and maximise the scheme’s contribution to environmental and social ambitions. I call on your Lordships to support this legislation in order to bring new impetus to the household energy efficiency agenda with immediate effect and ensure that we can best serve the interests of the economy and the public. I commend the order to the Committee.
Lord Jenkin of Roding
My Lords, I welcome what my noble friend said. He explained briefly the reason for the urgency of the measure; that point has been made to me by some of the interested parties. They desperately need to know where they stand at the end of the existing second phase of the CERT programme. As my noble friend said, the order provides a continuation up to the end of 2012.
However, perhaps my noble friend will comment on one of the consequences of the urgency with which the Government have brought forward the measure. I have in front of me the Merits Committee’s report. Under the heading, “Other instruments of interest”, it refers to this order. The paragraph ends:
“However, given the speed with which the Government wishes this SI to proceed, the Committee has not had the opportunity to make any detailed assessment of the instrument”.
I say with kindness to my noble friend that that requires some explanation. It is not satisfactory that this House should have a Merits Committee, which examines matters in the field of statutory instruments which are of interest, but which is precluded simply for shortage of time from being able to offer its comments.
We will have to do the best that we can. The report was published only last Thursday, on 22 July. It has been quite difficult to keep up with what has been going on. Obviously, I will have to do my best. There has been very little opportunity to consult with those outside, but it is a very complicated issue—not so much the changes that my noble friend has outlined, which are themselves quite complex, but the documents that accompany the order are very large. We have had the summary of consultation responses and the government response, a document running to no fewer than 50 pages, and the impact assessment, which runs to 77 pages. Like other noble Lords who have been faced with those documents at short notice, my questions to the Minister may seem naive and ill informed, but I shall have to do my best.
I found it a depressing experience to read the order, the consultation document and the impact assessment with which we have been supplied. That is not because the CERT scheme is undesirable; when we have debated the order’s predecessors, I have made the point firmly that the need to attack and deal with the poor quality of much of our existing housing stock is of huge importance, both to make life a bit more comfortable for the inhabitants and, as the Minister rightly pointed out, to achieve higher energy efficiency. What depresses me is its extremely complicated and bureaucratic method of achieving that.
I have had occasion to criticise that in the past and, although I have the copies of Hansard here, I promise noble Lords that I will not repeat what I have said on previous occasions. If anyone doubts whether it is bureaucratic and complex, just skim through the 77 pages of the impact assessment. That must have required a huge number of man hours to prepare for publication. One really has to wonder whether all that is necessary. I shall return to that point towards the end of my remarks.
In the mean time, I have a few more detailed questions to address to my noble friend. I turn at once to the major change in the order—the new super priority group. I can well understand the aim and have a good deal of sympathy with it. I should declare an interest: I am a member of the priority group. As such, I was able to get my house insulated—both loft and cavity wall insulation. I shall not repeat the horrors of that experience, but it filled me with a strong impression that the biggest single barrier we face is household hassle.
Under the priority group, 40 per cent of the carbon savings must come from people who enjoy a range of benefits or are pensioners aged over 70. The noble Lord, Lord Hunt of Kings Heath, will recognise that we have frequently had to complain about the difficulty for the suppliers who have to operate the scheme identifying the households that qualify for that treatment. I dealt with that two years ago under the 2008 order and again last year under the 2009 order. One concession was made by the Minister's predecessors. Under the Pensions Act, we had an order which allowed information to be shared on what was a very limited category of those in the priority group—namely, pension credit beneficiaries. No doubt that has been helpful. The data protection rules make it impossible for there to be a general exchange of names and addresses of people who fall within the various categories of beneficiary under the social security legislation.
Therefore, the companies which have to operate the scheme are reduced to other methods to try to find the people in the priority group, including cold calling and, much more intelligently, looking at areas and cities where they might expect to find a higher concentration of people in receipt of the various benefits. The point was made to me again this morning that that is a very unsatisfactory process which costs them a lot of money. It increases the cost of administering the whole scheme.
In the order, we are now faced with a new category, the super priority group. If anyone is any doubt about that, paragraph 3.2 of the order spells out the definition of those who are in the super priority group. It is nearly a full page long. Does my noble friend have a better answer than did his predecessors as to how on earth the companies are supposed to find out who those people are, so that they can approach them and, if they agree, insulate the houses in the way we all want?
I turn to the consultation. I will not weary noble Lords with the detail, but at paragraph 8.4 of the results of the consultation, there were many conflicting answers on how that problem should be tackled. I do not see any advance in the order on what has gone before. That is my first question.
My second question relates to the concept of market transformation measures. Again, there is an elaborate definition of that in subparagraph (4) of paragraph 3. Paragraph 7.4 of the Explanatory Memorandum spells that out in some detail. The second point in that paragraph states:
“CERT supports innovation and energy saving products and appliances”—
which my noble friend very properly mentioned in his speech—
“by providing a 50% increase in carbon score to qualifying products. The market transformation baseline”,
is set out in the 2001 order, thus going back some years.
“This means that a measure which saves carbon but was not promoted under the 2001 Order can be promoted as a market transformation action under the CERT order. However, we will increase the baseline to measures which have not been promoted under the …Order 2004. This will mean that suppliers need to come forward with new products or similar products which are no less than 20% more efficient than products promoted under the previous scheme to March 2008”.
I have hunted through the order, I hope with care, but I cannot find where the figure of 20 per cent comes from, so I would be most grateful if my noble friend could explain where in the order is the uplift, as it were, of 20 per cent which needs to be met. It is set out in the Explanatory Memorandum but I am quite unable to find it in the order.
Lord Reay
My Lords, this order extends the scheme in both time and scope to promote various energy efficiency measures to be carried out on residential properties, principally insulation measures, designed to reduce domestic users’ consumption of heating fuel. In so far as they have that effect, they will reduce the carbon emissions attributable to the domestic sector. In so far, however, as consumers choose instead to enjoy a greater measure of what the department calls “thermal comfort”—that is, choose to use the same amount of heating fuel in order to maintain a higher temperature in their homes—it will have no effect on carbon emissions.
What effect this will have in the event is apparently to be assessed in a review to be conducted by Ofgem at the end of the scheme in 2013. Even then, though, assessing the effect on carbon consumption of the energy-saving measures adopted under this scheme will largely be a matter of guesswork. Therefore, how will we be able to distinguish the effect of energy-saving measures from the effect of variations in energy prices, of variations of people’s real incomes or even of variations of winter temperatures on the amount of heating fuel that households choose to consume?
I will not go deeply into one of the issues that my noble friend took up. I will leave on one side the question of whether it is worth while performing the extraordinary intellectual gymnastics contained in the order’s 77-page impact assessment in order to justify measures that in the best case will provide a reduction amounting to an infinitesimally small fraction of present global carbon emissions. I will instead agree that using fuel more efficiently and promoting that efficient use is inherently a good thing, but still needs to be viewed in the light of its cost.
The cost of carrying out measures such as cavity wall insulation is largely to be borne by the supplier—entirely so, in the case of the new super priority group—but in some cases the consumer apparently has an option to contribute. As the impact assessment says on page 61, the share of costs borne by suppliers depends on the householder’s willingness to pay. What happens when the householder does not wish to contribute? Does the supplier then pay all the cost, or do the measures then not get carried out? Will the Minister give us any assessment that his department must have made of the likely take-up rate of consumers of this choice?
The suppliers’ costs, of course, are recouped by the additional charges that they can put on customers’ bills, so although giving special treatment to the priority group and the special priority group may help with alleviating fuel poverty, everyone else therefore has to pay a higher price, which, apart from anything, else, will result in additions to the ranks of those in fuel poverty. The impact assessment is frank about this. On page 23, it estimates that,
“for the average UK house, the costs of higher fuel prices on their annual fuel bills would be £46 in 2011 and £61 in 2012”.
Those are not negligible increases, although it would be interesting—as my noble friend was trying to learn—to know what the total estimated cost for the measures might be. I could not find it in the impact assessment, although it must have been assessed in order to produce the figures about the effect on individual bills. I realise that it will be based on a pyramid of assumptions, as are all the other figures in the impact assessment, but the Minister should have it.
Lord Teverson
My Lords, after those two speeches the Minister will be looking forward to that of the noble Lord, Lord Hunt, for some empathy. One thing I have discovered from being on these Benches is the picture opposite, which I have not seen before. I would stare for hours at “The Judgment of Daniel” in fear that one day it might be me. My sight is not good enough to see quite what that picture is about: it looks like a tragic circumstance with someone having befallen some terrible fate. Hopefully, that will not happen in this Committee.
I welcome the order as an interim measure. I very much agree with the noble Lord, Lord Jenkin, on that issue. It starts to improve a number of weaknesses of the original CERT scheme. The scheme had good intentions and was a good start, but a lot was still left to be desired. I hope that it will move on quite soon. I have said this before, so I shall say it only briefly, but it is counterintuitive to me that we have energy companies charged with reducing energy consumption. Somehow, life tells me that you get energy companies to be as efficient as they can by doing what they do well, which is producing energy, and get someone else to reduce consumption. However, the scheme is about energy saving, which has been the Cinderella subject of climate change and energy security, and I welcome it as an improvement.
There is one area that was put right by the previous Government, but the deal is sealed on this: light bulbs, of which I am sure that all of our houses are full. It was used as an easy way out by energy companies just to distribute them. I remember my fear of visiting my mother because every time I went to her house, she handed me a whole tray of energy-efficient light bulbs that she did not want but which had been thrust on her by her energy supplier. There was a bit of a farce with organisations going through the motions of energy saving that did not really happen. What we have instead is a much greater emphasis on insulation and the things that really make a difference. I am interested to see that microgeneration schemes are also mentioned.
On targets, I notice that there is a spectacular increase of 58 per cent, until you read down the bullet points and notice that the carbon budget extends over a much longer period. I would be interested to understand what the actual percentage uplift is pro rata in the overall targets for carbon reduction. The super priority group again sounds good, but I came up with exactly the same questions as did the noble Lord, Lord Jenkin: how do you identify this group and therefore how do you supply it?
The difficulty about the ongoing CERT scheme, which the order does not greatly improve, is the whole issue of value for money, of auditing and of transparency in how the money is spent. It is not public money because it never hits the public purse, the Chancellor’s piggy bank, but it is money that is paid compulsorily as a levy, effectively as a charge on individuals who use energy, which is all of us. It is not properly transparent in the way that it is used and whether energy companies do the work themselves or requisition it, where the margin goes or how the work is bid for. All of that is very unclear in terms of what in many ways would be seen as public money.
The figure that really struck me on reading the Explanatory Notes— no doubt it comes out of the elaborate cost estimates—is that of just under £9 billion-worth net present value of the scheme. My mind boggles as to how we get to that figure. It makes it sound a perfect and fantastic scheme if we are somehow all to receive that in our pockets. Net present values can be quite useful, but we must remember that although the super group is targeted here to reduce energy poverty, the scheme puts about £45 on every electricity bill in additional costs. It is well used at the moment, but we have to perform far better in the future than we have done in the past, and I look forward to further legislation.
Although I have enjoyed looking at the picture, what is more important is that I have the same view of the same people on the other side of the room, which is excellent.
Lord Woolmer of Leeds
My Lords, like the noble Lord, Lord Teverson, I have a different view of the room, but I can also see the same people and it is a great pleasure to see old friends here again. I have one simple question. In the 1960s and 1970s, I recall the piecemeal efforts made to improve old Victorian housing stock in Leeds. In the end the council adopted what eventually became a national approach, that of taking whole areas of housing, identifying it as old stock and designating “whole house improvement areas”. The council worked through the worst of the housing by taking a whole series of streets at a time. In some cases, we decided to demolish the houses because it was never going to be worth trying to keep them, but other areas were kept. This proved to be an extremely cost-effective way of dealing with improvements.
Certain areas of housing clearly need improvements in terms of energy efficiency. It seems to be common sense, and it may be that this is what is being done in some areas, that if one works through the areas most in need, that is a cost-effective approach. But instead of doing that, we are attempting to prioritise in the first instance individual properties where particular people with particular characteristics live. That is extraordinarily difficult to do, as the documents we are considering today show. In any case, people die or move on into other housing, and some individuals may therefore qualify again. My question for the Minister is this: will the Government reflect on whether the most cost-effective approach over 15 or 20 years would be by area? Clearly we would not be going into more recently built housing for a long time. This approach could be funded in the same way and suppliers could put the work out to tender by negotiation with local authorities who know the areas well and can easily identify them. This approach may already be in train, and it seems to be the most cost-effective one—not in the short run, that cannot be denied, but over a period of time it would be. Certainly it would avoid all the bureaucracy of trying to identify people in particular circumstances and with particular needs, but who are in fact moving targets. I hope that the Minister can reflect on this when he responds.
Lord Hunt of Kings Heath
My Lords, I should like to welcome the Minister to the world of order-making and the familiar cast list of noble Lords present who spoke in a similar debate a year ago. The Community Energy Saving Programme is extremely important and we see this as a critical part of how we can help people to make energy savings, cut their household bills, and contribute to permanent reductions in CO2 emissions. Over the years that the schemes have been in operation, millions of households have been helped. However, as noble Lords have suggested, there is no room for complacency. That is why the previous Government consulted on the scheme a few months ago, and on the amendments to the existing framework. I am grateful to the Minister for his explanation.
I will also ask a question raised by the noble Lord, Lord Jenkin. I, too, have read the brief report of the Merits Committee, and I am grateful to the committee for its work and comments. As the noble Lord, Lord Jenkin, said, the committee noted that the detailed impact assessment, which runs to 77 pages, is attached to the statutory instrument that we are debating today. The committee said that it had not had the time to make a detailed assessment of the instrument, given the speed with which the Government wish the SI to proceed. Like the noble Lord, Lord Jenkin, I ask the Minister for an explanation. I am confused: surely the Merits Committee must be given enough time in which to do its job properly. I speak as the first chair of the Merits Committee, the point of which is to have time to go through statutory instruments in order to make a judgment on whether it should draw to the attention of the House that scrutiny of a statutory instrument merits special attention. If it does, it is marked with an asterisk on the Order Paper, which usually will lead to a debate in the Chamber. The Minister should explain why the Select Committee has not been given proper time to do its job. I am sure that, when the SI goes back to your Lordships' House, I will raise this matter on the Floor of the House.
Lord Jenkin of Roding
I do not know when we will have an opportunity to come back to this: perhaps tomorrow or Wednesday. I am sure that the Minister wants to get his order through before the Summer Recess. The noble Lord, Lord Hunt, raised the issue of whether the figures should appear on bills. He would do well to remind himself of what he said when I moved similar amendments in the past that were rejected by the then Government.
I had thought that we would have this. It was in my honourable friend Mr Hendry’s speeches on many occasions; but we will have to wait and see. The noble Lord, Lord Hunt, is being a little disingenuous. He, in fact, has turned this down in the past.
Lord Hunt of Kings Heath
We were not always able to agree with the noble Lord, Lord Jenkin, on specific proposals, but I do not think that I ever argued with him on the general principle. I realise that “The Judgment of Daniel” is facing me and that I must be very careful about how I respond, but I recall the noble Lord, Lord Reay, raising this very point in Grand Committee 12 months ago. I am absolutely convinced that if we are seeking to ensure that these measures are taken—and I do not mean just the measures that will have to be taken on energy saving, but more generally in terms of the energy strategy; no doubt we will discuss this tomorrow afternoon in relation to the Statement on energy—the more general information that can be provided to the public, the better.
My noble friend Lord Woolmer mentioned the scheme in Leeds in which whole housing areas were taken together. In the inner city in Birmingham we also had a scheme called “enveloping”. Essentially, the local authority renovated the whole structure of houses which might have been privately rented or owner occupied. That scheme was enormously effective and meant that in many inner city areas, instead of houses being knocked down, some of the social fabric of the areas was maintained. I have long thought that such an approach could be used in relation to energy saving. We will be very interested to hear the Minister give some indication of when he is likely to come forward with proposals. He mentioned the green deal and the forthcoming energy Bill; I would certainly welcome as much information as he can give about what is likely to be contained in them and when they are likely to come to your Lordships' House.
I remind the noble Lord of a comment made by the noble Baroness, Lady Wilcox, who was standing in my place on this side of the Room only 12 months ago. When we debated a previous order on this matter, she then referred to Conservative Party policy to grant an entitlement to householders for approved home energy works up to the value of £6,500. At the time, I estimated that a loan guarantee of up to £200 billion would be required of a Conservative Government. I would be interested to know whether thinking has moved on since then. We will look at this carefully, but it strikes me that at a time when they seem to have found it impossible to give a rather modest loan to Sheffield Forgemasters, they have been indulging themselves in schemes which would involve considerable amounts in loans. I should be interested in the noble Lord’s response to that.
Finally, I come to the question raised by the noble Lord, Lord Jenkin. Given the current economic circumstances, a particular focus must be the impact on poorer people and households. The order contains a specific amendment in relation to microgeneration which means that suppliers will be able to promote only microgeneration measures that are eligible under other microgeneration support mechanisms for promotion to super priority group households. The noble Lord, Lord Jenkin, asked for information about super priority households. The Explanatory Memorandum states at paragraph 7.4:
“All microgeneration uplifts will be withdrawn from April 2011”.
Can the Minister confirm that this applies only in circumstances arising in this order—in other words, it does not apply generally to the other microgeneration support mechanisms embracing feed-in tariffs and renewable heat incentives? Some clarification would be welcome.
Lord Marland
My Lords, as always, it is a great pleasure to enter into a debate with such eminent gentlemen who know so much about the subject. Perhaps I may deal with the points raised in consecutive order. I note the comments of the noble Lords, Lord Jenkin and Lord Hunt, that this order should have gone through the Merits Committee. You’re damned if you do and you’re damned if you don’t. It is worth pointing out that the Joint Committee of both Houses that scrutinises statutory instruments did not think that it needed drawing to the special attention of both Houses. This legislation is in operation and all we are doing is seeking to extend its lifetime. We have had three months of public consultation; some 102 companies have been consulted, as have the big six and their agencies. The whole point here is to keep up the pressure on an existing programme to build the bridge between now and the green deal.
This programme is being filled quickly—probably quicker than we predicted—and we now have an opportunity to keep up the pressure. It would be wholly wrong to tear up the current programme while it is in force and particularly while we are planning the green deal to which the noble Lord, Lord Jenkin, referred. We completely understand the bureaucratic and complex nature of the current arrangements, and I give the noble Lord the commitment that the green deal will seek to address that. As regards his point on difficulty of suppliers, that is a practical issue. Some people have no difficulty with them, while others do. We hear positive remarks and I am sorry that he experienced difficulty. Perhaps if he joins the super priority pension group, it might be a different thing altogether.
Lord Jenkin of Roding
My Lords, I am tempted to regard myself as being very poor, but I am not as poor as that.
Lord Marland
We are deeply gratified to hear that. Of course, it is easy to data-share under the Pensions Act 2008 as it commits to providing data. I am afraid therefore that I do not agree that it is difficult to find out who the relevant people are. Any work with local charity groups and local authorities adds to the information flow. This is not therefore a change; it is an extension of a policy. It gives us time rightly to re-examine his points about bureaucracy and difficulty of commitment.
As regards cost, raised by a number of noble Lords, it is £50 to customers. It is an increase from £41. However, against an average bill of £1,124, it is a worthwhile commitment to the cause. Climate change is not the main driver—this is reducing carbon throughout the supply and we must differentiate between the two. The noble Lord, Lord Jenkin, rightly mentioned the Hartwell report—not for the first time. We have three days of debate coming up. I will lay a private bet that it will be mentioned every day and I look forward to the noble Lord doing so. I believe that the writers of the Hartwell report will see the green deal as an opportunity for their recommendations to be examined. It will give us the opportunity to take their views into account.
The noble Lord asked where legislation states that market transformation requires a 20 per cent improvement on existing products. I repeat that to him as said because it is important that we understand it. I will give him the officials’ response, which is that the CERT legislation details that uplifts will be applied if a significant improvement in efficiency is achieved to previously promoted measures. Ofgem, the scheme’s regulator, has indicated that a 20 per cent improvement is the minimum requirement. Ofgem consulted with suppliers and other interested parties before providing this figure.
My noble friend Lord Reay asked about priority groups and super priority groups and how they are going to be funded. I confirm to him that they will 100 per cent generally be funded. He asked questions about how carbon savings are assessed, especially comfort-taking. Comfort-taking is considered in the impact assessment calculation for the carbon savings, and if he would like more information on that, I would be happy to invite him to discuss it with our officials later.
Lord Marland
The answer is that they may or they may not. There is no fixed method by which to use the commercial levers that are available to them, as you would expect. I hope that that answers my noble friend’s question.
My coalition friend, the noble Lord, Lord Teverson, rightly mentioned that he has changed his place and now has to look at a new picture. I agree that it is nice to see a different prospect and I do not have to work out whose foot that is, lying there wearing the sandal; hopefully, the intelligence of the noble Lords, Lord Hunt of Kings Heath and Lord Woolmer, will work that out for us. I certainly know who wears the trousers in our household, but I have never worked out who wears the sandals.
He mentioned the counterintuitive nature of the current CERT arrangement. I agree with him that it is counterintuitive; again, the green deal—sorry to bang on—should help to cope with some of that counterintuitivity.
The noble Lord asked what the uplifts are, compared with existing targets. The pro rata extension of the reduction of 108 million lifetime tonnes of carbon dioxide represents a 3 per cent reduction of household emissions from the non-traded sector in 2013. I hope that that deals with his question.
The noble Lord, Lord Woolmer, dealt with what the noble Lord, Lord Hunt, calls “enveloping”. I was wryly pleased that he asked that question; it was the first question that I asked our officials when this was brought to my attention. The answer is that it is the best way of coping with this, and it is the most cost-effective way for the supplier to deal with small groups in certain areas. We should encourage this. I take on board fully what the noble Lord said, but I am amused that we should have thought of the same thing together. I am grateful to him.
The noble Lord, Lord Hunt, whose baton I am merely picking up on this issue—I am glad I did not get as hard a time as I might otherwise have done—went on about cost. With all due respect to him and to others, there are more than 11 pages in the document outlining the costs. I know that the breakdown is complicated and split into various measures, but I commend it to noble Lords because it is comprehensive, and I am grateful to my noble friend Lord Taylor for talking me through it.
Lord Hunt of Kings Heath
The RIA, like all RIAs produced by his department, is comprehensive. However, what is difficult to get out of it, and what would have been helpful in the Explanatory Memorandum, is a succinct summary of the likely overall impact on costs.
Lord Marland
I take on board the noble Lord’s point. I addressed the issue of costs earlier. They are not significant in the context of the average bill. The noble Lord mentioned Sheffield Forgemasters. I have a private bet—as this is only round one of three rounds in the next three days—on how many times he will mention that. A lot of discussion and water have gone under the bridge. I confirm that the feed-in tariff will not be affected and I hope that that will give him comfort.
I hope that I have answered the questions that have been put by noble Lords and addressed the issues that they have raised. The principal theme of the order is to keep up the pressure on installation suppliers, to maintain employment and to deliver carbon reduction. It will also help us to bridge the gap between now and the green deal, which is a fundamental part of the Government’s policy. The green deal will bring forward a new and ambitious approach to driving home energy efficiency which will not require up-front payment, but will benefit from the repayment of the costs of work over time through the savings of the Bill.
Ahead of this change, it is essential that we do everything that we can to maintain and, where possible, quicken the pace of energy efficiency movements, and to increase the focus on lower-income pensioners and family households. We can make a difference to household energy bills this winter if we act now. Therefore, I hope that noble Lords will support the refocused CERT scheme so that householders, and the UK more broadly, can reap the benefit of energy-reducing measures as soon as possible. I commend the order to the Committee.
Equality Act 2010 (Consequential Amendments, Saving and Supplementary Provisions) Order 2010
(13 years, 9 months ago)
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Baroness Verma
That the Grand Committee do report to the House that it has considered the Equality Act 2010 (Consequential Amendments, Saving and Supplementary Provisions) Order 2010.
Relevant Document: Second Report from the Joint Committee on Statutory Instruments.
Baroness Verma
My Lords, the underlying theme of the order is to make effective the provisions of the Act in line with its main intention of simplification and consistency. The changes that the order makes fall into three broad categories.
First, some of the changes involve corrections or updates to the Equality Act 2010 itself. Article 3 makes amendments to Section 87 of the Act. Section 87 enables the Secretary of State to give directions using powers under the Education Act 1996 to require a school to comply with its duties not to discriminate against pupils under Section 85. The reason for the amendment is to refer to the corresponding Scottish legislation to ensure that the procedure works for Scotland as well as for England and Wales.
Article 4 makes changes to Section 94, which explains what is meant by various terms used in Chapter 2—on further and higher education—of Part 6. The amendment is needed to reflect concerns from interested parties that there needs to be a definition of “conferment” in the context of awarding qualifications.
Article 5 makes changes to Section 108. Section 108 prohibits discrimination after relationships have ended, and the amendment to subsection (4) is intended to replicate existing law. That is to say that even if a person becomes disabled after the relationship has ended, the duty to make a reasonable adjustment still applies. The current Act could be interpreted as meaning that the duty arose only if the person already had a disability at the time the relationship ended. The amendment puts that right.
Articles 6 and 7 make changes to Sections 132, 134 and 135. Those provisions cover, among other things, the period for calculating arrears where successful claims are made about equal pay or pensions cases in Scotland, in the case of a person with an incapacity or one involving a fraud or error. The effect of the amendment is that the five-year limit for calculating arrears may be extended if it includes time during which the claimant suffered incapacity or was induced by the fraud or error not to raise the claim, subject to a maximum reckonable period of 20 years. The amendments enable the provisions to work correctly in Scotland and reflect the existing position under the Equal Pay Act 1970.
Article 9 amends Part 9 of Schedule 3 to the Equality Act to reproduce an amendment made to Section 19 of the Disability Discrimination Act 1995 by the Rail Passengers’ Rights and Obligations Regulations 2010, after the Equality Act received Royal Assent. Those provisions of the Equality Act restate provisions of the DDA that provide for exceptions to the duty not to discriminate in relation to the provision of transport services for disabled people. The amendment needs to be made to ensure that, when they come into force, the Equality Act provisions are exactly the same as the existing DDA provisions which will be repealed.
To reassure noble Lords, I can state that the amendment does not in any way reduce the rights of disabled persons, but simply ensures that there is no overlap between domestic equality legislation and European transport legislation protecting the rights of disabled people in air and rail transport.
Article 10 amends Schedule 11 to the Equality Act to remove a reference to the Learning and Skills Council, which was abolished just before the Equality Act was enacted. Articles 8 and 11 update certain provisions to refer to EU law rather than Community law, as a result of the coming into force of the Lisbon treaty.
The second category of amendments is to reflect adjustments needed to the existing equality duties to reflect the introduction of new key concepts by the Equality Act. The existing gender duty, race duty and disability duty will be replaced by the new public sector equality duty in Sections 149 to 157 of the Equality Act, but not until some time after October. Therefore, the existing provisions in the Sex Discrimination Act, Race Relations Act and Disability Discrimination Act need to be kept in force for the time being. However, the existing definitions of sex, race and disability discrimination, victimisation and harassment in those Acts are slightly different to those in the Equality Act.
Articles 14 to 16 therefore update the relevant provisions of the Sex Discrimination Act, Race Relations Act and Disability Discrimination Act to reflect the new terminology. This will make it easier for public authorities to operate, as they will not need to use one set of definitions for public sector equality duties and another for all their other equality-related functions.
Baroness Gale
My Lords, I thank the Minister for her remarks and welcome her to her position as Minister with responsibility for equalities and women’s issues in your Lordships’ House, although obviously this is not the first time that the noble Baroness has spoken on these matters, as only last week she replied to our excellent debate on women. I am aware of her excellent record and long experience of working for the enhancement of women, and especially her record of service to women in her own party, so it is good to see her in what I regard as a very important post.
I am pleased to say that we on these Benches agree with the order. It is largely a technical instrument to ensure that existing legislation continues to work well when the Equality Act commences. As the noble Baroness said, it makes minor amendments and repeals other primary legislation relating to the Act, which brings together nine separate pieces of legislation into one single Act. That simplifies the law and reduces the burden on business by making it easier for firms to comply with discrimination legislation. It will also help many individuals to deal with difficulties that they may experience relating to any form of discrimination.
The core provisions of the Act are due to come into force in October, so it is important that we deal with these matters now. I am pleased to say that I followed the Equality Bill as it made its way through your Lordships’ House and saw it become law. We now have a strong and robust piece of legislation that will allow people to lead their daily lives in a way that shows tolerance and fairness to all. The whole of our society should welcome that. Also, I am proud that the previous Labour Government were able to produce such an Act, but of course with the co-operation of all the parties in the House.
Although this is a comprehensive Act, much guidance will need to be given by the Government Equalities Office and the Equality and Human Rights Commission. I am sure that the Minister will be able to confirm that these guidance notes will be available so that everyone can ensure that the Act is fully understood and that the publications will be there to assist all to appreciate the workings and the intentions of the Act.
A press release issued by the GEO in recent days stated:
“The first wave of implementation of the Equality Act will go ahead to the planned October timetable following the publication of the first commencement order in Parliament …. This will pave the way for the implementation of landmark provisions to protect disabled people from discrimination and tackle the gender … gap”.
That sums up the Act perfectly and is what the order is about. We on these Benches welcome the order as it is another step along the road to the full implementation of the Equality Act in the coming months. I thank the Minister again and I wish her well in her new role.
Lord Addington
My Lords, this is one of those times when there is not much to say, and I shall be quick about saying what little there is to say.
Basically, there is nothing to disagree with here. As the noble Baroness, Lady Gale, said, it carries on the previous Government’s good work in many fields. It brings everything together in one Act, or tries to. The law here, good and well intentioned though it was, was a bit like a cat’s cradle and thus occasionally became a dog’s dinner, if I am allowed to double my metaphors; there was so much legislation that crossed over. Everyone who is involved in any part of this area of the law should welcome this approach. Not only is there nothing to disagree with here, but hopefully we shall carry on in this way.
Baroness Verma
I thank the Committee for this short but quality debate. I am grateful to the noble Baroness, Lady Gale for her kind welcoming remarks. I also pay tribute to the wonderful work that she has done in this area. I assure her that there will be several pieces of guidance. Five summary guides were published on 5 July, and a further set of quick-start guides will be released over the summer.
I welcome my noble friend’s comments. We all want to ensure that we can make society as equal as possible. Wherever we find discrimination against any group that we are able to eradicate, we will do so. This piece of legislation is a tool to help us achieve that.
On that note, I hope that we shall have no problems in passing the order. The Equality Act 2010, which went through this House just a few months ago, has momentum, and I hope that with your Lordships’ approval, we will see the benefits of it soon.
The Deputy Chairman of Committees (Baroness Harris of Richmond)
My Lords, as we are waiting for the next business, the Committee will adjourn for five minutes.
Serious Organised Crime and Police Act 2005 (Disclosure of Information by SOCA) Order 2010
(13 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Neville-Jones
That the Grand Committee do report to the House that it has considered the Serious Organised Crime and Police Act 2005 (Disclosure of Information by SOCA) Order 2010.
Relevant Document: Sixth Report, Session 2009-10, from the Joint Committee on Statutory Instruments.
The Minister of State, Home Office (Baroness Neville-Jones)
My Lords, the order will designate the functions of the UK’s anti-doping organisation as being of a public nature for the purposes of Section 33 of the Serious Organised Crime and Police Act. This will allow the Serious Organised Crime Agency to disclose information to UK Anti-Doping. The order was laid by the previous Government to help the UK prevent doping in sport. This Government are equally committed to tackling doping and are happy to take it forward. There is a strong public interest in preserving the integrity of sport, which is of particular significance in the run-up to our home Olympic and Paralympic Games in 2012. UK Anti-Doping was set up to address this interest and to protect the right of athletes to compete in drug-free sport. UK Anti-Doping also ensures that the UK Government meet their commitments under UNESCO's anti-doping convention, which include tackling the trafficking and supply of doping substances.
The traditional way of stopping athletes doping has been through education and testing; but we have learnt that rogue scientists and cheating athletes will always try to elude the system by relying on testing not always exposing them. We must keep pace with international best practice and go after those who facilitate doping by supplying the substances that are banned in sport, which are much less detectable than they used to be. This calls for a more investigative and intelligence-based approach. Experience in other countries has shown that where there are partnerships between anti-doping organisations and law enforcement agencies, trafficking and supply routes have been disrupted and perpetrators have been caught. This approach is seen as essential by the World Anti-Doping Agency, which co-ordinates the global fight against doping in sport.
UK Anti-Doping can already obtain information from a range of sources, including the UK Border Agency and the Medicines and Healthcare products Regulatory Agency. Allowing SOCA to have a gateway would greatly add to those sources and would be particularly important because SOCA receives information from UK police forces as well as from Interpol. That will allow UK Anti-Doping to obtain information about the traffickers and the suppliers of these substances and will avoid it having to set up separate gateways with each of the 52 police forces in the UK, taken overall.
Lord Brett
My Lords, I thank the noble Baroness for the background and detailed information about how we take forward this important piece of secondary legislation. The Opposition support it and I commend it to the Grand Committee.
Baroness Hamwee
My Lords, I, too, am grateful to the Minister, as she anticipated one or two of my questions, but I have a couple more—a little more than the noble Lord, Lord Brett. First, it was interesting that we are dealing with SOCA providing information to a non-departmental public body. I could have understood the position more easily were it the other way around, as SOCA is the organisation that really needs the information. However, I appreciate the concerns which underlie this measure.
I was interested in the Information Commissioner’s comments. The noble Baroness anticipated these to some extent, but his office emphasises that the question of whether disclosure of information to the anti-doping agency is fair and proportionate necessitates detailed consideration of what information is to be shared and why. I assume that this refers to the need for the assessment to be carried out on a case-by-case basis and that what is being said is that one cannot give global rubber-stamping to this work when dealing with confidentiality and human rights requirements.
The Explanatory Memorandum refers at paragraph 7.4 to,
“obtaining evidence to help pursue drugs cheats”.
I should like to understand whether that is part of this programme, if we are talking only about individuals. It does not immediately strike one as being serious and organised crime, although that may simply be the way that this paragraph is worded and that what we should understand by it is that an individual may be part of a serious and organised crime.
The Minister said that there would be no significant additional cost. Can she therefore confirm that the figures given in the papers attached to the impact statement on a requirement for eight extra staff at SOCA, with a budget of around £100,000, are correct? I appreciate that in government £100,000 is sometimes regarded as small beer, but the public might not always see it that way. I was a little surprised to see that eight more staff were needed. I should have thought that that sort of work might have been swept up in the work that was already being carried out, but I am probably too optimistic on that score.
Baroness Neville-Jones
My Lords, the noble Baroness raises a number of points. The reason that we have the arrangement of SOCA being willing to provide information to an NDPB is because the sporting community is extremely unwilling to see an extensive criminalisation of the control of doping in sporting activity and wants to try to pursue a policy where best practice, peer pressure and effective action by the sports’ regulatory bodies are the way by which it is controlled. That accounts for doing it this way. Clearly, if it was concluded that that was not effective, one would have to look again at the arrangements, but the doping that goes on at the moment is not so excessive that it is thought necessary to bring in SOCA in a big way.
On the number of people needed, unless I am mistaken, I think that the eight extra staff will not be employed by SOCA but will be acquired by UKAD, because it has to set up a unit to process the information that it gets from SOCA and to decide the action that needs to be taken. Those individuals need some security clearance, so there is a reason for needing a specialised staff. For SOCA, it is true that the information that it is able to supply is in many respects a by-product of other investigations, but it is extremely useful to the sporting regulatory agencies.
As for the question of drugs cheats, one reason why it will be increasingly necessary to go down that road is that the testing procedures have been shown to be only partially adequate, because practices have developed where either substances are used which are extraordinarily difficult to detect in tests, or they are being dosed in such small amounts that they do not show up in a test, such that one has to go to a more forensic approach to dealing with those cheats. That is why, in the end, one has to bring in an agency which might have information about suppliers. It is, in the end, the suppliers whom we need to try to choke off so that the substances never reach the performers. We are witnessing a change in the nature of the doping culture that, in turn, leads to new investigative techniques having to be employed.
Lord Imbert
My Lords, first, I apologise to the Minister for rising before she had had an opportunity to respond to the speech of the noble Baroness.
Your Lordships will be relieved to know that my contribution to our proceedings this afternoon will be very brief—in fact, less than three minutes. I hope that that does not diminish the impact of what I say on this most important subject. Illegal drugs have become the scourge of modern society throughout the world. Thousands of deaths are recorded annually, and national and international organised crime thrives on that disgraceful trade worldwide. In some areas of the globe, sport has been wholly corrupted by the poison of performance-improving drugs. No longer, when we see an outstanding sporting performance, can we cheer unreservedly without thinking the unthinkable: was he or she using a performance-enhancing drug? That cynicism among spectators is grossly unfair to those athletes and sportsmen and women who are honest and cast aside the temptation to cheat by the use of such substances.
I believe that, fortunately, the honest athletes and sportspeople are still in the majority, but we must be vigilant. Only by law-abiding individuals and organisations sharing intelligence about the trafficking, sale and use of illegal or performance-enhancing drugs can action be taken to prevent or reduce this evil and destructive business.
Baroness Neville-Jones
The noble Lord makes a very important point when he says that the cheats and those who connive with them destroy trust between competitors and also between competitors and the audience. That is extremely destructive, particularly of the Olympic spirit. The Government agree that we must do what we can to stamp on this. It is very much to be hoped that this move by the UK will increase our ability to contribute to the international effort that has to be made against doping in sport. There are people who make a more than adequate living out of producing ever more sophisticated performance-enhancing drugs. We must chase them as hard as we can. I am grateful for the support of the noble Lord.
House of Lords
Introduction: Baroness Hughes of Stretford
Introduction: Lord Blair of Boughton
Introduction: Lord Allan of Hallam
Agriculture: Dairy Industry
Baroness O'Cathain
To ask Her Majesty’s Government what plans they have for the dairy industry.
Lord De Mauley
Our goal is a competitive, profitable dairy sector that produces for the market. It should meet consumer needs while protecting and enhancing the environment it depends on to safeguard future production. We are reinvigorating the Dairy Supply Chain Forum, which my honourable friend Jim Paice chairs, to identify and tackle the issues affecting the industry’s health. We are developing the milk road map and involving ourselves closely in the EU High Level Group for dairy.
Baroness O'Cathain
My Lords, I thank my noble friend very much indeed for that positive reply to my Question. Does he agree that, despite the vicissitudes of the past 13 years, the dairy industry has shown remarkable resilience and been extremely innovative in its products? In view of the statement made by the Secretary of State in this week’s issue of Country Life that:
“The growing world population means that food security is becoming a very serious issue”,
and that she is,
“determined to help British agriculture to increase production”,
does he further agree that it would be a very good idea if the department and the dairy industry got together to work out a long-term strategy for the industry so that, if we do have food shortages, it will be able to cope?
Lord De Mauley
My Lords, the industry is a significant part of British agriculture and is, as my noble friend said, resilient and innovative. Our main strategic thrusts, which cover several objectives, including food security, are active participation in the EU High Level Group for dairy and the Food 2030 strategy. In addition, we are introducing an ombudsman into the OFT to enforce the groceries and supply code of practice, to curb abuses of power and to establish a task force on regulation to identify ways of reducing regulatory burdens on farmers.
Baroness Quin
My Lords, given that the Minister mentioned the idea of the supermarket ombudsman—something to which all parties were committed at the time of the election—has the department for business asked for a second consultation on the establishment of the ombudsman? Is there not a risk that this will further delay the establishment of the ombudsman? What timetable do the Government now propose to set for the establishment of this important post?
Lord De Mauley
My Lords, I am grateful for that question because it allows me to explain that the coalition programme for government, published on 18 May, made a commitment to introduce an ombudsman into the Office of Fair Trading to enforce the GSCOP and to curb abuses of power that act against the long-term interests of consumers. As to the when, about which the noble Baroness asked, we are awaiting the results of the consultation exercise within BIS. This will guide our decision on how best to enforce the GSCOP, which, as I have said, the coalition Government have agreed should be done through an ombudsman.
Lord Williamson of Horton
My Lords, as a former head of the milk division in the Ministry of Agriculture and the owner of a milk churn presented to me by dairy farmers, may I invite the Minister to agree that we have excellent dairy farmers here and excellent natural conditions in the United Kingdom for the production of milk from grass? In order that we can all have the benefit of these advantages, can we make a special effort to ensure that milk is produced and marketed in fair conditions?
Lord De Mauley
I am grateful for that question, which brings us back to the issue of the ombudsman, whose duties will be precisely that. I agree very much with what the noble Lord says.
Lord Lea of Crondall
My Lords, is the Minister aware that, in the European Union, Britain is not atypical in subsidising each cow by £900 per annum? Is he further aware that in the two countries outside the EU that are much vaunted by Eurosceptics outside—that is, Switzerland and Norway—each cow is subsidised by £9,000 per annum?
Lord De Mauley
My Lords, I am not entirely sure what the question was, but we think that competitiveness is extremely important in this market.
Lord Livsey of Talgarth
My Lords, when the supermarket ombudsman is in his place, will the Minister take action to make it illegal for retail milk to be sold for less than the cost of production? It is the reason why 14,000 dairy farmers have left the industry since 1997 and why we have only 11,000 left. The ombudsman should use his powers to address that problem immediately.
Lord De Mauley
I acknowledge my noble friend’s point, but it will be up to the ombudsman to make these sorts of decisions. Industry tells us that there are grounds for cautious optimism in the dairy industry. The continuing decline in production has put pressure on buyers to pay more remunerative prices. Secondly, most major retailers now have dedicated groups of farmers supplying them with milk in return for premium prices.
Lord Scott of Foscote
My Lords, do the Minister’s answers apply simply to farms that produce milk by cows or do they apply also to the increasing number of farms where the milk is produced by goats?
Lord De Mauley
My Lords, I am answering in respect of dairy. I think that means principally dairy cows.
The Lord Bishop of Blackburn
My Lords, does the Minister accept that, if young people are to come into the dairy farming industry, superfast broadband is a necessity? Can he confirm that superfast broadband will be rolled out to the one-third of farmers who are unable to access it?
Lord De Mauley
My Lords, the Government are very keen that broadband should be rolled out. Ministers intend to provide a strong lead in driving forward rural policy, such as ensuring that rapid rollout.
Lord Davies of Coity
My Lords, does the Minister agree that the discounting of milk by the processors and the abolition of the Milk Marketing Board have damaged the dairy industry considerably?
Lord De Mauley
My Lords, I think we need to move on to the future, which is, as I have tried to explain, reasonably positive for the industry.
Housing: Lettings
Baroness Gardner of Parkes
To ask Her Majesty’s Government whether they will encourage the letting of residential properties by classifying them as businesses in the same way as holiday lettings.
Baroness Gardner of Parkes
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I remind the House that I have a declared land and property interest in the Register of Lords’ Interests.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the tax system already treats both holiday lettings and residential lettings as businesses. However, furnished holiday lettings can benefit from some of the more generous tax rules for trades. This reflects the fact that they offer extra equipment and services in order to compete with hotels and guesthouses. We have no plans to extend these rules to other property businesses.
Baroness Gardner of Parkes
I thank the Minister for that disappointing reply. Is he not aware that if you have holiday lettings, you can roll over capital gains and therefore there is every encouragement to extend your business, whereas if you are a private residential landlord, you do not have that? Furnished holiday accommodation can only be let to anyone for a maximum of 31 days. Surely there is a desperate need for long-term residential accommodation in this country.
Lord Sassoon
My Lords, I fear that there is more disappointment coming. I had one grandparent who came from the great state of New South Wales and one parent who was educated there, and I thank my noble fellow Australian for her Question. However, the Government have no plans to change the tax or other arrangements for tenancies in the private rented sector. Since the assured shorthold tenancy rules came in in 1988, the private rented sector has grown steadily and responded flexibly to changes in the wider housing market, and some 21 per cent of tenancies now last for five years or more.
Lord Best
My Lords, I declare private and social housing interests, and I commend the suggestions of the noble Baroness, Lady Gardner of Parkes. Does the Minister accept the criticisms coming from many sides of the changes to housing benefit, which we fear will mean a rise in arrears, repossessions and homelessness? Does he accept that some new measures are needed if these housing benefit changes are not to discourage private renting at the lower end of the market, where it is most needed?
Lord Sassoon
My Lords, I am pleased that we have had attention drawn to social housing and housing benefit, because they provide a critical underpinning at the lower end of the residential housing market. Housing benefit will continue at a very substantial level and is a vital part of what comprises the broad housing market that we need in this country.
Lord Rennard
My Lords, does the Minister agree that changes in taxation for private landlords could incentivise them to refurbish and modernise their properties, increase capital gains tax revenues and increase the provision of housing at a time when it is very much needed?
Lord Sassoon
My Lords, we never rule out any suggestions for changes and developments of the tax system, but we have no plans to review taxation in the way that my noble friend has suggested.
Lord Foulkes of Cumnock
My Lords, in the light of the last question, will the Minister clarify whether all the words that he has said today represent the views of both parts of the coalition?
Lord Sassoon
My Lords, what I have said today represents the views of the coalition Government.
Baroness Hollis of Heigham
Following the question of the noble Lord, Lord Best, can the Minister inform the House what the cuts in housing benefit, particularly the cut after 12 months for those on JSA, will do to the private residential letting sector?
Lord Sassoon
My Lords, I am not sure that any assessment of that has been done, but I shall find out and write afterwards.
Lord Clark of Windermere
My Lords, the Question refers to holiday lettings. Is the Minister aware that in many rural areas, especially national parks, where there is a great shortage of housing for local people and many workers’ cottages and former council houses are now used as holiday lets, every holiday let is a house removed from the market for local people?
Lord Sassoon
My Lords, the changes to the taxation arrangements for holiday lettings, on which the Government will consult during the summer, are intended to strike a balance between recognising the important contribution that holiday letting makes to the economy in rural areas and making sure that the tax reliefs available are not principally for wealthy owners of second homes. The changes, on which we will consult, will make sure that the taxation benefit available is more targeted than it was previously.
Lord Anderson of Swansea
My Lords, the Minister said that he is not aware of any assessment having been made of the effect of the changes in housing benefit on the private rented sector. Is it not normal in government to assess the effects of policies before they are introduced?
Lord Sassoon
My Lords, I did not mean to say that no assessment had been made. As I said, I will take back the question, find out what assessment has been made and write on the point.
Lord Myners
My Lords, the Minister clarified in response to a question from my noble friend whether he was answering on behalf of the Conservative Party or the Conservative and Liberal parties. May I suggest that when answering questions in future, Ministers also indicate whether they are speaking in a personal capacity or on behalf of the Government?
Lord Sassoon
My Lords, I cannot quite see what that has to do with the Question. It could take up a lot of time if every time I stood up, I prefaced it by saying that I was speaking on behalf of the coalition Government, but I am happy to do that.
The Earl of Listowel
My Lords, will the Minister keep in mind the many families and children living in overcrowded and unpalatable conditions when he considers what might be done to encourage more private landlords to come into this area and to refurbish this housing?
Lord Sassoon
My Lords, I absolutely take the point that the noble Earl has made. My understanding is that the gap on decency between owner-occupied and rented accommodation has lessened over recent years—and indeed rented accommodation is now on average more energy efficient—so some progress is being made.
Sport: Football World Cup 2018
Lord Faulkner of Worcester
To ask Her Majesty’s Government how they are supporting England’s bid for the 2018 World Cup.
Lord Shutt of Greetland
My Lords, the Government wholeheartedly support the Football Association’s bid for the 2018 World Cup. In his first week in office, the Prime Minister discussed the bid with the president of FIFA, the international federation of association football. Both the Secretary of State for Culture, Olympics, Media and Sport and the Minister for Sport and Olympics went to South Africa to discuss the bid with FIFA executive committee members and to demonstrate the level of government support.
Lord Faulkner of Worcester
My Lords, it gives me pleasure to thank the Minister for that positive and encouraging answer. He will be aware of the PricewaterhouseCoopers study published in May, which demonstrated that the potential benefit to the economy of a successful bid and of staging the World Cup in the summer of 2018 would be of the order of £3.2 billion. Can he clarify two points on his Answer? First, do the Government stand unequivocally by the £300 million of financial guarantees that were entered into by their predecessor in December and which were signed at the same time by the then Leader of the Opposition and the leader of the Liberal Democrats? Secondly, when the FIFA inspection team comes to Britain at the end of August, will it have the opportunity to meet members of the Government at the highest level and be given every encouragement?
Lord Shutt of Greetland
My Lords, I pay tribute to the noble Lord’s involvement in the world of football. First, I am able to confirm that the coalition Government have accepted the position agreed by the previous Government, as indeed the party leaders signed up to last autumn. Secondly, I understand that the inspection team is likely to come in late August and on that occasion will meet the Deputy Prime Minister.
Lord Willis of Knaresborough
What discussions has my noble friend had with the Premier League, to extract some of the obscene money that goes into that league rather than having to depend entirely on the taxpayer to fund a 2018 bid?
Lord Shutt of Greetland
My Lords, I have had no discussions with anybody to do with the Premier League. I think that is above my pay grade, as it were. I am sorry but I cannot help any further about that. Of course, this bid is very different from the Olympics, where there is an Olympic stadium to build and all that that means, in that there are already football stadiums up and down the country—it is a truly national event. They are throughout the land, many in the north of England, and if the bid succeeds in 2018 it will be something for the country as a whole and not just for London.
Baroness Billingham
We firmly support and applaud the work by the previous Administration and by this one. This is something that the country really desires and we all want it to be successful. But clearly the key player here is going to be the Chancellor of the Exchequer, so my question to the Minister is whether he is convinced and can reassure us that the Treasury is absolutely on side on this issue, because without its support the bid is doomed.
Lord Shutt of Greetland
My Lords, obtaining a bid of this nature is a tricky process in that the Government are asked for a range of guarantees, and FIFA has asked for details all to be dealt with in confidence. These are to do with visas, work permits, tax treatment, security, foreign exchange operations, intellectual property and telecommunications. The bid book, as it is called, has been submitted. The Government of the noble Baroness, Lady Billingham, made this country’s best offer in May, in order that this country is in the best place to get this World Cup.
Lord Griffiths of Burry Port
My Lords, can the Minister answer the question put by his noble friend? Have any discussions taken place with the Premier League and is it possible that money might come from sources other than the taxpayer?
Lord Shutt of Greetland
My Lords, I mentioned that I am not aware of the particular discussions with the Premier League. The bidder is the Football Association; there was a suggestion in earlier times that it would be looking for government money to assist it with the bid. That did not turn out to be the case, in that it got resources from elsewhere.
Lord Addington
My Lords, will my noble friend give us an assurance that, in bidding for the football World Cup, we are learning from our successes in the previous tournaments and games that we have achieved and from prior failures that we have had? Can he tell us the exact structure of the bidding for all future large sporting events?
Lord Shutt of Greetland
My Lords, there have been lessons learned from an unsuccessful bid for the 2006 World Cup. There was then an in-depth inquiry by the Culture, Media and Sport Committee of the other place back in 2001. That was analysed by both the Football Association and the Government and fed into the development of the bid structure and what has happened since. Winning the 2012 Olympics was, obviously, a great success story and account was taken of that in going forward for this bid. The major feature is that there is a stand-alone bid company, which has put in the bid. Football may be a national game but it is not a nationalised game. The bid company has done that work on behalf of the Football Association.
Lord Corbett of Castle Vale
Is the Minister aware that FIFA did not pay any tax on the profits it made from the recent world championships—in which England apparently did not take part? Can he assure the House that that will not be repeated should we be successful in this bid?
Lord Shutt of Greetland
My Lords, I cannot confirm that. It is a very tricky line, the whole basis of getting this bid. As I indicated, on the one hand one has to give all this information; on the other, the FIFA people say that Governments should not interfere with the game of football.
Russia
(13 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Viscount Waverley
To ask Her Majesty’s Government what steps they are taking to improve diplomatic relations and dialogue with Russia.
Lord Kilclooney
My Lords, in the absence of the noble Viscount, Lord Waverley, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, the Prime Minister and President Medvedev are agreed that they want to see a stronger, more positive relationship between the United Kingdom and Russia, including through an exchange of ministerial visits. Although our bilateral differences will take time to resolve, we will take forward a broad agenda of practical co-operation that is in both our interests, engaging on the major global, political, economic and security challenges and working to enhance our prosperity.
Lord Kilclooney
My Lords, I thank the Minister for his reply. Does he agree that, in matters of international affairs, Russia is most important in matters such as Iran, the Caucasus, Nagorno-Karabakh and, of course, the Middle East? It is also one of the most important developing economies in Europe. Do we not need relations that are more positive and which depend on the United Kingdom engaging with rather than talking at Russia? That was my experience, regrettably, when I was in the Council of Europe Assembly, and I know that my noble friend Lord Waverley shares this opinion.
Lord Howell of Guildford
The noble Lord is absolutely right. We need to engage very carefully. The Russians have been through the great traumas of the 20th century and while there are always difficulties and tricky aspects in dealing with them, this is certainly not a relationship of lecturing or harassing, or any other thing like that. This is a relationship of mutual respect, understanding the differences that we have but not letting them overwhelm the important, positive developments of our relations with such a vastly important nation in a whole range of areas. As for the EU, we certainly want to see there a united momentum in engaging with Russia and moving forward positively as well.
Lord Soley
While regular meetings between senior political and business leaders would obviously be very welcome, will the Minister not forget the importance of the links between the Russian and British people? Perhaps some thought can be given to something the Russians have already helped on—a visit to Poolewe where the Arctic convoys assembled during the war to supply Russia, at great loss of British life. The possibility of developing that link could be examined so there is a better understanding of the relationship between Britain and Russia. It has already been developed in a very limited way by the museum at Gairloch just a few miles from Poolewe.
Lord Howell of Guildford
I agree with the noble Lord that that is a positive and interesting aspect and there have of course been others. I do not know whether your Lordships shared my view that there was something rather splendid about seeing a platoon of the Brigade of Guards marching through Red Square the other day in full dress. I liked that.
Lord Wright of Richmond
My Lords, picking up the last point made by the noble Lord, Lord Kilclooney, can the Minister tell us whether Russia, as a member of the quartet, is playing a significant and positive role?
Lord Howell of Guildford
I think it is in so far as the quartet as a whole is able to get into a positive position. Certainly President Medvedev indicated to our Prime Minister that that was what it wanted to do, but it has found some difficulties dealing with Israel’s position. All members of the quartet are still engaged and want to go forward together and I do not think there is any major gulf between them in recognising the vast importance of trying to make progress on that front.
Lord Teverson
My Lords, while it is important to improve relations between Britain and Russia, what moves are the Government making to free the occupied zones of Georgia—Abkhazia and South Ossetia—and making Russia comply with the Sarkozy agreement which it has clearly failed to do?
Lord Howell of Guildford
My noble friend is quite right. At present Russia is not complying with its commitment to evacuate Georgia, where it still has troops, as well as South Ossetia and Abkhazia. We are all the time raising this issue and pressing the Russians to get into a more acceptable and positive position but progress is slow. At the moment they are not moving.
Baroness Symons of Vernham Dean
My Lords, the noble Lord mentioned the economy and the important issues between Russia and us. He will know that the UK-Russia intergovernmental steering committee on trade was successfully relaunched in 2008 and last met last November. Are there any plans for that steering committee to meet again this year and, if so, will it be touching on some of the thorny issues such as international banking standards, concerns about corruption and corporate governance taxation?
Lord Howell of Guildford
I cannot answer the noble Baroness on her precise question about the meeting at this moment, but I will check. On corruption, she puts her finger on one of the central problems. There is no doubt that there is a very great deal of corruption still in Russia today and some of it at alarmingly high levels. President Medvedev has highlighted this and says he wants to tackle it. We will do everything to support him but we would like to see more results in certain cases than we have seen so far. Corruption is the cancer that could undermine the whole Russian progress.
Lord Anderson of Swansea
My Lords, in spite of the invasion of Georgia, the Litvinenko affair and the spies in New York, is it not true that we should build on areas where there is a mutuality of interest? One, surely, is the intelligence relationship because we both face Islamist terrorism. What are the prospects of reviving an exchange that I believe has virtually dried up?
Lord Howell of Guildford
I hope that the prospects are getting better. They have not been good, as the noble Lord recognises. There have been real difficulties and building up the degree of mutual understanding and trust on which aspects such as joint intelligence can develop is very difficult and slow. But it is certainly an objective, and part of our view that we should have a better and stronger relationship with great Russia, which remains a major world power.
Wind Turbines (Minimum Distances from Residential Premises) Bill [HL]
Business
Baroness Anelay of St Johns
My Lords, at a convenient point after four o’clock, my noble friend Lady Neville-Jones will repeat a Statement entitled “Policing in the 21st Century: Reconnecting Police and the People”.
Control of Donations and Regulation of Loans etc. (Extension of the Prescribed Period) (Northern Ireland) Order 2010
Lord Shutt of Greetland
That the draft order laid before the House on 30 June be approved.
Relevant Documents: First Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 21 July.
Communications Act 2003 (Maximum Penalty for Persistent Misuse of Network or Service) Order 2010
Baroness Wilcox
That the draft order laid before the House on 25 March be approved.
Relevant Documents: First Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 21 July.
Consolidated Fund (Appropriation) Bill
Finance Bill
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, I beg to move that the Bill be now read a second time.
This Bill follows the emergency Budget and puts in place many of the measures necessary to gain control of the public finances and strengthen the economy. Despite its brevity, this Bill makes significant and necessary changes to our tax system—changes that will secure fiscal credibility, changes that will promote free enterprise and changes that will promote fairness, especially for the most vulnerable in society.
Our Budget was necessarily a tough Budget, but it was also a fair Budget. It set out the decisive and credible plan that is necessary to deal with the record deficit that this Government inherited. We currently have the largest budget deficit in Europe, with the single exception of Ireland, and we are borrowing one pound for every four we spend. Our deficit reduction plan will pave the way for sustainable, private-sector led growth, keep interest rates lower for longer and help to support jobs in the private sector. I cannot put it better than the noble Lord, Lord Myners, put it in this House on 8 June, when he said:
“There is nothing progressive about a Government who consistently spend more than they can raise in taxation, and certainly nothing progressive that endows generations to come with the liabilities incurred by the current generation. There will need to be significant cuts in public expenditure”.
The noble Lord went on to say:
“The Government cannot create jobs. The Government can create an environment that is conducive to the creation of jobs, but they cannot create jobs and we mislead ourselves if we believe they can”.—[Official Report, 8/6/10; col. 625.]
Earlier this month, in its report on the UK, the OECD said:
“The comprehensive budget announced by the government on 22 June was courageous and appropriate. It was an essential starting point. It signals the commitment to provide the necessary degree of fiscal consolidation over the coming years to bring public finances to a sustainable path, while still supporting the recovery”.
Despite containing only nine substantive clauses, the Bill represents a clear change from the past and a new direction of travel. As my honourable friend the Exchequer Secretary said to the other place, it is underpinned by the three principles of responsibility, freedom and fairness. First, the Bill is based on the principle of responsibility. We are taking responsible action to restore our nation’s finances because failure to address the deficit is the greatest economic threat that we face. We have been honest about the scale of the challenge and we have been honest about the actions needed to address it. If we are to bring down the deficit without cutting vital public services, raising valued added tax is an unavoidable choice.
For the first time, we have published within the Budget an analysis of the distributional impacts its measures will have. This shows that fairness underpins the tough choices that the Government have taken to tackle the deficit. It shows that this is a progressive Budget that deals with the deficit fairly: all sections of society will contribute, but the richest pay more than the poorest. We cannot, as some have done, look at the VAT increase in isolation. It is part of a wider package that ensures that the most vulnerable in society are protected. Without tough action on the deficit we risk losing the freedom to protect the services that the most vulnerable rely on.
Our long-term objective remains to increase the income tax personal allowance to £10,000, as set out in the coalition agreement, and we will take steps towards achieving that objective through the rest of this Parliament. Additionally, we have taken steps to increase child tax credit by £150 next year and £60 the following year. As a result of that, the level of child poverty will not increase.
Secondly, the Bill is based on the principle of freedom of enterprise in Britain, the freedom that our private sector so urgently needs in order to thrive and to spearhead a strong and stable recovery. A genuine and long-lasting economic recovery must have its foundations in the private sector. By cutting the corporation tax rate to 27 per cent, the Bill takes the first step towards reversing the decline in the UK’s competitiveness that we have seen over the past decade. As the Budget announced, we will continue to cut the rate of corporation tax by one percentage point every year until it reaches 24 per cent—the lowest rate of any major western economy and the lowest rate that this country has ever known.
The concern has been raised that cutting the main rate of corporation tax would mean that banks do not pay their fair share of taxes. However, I would point to the wider reforms outlined in the Budget, in particular the announcement of a banking levy, which will, in fact, ensure that the banking sector makes a greater contribution, one that outweighs the benefit that it receives from lower corporation tax rates. Banks will pay at least £2 billion more in tax as a consequence of these proposals.
Concerns were also raised in another place that the banks will not be deterred from pursuing risky behaviour. This is not the case: we have taken a targeted approach that preserves competitiveness, while ensuring that those who indulge in risky behaviour pay an appropriate premium for it. Tax competitiveness is good for employment and society as a whole and the bank levy allows us to be competitive while ensuring appropriate tax treatment for those activities that pose the greatest threat.
The reduction in the main rate of corporation tax is just one part of a wider package to build a private sector led recovery. Instead of increasing the small profits rate by 1 per cent, as planned by the previous Government, in next year’s Bill we will cut it to 20 per cent, benefiting some 850,000 companies from April 2011. We are also increasing the threshold at which employers start to pay national insurance contributions, and the Budget included a wider package of support for small businesses.
As we cut the rate of corporation tax we will also reduce allowances. The Budget announced a reduction in the writing-down value of plant and machinery allowances to 18 per cent and a reduction in the annual investment allowance to £25,000. However, allowances will remain broadly in line with depreciation and the annual investment allowance will still cover the annual qualifying expenditure of 95 per cent of businesses. Furthermore, by reducing the main rate of corporation tax in 2011 and changing allowances only in 2012, we are giving companies a timing benefit, which will form part of the £13 billion additional investment that we expect as a result of these changes.
Thirdly, I come to the principle of fairness in the Bill. Clause 2 increases the rate of capital gains tax for higher-rate taxpayers to 28 per cent. This progressive change will substantially reduce the incentive for individuals to disguise their income as a return on capital and will ensure that the appropriate rate of taxation is paid. This is fair in itself, but we have also ensured protection for those on more modest incomes. Consequently, those who pay only the basic rate of income tax will carry on paying capital gains tax at 18 per cent. In addition, this increase in the rate will help to fund the increases in income tax personal allowances that I mentioned. Those who have the most will help to lift more of those who earn the least out of income tax altogether. The optimum rate of capital gains tax has been debated at length in another place. Treasury analysis has shown that 28 per cent is the revenue-maximising level and is therefore the appropriate rate. A different value would reduce revenues, either by increasing the incentive to shift from income to capital or by reducing the incentive to invest in the economy.
Tax avoidance has also been a significant issue during the passage of the Bill. It was raised in reference to corporation tax and capital gains tax and is the target of Clauses 8 and 9, which together protect around £200 million of revenue per annum. The Government are absolutely committed to tackling robustly avoidance and evasion. We must continue to take the necessary steps to protect the Exchequer and to maintain fairness in the tax system. In the future, we want to take a more strategic approach to tax avoidance by protecting against such opportunities when reforming policy and by seeking to reduce complexity within the tax system. Against this background, we are considering whether a general anti-avoidance rule should form one element of those defences and we will seek the views of interested parties on whether there is a case for this approach.
The Government have inherited plans to limit tax relief on pension saving for the wealthiest. Under the approach of the Finance Act 2010, individuals on the highest incomes who are able to make very large pension contributions could have continued to receive pensions tax relief worth up to £51,000 every year. We have concerns about both the complexity and the fairness of the previous Government’s approach but, given the state of the public finances, we cannot ignore the £4 billion of revenue that this policy was set to raise. We are committed to protecting the public finances and we will put forward an alternative measure that will raise no less revenue than the existing plans. We are looking at an approach where annual tax relief available will be restricted to less than half that available under the previous Government’s plan, which will significantly curtail the ability of the super-rich to benefit from pensions tax relief. We want to ensure that this is a fair and effective approach and will be talking to employers, pension schemes and other interested parties to determine the design of an alternative scheme. It was requested in another place that the Government publish an analysis of the impacts of the alternative measure that we establish. I can confirm that the Government, as a part of our commitment to transparency, will publish a range of assessments alongside the legislation, including the impact on the economy and the impacts of the policy, as suggested.
This is a progressive Budget. It ensures that every part of society makes a contribution to deficit reduction, while protecting the most vulnerable, including pensioners. In fact, the Budget included a number of measures to support pensioners, not least our triple lock guaranteeing an annual increase in the state pension in line with earnings, prices or a 2.5 per cent increase, whichever is highest, to the benefit of 11 million pensioners across the country.
Lord Lea of Crondall
Is the noble Lord suggesting that inequality in Britain will be reduced by this Budget?
Lord Sassoon
My Lords, as I have already said, the Budget document sets out transparently for the first time tables which have never been published before and indicate the effect on different decile income bands of the population. These show that the Budget is progressive in its effect.
Continuing on the theme of pensions, the Government will enable people in retirement to make more flexible use of their pension savings. We intend to end from April 2011 the obligation to annuitise by the age of 75. Last week we launched a consultation on the detail of this change. The Bill therefore provides interim measures which delay this requirement until an individual has reached the age of 77, so that people turning 75 on or after the day of the Budget will not be required to annuitise before the new system is introduced in next year’s Finance Bill.
To conclude, the Finance Bill is founded on the principles of responsibility, freedom of enterprise and fairness, and is a vital part of implementing the changes to the tax system set out in the Budget. I look forward to hearing this afternoon’s speeches. In particular, I will listen intently to the maiden speeches of my noble friends Lady Browning and Lord Spicer, who bring many years’ experience of scrutinising Finance Bills in the other place. I commend the Bill to the House.
Lord Tunnicliffe
My Lords, I thank the Minister for setting out in such detail the Bill and what it will do. I was tempted for a few moments to think that it would be exciting to go through all this detail and slog it out, clause by clause, in Committee, but I was reminded that it is a money Bill. As such, this afternoon is a formality. Nevertheless, it is an occasion when this House can debate the generality of the Budget. I will stick to that generality, rather than go into much detail.
The objective of the Budget should be to set a fiscal framework for the enhancement of the material well-being of the British people. That is how it should be judged. Does the Budget contribute to the expansion of the production of goods and services that define national well-being? Mr Geoffrey Dicks of the Office for Budget Responsibility told the Treasury Committee in another place that, “logically the chances of” a double-dip recession “have increased” as a result of the Budget. I think Mr Dicks is right, which raises another important question: why is the coalition proposing measures that most objective observers believe will harm the well-being of the British people? To answer that question we need to examine the coalition’s analysis of the crisis and its own justification for its destructive policies. Consider, for example, Mr Cameron’s statement:
“Nothing illustrates better the total irresponsibility of the last Government’s approach than the fact that they kept on ratcheting up unaffordable … spending even when the economy was shrinking”.
Thank goodness the Labour Government did ratchet up spending in the face of the worst financial crisis in 80 years. That is what saved us from entering the terrible recession that would have been our fate if the coalition had been in charge. Indeed, the coalition may take us there. Even now, government expenditure is vital to the maintenance of the fragile recovery.
In the face of the fact that government expenditure is necessary, Mr Cameron still argues that spending is unaffordable. The Budget and the Finance Bill herald massive cuts in the public sector. In his Budget speech, Mr Osborne said:
“What we have not inherited from our predecessors is a credible plan to reduce their record deficit”.—[Official Report, Commons, 22/6/10; col. 166.]
Contrast that with the report by the Office for Budget Responsibility, which demonstrates that the Budget put forward by Alistair Darling would have halved the deficit in four years, exactly the timeframe recommended by the G20 at its meeting in Toronto last month.
Consider also Mr Osborne’s statement that the crisis in the eurozone shows that unless we deal with our debts, there will be no growth. Contrast that with the fact that the UK has the lowest debt to GDP ratio of any major EU economy, that the average maturity of British government debts at 14 years is significantly more than double that of any eurozone economy and that the cost of government borrowing in Britain has been falling all this year. There is no comparison. Mr Osborne said:
“Because the structural deficit is worse than we were told, my Budget today implies further reductions in departmental spending of £17 billion by 2014-15”.—[Official Report, Commons, 22/6/2010; col. 171.]
Note that the Chancellor refers to the structural deficit, not the actual deficit. The structural deficit is a theoretical construct that relies heavily on contentious assumptions. The OBR clearly states that the actual deficit is less than Alistair Darling estimated in March, and the rate of growth of the economy is slightly higher—a fact borne out by second-quarter figures. In other words, the overall economic position is better than my right honourable friend estimated, not worse.
To sum up, it is not true that the overall fiscal position is worse than that presented by Alistair Darling in March. It is not true that the overall economic standing of the UK is comparable with that of major eurozone countries, let alone Greece and Spain. It is not true that the Labour Government had no plan to deal with the deficit. Of course, we have serious economic problems in this country; how could we not when we have just gone through the worst world recession for 80 years and when we have suffered massive convulsions in the financial sector? However, it is our contention that the massive cuts in public expenditure trailed in the Budget will make the situation worse.
There is one crucial question that the Government must face: with the withdrawal of public sector demand planned by the Government, where is the demand in the economy going to come from? The OBR seeks to answer this in the Red Book. It sees only 1.1 per cent coming from private consumption, compared with 1.9 per cent in the boom years. Even 1.1 per cent is likely to be generous as unemployment increases and real pay is cut. Instead, the OBR forecasts that growing business investment will make a positive contribution of 1.1 per cent to the growth of GDP—three times greater than in the boom years—investment in housing will contribute twice as much as in the boom years and the contribution of net trade will be 1.1 per cent, when it was negative in the boom years.
These heroic assumptions are difficult to believe. Of course, the Liberal Democrats will believe them—they have to to keep the coalition together—but do the Tories really think that they are credible, or are they just a cover for the old-fashioned slash-and-burn politics with which they are so comfortable? Their goal is not simply to cut the deficit—Alistair Darling’s proposals did that—but to shrink the public sector, whether it be education, transport or, of course, support for the poor. The Tories want less public sector to make way for tax cuts to come.
One specific measure in this Bill on which I wish to comment is the broken promise on VAT. The Budget announced that VAT would rise from 17.5 per cent to 20 per cent in January 2011. This will cost each household in the country more than £500. Labour rejected a VAT increase as part of our deficit reduction plan and chose to increase national insurance contributions instead.
Lord Bates
My Lords, I am grateful to the noble Lord for giving way, but on that point is he familiar with the comments made by Alistair Darling on the “Andrew Marr Show” on Sunday, when he said that he favoured increasing VAT and not increasing national insurance contributions? Does the noble Lord agree with him?
Lord Tunnicliffe
My Lords, regrettably, I did not watch the “Andrew Marr Show” and did not hear Alistair Darling’s precise words. Therefore, I will not comment on them.
Before the election, the Liberal Democrats warned that the Conservatives would raise VAT. Nick Clegg said, “Our plans do not require a rise in VAT, the Tory plans do. Their tax promises on marriage and jobs may sound appealing, but they come with a secret VAT bombshell”. In fact, their election campaign was based on it. During the campaign, the Conservatives repeatedly denied they had plans to raise VAT.
“We have no plans to increase VAT”,
said George Osborne in the Times on 10 April 2010. VAT rises are unfair and regressive, as both David Cameron and Nick Clegg know. David Cameron has made an absolute promise that VAT is regressive and hits the poorest hardest. Nick Clegg shares this view that raising VAT would be regressive and penalise the poor.
I touch upon an area that is difficult given our Budget and expenditure structure. I commend the Government and the OBR for the comprehensive analysis in both the Red Book and subsequent documents that have been released, although some of it is based on assumptions I do not find particularly credible. However, this Budget will change the shape of our society, and we will not see that change until the spending review in the autumn, although we can be sure that it will be significant. The Budget anticipates £83 billion less public expenditure in 2014-15, which is more than £1,000 for every man, woman and child. Some of this will come from efficiency, as Alistair Darling’s Budget assumed. Some will be payments by cash transfer, and they are analysed in the Budget documentation. Yet a most important part will come from the non-cash value that we as citizens get out of society. That is what is so weak about the Budget process; the value that is withdrawn by these non-cash items is undoubtedly regressive.
The non-cash items pay for education—everything from Home-Start to universities and research. Cuts in these areas will hit poor people who have to go through state education and use things such as Home-Start. They will come from policing and justice. Yes, some efficiency will be available, but there will also be less policing and fewer justice facilities. They will come from social services such as home helps and respite care—the things that support lonely older and poorer people. They will come from programmes to protect the environment and from the arts, culture and sport. They will come from transport, which needs revenue support to maintain services to all our citizens and specialist support for the bus pass scheme so valued by our older citizens.
This Budget and its consequences in spending cuts will make our nation less secure. It will hit the poor and weakest most. It will leave society as a whole poorer and more fractured. It will leave it a less happy society, attacking those things that cause society to be at peace with itself. History tells us that, once the Tories start cutting, they will not stop. Sadly, these damaging measures may not achieve the Tories’ ultimate goal of tax cuts for the better-off because that depends on an economic recovery. This Budget and Finance Bill make recovery less likely. Without sustained recovery, no significant group of citizens in the country can achieve significant improvement in their material well-being. That is how this Finance Bill should be judged.
Lord Razzall
My Lords, I rise in support of the coalition’s Budget proposals although, as the noble Lord, Lord Tunnicliffe, has indicated, it is immaterial whether or not I do as this is a money Bill and we can only talk to it, not vote on it. I rise to support it as the relevant Liberal Democrat spokesman; I am not part of the Government but am in the coalition. This is probably the first Budget to emerge from a coalition since the 1930s. Apart from trying to provide stability for our government, one reason why the Liberal Democrats went into the coalition was to see which of our measures could be implemented by the coalition agreement and what our track record would be, having implemented the sort of policies on which we fought the election.
Of course, no one will know what went on within the Cabinet rooms in the Treasury when the Budget was agreed; nor indeed will we know until we see everyone’s memoirs, which I suspect will not be rushed out quite as quickly as those of the noble Lord, Lord Mandelson. However, looking at the proposals in the Finance Bill and the related announcements, there are clearly some issues where the Liberal Democrat members won the relevant arguments. I suspect that there would not be the proposed bank levy, on which we campaigned during the election, without the influence of the Liberal Democrats, and, bearing in mind the hostility that came from certain elements of the Tory party against an increase in capital gains tax, I suspect that the proposals to increase capital gains tax enshrined in this Bill came from the arguments raised by the Liberal Democrats. As noble Lords will know, we attacked over a period of years the Labour legislation under which, to coin a phrase, many of the rich paid less in capital gains tax compared with the income tax paid by those who cleaned their offices. As the Minister indicated, the coalition Government have taken the first steps to eliminate from tax altogether people with an income of under £10,000, and, as he has indicated today, those proposals are part of a process which the coalition has agreed will continue throughout the period of the Government. Most importantly, we have long advocated the restoration of the earnings link on pensions—something that Labour has always resisted—and that link is now being restored.
I have said what I agree with in the Budget and have referred to the legislation that reflects Liberal Democrat policies. However, I think that the role of the Liberal Democrats in your Lordships’ House is also to question the coalition about areas at which the Government need to look carefully. Taking up the point that the Minister made regarding the fairness of the Budget, undoubtedly both parties in the coalition have tried to demonstrate that this Budget is fair across all elements of society. However, there is no doubt that there are issues here, one of which was touched on in the intervention of the noble Lord, Lord Lea of Crondall. The Budget briefing indicates that the package mitigates,
“the impact on the most vulnerable in society”,
and that fairness will be achieved by sharing the impact across all income deciles—a wonderful Treasury phrase. It claims that, while the bottom 20 per cent will lose, on average, 0.9 per cent of income, the top 20 per cent will lose 2 per cent. However, as always, the devil is in the detail, and Robert Chote, the head of the IFS, has said that the problem is that that does not take into account alterations in welfare benefits. If the coalition is to claim that this is a fair Budget, the Government need to look at how the Treasury models the impact of the reductions in taxation at the bottom end and plugs in the impact of the loss in welfare benefits. I certainly urge the Government to do that.
A number of right wing newspapers have trumpeted the impact of reductions in housing benefit, and there have been horrendous stories of people getting hundreds of thousands of pounds in housing benefit in the wealthier parts of London; but as the noble Lord, Lord Best, indicated in the debate on Thursday, that is just the tip of the iceberg of the issue and the proposals to cut housing benefit could bear down particularly on the unemployed in London and the south-east. Why should we attempt to make life tougher for the unemployed? As some of these measures will require legislation, I urge the coalition Government to have a look at the detail in order to see the extent to which these problems can be ameliorated.
The elephant in the room, which the noble Lord, Lord Tunnicliffe, touched on, is what will happen in the comprehensive spending review in October. We are all aware that the Finance Bill and the Budget proposals have, in a sense, a relatively small impact compared with the CSR. I am sure that the Liberal Democrat Members of the Government will be arguing strongly with the Tories that—whatever happens in the CSR, and clearly there will be significant cuts—we should endeavour to ensure that they do not bear unfairly on those in our society who are less able to cope.
One point which nobody has touched on yet is the fact that managing economic policy is not just about fiscal policy or public expenditure; there is also the whole area of monetary policy, which has now been handed over to the Bank of England. I refer to a point which a former member of the Monetary Policy Committee raised today in the New Statesman. Will the Minister indicate whether, if the MPC were to lose control of its senses and significantly raise interest rates, tightening monetary policy at the wrong moment, the Government would not rule out exercising Section 17 of the relevant legislation, which allows the Chancellor of the Exchequer to overrule the committee? Although it looks like that will not be necessary, it would greatly comfort those of us who follow these matters to know that that would not be ruled out.
I listen with absolute fascination to what the Labour Party has to say on the Budget, the Finance Bill and the Government’s current economic policy. Let us look first at the point that the noble Lord, Lord Tunnicliffe, made on VAT. Not only did Alistair Darling indicate that he had been in favour of an increase in VAT when he appeared on “The Daily Politics” and “The Andrew Marr Show”; the third man has indicated it as well. In his book, he said:
“Alistair’s final pre-election PBR was due to be delivered on December 9 ... he told me his proposed surprise announcements would reduce the bill for basic-rate taxpayers … here was the shock—to balance these moves he was minded not only to restore VAT to its previous level of 17.5 per cent, but … even to 19 per cent”.
“I was impressed”, said the third man:
“These were exactly the sort of hard choices that would enable us to regain the initiative … Gordon … vetoed [it], point blank”.
Alistair Darling floated a VAT increase before the March 2010 Budget, and again Gordon Brown vetoed it. Alistair Darling disclosed that on “The Andrew Marr Show”, but he had also done so on 13 July on “The Daily Politics”, when Andrew Neil asked him whether he had considered an increase in VAT, which Gordon Brown was against. Alistair Darling said:
“This is public knowledge. It’s well known that there was this difference between us”.
So, on the question of VAT, the Labour Party really should keep silent.
Let us consider Labour’s record. Labour has left this country with the second largest deficit in Europe. On the OBR’s forecast, the UK deficit will be 10.1 per cent of GDP in 2010-11. That is higher than France, at 8 per cent, Germany, at 5 per cent, Japan, at 6.7 per cent, and—would you believe it?—Greece and Portugal, the two weak members of the euro zone, at 9.3 per cent and 8.5 per cent respectively. Under Labour the UK has had the deepest recession on record, and the longest recession in the G20. Labour cannot deny that. There have been six consecutive quarters of negative growth, and no other country has had that. There is also no doubt that the Labour Party was planning cuts just as large as those which the coalition Government are proposing. The IFS has indicated that on Labour’s own Budget plans we would have to have cuts of 25.4 per cent to non-protected areas. Those are huge cuts which Labour was committed to bringing in but which it was not prepared to disclose in the run-up to the election. As I said in the debate on the gracious Speech, to misquote Attlee on Laski: a period of silence from the Labour Party on this issue would not come amiss.
Lord Stern of Brentford
My Lords, many of the challenges we face in the world economy in the coming years are structural and profound. These include high public deficits in some countries and major imbalances in savings and investments with correspondingly large external surpluses or deficits in key economies of the world. Both can feed, and have fed, instability. Over this decade, we will continue to see fundamental changes in the international division of labour, which will imply great industrial change and some dislocation in both the rich and the poor world, and our international financial and economic system will have to change to reflect the new realities. Still more profound is the necessary acceleration of the energy and industrial revolution, which will be not only innovative, creative and dynamic but critical to our building of the low-carbon economy which is essential for managing climate change. If we see these related challenges together, we will do much better on each than if we try to tackle them one by one or in sequence. This decade in the world economy is of special importance. In the UK, we must close our deficits while avoiding tipping back into recession. We must come out of this recession by laying the foundations of long-term and sustainable growth and not, as we did in much of the world, including the UK, a decade ago, by sowing the seeds of the next bubble.
Today, in the long-term and international context I have described, I want to consider briefly three particular related issues that confront us now and which are, or should be, central to our consideration of the UK’s fiscal policy and the Finance Bill. These are first, revenue forecasting, secondly, the pace and flexibility with which we attempt to close the deficit and thirdly, tax reform.
I must declare an interest in the economics of public policy. I am currently professor of economics at the LSE and have been a professor of economics, specialising in public policy, for more than three decades. For 10 years, I was first chief economist of the European Bank for Reconstruction and Development and then chief economist and senior vice president of the World Bank, interacting with finance Ministers around the world. Closer to home, and of direct relevance to what I have to say today, I was from 2003 to 2007 head of the Government Economic Service in Her Majesty's Treasury, and for the first nine months of that time, I was Second Permanent Secretary of the Treasury with particular responsibility for the revenue side of the public finances, before I turned in my next two and a half years as a civil servant to write two major reports, the report of the Commission for Africa and the review of the economics of climate change. I was indeed fortunate in my assignments. I returned to the LSE three years ago.
On revenue forecasting, I must welcome the establishment of the Office for Budget Responsibility. My brief experience in this area at the Treasury in 2003-04 underlined very strongly the importance of independence and of transparency. In my view, in the Treasury at that time, there was a lack of clarity in setting out the assumptions, an absence of clear models of revenue and excessive use of hopeful judgment on future revenues. One result was that we went into the crisis in 2007 with inflated forecasts of structural revenues, and thus inflated expenditures which had expanded to meet the anticipated, or rather “wished for”, revenue, and with a substantial structural deficit.
There were some positive moves on the revenue front at that time. We brought Her Majesty’s Revenue and Customs together—one or two centuries too late, but better late than never—and provided much greater clarity for the formation of tax policy across the Treasury and HMRC. But in my few months working on revenue, I was not successful in bringing more rigour to revenue forecasting. Hence, my emphasis now on clarity, transparency and independence.
We must not, however, confuse independence with isolation or incoherence. It is important that the OBR is well informed about the analysis and sense of direction on policy of Her Majesty’s Treasury and the Bank of England. Independence of the OBR is perfectly consistent with discussion on analysis and policy with these two key institutions. Indeed, all three will function the better for this interaction. Bank of England independence is not compromised by constructive and detailed discussion with Her Majesty’s Treasury, which during my time was a much weaker discussion than it should have been. The reluctance to engage was not for the most part in my view on the side of the Bank of England.
I have three questions on the OBR for the Government, to which I hope that the Minister can respond. First, will he encourage the OBR to illustrate its value-added by examining how far its methods would produce different results from the less transparent methods of the past? This would be very helpful in assessing the contribution of the OBR. Secondly, will he encourage the Government to emphasise still more strongly the uncertainty surrounding all revenue forecasts and thus uncertainty in deficit forecasts? To be slightly nerdy, we should welcome the appendix on fan charts in last month’s pre-Budget forecast of the OBR. Thirdly, will he consider establishing an independent board for the OBR, advisory or otherwise, which could provide guidance to the chair of the OBR and play a role in defending its independence, as Sir Michael Scholar has so admirably done for UK statistics?
Finally, on revenue forecasting, I should like to pay tribute to the outstanding work of Sir Alan Budd in establishing the OBR so effectively and so rapidly. I have known for some months of his clear intention to serve for only a few months as its head. This was also very clear to senior Treasury officials and to Ministers, as I am sure that the noble Lord will confirm. Thus, any speculation from the press and elsewhere to the contrary is completely misplaced.
My second issue is the pace of closing the deficit. I fear that this is a subject that sometimes descends to camps and slogans. If I said that the entire structural deficit should be closed in one year, you would think that I was mad. If I said that it should be closed in a decade, you would doubt my seriousness. It is clear that we must discuss whether it should be targeted over four, five, or six years. There is nothing in the subject of economics that allows us to be very precise on this. Thus it makes no sense to denounce those who rightly draw attention to the risk of recession as narrow Keynesians who care little about budget responsibility and the future servicing of debts, just as it makes no sense to label those who rightly emphasise the dangers of large deficits and ever-increasing debt to GDP ratios as Hooverians intent on repeating the mistakes of the great depression.
Let us recognise not only that we shall have to set clear intentions on deficit reduction but also that we must feel our way on the risks of recession. These risks are very real. We will probably see strong growth in China and India, but while they are around 36 per cent or 37 per cent of the world’s population, they are around only 10 per cent of the world’s economy, although somewhat larger on a purchasing power parity basis. The US and Europe are far more important in the global economy, constituting around 45 per cent of the total. More than half our exports are to Europe where there seems to be a clear intent to go for a strong and co-ordinated fiscal consolidation with significant risks to overall demand. As Ben Bernanke said last Wednesday, the future of the US economy is “unusually uncertain”. While we have in the UK the advantage of a flexible exchange rate there can be no guarantee that rising exports and private investment will replace the demand reduction in the UK from fiscal consolidation.
It is difficult to be precise about the risks of recession in the UK, but they are not small. Let us recognise both that we will learn more in the coming months and the next year or two, and that if we fall into recession we risk not only the severe human cost of unemployment but, via the automatic stabilisers, raising the deficits we are trying to reduce. We do not know how much capacity or underlying potential have changed as a result of the crisis and recession. It is thus difficult to distinguish cyclical from structural deficits. As I have said, there are strong risks to export demand and we do not know what may happen to consumer and investor confidence. It is absurd to pretend otherwise.
Thus, while agreeing with the Government and their predecessors on the importance of cutting the deficit, I would like the Minister’s assurance that the Government will keep the risk of recession under review and stand ready to adjust their fiscal stance if necessary. While recognising that the Bank of England has a strong role to play in demand management, it cannot be left solely to the Bank. This is not lack of resolution or anticipating U-turns; it is sound economics in the face of risk and uncertainty and it is common sense.
As to tax reform, at a time when strong shorter-run decisions are necessary on the public finances, we must also recognise that tax reform is about the medium and long run. Let us not make the urgent need for extra revenue and expenditure control an excuse for yet more incremental tinkering that is not well thought through in terms of the coherence of the tax system as a whole. Tax systems suffer badly from the creeping approach to policy. Each new initiative might have had some plausibility at the time, but we now have a system with a set of major defects. These include: disincentives to work for many at the bottom end of the scale; incoherence between the various forms of personal income tax, corporate income tax and national insurance; no clear rationale on the taxation of wealth and savings; and inefficient and inconsistent ways of pursuing distributional objectives. The tax treatment of housing is a special mess. Now is the time for a strong move to correct the great market failures associated with the environment and climate change. With green taxes and other measures, including the green investment bank, we can simultaneously raise revenue, help markets work better and foster a new and cleaner source of growth. This is surely what our American friends would call a no-brainer.
There is not time to develop these points in detail. I recommend to noble Lords the work of the Mirrlees review from the Institute for Fiscal Studies which is scheduled to be published in September this year. Much of this analysis is already available and there is a clear discussion by Paul Johnson, a co-editor of the Mirrlees Review, in his lecture at the LSE last month which is available on the IFS website. Three decades after the important and influential Meade review on the tax system, it provides a most valuable analysis and sense of direction.
Let me give two examples from indirect taxation. First, the base of the VAT could be substantially broadened and the extra revenue used to more than compensate, as we should, those on low income who are most affected. Secondly, a financial activities tax, as suggested by the IMF, could be structured in a way that would be economically equivalent to a VAT on this currently exempt sector. I could go on to give examples concerned with income and other taxes and benefits.
There is also much analysis to draw upon from international institutions in other countries—for example, the expert groups of the OECD and the Fiscal Affairs Department of the IMF. At the request of an earlier Chancellor, I ran, as Second Permanent Secretary of the Treasury, a series of internal seminars on tax reform in the first half of 2004 and provided the summary paper drawing conclusions for the Chancellor in June of that year. I quite properly left my only copy with the senior management of the Treasury when I left in the summer of 2007, and I am sure they will have retained—at least, I hope they will have retained—their own copies. I hope they find the study useful.
Now is the time for a careful and considered discussion of the reform of tax and benefits in this country. I trust that the Government will play a strong, analytical and thoughtful role in this discussion and that we will see the fruits in terms of action in the coming two or three years. I seek the Minister’s assurances on this point. There is so much that we could do at this time of reform and reappraisal to move towards a system which is simpler, more equitable and more efficient. Furthermore, it could foster the entrepreneurship and creativity to drive the new forms of growth that are vital to our nation and the world in this decade of fundamental change.
Policing
(13 years, 9 months ago)
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The Minister of State, Home Office (Baroness Neville-Jones)
My Lords, with the leave of the House, I would like to repeat a Statement made earlier today in another place by my right honourable friend the Secretary of State for the Home Department.
“Mr Speaker, with permission, I would like to make a Statement about a consultation paper I am publishing today. Called Policing in the 21st Century: Reconnecting Police and the People, it sets out the most radical reforms to policing in at least 50 years. For this Government, police reform is a priority, not just because we inherited the worst public finances of any major economy, but because for far too long the police have become disconnected from the communities they serve. They have been bogged down by bureaucracy, and they have answered to distant politicians instead of the people. Crime remains too high, too many families and communities suffer from anti-social behaviour, and barely half the public are confident that important local issues are dealt with. Meanwhile, the challenges we face have changed. Terrorism and the growth in serious organised crime and cybercrime all require new approaches that cross not just police force boundaries but international borders.
First, we will transfer power back to the people. We will introduce directly elected police and crime commissioners by 2012. The commissioners will set the police budget, determine police force priorities, and have the power to hire, and when necessary fire, their chief constable. To help the public hold their local police force to account, we will publish local crime data and mandate beat meetings so that people can challenge the performance of their neighbourhood policing teams.
Secondly, we will return professional responsibility to police officers. Front-line staff will no longer be form writers but crime fighters, freed up from bureaucracy and central guidance and trusted to get on with their jobs. We have scrapped the policing pledge. We have got rid of the confidence target. We will restore police discretion over charging decisions for particular offences. We will limit the reporting requirements for stop and search, and we will scrap the stop form in its entirety.
Thirdly, we will shift the focus of government. As the Home Affairs Select Committee noted during the last Parliament, the last Government tried to micromanage local policing but failed to support forces effectively on national issues. We will build on the work of the Serious Organised Crime Agency to create a more powerful National Crime Agency, which will tackle organised crime and protect our borders. We will phase out the National Policing Improvement Agency and scrap Labour’s plans for a statutory police senior appointments panel. We will discuss with the Association of Chief Police Officers the way forward in its role as a professional leadership body.
Fourthly, we will make the police more efficient at force, regional and national levels so that front-line local policing can be sustained. To this end, we are already consulting separately on police procurement regulations to get better value for taxpayers’ money.
Fifthly, we will unleash the power of community pride and civic responsibility so that people can come together to cut crime. We will look for a cost-effective way to establish 101 as a single police non-emergency number so that it is easier to report crime and anti-social behaviour, and we will do more to encourage active citizens to become special constables, community crime fighters and members of neighbourhood watch groups.
There is nothing inevitable about crime. That is why we are determined to press ahead with these reforms. They demonstrate our determination to undo the damage of the Labour years, to put the people back in charge, and to rid our communities of crime, anti-social behaviour and disorder. I commend this Statement to the House.”
That concludes the Statement.
Lord Brett
My Lords, I thank the noble Baroness for repeating the Statement made by the Home Secretary in another place and for her letter notifying me of the review and inviting views.
Passing over the pejorative paragraph, repeated by the Government ad nauseam, about public finances, I am struck by the rhetorical style of the Statement, with phrases such as,
“power back to the people”.
I know that the Minister bears no resemblance to Wolfie Smith, but the Home Secretary’s call sounds to me more like that of the Tooting Popular Front than of responsible government. I refer particularly to the proposal to legislate to remove police authorities in favour of elected police commissioners with wide powers. This is done in the name of accountability. It is backed up by the police being required to publish local crime figures and data, and the mandating of meetings so that people can meet, and challenge the performance of, their neighbourhood policing teams. Is that revolutionary action? Well, not quite.
The Minister tells us that the Government have scrapped the policing pledge. I am sure that that was said in the other place with a flourish. Let us examine what has been scrapped. Let us look at policing pledge number 9, which states:
“We will arrange regular public meetings to agree your priorities at least once a month, giving you a chance to meet your local team with other members of your community. These will include opportunities such as surgeries, street briefings and mobile police station visits which will be arranged to meet local needs and requirements. We will provide monthly updates on progress and on local crime and policing issues. This will include the provision of crime maps, information on specific crimes and what happened to those brought to justice, details of what action we and our partners are taking to make your neighbourhood safer and information on how your force is performing”.
The pledge now contains an update on progress and meetings with local representatives. Therefore, what the Statement promises is already in place in the policing pledge, which the Home Secretary has chosen to scrap.
I turn to elected police commissioners, which the Statement says is about accountability to the public. Let us see how it impacts on the public. What is the current level of accountability? I commend to all Members of your Lordships' House an excellent debate last Thursday on policing and crime rates proposed by my noble friend Lord Mackenzie of Framwellgate. He made clear all the areas of accountability that the police already have. Consultation on local policing, as set out in the policing pledge, is now apparently to be reinstated.
The issue is therefore one of scrapping the police authorities, which are currently made up of elected council members from all the major parties, independent councillors and independent appointed members. Their role is to be invested in a police commissioner, who, unless he or she has a wide-reaching consultative body of some kind, will inevitably narrow the consideration of public accountability that now exists in law enforcement and local government.
A number of people have voiced to me their fears of political interference and the potential for cronyism and corruption among elected police commissioners. Why should that be? In an elected police authority, which comprises members of different political parties, people will express different views about policing. They will be tackling the same issues. There is no evidence that that has led to anything other than consensus policing, which has assisted chief constables in meeting their operational requirements while enforcing the accountability that we want. No one in the police service, in police authorities or in local authorities has any great confidence in this proposal.
If the overwhelming response to the consultation on elected police commissioners is negative, as it was when a similar question was asked in a survey in 2004, will the Minister abandon the proposal? The Local Government Association says that elected police commissioners will cost £50 million. What is the Minister’s estimate of the cost? Will not the abolition of the police authorities remove a reservoir of knowledge and experience that no single individual can replace?
If I were to stand for police commissioner for Cumbria, in whatever competition there was—and I buy completely the idea that there should be no interference in the policing part of the role of the chief constable—I would get elected by making promises. That is how people get elected. Those promises might include a rebalance between rural and urban policing in Cumbria. The chief constable is very clear that with the reduced resources he is likely to have, the way to do it is the way he is doing it, so I have a problem at re-election of presenting how I delivered my promises. That at least has major potential for political interference. If I do not interfere, how do I deliver the promises on which I have been elected against whatever party or non-party opposition that has stood in the same competition?
On the SOCA proposal, the coalition agreement talks of refocusing SOCA, not eliminating it. Is this a coalition U-turn? A press briefing over the weekend talked of creating a British FBI. Is this the Government’s intention? This has been denied in the past and there have been very clear views from senior police that that is not what is required. A good friend of mine with the metropolitan police in Washington DC said to me in the late 1980s that FBI stood for “famous but incompetent”. When I questioned that, he said that he was referring not to the ability of FBI agents but to everything from what you might call turf wars to the unwillingness of certain parts of local law enforcement and the agency to accept the authority of the other. There are major problems attached to this, and I would be very interested to hear more on that subject.
We also hear that there is to be an enhanced border police force. Is this to replace the UKBA? Is this going to impact on numbers? It is very odd because in the debate last Thursday, and indeed in every previous attempt by this side in both this House and the other place, we have tried to persuade Ministers to admit simply that with the kind of cuts that they are contemplating, there will be fewer police on the beat and fewer resources available to maintain the present successful battle against crime. When I say “successful”, I agree with the noble Baroness that it can always be improved, but it is not a damaged record. It is the best record for 30 years, the level of confidence among the public is the best in 30 years, and there is the least lack of confidence in the ability to deal with social issues and anti-social behaviour. It is therefore a rhetorical, Wolfie Smith-type Statement, and it would be better if we dealt with it in a much more serious manner.
We are making major moves ahead of the review that we are told will take place in October, so I ask yet again: is that going to reduce the number of front-line police officers or not?
Baroness Neville-Jones
My Lords, 68 per cent of the public in recent surveys support the idea of having elected commissioners, and I hear what the noble Lord says about the way in which the police authorities have performed. I do not think that the Government are suggesting that the police authorities have done a sustainedly bad job, but they are invisible to the local population. One of the main objects of this exercise is to reconnect the police force of the locality with the people of the locality, and we believe that the way to do that is to have an official who has to account to the people. We are trying to get away from the police accounting bureaucratically upwards instead of being the servants of their local populations. With all the measures that we are trying to put in place, including the beat meetings and the crime and policing panels, it is not true to say that there will be no checks and balances in the system. The police commissioner will himself be answerable to these panels. They have the right to challenge his decisions. They cannot override them, but they can certainly conduct dialogue in the name of the local people, so you will have local discussion. There is probably a philosophical difference between my party and the other side of the House on the need to reconnect authority over the police to the local community.
Lord Brett
The noble Baroness makes a great play of the lack of connection. We have had elected and appointed members on police authorities for a number of years. Does she have information on a failure of people coming forward to be independent members of police authorities? I happen to know that in Cumbria there were 100 applicants last time for what I think were two or three posts. Is there evidence to sustain the argument that there is a disconnect, other than in surveys?
Baroness Neville-Jones
Only 8 per cent of wards have a councillor on their local police authority. It seems to me that there is a much more slender connection between local accountability and the people than is suggested by that kind of assertion. Police commissioners are much more directly responsible and accountable to the locals than a police authority, which has relatively few councillors among its number, with an election behind them.
The noble Lord made a number of other points. The general proposition that we are putting forward here is that accountability is not to and for government but towards local communities. As the Home Affairs Committee said in its report during the last Parliament, the previous Government succeeded in micromanaging too much local policing while neglecting some of the national issues.
On the national side, the noble Lord asked a number of questions about the nature of the National Crime Agency. The agency will be a much more powerful body than we have at the moment. It will be at the centre and will take issues of national importance. It will perform in two areas. One is serious organised crime. It will build on what SOCA has done and achieved and will retain SOCA’s facilities, including its intelligence-gathering capability.
At the same time, the agency will also have control over the border police force and will direct a chief constable directed at that. The border police force will sit alongside the UKBA, which will not be incorporated into it. We have decided that for a number of reasons, including the need for economy. Also, with the Olympics in sight, it is not sensible to have vast structural change at this juncture. It therefore seems more sensible to us to have, overarching the agency, a strategy to which the agency will work. The agency will then be responsible for the part of the strategy over which it has control: serious organised crime and border policing. The UKBA will, however, be tied into that overarching strategy as well. We will therefore have a single strategy for border control, part of which will lie with the National Crime Agency—that is to say, SOCA and the functions that it performs, plus the functions that will be created for the border police command. The UKBA will work alongside the border command within the framework of that overriding and overarching strategy. The object of that exercise is to create more coherent control of the borders without resorting to excessive expense in an era in which that is not going to be possible.
I am sure that the noble Lord asked me some other questions, which I would be happy to answer; I am looking at my notes.
The noble Lord asked if it was going to be a British FBI. No, it is not going to be a British FBI. We want to try to ensure that the National Crime Agency has broader powers, but it will not have a FBI-style role. All the powers it exercises will in the end also link back to the constabularies. Part of the role of the National Crime Agency will also be to link into the constabularies when it comes to, say, level 2 crime. So it will not be divorced from the role of the 43 police forces round the country, but it will give a strategic override to that function.
Baroness Hamwee
My Lords, perhaps I may ask the Minister two questions. First, can she say something about the role of local authorities? They have crime and disorder responsibilities and will need to be linked into the new arrangements. Secondly, I ask for an assurance that giving the new National Crime Agency some border responsibilities does not portray a mindset that immigration and crime are necessarily and inevitably linked.
Baroness Neville-Jones
We intend to consult on the role of local authorities and how they will link into the police and crime commissioners. I take the point about the new agency. The fact that the UKBA will retain its own separate role alongside the border police agency indicates that we recognise that there are border control functions that are unrelated to and do not concern themselves with crime.
Lord Dear
My Lords, I should first remind the House that I served for more than 30 years in police forces in this country—in one of the smallest and, indeed, in the two biggest forces. I also currently hold three non-executive chairmanships of companies that have some sort of interface with the police service, although I hasten to add not directly related to the issues that have been mentioned today.
I welcome this Statement. I should say immediately and it will not be any surprise to those listening that I respect and greatly admire the police service, both for its history and for what it does today. However, there is no doubt in my mind that there has been a need for a top-to-bottom, root-and-branch overhaul of the functions of the police service for at least the last two decades and probably longer. These proposals address only some of those issues, but it is I believe a good start and I look for more to come in the future.
First, one needs to recognise that the police have slipped quite badly in terms of public confidence, and a good deal of the blame for that must come from the issue of bureaucracy in general, in the broadest sense. About 10 days ago Her Majesty’s Chief Inspector of Constabulary, in conjunction with the Audit Commission, published a damning report on the back-office function of the police. It has grown to enormous proportions. It has been indicated that that, coupled with the growth of specialist groups, must change. Therefore, the moves in the Statement today to support a retreat from micromanagement and to cut central targets have to be applauded.
So far as the central crime agency—
Lord Wallace of Saltaire
My Lords, I remind you that the rules on Statements apply. People should make short interventions in order to leave time for others to come in.
Lord Dear
As for the National Crime Agency, I support what is being said there. I have supported border policing, working in conjunction with UKBA, for some time.
The nub of the whole problem for onlookers is with elected commissioners, and I seek two reassurances from the Minister. In principle, I give qualified support to that proposal, which amounts to a revamp or modernisation of current police authority structures, which have stood the test of time for the past 50 years. Times have changed and this may be the time to look again at the role of police authorities, but the devil is in the detail. I ask the Minister to comment on the issue of hire and fire. Hiring will need very careful handling at a time when the whole question of police leadership is under the microscope and the need is even greater to ensure that there is selection of the right person for the right job and that careers are managed not only for the benefit of the individual but to the advantage of the community. On the issue of firing I seek a very firm reassurance from the Minister. If there is the power to fire, reserve powers must be given to the Home Secretary to endorse that, or the chief officer will be at the mercy of single-issue politics and extremist groups. Comment has been made about operational independence not being damaged, and I accept that, but I seek reassurance, particularly on the issue of hire and fire. Overall, I welcome the Statement and look forward to the debates that will follow.
Baroness Neville-Jones
On the question of hire and fire, the noble Lord is right to say that those powers are contained in the proposed remit of the police and crime commissioner, who is himself potentially subject to recall. It is not the case that any police commissioner would be able to exercise his powers unreasonably or arbitrarily without himself thereby being called to account. The whole point of having him—I mean, these individuals; I hope that there will be some women, too—accountable to the local electorate is precisely so that unreasonable behaviour can be checked. I see no reason why an elected official in such a position should behave unreasonably any more than any other elected official.
I take note of what the noble Lord says about reserve powers, and will take that back to the Home Secretary.
Lord Harris of Haringey
I declare an interest as a member of the Metropolitan Police Authority, which I understand is to be abolished under these proposals. Could I ask about this brave new world of the police and crime commissioners? In parenthesis, calling somebody a crime commissioner implies that they commission crime, which seems a slightly strange thing for the Government to want to do. Given that the commissioners will apply to the forces that provide neighbourhood policing, which is essentially visible to local communities and for which there are already substantial arrangements for local dialogue with local communities, why are other areas of policing not to have the benefit—if benefit it be—of having their own police and crime commissioners? Why, for instance, is there no police and crime commissioner for the British Transport Police or the Civil Nuclear Constabulary or the Ministry of Defence Police—or, for that matter, the City of London Police? The Civil Nuclear Constabulary and the Ministry of Defence police are extremely heavily armed and the work they do raises important issues of public accountability. The City of London has its own slightly different means of democratic control from anywhere else. Why is there not that clarity? Could the Minister also tell the House about the accountability arrangements for the new national agency, given, again, that this will have very important but not essentially visible responsibilities for policing? These are precisely the areas in which strong, robust and transparent accountability mechanisms are necessary.
Baroness Neville-Jones
The noble Lord raised the question of other functions not covered by the police and crime commissioners and he is quite right to do so. The proposals make a distinction between those issues where we believe that local accountability is of the essence, in the area of neighbourhood and constabulary activity. Where we think that the functions have a much more national character—and certainly the police commissioners themselves must contribute to efficient national policing by collaboration—such as in counterterrorism, or in the powers that are going to be grouped under the National Crime Agency, different arrangements are needed. We will certainly have to put in place, subject to further consultation, the nature of the accountability arrangements that will be required. There will certainly be accountability arrangements but they have not yet been spelled out. Our purpose today is to make it clear that lying at the core of this is the need for accountability of local and neighbourhood policing.
On the British Transport Police, there is indeed a series of other protective policing powers and activities which are not covered by today’s proposal. We are looking at the rationality of present structures in that area with a view to seeing whether we cannot make them more efficient. Again, we will have to deal, in that instance also, with the question of accountability.
Lord Martin of Springburn
My Lords, as someone who has served both as a councillor and an elected Member of Parliament for 37 years, I always felt that it was the chief constable who was accountable to local people and to his police region. If the local people were displeased about his or her performance, they were not long in making that known. Can the Minister check her facts on the make-up of police authorities? It has been my understanding that there is a large proportion of elected councillors on those boards.
Baroness Neville-Jones
The noble Lord says that chief constables are accountable. Yes, but it has to be said that police authorities as they stand at the moment had the money and the strategy and the problem that we have at the moment is that they are insufficiently accountable. I do not think it follows that because we are putting in place police and crime commissioners, the chief constable is therefore relieved of accountability. That is most certainly not the case. His accountability will be for the efficiency of his operations and he will retain his operational independence.
As for my facts on the elective elements within police authorities, it is certainly the case that each authority has 50 per cent of councillors, but it is still a small number nationally, and at ward level it is only 8 per cent.
Baroness Scott of Needham Market
Perhaps the Minister can clarify the expression in the Statement that the new commissioner will “set” the budget. Do the Government really mean set the budget, or do they mean manage the budget within its existing parameters? For example, do they intend to retain the precepting arrangements whereby it is the local authority which levies it? If they do, how can this flexibility be exercised within the context of a council tax freeze, which would impact on police spending as well as local government spending?
Baroness Neville-Jones
My understanding is that the police commissioner will set the priorities for the budget and, indeed, I think that he does have a hand in the setting of the precept. I will have to write to the noble Baroness about other detail, because I would not want to mislead her.
Baroness Gibson of Market Rasen
Will the noble Baroness answer the question asked by my noble friend Lord Brett about the cost of elections for police commissioners?
Baroness Neville-Jones
Clearly, elections cost money, but it is difficult to know before we have had one what they are likely to cost, although we will certainly make an estimate. The money will have to come out of the finance that is available to the Home Office for policing, but we believe that this is good value if the public are to have better control. Given the totality of the package that we are putting forward, with our determination to increase value for money, to drive down duplication and to improve procurement, for example, which at the moment is lamentably fragmented, duplicative and therefore costly, we believe that, in the end, this will not be a more costly way of running the police service than the current one.
Lord Stevens of Kirkwhelpington
My Lords, I declare an interest as the previous Prime Minister’s senior adviser on international security and the chairman of the committee set up by David Cameron to look at border policing. I have two points. First, this is a consultation paper, so other people’s views will be looked at and considered. I should like to see the evidence, if I may—no doubt the House would, too—showing how the police authorities have been a failure. The bottom line is that, having been a policeman for 46 years and inspector of constabulary for two years, during which time I was at the appointment of 12 chief constables, I have seen no evidence that police authorities are a failure—quite the opposite. When I was Commissioner of the Metropolitan Police, I thought that the police authority was a very effective, although sometimes hurtful, reminder of what one’s duties were. I should like the consultation to take account of why it is thought that the police authorities in this country, linked in with local authorities, have been a failure.
Secondly, it will come as no surprise to the House to hear that I am totally in favour of where we are going with border policing and the amalgamation of some agencies that are seen to be separate in terms of where they are. The committee, which is made up of 14 people, has met for nine months to a year, during which time there has been an absolute need to firm up the borders of this country in every aspect. Yes, we are hard up for money and have to work in the financial situation in which we are, but does the Minister agree that we must work towards having a proper border policing agency as soon as we can and that that agency must be beefed up by a more effective Serious Organised Crime Agency?
Baroness Neville-Jones
The noble Lord makes two points, the first about police authorities and the second about the border policing arrangements. As I said at the outset, I do not think that the Government are claiming that police authorities have been a failure in the sense that they have not been able to exercise functions properly. The point that the Government are making is that the authorities are not visible and, in that sense, properly accountable to local people. Only 7 per cent of people know what the authorities do or have ever heard of them. Some authorities, although not all, perhaps do not rate as more than adequate. We are saying that we can do better. The whole drift of the Government’s policies is to return authority to local people and to make those who have considerable control over the condition of their daily lives more directly accountable to them. One of the ways of doing that is to give both power and authority to somebody whose job is, in the end, owed to the people who put him in that position. There is legitimate room for difference in this area and we will certainly want to consult on the functions of the police authorities and the contributions that they have made over time to see whether some of those aspects can be properly incorporated in the role of the police commissioners. However, we are determined to put police commissioners in place.
The other point that the noble Lord raised was about border policing. He asked whether what I had outlined was the last word. I do not think it is but it is certainly what we think it is sensible to do now. If we manage to get an effective strategy in place—one that unites the functions of the border policing command, which brings together several agencies which are separate at the moment—and, in turn, ensure that that strategy also incorporates the role of the UKBA, which will, however, retain its own functions, we will move a good way down the road of creating a single strategy for border policing. This is the first important thing to do. I am sure that, in the process of doing that, we will find that there are further improvements that we can make.
Turning to SOCA, or the functions performed by SOCA at the moment, I do not know what this part of the agency will eventually be called but those functions will also be closely tied into what we need to do at the border. It is very clear that we must be able to police serious organised crime at level 2. There must be good connections between the constabularies and that part of policing at the national level which is responsible for organised crime. However, we must also be able to operate at the border because of its international dimensions. We need a tight strategy which brings all these elements together.
Finance Bill
Lord Northbrook
My Lords, I welcome the emergency Budget as a whole. The emergency that we face is that, as the Minister said, one pound in every four that we spend is being borrowed. I could not quite believe—if I heard correctly—the remark of the noble Lord, Lord Tunnicliffe, that Labour policies prevented the UK falling into recession. Under Labour, Britain had the longest and deepest recession on record. Britain has had the longest recession in the G20, with six consecutive quarters of negative growth—more than any other major economy. The coalition has inherited from its predecessor the largest budget deficit of any Government in Europe with the exception of Ireland. This is at the very moment when fear about the sustainability of sovereign debt is the greatest risk to the recovery of European economies.
The second quarter preliminary GDP figures published on Friday show that there is some light at the end of the tunnel, but there is still a need for the strong measures proposed in the Budget. The Office for Budget Responsibility has downgraded the previous Government’s overoptimistic growth forecasts to more sensible figures of 1.2 per cent for 2010 and 2.3 per cent for 2011. It has also increased the estimate of the structural deficit.
The majority of debt reduction measures are to come with proposed spending cuts. I welcome the forecast that public sector net borrowing will decline from the horrendous figure of £149 billion to £37 billion by 2014-15. Taking the consolidation as a whole, Table 1.1 in the Red Book—which, as a whole, seems much more straightforward this year—shows that roughly three-quarters of the total cumulatively will be made up of spending cuts by 2015-16. This is where the challenge comes. Paragraph 1.4 of the Red Book says that once you discount the ring-fenced departments, other departments could see average real cuts to their budgets of around 25 per cent over the four years. This is where the coalition must keep its nerve. There is likely to be strong departmental resistance and special case pleading against the 25 per cent reductions to their budgets. There are also likely to be strikes over the proposed pay freeze and reduced pension arrangements for much of the public sector workforce. The general public must continue to be told why these sacrifices are necessary.
I move on the tax measures proposed in the Budget. On VAT, the noble Lord, Lord Tunnicliffe, seems to be unaware of the former Chancellor’s view that VAT had to be raised and has not yet read the third man’s book on the subject. Like Alistair Darling, I understand the need to raise VAT to 20 per cent next January, while not especially welcoming it. I support the new bank levy. Likewise, I back the increase in insurance premium tax. I welcome the reduction in the main rate of corporation tax from 28 per cent to 24 per cent over the next four years, and the plans to reduce from 21 per cent to 20 per cent the small companies corporation tax rather than increase it, as the previous Government proposed, as the Minister stated. I accept the need for an increase in the capital gains tax rate but regret that there is not a lower rate for business assets.
I applaud the increase in the lifetime limit for CGT entrepreneurial relief. However, I feel that it sends the wrong message to our manufacturing companies to cut the annual investment allowance by 75 per cent from 2012-13 and the writing down allowances together with the abolition of the agricultural building allowance to nil by 2011. I declare an interest as a landowner. The situation is well summed up by the accountants Saffery Champness. It says, “It seems that tax relief on investment by businesses is not considered a priority”. How does the reduction in capital allowances square with the Government’s wishes to encourage a more manufacturing-based economy?
In the area of personal tax the situation is more complicated. The 50 per cent higher rate of tax proposed by the previous Government still stands but must be reversed as soon as possible. How much extra revenue does the coalition anticipate it will bring in? With regard to national insurance, despite the current Chancellor’s protestations in the run-up to the election, it is still the case that employer and employee rates are going to rise by 1 per cent with effect from April 2011. This will be mitigated to an extent by the fact that the level at which employers will start to pay NIC will increase by £21 per week above indexation from April 2011. The tax take from national insurance is forecast—per table C11 of the Red Book—to increase from £97 billion in 2008-09 to £128 billion in 2015-16. However, should not the Minister be a little concerned that it sends the wrong signal as a tax on jobs that may hinder the recovery? Would it not have been better to tax alcohol and tobacco more heavily or to consider motorway tolls? But overall, as I said, I support the Government’s decision to take rapid steps to cut the deficit. The dangerous result of doing nothing for a period was demonstrated by what happened in Greece. We could not take the risk of interest rates for our debt rapidly increasing.
Another measure I strongly support is the creation of the Office for Budget Responsibility. This has already brought a more realistic tone to government economic forecasts. However, it must be seen to be independent of the Treasury. First, this means not being in the same building. Secondly, as Sir Alan Budd told the Treasury Select Committee on 20 July, it must be free of ministerial interference. It did not, for instance, look good that the OBR tweaked its budget forecasts at the last minute to erase 175,000 job losses by 2014. Sir Alan also admitted that the OBR does not have its own economic models but uses the Treasury’s. The Treasury Select Committee in a separate report stated:
“It is unfortunate that the independence of the OBR has been called into question. This makes it all the more important to get the structure and the statutory basis of the permanent organisation right, as both the OBR and the Chancellor recognise”.
What progress is being made in finding a new chairman of the OBR?
I welcome another new body set up by the Chancellor, the Office of Tax Simplification. I am particularly pleased that John Whiting, a former tax partner at PWC, has been chosen to lead it. However, two issues are important: first, that it is genuinely independent; and, secondly, that Ministers are prepared to act on its recommendations.
The coalition has produced an interesting document, Tax Policy Making: a New Approach. I highlight two areas here: first, to reconsider the requirement to purchase a compulsory annuity at the age of 75; and, secondly, a review of PAYE to consider how the system could be made easier for employers to operate. My only criticism is that it fails to consider how this House could usefully further scrutinise finance Bills, building on the useful reports of the Economic Affairs sub-committee.
Overall, the emergency Budget puts in place a credible plan as approved by the OECD to eliminate the UK’s structural current budget deficit over the lifetime of this Parliament. The medicine is tough and may dampen growth in the short term but it should help to support a more sustainable recovery in the longer term.
Lord Desai
My Lords, I have been in favour of a serious cut in the budget deficit since before the election. When I said that, I had no idea which Government would be in power so my desire for a budget cut had nothing to do with political preferences. We have heard that in his March Budget, Alistair Darling proposed a time-path of cutting the deficit over the course of five years. We even had a debate in your Lordships’ House in which the noble Baroness, Lady Noakes, questioned why the Government had not decided to comply with the Maastricht criteria by 2015. I remember speaking in that debate.
The Chancellor has now proposed his own time-path over the next five years. There are some significant differences but they are less dramatic than people think. It is important to note that we have already had a debate about how soon and how much to cut because of whether the current economy is in a fragile or strong recovery, on the brink of a double-dip recession or whatever. That uncertainty remains despite the fact that for the last three quarters we have had positive growth of output—a small 0.4 per cent in the last quarter of 2009, 0.3 per cent in the first quarter of 2010 and then suddenly 1.1 per cent in the second. We have to average these things out and not take recent numbers all that seriously but there have been three quarters of percentage growth so there is a recovery. We do not know how fragile it is. That is a problem in economics: we do not even know what the recent past is, much less what the future will be.
Given that we have had three quarters of recovery, it is worth examining what the Budget does. It has a mild cut in 2010-11. The numbers are on page 37 of the OBR’s Pre-Budget Report. In table C13 and C14, for 2010-11 the cut is only £3 billion—the current spending is £640 billion as in the Alistair Darling Budget and £637 billion in the Osborne Budget. In terms of investment expenditure, there is a slight difference in the two projections. Alistair Darling projected about 1 per cent real growth in current spending over the next five years. The Chancellor has eliminated that 1 per cent and decided that current spending ought to be constant in real terms.
It is not so much that the cuts in spending will be severe this year and so we may have a double-dip recession, but a political gamble that the size of the cuts grows over the Parliament and that more severe cuts come in the third or fourth year. If the Chancellor wants to a take a political risk, that is his business. As an economist, I note that he has left current spending constant in real terms. That is perhaps the best risk-averse strategy if you are uncertain about growth. If you are pessimistic about growth, it is best to leave current spending constant in real terms so that it grows a little year by year but not much more than that. That requires the Chancellor to do a variety of things, such as freezing public sector pay for those above a certain level, freezing various benefits or indexing them slightly lower, perhaps at CPR rather than RPI, and so on, although I do not wish to go into too much detail on that.
The spending strategy is quite straightforward but current spending should be kept under control. To those who disagree with that and would like spending to be higher, I say that it should be higher only if it is investment spending and not current spending. Even if it were desirable to do so, I do not believe that we would get a revival based on consumption or current spending. A revival has to be based on investment. If the private sector is not ready to invest, the Government can borrow in benevolent surroundings but only if they do so for investment purposes. The markets would probably tolerate that. That, so far as I can see, is the strategy to follow. In my view, the risk is not that there will be a double-dip recession, although no one knows. Indeed, as noble Lords have said, especially the noble Lord, Lord Stern, if we have a double-dip recession, the Government should be ready to relax the constraints —not just through monetary policy, as I think the noble Lord, Lord Razzall, said, but also through fiscal policy.
The advantage of overbidding on the cutting side, if I may put it that way, is that the Chancellor will have some room in the future. If he did not cut too much now, he would not be able to relax later, so I think that he has front-loaded the psychology of the pain so that he will be able to retract if there are problems later. However, I suspect that we will have not a double-dip recession but very weak growth of perhaps 1.2 or 1.3 per cent this year and maybe somewhere between 2 and 2.5 per cent next year. Some of the sluggish growth relates to longer-term problems, as the noble Lord, Lord Stern of Brentford, said in an excellent speech. The sources for rapid growth, or an accelerated 3 to 3.5 per cent growth, are extremely weak in the view of economists. Unless we do something really fantastic by way of green technology or some such innovation, we will face severe competition in the standard manufacturing sectors from Asian economies, which have not suffered a recession. They are growing very fast and are acquiring, through research and development, the kind of industries in which we thought we had a temporary monopoly. There are already complaints in Germany and the United States that various Chinese industries are catching up in relation to some of the capital goods that China used to import but now exports. I think that we will have to be quite organised about a growth spurt, but it will have to come from investment and not from current spending.
I want to say something about taxation. My personal preference would have been for a higher proportion of tax increases rather than spending cuts but that is a judgment which a Government in power have to make. I welcome the VAT rise. I have always been a hawk on VAT and in a speech some time ago in your Lordships’ House I even said that the Chancellor should have taken the opportunity to remove the zero-rating on VAT and go all the way. I do not mind saying that I have been sacked twice from the Front Bench for saying that, but the IMF agreed with me that zero-rating of VAT should be removed and that we should have no sacred cows when it comes to taxation. We have to reduce our consumption and raise our saving and investment. VAT is a tax on consumption. We should think much more progressively about using VAT and not be worried by what I might call the standard economic 101 response that it is a regressive form of taxation. It is not quite true, but we ought to define it.
I am worried that the Government have not taken the opportunity to do very much about taxation of work. I do not know how national insurance contributions got to be where they are, but it is interesting that we tax earned income more than we tax unearned income. Someone in employment pays both income tax and NIC. If I were sitting on my butt at home drawing dividend income I would pay income tax only, not NIC. There is an opportunity for this or any Government to think about integrating income tax and NIC and the real extent of how much we tax earned income will become clear. It is about one-third. Having to pay 30 per cent plus tax on earned income is something that we ought to think about seriously. We should try to reduce tax on work and raise it on spending.
There is a lot of scope for simplification and integration of tax. I do not see why there is an upper limit on NIC. That makes it very regressive and it should be brought into line with income tax. I am not, and never have been, in favour of the Liberal Democrat proposal to increase personal allowances from £6,500 to £10,000. I have spoken about that before. I think that that would be a regressive step. I commend the fact that the Budget limits the regressive effect of that tax cut by not letting the higher income levels earn the benefit of raising the personal allowance as well. There is something else to think about regarding personal allowances. We could make them more into a tax credit rather than maintaining them as they are, but I have spoken before on that so I shall say no more.
I hope that the Government do not adopt a graduate tax. I beseech them not to do that. I would much rather British undergraduates paid the same fee that foreign students pay, which is roughly £10,000. I have been advocating that since 1997. We should allow universities to charge whatever fees they want and remove the subsidy for undergraduate tuition fees. The money saved could be put into research for universities, which would be a much better use of money and more growth-enhancing than having 18 year-olds who have nothing better to do but to go to college. There is no logic in subsiding them up to £7,000 a year over three years—£10,000 would be the right amount. We currently subsidise EU students coming to British universities, and we could eliminate that if all students, from wherever they came, had to pay the same amount of £10,000. I hope that the Government will consider these mild proposals.
Lord Spicer
My Lords, 36 years ago almost to the day and the hour, I made my maiden speech in the other place. I spoke in the Second Reading of the Finance Bill, and as punishment was put on the Finance Bill Committee for the next five years. Luckily, that cannot happen to me here. It was my first speech in Parliament but it was almost one of my best. Inflation at the time was raging at 20 per cent, which is completely unsustainable and I came to the conclusion and suggested in my speech that it would result in middle-class revolution. I said that middle-class people would be marching on the streets between the fruit-growing areas of Evesham in my constituency and the Malvern Hills. I was completely wrong—they all stayed at home—but it was a magnificent speech.
I am afraid that this one will not be as good for various reasons, not least that it will be short—I have almost finished it already. As I enter my dotage I do not remember or even understand the clever economic arguments that one used in the past. In 1974 I was still running a semi-respectable econometric forecasting company—the noble Lord, Lord Burns, was a part-time member. Terry Burns, as I used to know him, was absolutely brilliant as a computer and econometric programmer. He was working at that time on the London Business School forecasting model, commanded—I think that is the right word—by the inimitable Professor Jim Ball.
The other thing that I have to consider in this speech is not to be controversial. I suppose that means being anodyne. However, I hope that your Lordships will forgive me if I say one thing of substance about the Bill that we are currently debating—I shall be as uncontroversial as I possibly can be in saying it. It is, I assume, a matter of no controversy that there is a debt problem in this country. It is also a matter of no controversy that the coalition Government are adopting a fiscal stance in terms of taxation and public expenditure policy to remedy that situation. I understand that it is, in a broad sense, supported by the Opposition. There is debate about timing and, because it is controversial, I do not intend to go into that.
I simply want to put before your Lordships the point that there is a strategic alternative to what is going on at the moment. It is not one that I support—I have to give an opinion about that—but there is one. The noble Lord, Lord Razzall, hinted at it. In most cases similar to the one we are in with high government debt, there could be a monetary policy aimed at stoking up a bit of inflation to bring down the cost of the debt in real terms. That is quite normal for Governments. It is a perfectly reasonable alternative and may, indeed, come about by default at some point, but the problem with it is that if you have a little bit of inflation, it can, in bad times, become quite big inflation. That was the point of my raising this in my maiden speech when we had 20 per cent inflation. One fifth of people’s savings were collapsing every year. It seems to me that a policy that implicitly or explicitly is based upon inflation, which could be an alternative to what we have at the moment, is not a brilliant idea. Even if you have low inflation, it is not good news for those dependent on savings or on fixed incomes. I hope that it is not too controversial to say that I support the present strategy so far as fiscal policy is concerned.
I have one final, very small, point, which I hope your Lordships will not feel is too sycophantic. This House in its present shape contributes a little bit towards the balance of public expenditure by not paying its Members. If there were to be a change to an elected Chamber where professional Members were fully paid, that situation would alter. I simply make that point. It is a very small point in connection with the revision of this Chamber, and there are much wider issues that I hope noble Lords will allow me to come back to on another occasion, but I would tax noble Lords’ patience and it certainly would not be relevant and would be controversial if I went down that way so, on that basis, I will sit down.
Lord Ryder of Wensum
My Lords, it is a great pleasure to follow my noble friend. I congratulate him on his fine maiden speech and, in particular, on his words about the dangers of inflation. As he said, my noble friend represented a Worcestershire constituency in the other place for 36 years, and I know he represented it with great distinction. He was a Minister, deputy chairman of the Conservative Party and served as chairman of the 1922 Committee for nine storm-tossed years. It is testament to his admired calm and strength of character that he managed to emerge from this experience with his sanity and humour still intact.
My noble friend is also an author. His books include The Cotswold Murders and The Cotswold Mistress. Disraeli once remarked:
“An author who speaks about his own books is almost as bad as a mother who speaks about her own children”.
What with murders and mistresses, my noble friend’s literary reticence does not surprise me in the least. We welcome my noble friend to your Lordships’ House.
The Chancellor’s Budget deserved praise for its aims, construction and delivery, but of course it was just a June hors d’oeuvre before October’s main course. I favoured broadening the VAT band rather than raising the scales. It would have yielded the same revenue and I fancy that Treasury officials recommended this option. It remains incongruous for the United Kingdom to keep one of the narrowest VAT bands in Europe while espousing the virtues of tax incentives to businesses and preferences for indirect taxes and lower direct taxes.
I supported the establishment of the Office for Budget Responsibility, but it must stay separate from the Treasury and free from ministerial interference, broadly along the lines advocated by the noble Lord, Lord Stern, earlier. It is required because circumstances have changed. During my spell as a Treasury Minister more than 20 years ago under my noble friend Lord Lawson, ministerial tampering with growth forecasts was strictly out of bounds. Yet it became clear each year under Gordon Brown that growth forecasts were manipulated for political purposes. Indeed, the noble Lord, Lord Mandelson, confirms this practice in his memoirs.
During our debates in the past three years, some noble Lords have heard me dissenting from the then Opposition’s policy of sharing the proceeds of growth adhered to by the Conservatives long after it became apparent that the Labour Government’s spending had emptied the kitty. Consequently, and in view of the grave condition of our public finances, I rued the Opposition’s vow to ring-fence the health and international development budgets.
My late noble friend Lord Bauer, a colleague of the noble Lord, Lord Desai, at the London School of Economics, would have raised an eyebrow over protecting overseas aid. He would have reminded us that it is a process by which the poor in rich countries often subsidise the rich in poor countries. Evidence of these government-to-government subsidies, fitting Bauer’s maxim, come from Afghanistan and elsewhere. Apparently, the Dubai construction industry is a beneficiary of siphoned off aid redirected by corrupt rulers. Doubtful schemes said to be assisted by British overseas aid include fraud in the Kenya education sector, 700 “ghost” teachers in Malawi and money spent on strengthening the voices of older people in the Ukraine.
Julian Harris of the International Policy Network, which scrutinises aid, said:
“It is extremely irresponsible to increase … aid … while at least a quarter of projects are failing”.
What provides Britain with better value for money, pound for pound: the ring-fenced DfID or the unprotected BBC World Service? Eight years ago, after the death of Lord Bauer, the noble Lord, Lord Desai, wrote that his views had won the respect of time—but not at DfID. Lord Bauer, a classical Smithian, would have raised another eyebrow; namely, that a Government in office for three months had failed to appoint a trade Minister.
Of course, it is heartening to hear the Prime Minister’s declaration about the need to attract inward investment and explore trade opportunities in emerging markets partly by obliging the Foreign Office to become more commercially minded. Yet can these outcomes be achieved unless the Foreign Office budget is protected? As it stands, the Foreign Office budget is about a quarter of the size of DfID’s. I would merge them, as of old, giving the Foreign Secretary control with a Minister of State responsible for DfID. I understand that up to 27 people are now entitled to sit around the Cabinet table. One fewer would be a start, still leaving no fewer than 18 more table sitters than at the height of our empire. It is right, of course, to reduce the numbers of Members of Parliament, but why not cut the number of Ministers too?
Last week, the Prime Minister spoke about competitiveness with great enthusiasm. His precise words were:
“We have got to fight the battle over free trade all over again”.
I am sure that he is familiar with the name of Professor Paul Krugman, a Nobel prize winner in economics. Krugman, when invited to define an economist’s creed, replied:
“I understand the principle of comparative advantage and advocate free trade”.
I wonder whether the Krugman creed applies to overseas aid or pages 16 and 17 of the coalition’s programme for government devoted to energy and climate change. These pages amount to at least a dozen public spending pledges worth more than £200 billion during the next decade. Ben Warren, a partner in Ernst and Young, said:
“We don’t know how the government intends to raise money, and we do not know the green investment bank is going to leverage in private capital”.
Most of the cost will ultimately fall on consumer bills. Funded that way, boosting the use of renewable energy may prove unaffordable.
Thus I was concerned over the weekend to read the Energy Secretary evangelising about the need to increase subsidised wind turbines when priority should be given to nuclear power. Your Lordships’ Economic Affairs Committee estimated that wind was at least 50 per cent more expensive per unit generated than nuclear. Whatever we think, the renewable targets will not be met. Gas may be the best answer to bridge the gap between 2015 and the new nuclear stations. Both gas-fired power stations and fuel cell technology in urban and rural areas should be studied in greater detail and with greater urgency.
Professor Dieter Helm from the Oxford Energy Institute has calculated that the added cost to business of the coalition’s energy plans could be as high as 25 per cent—hardly a spur to competitiveness. We already know that climate change policies constitute 21 per cent of our industrial bills and last year the burden of green taxes and regulations amounted to £26 billion. The ITEM Club has stressed that recovery will not come from consumers this time but from the business sector. My fear is that yet more additional costs could force manufacturing businesses abroad and limit our growth rate. A danger exists that the energy measures of the coalition as set out could damage our economy far more and far sooner than any projected global warming when the economy is in such a vulnerable state as it is to day.
The same anxieties haunt Congress. It and the president are unwilling to risk higher taxes in order to subsidise China. Even President Sarkozy, never the soundest man on parade, has warned about green protectionism; and Canada, a Kyoto signatory, has increased its emissions more than the USA, a Kyoto dissenter, simply to protect its competitiveness on world markets.
I support the coalition and its general direction, but it must not impose unnecessary costs on British industry in the name of fashionable doctrines, however well intentioned. Otherwise it will find that growth is blunted and our better manufacturers move abroad for fear of lacking competitiveness.
Lord Barnett
My Lords, I add my congratulations to those already given to the noble Lord, Lord Ryder. I think he said he made his maiden speech 36 years ago on a Finance Bill and, for his sins, got put on it again either for five years or five times—I am not sure which he said. For my sins, as Chief Secretary I took those Finance Bills all the way through the House, whether it was for five years or five times, and there were often two a year in those days. I cannot remember what I said so I hope he will forgive me if I cannot remember what he said at that time.
I will not speak about the Finance Bill this year. I want to speak to speak about the central economic forecasts of the present coalition Government. The central policy, as expressed in the emergency Budget, was reducing the deficit. The only other major policy, described as a new policy, was the Office for Budget Responsibility. Unlike 1997, when the Monetary Policy Committee was a genuinely new policy given real powers, the Office for Budget Responsibility has powers only to forecast, and those forecasts can, of course, be ignored. The OBR’s independent forecasts have been semi-criticised by many as not necessarily being so independent. The criticism of Sir Alan Budd was much overstated. He himself admitted that he was a little naive. Perhaps he should learn that he should never be naive about the Treasury and its forecasts. Otherwise, I would not doubt his integrity or his honesty, either on this occasion or on any other.
There is no shortage of independent forecasts, as the noble Lord, Lord Sassoon, will know. The Treasury itself in most, if not all, of its documents constantly quotes independent forecasts. It seems a little insulting to suggest that the Treasury’s civil servants were so lacking in independence that they were not really independent at all and allowed Chancellors over the years to override what they were saying in their published documents.
The noble Lord said that one of the benefits is greater transparency. I am sorry to see that the noble Lord, Lord Sassoon, is not transparent on every occasion. In answer to a Written Question from me, asking him for various discussions that the Chancellor may have had with the Governor of the Bank of England, he said:
“As was the case with previous Administrations, it is not the Government’s practice to provide all details of such discussions”.—[Official Report, 21/7/10; col. WA 220.]
So the noble Lord, Lord Sassoon, is not transparent on all occasions, even if he is now telling us that the OBR is.
What is clear from the OBR’s forecasts is that, unlike what was said in the emergency Budget about there being no alternative to the Government’s Budget policy, there clearly is an alternative and it was shown in the pre-Budget forecasts. In the pre-Budget document we were told that if the pre-Budget forecasts had been based on the predecessor Government’s policies, the deficit would come down to 3.9 per cent of GDP in 2014-15. In the June Budget document, we were told the Budget deficit would come down to 2.1 per cent. Even if it were to come down to zero, the difference is not so huge as to warrant such major cuts as are proposed in the emergency Budget. In any event, huge uncertainties underlie those forecasts. On page 7 of the pre-Budget forecast, under the heading, “Constructing the forecast”, we are told of the uncertainties five times within some five lines. Even the OBR and its forecasts, therefore, are massively uncertain. Despite that, a substantial programme of public expenditure cuts is now being planned, based on all those uncertainties in the OBR’s forecast.
It is clear, then, that there is an alternative. Not only is the pre-Budget forecast of the OBR not so different from the Budget forecast for 2014-15, but page 99 of the Treasury’s Red Book shows net debt remaining in 2014. Total net debt is expected to be 69.4 per cent of GDP; it would have been 74.4 per cent under the pre-Budget forecast. Although the Government’s Budget anticipates the public finances being in better shape—in their terms—than under the previous Government’s forecast, the previous forecast could by no means be described as disastrous. In any case, as I have said, there are huge uncertainties in anybody’s forecasts.
Much depends on the assumptions made. For example, the pre-Budget forecast took the predecessor Government’s growth forecasts, which many thought were too optimistic. I agree that they seemed too optimistic, although I am bound to say that the figures for the latest quarter, showing 1.1 per cent growth—which is the equivalent of nearly 4.5 per cent per annum—suggest that I was being too pessimistic. Perhaps the previous Government’s growth forecasts were accurate and would have helped cut the deficit rather faster than the present Government’s plans. However, it is much too soon to suggest that growth next year will be that high. I would not suggest for a minute that it is likely to be, because none of us knows—the uncertainties remain. The forecasts may have been reasonable—it may even be that the inheritance of the Government is rather better than they have been telling us—but the figures do not provide certainty, and it is planning major policy on the basis of such uncertainty that is so wrong.
Against that uncertain background, the Chancellor has chosen to make the savage public expenditure cuts that he will tell us about after the comprehensive spending review. Even if it is the right policy to cut to that degree, what are the chances of success? The Chancellor is setting about it in the right way—as Chief Secretary, I had to make rather a large number of cuts over many years—and asking the departments to choose their own priorities. They will have to set out public expenditure cuts in their own departments ranging from 25 per cent to 40 per cent, with the Chancellor, or the Cabinet if necessary, deciding. The departments know their own priorities.
Overall, when you are spending £700 billion of public money, I would not deny that there is room for cuts. However, I would not have ring-fenced any department, not even the National Health Service. After all, the National Health Service’s expenditure in 2008-09 was nearly £110 billion—it will be much higher now in real terms. To pretend that there is no room for substantial cuts in administration out of that level of expenditure is surely wrong, so one could have reduced the cuts even more.
Public expenditure can be cut, and it is clear that this was the Conservative Party’s agenda. Indeed, even if there had been no deficit, these cuts would have been proposed so that it could make the tax cuts, which is what it is really about. It is going to have considerable difficulty in making 25 per cent cuts, never mind 40 per cent, in every single department.
I have spoken to a number of other former Chief Secretaries and Chancellors, Conservative ones as well, and none of them thinks it can be achieved. If it is achieved, as the Government seem determined it will be, I am sure they will appreciate, although I am not sure their coalition partners the Lib Dems appreciate, what it will mean to those departments to make 25 per cent cuts in every one of them over a four year period. I hope we never come to it, but I fear we may if the House accepts and the Government accept that what they are doing is right.
The OBR has shown, given its uncertainties of forecasts, that it will no longer forecast what exactly is going to happen, so we should listen to Ben Bernanke in the United States, where they also have uncertainties. Indeed the phrase used by Bernanke was, “unusually uncertain”. Despite all that, we are going to get these massive cuts, come what may. I can only hope that by keeping interest rates low, the Bank of England would offset some of the worst of it.
The Bank of England is truly independent of course. It is more independent than the OBR because it has an Act of Parliament already. We have always known that a senior Treasury official attends the monthly meetings of the Monetary Policy Committee of the Bank of England. What we have never known is whether he sits there saying nothing, because no previous Treasury Minister has ever been willing to say what exactly goes on at those MPC meetings or whether the Treasury official joins in. He is not a member of course. Now we know that he does. We had an answer the other day which I think the noble Lord, Lord Sassoon, may regret, but it is worth quoting. He is shaking his head, but let me quote what he said, because I promise him that it will come back to him. It was on 20 July in answer to a supplementary question from me, in which I said:
“the noble Lord has just said that it is not for him to comment on what the Bank of England does”,
but I pointed out that a senior official from his department attends those MPC meetings. His reply was very interesting.
“My Lords, it is correct that a senior official of the Treasury sits in on the monthly Monetary Policy Committee meetings, but that official is not a member of the committee. I have performed that function myself on one occasion, and I understood that it was my duty to bring to the attention of the MPC anything the Treasury thought it ought to be aware of”.—[Official Report, 20/7/10; col. 908]
I am delighted to hear that, because it is quite sensible. I never really did believe, because it is so important an issue, that the Chancellor never spoke to the Governor of the Bank of England on this and many other matters. The sensible thing to do was to talk to the Governor of the Bank of England. In due course, if, sadly, they go ahead with these policies, will the noble Lord, Lord Sassoon, assure us that the Treasury, if not the Chancellor himself, will, through the senior official at the MPC meetings, tell the MPC the Chancellor’s or the Treasury’s views on the need to offset the worst of the public expenditure cuts by keeping interest rates low, and possibly by increasing quantitative easing? I know that the noble Lord, Lord Higgins, thinks that that is of no use anyway but it is a worth a try. It is better than doing nothing and letting the worst effects of the public expenditure cuts take effect. I have some more written questions—
Lord Higgins
I am grateful to the noble Lord. I did not say what he has just reported me as saying; I said that the quantitative easing is being frustrated, which is not the same thing.
Lord Barnett
I am sorry to misquote the noble Lord. I thought that that was what he was getting at, but never mind. I apologise to him, but I am not apologising to the noble Lord, Lord Sassoon. I want him to give us an assurance. In the event of the cuts turning out to be as bad as many are now indicating, I am not alone in suggesting that that could reduce economic growth, not see it increase. The ITEM Club, which is truly independent, has said the same as the IMF in suggesting, based on Treasury figures, that it would have an effect on economic growth.
Finally, Martin Wolf, in a recent article in the Financial Times, put the arguments well for whether the economy should be tightened in current circumstances. He is a highly regarded journalist, as I am sure the noble Lord will agree, and he put the central issue as follows. If tightening is correct, which is the Government’s policy,
“failure would bring fiscal and financial shocks”.
On the other hand, if tightening is not correct, it might,
“threaten recovery and might trigger further … shocks”.
The consequences of tightening, as I have said, could be very serious indeed. Nevertheless the Government, with Lib Dem support, seem bent on pursuing that policy. I am not sure whether the coalition partners fully appreciated what they were agreeing to. The Government, however, have always said—I started off with this—that there is no alternative. In fact, as I have shown from the OBR’s own forecasts, there is an alternative. I hope that the Government will take it.
Baroness Browning
My Lords, I begin by thanking your Lordships for the many kindnesses and considerations that have been shown to me since my introduction on 13 July. I also thank the members of staff in your Lordships’ House for their very helpful guidance and the tips they that have given me, such as how to find the right corridor to go along. I have sometimes found myself a little lost but they have always shown great concern and been very kind and helpful. I thank them very much. To many outside this Chamber, it may seem quite a simple journey along the Corridor from another place to your Lordships’ Chamber, but there is much to learn here. It is rather nice that, as somebody who would normally be categorised as a baby boomer, for the past two weeks I have felt myself to be a new girl. That has given me some considerable pleasure.
I have also had experience in recent years of working with Members of your Lordships’ House on issues that are very important to me, issues in which I showed interest in another place and issues on which I hope to continue my work here in this Chamber. I was privileged to be a member of the pre-legislative scrutiny committees on the then Mental Capacity Bill, so ably chaired by the late Lord Carter, and on the Mental Health Bill, so ably chaired by the noble Lord, Lord Carlile of Berriew, who brought a great deal of personal experience to his chairmanship in what was a very complicated and difficult piece of legislation. I enjoyed that work and hope to continue it in your Lordships’ House. I have a particular interest in mental health, learning disability and autism, where I have a very personal family interest. I look forward to continuing some of that work not least because much of the legislation in this area is new to the statute book. The Autism Act 2009, which your Lordships dealt with in the last Parliament, has yet to be fully implemented. Perhaps I may say to my noble friends on the Front Bench that I shall be quite vigilant in pursuing that, to make sure that the Government implement that legislation as it was intended by both Houses of Parliament.
I studied in great detail this very short Finance Bill, and I have to say that I could not find anything in it that was non-controversial. I was given some guidance that said, “If you say something in your maiden speech and somebody is tempted to stand up and intervene on you, then don’t say it”. So I have spent the whole weekend studying this very short Bill—probably more time per line than I have ever given to any other piece of legislation. I have to say to my noble friend Lord Spicer that I rather have chickened out. I hope that your Lordships will be relieved that I just want to make two short points which are associated with the Bill. I see them as a backdrop but I am in no way going to venture into any of the taxation legislation that is before us today.
The first point concerns banks. I think we all agree that there is a need for small and medium-sized businesses not only to start up but to grow, and that a lot is vested in this country in their ability to do so, and to do so successfully. I say to my noble friends on the Front Bench that I believe that the Government need to pursue banks to make sure that there is sufficient lending to the small business sector to enable it to make the most of its and the country’s opportunity, not only by contributing to growth but, very importantly, by creating jobs. I know that the Department for Business has today made statements about what it intends to do with the banks, but all of the policies before your Lordships’ House today will benefit from a viable and successful small business sector that can access funding from the banks. Unlike other parts of business—large corporations, for example, and many of the bigger incorporated businesses which have access to other sources of money and borrowing—small and medium-sized businesses are very dependent on the big clearing banks for funding.
On the subject of banks, there has to be a balance struck between their ability to lend and, in the light of our recent experience of the banking sector, the viability of banking both in this country and beyond it as well. I am very concerned that on Friday, when the Committee of European Banking Supervisors announced its assessments of the stress tests of more than 90 European banks, including UK banks, it came out very late in the day. There may have been a very good reason why it felt that it was better to announce the results after the markets had closed, but it took a lot of analysis by people over the weekend to identify that these assessments were in fact made on the banks’ trade books, not on the whole balance sheets. Further, if you dig really deeply into the CEBS website you will find that the sovereign debt of these banks was not taken into account at all. I am raising the issue in today’s finance debate in order to say to my noble friends that I believe that, while we need to make sure that banks in this country can lend, as I have said, we also need to make sure that any assessment of banks, either individually or collectively, is both comprehensive and transparent or we will not have learnt the lessons of what has happened recently in the banking sector.
Finally, there is the question of the deficit. Noble Lords will be pleased to hear that I am not going to venture into the deficit—but it is huge. It is often quite difficult to explain to people what in tangible terms it means to them and to their everyday lives, and the necessary measures that have to come forward. Debt, and interest on that debt, is accruing at a rapid rate—the figure which I was given this morning was £350,000 a minute. In the six minutes that I have been speaking, more than £2 million of debt has accrued in this country. As this is a maiden speech, I am sure that your Lordships are being very polite—otherwise you surely would have said, “Please sit down before it goes up any more”. I will sit down, but I wanted to flag up the fact that this is something that we have to take seriously. It has to be tackled because the money is going out as fast as it is coming in.
Lord Blackwell
My Lords, it is a great pleasure and privilege to follow my noble friend Lady Browning, and I congratulate her on a very eloquent and well judged speech. Her speech illustrated that she brings to this House a huge and valuable breadth of experience on many topics. She served some two decades in the other place, scrutinising legislation, but also spent several years as a Minister—lastly and perhaps most notably at the Ministry of Agriculture, Fisheries and Food, where she made a huge impact. She also spent several years as a shadow Cabinet Minister and vice-chairman of the Conservative Party. Before entering Parliament, she had further varied experiences: as a tutor in adult education; as an auxiliary nurse; in business, as a sales and training manager and as a self-employed entrepreneur; and 10 years as chairman of Women into Business. As she says, she also has a very active interest in mental health and has been an active vice-president of the national Alzheimer's disease society as well as having a personal interest in autism. So it is clear that she has very much to bring to the House on a wide range of matters. We welcome her and look forward to her future contributions.
Before I delve into the Finance Bill, I put on record my interests as a director of a number of businesses affected by the tax provisions in this Bill, and in particular of a life company involved in pensions and savings. I shall touch on some of the issues in the Bill that relate to that. I shall talk about some of the specifics in the Bill but, first, I shall say a few words to put it in context. There has been a lot of discussion about fiscal judgment and the scale of the deficit. That is, of course, important—but it is perhaps even more important to look at the policy in the framework of a long-term policy for stimulating growth and wealth creation in the economy. Economic growth is ultimately not determined by one year’s deficit or tax levels but by the size of the labour force and its productivity, which is driven by the success we have in driving entrepreneurship and innovation in the economy, the level of investment and perhaps also our success in generating an environment of free trade. If you start to analyse those factors and their relationship to the Bill, wealth creation as the starting point derives from enterprise and innovation and is crucially dependent on the stimulation of a low-tax economy.
There are two components of any economy—the component that pays tax and the component that spends tax. It is vital that any economy keeps those two sectors in balance. If we end up with too much tax falling on the sector that pays tax, the consequence is to drive out wealth creation, to destroy growth and reduce the future welfare of individuals and society. At the beginning of any discussion about fiscal policy and public spending, we must ask how much tax we can afford to pay in a modern, competitive economy. That is the starting point—not the shopping list of what we would like to spend the money on.
Since the 1960s, for some 50 years, the UK has only briefly had government tax receipts rising above 40 per cent of GDP. The highest period, when they rose into the mid-40 per cent range, was in the early 1980s, when a previous Government were restoring fiscal balance after a period of spending excesses. But for most of the 50 years since the 1960s, public receipts have ranged in the late 30 per cent range—36, 37 or 38 per cent of GDP. You might think pragmatically, therefore, that experience tells us 40 per cent is something of a natural ceiling on the amount of tax that can easily be raised from the UK economy without damage. There are reasons why that might be true—the need to maintain incentives, the need to maintain international competitiveness, and tax efficiency. Clearly, you get to a point where, as you raise taxes, the tax yield starts to fall rather than rise, particularly as economic growth is depressed. It was perhaps for that reason that the last Conservative Government’s manifesto in 1997 set out a commitment to keep public expenditure at the level it had reached—below 40 per cent—as, if you like, a golden rule.
The actual course of public expenditure since 1997 was that it grew remorselessly as a percentage of GDP almost year by year since 2000, to reach 48 per cent of GDP in 2009-10. Government receipts, however, have stayed at the historic levels or 38 or 39 per cent. It is that 10 per cent gap, between the level of public spending and the level of receipts that the Government can raise through taxation, which has caused the budget deficit and the crisis we are now facing. Whatever the banks have done, it was never sustainable for a Government to believe that they could carry on increasing expenditure to the level they had, up to 48 per cent of GDP, and then to go on borrowing at that level.
The right answer is not to seek to raise taxes to 48 per cent, which would be a level we have never achieved in this country, but to move spending back to an affordable proportion of GDP, to get the balance between the taxpaying and the tax-spending parts of the economy back into a sensible proportion. That is the way to promote growth in a low-tax economy that ultimately creates wealth that we can all share. I therefore welcome the plans set out in the Budget to reduce spending back to below 40 per cent of GDP by 2015-16. That is an essential plank of sound financial management and restoring a growth economy. I also welcome raising tax thresholds to the low paid, as a first step in the benefits of low taxation—it is a policy that I have written about and argued for over many years and I am delighted that it is now part of government policy. I also welcome, of course, the plan to start the reduction in corporation tax rate and the aim to reduce corporate tax rates to 24 per cent.
Many noble Lords have raised arguments about the speed of adjustment and whether the speed of adjustment back to an affordable level of spending is appropriate, but as the noble Lord, Lord Desai, pointed out earlier, these so-called cuts are cuts against planned public expenditure. If you look at the proposed course of public expenditure set out in the Red Book, you will see, as the noble Lord said, that current public expenditure is more or less flat over this period, reducing, I think, by 1 per cent in real terms by the end of the planning period. I have no doubt that there are many opportunities, having had such a large rise in public expenditure in recent years, to create efficiencies, to cut out waste and to find low priorities which can be reduced, which will ultimately benefit the efficiency and productivity of public services.
If there are those who believe that a fiscal stimulus is still required—or a greater fiscal stimulus; the noble Lord, Lord Stern, said that the Government should keep this under review—we should remember that there are two ways of delivering a fiscal stimulus. You can either spend more, or you can reduce taxes. Against the background I have just described, I have no doubt that, if there is need for more fiscal stimulus, it should not be created by carrying on spending at profligate levels; it should be done by taking earlier action to meet the tax objectives that will restore growth in the economy.
At a time when the private sector is struggling in an austerity period, when many in the private sector are suffering low or negative wage rises, reductions in overtime and so on, it seems perverse that anyone should propose that more money should be taken out of people’s wage packets, or VAT raised higher than it has been, in order to carry on subsidising inefficiency or waste in the public sector. It is much better to do what we need to do to create an efficient public sector. If a fiscal stimulus is needed at any point, the Government should move further and faster to reduce taxation.
The second element of driving growth and productivity is investment. The counterpart to investment is, of course, a high-savings economy. High-savings economies are high-growth economies. At full employment, a high-savings economy is one in which more of the output is devoted to investment goods, driving future wealth creation and future opportunities to raise incomes and welfare. Therefore, I welcome the proposals to encourage savings in the Finance Bill. In particular, I welcome the proposal to end the tax penalty for high earners who put money into retirement provision. Like the Minister, I understand and accept the need to limit the tax benefit from pension tax relief for high earners, but I believe that a much more sensible route to go down is to have a limit on the annual contribution, which is fairer and less likely to damage the maintenance of pension schemes for those companies that have schemes covering the whole employee workforce.
I should like to raise a few points that the Minister and his colleagues might consider in the review that they are conducting. The first is whether the annual limit might be smoothed over two or three years so that, when somebody comes into an inheritance, makes a house sale or receives a redundancy payment, for example, they can take advantage of that and put a lump sum in the pension scheme, perhaps spreading the annual allowance over two or three years. Of course, that would be done without an increase in the total amount of money that people could put into a pension scheme. Secondly, I ask my noble friend to consider whether, as part of the reforms, the Government might abolish the lifetime limit on the value of a pension pot. If there is an annual limit on the amount that can be put in, it seems unnecessary also to limit the success with which that is invested. It is quite difficult for people who are near that limit to understand what the investment performance will be and whether they should put more money into the pension. If they happen to be successful, they will be penalised, so it seems to me that we should consider just limiting the amount that is put in, as that would be a fairer system. Finally, I suggest that the Minister might consider removing the distinction between the annual allowance for pensions and that for other forms of tax-efficient saving, such as ISAs. Many people would be encouraged to save more if they knew that they did not have to lock away the money on day one until retirement but could build up sums in an ISA and transfer that to a pension later. However, these are all points to consider and I very much welcome the review that will take place.
My final point is on the importance of free trade in encouraging growth and wealth creation. Free trade is perhaps not directly related to the Bill, but I am encouraged by the emphasis that the Government are putting on encouraging trade between the faster-growing economies around the world. I cannot resist the temptation to say to my noble friend that, when the expenditure review comes out in the autumn, we might look carefully at the amount of money and the priority given to expanding the European Union’s External Action Service and diplomatic posts and compare that with the amount of money that we put into supporting our own commercial embassies and other forms of support overseas.
In summary, I am extremely encouraged by the aims of financial policy set out in the Bill and by many of the measures in it. I believe that the Bill deserves every support.
Lord Lea of Crondall
My Lords, I add my congratulations and welcome to the noble Lord, Lord Spicer, who is an erstwhile tennis partner. More recently, he found himself showing me round the Carlton Club—as much to his surprise as mine, I think. It reminds me of his distinguished service as chairman of the 1922 Committee. I wonder how many years there will be before another revolution, so that the 1922 Committee will be the 2012 committee. I am sure the noble Lord, Lord Spicer, will advise his co-conspirators of how to go about that with his usual courtesy. He is a man of very great courtesy. He could slide a dagger in 16th century Rome and everybody would still be his greatest friend. I say that as a compliment.
I am afraid I will now part company with the noble Lord, Lord Spicer, and all his colleagues by saying that this will be the most disastrous Budget in living memory. First, economic growth will be hit. Secondly, it will be disastrous for employment. Thirdly, it will be disastrous for social cohesion and social justice. Fourthly, it will be disastrous for regional balance. These intertwine in many ways. The Budget is based on an implicit ideology which reminds me of the old Galbraith slogan and, indeed, of George Orwell: private sector good, public sector bad. I will come back to that point.
My starting point must be that the OBR has recently found that Labour’s deficit reduction plans would have more than achieved the target of halving the deficit over four years from 11.1 per cent in 2009-10 to 5 per cent in 2013-14. The OBR has also said that Labour’s plan would have reduced the structural deficit by nearly three-quarters, from nearly 5.2 per cent of GDP in 2010-11 to 1.6 per cent of GDP in 2014-15. That would have met the timetable set out in the G20 communiqué on 27 June. It is about time that the Conservatives—with their rhetoric about the mess that they were left—were shamed into ceasing to make those ridiculous remarks about the legacy.
The real problem with the legacy is totally different. The problem is the hole in the economy caused by the banking crisis. The loss that GDP has to bear is, according to the IFS, 20 per cent cumulatively. That is £300 billion before we get back to where we would have been if there had been no banking crisis. We will not achieve that, but that is the amount of lost output, income and living standards that we have all suffered thanks to the banking crisis. That, in turn, caused the public finance deterioration of about £50 billion. However, logically and arithmetically, rapid economic growth would need to be far more than the trend; it would need to be 4 per cent or 5 per cent per annum to get back up to where it should have been.
Filling the output gap is the only way to produce greater tax income and lower expenditure. Both go together. Tax income would come from the higher output from corporation tax, income tax and so on. Lower public expenditure would come from not having to spend as much on unemployment benefit and social security. Those are the dynamics of economic growth. I am sure that we will hear more about the fundamentals of that from the noble Lord, Lord Skidelsky, who wrote his monumental book on Keynes only recently. The real question, which I rarely hear Ministers comment on, is: what growth rates do they think would be needed to get back to that trend? Do they agree with these figures—not, do they disagree with them?—because that is the territory that we ought to explore?
Samuel Brittan, hardly a socialist revolutionary, has quoted Goldman Sachs in a recent article. I do not normally quote Goldman Sachs, but it has carried out work on the output gap and judges potential output to have grown at an annual rate of 2.6 per cent when output was on trend in 2005. On that basis, the output gap is now in excess of 10 per cent. That gap can only grow given that we are now at a lower base. The only scary variation on that is that we are so rapidly destroying potential growth that we will have to stabilise at much lower living standards than Germany because of the collapse of fixed investment, which fell by no less than 14 per cent in 2009. We must avoid that at all costs. People are now assessing what they describe as the sustainable rate of unemployment as 6 per cent, 7 per cent, 8 per cent or 9 per cent. This will be disastrous as it will inevitably exacerbate regional differences and cause dreadful social problems in swathes of Britain, particularly in areas other than the south-east. However, I do not exclude the south-east as there will be growing inequality and poverty in some areas there.
The regional development agencies have delivered for the regional economies. They have been independently evaluated and shown to lever, on average, £4.50 of benefit for every pound spent. The scrapping of the RDAs springs only from the ideological dogma: private sector good, public sector bad. Come back George Orwell, all is forgiven. The RDAs have trained more than 400,000 people and have created 850,000 jobs over the past 10 years. They have started, or rather have helped to start up—my noble friend Lord Myners will correct me if I say “started”—60,000 businesses. Some £100 million of funding has been brought forward by RDAs for regeneration projects to boost the economy during the recession.
All these figures are, of course, the mirror image of those claimed by Mr Osborne. However, the independent OBR has now more or less predicted many of Labour’s figures rather than Mr Osborne’s. It predicts that the Osborne strategy will mean tens of thousands more people in the dole queue and that it will bring employment down by 100,000. The CIPD forecasts that unemployment will increase by about half a million over the next two years to 3 million, and remain at that high level until 2015. A final twist in this jobs question is that George Osborne’s election campaign—a totally cynical campaign —promised to scrap Labour’s jobs tax. I say “cynical” as a rise in national insurance would keep people out of work. However, in the Budget, we learnt that the promised NI cut for employees would not go ahead and that more people would be out of work under the Government’s plans than under Labour’s. So much for George Osborne’s election claim that jobs would be saved under his plans.
Even now the penny does not seem to have dropped in Conservative ranks that public expenditure and private expenditure have a symbiotic relationship. As regards buildings and infrastructure—for example, schools and hospitals—the money is spent by Costain and all the suppliers. You do not need to be Einstein to work that out.
Finally, on the social impact, I follow up on the effect of income distribution. I thank the noble Lord, Lord Razzall, for probing this question after I started it. I was astonished by the flat answer given by the noble Lord, Lord Sassoon, that the whole package is progressive—or certainly not regressive. He does not seem up to speed with the Government’s own line. On 20 July, the Treasury Select Committee published a report on the Budget and its conclusions are quite different from the Government’s. The Government now have a dilemma over what to say to the Treasury Select Committee.
The original hypothesis was, said Robert Chote, Director of the Institute of Fiscal Studies,
“that the Budget looked progressive when assessing whether the lowest income decile paid less than the highest income decile largely because of the reforms that had been announced by the previous Government in its March 2010 Budget rather than the specific measures announced in the June 2010 Budget”.
I underline that with another quote which is even more startling and has not yet been widely understood:
“Mr Chote concluded that based upon the three factors he had outlined—taking out the measures inherited from the previous Government, looking further into the future than 2012-13 and including some of the other measures which the Treasury had chosen not to model in their analysis of tax and welfare changes on households—the June 2010 Budget was ‘regressive’”.
In other words, it is regressive if you take out the measures inherited from the previous Government. It is astonishing to me they were ever there. The Government claim that it is progressive, but only because they embrace the measures taken by the Labour Government in the Labour Government’s Budget. You would be run out of the Monte Carlo casino if you tried that there.
The conclusion is that, now the Government have started to go down this path,
“the Comprehensive Spending Review will [have] effects on different income groups. We recommend that the Treasury builds on the approach taken in the Budget to give information about the impact of CSR changes on different households. We would like the analysis for both the CSR and future Budgets to take two forms: a narrowly drawn set of figures based on those measures most easily modelled”.
This is like the reference of the noble Lord, Lord Sassoon, to all these fancy tables. You have to have a flannel round your forehead to get your brain round them, and now they turn out to be misleading because they include the Labour Government’s measures. They also want,
“a wider analysis using more assumptions, which would allow a fuller set of measures to be included”.
We desperately need to see the economy holistically—that is, public expenditure, the cuts, what you might call the macroeconomic situation and specifically the Budget measures.
The Minister has got himself into slightly hot water on this whole question of income distribution. Will the Government go with the spirit of the Treasury Select Committee and in future do income distribution analysis combining the Budget and the CSR? That will become a key question later in the year. Meanwhile, we are left with the poorest 10 per cent of households seeing an average annual spending cut of £1,300, equivalent to 20 per cent of their household income, whereas the richest 10 per cent of households see an average annual cut of £1,135, equivalent to only 1.6 per cent of their household income. That really needs to be addressed in a proper statistical manner.
Lord Higgins
My Lords, it is difficult to welcome a Finance Bill which increases taxation, and it will most certainly be unpopular. However, I do not have the slightest doubt that it is absolutely essential if we are to deal with the situation that we have inherited, which requires drastic measures on both taxation and public expenditure.
The Bill is probably one of the smallest that we have had for very many years and, in terms of pounds per page, probably more effective. It is not entirely clear to what extent the Government believe that they will increase revenue in either the current year or next year, but the Minister may be able to enlighten us in that respect. None the less, I think that we are going to see an increase in revenue but it is going to take some time, in the same way that cutting public expenditure takes some time. Therefore, the argument about whether one should make these changes quickly or slowly seems to be largely irrelevant. We know that an immediate impact of any scale is not possible, and the process is therefore bound to take place over a considerable period. However, we need to get on with it as fast as possible and that is effectively what this Finance Bill does.
First, I welcome without reservation the point made in my noble friend’s opening remarks regarding the abolition of the requirement to take an annuity at the age of 75. On at least three occasions from the opposition Front Bench, I moved an amendment to do just that, with suitable safeguards, and I think that the Government would be wise to look at those safeguards. This House, by a very large majority, supported the view that I expressed, but on each occasion the amendment then went to another place, where it was reversed. Therefore, I am absolutely delighted that, despite the arguments that tend to be made within the Treasury, the Government have at long last decided to take action on this. I have only one small caveat, which is that there appears to be some delay in implementing the measure, which means that people who are about to become pensioners will be forced to take out an annuity when annuity rates are so appallingly low. My noble friend shakes his head; if he is right, I should be delighted to hear why.
Apart from that, I want to concentrate on three specific points and then a more general one. The first relates to VAT. I made representations on this to the Chancellor ahead of the Budget because I was deeply disturbed by a recommendation from the International Monetary Fund that we should eliminate our process of zero-rating in order to raise more money. I think that that would have been completely wrong. No tax in our system has ever had the kind of scrutiny that VAT had when I had the task of steering it through the House of Commons. Ahead of the Conservative victory in 1970, we went into it in great detail. It had pre-legislative scrutiny; it had extraordinary examination at Committee, Report and Third Reading in the House of Commons; and the structure that we designed was intended to prevent the change from SET and purchase tax—both of which we abolished—being regressive. I have no idea why the IMF thinks it appropriate to go into detail about taxation in this way but, had the Chancellor gone along with the IMF’s views, the measure would certainly have been regressive.
On the other hand, the Chancellor has found it necessary to increase the rate of VAT to 20 per cent—exactly double the rate that it was when I introduced the tax—and this is going to have a substantial effect. Popular commentators are all saying that it is inflationary. It is, of course, cost inflationary but demand deflationary, depending on what the Chancellor does with the money. Certainly, if he simply puts it in a mattress somewhere, that is substantially deflationary and the overall effect may be in that direction. None the less the step that he has taken to increase the rate to 20 per cent was certainly better than the alternative for reasons that I have just given.
I turn now to capital gains tax. There was huge anticipation during the election that, given the policy of the Liberal Democrats, and so on, it might be raised in line with the top rate of income tax to perhaps 40 or 50 per cent. Again, together with colleagues, I made some representations to the Chancellor and said that it would be totally wrong to increase the rate of capital gains tax without making some allowance for the fact that inflation was built into those gains and therefore it was important to have some form of indexation or other recognition of the length of time that the asset has been held. Alas, in that respect we were not successful in persuading the Chancellor who came up with the rather strange compromise, evidently reflecting the needs of the coalition, that we should have an increase in rate of 28 per cent but no indexation. I think that that is quite wrong for the reason I mentioned—that the Chancellor is taxing again, which is entirely due to previous inflation, and which may stretch back over 20 years. Pensioners and others may be in a very difficult situation because of such a low rate of return on their savings and find it necessary to liquidate some of their assets, so to tax them on that gain without allowing for inflation is wrong. It is effectively a tax on wealth. I therefore hope very much that when the matter is discussed in another place—alas, we cannot do so—allowance will be made for that and it can be changed.
I said that this appeared to be in line with the coalition agreement, and it is crucial in that context to say that we should not go along with proposals put up by either part of the coalition on the basis that it keeps it together or become involved in horse trading rather than saying that it is justified on its merits. In that context, I go along with the noble Lord, Lord Desai, in relation to the student taxation proposals, put forward by Mr Vince Cable. A detailed examination of that shows that it would be a very bad tax indeed and ought not to be proceeded with.
Finally, I want to put the Finance Bill in context. There is no doubt that it represents a very substantial fiscal tightening. It has been pointed out that it may lead to consequences with regard to double-dip recessions and other fashionable ideas of that sort. Against that background it is important to have an appropriate monetary policy, and there seems to be a conspiracy of silence with regard to that. I read some of the papers over the weekend and just before. There were diagrams of every conceivable economic variable but not a single one showing what is happening to the money supply. Pessimistic forecasts were being made by the chief economist of the Bank of England who also did not mention the money supply. I have said before to the noble Lord, Lord Myners, and I say it now to my noble friend on the Front Bench that it is very important to distinguish between the price of money—interest rates—and the quantity of money. Monetary policy, strictly interpreted, is concerned with both, but in fact it is the money supply side that is really important against the fiscal background that I have described.
I think there is a strong case for easing monetary policy further by way of quantitative easing or, alternatively, as I suggested in questions to my noble friend, by the Debt Management Office pursuing a policy of funding that effectively frustrates the effect of the quantitative easing. To make it absolutely clear, I refer to the Bank of England’s 20 July provisional estimates of what is happening to the money supply. Seasonally adjusted provisional figures for June show that M4 fell by £0.7 billion in the month, and if you look at the graphs for growth rates in M4 from December to now, it falls off a cliff, despite quantitative easing. Therefore, despite the efforts of the Bank of England in that respect, we have not succeeded in having a growth of money supply that is consistent with a growth in the economy, but if we are to get out of the hole the economy is now in, it is essential that we should have a fixed plan for increasing the level of aggregate demand.
Of course, there will be queries at that stage. My noble friend Lord Spicer, who I am delighted to see here, referred to the danger of inflation. The level of inflation is much higher than the Bank of England’s target rate, but we need to look at this situation very carefully to see to what extent increasing the money supply in line with the level of growth we would like to see is likely to prove inflationary. This is not a simple issue, but the way the figures look at the moment is being ignored. We are not following a monetary policy that is consistent with our objectives. I have the privilege of being followed by my successor bar two, or perhaps three, as the chair of the Treasury Select Committee in the other place, which I was for 14 years, and I will be interested to know his views on this subject. We need to wake up on this issue because it is being ignored.
Lord McFall of Alcluith
It is a privilege to be speaking in a Second Reading debate so soon after being introduced in this House. I congratulate the noble Lord, Lord Spicer, and the noble Baroness, Lady Browning, on their excellent maiden speeches. They were colleagues in the Commons, and I look forward to healthy exchanges in this Chamber.
The noble Lord, Lord Stern of Brentford, was an excellent and regular witness before the Treasury Committee and a fine ambassador for our country. That came home to me very clearly during the visits I made to Africa where the impact of his climate change report had great ramifications. The noble Lord should be proud of his role in the Treasury and as climate change ambassador as a result of that. He mentioned the Office of Budget Responsibility and the need for transparency, clarity and independence. I offer noble Lords the example of United Kingdom Financial Investments, which came before the Treasury Committee and had a disaster on the first day. It was lodged in the Treasury building, and you could not put a piece of paper between it and the Treasury. The relationship between the OBR and the Treasury seems very similar. My advice to the Government is to get it out of the Treasury very quickly so that it can be independent and have that transparency and clarity of message that has, to date, been missing. It is important that we get that.
I wish this Government well for the sake of the country and for the sake of individuals. We are most definitely living in uncertain times. Last week, Ben Bernanke of the Federal Reserve, in his comments to Congress, said that it is an unusually uncertain environment. Last week, comments were made by Spencer Dale, the chief economist of the Bank of England, and a debate took place in the pages of the Financial Times, with comments from Jeffrey Sachs, Paul Krugman and Martin Wolf, who, incidentally, is on the Government’s independent Banking Commission.
When Sam Brittan, a favourite journalist of mine, wrote about this Budget, he asked: “Are these hardships necessary?”. He pointed out that the real argument should be about whether we need this unparalleled fiscal austerity. Mohamed El-Erian, in his column in the Financial Times, made very clear the global nature of this problem, which we have not spoken about enough. He said:
“The world is facing deep structural challenges”,
yet we are witnessing,
“fruitless discussions … and a troubling lack of global”,
financial “harmonisation”.
The utterances that came out at the G20 in Toronto fill that description aptly. Unless we get on top of this, and look at global imbalances and develop policies for the structural change, we will find ourselves in real problems.
Against that background, what is plan B for this Government? We are living in uncertain times. Therefore, there is no certainty about the proposals being put forward. I followed the deliberations of the Treasury Select Committee in its June 2010 Budget, which was released a few weeks ago. When the Chancellor of the Exchequer was asked about plan B, he said:
“The plan is to have confidence in the British economy and its ability to pay its way in the world”.
That is the sum total of the explanation for plan B, but I would suggest that that is insufficient. The political nature of the debate has made it harder to discuss plan B, but it must be discussed. The noble Lord, Lord Stern, made reference to that in his speech. There is insufficient assurance in these deeply worrying times.
Against that we have had a Budget which has accelerated the fiscal position very tightly. There will be £40 billion of spending cuts and tax decisions, made up of £8 billion in tax and £32 billion in spending cuts by 2014-15, of which £11 billion will be specific measures on welfare. You cannot tell me the implications for poorer people in our society when we have that £11 billion coming directly out of the welfare budget, with suggestions that more is to come. The impact of that will be a massive discretionary tax on £13 billion extra of spending. The Government have 77 per cent of its spending and 23 per cent of its tax rises for their Budget. Martin Wolf, in the Financial Times, said that the adverse impact on the poorest 10 per cent will be harsher than on the most rich groups in 2012-13 and that it will get worse thereafter.
There is a huge gamble at the core of this Budget. Can the Government explain this massive assault and spending cuts adequately to the satisfaction of ordinary people? Can they manage their public relations in this regard? Are these policies being fair on their impact on society? What will they do for long-term unemployment? The ONS June figures show that those who have been unemployed for more than 12 months have increased by 85,000 over the first quarter of this year. Standing at 772,000 that is the highest figure since the first quarter of 1997.
Let us not forget youth unemployment, which, for 18 to 24 year-olds, stands at an unprecedented 17.3 per cent. Since the start of the recession, youth unemployment has risen 5.1 per cent. I remember well as a school teacher meeting former pupils 10 years after they had left school and being introduced to their spouses and children. When I asked them whether they had a job they said that they did not. They were the lost generation of the 1970s and 1980s. Do we want to go back to a lost generation or do something about youth unemployment now, so that when we come out of this recession we will be in a fit and proper position in terms of skills in the economy? That is one issue.
The second issue in the gamble concerns the impact of the fiscal tightening on GDP. The Office of Budget Responsibility has predicted growth in 2010 of 1.2 per cent; in 2011 of 2.3 per cent; and in 2012 of 2.8 per cent. It will need a substantial contribution from business investment and exports in 2012 to achieve that. Indeed, contributions from business investment in that year will have to be 1 per cent and from exports 0.9 per cent if we are to achieve our growth target. That is a big challenge. In order to meet that challenge, the Government will be dependent upon domestic private spending being maintained and spending on UK exports being little affected by the fiscal squeeze which they are presently urging countries around the world to adopt. Something does not add up in that situation. We should remember that the Government’s plans are predicated on a private sector revival, with 2 million new jobs being created over the next five or six years. I have yet to meet an experienced economist who will tell me that that is a feasible outcome. This is a fast adjustment early in the life of the coalition Government and it raises the question of what effect these measures will have on individuals.
That brings me neatly to the Liberals. I held a landmark birthday party at my home on Saturday for one of my offspring. The cake with the candles was brought in and I thought of the coalition Government. Why should I think of the coalition Government when I should have been enjoying myself? It was because I saw the candles as the Liberals and the cake as the Conservatives, the Tories. The candles gave a little glow and a little hope but, as you and I know, they were cruelly blown out by my three year-old granddaughter. We were then left with the Tory cake. The question is whether it is an edible cake; is it succulent? Are we going to ask for second helpings or will it be inedible? I think it will be the latter. That is the issue. It will be hard to digest for many people.
Are the cuts on the cake illiberal? Are they too deep for an economy in the early stages of recovery when some of our trading partners are still very weak? Will the tax changes provide enough private sector investment and job creation after the state withdraws quickly? Will it be fair for all sectors? Is there a coherent ideology? If there is no ideology from the Government then we will have little shape and direction to where we are going. The noise of the cuts will be drowned out by everything else.
However, this is what the Government believe in and demonstrates their aspirations for society, but where is the Liberal influence? Where is the Liberal influence on the acceleration in the fiscal tightening area? Where is the Liberal influence on child poverty? In their manifesto the Liberals agreed with the eradication of child poverty by 2020.
Lord Phillips of Sudbury
My Lords, I am grateful to the noble Lord for giving way but I must reply to his assault upon the sole Liberal Democrat in the Chamber. Does he not agree that a candle at least provides a little light in a naughty world?
Lord McFall of Alcluith
Yes—but it depends for how long the candle exists before it is blown out. That is the issue. I fear that the candles have been blown out already.
In terms of child poverty, the Liberals have signed up for eradication in 2020. The Minister stood at that Dispatch Box last week and said that there are four criteria to the Child Poverty Act 2012. But the Government have given their commitment to one of those criteria only for the next two years and ignored the other three. If I have one criticism of my colleagues on the Treasury Committee for their June 2010 Budget, it is that there was no mention of child poverty. I hope this mild statement here will propel them to ensure that child poverty is taken into account.
I am being followed by the noble Lord, Lord Skidelsky, the expert on Keynes. Keynes did not believe in deficits for the sake of it. Sam Brittan said that the Government’s approach is not like that of households. When households and businesses do not spend, the Government step in. That is why we have had quantitative easing. There is an awful lot in this Budget that we still need to look at. I hope if recovery stalls that the Government will listen and that it will not be too late.
Finally, I note that the Brokeback utterances mentioned at the weekend by my good friend in the Commons, David Davis, took place in the Boot & Flogger pub in London. I would suggest to you that the Liberals will get the boot if they are insufficiently authoritative with their influence and that the Tories, if their PR strategy fails and their narrative is rejected, will be flogging a dead manifesto and will have to live with the consequences. Dealing with those generalities not specific to the Budget, I am delighted to contribute to this debate.
Lord Skidelsky
My Lords, the Finance Bill implements the taxation provisions of the emergency Budget Statement of 22 June. These will come to about 20 per cent of the total fiscal tightening which has been planned in this Parliament. So the Finance Bill as we have it before us is part of the Government’s programme for balancing the Budget over the next five years. In his opening speech, the noble Lord, Lord Sassoon, said that a failure to address the deficit is the greatest danger we face. I would say that the failure to address the hole in the economy is the greatest danger we face and that unless the noble Lord is able to demonstrate how cutting the deficit will produce an economic recovery, there is a massive hole in his speech. I listened in vain for any such demonstration by the noble Lord.
In the debate on the Address, I asked the noble Lord, Lord Henley, this question. By what mechanism do the Government believe that fiscal tightening will promote recovery? The noble Lord, Lord Henley, was good enough to write to me, making three points. His first was that public borrowing is only taxation-deferred. The idea is that the public, knowing that they will have to pay for the deficit with higher taxes, increase their saving by the amount of the higher taxes they expect to have to pay. Thus the deficit not only fails to stimulate the economy, it crowds out more efficient private spending. As stated, the argument is simply false. That part of the deficit which brings into employment resources which would otherwise stand idle will be paid off without any need to increase taxes, simply by the growth of public revenue which the rise in national income brings about. I do not know that any serious economist believes this Ricardian equivalence argument and yet it is one of the justifications for the Government’s deficit-cutting programme. So where is the Treasury getting its wisdom from?
The second point the noble Lord, Lord Henley, made was that it would be irresponsible to accumulate substantial debts that would have to be paid off by subsequent generations in the decades to come. The reply to this is that a deficit does not impose a burden on future generations. There is no repayment burden because the Government, unlike private individuals, can and normally do repay their maturing debts by continuing to borrow. As for the interest burden which is said to arise when interest is paid by taxation rather than by fresh borrowing or printing money, it is merely a transfer payment. Income is transferred from taxpayers to bond holders. Since most of the transfer of income is within the United Kingdom, it is therefore a redistribution rather than a loss of income for future generations. Again, these are quite straightforward points once one grasps them, but the Government and many of the fiscal consolidators have gone on and on about the burden which would be faced by future generations, as though there was a net loss to them from an increase in the national debt.
If, however, the public deficit is cut now, there will undoubtedly be a burden on both present and future generations. Income and profits will be lowered straightaway; profits will fall over the medium term; pension funds will be diminished; investment projects will be cancelled or postponed; and schools will not be rebuilt, with the result that future generations will be worse off, having been deprived of assets that they might otherwise have had.
I go back to the letter of the noble Lord, Lord Henley. Of course, this is not a personal attack on the noble Lord, whom I greatly like and admire. He is just acting, as is the noble Lord, Lord Sassoon today, as the unfortunate fugleman of the Treasury. His third point was:
“The higher the level of debt, the higher the interest rate that markets will demand to compensate them for holding that debt. Failure to tackle Britain’s deficit would therefore push up the costs of debt service and risk higher long-term interest, not just for the Government, but also for families and businesses through the higher costs of loans and mortgages”.
Every proposition in that short paragraph is false in the present situation. If the economy were fully employed, it is true that the higher the level of public debt, the more the Government would have to pay for it, which could cause the whole structure of interest rates to rise. But if the private economy is depressed, interest rates on government debt do not have to rise; indeed, they have not risen over the whole of this recession, even though the Government are borrowing almost three times as much as before. Why? It is surely not because of the resolute steps which the Chancellor has taken to reduce the deficit and thus restore confidence, since the Treasury is able to borrow just as cheaply and with the same long maturities as under the previous Government.
The reason that all Treasuries, except the most profligate ones such as the Greek treasury, can get their money so cheaply is that investors demand safety-first investment strategies, or, as Keynes would have said, there has been a massive flight to liquidity. Even as government debt mounts, low yielding bonds are still considered better—because they are safer—than equities. Or, put another way, when there is a dearth of private sector investment opportunities, government borrowing does not “crowd out” private sector investment; it adds to it.
The reason that private sector investment is depressed is not fears about the cost or sustainability of the deficit. Do businessmen wake up in the night, thinking, “God, how large the deficit is! I really can’t do any business now because of the increase in the deficit”? I do not believe that that is the way in which businessmen think about it. They do not invest because they do not see the orders, not because they think that the deficit is running out of control. It is the same with the commercial banks, which still cannot accurately price their assets. It is because they have troubles with their balance sheets and because businesses cannot see where the orders are coming from that there is too little investing and borrowing going on in the private sector.
This explains—I go to a point made by the noble Lord, Lord Higgins—why quantitative easing is not the automatic offset to fiscal tightening that some noble Lords, especially the noble Lord, Lord Barnett, assumed it to be. It is not the printing of money but the spending of money which is important. Quantitative easing, unless it is done in particular ways—that is a subject on its own—is not a guarantee of the spending of money. So how does the noble Lord, Lord Higgins, propose to get a monetary policy consistent with a reasonable level of demand through quantitative easing? That was a missing part of an otherwise very interesting speech. In short, contrary to what the deficit vigilantes say, the deficit is the consequence and not the cause of depressed business conditions.
I believe that a Government who had the courage and intelligence to explain all this properly to the public would have a much better chance of calming jittery markets than the grotesque exaggeration of the dangers of debts and deficits which is now going on.
I agree thus far with the noble Lord, Lord Desai. There is not going to be a repeat of the 1929-31 depression. We have done enough to cut off the slide. There is an anaemic recovery going on. The UK may grow by 2 per cent this year, though I would be surprised if it did. If we look beyond a single quarter’s figures, to the forces of demand in the world, especially as they will be impacted by the rolling out of the cuts in Europe and elsewhere over the next few years, it is hard to see where the sources of robust growth are coming from. In that sense I disagree with the noble Lord, Lord Desai, who made a constructive and well-thought-out speech. I agree with him when he argues that the extra cuts this year are too slight to have any really depressive macro-economic consequences.
The point is that the Government have said that they are deliberately going to take £100 billion of spending out of the economy over the next four or five years, and it is the effect of that determination to do that on business confidence which seems the relevant factor, not the very small amount of cuts that are going to take place this year.
So what would my alternative policy be? One confidence-boosting policy would be for the Government to cut taxes by the same amount as they cut their own spending. This would imply a reduction of taxes by about £100 billion over five years. There is a nod to tax cutting in the Budget in the proposals to reduce corporation tax, but the net effect of the tax policies is to raise taxes and therefore will be deflationary. Also, the effect of tax cutting on demand is subject to quite large uncertainties: how much will be saved, how much will be spent and so on. A far better way would be to offset any cuts in current spending by an increase and acceleration in capital spending. A recession is an ideal time to bring a country up to date, since labour and capital will be cheaper than in boom times.
The £38 billion high-speed rail link from London to Birmingham and beyond, unveiled in March by the noble Lord, Lord Adonis, who I see is in his place, is a perfect example of such a programme, as is the smaller railway electrification programme announced at the same time. This is not all shovel-ready stuff, but a determined Government could get the high-speed scheme going long before the business-as–usual start planned for 2017. It would set up an immediate demand on the construction industries while also offering long-run returns. Former Chancellor Alistair Darling’s scheme for a green investment bank to invest in renewable energy and energy efficiency, is another example. Industry experts predict that up to £37.5 billion will be needed each year for the next 10 years to upgrade or replace our old power plants.
These are examples to develop the capital of this country for its long-term benefit which should certainly be part of any fiscal plan for both the immediate and the medium-term future. Of course it would be better if a large programme of capital spending could be agreed with other governments. But we could still do a lot of it on our own. A Government whose animating spirit was Lloyd George rather than Boy George would ask the public to subscribe to a national recovery loan of £100 billion, to be spent over five years to equip the UK with a modern transport system, an efficient energy system and a modern school system. To advocate capital cutting at a time of recession is the worst remedy that one could possibly have. It is an insane policy and it will not only destroy the coalition, but it will do enormous damage to the country.
Lord Rosser
My Lords, the financial deficit has to be addressed and it has to be reduced. The question, though, is whether the Budget and this Bill address the deficit in a rational and appropriate manner. The global recession of 2008 was the largest since the end of the Second World War. The global economy fell by 1 per cent, G7 economies by around 3 per cent and world trade by around 12 per cent. It started with a fall in confidence in the American financial system, which led to a collapse in confidence in markets around the world. Since we are a trading nation with a major financial sector, it was inevitable that we would feel the effects more than most.
Despite the difficulties faced, the previous Government took the action to get this country out of the global recession, including steps to ensure that the banking system in this country did not collapse and that, through fiscal stimulus, the impact of the recession on jobs, on homes being repossessed and on businesses going into liquidation was considerably less than nearly all experts had predicted in the light of the depth of the global recession. Unemployment in this global recession is half what it was during the recession of the 1990s, repossessions are 40 per cent lower and company insolvencies are running at about a third of the rate reached in the 1990s recession. The growth figures for the second quarter of this year, published at the end of last week, show that growth in the first quarter—I think that was 0.3 per cent—has been comfortably surpassed in the second, with a figure of just over 1 per cent. In Germany and France, the figures are lower, while some eurozone countries are forecast to see negative growth this year.
The issue is: what will be the impact of the Budget and this Bill on an economy that is beginning to grow its way out of global recession? The omens do not appear particularly good, with significant cuts to public sector jobs on top of reductions in domestic demand—likely under the pending increase in VAT. I was one of those who were sent a letter during the election campaign by Mr Nick Clegg who, under the heading:
“Your choice is between a … Liberal Democrat MP, or the Conservatives”,
told me that:
“Another backbench Conservative MP will simply support VAT increases, an unfair tax rise which hits the poorest hardest, and support cuts in vital services”.
I suppose, in fairness to Mr Clegg, he did not actually say in the letter that Liberal Democrats would not also support them. I suppose that it was just a clever, craftily-worded letter that implied that Liberal Democrats would not, but did not actually make such a commitment.
Already, there are some worrying signs that the Government’s Budget may be putting in jeopardy the recovery in our economy that has been reflected in the growth figures for the past two quarters. If the deficit is cut too fast, output will probably fall and unemployment will rise. If other countries are doing the same, there will also be an adverse impact on the level of earnings and growth from our exports. Indeed, in Germany the Government are proposing a package of budget cuts and tax increases, which will certainly have an impact on their economy. According to the Bank of England, mortgage approvals fell in June, while the consumer confidence index fell and Rightmove has reported that house prices have been cut for the first time this year.
In his opening comments the noble Lord, Lord Sassoon, quoted the Organisation for Economic Co-operation and Development. However, it has also said that it expects the UK recovery to be,
“too muted to result in strong job creation”,
and went on to say that unemployment is,
“likely to recede only slowly”.
In the light of the budget cuts, the International Monetary Fund has downgraded its forecast of UK growth.
The Chartered Institute of Purchasing and Supply’s recent services survey showed that business expectations had dropped to a 15-month low, in the single biggest month-on-month fall ever recorded. Perhaps that is not surprising if we have a Government who spend their time talking down the state of the nation’s economy, promise over-the-top cuts in spending and appear to think our economy is in a similar position to that of Greece and other Mediterranean countries—a view, shall we say, not universally held. Our national debt as a proportion of GDP is below that of, for example, France, the United States and Japan.
The previous Government’s deficit reduction plan projected that the deficit would be reduced by around £80 million over the next four years. The Office for Budget Responsibility has said that we were on course to deliver that. Part of the deficit was projected to be closed by the economy returning to growth and thus more in tax coming in and less in benefits going out. However, this Government’s Budget is going to have an adverse impact on growth as the Bank of England’s chief economist said, before going on to comment that for the next three, four, five years demand in the economy will be “incredibly anaemic”.
Even the Office for Budget Responsibility is acknowledging that extra taxes or spending cuts will be necessary to make up for lower growth as a result of the Budget. The Office for Budget Responsibility is very much a creature of the Government as it showed when very conveniently press releases on unemployment figures were moved forward to try to bail out the Prime Minister at Question Time after a leaked Treasury analysis did not quite portray the picture the Government would have wanted. That leaked Treasury analysis showed that the Budget would result in the loss of at least half a million public sector jobs and some 600,000 to 700,000 private sector jobs by the end of this Parliament since much private sector employment is dependent on public sector spending.
The Office for Budget Responsibility then proceeded to tell us that the private sector would create about 2.5 million jobs by 2014 when, according to the Office for National Statistics, in the eight years prior to the start of the recession in early 2008 the private sector created a mere 1.6 million jobs at a time when the economy was doing extremely well. Now, of course, Sir Alan Budd is leaving with a certain degree of rapidity. He was the Government’s darling bud of May who failed to bloom in June and is now doing a bunk this month. Let us hope that the current apparent cosy relationship between the Government and the Office for Budget Responsibility is brought to an end.
So why are the Government pursuing tax rises and spending cuts at a greater rate than is necessary and which puts the rate of recovery at risk and will make things even harder for the less well off? This is a coalition Government of shared values and shared philosophy and that certainly seems to be the case in the desire to minimise the role of both national and local government and effect a major reduction in public services spending. Yet all benefit from the services of central government and their agencies, and local government, but it is those on average incomes and below who benefit the most and will be adversely affected the most.
It would not be politically very acceptable for this Government to say that that is what their version of the big society means to them—a substantial cutting back of the services provided by central government and their agencies and local government and from which so many benefit. Much easier then to overstate the country’s current adverse economic situation and use that as the smokescreen to make the cuts in public expenditure that are part and parcel of this Government’s concept of the big society, where power is retained in Whitehall but every effort is made to pass responsibility and accountability as far down the line as possible for the consequences of how that power is used to cut public services spending.
As the Institute for Fiscal Studies has said:
“We are looking at the longest, deepest sustained period of cuts to public services spending at least since World War II”.
As my noble friend Lord Lea of Crondall has commented, the institute also said that the Budget looked “somewhat regressive”. It also referred to,
“the impact of the looming cuts to public services, which are likely to hit poorer households significantly harder than richer households”.
Not quite the rosy picture of fairness that the noble Lord, Lord Sassoon, tried to portray.
The Government claim that we are all in this together, although in what exactly they have never said. Let us just say that thanks to the Budget and this Finance Bill many people are in it rather more than some others and the dividing line appears to be how well off or otherwise people are at the moment. It certainly is not gloom everywhere; the leaders of Britain’s biggest companies have seen their pay and bonuses rise by an average of 5 per cent to more than £3 million over the past financial year, despite a drop in earnings per share. So that is one part of the all that certainly does not seem to be in this together. On top of the extent of the cuts to public services, the rise in VAT, which the previous Government reduced to stimulate the economy, the move from retail price indexation to consumer price indexation and the disproportionate impact of the measures on women and children, to name just three issues, will have much less of an impact on those at the top of the income bands than those lower down. The Budget takes a far higher percentage of income from the bottom 10 per cent than it does from the top 10 per cent.
I hope that the Government will reflect further on this over the summer and at least privately admit, not that no deficit reduction is needed, but that they have gone over the top in the level, speed and nature of the cuts that they have made or are apparently proposing to make and reflect that fact in their decisions on the actual extent of spending cuts still to come. This is no time to take the sort of unnecessary risk with the economy that the coalition Government are taking by seeking to cut the deficit too far, too fast.
Lord Bates
My Lords, it is a privilege to contribute to this debate. We have heard two excellent maiden speeches from my noble friends Lady Browning and Lord Spicer. Although their speeches were very different, they were both accomplished parliamentary performances. They will both be a credit to this House, and we look forward to many more of them.
I was particularly interested in the contribution of my noble friend Lady Browning, who drew on her experience in small to medium-sized enterprises. We have heard some wonderful expositions of macroeconomic theory in this debate—and I mean that genuinely. They have been quite astounding and it has been a privilege to listen to them. But there is also another side to this. I wonder what lessons could be learnt from the small business community, which has been wrestling with exactly the same recession that the Government are now wrestling with, and the same problems. They acted more responsibly. They have been controlling costs, which is the first thing that you can do in a recession, since the onset of the financial crisis two years ago. That lost two years of the Government taking responsive action has meant that the delay has increased the severity of the measures that are necessary to correct the problems that we face. Our costs are too high as a country. I cannot quite understand how it is possible to double public spending over the past two years and double the debt over the past five years but somehow not possible to reduce it by 25 per cent or to reduce government borrowing by a similar proportion. One might begin by simply retracing the steps taken to get us into the situation that we are in.
The responses that a small business might have to this crisis might be, first, to control unnecessary costs. What do I mean by controlling costs? One way in which to control costs in a small to medium-sized enterprise is by reducing complexity, which adds to cost. If you take out complexity, you increase efficiency in the business. One thing that I have been delighted about with the Finance Bill is that it runs to only 26 pages, which is terrific. I dug out from the Library last year’s Finance Bill, which was 167 pages long. Just to add to that, in case there might be a worry that it was not complex enough, 156 pages of Explanatory Notes went with it.
Every time you add complexity into the tax system, into government and into regulation, you immediately add to costs and overheads, because there needs to be people sitting in government departments interpreting what it actually means. It is more difficult to collect revenue from a complex tax system, simply because there are people on the other side who are hiring equally qualified accountants and lawyers to navigate through the same complexity that we are facing. So, complexity adds to cost. Simplicity reduces cost and I therefore pay tribute to my noble friend the Minister for introducing such an efficient Finance Bill to this House and I hope very much that this is a shape of things to come. We must be ruthless in cutting down on unnecessary legislation and bureaucracy, not because of some free-market experiment, but simply because that is the way that we can cut the overheads of government and cut the cost of government without cutting front-line services, which is what we all want to do.
There is another thing that we would do. So far in the debate, some comments have suggested that this is a one-gear approach to tackling the deficit; that all it is about is reducing cost. Of course, it is not about reducing cost, any more than in business it is all about reducing cost. It is about reducing cost, taking out cost, simplifying systems, but it is also about increasing sales, increasing revenue into government.
I am delighted to see a number of things in the Bill which are aimed at stimulating the enterprise economy so that we can actually start increasing sales: the reduction in the small companies rate to 20 per cent, instead of the previous Government’s planned increase to 22 percent from April 2011; the increase in the entrepreneurs’ relief lifetime limit for capital gains tax from £2 million to £5 million, effective immediately; the reversal of the most damaging part of the increase in employer national insurance contributions inherited from the previous Government; the raising of the threshold for national insurance contributions by £21 above indexation; a review of small business taxation, including IR35 regulations, to create a simple, more predictable tax regime. Together, I believe that all these measures will increase our sales as a nation and that has to be important.
Some might say that that sounds a bit simplistic, but a very sophisticated organisation, the World Economic Forum, undertakes an annual assessment of the competitiveness of all the economies in the world. I know that it has been a source of concern to the previous Government as well as to the current Government that the level of competitiveness of the UK economy is falling substantially. What are the criticisms that the World Economic Forum find in our economy, the reason we are tumbling down the league tables? There are four. It identifies, first, access to financing. Secondly, interestingly, it identifies inefficient government bureaucracy. Thirdly, it identifies tax regulations. Fourthly, it identifies tax rates.
That is an independent, credible organisation, undertaking an assessment of all governments around the world and coming out with some pretty clear statements about what it thinks the inherent weaknesses of our economy are. That is why the responses which have been brought forward by the coalition Government are interesting; they chime very much with what the World Economic Forum has found. First, I talked about tax rates and the measures which are being introduced there. I talked about the need for tax simplification and less regulation, a new system of regulatory control whereby Ministers must first show how they will reduce the existing burden of regulation before bringing forward new regulations—what a breath of fresh air. Also welcome is a fundamental review of all regulations that the previous Government scheduled for introduction over the coming year. Regulations will cease to be law after seven years unless Parliament has confirmed that they are still necessary and proportionate and they were explicitly set to have a longer timeframe. There will be a review of all the employment law for which each department is responsible, as well as unnecessary health and safety regulations. The gold-plating of EU regulations will be tackled. I am making the point that when an external audit of the performance of our company—UK plc—points out that there is a real problem with the complexity of the bureaucracy, that will help to reassure, as it relates to one of the responses that we are taking. The lower tax rates will help, too.
My noble friend Lady Browning made an impassioned plea about access to finance, which is a major problem. I see it from two sides. I have seen it on the small business side, where things are tightening up dramatically, but I also spare a thought for the banks, although I know that that may not be the most popular thing to say. The banks have said to me in conversation that the problem is not so much that they are refusing to lend now. The problem relates to the level of anxiousness that, unless there is confidence that the deficit will be tackled—I appreciate that this may not fit with economic theory, but it certainly fits with banking practice—there could be an increase in interest rates. The one thing that is keeping UK plc and many homes, families and businesses afloat is the 0.5 per cent base rate—not that you get it, but it is the base rate from which the premium is operated. Low interest rates are keeping people in their homes by making homes affordable and they are keeping people in their businesses and their jobs. If interest rates were to ratchet up to 5 per cent or 10 per cent as a result of international confidence in the economy decreasing—
Lord Skidelsky
I would not normally interrupt, but is the noble Lord seriously suggesting that markets are likely to price our government debt at 5 per cent or 10 per cent? If so, does he accept that view of the markets? Does he think that it is binding and that we just have to do whatever market sentiment tells us?
Lord Bates
That is a fair point but, in a sense, it does not really matter what the most distinguished economist in the room says about it or what the least distinguished economist in the room—me—says about it. Fitch’s preliminary assessment of the Budget was that,
“it sets out an ambitious deficit reduction path that, if delivered upon, will materially strengthen confidence in UK public finances and its ‘AAA’ status … Taken together, the specific measures announced today are substantial and enhance confidence in the outlook for UK public finances”.
Moody’s Investors Services has said that the UK Budget is “supportive” of the country’s AAA rating. There is that element of international confidence—
Lord Myners
I thank the noble Lord for allowing me to intervene. Is he quoting from the same credit rating agencies that played such a horrible part in the collapse of the banking system through their lack of foresight?
Lord Bates
I am quoting from the same rating agencies that rate government debt and sovereign debt around the world. That is what results in the prices of those debts being traded on the international money markets. The noble Lord, Lord Myners, knows better than anyone about the global flows of international finance. The rating levels are crucial to this, as we see when we look at the situation in Ireland. To stretch the small business analogy to its absolute limits, you can say that international confidence in the Government’s resolution to get to grips with the deficit is analogous to what many companies will have—
Lord Bates
I will just finish this point, if I may. It is analogous to what many companies will find in dealing with their share price. The share price reflects the market’s belief in the Government’s resolution and its confidence in the soundness of the finances. That has a huge impact on the Government’s ability to—
Lord Lea of Crondall
I am grateful to the noble Lord for giving way. I do not think he has answered the noble Lord, Lord Skidelsky, or my noble friend Lord Myners. Would it be too much of a caricature to say that if we have to believe in voodoo economics, which is what the markets add up to, the logic of the noble Lord, Lord Skidelsky, and my noble friend Lord Myners is of no matter whatever? Do we just have to worship the voodoo economics of the markets?
Lord Bates
I accept these points. All I am saying is that, by arguing the other way, the noble Lord effectively says that there is not the slightest correlation between the ratings of global rating agencies, the level of debt in the economy and the price that we pay for that debt. I find that a more extraordinary position to argue from. I agree that these are contentious matters. What I have tried to set out through my contribution to the debate is that it is a multi-layered and complex subject but, essentially, we need to control costs; introduce simplicity to the system as a mechanism of doing that; increase sales by driving up enterprise; and repair the balance sheet so that the international lenders who are providing the debt have the confidence to continue doing so. I believe that the Government have done that and they have my full support.
Lord Myners
My Lords, it is a pleasure and an honour to speak in a debate which saw the maiden contributions of the noble Lord, Lord Spicer, and the noble Baroness, Lady Browning. They both made excellent maiden speeches and will be considerable additions to House. They come with reputations as fine constituency MPs for Worcester and Honiton, and with specialist expertise in finance and health which will be of great benefit to the House. I crossed swords with the noble Baroness, as she now is, when I was a junior Treasury Minister. She called for my resignation on the grounds that I was slow in answering her letters. I inherited some 3,000 letters when I became a Minister, which I was told was a sign that my predecessor anticipated a forthcoming reshuffle.
The Minister told us that the Budget is tough but fair. Tough it certainly is; fair it is not. The Minister talked about the Budget being progressive but my noble friend Lord Lea of Crondall correctly pointed out that the only progressive elements in the Budget are those which the Government inherited from the previous Administration. As the Institute for Fiscal Studies shows, if you subtract that contribution to the Budget arithmetic from the Budget and the proposals in the Finance Bill, you will find that they are regressive rather than progressive. That trend will continue when we see the forthcoming spending review, to be announced in October. The Minister needs to be careful that he does not represent a Budget as being progressive when it is clearly not the intention of the Government that it should be progressive.
The Minister quoted from my contribution to our last debate on the economy. I stand by my words in that debate. I believe I was summarising what was known at one time as the golden rule, which is that recurrent expenditure by government should be matched by tax revenues through the economic cycle. I believe that that was a good policy. It was unfortunate that, for a period, it was placed in a form of suspension.
The challenge of working out a policy of keeping in balance recurrent expenditure and taxation requires one to look at things from a historic perspective. Therefore, there are always issues of judgment which will be challenging for Ministers. With hindsight, we were perhaps overly accommodating in the Budget strategy in the mid-1990s and failed to recognise the narrowing of the fiscal base. However, I believe that we were right to take the actions which we took once it became clear that the global economy was going into a significant recession, and to promote public expenditure to ensure that the worst effects were ameliorated. I also believe that the previous Administration provided absolutely the right global leadership at the G20 meeting in London in April.
The question the House has to ask itself is whether the Chancellor might now be making mistakes of judgment. The second quarter GDP figures suggest evidence of continuing improvement in economic activity. This is the third quarter during which economic growth has moved forward with developing momentum. Do these figures justify aggressive cutting? The Chancellor may well argue—indeed, he did so on Friday—that the strength of the economy provides further assurance for his programme of expenditure cutting. However, we need to recognise that this recovery is still very nascent. Consumer and business confidence are very low. We are seeing in both consumer and business behaviour a Ricardian equivalent as people again anticipate a setback in economic activity as a consequence of the policies the Government are taking. As a number of noble Lords have mentioned, including my noble friend Lord McFall, Ben Bernanke referred to unusual uncertainty being the prevailing condition in the global economy. That is clearly recognised as well in the minutes of the previous meeting of the Bank of England Monetary Policy Committee. I find it very surprising that the Monetary Policy Committee appears to be considering approaching the Treasury for further support for additional quantitative easing. My understanding is that in the third quarter of recovery it would be most surprising for the Bank of England to consider it necessary to have more quantitative easing. Therefore, I begin to ask myself whether the Bank of England is not concerned about the pace of expenditure cutting which the Government are pursuing, and is seeking to counteract that by a further programme of quantitative easing when we still do not know the true effect of existing quantitative easing.
Without swift and appropriate action and a significant contribution from fiscal policies, we would, of course, have experienced a much more significant depression over the past two years than was the case. We intervened to support the banks. I am pleased to note that the surplus which will arise to taxpayers as a consequence of that support continues to increase, as was evidenced last week by the first report from the Asset Protection Agency, which is now suggesting a further surplus for taxpayers of £5 billion. I look across at the noble Lord, Lord Forsyth of Drumlean, who is smiling as he used to ask me how much money was being lost by the taxpayer as a consequence of these interventions. My estimate is that, as a result of the interventions, the taxpayer has a net gain of the order of £15 billion. That is a huge amount resulting from the interventions that we took to support the banking system during a period of acute crisis—and we did so in a way that would deliver value to the taxpayer.
The Government of whom I was part had a plan to halve borrowing as a percentage of GDP over the next four years. We proposed to do that without an unmandated VAT rise and without placing at risk the recovery, the poor, the vulnerable, the unemployed or those who look to the state for assistance and encouragement during a time of global difficulty. This Bill is part of a hair-shirt Budget, but it is not a hair shirt which will be worn by those who buy their shirts in Jermyn Street.
The economy has considerable surplus capacity, as the noble Lord, Lord Skidelsky, observed. We have only to look at the unemployment figures to see that that is the case. Cutting public spending when the economy still has excess capacity and high unemployment is a most unwise thing to do. We as a Government were committed to reducing the deficit but in a way that recognised the risk of setback and was socially just in its implementation. Indeed, the deficit was already falling, as the Chancellor of the Exchequer forecast it would. The cuts the Government propose are borne not out of rigorous economic analysis or designed to produce a better outcome for public finances and the economy but out of political prejudice and a wish to contract the size of the state and its ability to support the wider community.
I have already mentioned declining consumer and business confidence. We also see a slowing in the US and European economy. The banking system is still in poor shape and last week’s EU stress testing will do nothing to restore confidence in it. However, UK banks are well capitalised and we will gain an important inheritance for society in the future as a result of the fiscal consequences of the intervention.
The net effect of the Government’s programmes amounts to a not inconsiderable risk to future economic activity. The first half of this year has seen economic growth picking up. An annualised rate of growth in the second quarter of nearly 4.5 per cent compares with the OBR forecast for this year of 1.2 per cent. Will the OBR issue a new forecast or does it only produce forecasts when asked by Treasury Ministers, and then at short notice if necessary to answer Questions in the other place?
My own view is that quarter 2 GDP figures will be the strongest quarter in 2010. Does the Minister expect economic activity to increase in momentum during the remainder of this year or does he share my view that the quarter 2 figure will be the highest reported? What will the Minister do if things begin to deteriorate and, as a number of noble Lords have suggested, the Government’s policies are seen to be contributing to an economic setback rather than a recovery?
As I have asked before, where does the Minister see the sources of growth for the future? The noble Lord, Lord Skidelsky, shares my view that the argument about squeezing out is simply not economically rational. It is difficult to reconcile the Government’s argument that the public sector is squeezing out private sector investment with the accumulation of a private sector surplus. Businessmen are not concerned about the deficit but with the Government’s withdrawal of support for the economy. The deficit is a consequence, not a cause, of excess capacity.
The Minister needs to address how we exploit comparative advantage. We compete with fast-growing, literate, numerate and young economies in the developing part of the world. Where are we going to compete? The noble Lord, Lord Bates, quoted from the millionaires’ favourite think tank, the World Economic Forum, to suggest that cutting taxes might be the obvious thing to do. We need to identify how we are going to compete effectively in economic terms in the future against these fast-growing economies, in particular those from the eastern part of the world. We need to invest in our workforce and in education and training. We should invest in infrastructure. As the noble Lord, Lord Skidelsky, said, now is the right time to do that because we have excess capacity. We should invest in facilitating the application of new technology and innovation but these are precisely the areas which the Government have picked out for early cuts. The Government are cutting on schools, innovation and technology, and universities. This is absolute nonsense and a huge risk to the economic performance of the country going forward.
I believe that the Office for Budget Responsibility is a commendable idea and it has my support. However, the concept has been damaged by its implementation. I welcome the involvement of the Treasury Select Committee in future appointments to the OBR. I know that the Minister will not make a commitment here in the House but does he believe that the decision that the Treasury Select Committee should have an involvement in appointments to the OBR should be extended to the Monetary Policy Committee and the Court of the Bank of England? If not, why has the OBR been picked out for special treatment and not these other, more important, entities? As my noble friend Lord Barnett pointed out, they have real powers, as opposed to those of the OBR, which are limited to forecasting and commenting on those forecasts.
I invite the Minister to answer a question which I have now been asking him for several weeks: will any action be taken to ensure that those who leave the Office for Budget Responsibility are not allowed immediately to return to the private sector with all the knowledge that they have as a result of their sight of the Government’s economic forecasting and public accounts? I do not suggest for one minute that Sir Alan Budd or anyone else will misuse that information but I am certainly aware that the appearance of the possibility of so doing may further erode what is already a deeply damaged, although good, concept.
There is undoubtedly scope for cutting public expenditure but the proposed level of cuts is draconian. I am not sure that the Liberal Democrats fully understand the extent of those cuts but we have a Liberal Democrat, Mr Danny Alexander, leading the process. In some ways, I wonder whether there might be some method in the Prime Minister’s madness in putting a Liberal Democrat in that position. However, if we are to do this job, why do we not do it well? Why do we not have someone such as Mr Philip Hammond, Mr Michael Fallon or Mr John Redwood as the Chief Secretary to the Treasury, or even the noble Lord, Lord Forsyth of Drumlean, who would bring considerable experience rather than the inexperience and naivety of the present incumbent? I worry that Treasury officials have very little experience in the management of the exercise that they are contemplating, and I also worry that there is very little experience among the Treasury Front Bench in respect of public expenditure. I defer to the Minister, who has considerable business experience, but it is striking that no one else in the Treasury team with responsibility for budget management has any experience at all in business management or in dealing with the sorts of issues to which the noble Lord, Lord Bates, referred earlier.
Finally, I want to mention Dr Cable’s comments today on banking, which I thought were quite irresponsible. To suggest that we should give a financial incentive to bankers to lend against their best judgment borders on the reckless and ill behoves a Government who are supposed to believe in private enterprise. I ask the noble Lord to dissociate himself from Dr Cable’s comments in that respect and to make it clear that in his judgment the problems of bank lending are more to do with demand than supply. Furthermore, I ask him to make it clear that bonuses, on which the right honourable Dr Cable has again spoken, are the responsibility of shareholders rather than of the Secretary of State for business.
Lord Davies of Oldham
My Lords, there is at least one joy in summing up for the Opposition in a debate that has ranged so widely over such an important issue, and that is to congratulate our two maiden speakers, the noble Lord, Lord Spicer, and the noble Baroness, Lady Browning, on their contributions. I noticed that on this occasion they both eschewed controversy and therefore must feel left out of a great dimension of this debate. However, we know that they will bring their experience of the other place to bear in future debates on these and other issues, and we welcome them to this House.
It is a somewhat invidious role to sum up for the Opposition when everything that can be said and presented as a challenge to the Government has been done so ably from the Benches behind me. However, I want to identify one or two points, which I hope the Minister will address. I noticed from his opening statement that he covered with great thoroughness a good deal of what was in the Budget, and I have no doubt at all that he will address the specific points that his noble friends Lord Northbrook, Lord Blackwell, Lord Higgins and Lord Bates put to him. After all, they have given their full support to his Budget, so he owes them a response to their particular points. I am rather more interested in the narrowness of the presentation that the Minister brought to the Budget, and I want a context. It is from our side—the Benches behind me, and exceptionally from the Cross Benches—that we have had a presentation of the context in which this Budget needs to be placed.
First, I shall respond to the noble Lord, Lord Razzall, the only Liberal Democrat who has contributed to this debate from his lonely eminence. I recognise that there was bound to be a parting shot at VAT and the position of the shadow Chancellor and former Chancellor, Alistair Darling, to cover up the obvious continued embarrassment in the Liberal Democrat ranks at that great poster in which their leader condemned VAT as the unfair, regressive tax that a Conservative Government would bring in if elected. However, the noble Lord, Lord Razzall, was a little more constructive than that. He emphasised that we needed context for this Budget. In particular, he referred to process and the rate at which cuts should be introduced. Some cuts are necessary—no one on this side of the House will deny that—but the extent and pace at which they will be introduced worried the noble Lord, Lord Razzall, and by heavens, they worry a great number of distinguished contributors to the debate.
The noble Lord, Lord Stern, raised the issue in the broader context. How can the Minister persist in this position, as the Government continually do, of addressing the economic problem as just a UK issue? It palpably is not just a UK issue. Debt plagues all the significant economies in the world, as the noble Lord, Lord Stern, identified in his thoughtful contribution. What is more, because debt plagues these countries, the Government have to address themselves to that issue as well. If they are to put all their trust in the private sector and insist that manufacture and services delivered by the private sector will bring the United Kingdom rapidly out of the difficulties that we are in, we want to know in which markets we will flourish. Have the Government not recognised that the German economy is in difficulties, and so too the United States economy? Indeed, the United States is pursuing a strategy that is very different from that of our Government. If there is one ray of hope in the present position, it is that there may be some engine of demand from the United States, which may bring benefits to Europe and the United Kingdom to give us a chance but not because of the Government’s philosophy on this matter.
My noble friend Lord Myners is absolutely right. This is not just a question of identifying a problem and applying a possible solution; it is an opportunity for the Conservative Party, which it is seeking to seize with both hands. It gives the party the chance to elevate the nebulous concept of the big society and to seek to decimate the contribution of the public sector. That is what these cuts are really about. Of course, the noble Lord, Lord Ryder, is absolutely right when he says that the Budget is merely an hors d’oeuvre. It may be hard to swallow, but think of the digestion we have to produce when the comprehensive spending review is revealed in the autumn. That is the ghastly feast that will be laid before the nation, and it will lead to exactly the anxieties that the noble Lord, Lord Stern, first articulated and which were brilliantly developed by the noble Lord, Lord Skidelsky, with all his understanding of these issues.
As the noble Lord, Lord Skidelsky, rightly said, the challenge is not the deficit; the challenge is the problem in the economy. Of course, cuts have their role to play, but investment and building up our capacity is of equal, if not greater, importance. We cannot trust a Government to invest who are, on ideological grounds, hell-bent on reducing the role of the state. The only professional economist, the noble Lord, Lord Desai—I think the noble Lord, Lord Skidelsky, probably rates himself as a professional economic historian, but if he wants to be included with my noble friend Lord Desai in this nomenclature, I am quite happy to include him—indicated that cuts are necessary but also indicated that, in fact, they will not have the immediate impact that could otherwise bring disaster upon the British economy.
Are we to rely upon inadvertency or inefficiency by the Government, or a bad selection of targets, for a delay in the savage proposals they have for the cuts? It will not do. My noble friends Lord McFall and Lord Rosser and other noble friends set out to establish the context in which this Budget is being presented to the British people. It is not a Budget that will solve the problems. It will certainly address itself to aspects of the deficit. None of us is against addressing aspects of the deficit, but that one should put as the sole priority the speed with which one can reduce that deficit is to rate the real economy lowly and to rate the concern of the noble Lord, Lord Bates—the irrationality of the markets—as the only driving force of government policy. If that is the only driving force, we do not need a Government, but we do need a Minister to respond to the challenges of this debate.
Lord Sassoon
My Lords, as I conclude the debate on this Finance Bill—and I note that it is a debate on the Finance Bill, although I am grateful to noble Lords who have contextualised it by talking more widely about the Budget—I thank all noble Lords for their contributions, which have played an important part in scrutinising this legislation. I beg to differ from the view expressed by the noble Lord, Lord Tunnicliffe, at the outset, that this debate would be a formality. It has been an excellent debate, and I would like to start by drawing attention to the maiden speeches of my noble friends Lord Spicer and Lady Browning. Their contributions did not disappoint. My noble friend Lord Spicer drew important lessons from economic history. He started a bit of a debate with the noble Lord, Lord Barnett, about who had participated in more Finance Bills. I have to confess that I have only part of one to my name so far, but there will be another one later this year, so I will be trying my best to catch up.
My noble friend Lady Browning talked about the important need for financing for small and medium-sized enterprises, which is one key plank of the Government’s focus at the moment. Attention was drawn to this issue by my noble friend Lord Bates and the noble Lord, Lord Myners. In response to points made by my noble friend Lord Higgins and others about the money supply, the proof of the pudding is in the eating—which is partly whether finance does indeed flow particularly into the small and medium-sized enterprise sector of the economy. I remind your Lordships that today the Treasury and BIS, my right honourable friend Dr Cable’s department, jointly published the document Financing a Private Sector Recovery. The noble Lord, Lord Myners, might like to read that as an exposé of government policy in this important area.
The Government have inherited an exceptional fiscal challenge. Within seven weeks of taking office, we have set out a decisive plan for dealing with this challenge. Within 12 weeks we have our first Finance Act in place, legislation which will help to restore our public finances and confidence in our economy. We have also set up the independent Office for Budget Responsibility, which has been much discussed today. The noble Lord, Lord Stern, has today graphically shown why the OBR is so necessary. He speaks in the very guarded language of a former distinguished Second Permanent Secretary to the Treasury and head of the Government Economic Service. When he talks about the way in which revenue forecasts in particular were previously handled by Treasury Ministers and their advisers, and talks in terms of lack of clarity, hopeful judgments and inflated forecasts, I take that as a damning indictment of the way in which Ministers under the previous regime were able to play fast and loose with the data. That approach has made the OBR necessary, and the OBR will not allow Ministers to take such an approach in future.
I very much take to heart the suggestions that the noble Lord, Lord Stern, made about the conduct of the OBR. I note his well-balanced perspective on these issues of independence which other noble Lords seem to have got excessively fussed about in recent weeks. I also note that even the view of the noble Lord, Lord Barnett, on the OBR may be softening a bit. I think that I heard him talk about semi-criticism. He is shaking his head, but if we have got to semi-criticism, we are making progress, and we might have him fully on board very shortly.
As we are talking about the conduct of fiscal policy under the previous Government, I should point out that the noble Lord, Lord Myners, drew attention to the previous fiscal rules, which were open to all sorts of manipulation. The beginning and end of cycles could be changed at the whim of Ministers, and Ministers did so regularly.
The noble Lord, Lord Barnett, also drew attention to the relationship between the Monetary Policy Committee and the Treasury. Even though he attempted to put a completely false construction on my previous answer on this point, I absolutely stand by what I said. I am sorry to disappoint him on that.
Lord Barnett
I pointed out that I was delighted that the Treasury intervenes in the MPC. I asked the Minister to make sure that it intervenes again in the future.
Lord Sassoon
I thank the noble Lord for that. But I did not say that the Treasury intervened at all in the workings of the MPC. It has a representative there to point out policy matters which the Treasury might be aware of or which it thinks the MPC might be aware of. That is not in any sense intervention in the way in which I think the noble Lord means it.
Lord Myners
I fear that the noble Lord is moving on from the OBR, so may I ask him again for a simple and straightforward answer? Are the members of the OBR going to be allowed to return to the hedge funds for which they previously worked immediately on leaving the OBR, or will they be subject to a period of purdah?
Lord Sassoon
I thank the noble Lord, although that was a different point from the one that he made previously; the point that he made in his speech was whether members of the OBR would have inside knowledge of the forecasts. The whole point about the OBR is that it will publish its forecasts transparently. I am not sure what the inside information is that the noble Lord is so concerned about.
Lord Myners
Perhaps I may help the Minister. In his evidence to the Treasury Select Committee, Sir Alan Budd said that he had seen confidential information which was not in the public domain—information which the Minister, given his past City career as a Swiss banker, would no doubt recognise as price-sensitive information.
Lord Sassoon
I look forward to seeing if and when the noble Lord, Lord Myners, returns to the City. There are accepted practices and terms for all who have worked in different parts of the public sector when they return to the City or elsewhere. Perhaps I may move on to talk about the new fiscal mandate.
Lord McFall of Alcluith
If the OBR members have access to confidential information and take that away with them, will it be available to them in their new job a few days after leaving the OBR? The purdah issue is very important. Can the Minister address it?
Lord Sassoon
My Lords, I believe that I have addressed the point. As with any such office, it would be inconceivable if members of the OBR took confidential information away with them. Just as the noble Lord, Lord Stern, has referred to a report which he compiled for Ministers in 2004 but which he left behind in 2007, it would be extraordinary to suggest that those working on sensitive matters in the public sector would take away secret documents.
Lord McFall of Alcluith
They are taking away information in their head. It is intellectual property; it is not taking away documents. The Minister is being less than open with us if he puts that construction on it.
Lord Sassoon
The OBR receives unpublished information of different kinds and then publishes its forecasts publicly. I should have thought that the information the OBR has is of limited ongoing value. However, I have listened carefully to the points made by noble Lords. As the legislation to set up the OBR on a permanent basis goes through the House, there will be other opportunities for noble Lords to discuss the issue more fully. However, as we are concentrating today on the Finance Bill, perhaps I may move on and discuss matters which are of more direct relevance to that Bill.
I have said, and will return to say again, that the new fiscal mandate will eliminate the deficit in five years and that the bulk of this reduction will come from lower spending rather than higher taxes. However, this autumn’s spending review is not only about cuts and tackling the deficit; it will be a complete re-evaluation of the Government’s role in providing public services. I take the point to which my noble friend Lord Razzall rightly drew attention in our earlier discussions about this. As to the specific point made by the noble Lord, Lord Barnett, even areas which are protected—such as the National Health Service—will be looked at to ensure that administration costs are cut. I agree with the noble Lord that that should be done; the question is where and how such administration cuts should be recycled.
We have set out our steps for tackling the budget deficit and we have done so in a more transparent way than any previous Government. Some noble Lords have argued that, because we have lifted the skirt a bit, they would now like the skirt to be lifted a lot further. However, they do not give us much credit for the greater transparency we have already introduced.
We are on track to have debt falling and a balanced structural current budget by the end of this Parliament. It is only by acting quickly to tackle the deficit and restore confidence in the public finances that we will underpin and achieve economic growth. Action of this kind requires us to take tough decisions. A number of noble Lords have questioned this basic judgment, starting with the noble Lord, Lord Tunnicliffe. I was struck by the intervention from the opposition Benches of the noble Lord, Lord Desai, who did not in any way question the basic Budget judgment and gave a very balanced account. I had a look two or three times at the briefing notes that officials had given me just to check that the noble Lord was sitting on the right Benches, because I thought it was a very balanced account of the judgment that has been taken. And of course there are risks ahead. The basic judgment was questioned by other noble Lords, including the noble Lords, Lord Tunnicliffe and Lord Rosser. We had one quote from the OECD. The one I have to hand is from its Secretary-General, Angel Gurría, who hailed the Budget as a courageous move by the British Government, and said:
“It provides the necessary degree of fiscal consolidation over the coming years to restore public finances to a sustainable path, while still supporting the recovery”.
That is the basic judgment at the heart of the Budget.
The recent G20 communiqué stated that those countries with serious fiscal challenges needed to accelerate the pace of consolidation. The noble Lord, Lord McFall of Alcluith, says that it is the UK Government calling for early fiscal consolidation but it is actually the G20 that is calling for countries such as the UK to get on with it. The noble Lord, Lord Davies of Oldham, says that we are not adopting the same policies as certain other countries. Too right. Different countries need to adopt different policies appropriate to their particular circumstances, and our circumstances are regrettably that we inherited from the previous Government the largest budget deficit in Europe except Ireland, and we have to get on and tackle it. The bulk of the deficit reduction will come from lower spending but given the astonishing size of the budget deficit, we have not been able to avoid the need to raise some taxes. My noble friend Lord Higgins asked what increase of revenue there would be in the current and next year. The figures in the Red Book in Table 2.1 on page 40 show that the amounts raised by tax policy decisions in the Budget represent an increase in revenue of £2.8 billion in 2010-11 and £6.25 billion in 2011-12.
The choices that we have now made are ones that face up to the challenges ahead and do not simply defer them to future generations. There has been precious little from the opposition Benches in the way of alternative plans and thoughts as to how we are to deal with it. I welcome the contribution from the noble Lord, Lord Skidelsky, in one respect and that is that he put up a radical alternative vision. It seemed to be founded on the starting premise or assertion that we can continue to push up government borrowing without limit, although even he went on to recognise that certain Governments have got to the limits of what the borrowing capacity of a country can be.
There was an interesting contrast between the contributions from the noble Lord, Lord Skidelsky, and my noble friend Lord Bates. The noble Lord, Lord Skidelsky, postulated what might cause a businessman to invest, but I heard from my noble friend Lord Bates pretty much what I had already scribbled down as what I thought businessmen wanted, which is that they will increase their investment when they have confidence that there will be increasing orders from their customers. I believe that their confidence in their customers will be founded on the customers’ view of whether there is a grip on the economy. Businessmen will look at the level of interest rates and they will want to see them kept low. They will want and need to see credit continuing to flow. They will need to see that government expenditure is under control. They will want to see that regulation is being tackled. They will want to see predictable and falling corporate tax rates. They will want to see that employment taxes are being cut from where the previous Government intended to take them. They will want to see that the Government, in cutting back expenditure, are maintaining investment in those areas of economic growth. These are all things which I see in the total Budget package. I agree with my noble friend Lord Bates on them.
There was discussion about value added tax and, in that context, whether this a progressive or regressive Budget. We are taking responsibility in this Bill for the financial challenges that we have inherited but in a way that is fair and open. Everyday essentials such as food and children’s clothing will remain zero-rated for VAT throughout the Parliament, protecting those on low and middle incomes. Those most affected by the VAT rise will be those who spend the most. This is clear in both government and independent analysis. If one looks at the impact of expenditure by decile, as is appropriate for a tax on expenditure, one sees that the richest pay the most and the poorest least. These points were questioned by the noble Lord, Lord Tunnicliffe, but were knocked admirably on the head by the noble Lord, Lord Desai, who said that it was wrong to suggest that VAT was necessarily a regressive tax. I do not want bore everybody with more quotes from the IFS, but its view is that total expenditure is the more appropriate guide to lifetime living standards, as households smooth their expenditure over their lifetime. Analysis by expenditure rather than income level is therefore a better measure of the impact of the VAT increase and, on this basis, the VAT increase is progressive.
Other noble Lords made wider points on whether the Budget is regressive or progressive, including the noble Lords, Lord Lea of Crondall, Lord Rosser, and, again, Lord Myners. They questioned whether policies of the previous Government should be included in the assessment. The IFS accepts that, looking at the Budget as a whole, the changes are progressive. It does not make sense, surely, to ignore the policies of the previous Government which the coalition Government have decided to retain and will legislate to implement.
Lord Lea of Crondall
The Minister is rather gratuitously missing the point. The Government have never made that clear when they proclaim that the Budget is progressive. I can make their sums add up to that conclusion only by including the March measures of the Labour Government. That is an astonishing thing to do.
Will the Minister agree to desist from claiming that this Budget has those effects? Does he agree with the Treasury Select Committee that a proper analysis of the income redistribution effects of measures announced this year should include the public expenditure cuts and that they should be looked at together? The noble Lord, Lord Razzall, and I persistently have asked these questions. This is an opportunity for answers. They are serious questions and they need serious answers.
Lord Sassoon
My Lords, given that I have just said that I thought it appropriate for the assessment of the total effect of the Budget to include an assessment of those policies proposed by the previous Government which the coalition Government have decided to retain and will legislate to implement, I am at a bit of a loss to understand the premise of the noble Lord’s question. I am not sure that this stage of the Bill is the point to be going into clarifications of this kind, so, if he will permit me, I will move on.
I turn to the welfare budget. We have to strike a balance between what is right to do with the welfare budget on the one hand and the depth of cuts to public expenditure on the other. If we fully protected the welfare budget, it would force deeper cuts to public spending, which could affect the services on which the most vulnerable in society depend. Refocusing benefits so that they go to those who need them most helps in turn to relieve pressures on front-line spending. I remind noble Lords that 880,000 people on the lowest incomes are being lifted out of income tax entirely.
We also had a certain amount of talk from the noble Lord, Lord Lea of Crondall, about “private sector good, public sector bad”. I want to refute any suggestion that that is the Government’s view. A much more sophisticated and appropriate way to look at it was the approach of my noble friend Lord Blackwell, who pointed out that a situation in which government spending accounted for 48 per cent of GDP was unsustainable. That is the right way to look at it. Private sector growth is absolutely what we need, but the public sector does a very fine job; it is just that we cannot afford a public sector of the size to which it had grown under the previous Government.
Although we probably had enough talk of cake from the noble Lord, Lord McFall, it is a question of the size of the cake, how it is distributed and what we can afford of the cake, not of wholly inappropriate comparisons between one part of it being good and the other part being bad.
Lord Lea of Crondall
On the idea that it is a gross caricature to say, “private sector good, public sector bad”, the Minister’s predecessor on the Conservative Front Bench said that the private sector is productive, the public sector is unproductive. The noble Lord can look at Hansard. I was simply making the point about all the ordering—I mentioned Costain—when it comes to cutting schools and cutting hospitals, and the interdependence of the public and the private sector.
Lord Sassoon
My Lords, I fully accept that of course there is huge interdependence between the public and private sectors.
I stress again that the Government’s aim is to make Britain a place where innovation and enterprise can succeed. This is critical. We want to send a clear signal to international business that Britain is once more open for business. Attracting inward investment will stimulate growth and create jobs, and the Budget provides a springboard for a private sector-led recovery, with measures to support business and restore the UK’s competitiveness. These include not only a reduction in corporation tax to 24 per cent, but a reduction in the small profits rate to 20 per cent, an increase in the national insurance contribution threshold for employers and a wide package of support for small businesses. In answer to the specific point raised by my noble friend Lord Northbrook, on the reduction of capital allowances, I can assure and reassure my noble friend that even allowing for reduction of capital allowances and the decrease in annual investment allowances, the next take from corporation tax will be reduced by £1.3 billion per year by the end of the forecast period.
It is right, as set out in the coalition agreement, that capital gains tax should increase in order to help create a fairer tax system. The approach we have taken balances the competing demands of fairness, simplicity and competitiveness and the increase in the rate of capital gains tax will allow this Government to remove almost a million of the poorest people from income tax.
My noble friend Lord Higgins talked about indexation allowances and taper relief. I should point out that indexation allowance for CGT has a substantial Exchequer cost. It cost £1.4 billion in 1997-98 and indexation would add significant complexity to the tax system. Therefore, we do not believe that indexation is justified when CGT rates are well below the top marginal income tax rate and at a period with lower inflation than at a time that indexation allowance was originally introduced.
Lord Higgins
On the point about indexation, to say that it would increase complexity when the Explanatory Notes to the clause as it stands run to six pages is perhaps a little strange. May I pursue with my noble friend the broader point that I raised: is it not important to have a monetary policy that is compatible with the cuts being made? Also, in that context, why does he think that quantitative easing appears not to have had a significant effect on the money supply?
Lord Sassoon
My Lords, I am not going to answer for judgments that are fundamentally for the Bank of England. It has a very clear monetary policy mandate, which is around keeping inflation low, and through the combination of monetary policy and confidence in the new Government’s fiscal stance we have seen that UK government borrowing rates have indeed remained low, and that the spread against the benchmark of the German Bund has indeed worked in the UK’s favour since the election. That goes to the heart of the nexus between monetary policy, low interest rates and keeping the flow of credit going to businesses and private individuals. I want to move on—
Lord Myners
The Minister spoke on the subject of capital gains tax. Can he confirm whether he stands by his statement, in introducing this debate, that the capital gains tax rate for those on standard-rate income tax will remain at a lower rate of 18 per cent and that a standard-rate taxpayer will not be required to pay a higher rate of capital gains tax?
Baroness Anelay of St Johns
My Lords, I appreciate the nature of the intervention by the noble Lord, Lord Myners, and the Minister has been generous in giving way. The House will understand that the guidance in the Companion is that speeches are normally not expected to exceed 20 minutes. I also understand that this is an unusual debate, because this House has a great interest in but is not permitted to return to this matter at a future stage. I therefore took, perhaps, a sole decision that matters ought to be allowed to continue so that noble Lords could intervene upon my noble friend. I should perhaps indicate that the patience of the House may soon be extinguished and I therefore advise my noble friend that although he may of course respond as he may feel appropriate to the intervention by the noble Lord, Lord Myners, he should then draw his remarks to a close.
Lord Sassoon
My Lords, I confirm to the noble Lord, Lord Myners, that the proposals are indeed for an 18 per cent capital gains tax rate and for 28 per cent on those who are on the higher bands for income tax. We have no other proposals. I shall respond briefly to the point made by the noble Lord, Lord Desai, about unearned income needing, in his view, to be taxed at rates as high as earned income. Taxing unearned income at lower rates maintains incentives to save and invest, and it is critical that we continue to think about and promote savings and investment in this country. Lower rates for unearned income allow for the fact that income has already been taxed before it is saved. Higher tax rates on savings would lead to high levels of double taxation, which would not be conducive to increasing savings and investment.
One or two comments have been made today about pensions, because the Bill will provide the first step in freeing employers from the complicated and poorly targeted pensions legislation that the previous Government introduced. We will use this power, which expires on 31 December this year, only if a sensible alternative system can be found that provides the same necessary revenue. We will also be clear about the impacts of this alternative, so I am glad that my noble friend Lord Blackwell recognises the benefit of what we are doing. I will certainly make sure that the ideas which he puts forward are fed into our consultation on this issue.
On annuities, the Government, as I have said, will remove the requirement to purchase annuities at 75. In answer, I think, to the point that my noble friend Lord Higgins was making, this Bill brings in transitional provisions that prevent anyone turning 75 on or after Budget day from being disadvantaged by having to make a decision before the new rules are in place. We are consulting on the mechanics of the new system now, and in that context I will make sure that we look at my noble friend’s previous amendments on this subject.
Lastly, I want to do justice to the points that have been made in the debate. If noble Lords will permit me, I will say a couple of words on points that have been raised on the general structure of the tax system. This topic was first brought up by the noble Lord, Lord Stern. The noble Lord, Lord Desai, also made some comments, as did my noble friends Lord Northbrook and Lord Bates. As set out in the coalition’s programme for government, the tax system does indeed need to be reformed to make it more competitive, to make it simpler, to make it greener and to make it fairer.
In addition to structural reform, at the Budget the Government committed to reforming the way in which tax policy is made to restore the UK tax system’s reputation for predictability, stability and simplicity. The Government will consider the conclusions of the Mirrlees review when they are published later this year and, as announced at Budget, the Government are considering improvements to specific green taxes, including changes to the climate change levy and to the aviation tax system. I do not know whether I will be able to get access—I rather doubt it under the arrangements that apply—to the 2004 paper of the noble Lord, Lord Stern, but I hope if he can remember some of the critical ideas in it that he may drop me a line. I remind him and my noble friends Lord Northbrook and Lord Bates that the Office of Tax Simplification has now launched, and it will address the critical issues to which they properly draw attention.
Before we conclude, I will explain briefly how the Government will ensure greater scrutiny of the next two Finance Bills. Given this unusual year, the Government will publish a further Finance Bill in the autumn. I cannot promise my noble friend Lord Bates that it will be as short as this one but it will introduce those measures inherited from the previous Government. For the first time, draft legislation and Explanatory Notes are available on the Treasury website.
To conclude, this Bill sets out our priorities, our vision and a credible path to a sustainable recovery. We are encouraging enterprise and protecting those most in need, yet tackling the stratospheric debt left to us and this country. This Government are taking action where others have not.
Bill read a second time. Committee negatived. Standing Order 47 having been dispensed with, the Bill was read a third time and passed.