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Oral Answers to Questions
(14 years ago)
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Mr Bob Ainsworth (Coventry North East) (Lab)
1. If she will discuss with West Midlands police the likely effects on police numbers in the west midlands of the outcome of the comprehensive spending review.
The Secretary of State for the Home Department (Mrs Theresa May)
The Government’s first duty is to protect the public. The events of the last few days have been a stark reminder of the harm our enemies wish to inflict on us. I will make a statement later this afternoon on the airline terror plot, following the Prime Minister’s statement on the European Council.
To respond to the right hon. Gentleman’s question, I spoke to Chris Sims, the chief constable of West Midlands police, just under a fortnight ago. He reassured me, as he has also done publicly, that he remains absolutely confident that West Midlands police will continue to protect and serve people in the west midlands in the way they expect. I will continue to hold discussions with police forces.
Mr Ainsworth
Of course they will try, but West Midlands police is planning to shed 400 police officers and support staff, and that is just in year one. Why is low-crime Surrey getting a far lower rate of cuts than the west midlands? I thought we were all in this together.
Mrs May
May I first thank the right hon. Gentleman for advance notice of his question, which he tweeted about half an hour ago?
The effectiveness of a police force does not depend primarily on the numbers of staff. What matters is how effectively they are deployed, whether they are visible and available doing the job the public want them to do, and whether they have been freed from unnecessary paperwork and bureaucracy. We will be doing that, and the steps we are already taking to do away with the stop-and-account form and to reduce the amount of information recorded for stop and search will save 800,000 man hours a year.
Ed Balls (Morley and Outwood) (Lab/Co-op)
We will hear more from the Home Secretary later this afternoon about the security threat to our country, but I am sure the whole House will want to join me in commending her on the very calm way in which she has handled events over the past few days. I also want to thank her for welcoming me to my shadow role and offering me a detailed security briefing.
On the spending review and its impact on police numbers in the west midlands, at the weekend the Home Secretary said that in the spending review it is important that the Home Office takes its share, and policing is taking its share in that, but given that the NHS budget is rising by 0.4% in real terms over four years and the Defence and Education budgets are falling by 7.5% and 11%, does the Home Secretary really think a real-terms cut in the Home Office budget of 25% and a 20% real-terms cut in the central resource budget for policing constitutes a fair share?
Mrs May
May I first welcome the right hon. Gentleman to his post as shadow Home Secretary? I was pleased to be able to welcome him to his new position with a telephone call and, indeed, to be able to update him over the weekend on the recent events that have taken place—they will be discussed in more detail later this afternoon, of course.
I simply say to the right hon. Gentleman that, yes, it is important for the Home Office to be willing to look at playing its part in dealing with the biggest deficit of any G20 nation, a deficit that was left as a legacy to this country by his Labour Government.
Ed Balls
Police leaders in the west midlands and across the country will have to decide for themselves whether that was an adequate answer. In the last week, the accountancy firm KPMG has estimated that 18,000 police officers will lose their jobs, and the Police Federation says 20,000, which would mean that 1,200 officers would be lost in the west midlands alone in the next four years. Given the impact these cuts will have in the west midlands and across the country, does the Home Secretary agree with these estimates of deep cuts to front-line policing, or does she think that KPMG and the Police Federation have got their sums wrong?
Mrs May
I repeat to the right hon. Gentleman what I said to the right hon. Member for Coventry North East (Mr Ainsworth): the issue of policing and the effectiveness of policing is not just about numbers, which is what he and his colleagues seem to think; it is about how we deploy police staff and the job they are doing out on the streets. I have more confidence in the ability of our chief constables up and down the country, chief constables like Jon Stoddart in Durham, who says that
“our commitment to neighbourhood policing is undiminished”
and the deputy chief constable in Essex who said:
“We are…working on a…new Blueprint for policing…taking the opportunity fundamentally to re-design all aspects of how we deliver our services.”
We are clear that savings can be made without affecting front-line policing. We are doing our bit as a Government in reducing the heavy load of bureaucracy introduced by the right hon. Gentleman’s Government, which will result in police being out on the streets.
Mr Mark Spencer (Sherwood) (Con)
2. What recent progress she has made on reform of the immigration system.
Mr David Evennett (Bexleyheath and Crayford) (Con)
10. What recent progress she has made on reform of the immigration system.
Bob Blackman (Harrow East) (Con)
12. What recent progress she has made on reform of the immigration system.
Dr Phillip Lee (Bracknell) (Con)
17. What recent progress she has made on reform of the immigration system.
The Minister for Immigration (Damian Green)
In just six months, the coalition Government have made significant progress in the reform of the immigration system. We have introduced an interim limit on non-EU economic migrants and consulted on proposals for the annual limit. We are also reviewing student and family routes. We have made significant progress towards ending the detention of children and we have also begun exploring improvements to the asylum system.
Mr Spencer
The Minister will be aware that companies such as Rolls-Royce, in my constituency, require highly skilled staff from outside the EU. What can be done to ensure that those companies have access to those highly skilled staff while also ensuring that the immigrants coming in have the right skills?
Damian Green
My hon. Friend makes an extremely good point, because this is what we are seeking to achieve under our annual limit: we want to ensure not only that the skills that may not be available at the moment in this country are made available, but that jobs are also available for British workers. I commend to him the research published by the Home Office last week showing that 29% of those who came in under the tier 1 route—the route meant for the most highly skilled: the people who are so highly skilled that they do not even need a job offer—were employed in low-skilled roles. That tells me that the points-based system has not been working as well as it should have been.
Mr Evennett
I welcome my hon. Friend’s actions to date on this matter, but in order to bring net migration down to a sustainable level a robust limit on non-EU economic migration is vital. Will he update us on what progress he has made on dealing with other routes into the UK, for example, bogus colleges and illegal transportation?
Damian Green
I agree with my hon. Friend that it is not just the economic routes we are looking at—as I have said, we are examining other routes. We are, of course, committed to attracting the brightest and best students to the UK, and we welcome legitimate students coming here to study legitimate courses, but there has been and still is significant abuse of the student route. Part of our summer crackdown on illegal immigration has been aimed at bogus colleges. We have suspended the licences of another five bogus colleges in the past three months, and I am happy to assure him and the House that we will continue to crack down as hard as possible on those using the student route to promote illegal immigration.
Bob Blackman
My hon. Friend has referred to the previous Government’s policy of relying on a points-based system for controlling immigration. Can he elucidate on the figures he cited on the success of tier 1 migrants—by definition, the brightest and best—in obtaining highly skilled jobs?
Damian Green
The detail of the tier 1 research is fascinating because, as I say, it showed that nearly a third of the people who came in under that route were doing essential but low-skilled jobs—they were shop assistants, they were working in fast food outlets, and so on. Those are all jobs that need to be done, but upwards of 2 million people are unemployed in this country and they will find it very strange that those jobs, in particular, are being done by people who have come to this country under a route that is supposed to be specifically designed for the most highly skilled. That situation seems to be unfair to many of our British workers.
Damian Green
Some Labour Members seem not to think this an important issue, but it is an extremely important issue. Part of our summer crackdown has been precisely aimed at sham marriages, and that campaign has produced more than 800 arrests. Perhaps most vividly, and extremely regrettably, a Church of England vicar has been convicted of facilitating sham marriages. We are working very hard with the Church authorities to make sure that nothing like this happens in future and that we help vicars, those in register offices and all such people to make sure that they are not accidentally involved in any more of this type of criminality.
Keith Vaz (Leicester East) (Lab)
One area that might well need reform is the humane removal of failed asylum seekers, following the death only 20 days ago of Jimmy Mubenga. Will the Minister confirm newspaper reports that the contract for escort services provided by G4S has now been terminated? What immediate steps, pending the outcome of the police investigation and the other investigations, is he taking to ensure that that kind of tragic event never happens again?
Damian Green
The right hon. Gentleman will know, of course, that while a police investigation is going on it would be completely improper of me to give any details about that investigation. I can confirm that the contract for the removals has been given to Reliance, but I should say at this point—to clear up any possible misunderstanding—that the tendering for the new contract took place under the previous Government, last September, and the decision was taken in August. The change in the contract away from G4S has nothing to do with any recent events.
Fiona Mactaggart (Slough) (Lab)
One of the changes that the hon. Gentleman has made to the immigration service system is to bring forward pre-entry English language testing for spouses overseas. What assessment has he made of the availability and quality of English language teaching in places such as Pakistan and India, where many of these spouses come from?
Damian Green
The hon. Lady mentions two particularly entrepreneurial societies where, if there is a need for businesses, businesses will spring up. I remind her that the desire to introduce English language tests in that sphere was promoted by a Government of which she was a member. We have brought it forward to this November because, as I am sure she agrees, it is a significant way of ensuring that everybody who comes to this country can be fully integrated into the life of this country. That seems to me to be an extremely important goal for the long-term health of our society.
Pete Wishart (Perth and North Perthshire) (SNP)
Does the Minister appreciate and understand that the different nations of the UK have different immigration requirements that require different solutions? Will he therefore start to explain how his immigration cap will help the nations of Scotland and Wales?
Damian Green
The immigration cap will help all parts of the United Kingdom by ensuring that we bring in the skills of those we need while not having the scale of immigration that we have had over the past 10 years, which has proved simply unsustainable. I am sure that the hon. Gentleman would agree that we could not carry on as we had done over the past decade. Over that decade, more than 2 million people net arrived in this country, putting pressure on public services. That is why we need an immigration limit, and it will be for the benefit of every one of the nations of the United Kingdom.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
On the subject of reforms to the immigration system and the particular point of deportation, the death of Jimmy Mubenga a few weeks ago was the first time that an escorted individual has died during deportation. My right hon. Friend the Member for Morley and Outwood (Ed Balls) has twice requested a briefing from the Home Secretary regarding the circumstances of that case, and both requests have been refused. Will the Minister now make a statement to the House, updating Members on the progress of any internal investigation into Mr Mubenga’s death and the use of restraint during enforced deportation more generally? In particular, will he state whether the use of restraint on children during deportation is also being reviewed?
Mr Speaker
Order. In less than a minute, if the Minister is going to do it now.
Damian Green
I welcome the hon. Lady to the Front Bench and congratulate her on her very rapid promotion. May I repeat what I said to the right hon. Member for Leicester East (Keith Vaz)? There is a police investigation going on at the moment. It would clearly be inappropriate for me or my right hon. Friend the Home Secretary to give any details about this case while the police investigation is going on. I am surprised that the shadow Home Secretary asked the hon. Lady to do that while a police investigation was going on.
Esther McVey (Wirral West) (Con)
3. What assessment she has made of the likely effect on the administrative burden on police forces of the establishment of the proposed national crime agency.
Mr David Ruffley (Bury St Edmunds) (Con)
14. What assessment she has made of the likely effect on the administrative burden on police forces of the establishment of the proposed national crime agency.
The Secretary of State for the Home Department (Mrs Theresa May)
We believe there is a real need to bring a greater focus to the issue of organised crime and other national aspects of policing. The national crime agency will strengthen the operational response to organised crime and better secure our borders. The NCA will contribute to our aim of rationalising the national policing landscape, thereby driving out waste and increasing productivity.
Esther McVey
Will my right hon. Friend assure the House that the new joined-up approach of the national crime agency, which will also incorporate functions from the National Policing Improvement Agency, will not only provide efficiency savings but will give equal attention to the individual regions, mine being the north-west?
Mrs May
I thank my hon. Friend for her question. I assure her that in setting up the national crime agency we are considering efficiency, and efficiency savings. We will be changing the national policing landscape and it is important to put greater emphasis on serious organised crime. Organised crime is calculated to cost this country and society £20 billion to £40 billion a year and it is right that we should do something to enhance our fight against it.
Mr Ruffley
Police forces have to comply with 162 separate protective services standards involving answering 1,099 separate questions. The fact that there is too much process and paperwork prevents the police from catching criminals, so will my right hon. Friend publish an annual statement to the House telling us what she has cut and how much police time she has saved?
Mrs May
I am grateful to my hon. Friend for that proposal. I suspect that is exactly the sort of thing that the Policing Minister will be happy to keep the House informed about. As I said earlier, a very good example of the impact of that bureaucracy is the fact that it is reckoned that what we are doing to stop the stop-and-account records and to change the stop-and-search records will save up to 800,000 man hours a year.
Ann Coffey (Stockport) (Lab)
The Missing Persons Bureau is the only UK agency focused exclusively on missing people and is the UK’s national and international point of contact for all missing person and unidentified body cases. What assurances can the Secretary of State give me that the valuable work it does will be recognised when the proposed national crime agency is set up?
Mrs May
The hon. Lady asks a very important question: the work of the bureau is of considerable significance. Work relating to young people has already moved to the Child Exploitation and Online Protection Centre and we are considering where it is most appropriate that the bureau’s work relating to adults should sit in the new policing landscape.
Diana Johnson (Kingston upon Hull North) (Lab)
Given the concerns that have been expressed by Sara Payne and the National Society for the Prevention of Cruelty to Children as well as the evidence given by Jim Gamble to the Select Committee on Home Affairs on 12 October, will the Secretary of State tell the House what evidence base informed the decision to submerge the Child Exploitation and Online Protection Centre within the proposed national crime agency, especially given that previous independent reviews had supported CEOP remaining separate?
Mrs May
I welcome the hon. Lady to her position on the Opposition Front Bench. We have considered closely the CEOP issue, but there seems to be a misconception out there that it currently has independent status. It does not: it is part of the Serious Organised Crime Agency. The proposals that we put in the White Paper, which will be coming forward in the Bill with our final decisions, relate to its becoming part of the national crime agency and being able to benefit from the synergies of being part of that agency.
Mr David Hanson (Delyn) (Lab)
4. What estimate she has made of the likely effect of the outcome of the comprehensive spending review on the number of police officers in England and Wales in the period to 2014.
Chris Evans (Islwyn) (Lab/Co-op)
9. How many police officers she expects there to be at the end of the current spending review period.
The Minister for Policing and Criminal Justice (Nick Herbert)
The number of police officers is not set by central Government, but we believe that forces can make savings to ensure that visible and available policing is secured for the public.
Mr Hanson
The Minister will be aware, because it has been mentioned already, that the poorest areas of England and Wales will bear disproportionately the brunt of any reductions in central Government funding, because the Home Office provides the bulk of resources to those areas in particular. That will mean fewer officers on the street and inexorable rises in crime. Is that fair?
Nick Herbert
I do not accept any of what the right hon. Gentleman has said. We believe that police forces can make significant savings in line with the report of Her Majesty’s inspectorate of constabulary, which said that they could save more than £1 billion a year without impacting on the front line. The settlement that we have announced will enable them to protect the visible and available policing that is so important to the public.
Chris Evans
Fears over the cut in the number of police mean that there are real concerns that small forces such as Gwent police could disappear in forced mergers. Given the serious impact that that would have on the quality of front-line policing in Islwyn, can the Minister give an assurance that it will not happen?
Nick Herbert
I remind the hon. Gentleman that the previous Government proposed compulsory forced mergers. We do not intend to go down that route. Where forces wish to merge, if there is a sound business case and the merger has the consent of local people, we will not stand in the way. We believe that forces can make significant savings by sharing services and collaborating, without having to merge.
Tom Brake (Carshalton and Wallington) (LD)
How can the cost of elected police commissioners be minimised so that it reduces the impact on police officer numbers?
Nick Herbert
We do not wish elected police commissioners to cost any more than police authorities currently do. The exception is that there will be the cost of the elections, which will be once every four years. That will be met by separate funding. It will not come out of the police budget.
Mr Philip Hollobone (Kettering) (Con)
Given that 10% of criminals cause 50% of the crime, does my right hon. Friend agree that one of the best ways to maximise the effective use of police time would be to ensure that our colleagues in the Ministry of Justice ensure that persistent and prolific offenders, when apprehended, serve their time in jail in full?
Nick Herbert
I was talking about that this morning to senior police officers responsible for criminal justice policy. Our concern is to ensure that rising rates of reoffending are reversed. That means ensuring that sentences are effective, and that we focus on the rehabilitation that is necessary to ensure that prisons fulfil their purpose and criminals go straight.
Vernon Coaker (Gedling) (Lab)
It is interesting that the Home Secretary chose not to answer the question on the spending review and the impact on police numbers, but we have heard from both the Home Secretary and the policing Minister that thousands of police jobs are to be lost. The idea that that will not impact on front-line policing is one for the fairies. Can the Minister explain why the 20% cut announced in direct Government funding for police forces is front-loaded? In other words, of that 20%, why are the deepest, most far-reaching cuts in the first two years—next year 6%, in 2012-13 8%, then 4% and 4%? Why is the deepest, most far-reaching cut, 8%, in the year when the country is facing one of it greatest security challenges, the Olympics?
Nick Herbert
I welcome the hon. Gentleman to his position.
Olympic security funding is being prioritised in Home Office budgets, and counter-terrorist policing was subject to a much lower cut than the 20% cut for policing. We intend to ensure that priority continues to be given to counter-terrorist policing. We believe that significant savings can be made. Her Majesty’s inspectorate of constabulary found that only 11% of force strength, on average, was visible and available at any one time, because officers are spending too much time tied up in the red tape that the hon. Gentleman created when he was a Minister.
Anne Marie Morris (Newton Abbot) (Con)
What steps has my right hon. Friend taken to ensure that when the cuts come, they will impact on the back office rather than the front office? I have a particular concern in a rural constituency where front office is fairly thinly spread.
Nick Herbert
Chief constables agree with us that the front line should be the last thing that is cut, and under the spending settlement that we have announced, there is no need for the front line to be cut. They can make savings through better collaboration and efficiencies. That is what the inspectorate says. They can also make savings in relation to procurement, amounting to hundreds of millions of pounds. As a consequence, we think that the visible and available policing that the public value can be retained.
Sir Peter Soulsby (Leicester South) (Lab)
5. What estimate she has made of the likely effect on the number of police community support officers in post of implementation of the outcomes of the comprehensive spending review; and if she will make a statement.
Mr Kevan Jones (North Durham) (Lab)
13. What estimate she has made of the likely effect on the number of police community support officers in post of implementation of the outcomes of the comprehensive spending review; and if she will make a statement.
The Minister for Policing and Criminal Justice (Nick Herbert)
PCSOs are an important part of the policing family, providing a visible, uniformed presence on our streets. It is for police forces and authorities to determine how they deploy their personnel, but we are clear that forces should be focusing on finding efficiencies in back-office and support functions to protect front-line policing.
Sir Peter Soulsby
In recent years community support officers have become a vital part of the policing team, particularly in the delivery of crime prevention and genuine community policing. There can be nothing more front-line than that. It is inconceivable that the Department has not made an estimate of the number of these posts that will be lost. The House deserves to know what that number is, and the public deserve to know how this vital service will be cut.
Nick Herbert
We do not set the number of PCSOs; that is a decision for chief constables. When I speak to chief constables throughout the country, I, like the hon. Gentleman, find that they value police community support officers, and there is an overwhelming desire on the part of chief constables to protect PCSO numbers, in so far as is possible, as an important part of the delivery of neighbourhood policing. I share that view with the hon. Gentleman.
Mr Jones
On Friday last week, Durham MPs met the deputy chief constable of Durham, who said that the constabulary was just about to announce 190 compulsory redundancies. When asked whether that would include community support officers, he said it could not give a guarantee, because the decision was dependent on whether its central Government grant was going to be protected. Can the Minister guarantee Durham that its money from central Government for PCSOs will be protected?
Nick Herbert
We will announce the specific allocations for forces and the future of particular grants later on this year, but on 20 October the chief constable of Durham said:
“It will be business as usual as far as local communities—and local criminals—are concerned… our commitment to neighbourhood policing is undiminished.”
Mrs Helen Grant (Maidstone and The Weald) (Con)
Does the Minister agree that good policing is about tangible results, and not fixated on cuts?
Nick Herbert
The previous Government would not give any guarantee on police officer numbers. Indeed, in many forces police officer numbers were already falling when this Government came to power. The test is about what those police officers are doing, and whether they are visible and available to the public. We will accept no lectures from the Opposition, who have put this country in the position of having to cut police officer funding. [Interruption.]
Mr Speaker
Order. I am not quite sure what Members had for either breakfast or lunch, but I think I had better steer clear of both.
Mr Robert Buckland (South Swindon) (Con)
6. When she plans to publish her proposals to amend the Licensing Act 2003.
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
The proposals for amendments to the 2003 Act will be included in the police reform and social responsibility Bill, which will be introduced later in the year.
Mr Buckland
Local residents and businesses in my constituency feel effectively gagged and excluded from the current licensing application process. What plans do the Government have to improve the fairness of the system?
James Brokenshire
I am very grateful to my hon. Friend for making that point, because the consultation that the Government embarked on in relation to reforms to the Licensing Act was precisely on that issue—about rebalancing the Act in favour of local communities. He makes his point very well, and we will bring forward proposals in due course.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
Those of us who argued against the 2003 Act did so on the basis that 24-hour drinking would not introduce a café society to the UK where youngsters sipped wine into the early hours discussing Baudelaire, and the only thing that the Act has done is to move yobbishness, drunkenness and violence from late nights to early mornings.
James Brokenshire
The hon. Gentleman makes a very important point, and it will be interesting to hear whether the former licensing Minister, the hon. Member for Bradford South (Mr Sutcliffe), who is now on the shadow Front Bench, will be able to explain why that café culture, which was supposed to be created as a result of the previous Government’s reforms, has perhaps not arisen. In reality, we have seen an increase of about 65% in the number of hospital admissions linked to alcohol over the five years to 2008-09, and that is why we think that reforms are required.
Dr Julian Huppert (Cambridge) (LD)
In the Minister’s work on the Licensing Act, will he ensure that he looks carefully at the licensing of one-off and annual events, such as Strawberry Fair in my constituency, so that delays in determination, because of late interventions, for example, do not mean that the events have to be cancelled regardless of what is decided?
James Brokenshire
I am not familiar with the detail of the individual event to which the hon. Gentleman refers, but we are looking at temporary event notices and how community events are licensed, and if issues continue to prevail in relation to that situation no doubt he will write to me.
Mr David Crausby (Bolton North East) (Lab)
7. How many police officers there were in England and Wales in March (a) 2010 and (b) 1997.
The Minister for Policing and Criminal Justice (Nick Herbert)
On 31 March 2010 there were 142,132 police officers, compared with 125,825 on 31 March 1997.
Mr Crausby
I thank the Minister for that reply. Does he believe that the previous Labour Government spent too much on police officers and too little on the European Union budget?
Nick Herbert
I will not be drawn on the European budget, but I can tell the hon. Gentleman what the previous Government spent too much on—red tape that tied up police officers and wasted police time. When we had a position whereby police officers were spending more time on paperwork than on patrol, we knew that something had gone wrong: it was costly and it reduced police availability.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Can the Minister tell us how we got to the sorry state in which warranted police officers are inside the building doing the police work and non-warranted officers—community support officers—are on the streets without the power of arrest?
Nick Herbert
We believe that police community support officers do an important job out in communities, and the fact that they do not have the power to arrest prevents them from being abstracted and builds confidence in neighbourhoods. However, we are determined to release police officers from the red tape that can keep them in police stations—for instance, by fully scrapping the stop form and reducing the burden of stop-and-search reporting, which will save 450,000 and 350,000 hours of police time respectively.
David Wright (Telford) (Lab)
West Mercia police authority tells me that it wants to protect record police numbers in Telford, and that one of the ways of reducing the administrative burden is to scrap the crazy, politicised idea of having elected police commissioners. Will the Minister save the money that he is going to spend, even if the budget is ring-fenced, and reallocate it to police forces for front-line policing?
Nick Herbert
May I remind the hon. Gentleman that the policy of increasing the direct accountability of police authorities was proposed twice by the previous Government, who backed down from that proposal in the face of opposition? We are determined to see it through, because we want to exchange bureaucratic accountability for democratic accountability and help to get police officers where they are needed—on the streets.
Jo Swinson (East Dunbartonshire) (LD)
8. What representations she has received from scientific organisations on the likely effects on the UK’s science base of proposed changes to the immigration rules.
The Secretary of State for the Home Department (Mrs Theresa May)
Our recent consultation on the immigration system fully involved scientific organisations, which have underlined the importance of being able to recruit the best scientists from around the world. I am aware of the case of the Beatson institute in my hon. Friend’s constituency, and I can assure her that the UK Border Agency is looking closely at this and related cases.
Jo Swinson
I thank the Home Secretary for that reply. She refers to the Beatson institute, which is a world-class cancer research facility that needs to attract the very best scientists in their field, regardless of their nationality. Previously it required about five tier 2 visas every year; that has been cut to just one under the new regime, so I welcome the fact that the issue will be looked at. Does she recognise the damage that could be caused to the Beatson, and to other scientific institutions, as a result of the unintended consequences of the immigration cap, and will she look again at whether an exemption could be made for science and research?
Mrs May
I am grateful to my hon. Friend for recognising that the UK Border Agency will look at the very real case that has been presented by the Beatson institute in relation to its particular requirements. We have a commitment, as a coalition Government, to reduce net migration into this country. I believe that it is important that we do that, but do it a way that will ensure that we can truly attract the brightest and the best into this country to do the valuable work that they do in places such as the Beatson institute.
Andrew Miller (Ellesmere Port and Neston) (Lab)
I presume that there must have been some joined-up thinking in the Government on this matter. Will the Home Secretary therefore publish the cross-departmental analysis that brings together the impact on our science base and competitiveness of Lord Browne’s report, the comprehensive spending review, cuts in departmental science, and the immigration cap?
Mrs May
As the hon. Gentleman has an interest in these matters, he will be aware that the Department for Business, Innovation and Skills has made efforts to protect the spending in relation to research on science. In looking at how we introduce our immigration cap, we will be making efforts to ensure that institutes and universities that require access to truly the brightest and the best are able to have it.
Stephen Mosley (City of Chester) (Con)
11. How many immigrants entered the UK in the most recent period for which figures are available.
The Minister for Immigration (Damian Green)
A total of 528,000 long-term migrants entered the UK in 2009, according to the most recent figures from the international passenger survey. Of these, 437,000 were non-UK nationals. IPS figures do not include asylum seekers, those who have arrived from Northern Ireland, and those who change their original intentions and therefore alter their length of stay. Final detailed figures for 2009 will be published on 25 November.
Stephen Mosley
I understand that my hon. Friend has recently been to Heathrow to see our front-line border controls in action. Will he give the House his assessment of the quality of our current systems to detect illegal entry into the UK at the first port of call?
Damian Green
We do have a comprehensive border protection framework, provided not just by the UK Border Agency but by the police and other agencies. The whole House will recognise that there will be an increase in passenger journeys and freight volume, and in the use of ever more sophisticated technologies by those who have malicious intent of either illegal immigration or, even worse, terrorism. That is one reason why we are setting up a new border police command within the new national crime agency, which will enhance our existing capacity to protect our borders.
Mr Phil Woolas (Oldham East and Saddleworth) (Lab)
I thank the Minister for that straightforward answer. On 27 February, he told the House in relation to border control that we would become increasingly dependent on technology. In table A.6 in the spending review document, we see that there is to be a 49% reduction in capital investment in the Home Office’s budget. Is he confident that he has the resources to provide the kit needed to protect our borders at airports and ports from illegal immigration and, given the events of the past few days, from potentially dangerous weapons and other attacks?
Damian Green
I congratulate the hon. Gentleman on being appointed to my old job by the Leader of the Opposition. I did it for four and a half years and I can say with complete sincerity that I hope he does it for even longer.
Yes is the answer to the very serious question that the hon. Gentleman asks. He has been intimately involved in this subject for some years, so he will be pleased to know that the e-Borders system will continue, I hope in an improved way, under our new arrangements, and that other areas of capital spending such as the integrated casework project will also continue so that we use technology and the experience of our border officers to keep our borders safe.
Jessica Morden (Newport East) (Lab)
15. What consultation her Department has undertaken on the future of the Newport Passport Office.
The Minister for Immigration (Damian Green)
On 19 October, the Identity and Passport Service began a formal 90-day consultation period with the trade unions on the future of the passport application processing centre at Newport. In addition, as the hon. Lady knows, I have had meetings with her and the hon. Member for Newport West (Paul Flynn), the leader of Newport city council and the Secretary of State for Wales.
Jessica Morden
Will the Minister reassure me that the consultation on the future of Newport passport office is truly a consultation, in that he is genuinely listening to the concerns of people in Wales, including the 17,000 who have now signed the South Wales Argus petition on the future of the office and its staff?
Damian Green
I am happy to give the hon. Lady that assurance. She has quite rightly made her position perfectly clear in defending her constituents’ jobs, and I would expect no less of her. I hope that she can help me correct the misunderstanding that has been put about that Wales is losing its passport office. It simply is not. The passport office delivering passports to people in Wales will remain in Newport.
Paul Flynn (Newport West) (Lab)
Was the Minister impressed yesterday when the Conservative Assembly Member Darren Millar said on television that the Welsh Conservatives in the National Assembly were united in their opposition to the closure of the Newport passport office and the Government’s proposal? Will he provide an assurance that he will re-examine the matter, to ensure that cuts are made evenly across the United Kingdom and not concentrated in Newport?
Damian Green
As I just said to the hon. Member for Newport East (Jessica Morden), anticipating the hon. Gentleman’s question, the passport office in Newport is not being closed. It is a simple untruth to say that it is. The passport office will remain open. Some 47,000 people a year use it, and they are very important to the economy of Newport. I have been told that in no uncertain terms by the Secretary of State for Wales. I am pleased that we are able to keep that passport office open, not just for those who will continue to work there but for the economy of Newport city centre.
Greg Mulholland (Leeds North West) (LD)
16. What recent representations she has received on the regulation of private companies contracted to provide deportation services; and if she will make a statement.
The Minister for Immigration (Damian Green)
All detention and escorting services provided by private sector companies are subject to internal and external oversight. Contracted staff are vetted carefully by the Home Office as part of their accreditation to work as detention custody officers or escorts, and services are monitored by UK Border Agency officials and the independent monitoring board and through announced and unannounced inspections by Her Majesty’s inspectorate of prisons.
Greg Mulholland
I thank my hon. Friend for that answer. Of course, it is part of a functioning immigration system sometimes to remove foreign nationals who no longer have a right to stay. Nevertheless, that has to be done in a regularised and humane way. What plans does my hon. Friend have to limit and regulate the use of force as part of the accountability that he rightly talks about?
Damian Green
As I have explained in answer to previous questions, there is already significant regulation. Indeed, as I have just said, there is quite rightly a large number of checks, and the people who escort those who have no right to be in this country and who therefore have to be removed do need to be checked. Baroness O’Loan published a report on the issue in March 2010 and she found no evidence of systemic abuse by UK Border Agency escorts removing individuals from the UK. I am glad that that was true then and I am determined to make sure it continues to be true in the future.
Bob Stewart (Beckenham) (Con)
18. How many immigrants entered the UK in the most recent period for which figures are available.
The Minister for Immigration (Damian Green)
I refer my hon. Friend to the answer I gave some moments ago.
Bob Stewart
One of the main problems facing the immigration system has been the abuse of student visas. What plans have the Government to tackle that?
Damian Green
My hon. Friend points up one of the many problems with the immigration system. I point him particularly to student visas issued at below-degree level. We often think of student visas as being about the brightest and the best from around the world coming to our universities. Everyone in the House will welcome that, and they will want it to continue and our university sector to flourish. The problems have often come at sub-degree level with bogus students who do not have the appropriate qualifications, or with bogus colleges. Both of those routes need to be stamped out, which is why, along with proposing a limit on work routes, we are working hard to bring forward proposals on the student route, precisely to stamp out the abuse that my hon. Friend is rightly worried about.
Jane Ellison (Battersea) (Con)
T1. If she will make a statement on her departmental responsibilities.
The Secretary of State for the Home Department (Mrs Theresa May)
The Home Office continues to prioritise the counter-terrorism elements of policing. The national security strategy and the strategic defence and security review published two weeks ago will deliver a step change in Britain’s ability to protect its security and advance its interests in the world. To meet the real and growing threat identified from cyber-attack, £650 million of new funding has been allocated to a cross-Government programme to enhance Britain’s cyber-security. While I speak about the Department’s responsibilities, I should perhaps explain for the avoidance of doubt that the Under-Secretary of State for the Home Department, my hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone), who has responsibility for equalities and criminal information, has not been able to answer a question today because she has lost her voice.
Jane Ellison
Another real and growing threat for many of us, especially those with urban constituencies, is the use and abuse of dogs as weapons. That is a real problem, which is often associated with gang activity. It is clearly an animal welfare issue, and Battersea dogs and cats home in my constituency has long been a voice on policy on the issue. However, it is also a crime and policing challenge. Will my right hon. Friend update the House on how Home Office Ministers are working with colleagues in the Department for Environment, Food and Rural Affairs following that Department’s recent consultation on dangerous dogs?
Mrs May
I thank my hon. Friend for raising an important issue. It is particularly important for her constituency, for obvious reasons, as she said. The Home Office is reviewing the issue of antisocial behaviour and the tools and powers that need to be made available to deal with it. It is also dealing with Departments across Whitehall, including DEFRA. DEFRA will respond to the previous Government’s consultation on dangerous dogs, looking at issues such as dog licensing and wider issues such as breed-specific bans, once the Home Office has published our proposals on antisocial behaviour.
Mr Speaker
Order. I hope that the Under-Secretary recovers her voice before very long. We wish her better.
Mr David Hanson (Delyn) (Lab)
T4. Does the Home Secretary agree with the views of the Secretary of State for Energy and Climate Change on control orders? Having now had five months in office, does she accept that those of us who exercised such powers on behalf of the Home Office when we were in government did so because we tried to secure the safety of the British people, and we were, indeed, right to do so?
Mrs May
The prime responsibility of any Government is to keep people safe, and we are very conscious of that. The counter-terrorism legislation review is continuing. No final decisions have been taken on any aspects of that review, but, of course, I have undertaken to inform the House when the review is complete and when the answers to the questions that have been posed are available.
Mr Matthew Offord (Hendon) (Con)
T2. Following comments by my local police commander, my constituents in the Barnet neighbourhood watch, ably led by Maureen West, have expressed concerns to me about the ring-fencing rule for safer neighbourhoods teams and the impact of possible further cuts as a result of the Government tackling the economic deficit. What assurance can the Minister give me that the reduction in the police family will not lead to a reduction in the police presence on the streets of my constituency?
The Minister for Policing and Criminal Justice (Nick Herbert)
I can assure my hon. Friend that there is no need for a reduction in neighbourhood policing. Many police forces up and down the country are making a commitment to maintain neighbourhood policing by finding savings in the back office and collaborating, and through better procurement and saving money.
Andrew Gwynne (Denton and Reddish) (Lab)
T5. We all want to see our police officers out on the beat more, but how will cutting police staff who often free up police officers from administrative tasks help with that?
Julian Smith (Skipton and Ripon) (Con)
T3. Can my right hon. Friend reassure us that the new immigration cap will reflect the need for businesses to recruit international, highly skilled migrants and to transfer international employees internally? Will she make that process as easy and unbureaucratic as possible?
Mrs May
I thank my hon. Friend for raising the important issue of the impact of immigration on businesses. As we consider how to introduce the immigration cap, we will take on board comments made by business and its requirements in relation to the operation of the system. However, one thing that we have found recently is that nearly one third of those who arrived via the tier 1 route—the brightest and the best highly skilled migrants—did not take on highly skilled jobs. That is something to which we should pay attention.
Phil Wilson (Sedgefield) (Lab)
T8. The Independent Safeguarding Authority in my constituency employs about 250 people. Can the Home Secretary let me know what their future is? What is the future of the authority under this Government?
Mrs May
The Government have a commitment to ensure that we bring the vetting and barring scheme down to common-sense levels. Many people are concerned that the scheme introduced by the previous Labour Government actually reduced people’s willingness to volunteer and to do good in their communities. We are currently reviewing vetting and barring. The impact on the ISA will come out of that review.
Charlie Elphicke (Dover) (Con)
T6. May I ask about border security? Illegal entry at Dover has fallen 18% in the last year. We will no doubt hear more about the excellent work of those who keep our country safe and secure in the statement on aviation security later, but will the Minister congratulate those who keep our country safe?
The Minister for Immigration (Damian Green)
I am happy to echo my hon. Friend’s congratulations to his constituents at Dover, and indeed to immigration officers at ports, airports and inland ports all around the country. They work tirelessly—day and night—to keep our borders as safe as possible. Like him, I welcome the significant reduction in the amount of illegal immigration through Dover over the past few months.
Mr David Winnick (Walsall North) (Lab)
We all look forward to the review anti-terrorism legislation, but is it not important that murderous fanatics—another indication of what they are like was given last week—and the enemies of all humanity do not force us to give up long-held, traditional liberties in this country? The sort of changes that the Home Secretary mentioned earlier will hopefully come about despite the current terrorist danger.
Mrs May
The coalition Government are very aware of the need to rebalance our national security requirements and our civil liberties. That is precisely why we have undertaken the review of counter-terrorism legislation. As I indicated in a previous answer, the results of that review will be brought to the House when they are available, but I can assure the hon. Gentleman that we are aware that we need to ensure that we keep the country safe so that people can exercise those ancient freedoms and civil liberties.
Laura Sandys (South Thanet) (Con)
T7. Will the Home Secretary join me in welcoming the shadow Home Secretary’s conversion to our policy of putting antisocial behaviour orders behind us? The shadow Home Secretary said:“I want to live in the kind of society that puts Asbos behind us.”
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
I hope that the shadow Home Secretary will remember his original comments, and will therefore accept that the current tools and powers for dealing with antisocial behaviour are overly bureaucratic and do not work effectively. That is why we are currently reviewing them to ensure that all local agencies have a toolkit that provides a strong deterrent, and is quick, practical and easy to use.
Jack Dromey (Birmingham, Erdington) (Lab)
The Home Secretary was reluctant yesterday to confirm the consequences of Government cuts for the police service. Will she give a straight answer to that question today, and confirm that 2,000 jobs will go in the west midlands police service, including those of 400 police officers in Birmingham—40 for each of Birmingham’s 10 constituencies —and does she share my constituents’ fears that, as police numbers fall, crime will go up?
Mrs May
The fight against crime is not simply a matter of the number of police officers, but about how effectively they are deployed and what they are doing. What the Government are doing by releasing police officers from the bureaucracy imposed by the last Labour Government will make them freer and more available to be out there on the streets doing the job the public want them to do.
John Glen (Salisbury) (Con)
T9. In 2004, my constituent Stephen Ings’s son and ex-wife were murdered by an illegal immigrant, Alex George. Will the Minister meet me and my constituent to explain the decision to offer a deferred conditional discharge to Mr George while his appeal against deportation is heard?
Damian Green
I and my ministerial colleagues are aware of the correspondence between my hon. Friend and the UK Border Agency about this case. I understand perfectly—as the whole House will—how distressing and awful the case must be for his constituent, and of course I will happily meet him, and his constituent and his family to discuss the matter further.
Mrs Mary Glindon (North Tyneside) (Lab)
Will the Home Secretary join me in wishing Northumbria police warm congratulations on the opening of the new area command at the north Tyneside headquarters, especially given that it was built with money from the Labour Government?
Mrs May
I rather hope I might at some stage be given an invitation to visit the new area command. May I say, however, given that Northumbria has been mentioned, that I was pleased to speak to Sue Sim recently, following the difficult time that Northumbria police had earlier this year in dealing with the case of Raoul Moat, to congratulate her on how she and her force dealt with that case?
Lorely Burt (Solihull) (LD)
Many international companies contemplating investment in the UK are being put off by the fact that inter-company transfers are defined as coming under the immigration cap. Inter-company transfers mean more jobs for British workers, and they do not stay in the United Kingdom. Will Ministers look at the rules placing inter-company transfers under the immigration cap, otherwise we run the risk of saying, “Yes, we are open for business, but you cannot come in”?
Damian Green
I am happy to assure my hon. Friend and the companies in her constituency that, under the interim cap operating now, inter-company transfers are not covered—they are outside the cap—so there is no reason for any business to be worried about that now. Obviously, for the permanent cap that will come in from next April, we are considering the best way to enable businesses to operate successfully in the future.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op)
Will the Minister accept that there is deep unease within the IT industry about the possibility that the focus on numbers will reduce the flexibility of companies to bring people in and out of the country to meet the needs of what is an extremely flexible and internationally important industry?
Damian Green
I completely agree with the right hon. Gentleman. It is an important international industry. I hope, however, that he will recognise two countervailing pressures here. There is the pressure from international business, which wants to move people around, but there is also a lot of perfectly reasonable pressure from trained British IT workers, who have done everything that society has asked of them—got the right sort of degree, gone into the right sort of business—but are finding it increasingly difficult to find jobs. We should listen to their voices as well.
Mark Pawsey (Rugby) (Con)
Many of my constituents are concerned that the inquiry desk at Rugby police station is being closed between the hours of 8 pm and midnight. Although I recognise the pressure on police budgets caused by Labour’s economic mismanagement, does the Minister agree that this decision should be reconsidered?
Nick Herbert
What is important is how visible and available the police are. There are innovative things that they can do instead of necessarily keeping police stations open at times when very few people visit them, such as setting up shop in shared premises in supermarkets. My hon. Friend should talk to his chief constable about such ideas.
Huw Irranca-Davies (Ogmore) (Lab)
May I genuinely and unbegrudgingly thank the Policing Minister for recently visiting my constituency and seeing the award-winning group of police community support officers and police officers at the Caerau station? Thank you very much indeed. However, will he pay a return visit if we find that that team, or any others in my constituency, is broken up because of the police cuts coming down the line?
Nick Herbert
I am happy to tell the hon. Gentleman that I will be returning to the force area this week, although not to his constituency. I spoke to his chief constable a few days ago, and he assured me that by making savings, there would be protection for the visible and available policing in the streets that the hon. Gentleman’s constituents want to see.
Nigel Adams (Selby and Ainsty) (Con)
Is the Minister aware that a pioneering partnership between North Yorkshire police and the local community in Sherburn in Elmet in my constituency has seen the public inquiry desk at the village police station reopen? The desk is manned completely by volunteers. Does he agree that this is a great example of the big society in action? Will he join me in congratulating the local volunteers and North Yorkshire police—
Nick Herbert
My hon. Friend might have noticed that he just got a nod of approval from the Prime Minister. Helping to keep police stations and front desks open is a very good use of volunteers. There may be very few visitors, but that visibility is important, and there are many other ways in which the police can maintain such a presence in their areas.
European Council
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Mr David Cameron)
With permission, Mr Speaker, I should like to make a statement.
Clearly the whole country has been focused this weekend on the terrorist threat, and the Home Secretary will make a full statement after this. However, I want to put on record my thanks, and the thanks of everyone in this House, to all those involved in the international police and intelligence operation, whose efforts clearly prevented the terrorists from killing and maiming many innocent people, whether here or elsewhere in the world. The fact that the device was being carried from Yemen to the United Arab Emirates, Germany and Britain, en route to America, shows the interest of the whole world in coming together to deal with this. While we are rightly engaged in Afghanistan to deny the terrorists there, the threat from the Arabian peninsula, and from Yemen in particular, has grown. So as well as the immediate steps, which the Home Secretary will outline, it is clear that we must take every possible step to work with our partners in the Arab world to cut out the terrorist cancer that lurks in the Arabian peninsula.
Let me turn to last week’s European Council. The Council’s main business was going to be economic governance in the light of the serious problems that the eurozone has faced. However, I was clear that we could not talk about the need for fiscal rigour in the EU’s member states without also talking about the need for fiscal rigour in the EU budget, both next year and for the future, so we ensured that the EU budget was also on the agenda. Let me go through both issues. First, on the budget for 2011, from the outset in May, we wanted a freeze. We pressed for a freeze, and in July we voted for a freeze, seeking to block the 2.9% proposed by the presidency. Finland, Sweden, Denmark, the Netherlands, the Czech Republic and Austria all voted with us. Unfortunately, we were just short of the numbers needed for a blocking minority, so in August the Council agreed a 2.9% increase.
Then in October, the matter went to the European Parliament, which voted for around a 6% increase. That was the frankly outrageous proposal with which we were confronted at this European Council. Now, normally what happens in these situations is that you take the position of the EU Council and that of the EU Parliament, and there is a negotiation that ends up splitting the difference. Indeed, that is precisely what happened last year. So before the Council started, we began building an alliance to take a different approach and to insist on the 2.9%. I made phone calls to my counterparts in Sweden, France and Germany, among others, and then continued to press the case during the Council. Twelve other Heads of State took that approach, and we issued a joint letter that makes it clear that a 6% increase is
“especially unacceptable at a time when we are having to take difficult decisions at national level to control public expenditure”.
Furthermore, the joint letter goes on to say that
“we are clear that we cannot accept any more than”
the 2.9% increase being proposed by the Council.
Let me explain what this means. Either the Council and the Parliament now have to agree to the 2.9%, or there will be deadlock, in which case the EU will have to live on a repeat of last year's budget settlement handed out in twelfths over the next 12 months, an outcome that we would be perfectly content with. Next, and more importantly, Britain secured a significant breakthrough on a fundamental principle for the longer term. As well as the individual budget negotiations for 2011, 2012 and 2013, there is also a big negotiation about to happen for the future funding of the EU over the period between 2014 and 2020. We clearly want to do all we can to make the negotiations go the right way, and what we agreed at the Council was, I think, a big step forward. The European Commission was wholly opposed to it, but the Council agreed that
“at the same time as fiscal discipline is reinforced in the European Union, it is essential that the European Union budget and the forthcoming multi-annual Financial Framework reflect the consolidation efforts being made by Member States to bring deficit and debt onto a more sustainable path.”
So from now on, the EU budget must reflect what we are doing in our own countries, and it is quite apparent that almost every country in Europe, like us, is seeing very tough spending settlements.
This new principle applies to the 2012 and 2013 budgets, and to the crucial 2014 to 2020 EU spending framework. Just as countries have had to change their financial plans because of the crisis, so the EU must change its financial plans too. Mr Speaker, if you look at the published conclusions and language on the budget, they formed a prominent part even though it was not originally on the agenda. I think this is an important step forward.
In my discussions with Chancellor Merkel at the weekend, we agreed to take forward some joint work to bring some transparency to the EU budget––salaries, allowances, grants. This work has just not been done properly in the past, and it is about time that citizens of the EU knew what the EU spends its money on. That is the spotlight that needs to be shone, and that is what we propose to do.
On economic governance, there are basically two issues. First, there is Herman Van Rompuy’s report from the taskforce on economic governance. This was set up after the sovereign debt crisis, and my right hon. Friend the Chancellor and the Treasury have been fully involved. Secondly, there is the additional proposal made by the Germans, and in principle agreed by the Council, for a limited treaty amendment focusing on putting the EU’s temporary bail-out mechanism on to a permanent basis. Let me take each in turn. In Van Rompuy's report, there are some sensible proposals. For example, the eurozone clearly needs reinforced fiscal discipline to ensure its stability, and the crisis has shown that in a global economy early warning is clearly needed about imbalances between different countries.
Let me be clear on one point about which there has been some debate: the question of surveillance. All member states, including the UK, have participated in surveillance for more than a decade. This is not a new framework. The report is clear, and the current framework remains broadly valid, but needs to be applied in a better and more consistent way. The report proposes new sanctions, but we have ensured that no sanctions, either existing or new, will apply to the UK. The report could not be clearer. It says that
“strengthened enforcement measures need to be implemented for all EU Member States, except the UK as a consequence of Protocol 15 of the Treaty”.
That is our opt-out. It kept us out of the single currency; it kept us out of sanctions under the Maastricht treaty; and we have ensured that it keeps us out of any sanctions in the future.
In addition to the issue of sanctions, a number of other concerns have been raised. Let me try to address each of them head on. First, will we have to present our budget to Europe before this House? No. Secondly, will we have to give Europe access to information for budgetary surveillance that is not similarly shared with organisations such as the International Monetary Fund or is publicly available on the internet? Again, the answer is no. Thirdly, will powers over our budget be transferred from Westminster to Brussels? Again, no.
I turn to the proposal mentioned in the Council’s conclusions for limited treaty amendment. We have established that any possible future treaty change, should it occur, would not affect the UK, and I would not agree to it if it did. The proposal to put the temporary bail-out mechanism on a permanent footing is important for the eurozone, and eurozone stability is important for the UK. Nearly half our trade is with the eurozone, and London is Europe’s international financial centre.
Let me be clear. Throughout this process, I have been focused on our national interest, and it is in our national interest that the eurozone should sort itself out. It is in our national interest that Europe should avoid being paralysed by another debt crisis, as it was with Greece in May, and it is absolutely in our national interest that Britain should not be drawn into having to help with any future bail-out. That is what we have secured.
Let me turn briefly to the other business of the Council. On the G20, the Council discussed its priorities for the upcoming summit in Seoul. Again, our interests are clear. As an open trading nation, we want progress on Doha. This has been going for nearly a decade, and 2011 should be the year when we try to achieve a deal. We believe that the world has suffered from economic imbalances, so we want countries with fiscal deficits to deal with them, and countries with trade surpluses to look at structural and currency reforms. We recognise the importance of strengthening global financial stability, and that is why we support the recent Basel agreement on stronger banking regulations. We also want global institutions to be reformed to reflect the growth of emerging powers, so we will see through the work that my right hon. Friend the Chancellor has led on the reform of IMF votes and board seats. Finally, on Cancun, we are committed to making progress towards a legally binding United Nations agreement.
I believe that this Council demonstrates that it is perfectly possible to deliver for our national interest while protecting our national sovereignty. Tomorrow, the British and French Governments will sign new defence and security co-operation treaties, which will be laid before Parliament in the usual way. This follows the same principle: partnership, yes; giving away sovereignty, no. At this Council, Britain helped Europe to take the first vital steps towards bringing its finances under control. We prevented a crazy 6% rise in the EU budget next year, we ensured that the budget would reflect domestic spending cuts in all future years, and we protected the UK taxpayer from having to bail out eurozone countries that get themselves into trouble. There is a long way to go, but we have made a strong start. I commend this statement to the House.
Edward Miliband (Doncaster North) (Lab)
May I thank the Prime Minister for his statement? I also thank him for the briefing statement that he gave me on Saturday on the developments following the discovery of explosive materials, including those at East Midlands airport. I join him in thanking the security services, the police and others for the work that they do to protect innocent people here and abroad. I also want to assure him that he has the full support of the Opposition in his efforts to tackle terrorism and keep the nation safe.
On Europe, Labour Members think that it is in the national interest for Britain to be strongly engaged in Europe on issues from terrorism to climate change, and from the global economy to human trafficking. We all know that the Prime Minister is in a slightly tricky predicament on Europe. He has his old friends and his new friends on the Front Bench. I want to tell him very sincerely that we are here to help him. We know that he held some pretty strong views on Europe in the past, but we are willing to ignore his previous convictions, just as long as he is as well.
Let me start with the Council’s conclusions on economic governance. We welcome any sensible proposals for greater co-operation to ensure economic stability across Europe. In principle, we also welcome the idea of putting in place clear arrangements for providing help to eurozone countries that get into trouble, rather than relying on an ad hoc approach. The Prime Minister is also right to say that eurozone countries should take financial responsibility when those circumstances arise. He was right to say in his statement that these new arrangements would not apply to Britain, but they might affect Britain. We have an interest in stability in the eurozone but also in supporting growth in what is our largest export market. Can he therefore assure the House that, as well as protecting Britain from those provisions, he will engage in discussions to ensure that the right balance is struck between the need for stability and the need for growth in the eurozone?
In the context of these reforms, I do not think the Prime Minister made it clear in his statement whether, if proposals are made for treaty change as a result of the amendments, he is prepared to accept the changes without a referendum. He used to imply that if treaty change were ever back on the table, he would have a referendum, but he seems to have abandoned that position. Will he confirm that that is the case?
The Prime Minister also used to imply that he would use the opportunity of treaty change to bring back the British opt-out on employment and social legislation. I think that is a pledge he made for this Parliament. Labour Members do not believe that this is a necessary or sensible course of action. He was silent on this issue during his statement. Can we therefore assume that his previous red lines on this issue were not raised by him at any time in these negotiations, and can he confirm that he does not intend to raise these red lines—or what were his red lines—in the coming months in the context of any possible treaty changes that might take place? Again, we will support him if he takes the right course.
Secondly, on the G20 summit in Seoul, which will discuss the prospects for the world economy, the Prime Minister will know that an increase in trade accounts for almost half of the growth forecast that the Office for Budget Responsibility predicts for the United Kingdom next year. Can I ask what discussions were had at the European Council about the uncertainty in the world economy and how Europe plans to do its bit to ensure that economic demand is sustained?
Thirdly, on the Cancun conference on climate change, I have to say—I think the Prime Minister will agree—that the prospects do not look bright for completing the unfinished work of Copenhagen. May I urge him on to show greater leadership on this issue—[Interruption.] Leadership, which is not just about some huskies, but is real leadership on this issue. Can he say what he will be doing personally to advance a deal on finance, which is a crucial precondition of progress and a key objective of the Cancun summit?
Let me turn next to the EU budget. The Prime Minister has offered what we might call an interesting version of events. He confirmed that, in August, the 2.9% increase was put forward by the Council of Ministers and 20 countries voted for that—Britain was not one of them; it voted against that. The Prime Minister tells us in his statement today that “before the Council started, we began building an alliance to take a different approach”—different from the Parliament—“and insist on 2.9%”. The question I ask the right hon. Gentleman is when he took that view. On 20 October, he told this House:
“We have called for a cash freeze in the size of the EU budget for 2011 and we are working hard to make this case across Europe.”—[Official Report, 20 October 2010; Vol. 516, c. 938.]
He was not saying that 2.9% had been agreed and that he had lowered his sights; he was telling us that he was still working for a freeze. Three days later he repeated this to the Daily Mail—a reliable source:
“We need to start working on trying to keep next year's budget down. It should be a freeze or a cut.”
That was his position at that time. So I have a simple question: when did the Prime Minister change his position on this issue? He certainly did not tell the House; he certainly did not tell the Daily Mail—and one would have thought that he would have kept it informed. As far as we can gather, it was sleeves rolled up, full steam ahead and when it came to 2.9%, it was “fight them on the beaches”. Now the Prime Minister has said that he changed his position.
Now, the Prime Minister has agreed to 2.9%. What does he say about something he originally voted against? One would have thought that he might be slightly sheepish about this—but not a bit of it! He actually says that he has “succeeded quite spectacularly”. If that is his view of spectacular success, I would hate to see what happens when things go wrong in his negotiations in Brussels.
What about the letter that the Prime Minster brandished as having been signed by 13 member states, supporting 2.9%? I do not think that is a spectacular success. Twenty countries were supporting 2.9% in August, so this is seven fewer countries than were originally supporting that increase. The only big difference is that Britain, which used to be against the 2.9% increase, is now for it. Let me say to the Prime Minister, in words that my grandmother might have used, that I admire his chutzpah on this issue. Is not the truth about it that he wished he could come back and say, “No, no, no,” but in his case, it is a bit more like, “No, maybe, oh, go on then, have your 2.9% after all”?
What is the deeper truth about the Prime Minister’s position? I have to say that I am disappointed in him, because he has fallen back into his old ways. It is more ludicrous grandstanding on Europe, which ends up proving futile and fooling no one. The Prime Minister said that he would provide for a referendum on Lisbon if there was an opportunity; he has abandoned that position. He said that he would repatriate powers; he has abandoned that position. He said that he would obtain a freeze in the EU budget; he has abandoned that position.
The Prime Minister has obviously not learned the lesson, because he left the summit bragging again, saying that he was a Euroscpetic. When will he recognise that anti-European bluster and PR are no substitute for a decent, engaged European policy? He should be leading the way on climate change, signing the directive on human trafficking, and working with European Governments to sustain demand in the global economy. The Prime Minister may have abandoned some of his previous convictions, but his rehabilitation on Europe has a long way to go.
The Prime Minister
If mine was chutzpah, that was brass neck.
The right hon. Gentleman asked how I was getting on with my new friends and my old friends. Let me put it in a way that he may understand: we are just one big happy family. It is brotherly love on this side of the House; it really is. The problem is that we are living with the decision of the right hon. Gentleman’s old friend, Tony Blair, who gave away £8 billion of rebate and received nothing in return.
The right hon. Gentleman asked whether we would ensure stability in the eurozone. Of course we want to do that, as I said in my statement. He said that this did not affect Britain in terms of the treaty change, and he was quite right about that. He asked whether this should lead to a referendum. The point is that we are not passing any powers from Britain to Brussels: this limited treaty change does not affect the United Kingdom. However, I cannot take a lecture on referendums from someone who could have provided a referendum on the Lisbon treaty, but failed to do so.
The right hon. Gentleman asked what we were getting in return. We are getting progress on the budget, which we never saw in a month of Sundays under a Labour Government. Let me say something about the issue of the budget, and the points that he made. Let us contrast the position now with what happened last year under a Labour Government. Last year under a Labour Government—[Interruption.] It is very instructive to look at what happened last year and what happened this year.
Last year the European Council voted for a 3.8% increase. The Labour Government supported it. The European Parliament proposed a 9.8% increase. The Council then agreed a 6% increase, and the Labour Government supported it. That is the difference between last year and this year. Last year we had a feeble Government who would not stand up for Britain; this time we have a Government who will.
Mr Speaker
Order. A great many Members wish to catch my eye, and there is another important statement to follow, followed by business that I suspect will be of considerable interest to the House. Brevity from Back Benchers and Front Benchers alike is essential.
Sir Peter Tapsell (Louth and Horncastle) (Con)
As it appears that the treaties of the European Union can be changed on the insistence of a German Chancellor, is it possible to give a British Prime Minister the same opportunities, thus enabling him to give his country the pledge of the referendum that was promised to them? Is that so, or not?
The Prime Minister
If there were any prospect of a passage of power from Britain to Brussels, we should have a referendum. That is not just my word: we are going to legislate to put it into place. But the question that we must answer here—this goes directly to what my right hon. Friend has said—is, “What is it in Britain’s national interest to try to insist on at this time?” In my view it is the budget, and the amount of money that goes from Britain to Brussels, into which we should be putting our efforts. That is what I did, and that is what I am going to go on doing.
Mr Denis MacShane (Rotherham) (Lab)
May I welcome the Prime Minister to the club of Euro-pragmatism? He has said nothing today with which I can greatly disagree. Will he answer two questions, however? First, will he confirm that if the final budget deal is above 2.9%, Britain will not seek to veto it? Secondly, will the proposed treaty change happen under the so-called passerelle clause of the Lisbon treaty?
The Prime Minister
I thank the right hon. Gentleman for his endorsement—wherever they come from, they are always welcome. The point about the budget approach is that 13 countries have put their signature to a letter saying they will not accept anything over 2.9%. They will, I believe, all stick to their word, and we will insist on this so that we either get 2.9%, agreed between Parliament and the Council, or we get deadlock, in which case the budget is frozen at last year’s level.
The final decisions on the proposed treaty change will be taken at the December summit. That is likely to be under the simplified revision procedure so there is not a parliamentary convention. The key point here is to be absolutely clear that this is going to be a few lines that are about putting in place what is a temporary bail-out mechanism and making it a permanent bail-out mechanism. The key point for the House to hold on to is that this does not affect the UK, except inasmuch as we want the eurozone to sort itself out.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
Given today’s lunchtime praise of the Prime Minister by Miles Templeman of the Institute of Directors, and in particular his observation that the Prime Minister’s greater European sensitivity, which the IOD welcomed, must be down to the presence of Liberal Democrats in his coalition Government, may I assure the Prime Minister, speaking as one long-standing pro-European now to another, that as long as he maintains such constructive engagement he will deserve, and I am sure will receive, solid support?
The Prime Minister
Said without a hint of mischief. I believe the national interest right now is all about—[Interruption.] I heard that, I say to whoever said the G word. The national interest is about restricting our contributions to the EU. We are making difficult decisions here, and that is what we should be pushing for in Europe. What was encouraging about this European Council was what a strong alliance we could build with others at the same time as protecting ourselves by preventing any of this treaty change from having an effect on the UK.
Mr Nigel Dodds (Belfast North) (DUP)
The Prime Minister says that from now on the EU budget must reflect what we are doing in our own countries, so can he give us a cast-iron guarantee that in 2012, 2013 and thereafter there will be cuts to the EU budget, or can he use more reassuring words?
The Prime Minister
What I can say to the right hon. Gentleman is that, for the first time, the European Council’s conclusions set out the new principle that increases or changes to the EU budget should reflect what we are doing in our nation states. That has never been put in place before, which is why the Commission opposed it so much. The principle is that what is happening across Europe must be reflected in the EU budget; that is the key. I will be pressing for the best possible outcome in 2012 and 2013, and as Britain is a net contributor the best possible outcome for us is that we do not make these increases in our net contribution.
Sir Malcolm Rifkind (Kensington) (Con)
Does the Prime Minister agree that the experience of the Labour Government in respect of the European budget was a failure to reconcile net income with gross habits, and will he also confirm that his success in putting together this blocking coalition will save the British taxpayer half a billion pounds?
The Prime Minister
My right hon. and learned Friend is absolutely right. Every percentage increase we save is equivalent to well over £100 million. The failure there has been—for a long time, frankly—over this issue is twofold: a failure to take the budget issue seriously enough and, secondly, a failure to have transparency and therefore to have the information about the EU budget out there so that citizens in Europe can really complain about the inflated salaries and allowances. Let me give just one example: civil servants who have been in Brussels for 30 years are still paid generous expatriate allowances. That is the sort of excess that we have got to deal with.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
The Prime Minister seems to have great faith in protocol 15. I also noted that he did not really answer the question asked by my right hon. Friend the Member for Rotherham (Mr MacShane), and I am beginning to wonder something: has the Prime Minister ever actually read the Lisbon treaty from page one to page—to the end. If so, when?
The Prime Minister
One of the many contributions to public life that my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) made after making that remark is that all future Front Benchers, probably on either side of the House, will carefully read every treaty and get to the end.
Mr William Cash (Stone) (Con)
Given that response, will the Prime Minister confirm that the presidency conclusions, to which he has referred, do in fact endorse the EU taskforce report, which clearly states that there will be “a new legal framework” for further surveillance and powers for economic governance, which cover both the eurozone and the EU, including us, and, moreover, that any EU treaty imposes legal rights and obligations on all the member states? Why, therefore, did my right hon. Friend reckon that, together, these do not affect the UK, that
“it isn’t going to make any difference to us”
and that, on that basis, there would be, as he put it, no referendum?
The Prime Minister
This is a very serious point and we probably require a longer exchange than is possible from the Dispatch Box. I say to my hon. Friend, who follows this very closely, that we have to differentiate between two important things—the first is the Van Rompuy report and the second is the very limited treaty change that is being proposed by the Germans and now, in principle, endorsed by the Council—because the treaty change is really focused simply on the issue of putting a temporary bail-out mechanism on to a permanent basis.
On the Van Rompuy report, the paragraph to which my hon. Friend refers is paragraph 34, which talks about “macro-economic surveillance”—something that has happened for more than 10 years in the European Union. It is defined in paragraph 35, and paragraph 39 is very clear that the sanctions it talks about refer only to euro area members. I would also draw his attention to paragraph 4, which states that all of this is looked at
“within the existing legal framework of the European Union.”
That is important. The other paragraph that I think is vitally important is paragraph 18, which says—I quoted it earlier—that
“strengthened enforcement measures need to be implemented for all EU Member States, except the UK as a consequence of Protocol 15 of the Treaty”.
That is what gives us the protection. We read these things very carefully.
Mike Gapes (Ilford South) (Lab/Co-op)
May I congratulate the Prime Minister on his consistency? In 2005, he won the leadership of his party by being the most Eurosceptic candidate; in 2007, he made a very clear commitment to hold a referendum on the Lisbon treaty; and now he has capitulated on his previous position of a freeze. Can I take it that public sector workers facing a freeze will now get a 2.9% increase?
The Prime Minister
The hon. Gentleman, who is very experienced in this House, has clearly not met my right hon. Friend the Defence Secretary. I am sure that I can arrange for them to spend some quality time together.
Richard Ottaway (Croydon South) (Con)
I congratulate the Prime Minister on playing a very difficult hand at the summit. Does he agree that seeing off the European Parliament’s budget, securing our opt-out on economic governance and ensuring that future budgets will reflect a nation’s spending cuts all adds up to a good day’s work?
The Prime Minister
May I thank my hon. Friend? I do think this principle that what happens in terms of the EU budget should reflect what happens to member states’ budgets is an important principle. Of course, as we speak today, it is just words in a conclusions text, but many of the things that my hon. Friends and I have worried about over the years have been words in a conclusions text—a little opening that people who want more and more of the European Union push their force through. We have now got a wedge, if you like, that we can push on at all subsequent negotiations: that the European Council has accepted that what is good for nation states is good for the European Union’s budget.
Hywel Williams (Arfon) (PC)
What discussions did the Prime Minister have with the Council on convergence funding and what are the implications of the budgetary settlement on that funding?
The Prime Minister
We did not have detailed conversations about the elements of the budget. Clearly those countries that are net recipients were opposed to what I was proposing, and obviously the tighter the budget, the less money there is for the things within that budget, but within the budget we should always fight for a good deal and we should also make sure that depressed parts of the UK get access to that money. But when you look at what the European Parliament was putting forward for its 6%, you find that it included, for instance, a massive amount more for dairy farming, so it was not actually connected to getting the European economy moving.
Mr Edward Leigh (Gainsborough) (Con)
What sort of world are MEPs living in? At a time when everybody else is tightening their belts, these people are awarding themselves ever more generous allowances and salaries, despite the fact that most people do not even know who they are. Will my right hon. Friend suggest to his friends on the Council that we export IPSA the—Independent Parliamentary Standards Authority—to the European Parliament?
The Prime Minister
That is an idea of pure genius. I am not sure that even the brilliant simultaneous translation that is available would really enable me to explain IPSA in all its complexities. There is a serious point, however, and this is where transparency matters. I remember, when the whole problem of allowances, pay, pensions and everything broke in this place, looking again at the European Parliament’s rules. They are not transparent enough and we need to sort that out. As I say, when it comes to the European budget, transparency, which is going to be a great weapon in local government and central Government, can be such a weapon in Europe, too.
Tony Lloyd (Manchester Central) (Lab)
The Prime Minister, of course, will not have been able to see the faces of his colleagues behind him when he made his statement. In terms of the big happy family that he commands, does he think that he still has the support of the majority of Conservative MPs?
Sir Alan Haselhurst (Saffron Walden) (Con)
Instead of the passing satisfaction that might be gained from a “toys out of pram” approach, is not my right hon. Friend’s achievement the fact that we have a first pragmatic step towards getting a grip on the EU budget, and will other steps follow?
The Prime Minister
It is important that we build alliances for what we are trying to achieve. I would say to all my right hon. and hon. Friends that there are many things that we do not like about the European Union’s development and many things that we would like to change. We must pick our battles and our fights. The important battle to have is the one over the budget and it is important to try to build alliances for that. There is strong support from other countries—not just the donor countries but those that are making difficult decisions at home and recognise that it is simply insupportable to see one budget going up and up when they are having to cut things back in their domestic economies.
Mr Tom Watson (West Bromwich East) (Lab)
At what we now know as the Prime Minister’s “delicious” press conference, he questioned the number of BBC correspondents sent over to report on his triumph. Who did he want to send home the most—Nick Robinson or Michael Crick?
The Prime Minister
I probably should not have used the word “delicious”. I was just making the point, as we were talking about cuts, that the BBC seemed to be extremely well represented. I do not think that Nick Robinson was there, but it is always a joy to see Michael Crick.
Mr James Arbuthnot (North East Hampshire) (Con)
On the defence relationship with France to which my right hon. Friend referred, is he aware that I have forgiven the French for taking off the head of my great-great-great-great grandfather at Trafalgar? Does he agree that the treaty that he will be signing tomorrow with President Sarkozy needs to contain real concrete arrangements to improve defence co-operation between our two countries?
The Prime Minister
I am extremely glad that my right hon. Friend has forgiven the French, as I think he is joining me for lunch with President Sarkozy tomorrow—it might have been a little bit frosty. This is important, because Britain and France share a real interest. We have similarly sized and structured armed forces, we both have a nuclear deterrent and we both want to enhance our sovereign capability while being more efficient at the same time. This treaty will set out that in many areas—such as the A400M, the future strategic tanker aircraft, the issue of carriers and more besides—we can work together and enhance our capabilities while saving money at the same time.
Graham Stringer (Blackley and Broughton) (Lab)
Local democracy in this country is facing 28% cuts over the next four years. That would be a good starting point, I think, as a target for the EU budget. What level does the Prime Minister think that the EU budget should be set at, ideally?
The Prime Minister
Obviously, we had to do the best we could with the 2011 budget. We now have the issues of 2012 and 2013 before we go into the 2014-2020 perspective. Many countries will be arguing for increases—the recipient countries will fight very hard for them and the European Commission, which always wants to see greater competences and more powers, will fight for them. Those of us who are doing the paying will have to unite and fight very hard. The better we can do in 2012 and 2013, the lower the baseline we will work off for the 2014-2020 perspective. That is where we will be pushing extremely hard.
Conor Burns (Bournemouth West) (Con)
It is some 16 years since the European Court of Auditors last signed off the accounts. In welcoming our right hon. and noble Friend Baroness Thatcher’s return to home and health this afternoon, may I invite the Prime Minister to consult her regarding what instrument he could use in place of the handbag to sort out this mess?
The Prime Minister
I am sure that the whole House will welcome Baroness Thatcher’s better health and return from hospital. The deal she achieved at Fontainebleau all those years ago has saved this country £88 billion and it will be extremely important to defend that abatement as we go into the 2014-2020 negotiation. I am sure that she will be looking carefully to make sure that her legacy is assured.
Mr Dennis Skinner (Bolsover) (Lab)
After such a miserable failure on the budget freeze, did the Prime Minister console himself by thanking the Italians for building British ships such as the Queen Elizabeth or by congratulating the Germans on winning a contract to occupy the channel tunnel? How much time did he spend hawking around Royal Mail to his new European pals?
The Prime Minister
The answer is no, I did not do any of that. I am not quite sure what point the hon. Gentleman is making. Trade between European countries is extremely worth while: just as we sell important goods and services to Germany and France, so they sell to us. I would have thought that even he and the dinosaurs opposite would think that was a good thing.
Mr David Nuttall (Bury North) (Con)
I thank my right hon. Friend for his statement. Given that the proposed treaty change apparently will not affect the UK in any way, should we not simply leave it to the countries in the eurozone, which will be affected, to sign any new treaty? Should we not keep out of it?
The Prime Minister
My hon. Friend makes a fair point, but I think the best option for the UK, because this is a very limited treaty change about making this temporary mechanism permanent and because it is in Britain’s interests, as we do not want a eurozone that goes kaput and we do not want to have to join in bail-outs—that is what this is about—it is better that it takes place through existing operations. Also, as I said in the statement, we have to bear in mind the role of London and Britain as a key financial centre. That will be strengthened by what is being done rather than by any alternative.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
The Prime Minister’s visit to Brussels cost British taxpayers £450 million or so. Where is that money coming from, and would it not have been better spent on avoiding some of the cuts in services for ordinary hard-working families that his Government are putting through?
The Prime Minister
If we had taken the approach of the previous Government, we would have just said, “Never mind the increase suggested by the Council or the increase suggested by the Parliament, let’s just let them come to some sort of deal and Britain will cough up,” but we said, “No, let’s restrict this to the very minimum it could be.” That is not an approach that the previous Government took, but I am proud to say it is one that we took.
Mr Peter Bone (Wellingborough) (Con)
As one pro-European who has concerns about the European Union to another, may I ask the Prime Minister whether the real problem with the budget is the £17.5 billion extra that we are going to pay over the next four years because that lot opposite gave up Mrs Thatcher’s rebate?
The Prime Minister
My hon. Friend is absolutely right. In the negotiations in 2005, we were told repeatedly in the House by Tony Blair, standing here at the Dispatch Box, that he would consider giving up the rebate only if he got a proper deal on common agricultural policy reform. Do hon. Members remember that? In the end, all we got was a review of the CAP. That teaches us the very important lesson that we have to halt it.
Kate Hoey (Vauxhall) (Lab)
Did the Prime Minister get a chance to discuss with any of the leaders privately or publicly the ludicrous European Union embassies being set up all over the world at huge expense? Does he realise that the public do not want that, but want well-staffed British embassies? Can we do anything about it, and is there any chance of a referendum in the next five years on whether we stay in or go out?
The Prime Minister
I do not believe in an in-out referendum, for many reasons. I think we are better off in the European Union—we have to fight our corner very hard—but I would grant a referendum if there were any proposed transfer of powers from Westminster to Brussels. On the European External Action Service, the hon. Lady knows that we opposed the Lisbon treaty, that we thought the creation of the EEAS was a mistake and that we have pushed as hard as we can within Europe to keep its costs under control. There is an argument that because of the combination of the previous High Representative and Foreign Minister roles, the posts and the budget should cost less, and we push that case as hard as we can.
Sir Menzies Campbell (North East Fife) (LD)
As another of the Prime Minister’s new friends, may I remind him that in 2010 family life takes many different forms in this country? May I also commend his pragmatism in relation to defence co-operation with the French, which he no doubt discussed with President Sarkozy over the weekend? If it is successful in conventional co-operation, what are the prospects for similar co-operation in nuclear matters?
The Prime Minister
I think there are prospects for our working together in this area, not least the French investment in civil nuclear power that is going to take place in the UK. There are opportunities, which we will be talking about tomorrow. In terms of the broader family, I do not quite know what my right hon. and learned Friend would be—a wise uncle, I suppose, to give me good advice. I seriously believe that the link-up with the French over defence is in the long-term interests of both our countries. To those who worry that this might in some way lead to European armies, I say that is not the point. The point is to enhance sovereign capability by two like-minded countries being able to work together.
Nia Griffith (Llanelli) (Lab)
Following on from the Prime Minister’s answer to his hon. Friend the Member for Stone (Mr Cash) in which he explained very carefully why he fully understands and justifies the use of the Lisbon treaty for modifications, can he explain to us exactly what type of modifications or changes he would want to have a referendum on? Exactly what transfers of power would he want to put to the country in a referendum?
The Prime Minister
The hon. Lady asks a reasonable question. The Bill that we will be looking at will say that there should be a referendum on any transfer of power—a proper transfer of competence. As a general principle, the House should not give away powers it has without asking the people who put us here first. That is the principle that we should adopt. I do not want us to give any further powers from Britain to Brussels, so I am not proposing that we should. Further to answer the hon. Member for Vauxhall (Kate Hoey), I am not anticipating us having a referendum, because I do not want to see that transfer of powers. What is being proposed by the Germans and will be finally agreed at the December Council, yes, is a transfer of powers for countries in the eurozone. It definitely means that as well as having the euro, they will have more co-ordination of their economic policy, and punishments if they do not do certain things. That, to me, is perfectly logical if they are in the euro. It was one of the reasons why I did not want to join the euro in the first place and why, as long as I am Prime Minister, we will not do so.
Mr Oliver Heald (North East Hertfordshire) (Con)
Does the Prime Minister accept that it is welcome, if unusual, to see so many Heads of State supporting a British Prime Minister on an issue on which the European Parliament takes a different view? Does he agree that perhaps there is a role for national Parliaments, which, right across Europe, are facing difficult economic decisions, to support these Heads of State, including, of course, the Prime Minister, because it is right—
The Prime Minister
I hope the former Europe Minister, the hon. Member for Rhondda (Chris Bryant), will stay calm. My hon. Friend the Member for North East Hertfordshire (Mr Heald) makes a good point. Part of the problem in the past has been that other member states have not been as focused on the budget and the impact on their own publics as they are now. They are focused on it now because they all have to make difficult decisions. When we sit round the European Council table, we are often discussing what we are having to do with public sector pay, pensions or other difficult decisions, so there is a common interest which the Parliaments of Europe can help remind their Governments about.
Kelvin Hopkins (Luton North) (Lab)
It is clear that a number of member states are unlikely to be able to sustain their membership of the euro for the long term. They are already suffering serious internal economic damage, some requiring external fiscal transfers, and other countries may be in the same position in the not-too-distant future. Was there any talk, privately or otherwise, of the possibility of member states leaving the euro, so making it work better?
The Prime Minister
I do not believe that will happen, but what was interesting about this European Council is that there is quite an existential debate taking place within the eurozone about what it means to be a member of the euro. There is a very strong push by the Germans, who obviously feel that they have had to bail out the Greeks, that they have to have tighter rules for members of the eurozone, and there are very great worries on the part of some countries about the sanctions that could be applied to them. This is a debate that was inevitable when there is one currency and many countries and they are having to give up some of their sovereignty to make that single currency work. It is perfectly logical for eurozone members. It reinforces in my mind that they are right to do that, but we are right not to be part of it.
Chris Heaton-Harris (Daventry) (Con)
May I say to the Prime Minister how refreshing it was, after 13 years of inactivity and disinterest in this area, to see a British Prime Minister fighting for a reduction in the size of the EU budget and for better value for money for British taxpayers? Can he confirm that he now has two potential vetoes—first, on the limited treaty change on economic governance, and, secondly, on the EU budget for the next period, 2014 to 2020—and that they can be used independently of each other?
The Prime Minister
My hon. Friend is entirely right. Britain does have leverage, influence and an impact in these negotiations. The question that we have to answer is, what can we achieve that is most in the national interest. I do not want to make promises that I cannot keep or to set goals that are impossible, but action on the budget and the future financing is where we should exert our influence.
When it comes to treaty change, there would be a stronger argument for pursuing treaty changes of our own if what was now being suggested were a wider treaty change. It is not; it is a relatively limited change that makes the temporary mechanism permanent. We will see the full details of it in December, and we will be able to be involved in its negotiation, as my hon. Friend says.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Has the Prime Minister made any calculation of how many new teachers, nurses or police officers could have been employed with the 2.9% increase that he has conceded to the EU?
The Prime Minister
I have to say to the hon. Lady that one constructive thing that she and other Opposition Members could do is to talk to their Members of the European Parliament. They had the chance to vote for a freeze in the budget, and they did not do that. So, it is all very well hon. Members standing up and saying how much more Britain is going to have to pay, but their MEPs are doing nothing to help in that argument.
Mr Aidan Burley (Cannock Chase) (Con)
Has the Prime Minister had the chance to discuss security co-operation with the German Chancellor in the light of the increased bomb threats?
The Prime Minister
Yes. I did have that conversation, because the German Chancellor stayed at Chequers over the weekend, and we discussed a range of those issues. Obviously the aeroplane in question, having left Yemen, had landed in Germany and then in Britain before it was due to go on to the United States. That reminds us of how interconnected we are, so the British and the Germans, quite close together, made the announcement about not receiving packages and parcels from Yemen. My right hon. Friend the Home Secretary will be giving further details in a moment or two, when she makes her statement.
Chris Bryant
Let me get this right. The Prime Minister failed to put together a blocking minority in July, and he did not even manage to get the Polish on board, despite the fact that the Polish Foreign Secretary was in the Bullingdon club with him at Oxford. He failed to put together a blocking minority, he let the matter go through in August, he tried again at the beginning of last week, he failed—and then he proclaims himself the great saviour of this country. How can it possibly be a success until he comes back to this country with a guarantee from the French that they intend to cut the common agricultural policy?
The Prime Minister
The difference between the hon. Gentleman and me is that when we were both at Oxford he was a member of the Conservative association and I was not.
Nadhim Zahawi (Stratford-on-Avon) (Con)
The Prime Minister quite rightly says that London is the financial heart of Europe. The chief executive of the London stock exchange, a Frenchman, has warned of the harm that European legislation can do to the vital alternative investment market. Can the Prime Minister reassure the House that that will not happen?
The Prime Minister
My hon. Friend makes an extremely good point, and it goes to the heart of the point that my hon. Friend the Member for Daventry (Chris Heaton-Harris) made. When the Chancellor of the Exchequer, the Financial Secretary to the Treasury, I and others negotiate in Europe, I am extremely conscious of the fact that some of the directives coming out of the European Commission on alternative investments, such as the Larosière proposals on finance, have the potential to do great damage to the UK, and we do have to make sure that we use our negotiating muscle on the things that make the most difference to us. That is very important. Rather than focusing on things that might sound good from this Dispatch Box, let us focus on the things that make a difference to the great businesses of our country.
Diana Johnson (Kingston upon Hull North) (Lab)
In the light of the estimated 20,000 job losses among police officers in this country, how many officers does the Prime Minister think could be employed by the 2.9% increase that he has conceded?
The Prime Minister
I have a message for the Whips: you need to hand out more than one question; it is always better if there is a choice. But I think that I answered it earlier.
Alec Shelbrooke (Elmet and Rothwell) (Con)
I congratulate the Prime Minister on once again showing real leadership in Europe. Drawing on the comments made by the Leader of the Opposition a moment ago, we all want to be fully involved at the heart of Europe and in partnership with it, but that does not mean that we have to roll over and have our bellies tickled every time a proposal comes forward.
The Prime Minister
I am on only my third European Council, and they are rather more frequent than they used to be, but I do not think it is impossible to combine a strong defence of the national interest with building alliances. Everyone round that European Council table recognises that we actually do all have interests that we have to try to protect on our own as well as making sure that we are making the right decisions for the 27.
Mr Kevan Jones (North Durham) (Lab)
Given that negotiations on the budget are continuing with the European Parliament, will the Prime Minister give us one of his famous cast-iron guarantees that his Government will not accept an increase above 2.9%?
The Prime Minister
The point I can make is that 13 Heads of Government or Heads of State signed a letter saying they would not accept more than 2.9%, so it is not just my word but the word of all those leaders who have said that this should not be accepted. That is the best thing that we could do, and it gives a real chance of either achieving 2.9% or, possibly even better, a deadlock which would mean a freeze for next year.
Mr John Baron (Basildon and Billericay) (Con)
Given the extent of belt tightening in this country, does my right hon. Friend believe that now is the right time to get the EU’s accounts fully and independently audited in order to reduce waste and fraud, and will he push for that?
The Prime Minister
My hon. Friend makes a good point. The first thing we are going to do is the initiative on transparency and openness to try to draw greater attention to what the European Union spends its money on. We will find that some of the spending—spending on science projects and the like—may be worth while, but I am convinced that there is a lot of waste that could be cut out if we had the transparency that we are applying to our own budget back here in the UK.
Mr James Clappison (Hertsmere) (Con)
May I congratulate my right hon. Friend on clearly standing up for Britain’s interests? On the parts of the Van Rompuy report that set in place new mechanisms that clearly concern the United Kingdom, even though it is a non-eurozone member, will my right hon. Friend bear in mind the inevitable pattern of EU history whereby any grant of power is followed by demands for more and more power, as surely as night follows day?
The Prime Minister
My hon. Friend makes an extremely good point. I can tell him that the Chancellor and I, in undertaking these negotiations, are acutely conscious that you have to watch the language that is being proposed by others in the European Council and keep asking whether it is setting some future trap for the UK Government. I have to say that I think the language in the Van Rompuy report about its not affecting Britain in terms of sanctions is extremely clear.
There is one other point I would make, which is about the opt-out that was negotiated from the Maastricht treaty. That opt-out has worked well. Yes, there is surveillance in terms of economic policy—that has happened for 10 years—but frankly, it has not forced us into doing anything we did not want to do. Just as that opt-out has held good, we have now renewed and refreshed it for this fresh group of challenges that have come towards us.
Charlie Elphicke (Dover) (Con)
May I congratulate my right hon. old Friend on his excellent statement—[Interruption] Well, having some friends, that is—and ask him if he is aware of any member of the British delegation to the European Parliament who voted for the higher budget increase, and if so, will he name and shame them?
The Prime Minister
What I can say is that when there was a motion in the European Parliament to support a freeze, 12 out of 13—I think it was—Labour MEPs voted against that, so they had the opportunity to stand up for what some of their colleagues have stood up for today, and they failed to do it.
Mr Julian Brazier (Canterbury) (Con)
In the light of my right hon. Friend’s opening remarks and his comments on his bilateral with the German Chancellor, does he agree that Britain is very well placed to lead the transition in Europe towards the era of information-age terrorism, especially as we have GCHQ, and as his new National Security Council has made such a strong commitment to more spending against cyber warfare?
The Prime Minister
My hon. Friend makes a very good point. Prime Ministers and Ministers often praise the security services, and it is good to put on the record the very hard work that people at GCHQ in Cheltenham do; they are among the best in the world at what they do. That gives us an opportunity to combat this new threat of cyber terror and cyber attacks that affects not just our defences but many, many businesses in our country. There is a chance to have some real leadership in this respect, and other countries, including France and Germany, are coming to us wanting to work with us in combating cyber threats because of the investment we are managing to put in.
Mr Philip Hollobone (Kettering) (Con)
The cost of the new European diplomatic corps will eat up on its own the entire net contribution from this country, both this year and going forward. What did my right hon. Friend say to Baroness Ashton about the ballooning costs of that organisation, and what was her response?
The Prime Minister
I know that my right hon. Friend the Foreign Secretary has had this conversation, and I have discussed the issue as well. While we opposed the European External Action Service—we did not want it to be created in the first place—the Lisbon treaty, sadly, is now a fact we have to live with. But because what were two roles are combined into the role that Baroness Ashton fills, there should be opportunities for some cost savings. Actually, the European Parliament has offices around the world, and we think there is a real opportunity to rationalise that and ensure that it keeps its cost under control.
Aviation Security Incident
(14 years 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 on the recent airline bomb plot. The House will know that in the early hours of Friday morning, following information from intelligence sources, the police identified a suspect package on board a UPS courier aircraft that had landed at East Midlands Airport en route from Cologne to Chicago. Later during the morning, police explosives experts identified that the device contained explosive material. A similar device was located and identified in Dubai. It was being transported by FedEx to Chicago.
Since then, an intensive investigation has been taking place in this country and overseas. Cobra met on Friday to assess progress, I chaired a Cobra meeting on Saturday and the Prime Minister chaired a further Cobra meeting this morning. I am sure the House will appreciate that much of the investigation is sensitive, and the information I can give is necessarily limited. Disclosure of some details could prejudice the investigation, the prospects of bringing the perpetrators to justice, our national security and the security of our allies, but I want to give the House as full a picture as possible.
We know that both explosive devices originated in Yemen. We believe that they were made and dispatched by the organisation known as al-Qaeda in the Arabian Peninsula. This group, which is based in Yemen, was responsible for the attempted downing of an aircraft bound for Detroit on 25 December last year. The devices were probably intended to detonate mid-air and to destroy the cargo aircraft on which they were being transported. Our own analysis of the device here—analysis that has to proceed with great care to preserve the evidential value of the recovered material—established by Saturday morning that the device was viable. That means not only that it contained explosive material but that it could have detonated. Had the device detonated, we assess that it could have succeeded in bringing down the aircraft. Our forensic examination of the device continues. We are receiving valuable assistance from a wide range of partners, and the analysis has some way to go.
At this stage we have no information to suggest that another attack of a similar nature by al-Qaeda in the Arabian Peninsula is imminent, but the organisation is very active. During this year it has repeatedly attacked targets in Yemen. On 26 April and 6 October it attacked and attempted to kill British diplomats based in Sana’a. It continues to plan other attacks in the region, notably against Saudi Arabia. We therefore work on the assumption that the organisation will wish to continue to find ways of attacking targets further afield.
We will continue to work with international partners to deal with this threat. We have for some years provided assistance to the Yemeni Government and will continue to do so. The Prime Minister has spoken to President Saleh to make clear our desire for a closer security relationship. Following the Detroit incident, Ministers in the last Government took the decision to stop all direct passenger and cargo aircraft flying from Yemen to and through the UK. Over the weekend, we took the further step of stopping all unaccompanied air freight to this country from Yemen. That will include air freight from Yemen both carried on courier flights and hold-loaded in passenger aircraft. The small number of items in transit prior to that direction have been subject to rigorous investigation on arrival in the UK, and no further suspicious items have been discovered.
We are now taking further steps to maintain our security. I can confirm to the House that we will review all aspects of air freight security and work with international partners to make sure that our defences are as robust as possible. We will update the guidance given to airport security personnel based on what we have learned, to enable them to identify similar packages in future.
From midnight tonight, we will extend the suspension of unaccompanied air freight to this country from not just Yemen but Somalia. This decision has been made as a precautionary measure and it will be reviewed in the coming weeks. It is based on possible contact between al-Qaeda in Yemen and terrorist groups in Somalia, as well as on concern about airport security in Mogadishu.
From midnight tonight, we will suspend the carriage of toner cartridges larger than 500 grams in passengers’ hand baggage on flights departing from UK airports. Also from midnight tonight, we will prohibit the carriage of these items by air cargo into, via or from the UK unless they originate from a known consignor—a regular shipper with security arrangements approved by the Department for Transport.
We intend that these final two measures will be in place initially for one month. During that time, we will work closely with the aviation industry, screening equipment manufacturers and others, to devise a sustainable, proportionate, long-term security regime to address the threat. Department for Transport officials are already in technical discussions with the industry, and my right hon. Friend the Secretary of State for Transport will chair a high-level industry meeting later this week to discuss next steps. These initiatives are in addition to those that we have set out in the strategic defence and security review.
We are already committed to widening checks on visa applicants to this country. Following the Detroit incident, we are also committed to making changes to pre-departure checks to identify better the people who pose a terrorist threat and to prevent them from flying to the UK.
We are committed to enhancing our e-borders programme, which provides data on who is travelling to this country and which is therefore an essential foundation for our counter-terrorist and wider security work. We have an increasingly active and important border co-operation programme with counterparts in the USA. The Detroit incident led to the introduction of further passenger scanning devices at key airports in the UK.
Cobra will continue to meet through this week. The National Security Council will also consider this issue. We will continue to work closely with our partners overseas.
Finally, the House will wish to join me in expressing gratitude to the police and the security and intelligence agencies in this country for the work they are doing to understand the threat we face and to deal with it so effectively.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The whole country has been shocked by the events of the last four days—by the discovery of two concealed and hard-to-detect explosive devices on aircraft, one of which was at East Midlands airport, by the risk that further devices may be at large and by the serious and challenging threat that such terrorist activity constitutes to public safety and our country’s security.
At Home Office questions earlier, I commended the Home Secretary for the calm way in which she has led the response to these threats and chaired and reported on Cobra meetings. I thank her for the Privy Council briefings that she gave me on Friday night and again on Saturday afternoon. I join her in commending our police, intelligence and security services for the brave and vital work they have done over the past few days in close co-operation with allies around the world to save lives, as they do every other day of the year.
It is the job of Her Majesty’s Opposition to ask questions, probe statements and hold the Government to account. That we will do, but we will be mindful at all times of our wider responsibility to support necessary actions to keep our citizens safe and protect our vital national interests. In that spirit, I have questions for the Home Secretary on three issues: the detailed events of the last few days, and the implications for airline security and wider national security.
First, we all appreciate the way in which intelligence and international co-operation are involved. Events move fast, and things are always clearer with hindsight, but at what precise point were the police, the Home Secretary and the Prime Minister first told about the potential threat? Were there delays in getting precise information to our security and police officers on the ground? Why was the device not discovered by police officers during the first search? Could earlier information have made a material difference to the search? What operational lessons, if any, will be learned when dealing with such events in the future?
Secondly, the fact that the two live explosive devices were intercepted by an intelligence tip-off only after they had been carried on at least five different planes, three of which were passenger aircraft, raises serious questions about the security of our airspace. Some security experts have referred to cargo security as a potential blind spot. I understand that Lord Carlile drew attention to the potential risks of cargo transit in his annual reports in 2007 and 2008, and that significant actions were taken to improve intelligence and international security co-operation at that time. I also understand that a tougher search method, called explosive trace detection, was introduced for passenger flights last year following the Detroit attempted attack.
I appreciate that this is a complex problem to solve, that a review has been set up and that the Home Secretary has already acted to ban unaccompanied cargo packages from Yemen and Somalia and put in place temporary restrictions on carrying toner cartridges, but what conclusions does she draw about the reliability of current checks from the fact that the device was not spotted on the first check by police experts at East Midlands airport? Will the review consider extending explosive trace detection from passenger to cargo flights, which I believe has happened in the United States? Will the scope of her review cover cargo carried in passenger as well as cargo aircraft? Should we take any other action now to improve the security of cargo coming into, going out of or transiting the UK while the review is undertaken?
The events of the last few days also raise wider issues for national security and our counter-terrorism strategy. It is clear that terrorists operating out of Yemen constitute an increasing threat, as the Home Secretary said. Can she assure the House that the Government are in urgent discussions with the Yemeni Government and our allies around the world with a view to doing more to interrupt terrorist activities at source? Given the wider evidence of a mounting threat, the judgments that will underpin the Government’s current review of counter-terrorism powers are especially important. Although we will reserve judgment until we see the outcome of the review, I have said that the Opposition will seek to support her where we can and that consensus should be our shared goal.
Finally, I must raise the issue of resources. Given that the explosive devices were intercepted through vital intelligence work, is the Home Secretary confident that a 6% real-terms cut in the single intelligence account over the next four years can be managed without compromising such work? Given that the device was discovered by specially trained police working closely with our security and border services, is she confident that a 10% real-terms cut in counter-terrorism policing over the next four years and a 50% cut in capital available to the UK Border Agency will not undermine operational capability?
The Olympics are now just two years away and the eyes of the world will be on our country. Given that the planned 20% real-terms cuts in police budgets is front-end loaded, and that there will be a 6% cut in the year before the games and an 8% cut in the year of the Olympics itself, can the Home Secretary assure the House that the extra strain that police resources will face will not pose an unacceptable risk to fighting crime and our national security? Does she agree with me that in the light of the events of the past few days, the issue of resources should now be looked at again, alongside the counter-terrorism review?
Mrs May
May I first thank the right hon. Gentleman for the way in which he has responded on this issue? He is absolutely right that this is a not a matter of party political divide, but one of concern to all of us across the House. It is important that we get our response right, and I am grateful to him for indicating that he will support the Government in the measures that we take and the response that we give. He asked a number of detailed questions, some of which were quite operational in type. I will attempt to answer as many of his questions as possible, but if I do not answer his operational ones now, I will be happy to do so in writing afterwards.
The right hon. Gentleman referred to the fact, which I mentioned in my statement, that the initial indication of the device came from intelligence. We do not speak about intelligence sources or say how it came about, but, on timing, I can tell him that the police attended the airport and looked to see what they could find in relation to the device. It took a while before the device was identified as something that contained explosive material. I and the Prime Minister were informed that there was a device containing explosive material at about 2 o’clock on Friday.
The right hon. Gentleman referred to comments from security experts about this being the “soft underbelly”, which is a term that some have used. In relation to cargo and other aspects, I would say that, as I am sure he is aware, we are in a constant battle with the terrorists, who are always looking for another innovative way to get around our defences. Our job, and the job of our security and intelligence agencies and the police, is to ensure that we do all we can to ensure that there are no gaps in our defences. In that context, the work that the Government have already done in introducing the national security strategy and, crucially, in bringing Departments together in our work on security is an important part of that task.
The right hon. Gentleman asked various questions about cargo. The review will cover a number of issues. Obviously, when such an incident takes place, it is right not only that we take stock and that we take action immediately—as we have done—but that we do more work with the industry. As I indicated, my right hon. Friend the Secretary of State for Transport will be taking that forward, and I can confirm that the review will consider the extension of explosive trace detection, although there are some significant technical issues there. Certainly, however, the review will look at that.
The right hon. Gentleman referred to the counter-terrorism review. As he will have heard me say at Home Office questions earlier, final decisions have not been taken on the review. I am absolutely apprised of the fact that the Government, like every Government, need to ensure that the safety and security of the public are a prime concern. We need to rebalance our national security with our civil liberties, but I am well aware that it is our national security that enables us to enjoy our civil liberties. We remain conscious of that.
The right hon. Gentleman then asked a number of questions about cuts to budgets. He asked whether I was confident in the ability of the security and intelligence agencies to maintain their level of work, and to do their vital job in keeping us safe, and I can say that yes, I am confident. On cuts in policing, as he knows, police forces will be able to take money out of non-front-line policing. On border services, crucially, the coalition Government are committed to enhancing our ability to keep our borders secure, through the introduction of the border police command under the new national crime agency we will be setting up.
Finally, of course the Olympics budget is protected, and a significant part of the Olympics security budget, which is protected within the Home Office, relates to Olympics policing.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I thank the Home Secretary, her officials and the police, security and intelligence community for their excellent work in this case. In implementing the comprehensive set of measures that she has announced, will she take into account the fact that there have been reports of variable levels of rigour deployed by different companies responsible for ensuring that the highest inspection standards are enforced throughout our airports? Will she also undertake to ensure that any goods coming directly or indirectly from any country about which we have a particular concern have the same tracking method and the same double security check, which will give the additional assurance we need in regard to people acting mainly from specific places around the world?
Mrs May
I thank my hon. Friend for his comments. Obviously, the review has to consider a number of aspects of how we can defend ourselves against potential attacks of this sort. We can control what we do at our own airports, but of course what is done at overseas airports is not directly under our control. That is why our international work is so important. Generally the UK is looked to as a leader in airport security, and often other countries look to see what we are doing, and enhance their procedures in line with it. Obviously we will be talking to other countries, as well as to airline and airport operators, about the arrangements that they put in place. It is important that we are able to conduct certain tracking operations. For example, I checked with The UK Border Agency just before I came here to make this statement, and I can say that it has been tracking and looking at the ban introduced on Saturday on unaccompanied freight cargo from Yemen, and has confirmed that the prohibition has been operating properly.
Mr Jack Straw (Blackburn) (Lab)
May I add my commendation to the right hon. Lady for the balanced and calm way in which she has dealt with this difficult situation, something on which my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and I both have reason to reflect? Given the critical role that intelligence played in the detection of this potential outrage, may I ask her whether she agrees with what Sir John Sawers said last week in advance of this outrage, about the need for accountability for the agencies, but also, above all, about the imperative of secrecy to enable them to do their job with security, which is essential if we are to defeat the terrorist threat?
Mrs May
I thank the right hon. Gentleman for his kind remarks, and I agree with him absolutely. By definition, the very nature of the secret services is that part of what they do is secret. It is important that efforts are made where possible to explain to the public the sort of work being done and the sort of issues being addressed. Indeed, there has been a series of speeches in recent weeks—from the director general of MI5, the head of GCHQ and, now, Sir John Sawers—explaining the operation of each of those different agencies, but of course it is axiomatic that secret work has to be conducted in secret.
Andrew Bridgen (North West Leicestershire) (Con)
I would like to praise the security services and the staff of East Midlands airport, which lies in my constituency. By intercepting that package, they may well have saved lives. Everyone who contributed to that successful operation can be rightly proud. However, I would like to ask the Home Secretary for an assurance that additional screening will be introduced only if it is clearly shown to be necessary, and that any such measures would be implemented on a Europe-wide or worldwide basis, and not in the UK alone.
Andrew Bridgen
In other words, what we need to do is avoid UK-only measures.
Mr Speaker
Order. I think that we have got the drift of the hon. Gentleman’s inquiry.
Mrs May
I thank my hon. Friend for his question. May I join him in commending the work of all those at East Midlands airport, including the police and others working there, for the way that they dealt with the incident? It is one thing to stand here in the House of Commons and talk about such an incident; it is quite another to approach a device that one knows may be explosive and to deal with it on behalf of others. I certainly thank them for their work, and I commend them for it.
On the second part of my hon. Friend’s question, I would simply say that it is not in our gift to mandate the response of others on such issues. However, the work that we will be doing—and that we have been doing as a country over the years—which involves talking to international partners, airlines and airport operators about security levels and the measures that need to be put in place, is part of the process of trying to ensure that, as far as possible, we see enhanced security in other places.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
May I reinforce the bipartisan approach that my right hon. Friends have already mentioned? The Home Secretary will know that we have a significant Yemeni community in Sheffield, the members of which would want me to offer their support for the measures that she has announced this afternoon and for the way in which she is drawing down experience and expertise. Will she engage the Yemeni community in this country as part of the process of reinforcing the Government’s approach to the Yemeni Government, who face the most enormous difficulties because of historic, geographic and tribal splits, and the way in which al-Qaeda has moved from Saudi Arabia into Yemen, and in some cases is using the discontent of people living there as a way of propagating its terrorist activity across the world?
Mrs May
I thank the right hon. Gentleman for his suggestion, and of course that understanding and knowledge of the Yemeni community here in the UK are important to us. The Government have been working closely with the Yemeni Government to try to support them in doing what they want to do, which is to ensure that al-Qaeda is not in Yemen and is not able either to make attacks in Yemen or to use the country as a launch pad for attacks elsewhere. We will continue to work with the Yemeni Government to do all we can to provide them with the support that they need to conduct that task.
Patrick Mercer (Newark) (Con)
The Home Secretary will be aware that the borders of this country do not start and stop with the white cliffs of Dover. Will she outline what resources she intends to deploy directly in support of the Yemeni Government, and, if necessary, as the Department of Homeland Security has done, to work in that country?
Mrs May
I am happy to tell my hon. Friend that work is already under way with the Yemeni Government. Indeed, following the attempted Detroit bombing on 25 December, measures were put in place under the previous Labour Government, and have been continued under this Government, to work with the Yemeni Government and to provide them with various levels of support, particularly around airport security, which was crucial to the attempted bombing of that plane. That work is being funded by the Foreign Office and will be continued. More widely, the Foreign Office has been part of the Friends of Yemen group, bringing in others to ensure that we do all we can to provide the sort of support that the Yemeni Government need in their battle against al-Qaeda, and to help us to fight al-Qaeda, too.
Hazel Blears (Salford and Eccles) (Lab)
The devices were clearly designed to wreak havoc and cause a massive loss of life. I am sure that the country has breathed a sigh of relief that they were detected in this way. The right hon. Lady recognised that intelligence and the sharing of intelligence were key to what has happened. Will she reassure us that our international relationships are robust and strong enough to ensure the maximum sharing of that intelligence? Will she also, as my right hon. Friend the Member for Morley and Outwood (Ed Balls) has indicated, reflect on the fact that the comprehensive spending review says that there will be a real-term reduction in counter-terrorism funding for the police? In the light of such circumstances, I ask her to reflect on that position.
Mrs May
I have already responded on counter-terrorism policing. In answer to the first part of the right hon. Lady’s question about our relationships with international partners, let me say that on intelligence gathering and the sharing of intelligence, the working with international partners is absolutely crucial. We have a particularly close relationship with the United States. Since this incident took place, I have spoken twice with my direct opposite number, the Secretary of Homeland Security, Janet Napolitano. The Prime Minister has spoken to President Obama, and other contacts are taking place with the United States. We are also conscious of the fact that we need to enhance information sharing and working with other partners across the world. For example, last week I was in Pakistan, talking to the Pakistani Government about how can enhance our relationship in the battle that we all fight in dealing with terrorists and the terrorist threat.
Dr Julian Lewis (New Forest East) (Con)
My right hon. Friend has already made reference to the processes involved in scanning cargoes. Will she explain to the House whether the main issue is that existing scanners may not pick up a device of this sort, or is it that devices of this sort have been placed on the aircraft in other countries and they would not routinely pass before our own scanners?
Mrs May
I thank my hon. Friend for his detailed question. I am not in a position to give him an absolute answer, because forensic work is still ongoing in relation to the device. Obviously, once that forensic work is complete, we will know rather more about the device and, therefore, about what the response should be in relation to screening that sort of device. Until that forensic work is complete, it would not be appropriate for me to hazard an answer to the point that he has made.
Keith Vaz (Leicester East) (Lab)
Mr Speaker, may I declare my interest, commend those who work in East Midlands airport, and warmly welcome the phone conversation between the Prime Minister and President Ali Abdullah Saleh? Does the Home Secretary not agree that the best way to protect our people is to work with the Yemeni Government? That means giving them the equipment and the security capability that we promised them at the London conference in January and implementing the recommendations of the Home Affairs Committee. I implore her to work with the Foreign Secretary and the International Development Secretary to ensure that a stunningly beautiful but desperately poor country does not fall into the hands of al-Qaeda?
Mrs May
I thank the right hon. Gentleman for those points. I understand that the equipment that was promised earlier this year, following the Detroit incident, is to be delivered to Yemen shortly. The Government have been working with the Yemeni Government, and we have common cause against al-Qaeda and will continue to do so for as long as it is in that country. Certainly, my right hon. Friends the Foreign Secretary and the Secretary of State for International Development are cognisant of the role that their Departments can play in helping the Yemen to fight back against the cancer of terrorism.
Mr Ben Wallace (Wyre and Preston North) (Con)
I thank my right hon. Friend for her excellent bulletins and for her statement today informing us of the situation. That has led to a lack of hysteria as the issue has been reported in the media. At times like these, it is easy to reach for the latest piece of technology as a solution, as the previous Government did in the past. In countering terrorism, however, that often ignores the best solution, which is the profiling of people, air freight, destinations and embarkation points. Will the Home Secretary look again at the use of profiling, both for passengers and for freight, to see whether there is not a better way of solving the problem that we are facing from the likes of Yemen?
Mrs May
My hon. Friend raises an issue that has been mentioned on a number of occasions. That approach has been adopted by others. We are looking at all the techniques that we should be using to ensure that we provide the maximum protection for people in the UK. In relation to passengers, we are enhancing our ability at the borders to ensure that those who are a threat to the UK do not travel here.
Mr Nigel Dodds (Belfast North) (DUP)
I thank the Home Secretary for her statement and commend the security and intelligence services for their great work. Sadly, however, she will be aware that the bomb at East Midlands airport was not the only bomb to be planted or found at a British airport this weekend. A bomb planted by IRA dissidents was found and defused at Belfast City airport. It would have caused casualties, injuries and even death, and I commend the security forces on locating and defusing it. This illustrates the fact that British citizens are subject to attack from a range of sources. Will the Home Secretary give a guarantee to all our citizens, wherever they live, that resources and efforts will be put into combating all kinds of terrorism? The focus is rightly on the incident in the east midlands at the moment, but the people of Northern Ireland are still facing the threat of dissident republican terrorism.
Mrs May
The right hon. Gentleman is right to remind us of the fact that terrorism comes from a number of sources, and not just from al-Qaeda. I commend the security forces and the Police Service of Northern Ireland, not only this weekend but over recent months, for the increasing amount of work that they have done to prevent any incidents of terrorism in Northern Ireland from taking place. Indeed, the right hon. Gentleman will have seen in the national security strategy that we published two weeks ago that we have clearly identified the threat from dissident republicanism as one that we need to address. We are conscious of the fact that the number of attempted attacks in Northern Ireland has been increasing in recent months.
Robert Halfon (Harlow) (Con)
I commend the security services for doing a remarkable job, but does not the incident involving the Detroit bomber show that other parts of civil society, such as our universities, are failing to get a grip on Islamist extremists? Does the Home Secretary agree that, for our fight against terrorism to succeed, we need to deal effectively with the conveyor belt to terrorism, just as we must deal with the terrorists themselves?
Mrs May
My hon. Friend has raised an important point. I hope that I can reassure him that, alongside our work on the incident at the weekend and on reviewing our counter-terrorism legislation, we are also looking at the development of extremism and the process of radicalisation. It is important that we ensure that people do not get drawn into a radicalised agenda that leads to extremism, violence and terror. That work is ongoing.
Paul Goggins (Wythenshawe and Sale East) (Lab)
May I also thank the Home Secretary for her work over recent days, and for her statement this afternoon? In devising more effective ways of screening freight, what role do she and the Secretary of State for Transport envisage for the national aviation security committee, given the important role that the aviation industry plays in that committee’s work?
Mrs May
I can tell the right hon. Gentleman that the question of the most appropriate forum for the discussions and work that need to take place will be discussed with the industry later this week at a meeting chaired by my right hon. Friend the Secretary of State for Transport.
Paul Uppal (Wolverhampton South West) (Con)
In view of the fact that Yemeni unemployment is running at something like 40% and particularly that the intelligence intercept we received was from a former al-Qaeda operative, and echoing the sentiments expressed by my hon. Friend the Member for Harlow (Robert Halfon), may I ask the Home Secretary to be mindful of the fact that the battle for young hearts and minds is as important for the long term as any short-term security measures we implement?
Mrs May
I agree with my hon. Friend that the battle for hearts and minds is important. The approach to keeping this country safe is multi-layered. We have spent some time talking about physical security measures, which are an important part of our work to keep the country safe—intelligence and police work are other essential aspects of that work—but it is also important to ensure that we win the battle of hearts and minds, as my hon. Friend suggests. As I said in response to my hon. Friend the Member for Harlow (Robert Halfon), the Home Office is already looking at the processes of radicalisation and ways in which people turn to extremism. We need to see what can be done to ensure that we stop those routes and encourage people into a different way of life such that they do not want to blow up and kill people.
Mr David Hamilton (Midlothian) (Lab)
As someone who stays 20 miles from Edinburgh airport, I can tell the Home Secretary that the bomb incident in middle England has alerted people to the fact that this is not just a London issue. Has she been in contact with the Scottish, Welsh and Northern Ireland Governments to give assurances—it is especially necessary in Scotland, where there are discussions about moving to just one police force—that the highest levels of security will be maintained in all regional airports?
Joseph Johnson (Orpington) (Con)
Does the Home Secretary agree that the best way of defending this country against the terrorist threat is to win the battle of hearts and minds, as has been said? I happened to spend Saturday and Sunday in Gaza, talking to young Palestinian people, and it was very clear to me that we are losing that battle at quite a rate—in large part because of the continuation of the blockade of Gaza. I wonder whether my right hon. Friend feels that our efforts might best be spent not in reaching for the latest bit of technology—my hon. Friend the Member for Wyre and Preston North (Mr Wallace) mentioned that—but in deploying ever greater diplomatic efforts to resolving that particular long-standing conflict?
Mrs May
There are many issues to be addressed in the fight to prevent the cancer of terrorism. As I said, it is not simply about physical security; many aspects need to be dealt with. I assure my hon. Friend that the Government are well aware of the many issues that need to be considered.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Given the particular nature of the threat, does the Home Secretary think it might be advisable to think again about cuts in capital for the equipment used in screening and detection programmes at our seaports and airports?
Mrs May
There are two aspects to the expenditure on equipment. Much of the equipment used for screening at airports and some other aspects is paid for by the industry rather than Government. The hon. Gentleman has reminded me that I failed to respond to one of the questions put by the shadow Home Secretary—about capital expenditure at the UK Border Agency. I assure the hon. Gentleman and his right hon. and hon. Friends that, within the capital programme for the UK Border Agency. key aspects of the work needed to enhance our border security, such as e-borders, are protected.
Rehman Chishti (Gillingham and Rainham) (Con)
The Friends of Yemen task group reported back to the United Nations in July on a strategy for Yemen. What steps have been taken to implement the findings, prior to the group’s meeting in Riyadh?
Mrs May
I am grateful to my hon. Friend for his question. The Foreign Office has been taking this matter forward, and my right hon. Friend the Foreign Secretary has been very alive to the need for the Government to be working within that Friends of Yemen group to ensure that steps are taken to support the Yemen Government. I would be happy to ensure that my hon. Friend receives a detailed reply on the particular steps that have been taken.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
The events of the weekend underline the importance of global intelligence systems, but what new steps can be taken to develop new technologies and techniques to deal with the information that comes from those systems? May we have an absolute assurance that we will take strong action against those who incite mass murder, and that we will not accept any political excuse from those who advocate the killing of human beings?
Mrs May
I am happy to support what the hon. Lady has said about the need to deal with those who purport to encourage others to kill human beings and indulge in mass murder in the name of politics. As for her first question, there are many different aspects, and many different approaches need to be taken in response to intelligence. Some of that response may involve police work, while some may involve physical security work by Governments or others. It is essential for us to think carefully about all the facts that we need to identify and deal with, and we are working on that with airline operators and the aviation industry generally.
As I said in my statement, the screening equipment manufacturers have done helpful work with the Government since the incident involving the plane to Detroit. I look forward to establishing a relationship with those manufacturers, along with my right hon. Friend the Secretary of State for Transport, as we address yet another issue.
Richard Graham (Gloucester) (Con)
In the light of all that has happened recently, I thank the Home Secretary and the Government for making the difficult decision, in straitened times, to increase our overall spending on intelligence in order to combat terrorism. Will the Home Secretary join me in thanking my constituents who work down the road at GCHQ for the vital work that they do to protect our nation, and will she join me in encouraging our schools to make full use of the language immersion centre in Gloucestershire, which will be built soon and which will develop the skills in difficult languages that are so vital to our intelligence work?
Mrs May
My hon. Friend has raised an issue of which he has particular knowledge, but there is probably not much awareness generally of the need for people to be skilled in a large number of languages, including some that are not normally taught. I am happy to commend the work to which my hon. Friend has referred.
Valerie Vaz (Walsall South) (Lab)
I thank the Home Secretary for her statement. As one of two Members who were born in Yemen, may I ask for an assurance that she will ask the Secretary of State for International Development to ensure that aid to that country continues at its current level?
Mrs May
As I have already said, my right hon. Friends the Secretary of State for International Development and the Foreign Secretary are very conscious of the role that they can play, and that aid can play, in supporting Yemen. We are working closely with the Yemeni Government to enable them to deal with the al-Qaeda threat that is faced not only by us from Yemen, but by them inside it.
Mr Tom Harris (Glasgow South) (Lab)
As a country we are good at preventing the kind of attacks that we have already seen, but arguably less good at anticipating new forms of attack. Apart from the month-long ban on the carriage of printer cartridges, what bans are the security services considering imposing on items in carry-on luggage?
Mrs May
It is important that the Government have acted now to deal with the threat that we have seen, including the specific issue of printer cartridges. We will do further scientific work. As I said earlier, it is not always appropriate to give details, but I assure the hon. Gentleman that we are well aware of the need not just to respond to what has happened, but to be constantly alert in the future.
Kevin Brennan (Cardiff West) (Lab)
This very disturbing incident coincided with press reports about a possible future fudge on the counter-terrorism review that the Home Secretary is undertaking, in order to meet the needs of some colleagues in the coalition. May I encourage the right hon. Lady to take the position attributed to her in the press and make sure that at all times she puts the protection of the British public ahead of any protection of her coalition partners?
Mrs May
I can assure the hon. Gentleman that the coalition Government as a whole are governing in the national interest, and that we are very conscious that the first task of government is to keep the public safe. As I have said, and as I also said earlier this afternoon in Home Office questions, no final decisions have been taken on the counter-terrorism legislation review, but at such time as they are taken they will, of course, be brought before the House.
Paul Flynn (Newport West) (Lab)
Does this event not undermine the British Government’s justification for continuing to demand that our brave British soldiers continue to risk their lives in Afghanistan—that that keeps Afghanistan free of terrorist camps—and ignore the fact that the terrorist threat is not the Taliban but al-Qaeda, which is free to operate in Pakistan, Yemen and Somalia?
Mrs May
I simply say to the hon. Gentleman that this is not a zero-sum game: it is simply not the case that if we are able to take action against a group of terrorists in one place they just move somewhere else and we then deal with them there. In recent months and years we have seen the sources of terrorist threats become more diverse. Our troops have been doing a remarkable job in Afghanistan with great courage—great bravery—in order to ensure that al-Qaeda is unable to regain a foothold in Afghanistan. Al-Qaeda is, however, starting to operate from other parts of the world; that is the diversity of the threat, rather than simply an alternative one. I therefore say to the hon. Gentleman that it is right that we commend the important and vital work our troops have been doing in Afghanistan, but we must also be aware of the al-Qaeda threat growing in other parts of the world.
Mr Speaker
I am grateful to the Home Secretary and other colleagues for their co-operation.
Mr Speaker
We were about to proceed to the main business, but not before we have had a point of order from Chi Onwurah.
Point of Order
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
On a point of order, Mr Speaker. Over the weekend there have been reports in the press that children’s hospitals such as the Royal Victoria infirmary in Newcastle will face substantial cuts in funding. I have seen the work that is done, and I know how much concern there will be among parents and children. Will you, Mr Speaker, explain for the benefit of those not familiar with the ways of the House that any such announcement should take place on the Floor of the House, and will you ask the Minister with responsibility to come here and confirm those reports, or reassure us on them?
Mr Speaker
I am grateful to the hon. Lady for her point of order, although I am not sure that I will be able to satisfy her with my response to it. The form of Government announcements is a matter for the Government—that is to say, whether there is an oral or a written statement is a matter for Ministers to decide, not the Chair. I suspect that the hon. Lady will remain eagerly alert for any developments on this matter.
The second point I will make to the hon. Lady, which I hope she will forgive me for making, is that I have a sense that her attempted point of order will be communicated to either The Evening Chronicle or the Journal in Newcastle, or possibly both.
Parliamentary Voting System and Constituencies Bill (Programme) (No. 4)
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
17:23 - The House divided: - Ayes: 320 / Noes: 241 - Question accordingly agreed to.
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
I beg to move,
That the following provisions shall apply to the Parliamentary Voting System and Constituencies Bill, in place of paragraph 5 of the Order of 6 September 2010:
1. Proceedings on consideration shall be taken in the order shown in the first column of the following Table.
2. The proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.
Proceedings | Time for conclusion of proceedings |
|---|---|
Amendments relating to Clause 11. | 7.30 pm on the first day. |
Amendments relating to Clauses 12 and 13; Amendments relating to Clause 10; new Clauses and new Schedules relating to Part 2. | The moment of interruption on the first day. |
Amendments relating to Clause 4; Amendments relating to Schedules 5 to 8; Amendments relating to Clause 8; remaining proceedings on consideration. | 8.00 pm on the second day. |
I will be very brief. I am grateful to those hon. Members who took part in our five days of lively and rigorous debate on the Bill in Committee, and I look forward to continuing that debate throughout Report and Third Reading. Some hon. Members have expressed concern that certain parts of the Bill were debated less than others in Committee. The Government still believe that five days was an appropriate length of time, and how some hon. Members chose to use the time is, of course, a matter for them, not the Government.
The Government are, however, keen to ensure that Members have further opportunity to debate all the Bill’s provisions on Report, so the programme motion prioritises those provisions on which less time was spent in Committee. The motion provides that today’s debate will be on clauses 11 to 13, which relate to the boundary proposals, with a knife after clause 11 to ensure that we do get on to discussing local inquiries and the decoupling clause for the Welsh Assembly. Tomorrow’s debate will focus on the rules for combined polls and the issue of referendum thresholds. Third Reading will provide a further opportunity for Members to scrutinise and express their views on the Bill, as amended.
It was right that the Home Secretary came here today to make her very important statement about threats to our national security. That, of course, has necessitated the use of some valuable parliamentary time and I trust that all hon. and right hon. Members will agree that the time we have left is best used scrutinising the Bill and debating the issues of substance. I hope, therefore, that all hon. and right hon. Members will feel able to agree with the programme motion and that we shall move on to debating the Bill.
Chris Bryant (Rhondda) (Lab)
No, we disagree with the knives in this motion, and we made that absolutely clear when asked about it last week. We believe that allowing this amount of time today and tomorrow is inappropriate; we believe that it is inappropriate not to allow any specific time for votes, because it is the right of this House not only to debate but to vote on such matters; we believe that it is inappropriate in particular to have so little time tomorrow, when we will be dealing with 28 pages of Government amendments, not a single one of which is the result of discussions in Committee; and we think that it is inappropriate for no further time to be allowed today, particularly as we have had two, albeit important, statements. So we will be opposing the motion.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As a whole, the Bill is very significant for Wales—holding the alternative vote referendum on the same day as the National Assembly elections next May and introducing an equal electoral roll based on population quota for constituencies are both very damaging measures for Wales and democracy in our country. It is an insult that we were refused a Welsh Grand Committee debate on the Bill. Only one clause relates to Wales—it was clause 11, but it is now clause 13—and it deserves proper time for discussion in this Chamber. Specific time should have been allotted for its discussion—and not as an afterthought—because we probably will not reach it this evening. We should have had a proper debate on the clause for Wales, so we will be voting against the programme motion.
Kevin Brennan (Cardiff West) (Lab)
The time that has been given to debate the Bill overall is inadequate, as is the time set out in today’s programme motion. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) was absolutely right to point out the lack of time that has been granted to discuss the Welsh aspects of this Bill and, in particular, the intransigent refusal to grant any time to the Welsh Grand Committee process. That is leading to a “bring back John Redwood” campaign in Wales, because nobody can remember the right hon. Member for Wokingham (Mr Redwood) ever refusing any meeting with Welsh MPs or any meeting of the Welsh Grand Committee; I am sure that he would confirm as much himself.
Finally, this might have been an appropriate allocation of time for the Bill if it were not a Wallace and Gromit Bill, laying the track as we go along with hundreds and hundreds of Government amendments. Instead, the Bill should have been properly scrutinised in advance and should have been through a pre-legislative scrutiny process. For that reason, the time allocated and the knives in the programme motion are wholly inadequate.
Question put.
Parliamentary Voting System and Constituencies Bill
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
19:29 - The House divided: - Ayes: 245 / Noes: 326 - Question accordingly negatived.
19:43 - The House divided: - Ayes: 243 / Noes: 327 - Question accordingly negatived.
19:56 - The House divided: - Ayes: 257 / Noes: 315 - Question accordingly negatived.
22:00 - The House divided: - Ayes: 244 / Noes: 336 - Question accordingly negatived.
Chris Bryant (Rhondda) (Lab)
I beg to move amendment No 9, in page 9, leave out lines 13 to 20 and insert—
1A (1) No constituency shall have an electorate more than 5 per cent. above or below the electoral quota for that part of the United Kingdom unless the Boundary Commission concerned believes there to be overriding reasons under the terms of these rules why it should.
(2) No constituency shall have an electorate more than 10 per cent. above or below the electoral quota for that part of the United Kingdom.
(3) In this Schedule “the electoral quota for that part of the United Kingdom” means—
where U is the electorate of that part of the United Kingdom minus the electorate of the areas mentioned in rule 5A and Y is the number of constituencies in that part minus the number of constituencies allocated within that part as a result of the operation of rule 5A.’.
Mr Deputy Speaker (Mr Nigel Evans)
With this it will be convenient to discuss the following:
Amendment 185, page 9, leave out lines 14 and 15 and insert—
(a) no more than 5% above or below the United Kingdom electoral quota unless the Boundary Commission concerned believes there to be exceptional geographic circumstances, and
(b) no more than 15% above or below the United Kingdom electoral quota.’.
Amendment 200, page 9, line 14, leave out ‘United Kingdom electoral quota’ and insert ‘electoral quota for the part of the United Kingdom (England, Wales, Scotland or Northern Ireland) in which the constituency is located’.
Amendment 2, page 9, line 16, after ‘6(2)’, insert ‘, 6A(2)’.
Amendment 201, page 9, line 16, leave out ‘, 6(2) and 7’ and insert ‘and 6(2)’.
Amendment 202, page 9, leave out lines 17 to 20 and insert—
‘(3) In this rule “electoral quota” means—
where U is the electorate of the part of the United Kingdom in which the constituency is located, reduced in the case of Scotland by the electorate of the constituencies mentioned in rule 6, and C is the number of constituencies allocated to that part under rule 8.’.
Amendment 182, page 9, leave out lines 18 to 20 and insert—
where U is the electorate of the United Kingdom minus the electorate of the Council areas mentioned in rule 6 and C is the number of constituencies allocated to these Council areas.’.
Amendment 184, page 9, line 20, at end insert
‘and accordingly the electorate of each part of the United Kingdom shall be treated for the purposes of this rule as reduced by the electorate of those constituencies.’.
Amendment 10, page 9, leave out lines 27 to 34.
Amendment 186, page 9, line 30, leave out from ‘if’ to end of line 34 and insert
‘the Boundary Commission is concerned that unusual geographical considerations, including in particular the size, shape and accessibility of a proposed constituency, would require an unreasonable amount of time to travel round the various communities within it.’.
Amendment 188, page 10, line 2, leave out ‘A Boundary Commission’ and insert
‘The Boundary Commissions for England, Scotland and Wales.’.
Amendment 11, page 10, line 10, at end insert—
‘(1A) A Boundary Commission shall ensure that—
(a) in England, no district or borough ward shall be included in more than one constituency;
(b) in Northern Ireland, no local authority ward shall be included in more than one constituency;
(c) in Wales, no unitary authority ward shall be included in more than one constituency;
(d) in Scotland, regard shall be had to local authority ward boundaries.
(1B) The Boundary Commission for England shall where practicable have regard to the boundaries of counties and London boroughs; and in any case no constituency shall include the whole or part of more than two counties or London boroughs.
(1C) The Boundary Commission for Wales shall where practicable have regard to the boundaries of unitary authorities; and in any case no constituency shall include the whole or part of more than two unitary authorities.’.
Amendment 193, page 10, line 10, at end insert—
‘(1A) The Boundary Commission for Northern Ireland may take into account to such extent as they think fit—
(a) special geographical considerations;
(b) considerations arising from the co-terminosity of parliamentary constituencies and multi-member constituencies for the Northern Ireland Assembly under the Northern Ireland Act 1998;
(c) local government boundaries as they exist on the most recent day of an election for any district council, other than an election to fill a vacancy;
(d) any local ties that would be broken by changes in constituencies;
(e) the inconveniences attendant upon such changes.’.
Amendment 196, page 10, line 10, at end insert—
‘(1A) A Boundary Commission shall have power to specify, in certain specified circumstances set out in subsection (1C) below, that constituencies in areas determined by the Boundary Commission shall be—
(a) wholly within a principal local authority or authorities; or
(b) wholly within well-established historic or geographical boundaries.
(1B) The impact of any decision taken in respect of areas defined under subsection (1A) must not create constituencies within the remainder of the region or nation in which such areas fall which fail to meet the rules in this Schedule.
(1C) The coterminosity of parliamentary constituencies with boundaries as defined in subsection (1A) may be specified when the following support such a proposition—
(a) the principal local authority or authorities within the area proposed;
(b) all sitting Members of Parliament representing constituencies wholly or partially within that area; and
(c) at least two-thirds of all civil parish, community and town councils or parish meetings within that area who make a representation;
and where the Boundary Commission is satisfied, from its own soundings amongst the electorate and the business and voluntary sectors, that such a proposal is widely supported.’.
Amendment 207, page 10, line 16, at end insert—
‘(2A) The Boundary Commission for England shall take into account counties as listed in Schedule 1 to the 1997 Lieutenancies Act in so far as is possible in accordance with rule 2 above.’.
Amendment 12, page 10, line 17, leave out sub-paragraph (3).
Amendment 13, page 10, leave out lines 18 to 24 and insert—
‘Specified areas
5A (1) The following shall be allocated whole numbers of constituencies by whichever Boundary Commission is responsible for them:
(a) Orkney Islands and Shetland Islands council areas;
(b) Comhairle nan Eilean Siar council area;
(c) The Isle of Anglesey county area;
(d) The Isle of Wight county area;
(e) The County of Cornwall and Isles of Scilly council areas.’.
Amendment 183, page 10, leave out lines 18 to 25 and insert—
‘Whole numbers of constituencies
6 (1) The following shall be allocated whole numbers of constituencies by whichever Boundary Commission is responsible for them—
(a) Orkney Islands and Shetland Islands council areas;
(b) Comhairle nan Eilean Siar council area;
(c) the Cyngor Sir Ynys Môn Isle of Anglesey county area;
(d) the Isle of Wight county area;
(e) the County of Cornwall and Isles of Scilly council areas;
(f) the Highland Council area;
(g) the Argyll and Bute Council area.
(2) The number of constituencies to be allocated to each area shall be determined by dividing the electorate of the area or areas concerned by the United Kingdom Electoral Average and rounding to the nearest whole number, unless this would mean that rule 4(1) could not be satisfied, in which case the area concerned will be allocated the smallest number of constituencies required in order to satisfy that rule. Each area must be allocated at least one whole constituency.
(3) In this rule “United Kingdom Electoral Average” means (where E is the electorate of the United Kingdom)—
? | .’. |
Amendment 1, page 10, line 25, at end insert—
‘Isle of Wight
6A (1) All parts of the Isle of Wight must be included in a constituency which is wholly in the Isle of Wight.
(2) Rule 2 does not apply to any such constituency.’.
Amendment 4, page 10, line 25, at end insert—
‘Cornwall and the Isles of Scilly
6A (1) All parts of Cornwall and the Isles of Scilly must be included in a constituency which is wholly in Cornwall and the Isles of Scilly.
(2) Rule 2 does not apply in relation to any such constituencies.
(3) The electorate of any constituency in Cornwall and the Isles of Scilly shall be:
(a) no less than 95 per cent. of the Cornwall and Scilly electoral quota; and
(b) no more than 105 per cent. of that quota.
(4) The “Cornwall and Scilly electoral quota” means C/E where C is the electorate of Cornwall and the Isles of Scilly and E is the number of parliamentary constituencies which the Commission has determined should be allocated to Cornwall and the Isles of Scilly.
(5) The number of Parliamentary seats allocated to Cornwall and the Isles of Scilly shall not result in the electoral quota of any other constituency being compromised in respect of Rule 2.’.
Amendment 189, page 10, line 26, leave out from beginning to end of line 7 on page 11.
Amendment 192, page 10, line 27, leave out from ‘Ireland’ to end of line 7 on page 11 and insert—
‘ the Boundary Commission for Northern Ireland shall establish a Northern Ireland electoral quota by dividing the electorate of Northern Ireland by the number of seats allocated to Northern Ireland as determined under rule 8.
‘(2) The electorate of any constituency in Northern Ireland shall be no less than 95% of the Northern Ireland electoral quota and no more than 105% of the Northern Ireland electoral quota except where sub-paragraph (3) applies.
(3) Where the Boundary Commission consider that they can best have regard to factors in rule 5(1A) and achieve an appropriate allocation of the seats assigned to Northern Ireland under rule 8 they may recommend that some Northern Ireland constituencies may be outside the limits in paragraph 2 above, provided that they are not less than 95% of the United Kingdom electoral quota and no more than 105% of that quota.’.
Amendment 14, page 11, line 22, at end insert—
‘(5) The total number of seats to be allocated to any country shall not be more than 10 per cent. above or below the current number of constituencies. If the number of seats allocated by the process described in paragraphs (3) and (4) exceeds or falls below that limit then additional or fewer seats shall be allocated as appropriate sufficient to bring the allocation within 10 per cent. of the current number of seats in the country concerned.
(6) This adjusted number of seats shall be the allocation for that country for the purposes of these rules.’.
Government amendments 220 and 221.
Amendment 204, page 12, line 10, leave out ‘The United Kingdom’.
Government amendment 21.
Chris Bryant
The Government’s rhetoric suggests that all parliamentary seats should have exactly the same size of electorate, but that is not what the Bill says. It allows for a variation of up to 5% either way from the national average and creates three special exemptions for Scottish seats, one of which is held by the Scottish National party and the other two of which are held by the Liberals. We are not opposed to those exemptions, although they look dubious in the context of the Bill’s wider attempt to strive for mathematical purity.
Our argument is that although the majority of seats should indeed be within 5% each way, there are more instances than are allowed for in the Bill where the Boundary Commission should be allowed to exercise a degree of discretion, because this country is made up not just of statistics on a map but of living communities with distinct historical, cultural and political identities that need their discrete representation in the House. A system that delivers mathematical perfection may be aseptically clean, and please the tidy utilitarian and the centralist, but it will in countless cases leave voters on the wrong side of a river, a mountain, a county or ward boundary, or cultural divide and, thereby, fail the fundamental tests that we should be setting.
Will those boundaries be readily comprehensible to ordinary voters? Will they match the political and cultural aspirations of the discrete communities of the UK? Will they render Members more or less accessible? Frankly, will they look like common-sense boundaries or seem like crazed contortions devised by a centralised desiccated calculating machine? The Government are not just insisting on their mathematical equation, of course; they are also subordinating any other considerations of whatever kind, such as local authority boundaries, to that calculation. Taken together, those measures will lead to ludicrous anomalies.
Let us consider how some instances would have applied at the last election. Wyre Forest is, quite sensibly, coterminous with its district council, but it would have had 2,131 too many electors for the 5% rule. Likewise, Shrewsbury and Atcham is coterminous with the former district of that name and unchanged after a number of reviews, but it would have had 1,552 too many electors. Bath and North East Somerset council includes two constituencies, Bath and North East Somerset, but it would have had to find 1,886 electors from a neighbouring authority. Even Forest of Dean, comprising the Forest of Dean district council and one ward from Tewkesbury district council, a seat that was completely unchanged at the last review, would have been 383 voters short. That is why we want to change the Bill.
In many cases, it would be impossible to respect county boundaries. At the last election, Cumbria would have had to find 14,296 electors from neighbouring counties in order to make up its six seats. Northumberland would have had to find 22,529 electors for four seats. Warwickshire’s six seats—Kenilworth and Southam, North Warwickshire, Nuneaton, Rugby, Stratford on Avon,and Warwick and Leamington—would have needed to find 7,991 electors.
Mr Mark Field (Cities of London and Westminster) (Con)
How many electors would Wales have had to find to make up its full quota of 40 seats, which the hon. Gentleman would like to maintain?
Chris Bryant
A very large number, but I am not arguing against greater parity, as I hope I have made clear on several occasions during the Bill’s proceedings. However, I am also not in favour of one area of the country having its representation in this House cut by 25%—four times more than any other part of the United Kingdom. That seems to be a swingeing cut, and it will do no good for representation in this House.
The six seats in Oxfordshire would, on average, have been 1,907 electors over the threshold, so approximately 11,000 Oxfordshire electors would have needed to be shed so that they were in a constituency that was shared with a neighbouring county. Indeed, part of the Prime Minister’s own constituency, including the Saxon village of Burford, might have had to be shifted to Gloucestershire. Even Burford priory, the house of civil war Speaker Lenthall, would have had to be summarily moved from Oxfordshire to Gloucestershire.
In Hampshire, because the rules will not allow Isle of Wight to remain a single seat, the county would have been required to provide 40,000 electors from one or perhaps two of its existing seats. Most significantly, the historic county of Cornwall and the Isles of Scilly would have had to find 13,138 electors, or an average of 2,190 per constituency, from Devon to make up the number for six seats. I believe that to be wrong. King Athelstan determined as early as 936 that the east bank of the River Tamar should be the border of Cornwall, and, although it may be true, in the words of the Prime Minister, that the Tamar is not the Amazon, it certainly is the Rubicon—a river not worth crossing.
The same is true of metropolitan areas. Warrington would have had 119 too many electors for two seats—an average of 59 per seat. The five seats in Birmingham, each comprising four wards and with electorates of between 73,731 and 75,563, would have been slightly too large and would have had to shed voters elsewhere. In London, Wandsworth would have had 3,427 electors too few for its three seats, Sutton would have had 1,119 too few electors for its two seats, Barnet would have had 371 too many electors for its three seats, and Enfield would have had 219 too few electors for its three seats.
Fiona Mactaggart (Slough) (Lab)
My hon. Friend is talking about the number of seats within a larger boundary area. I am based in Berkshire, and Slough is very different from the rest of the county. We are one of Berkshire’s unitary authorities. If the number were calculated on the basis of the whole of Berkshire, there would be a serious risk that the community of Slough—which is nothing like the community of Windsor and Maidenhead; that is felt by both communities—would be muddled up. I am worried that in his very powerful peroration he is not sufficiently focusing on the cultural differences between different areas in the same county boundary.
Chris Bryant
I have not got to my peroration yet—this is just the beginning—but I am grateful to my hon. Friend for her comments. She is absolutely right. My whole argument is that some of the historical boundaries also represent historical cultural identities. We cannot just draw the lines on the map according to the numbers as if people were just statistics: we have to draw them in recognition of the communities and bonds that tie people together.
Mr Field
Does the shadow Minister recognise that this is the self-same argument that was made, probably in this House, some 170 years ago, in the run-up to the Great Reform Act of 1832, to justify the idea of the cultural importance of maintaining all the seats in Cornwall and Suffolk that had existed since time immemorial? It is a nonsensical argument, and we now have to look towards equality. I disagree with him in that I would like to see the three Scottish seats also taken out of this consideration to ensure that we have the proper equalisation of all 650 seats that should exist in the next Parliament.
Chris Bryant
The hon. Gentleman should not try to misrepresent my argument. I am not arguing in the slightest for tiny seats. I am not even arguing that the people of Rhondda alone have the right to elect in perpetuity, even though they have only 50,000 voters. There should be much greater parity, but we need to be able to balance the needs of parity with the needs of local communities and constituencies of interest that exist around the country. There was no constituency of interest in Old Sarum in 1831 and 1832—the only interest was that of Tory Back Benchers who wanted to ensure that they were still able to dole the seat out to one of their family members. So it is an argument not against Labour but against the Conservatives.
Sheffield will almost certainly be entitled to five constituencies, but with 20 wards it would end up with three constituencies of six wards, which would be too big, and two constituencies of five wards, which would be too small. We would therefore have to split wards in Sheffield or cross the boundaries with Barnsley and Rotherham, which would be tough, as wards in Rotherham are about the same size as those in Sheffield and there are a large number of hills in the way. In the words of Professor Ron Johnston,
“They are going to have to split wards, I have no doubt about this.”
Angela Smith (Penistone and Stocksbridge) (Lab)
Under these proposals, it is perfectly possible that one of the wards in my constituency, East Ecclesfield, could end up being split into three parts, with one part going into the seat of Wentworth and Dearne, one part into Brightside, and one part into my seat.
Chris Bryant
My hon. Friend is absolutely right. The wards in some metropolitan areas comprise 15,000 or 20,000 voters. Consequently, if the Government push ahead with their proposed 5% leniency either way rather than the 10% that we are advocating, they will have to split wards. Contrary to what the Deputy Leader of the House said last week, and what the Parliamentary Secretary, Cabinet Office, the hon. Member for Forest of Dean (Mr Harper) has said, there is not a single ward in England that is split between constituencies—not one. [Interruption.] The latter is chuntering very quietly, but now he is looking at his phone, so I presume he has given up on that point. He can pipe down.
The end result is that it will become impossible for wards to be used as building blocks, as they currently are without exception in England despite the fact that it is not a requirement of the rules. Voters will have to become psephological experts to know who represents them at each level of government—their councillor, their Member of Parliament and their representatives at other tiers in Scotland, Wales or Northern Ireland. Historical communities and towns will be split for negligible benefit, and because of the knock-on effects there will have to be a radical redrawing of virtually every seat in the land.
Chris Bryant
I will not give way to the hon. Gentleman a third time, if he does not mind. We have very little time for this debate.
My final point is very important. The proposed reduction in the number of Members of Parliament will have the effect of increasing the electoral quota in all four countries, even England, where it will go up from 71,537 to roughly 75,800. Just 204 current constituencies have electorates within 5% of that number. The knock-on effects, however, mean that it is likely that barely a handful of seats will remain untouched. That was confirmed by the heads of the boundary commissions, who told the Select Committee on Political and Constitutional Reform that the change would result in a complete redrawing of constituency boundaries.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
Is my hon. Friend aware that because of the totalising nature of the reforms, Professor Johnston said in his evidence to the Political and Constitutional Reform Committee that this was exactly the wrong point at which to abolish public inquiries?
Chris Bryant
My hon. Friend, who is on the Committee, makes a very valuable point. It was made very clear to the Committee, even in the short time that was allowed it to produce its report, that it would be ludicrous to get rid of public inquiries at this time, when so many changes would be coming up.
The complete redrawing of virtually every seat in the land will mean not just reselections but new selections for candidates around the country. More than one Conservative MP has already told me that the Conservative Whips have made it absolutely clear to them that if they do not toe the line, the party leadership will make it impossible for them to be selected under the new boundaries. What price accountability then? What price new politics, eh?
That is why our amendment 9 would provide that the vast majority of constituencies would indeed fall within the 5% rule, but that the boundary commissions should be allowed a wider degree of latitude where they believe there to be an overriding concern, up to a fixed limit of 10%. That 10% is actually the difference between the constituency of the Parliamentary Secretary and that of the Deputy Leader of the House.
Our amendment 13 would make explicit provision for a whole number of seats for Cornwall and the Scilly Isles, for Anglesey and for the Isle of Wight. Amendment 11 would determine that wards could not be split between constituencies, and amendment 12 would mean that factors such as local boundaries could be considered without subordination to the 5% rule, but not going further than the 10% rule.
This country is not a Rubik’s cube devised by a mathematician, it is a complex jumble of communities. Some live in inconvenient numbers in inconvenient places that cannot be readily and symmetrically delineated in equal numbers. I am not defending the right of the Rhondda or anywhere else to its own seat in perpetuity. We need greater parity, and that will mean the amalgamation of seats in many areas, but let us not create so crude a system that 383 voters have to be found for the Forest of Dean or 59 expelled from Warrington. Let us not create such a centralised system that the idiosyncrasies of the towns, villages, islands and cities of this land cannot find their voice in this House.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
I say in a genial way what a pleasure it is to follow the hon. Member for Rhondda (Chris Bryant)—it is a pleasure because, by definition, if I am following him, he must have stopped speaking for once. He has been difficult to avoid over the past two or three weeks in debates on the Bill, and, it seems, everywhere else. I got home on Thursday and there he was in Glasgow on “Question Time”.
Having said that, we have great sympathy with many of the principles that the hon. Gentleman enunciated. I wish to confine my remarks to amendments 182 to 184, which go together. We will seek to press amendment 183 to a vote if the opportunity arises in due course. The amendments are in my name and those of hon. Friends, all of whom are present.
I wish to speak to the amendments to add to the comment that I made when the Deputy Prime Minister made the initial statement about this whole business. I feel that it is incumbent upon me to say a word or two, as my constituency has been put up in lights as some kind of benchmark, albeit that the lighting has been somewhat distorted and much misunderstood. I wish to clarify the matter and refer to the implications that flow from it.
Over the past 27 years, my constituency has been geographically the largest in the United Kingdom. It was the largest when it was formed in 1983, and some 10 years later, at the time of the boundary changes for the 1992 election, it remained the largest and became larger. At the last general election, it remained the largest and became larger yet again. I have looked back at one representation made to the Boundary Commission about that trend and about the sheer size of what became the Ross, Skye and Lochaber constituency, and indeed I made the same point myself at the hearings on the boundary change. Although I did not oppose the proposals to increase the size of the constituency—one never wants to oppose the inclusion of communities where one might find oneself having to go to seek support—I felt that the increase was impractical and would create unique challenges, as I diplomatically put it, for whoever represented the seat.
I shall be quite honest with the House: having represented three such vast constituencies over the course of nearly 30 years now, I can say that the current one is by far the most impractical. It has to be said that the other two were gigantic and posed particular problems, but there comes a point at which geographical impracticality sets in and nobody can do the job of local parliamentary representation effectively. I would say that point has now been reached. It is no exaggeration to say that I can drive for five solid hours within the boundaries of the constituency, simply between point A and point B, to carry out one engagement, and then have to drive five hours back. That is just insane.
Ian Lucas (Wrexham) (Lab)
The right hon. Gentleman referred to hearings that took place following the latest boundary review. Does he agree that one of the most pernicious aspects of the Bill is that those hearings will no longer exist? The very worthwhile, and I am sure powerful, representations that were made in his community will be denied the rest of us.
Mr Kennedy
I absolutely agree and endorse entirely the sentiment and substance of what the hon. Gentleman says. I think it represents a negation of democracy to go about something so fundamental in this way.
I will explain specifically what we propose in the amendments. There are a range of options, as we all know, and nobody has the philosopher’s stone. However, the Government are trying to introduce the artificial construct of a capped number of constituencies for the whole UK. Leaving aside party politics, I think the House would agree that there are distinct and unique geographical considerations in places such as the Isle of Wight, in Cornwall, with its relationships between places on each side of the Tamar, and in the highlands and islands, a vast area that is bigger than Belgium. I think the House recognises that in such circumstances, a degree of sensible flexibility is called for. This is not gerrymandering; in fact the seats that tend to be involved could not be gerrymandered in a political sense, because they are not those kinds of communities. Largely because of their sheer disparity and diversity, the individual who happens to be their Member will, irrespective of their party affiliation, represent a significant link between those communities and officialdom at the regional, national and even European level. That is being dissipated and completely overlooked in the crazy approach that is being applied, which simply is not suitable and does not make sense given the communities involved.
Mr David Hamilton (Midlothian) (Lab)
Given that we are not going to be partisan, does the right hon. Gentleman agree that the Scottish borders are unique? It would be ridiculous to talk about Midlothian moving down to take in Peebles and Galashiels or West Lothian moving down to take in the borders. Historically, our areas have had nothing in common, and it would not make sense to make such changes now.
Mr Kennedy
Yes, I agree completely with the hon. Gentleman. In a moment of political frustration when he was Prime Minister of Canada, Mackenzie King said that the problem with Canada was that it had too much geography and not enough history. If anything, we have more than our fair share of both in Scotland, and that certainly comes through in considerations of the type that the Bill gives rise to. That is why the hon. Gentleman’s point about his part of the country is very valid.
Time is tight, and I do not wish to detain the House much longer. I want to stick to principles rather than becoming formulaic. Indeed, I have far better versed colleagues on hand, who can provide chapter and verse and who would leave the rest of us goggle-eyed with their statistics and equations—all of which I endorse, I hasten to add. I am always at my best in politics in such situations. The less one understands the issue, the more confident one can sound—witness the shadow Minister tonight.
Looking at the proposals, it makes eminent sense that the Western Isles are, and should be, a distinct, unique constituency. I remember growing up when the Western Isles constituency was bisected and was answerable partly to Dingwall and partly to Inverness. That was an absolutely atrocious affront to democracy for the communities there. It is a good thing that we have a unique, distinct constituency now, and I am pleased that it will stay that way.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
May I remind the right hon. Gentleman that the council in north Lewis was Ross and Cromarty, while from Harris southwards was involved with Invernessshire? He is absolutely correct that it was a nightmare, and people still talk about it because there was a lack of accountability—as he said, people on the mainland and officialdom could not be reached.
Mr Kennedy
I very much agree. A similar argument applies to the northern isles, and it is absolutely correct that these respective entities have been recognised in the Bill. That is why what is proposed for the Isle of Wight is such an affront. Although the numbers there are huge compared with the island communities that some of us represent, the sense of a natural, distinct identity in the Isle of Wight should surely be reflected in the attitude that officialdom takes. I do not claim to speak with insight for the people of the Isle of Wight, but if that is what people want—representing island communities such as Skye, I can well understand where they are coming from—who are we to pass legislation that thwarts them before they have even got off the starting block in making their argument?
Kevin Brennan (Cardiff West) (Lab)
Do not the right hon. Gentleman’s amendments, which specify particular communities, whether Na h-Eileanan an Iar or Ynys Môn in Scotland and Wales respectively, show that the sensible, really flexible way forward would be to leave detailed considerations to the Boundary Commission and to give it the flexibility to act, rather include in the Bill specific communities that are to be protected? That is the difference between the limited approach taken by the Government and the extended approach taken by the right hon. Gentleman.
Mr Kennedy
That is a very good suggestion, and I am pleased that Labour Front Benchers are nodding in agreement. That suggestion is contained in the group of amendments tabled by my hon. Friends and me, which I mentioned.
In the Isle of Wight, in particular, there has been considerable uproar about these issues. The uproar is yet to come on the mainland highlands of Scotland, but when it does—I say this in all seriousness and I do make a party political point here— generation upon generation of communities that have stuck with the flame of Liberal tradition and history in the United Kingdom through thick and thin, when it has been all but extinguished in many other parts, will absolutely fail to comprehend why Liberal Democrats in government have put their name to such a measure, which takes no account of the very special peripheral circumstances of communities that have helped to maintain the Liberal cause over generations.
It is never too late for Governments to think again. This Government should think again, and my colleagues and I will divide the House to encourage them to do just that.
Paul Murphy (Torfaen) (Lab)
It is an enormous privilege to follow the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy). I have always had great admiration for him, as he knows, but the points that he has made about the Government’s intransigent and hard-line views are extremely refreshing and, if I might say so, devastating. He rightly goes to the heart of our democracy. At the end of the day, it is the relationship between the Member of Parliament and his or her constituents that, in many ways, identifies British parliamentary democracy. The drift towards an American-style district, which is purely based on numbers and not on communities themselves, is an attack on the very basis of our democracy in the United Kingdom.
The right hon. Gentleman rightly points, as we can in Wales, to the preposterous anomalies that will result from the Government’s policy if it is allowed to continue. There will be enormous constituencies in Wales, just as there will be in Scotland. One constituency might even stretch from the south Wales valleys to Wrexham. It would perhaps not take five hours to drive from one end to the other, but it would certainly take three hours—[Hon. Members: “Five.”] It depends how fast one drives, I suppose. I take my hon. Friends’ point, and they make it very properly—it is a long way from one part of Wales to the other.
I have had the privilege of representing a south Wales valley for 23 and a half years in this place, and the valleys of Wales are very distinct. Our communities run north and south, not east and west. Dismembering those valleys or including them with others will make complete nonsense of the community basis of our constituencies, whether in Wales and Scotland, or, indeed, in Cardiff, which the hon. Member for Cardiff North (Jonathan Evans) will undoubtedly now talk about.
Jonathan Evans (Cardiff North) (Con)
The right hon. Gentleman talks about the history of the valley communities, but he may recall that when Aneurin Bevan was elected to the House in 1929, he represented three valley communities, not one or two. The right hon. Gentleman is over-stressing his point a little.
Paul Murphy
I cannot actually remember the time when Aneurin Bevan was in the House of Commons, but he is still my great hero. However, the hon. Gentleman knows that the situation he describes was exceptional because of the heads of the valleys situation, and he knows my point is valid. Our local authorities in south Wales are based on valleys, and our constituencies are based on valleys. However, the point is that our constituencies are also based on communities. What Government in their right mind could think that the Isle of Wight could be anything other than a constituency? The rigidity with which the Government are dealing with these issues is beyond belief.
I want now to talk to amendment 14 and to raise the business of Wales in so far as it is represented in the House of Commons. I had the great privilege of being Secretary of State for Wales on two occasions. The fact that I held that office at all was a recognition by our constitution that there should be territorial Secretaries of State—for Northern Ireland, Scotland and Wales. There is machinery in the House of Commons for dealing with Welsh and Scottish matters, although I must tell the Wales Secretary, who is in the Chamber, that the refusal to hold a Welsh Grand Committee on this issue is a disgrace. When I was Wales Secretary, I held 22 Welsh Grand Committees—we debated anything that the people of Wales wanted their public representatives to debate, whether they were Conservative, Liberal, Plaid Cymru or Labour.
Chris Ruane (Vale of Clwyd) (Lab)
Why does my right hon. Friend think the Wales Secretary has not held a Welsh Grand Committee?
Paul Murphy
I have not the slightest idea other than that the Secretary of State wants to avoid a debate or the difficult questions that might be raised. The constitutional aspects of the Welsh Grand Committee will be debated elsewhere in the House this week. Wales Members have taken the unusual step of calling a meeting of the Welsh parliamentary party, which was established in the later part of the 19th century—it represents all Wales MPs. It will meet under the chairmanship of my right hon. Friend the Member for Cynon Valley (Ann Clwyd) on Wednesday as an alternative to the Welsh Grand Committee, but we should never be in this position in the first place. I think the Secretary of State, for whom I have great regard, has caused more trouble by not allowing debate in the Grand Committee.
The House of Commons has special machinery for dealing with Wales business, but taking 25% of our Members of Parliament away goes completely against the devolution settlement that was voted for by the people of Wales in 1997. That settlement is that we should have not only an Assembly, but proper representation by Members of Parliament from Wales. We certainly should not have less representation than we had in 1832, when it was established that there would be 35 Members.
The Minister represents the Forest of Dean, which is a distinct community—it has historically been represented by Labour Members, but not since the previous Parliament. The miners there would have recognised, because they understood such issues, that there is a special case in Wales, Northern Ireland and Scotland for smaller nations to be represented in the UK Parliament. Such representation guards the interests of the people of Wales, Scotland and Northern Ireland. The Government, from the Wales Secretary to the Minister who is here today, the Deputy Prime Minister and the rest of their colleagues, have singularly failed to understand that that representation, if nothing else, guarantees the Union, because Wales is properly represented as a small nation.
I am not a Welsh speaker but I very much respect those who are. Some 21% of the people in Wales speak Welsh as their first language. The Welsh Affairs Committee heard that minorities in European countries are properly represented in their Parliaments. That should also apply to Welsh speakers, but under the proposals, Welsh speakers will be less well represented in Welsh constituencies than now.
The Government have been terrible on this matter. Wales has suffered in other respects, including from the cuts, but it has suffered very badly because the Government have not understood the nature of the Union. They are supposed to be the great Unionists, but they threaten the Union by taking a quarter of Wales MPs away.
Albert Owen (Ynys Môn) (Lab)
Does my right hon. Friend agree that it was not Members of Parliament who decided the minimum number of seats for Wales in this place but the Speaker’s Conference? We have been denied a debate on the current reforms in the Welsh Grand Committee, but is it not logical to debate changing the number of seats after a referendum on greater law-making powers for the National Assembly for Wales?
Paul Murphy
Of course.
Another aspect of the Bill is the Government’s singular failure to consult the First Ministers for Wales, Northern Ireland or Scotland. Had they held proper consultations on the Bill, it could have been different, but there has been no pre-legislative scrutiny, and the Welsh and Scottish Affairs Committees have condemned the Government for their lack of scrutiny.
Dr Hywel Francis (Aberavon) (Lab)
My right hon. Friend makes a strong point. Does he agree that the excellent report published last week by the Welsh Affairs Committee is an indication of the strength of feeling in Wales that he describes, because it was a unanimous report?
Paul Murphy
Indeed—the Chair of the Committee is my neighbour, the hon. Member for Monmouth (David T. C. Davies). The Committee’s report condemns the Government for how they have dealt with this matter.
Ms Louise Bagshawe (Corby) (Con)
The right hon. Gentleman is making an astonishing argument. Does he not understand that the preservation of the Union will be best served by remedying the democratic deficit and allaying the anger that voters in England feel because they are under-represented compared with voters in Wales and Scotland?
Paul Murphy
Absolutely to the contrary. The Union is protected because it recognises the different parts within it—whether Wales, Scotland or Northern Ireland. Devolution has strengthened the Union, but it will be weakened by these proposals, because the Bill fundamentally goes against the concept of the representation of smaller nations within a United Kingdom.
Mr Nigel Dodds (Belfast North) (DUP)
The right hon. Gentleman served with great distinction as Secretary of State for Northern Ireland as well as Secretary of State for Wales. He makes a valid point. At the times of the Belfast and St Andrews agreements, it was clear that part of the settlement was that there should be no question of any change in the representation of Northern Ireland in the House. That was never raised as an issue, because everyone was agreed and settled on it. That was the basis on which devolution took place.
Paul Murphy
The Government have ripped up that settlement, as they have ripped up the devolution settlements in Wales and Scotland.
Mr Denis MacShane (Rotherham) (Lab)
My right hon. Friend makes a powerful case for Wales, but the proposals affect many communities in England. My small town of Rotherham, which has three MPs, would rather affiliate or fuse with the Western Isles or Wales than have anything to do with Sheffield. There will be huge anger, concern and distress if we are reduced to American-style districts with boundaries rejigged to suit the Government. They talk of a democratic deficit, but they are destroying the traditions of this House of Commons for England, Wales, Scotland and Northern Ireland.
Paul Murphy
I entirely agree with my right hon. Friend. I would not want to come between Sheffield and Rotherham Members, but I understand his point. The Bill is a two-pronged attack on our parliamentary traditions. On the one hand, it reduces the link between a Member of Parliament and his or her constituency and the community that that constituency represents; and on the other, the Government’s policies on Wales, Scotland and Northern Ireland threaten the very integrity of the Union.
Angela Smith
I should like to put on record the fact that Sheffield would love to absorb Rotherham constituencies. Sheffield’s much greater fear is that it will end up sharing constituencies with Derbyshire or West Yorkshire or, God forbid, even Leeds.
Mr MacNeil
Does the right hon. Gentleman agree that the 88-year-old state of the United Kingdom is a very unbalanced Union? Some 8% to 10% of Members are from Scotland, and there is a percentage of MPs from Wales. However, if the UK were a proper union between nations, the percentage would be more equal between the constituent parts rather than grossly imbalanced. For the record, I would prefer it if Scotland needed to send no one down here, but this 88-year-old state is unbalanced.
Paul Murphy
I am sure the hon. Gentleman will agree that whatever his ideal, he is against a reduction in the number of Scotland and Wales MPs to represent Scottish and Welsh interests in the House.
Mrs Eleanor Laing (Epping Forest) (Con)
I have listened carefully to the right hon. Gentleman. I totally agree with him, and nobody is a fiercer Unionist than I am, but the way to preserve our United Kingdom is to show equal respect to all parts of it, meaning every little corner of every country in the UK. How can he argue that one Member of Parliament should come to the House with a greater weight of votes behind them than Members from other parts of the UK? That is not fair and it is not equal.
Paul Murphy
Is the hon. Lady not aware that many countries, including the United States and Spain, have proper representation of minorities and countries within countries in a very special way? But I suppose that some Members from England would not understand that.
Chris Ruane
My hon. Friend gave some excellent international examples. Is there any danger that those countries will be copying this Tory model in revised constitutions?
Paul Murphy
I very much doubt it. The whole point is that the Government have handled the matter atrociously. At the end of the day, this is not about better democracy; frankly, it is about the fortunes of the Conservative party. In taking that approach, the whole basis of our parliamentary democracy will be threatened.
Jacob Rees-Mogg (North East Somerset) (Con)
I wish to speak to my amendment 207, but first may I say how much I agreed with the hon. Member for Rhondda (Chris Bryant)—I am surprised to be saying it, but he will be even more surprised—who spoke a great deal of sense about not making constituencies purely numerical compartmentalisations? This country has such a rich history of communities, and when it is a case of a few hundred here or a few hundred there, we ought to be more generous than this very rigorous and rigid approach. Many Government Members, as well as Opposition Members, feel that.
This matter ought to be looked at in a broader context and have more cross-party support. The one area on which I disagree with Opposition Members is the advantage to the Conservative party, which I think will be remarkably small.
Kevin Brennan
I am grateful to the hon. Gentleman for giving way, particularly so early in his remarks. I have read his interesting amendment. Does he hope that the flexibility around historical county boundaries for which he is looking might find more favour in another place, if not with the Conservative Front-Bench team tonight?
Jacob Rees-Mogg
It had occurred to me that I might suggest to my noble kinsman that he might wish to move a similar amendment. I look forward to doing that after this evening’s debate, if Her Majesty’s Government are not kind enough to accept my amendment.
I hope I do not bore the House by going on about history too much, but not far from here, outside the House of Lords, is a statue of Richard the Lionheart—Richard I—who was a great, noble king of England. It was in his reign that people first came from the shires to advise the king. His reign began in 1189—that means more than 800 years of counties being represented in Parliament. I am sorry to say that those Members who represent boroughs are very much the Johnny-come-latelies—they only got here in 1265. However, those of us representing counties have been here since the reign of Richard I.
I tabled my amendment because it seems a great shame to get rid of a long-standing historic tradition by accident, by a rule of the pen, by just doing something because it is there and it is tidy. I accept, as the hon. Member for Rhondda did, that we need to have a numerical approximation, but it does not need to be utterly rigid, and it ought, as far as possible, to respect our historical traditions.
Tristram Hunt
Is the hon. Gentleman more and more surprised, when he reads into the Bill, that this proposal comes from the Conservative party? He understands the Conservative party and its traditions, customs and inheritance, yet this utilitarian Bill undermines all that.
Jacob Rees-Mogg
I thank the hon. Gentleman for his comments. Reading his piece in the Financial Times, which made a similar point, I did not understand why he was not on the Conservative Benches. His views and outlook seem similar to those of what I might call a high Tory. I am delighted that there are others in the House who might be so described.
I do not want to make a long speech. I just want to make the simple point that we have these great historic traditions, within which we can adopt what the Government are trying to do. My suggestion would not run a coach and horses through the Bill; it would broadly accept most of it.
Mark Tami (Alyn and Deeside) (Lab)
Is it not a sign of how rushed this is that the Government will not listen to any of these arguments? They are intent on smashing this Bill through before the next election.
Jacob Rees-Mogg
I was going to make the cheap comment that the Deputy Prime Minister is, of course, a borough Member, so he probably has an objection to the counties, because the borough Members used to get only half the wages of the county Members. Perhaps there is a long-standing objection to the higher pay we used to get.
Sheryll Murray (South East Cornwall) (Con)
Does my hon. Friend agree that the historic boundary between Devon and Cornwall needs to be protected? Cornwall has a unique identity; it has its own language, and should be treated as a special case, like the Shetland Isles and the Western Isles, for geographical purposes. Cornwall’s identity is special and deserves to be protected.
Jacob Rees-Mogg
I have the greatest sympathy with my hon. Friend’s view, although, as I said in an earlier intervention, in 1362—I think—one Member represented seats in both Devon and Cornwall simultaneously, so there is at least some historical precedent for Devon and Cornwall having an association. It is important, however, to respect communities as far as possible, so I call upon Her Majesty’s Government to be generous, to be kind and to consider the great history of my own county of Somerset—[Interruption.] I know that they are not listening, but they might listen eventually. I ask them to be kind and allow us to maintain our great historic traditions. It would not much change the Bill, it is not a very great amendment and I hope that the Government might at least think on it.
Susan Elan Jones (Clwyd South) (Lab)
I am not calling merely for kindness from Her Majesty’s Government; I am calling for decent, adequate representation for my home nation of Wales within my other home nation of the United Kingdom, of which the nation of Wales is part. It is ironic that tomorrow, in the United States, millions upon millions of people across that large and expansive land will elect their senators, and regardless of the size of the states from which they come, they will each elect two senators. Theirs was a constitution that developed over centuries, and those Americans realised that we ought not to enter into such changes lightly. How different from those on the Government Benches.
Once upon a time, in the “Encyclopaedia Britannica”, there were the words, “For Wales, see England”. That is what Government Members are saying today, because they do not understand—or perhaps they do, and this really is just gerrymandering, in which case I am being kind to Her Majesty’s Government—that we cannot get rid of 25% of the representatives of a nation within the nation of which it is part, and expect there to be no repercussions. Some Government Members will hop up and down and say, “Isn’t this a bit unfair? Aren’t some bits not truly equal?”, but that is not the point. This is about the devolution settlement, which was granted in a referendum. My party was in favour of devolution, but so-called Unionists on the Government Benches were against it—well, some sort of Unionism that shows itself to be this evening!
This is a Government who have already decided that Chesham and Amersham is part of Wales, and who decided in the past that Wokingham was too—and the right hon. Member for Wokingham (Mr Redwood) could not even sing the national anthem. They decided that a representative for Worcester could stand up for the people of Wales.
Susan Elan Jones
I would be delighted to, and I will give way to any Government Members if they have any points to raise.
Ian Lucas
I am grateful to my hon. Friend and neighbour for giving way. Does she agree that the contempt in which the Conservative party holds Wales was evidenced only last week, when a Secretary of State responded to a parliamentary question by saying that the fact that Herefordshire had been given broadband services should be sufficient for Wales? What sort of Government treat an essential part of our nation in that way?
Susan Elan Jones
The answer is this ragbag Government, who will not stand up for the people of Wales. Indeed, it is no surprise that all this is happening at about the same time that they are showing exactly the same sort of disrespect for the fourth Welsh television channel.
Jonathan Evans
As the hon. Lady develops this victimhood of Wales, perhaps she would like to reflect on the fact that there are 15,000 more electors in my constituency in Cardiff than there are in her constituency. How on earth is that fair? What do I say to my neighbour, just 50 miles away, who has 15,000 more electors? Surely the hon. Lady should recognise that fairness means that each vote, in every part of the United Kingdom, should be of equal value.
Susan Elan Jones
I suggest that the hon. Gentleman go back to his constituents and say, “Yes, of course it’s right that we are open to proper Boundary Commission changes, but we shouldn’t undersell our nation of Wales within the United Kingdom.”
Owen Smith (Pontypridd) (Lab)
Is not the point that my hon. Friend is making—and making very eloquently, I might add—that we should consider the aggregate effect of the Bill on Wales to be just as legitimate a question? We should not just compare one seat with another, but compare England with Wales.
Susan Elan Jones
I agree, and Government Members are showing that they have absolutely no understanding of the historic nature of Wales inside the Union.
Ms Bagshawe
I am grateful to the hon. Lady for giving way, as I am happy to rise to her earlier challenge. She says that fairness is not the point. Is not this Bill precisely about fairness? Is it not true that we on the Government Benches are arguing for people and that those on the Opposition Benches are arguing for geography?
Susan Elan Jones
I have always enjoyed reading the hon. Lady’s works in the past, but this is about fact: the fact of the nation of Wales inside the United Kingdom.
Albert Owen
In the 1980s, Margaret Thatcher said as Prime Minister that there was no such thing as society. Are not this Tory coalition Government now suggesting that there is no such thing as community?
Susan Elan Jones
I agree with my hon. Friend. This Government are also saying that there is no such thing as Welsh society, and it is downright shameful to see Ministers from Wales on the Front Bench who are barely responding to the points being made.
Huw Irranca-Davies (Ogmore) (Lab)
Does my hon. Friend share my distaste, not to say disgust, at the fact that if the proposal is put through, it will be done against the wishes of both the Welsh Assembly Government and the majority of parliamentarians from Wales in this place, and without any consultation whatever with Welsh society? This Union is a fragile beast. Devolution has evolved very carefully, bit by bit. Does she agree that if what is proposed were done, it would be the first time in the history of this place that such a proposal were agreed against the wishes of the majority of our nation? Does she hope that the other place has more sense and constitutionally challenges this proposal?
Susan Elan Jones
I would indeed hope that that would be the case.
I do not wish to continue in the same vein, because my point has been made. Indeed, it was made by the former Secretary of State, my right hon. Friend the Member for Torfaen (Paul Murphy), and many others. However, it is a sad reflection that the Government are choosing to wipe away so many centuries of history and to send the message to the people of Wales that they are sending. I do not believe that democracy will be better for this proposal. I do not believe that this proposal will better enable the people of Wales to be represented in this place, and I fear for the consequences of this measure.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
I rise in support of amendment 183, which my right hon. Friend the Member for Ross, Skye and Lochaber (Mr Kennedy) spoke to so eloquently. I hope he was not referring to me when he said that his hon. Friends behind him had come armed with formula and fact, because I do not have those to hand. However, in supporting the amendment, I want briefly to address the principles behind it.
What we have in this debate is a straightforward collision of principle. The first principle that the Government have put forward in the Bill is that of equalisation. I have absolutely no problem with that general principle, for many reasons. It will certainly help administratively, as well as with the burden of work. There are many reasons to support that argument, but there is one that I would not have particularly supported, which is the idea it addresses a democratic deficit, because it most certainly does not. It might enshrine some of the inequalities that first past the post delivers, but it will certainly not make anything more democratic. As a broad principle, however, for equal work across the constituencies, the principle of equalisation is a very good one.
At the same time, we have long accepted an equal principle in our constitution, which is that of community, which is often related to geography. In fact, the very first speech of any substance that I made in this Palace was one that I made at the other end, of the building on exactly that subject, when I argued that we cannot have a representative democracy without considering community and geography, in addition to the mathematical numbers of people involved.
Sarah Newton (Truro and Falmouth) (Con)
Does my hon. Friend agree that by supporting the cross-party campaign to keep Cornwall whole, this Parliament will be demonstrating that it is listening to the people of Cornwall? We have a golden opportunity in this Parliament to rebuild citizens’ confidence in our democracy and to ensure that MPs can earn their respect. In respecting the aspirations of the people of Cornwall, with our distinct culture, history and language, we will be taking a step in the right direction and building confidence in this Parliament.
John Thurso
My hon. Friend makes a very full point, although I would not wish to engage with her directly because I want to be brief and allow other Members to take part.
Mr Michael McCann
(East Kilbride, Strathaven and Lesmahagow) (Lab): Some eminent historians have already participated in this debate, so I will go for some other quotations. Groucho Marx said, “Here are my principles, but if you don’t like them, I have another set here.” In the light of the contribution made by my hon. Friend the Member for Rhondda (Chris Bryant), may I ask the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) how he can reconcile the exceptions for the Western Isles, northern isles and other areas when the Government are sticking rigidly to an arithmetical formula in this legislation?
John Thurso
The hon. Gentleman begins to make the precise point that I wish to develop, which is that this Bill already accepts the principle that there are geographical areas or communities that are either too disparate or too distinct simply to be left. There is nothing against that principle in the Bill. One could have argued—historically, it would have been easy to do so—for the old Norse principality of Orkney, which included Caithness. We could have gone back to Caithness, Orkney and Shetland. The Government have recognised that certain geographical difficulties make it important to have regard to them when building constituencies.
John Thurso
If the hon. Gentleman will let me first develop my argument, I will happily give way.
We have heard today from both sides of the House a variety of examples of why the two principles have worked in tension against each other for the benefit of the country. My broad argument is about removing that, suggesting an arithmetical figure, and making two exceptions. The exception of size is almost irrelevant, because it would change the constituency of my right hon. Friend the Member for Ross, Skye and Lochaber and mine, and Inverness would probably disappear. In the tension between those two principles, which have been dealt with by the Boundary Commission and through inquiry, we have broadly arrived at a workable set of solutions. Therefore, like the amendment, I urge that we take a similar approach while respecting all the Government’s principles.
Chris Bryant
The hon. Gentleman is making a splendid case. Some of us believe that his constituency should be called Thurso. He wants us to support his amendment, which we are happy to do, but I hope he recognises that it might be better not to make allowances just for named constituencies, but to allow greater flexibility throughout the country so that wards and communities do not have to be split. He would then have to vote for our amendment.
John Thurso
I am receptive to the hon. Gentleman’s argument. However, if he knew my constituency, he would know that saying it might like to be called Thurso is probably the worst insult that could be delivered to the Royal Borough of Wick and to Wickans. May I put it on record that I am entirely content with Caithness, Sutherland and Easter Ross—or however much of Ross I may end up with?
There is a clear need for the Bill to be amended and if, given the lack of time, we cannot achieve that, I sincerely hope that the other place will take a long, strong and hard look at it. This is the sort of constitutional change that simply must not be allowed to slip through on the back of an electoral pact.
Mark Durkan (Foyle) (SDLP)
I want to speak to several amendments that I tabled in this group. Amendments 188, 193, 189 and 192 all refer to issues that arise in the context of Northern Ireland. This group includes other amendments that address issues that arise in the context of Wales and the Scottish islands, and constituencies that include such areas. There is also an amendment relating to the Isle of Wight.
My amendments are not about “ferrymanders” for constituencies with many islands, nor are they about “valleymanders” because of the geography of Northern Ireland, but they address two points. One is the principle of having a distinct quota in Northern Ireland. Amendments 9, 200 and 202 would give the four boundary commissions four discrete electoral quotas for the constituent parts of the United Kingdom. I have no issue with that, and I agree with it in principle, although I am not here to legislate for other parts of the United Kingdom.
I tabled amendment 192 because the Government seem to have set their face against separate electoral quotas for constituent parts. It calls for a distinct Northern Ireland quota. If the seat reduction goes through, we will end up with about 15 constituencies. Because the boundaries will be changed every five years, according to the UK quota arithmetic, it could be that under the Sainte-Laguë system for distributing seats to the four constituent boundary commissions the following boundary review might reduce the number of seats in Northern Ireland to 14, and the boundary review after that, depending on what happens with registration, might raise the number again.
Chopping and changing the number of seats in Northern Ireland every five years without any regard to either a sense of equality or a quota that relates to Northern Ireland’s particular circumstances has difficulties. My amendments, which are specifically about Northern Ireland, could stand so I ask the Government to consider them even if they combine to defeat the other amendments, which sensibly and correctly call for discrete quotas. If separate boundary commissions are to be given particular tasks for particular areas, they should at least be mandated to produce a specific quota for those areas.
Mr MacNeil
The hon. Gentleman makes a good and interesting point in that it underlines the general population instability in the UK. Recent scholars of the Union have pointed out that the Scottish percentage of the UK population has decreased. In the years to come, given the pattern of movement in the UK and the way in which the economy is run from south-east England, we might see more MPs from England and fewer from Scotland, Wales and Northern Ireland. The hon. Gentleman thus makes a very sensible point.
Mark Durkan
The hon. Gentleman spells out exactly the vista that is ahead of us with this Bill. Not only are the different boundary commissions not allowed to take account of the totality of circumstances within the territories for which they are responsible, but they are bound not just by the arithmetic of the UK quota but by the fixed limit of 600 seats. Part of our problem with all this is that we have a fixed limit of seats. There is not one seat more and not one seat fewer; there is just an absolute given number. I can see in that some of the conundrums that will beset this House every single time a boundary review is undertaken.
Mr David Hamilton
Does the hon. Gentleman not accept that there is no recognition that in 2005, Scotland moved from 72 MPs down to 58 MPs? If the proposal goes ahead, there will be a further reduction of eight in Scotland. That is an outrageous reduction in MPs and representation throughout Scotland. It is much more than the percentage that is being talked about over here.
Mark Durkan
The hon. Gentleman has spelled out exactly what lies ahead with this Bill. There is uncertainty over the changes that will come with the introduction of this Bill but, in addition, in every single Parliament there will be an arithmetical play-off over who gets the last bundle of seats out of the 600. Does a party qualify under Sainte-Laguë for an extra seat, or does it end up losing a seat in Scotland, Wales or in Northern Ireland? The Boundary Commission will then be asked to deal with the consequences again.
Kevin Brennan
Does the hon. Gentleman agree that the Government’s approach to this Bill, and the observations from some Government Members, profoundly misunderstands the nature of the United Kingdom? By equalising—except with some exceptions—the parliamentary constituencies, it completely ignores the fact that we are a united kingdom of nations of different sizes. In the United States, where there are equal congressional districts, the Senate balances the rights of the smaller states. There is no balancing within this Bill for the small nations, which could never ever outvote the interests of the largest nation in this United Kingdom.
Mark Durkan
I think I understand the point that the hon. Gentleman is trying to make. Personally, I am no fan of the United Kingdom. I am not a comfortable subject of it, and, as far as I am concerned, my small nation is not represented in the United Kingdom. My small nation is divided between the United Kingdom and the Republic of Ireland. I have no doubt that that will be work for another Bill on another day.
I want to make the point that the amendment in respect of the distinct Northern Ireland quota has its own merits, even if the Government, wrongly, unwisely and unfairly combine to defeat the other sensible amendments that would entrust boundary commissions with their own discrete quotas.
The other key area in amendments 188 and 193, and particularly in amendment 193, is to do with ensuring that the Boundary Commission for Northern Ireland will not just have to respect carefully things like local government wards, as the hon. Member for Rhondda (Chris Bryant) has spelled out, which the Bill as it stood was already providing for, but will have to have regard to the fact that constituencies in Northern Ireland are also, absolutely by statute, constituencies of the Northern Ireland Assembly.
Under the Northern Ireland Act 1998 and the Good Friday agreement, it was decided that parliamentary constituency boundaries would be exactly coterminous with the Assembly multi-seat boundaries, so changing the parliamentary boundaries means changing the Assembly boundaries. Under this Bill, they will be changed every five years, according to arithmetic dictated by the UK in general. We could end up with geo-sectarian issues as a result, and with the unsettling effect of boundary reviews throughout the life of every Assembly and every Parliament. Towns and villages will feel that, because of the boundary arithmetic, they are being pushed out of their natural hinterland and perhaps split between two Assembly constituencies, and that the natural base for their Assembly seat could be lost. There could also be implications for health care and other services.
Mr Russell Brown (Dumfries and Galloway) (Lab)
My hon. Friend made a point about the people living on the periphery of a constituency chopping and changing between elected representatives at every election. What does he think that will do for the morale of those people, when they come to cast their vote? Is it good for democracy if those people feel that they are not really part of anywhere at all?
Mark Durkan
I do not believe that it is good for democracy. Thankfully, Northern Ireland now has a more settled process, but we face continuous and unsettling boundary reviews, some of which will come into play in time for the next parliamentary election but not in time for the next Assembly election. An Assembly election could therefore take place within boundaries that are about to disappear, and the next parliamentary election could be held within different ones. People will be completely confused. Equally, the number of our constituencies could go up and down, because the Sainte-Laguë method means that we are always in danger of just losing or just gaining a seat at each review.
Mark Durkan
Yes, it could have serious ramifications. I do not need to spell out the names of particular townlands and their hinterlands, but the consequences are obvious, especially for multi-seat constituencies.
In the various amendments that I have tabled, I am not saying that we are seeking inequality for Northern Ireland. The principle of equality of constituencies should exist, particularly in constituencies that have to elect six Members, supposedly on a PR basis. They should be broadly equal, but they should be equal in a Northern Ireland sense.
Mr Dodds
On this issue, the hon. Gentleman and I agree about the Bill’s impact on the Northern Ireland Assembly. We might not agree on how we see our future, because my party obviously sees Northern Ireland as part of the United Kingdom. He is absolutely right to mention the Assembly constituency boundaries, however. Those boundaries will be about to change when the election is held in 2019, so anyone standing in those elections will have been representing their constituency for four years, but the boundaries will have been changed for the past three years. That is a completely unacceptable situation.
Mark Durkan
The right hon. Gentleman is right to backlight exactly the sort of anomalies that will be created by the Bill. We are meant to be legislating for the whole of the United Kingdom and its constituent parts, so let us not legislate to create anomalies.
Paul Murphy
I say to my hon. Friend the Member for Foyle (Mark Durkan) and my right hon. Friend the Member for Belfast North (Mr Dodds) that a great deal of negotiation and compromise led to the Good Friday agreement, which created the situation in which the parliamentary constituencies equated with the Assembly constituencies. Does my hon. Friend not agree that the actions of the Government are such that, if their proposals are accepted, all that work could be jeopardised at a stroke?
Mark Durkan
I totally agree with the right hon. Gentleman, who served with great distinction in Northern Ireland, not only as Secretary of State but as Minister of State. He was also the person who chaired the Strand 1 negotiations. Everyone rightly praises George Mitchell for his role, but not enough praise is conferred on the right hon. Gentleman for his role, and for the patience and perspicacity that he showed at that time. I must remind him, however, that in those negotiations, some of us were advocating that Northern Ireland should be granted the alternative vote system for Westminster elections as well. He and his right hon. Friend the then Prime Minister resisted that proposal, however.
Mr MacNeil
The crux of my hon. Friend’s argument is the instability that will be caused by the five-yearly boundary reviews. Does he feel that an opportunity was missed in Committee when the House rejected an amendment tabled by the hon. Member for Leeds North West (Greg Mulholland) that would have established reviews every 10 years? That would have brought greater stability for mainland Members who, rather than looking over their shoulder every five years, would have had some breathing space and a continuous constituency for at least one Parliament. Does my hon. Friend agree that, unfortunately, the other place might have to ride to the rescue of the Commons yet again?
Mark Durkan
Again, my hon. and Celtic colleague has spoken with great sense. Hon. Members will regret what they are doing with this Bill. They will find themselves living with the consequences, and comparing the boundary process with the Independent Parliamentary Standards Authority process.
Mr Dai Havard (Merthyr Tydfil and Rhymney) (Lab)
The uncertainty to which the hon. Gentleman alludes has particular resonance in Northern Ireland, and extraneous matter can fill many vacuums, as we have seen in the past. Does he not agree, however, that that uncertainty, coupled with a fixed-term Parliament, would not be good for democracy, because Members elected under such a system would be interested not in representing the people but in the next stage in the development of their own electoral process?
Mark Durkan
I thank my hon. Friend for that point. Like so many other hon. Members, he reinforces exactly the kind of malign scenario that will emerge as a result of the Bill. Boundary reviews will take place during the life of every Parliament, with an absence of local inquiries, if the Government get their way. Also, as we know from our discussions in Committee, the Secretaries of State will be able to make modifications when laying reports. Boundary commissions will consult first on one report, then on another. The third report will then be final, but the Secretary of State may lay it with modifications.
Kevin Brennan
Does my hon. Friend agree that an unforeseen consequence of this electoral hokey cokey, with villages and communities coming in and out of constituencies every five years, could be competition for additional casework between Members of Parliament, as happens under the additional Member system? It would be utterly unhealthy if a Member of Parliament were seeking to represent the area that he would be representing in the next Parliament rather than his present one.
Mark Durkan
I note the hon. Gentleman’s point. I am not sure that the public would object to lots of local representatives working hard for them and their interests, but I understand the complication that he alludes to.
There is a glaring absence of any reference to the Northern Ireland Assembly in the Bill. We have not even been consulted or communicated with about the process. I have tabled amendments that deal with that. Whatever the Government’s attitude to all the other very worthy amendments, I ask them to bear in mind that they are in serious deficit in the attention that they are giving to Northern Ireland.
Andrew George (St Ives) (LD)
It is a pleasure to follow the hon. Member for Foyle (Mark Durkan), who makes a case for which I have a great deal of sympathy. I should like to express the great frustration of hon. Members representing Cornwall and the Isles of Scilly that we have not had an opportunity to advance the voice of, and the case for, Cornwall in debates on a Bill that will have a significant impact on Cornwall and its future. We should really have had such an opportunity before but, because of the arcane way in which we still manage our business in the House, we are left with the clock ticking away, and with very little time to make our case. As my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) said earlier, this is a clash between two principles. The first is that of equalisation, and no one could properly argue against that. However, we must also consider the important principle of respecting tradition, history and geography.
I draw attention to my amendments 196 and 4. One deals with the principle of discretion for the Boundary Commission to apply not just to Cornwall, but to other places, too. Sometimes people are not aware of the potential consequences that flow from their own community, their own identity and their own place. It is important to have an amendment that provides the Boundary Commission with a great deal more discretion. The other amendment deals with the historic and essential boundary of Cornwall, the integrity of which must be respected and protected.
Dan Rogerson (North Cornwall) (LD)
I congratulate my hon. Friend on his contribution and on his amendments, to which I have appended my name. On the principle of allowing areas to opt out of the system, it is important to note the ability to opt to be under-represented. Accusations have been made that the provisions are about areas seeking to be over-represented in order to get away from the general principle of equalisation. In fact, the Liberal Democrat amendment says precisely the opposite—that the boundary may be so important in a particular area that the people in it can signal that they wish to be under-represented, as it were.
Andrew George
My hon. Friend is absolutely right. I am grateful to all five of my parliamentary colleagues in Cornwall. With me, that makes six standing shoulder to shoulder together on this issue. We are not asking for a favour, only for the distinctiveness of Cornwall to be recognised. In a sense, we will be more unfavourably treated. As the statistics pan out for the electoral register for Cornwall as a whole, the best guesstimate is that, if we go for a rounding down of the constituencies, we will end up with an electorate nearly 10% higher than the quota.
Mrs Laing
Surely the hon. Gentleman is not suggesting that the proud duchy of Cornwall and its proud Cornishmen would feel any less Cornish or any less proud of their ancient historical traditions just because one of their constituencies happened to have in it a small part of another county. Surely Cornwall is worth more than that.
Andrew George
It is very nice of the hon. Lady to take an interest in Cornwall and I appreciate that. If she wants to identify the voices of Cornwall, however, she might do well to look at the three Conservative Members who represent three Cornwall constituencies. They are very clear on this issue, and they disagree with her on that particular point. The fact is that it is the thin end of the wedge and a slippery slope. We are moving in the opposite direction from the one many want to see—giving Cornwall a stronger say and enabling it to build the identity of which it is enormously proud.
Andrew George
I shall give way in a moment, but let me make a little more progress.
It is vital for people to understand that we are talking about a Cornwall that has a long tradition of culture and a separate language, as others have mentioned. No English counties have a language of their own in the sense that Cornwall does—and it has been recognised by the European Commission and other authorities. The language is recognised and specified in the European charter.
Angela Smith
I remind the House that Cornwall, along with South Yorkshire, enjoyed—if that is the right word—objective 1 status because of its need for economic growth and because of the poverty from which it has suffered. Does that not suggest that Cornwall needs all the representation it can get at the moment to make sure that its economic voice can be heard in this House?
Andrew George
I agree. Of course we would like to have more than average representation, but we are not asking for special favours. I have said already that we are not asking for favouritism, only for the distinctiveness of Cornwall to be respected.
Dr Alan Whitehead (Southampton, Test) (Lab)
Would the hon. Gentleman associate his remarks about Cornwall with other areas in the south of England, such as the Isle of Wight, which are in exactly the same circumstances? The consequences of not associating his remarks with those other areas would mean that the Boundary Commission would have to take completely arbitrary decisions, not based on any community considerations, so part of the integral community would have to be redistributed elsewhere.
Andrew George
I am grateful for that intervention, as I entirely support what the hon. Gentleman said. Indeed, I have appended my name to amendment 183, which brings Cornwall and the Isle of Wight together. It recognises that there are already parts of the country whose geographic boundaries need to be respected. The primary principle underlying amendment 196, to which I think the hon. Gentleman alludes, is that of giving the Boundary Commission some discretion. Although amendment 183 acknowledges that there are five other parts of the country whose boundaries should be respected, we do not really know how many such areas there are. Other places elsewhere in the country might be relevant when the Boundary Commission is undertaking its work, and hon. Members, completely unaware of the situation, might find that a line has been drawn slap, bang through the middle of their constituency—and at that point, they will cry foul and ask how it happened.
When people wake up to the full reality of the way the boundaries are to be divided, they will understand that it will result in the effective pasteurisation of parliamentary constituencies. They will be homogenised and we will see the denigration of place, the denigration of identity and the promotion of placelessness and bland uniformity. The Boundary Commission should be given the discretion to recognise identity, culture, tradition, history, geography and so forth, so that places with strong identities, historic communities, historic counties and, indeed, historic boroughs do not find themselves divided up for the satisfaction of the Government’s need for so-called statistical equalisation.
Toby Perkins (Chesterfield) (Lab)
The hon. Gentleman has made a powerful case about Cornwall. I believe that the amendment proposed by my hon. Friend the Member for Rhondda (Chris Bryant) would achieve what the hon. Gentleman is trying to achieve. We all accept the need for equalisation, but we also need to allow the Boundary Commission to do what it is paid to do—to recognise that it is not all about numbers; it is also about communities. That is how democracy works: people vote for us; they understand the areas we represent, and we understand them.
Andrew George
I shall support every amendment that achieves the objects set out clearly in my two amendments.
Mr MacNeil
The hon. Gentleman has mentioned history and culture, and there is of course the Gaelic proverb:
“S fhearr caraid sa chuirt na crun san sporran”—
it is better to have a friend in court—and, indeed, Parliament —than money in the purse. With that in mind, I say to my Celtic cousins from Cornwall that Karl Marx in one of his madder moments said that the fate of the Celtic races was to be ruled by the Nordic races. Does the hon. Gentleman agree that the treatment of Cornwall could thus be construed as Marxist? Did he ever imagine that when this coalition Government set out their aims, they would end up with Marxism in Cornwall?
Andrew George
Let me quote someone else. It was Matthew Arnold who said that it was the desire of a centralised state
“to render its dominions… homogenous”.
Stephen Gilbert (St Austell and Newquay) (LD)
This issue strikes at identity, community and history—all encapsulated in amendment 183, to which I and other Liberal Democrat colleagues have appended our names. Does my hon. Friend agree with me that the House should divide on amendment 183?
Andrew George
I do. I wish to bring my remarks to a close, as other Members wish to contribute to the debate.
I am glad that we have had the opportunity to talk about Cornwall. I hope that the Front Benchers are listening to our debate and I hope that it will not be necessary for an unelected Chamber to sort out the mess and that elected Members will ensure that we have the right type of election and the right type of boundary for elections to this place. We are not asking for any favours for Cornwall, as I have said. We just want the Government to be fair—“fair” being a favourite word of the coalition.
I shall support every amendment that achieves the objects that I have set out. I believe that it is a self-confident Government who are prepared to listen and to change their ways when the evidence is clearly opposed to the general direction in which they are proceeding.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I was prompted to speak solely by the words of the hon. Member for Corby (Ms Bagshawe), who said that this was about people. It is not about people; it is about dividing areas and regions into total numbers, rather than understanding the community. Communities such as those in Devon and Cornwall, in Wales, in Northern Ireland and in Scotland also exist in my part of south London—homogenised suburban south London. People live in villages, they live in communities, and they want to be represented by people.
Some of my constituents do not vote. They cannot vote. They do not register. We all know that someone who is black, someone who lives in private rented accommodation, or someone who is aged between 17 and 24, is unlikely to register, but those people still need to be represented. When they come to my surgery, I do not ask them whether they are from Afghanistan or from Germany. They live in my area, and I represent them.
We know that harsh, strict, numerical determination never takes account of the value of what we all do as individuals in representing our areas and communities. Dare I suggest that that is part of the big society? A big society that has no representatives and does not understand the meals on wheels ladies, the people from Somalia, or the people who enjoy whatever it is that they enjoy will be unable to represent them. If we cannot represent and understand our areas, we are completely lost, and the value of our system is lost.
The role of constituency Member of Parliament is not respected in the House of Commons, although it is talked about a great deal. The essence of our democracy lies in encouraging people to vote when, having lost faith in parties and the system, they are still prepared to confide to their Member of Parliament—someone they do not know—the greatest secrets about their lives and their values, and to tell that Member of Parliament about a pub or post office in their community that is about to close.
If we break up our areas, whether they are urban like mine, suburban or rural, we will rue the day. We must hang on in order to continue to make our political system work—and our political system works because people see us representing them and understanding their communities.
Mr Andrew Turner (Isle of Wight) (Con)
I tabled amendment 1 to protect the Isle of Wight. The needs and interests of the people of the Isle of Wight are different from those of people living on the mainland. However, it is not only on behalf of the islanders that I oppose the change; my proposal makes better sense for the mainland as well. The island needs local representation, whether by one or two Members of Parliament. What will not do is the creation of one whole constituency with an electorate of 76,000, with the remaining 34,000 forming part of another constituency extending across the sea to the mainland.
On 15 July, the Deputy Prime Minister told the Select Committee on Political and Constitutional Reform that we must
“come to terms with the need for extensive political reform in order to re-establish public trust in what we do here”.
I agree with the Deputy Prime Minister’s words, but it is hard to reconcile them with his actions. His aim is the establishment of 600 constituencies of more or less equal size. He says that he wants greater public trust and transparency, yet he has arbitrarily decided that exceptions will be made for some Scottish islands and not others. That is it: no discussion, no consultation, no justification. I am not criticising the Deputy Prime Minister for what he said, but he has not satisfactorily explained why Isle of Wight residents are not entitled to the consideration that is given to Scottish islanders. Like the Scottish islands, we on the Isle of Wight are physically separate from the mainland, but our uniqueness is totally ignored. We have no roads, trains or planes—
Mr Turner
Not for the moment, if the hon. Gentleman will forgive me.
What we have is a limited and sometimes eye-wateringly expensive ferry service. It is necessary to live on an island to understand how limiting that can be. Some islanders rarely or never travel to the mainland, and there are times when it is impossible to reach it because of weather or sea conditions. Ferries themselves provide evidence that the interests of electors on opposite sides of the Solent are very different. The Lymington River Association is vehemently opposed to the new ferries on the Yarmouth-Lymington route, while islanders who do travel to the mainland need the improved services that the companies are trying to offer.
Albert Owen
Like the hon. Gentleman, I represent an island community. Although it is linked to the mainland by a bridge, that does not make it any less an island community. Does the hon. Gentleman agree that those special characteristics must be preserved, and that the Isle of Wight, with a population of 100,000, and Ynys Môn, with a population of 50,000, are equal island communities whose uniqueness should be recognised?
Mr Turner
I understand that perfectly.
As well as the two Scottish island constituencies, there are other arbitrary exceptions to the principle of fair votes. However, it is not all about fairness or unfairness. It is about allowing people to be consulted and to have the representation that they want, even if that means keeping a larger constituency. That is why the decision should be made by the independent Boundary Commission, rather than according to the diktat of the Deputy Prime Minister.
My constituency is the largest in the United Kingdom, with 110,000 voters. I am happy to continue to be judged by those people when it comes to whether I represent them effectively. The Deputy Prime Minister paid me the compliment of saying that I was well known as an “outstanding constituency MP”. If that is the case, why is he determined to fix something that is not broken, particularly when his reforms are unwanted by the people who are affected by them?
I must end my speech, because we are running out of time. Let me finally say that it is a terrible thing to have one’s constituency divided. I recognise that that will happen in some cases, but what I do not like is the idea of the constituency being divided and part of it sent to the mainland.
Chris Bryant
So far this evening, the Government have gained no supporters for their argument. I think that there is a good reason for that. The arguments presented by Members on both sides of the House—including the persuasive argument of the former leader of the Liberal Democrat party, the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy)—can be summed up very simply as “This House does not believe in the Government’s construction of a mathematical exercise in order to create constituencies”. Everyone who has articulated an argument this evening has expressed the belief that, in the case of Cornwall, Scotland, the south Wales valleys or the whole of Wales, we need to ensure that minority voices are heard loud and clear in the House.
Chris Bryant
I will not, if my hon. Friend does not mind. I know that the Minister needs to be able to reply.
Kevin Brennan
On a point of order, Mr Deputy Speaker. When you called the Front-Bench spokesmen, at least a dozen Labour Members were still waiting to speak. It is clear that not enough time has been allowed for the debate. Can anything be done to enable those Members to put their points on the record?
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is not a point of order. The point about the amount of time allowed for the debate has been taken on board, but that is a decision for the Government rather than the Chair.
Chris Bryant
My hon. Friend the Member for Cardiff West (Kevin Brennan) knows perfectly well that I entirely agree with him. I note that at least 12 Labour Members have not yet been able to speak, and that is why I will speak very briefly now.
Let me just say this to the Government. The danger is that in their desire to create mathematically perfect constituencies and to allow only 5% of leeway to the boundary commissions, and in creating the exemptions for three seats in Scotland, they will undermine the three Scottish constituencies and make them seem like rotten boroughs. The Government will make the whole country look like a mathematical exercise, and not like anything that recognises the facts of life.
When miners went down the mines in the Rhondda in the 19th and 20th centuries, they had a number stamped on their miners’ lamps. The people of this country do not want to be just numbers on a miner’s lamp. The people of this country want to be recognised for the constituencies and the communities that are represented in it, and it is their voices that should be heard in the House rather than just the statistics with which the Minister agrees.
John Mann (Bassetlaw) (Lab)
On a point of order, Mr Deputy Speaker. You said in response to the point of order of my hon. Friend the Member for Cardiff West (Kevin Brennan) that a point about who gets to speak is not a point of order for the Chair. A point about which amendments are selected is, however, a point of order for the Chair. My amendment to this part of the Bill deals with the same kind of special privilege that other Members have addressed in their amendments, but it was not selected. I appreciate that the Chair has a difficult task. However, my point of order is: if this Bill had been taken in full Committee, would not my amendment have been allowed and debated?
Mr Deputy Speaker
The hon. Member has raised this point previously, and I stress once again that it is not a point of order. He cannot challenge what amendments are selected. The selection of amendments is the Speaker’s prerogative, and that has been decided. I now call the Deputy Leader of the House.
Mr Deputy Speaker
I think the Member will wish to withdraw that comment, for all our sakes.
John Mann
I withdraw that comment, but further to that point of order, Mr Deputy Speaker. The point of order I am raising is that in full Committee any amendment that is put in the Committee is eligible to be taken, and it is only the time constraints that have required you, Mr Deputy Speaker, to rule out certain amendments, including my own.
Mr Deputy Speaker
Order. We are not going to push this any further. I have made a ruling, I stand by that ruling and the Member must accept it. I call Mr Heath.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
This large group of amendments reflects a range of views about representation in the nations and the way in which the boundary commissions should go about the task of drawing up constituency boundaries.
Let me start with a simple statement of principle. In a single-Member constituency system, there must be broad equality in constituency size so that one elector means one vote between, as well as within, constituencies. I do not think that is a particularly controversial remark. The hon. Member for Rhondda (Chris Bryant) calls it an attitude that is “crazed” and “desiccated”—it is interesting that one can be both simultaneously—but I do not accept that. My concern about the amendments in this group is that they would all compromise on equality for a range of motivations, some entirely understandable, others less so.
The amendments seek to make exceptions for, variously, the Isle of Wight, Cornwall, Ynys Môn and the highlands of Scotland, and we recognise the pride and sense of history that underpins each of these claims for special treatment. The Minister with responsibility for political and constitutional reform, the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Forest of Dean (Mr Harper), visited the Isle of Wight on 1 October and Ministers at the highest possible level have met campaigners from Cornwall to hear their arguments. However, it is not the case that the only argument that was made was in favour of the status quo; I think the hon. Member for Isle of Wight (Mr Turner) recognised that in a previous debate. For example, a cross-Solent constituency might have advantages. The Isle of Wight council has recently made a submission to the Government to create a Solent local enterprise partnership covering the economic area of south Hampshire and the Isle of Wight. Where appropriate, therefore, the island is clearly willing to develop its long-term interests in conjunction with its mainland neighbours. There are a number of shared opportunities between the island and the mainland and I believe this willingness to engage could also be demonstrated in a cross-Solent constituency.
Ian Murray (Edinburgh South) (Lab)
Had the Government allocated enough time for us to debate this topic this evening, the hon. Gentleman would have heard a cross-section of views not only from Wales, Devon, Cornwall and colleagues from Northern Ireland and Scotland, but from the whole country, expressing concern about communities being split up and boundaries being drawn on the basis of strange anomalies or purely in accordance with mathematics. In fact, the Government are in danger of ensuring that people such as those mentioned by colleagues are under-represented in the House, not over-represented.
Mr Heath
Let me make some progress, as we have very little time.
More fundamentally, it is the duty of each MP to represent all constituents no matter whereabouts in the constituency they live. I understand the views of my colleagues from Cornwall—my hon. Friends the Members for St Ives (Andrew George) and for North Cornwall (Dan Rogerson)—but I simply do not accept that Cornwall will be any the less “Cornwall” if it is represented by a Member who also represents part of Devon. I believe a Member of Parliament who is doing their job can represent constituents on either side of the Tamar equally.
Mr Deputy Speaker
Order. The hon. Member has said he will give way a little later. Let us be a little more patient. People want to hear what is being said. [Interruption.] I am sure the hon. Member can see behind him, Mr Bryant; he does not need any assistance.
Mr Heath
I am most grateful, Mr Deputy Speaker. I am trying to cover quite a lot of ground for colleagues in a relatively short period.
I wanted to address the issues raised by my right hon. Friend the Member for Ross, Skye and Lochaber and my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso)—and I know that if my hon. Friend the Member for Argyll and Bute (Mr Reid) been able to contribute to the debate he would have said very much the same thing about the highlands of Scotland. [Interruption.] May I correct the hon. Member for Rhondda? He kept on saying that there are three exceptions in the Bill, but there are not three exceptions; there are two exceptions and they are, for very clear reasons, for the two island constituencies where contacts are very difficult. I think my hon. Friend the Member for Argyll and Bute can make a very strong case for his own constituency as well, but I do not accept that having a maximum size—which it has been said is the size of Belgium—is unreasonable for the Scottish Members representing highland constituencies.
The hon. Member for Foyle (Mark Durkan) made a very important point on Northern Ireland. I expected him to make the connection between parliamentary constituencies and Assembly constituencies. Instead, he concentrated on the quota and the Sainte-Laguë formula, and he raises an important point that we need to look at. I want to make absolutely sure that the system is fair to all parts of the United Kingdom, and I will certainly look at that point.
I find it very difficult to understand the argument that the Welsh constituencies are badly treated by being treated the same as other constituencies, such as those on my side of the Bristol channel. I do not know whether changing the name of Somerset to Gwlad yr Haf would have the desired effect of giving us twice as many representatives, but I do not accept that people in the west country should be disadvantaged in that way. [Interruption.] No, what is patronising is to pretend that we cannot go from one part of a constituency to the other because there is a hill or a river in the way. That is nonsense.
I briefly want to address the effect of Government amendments in this group, which are technical in nature. Amendments 220 and 221 allow the boundary commissions to use the most up-to-date register in areas where publication is delayed. If these amendments are not agreed to, in some areas the boundary commissions would have to use the register before the results of the annual canvass were included in it. I therefore hope we can all agree that the amendments must be made.
Amendment 21 makes consequential amendments to other legislation that refers to particular constituencies by name. We need to make that other legislation consistent with the new rules for constituencies in the Bill.
I hope the House will be able to support the Government amendments, and will reject the other amendments if they are pressed to a Division, as I believe they introduce inequalities—and inappropriate inequalities at that—that I personally cannot accept.
Question put, That the amendment be made.
? | .’.—(Mr Kennedy) |
Mrs Laing
I beg to move amendment 205, page 12, line 21, at end insert—
‘(A1) In relation to a report under section 3(1) that a Boundary Commission is required by section 3(2) to submit before 1 October 2013—
(a) a Boundary Commission shall make information available via their website, and if they see fit by other means, on their proposed general approach to the application of Schedule 2;
(b) representations with respect to this proposed general approach may be made to the Commission during a specified period of eight weeks; and
(c) the Commission shall take into consideration any such representations duly made prior to the provisional determination of any recommendations affecting any constituency.
(A2) A Boundary Commission’s “proposed general approach” shall include, but need not be limited to—
(a) the processes by which they intend to seek to ensure the application of rule 2, and in the case of the Boundary Commission for Northern Ireland of rule 7, including the circumstances in which they will consider recommending that wards, electoral areas and divisions should be divided between two or more constituencies, and the information on which they intend to rely in determining how to carry out such a division, and
(b) the extent to which they intend to take into account each of the factors described in rule 5(1), and in the case of the Boundary Commission for England of rule 5(2).’.
Madam Deputy Speaker (Dawn Primarolo)
With this it will be convenient to discuss the following:
Amendment 206, page 12, leave out lines 22 to 34 and insert—
‘(1) Where a Boundary Commission has provisionally determined to make recommendations affecting any constituency—
(a) they shall take such steps as they see fit to inform people in the constituency of the effect of the proposed recommendations and that a copy of the recommendations is open to inspection at a specified place within the constituency,
(b) they shall make available via their website, and if they see fit by other means, copies of their proposed recommendations and information on their effect, together with such information as they have on the number of the electorate in every sub-division of every ward, electoral division and electoral area in England, Scotland, Wales or Northern Ireland, and
(c) representations with respect to the proposed recommendations may be made to the Commission by people whether in or outside any given constituency during a specified period of 12 weeks, and the Commission shall take into consideration any such representations duly made.’.
Amendment 15, page 12, leave out lines 35 to 41 and insert—
‘(1A) A Boundary Commission may cause a local inquiry to be held for the purposes of a report under this Act where, on publication of a recommendation of a Boundary Commission for the alteration of any constituency, the Commission receives any representation objecting to the proposed recommendation from an interested authority or from a body of electors numbering one hundred or more.
(1B) Where a local inquiry was held in respect of the constituencies before the publication of the notice mentioned in subsection (1) above, that subsection shall not apply if the Commission, after considering the matters discussed at the local inquiry, the nature of the representations received on the publication of the notice and any other relevant circumstances, is of an opinion that a further local inquiry would not be justified.
(1C) In subsection (1A) above, “interested authority” and “elector” respectively mean, in relation to any recommendation, a local authority whose area is wholly or partly comprised in the constituencies affected by the recommendation, and a parliamentary elector for any of those constituencies.’.
Amendment 209, page 12, leave out lines 35 and 36.
Amendment 194, page 12, line 35, after ‘(2)’, insert ‘Subject to subsection (2A) below’.
Amendment 195, page 12, line 36, at end insert—
‘(2A) The Boundary Commission for Northern Ireland shall cause a public inquiry to be held for the purposes of a report under this Act covering the whole of Northern Ireland, where any representation objecting to a report has been received from the council of a district in Northern Ireland or from a body of parliamentary electors in Northern Ireland numbering one hundred or more from two or more constituencies.’.
Amendment 210, page 12, leave out line 41.
Mrs Laing
I am glad that we are going to be able to debate all these amendments in this one debate. It is unfortunate that the hon. Member for Nottingham North (Mr Allen), the Chairman of the Political and Constitutional Reform Committee, cannot be present, as he would have relished the opportunity to speak to these amendments on behalf of our Committee. I am pleased to see that other members of the Committee are in the Chamber, however, and they may wish to echo those sentiments. In the absence of the Chairman, I shall speak to amendments 205 and 206, which arise from the Committee’s report on the Bill—the nearest that we got to pre-legislative scrutiny.
The purpose of amendments 205 and 206 is to ensure that consultation by the boundary commissions is as meaningful as possible. Amendment 205 would require them to hold a one-off, short consultation on how they intended to approach the division of England, Scotland, Wales and Northern Ireland into constituencies before the first review—the 2011 to 2013 review—took place. It would allow people to give their views on the extent to which, for example, county boundaries should be crossed and which ward sub-division might be desirable and, where wards are sub-divided, on the kinds of sub-division to be used. The Committee has asked the House simply to consider whether amendment 205 would—we hope that it would—increase the perceived legitimacy of the boundary commissions’ decisions, and reduce the likelihood of local frustration and the possibility of legal challenge to their recommendations.
Amendment 206 is intended to improve the quality of the consultations that the boundary commissions conduct under each proposed future review. As the Committee said in its report:
“The legitimacy of the next boundary review in the eyes of the public is likely to be strongly influenced by their ability to participate effectively.”
The amendment would allow people to make representations to the commissions on constituencies other than the one in which they live, and it would require information on the number of electors within sub-ward divisions of constituencies to be made available nationwide. I appreciate that the Government are working to a very tight timetable and we do not have very much time for debate this evening. Members wish to raise important matters, so I shall be as brief as I can.
The purpose of the amendments is to ensure that people have, first, the information about their locality that they need to make to the boundary commission a proposal that keeps within the rules, and, secondly, the right to make recommendations about constituencies other than the one in which they live so that that they are not prevented from making suggestions about their locality that would otherwise take their constituency outside the range of the 5% flexibility permitted. I appreciate that I have truncated the case, for the reasons that I have set out, but I am sure that hon. Members who are interested in the matter and, certainly, Ministers will already have read the Select Committee’s report and fully appreciate the importance of the points that I have put to the House.
The Government may not wish to accept the amendments, but they are intended entirely to be helpful and constructive. The Committee took a cross-party position, and the amendments are not political. Given the timetable to which the Government are working, however, they may not wish to consider these matters. If the Minister is not prepared to accept the Committee’s amendments, how will the boundary commissions ensure that consultation with local people is meaningful, and that the mass of the new rules is not so constructed that local feeling on constituency boundaries cannot be taken into account?
Mr Russell Brown
I cannot speak about Epping Forest or Brentwood and Ongar, but, when the boundaries changed in Scotland in 2005, the proposal for my constituency was to take out two large wards from the town of Dumfries itself. People were so angry that they mounted their own campaign, which they took to a public inquiry, and they won the case that they should not be separated. It is wrong for the hon. Lady to say that only political parties undertake such activity. The strength and voice of communities should be heard, but the Bill will not give those communities the voice that they deserve in a democratic society.
Mrs Laing
I understand what the hon. Gentleman says, and I understand how strongly the people of Dumfries feel, but that is not the point of democracy. In a modern democracy what counts is not valleys, mountains, rivers and perceived ancient boundaries, as we heard argued in the previous debate; what counts is that every person in the United Kingdom has a voice of equal value and votes.
Mark Tami
The hon. Lady has made the point a number of times tonight about everything being of equal value and equal size, so why does she support measures that take three seats in Scotland and count them differently? Her argument would be stronger if she opposed those measures in the Lobby.
Mrs Laing
The hon. Gentleman does not know how I voted—that is my business. [Interruption.] Well, I was not in the Lobby with him. [Interruption.] It is hardly a secret, is it? The matters on which we have just voted were rather wider than that, and so I naturally loyally supported my Government—or part of my Government. [Interruption.] The hon. Gentleman has not been here throughout these debates.
Madam Deputy Speaker
Order. I know that people have strong views on this, but, Mr Tami, it would help if you proceeded by intervention rather than by shouting across the Chamber: it is very distracting. Thank you very much.
Mrs Laing
Thank you for your protection, Madam Deputy Speaker. Regardless of where the hon. Gentleman has been, he can have this argument with the Government, but he cannot have it with me, because I have said on more than one occasion—and I will say it again, but it does not really matter, because nobody listens to what I say—
Mrs Laing
I am much gratified by that.
I would not have had any exceptions in the Bill; I think that the exceptions are wrong. The matter at issue is that every vote in the United Kingdom should be of one value and of one weight—that every Member of Parliament who comes to this House should have, within a reasonable tolerance, the same number of potential voters, voting for them or otherwise.
Jim Fitzpatrick
Does the hon. Lady support—I fully presume that she does—the building of the big society, as outlined by her right hon. and hon. Friends on the Front Bench? Is not the Select Committee’s suggestion that the boundary commissions should have this arrangement for people to make representations an acknowledgement that the elimination of public inquiries is creating a vacuum and depriving citizens of the opportunity to make such representations, and therefore totally contradicts the big society in preventing expressions of disappointment or concern about the proposals from being heard?
Mrs Laing
The hon. Gentleman is, as ever, very clever in the way that he puts his point, but this has nothing to do with the big society. I take his point that the boundary commissions must be seen to be operating fairly, but I argue strongly that there is no need for them to take year after year, spending more and more taxpayers’ money, listening to political parties making points that are cleverly disguised as being about ancient boundaries, communities and so on, when in fact they are about the perceived electoral advantage or disadvantage of each particular political party. Anyone involved in politics knows perfectly well that that happens. At a time when we should be spending money on the real big society issues of which the hon. Gentleman is only too well aware, we should not be spending enormous amounts of taxpayers’ money on keeping the boundary commissions doing that year after year.
Huw Irranca-Davies
I agree with the hon. Lady’s Aristotelian logic. There is no need for wide public inquiries or forced submissions if we are going to have a purely arithmetical decision on where the boundaries lie; in fact, there is no need for any submissions whatsoever. May I therefore urge her to table an amendment that would scrap any discussion or debate in this House and just move on to drawing the jigsaw that will be the United Kingdom’s parliamentary boundaries? If one takes her logic to the extreme, there is no need for any discussion or debate whatsoever.
Mrs Laing
The hon. Gentleman makes an excellent point with which I cannot disagree. It is the arithmetic that rules. Labour Members try to find arguments against that, but the fact is that if one believes in a modern democracy where every vote is of equal value and every Member of Parliament comes here with an equal weight of potential votes behind them, one cannot argue otherwise. I would go further and say that there should have been no exceptions in the Bill.
Mr Russell Brown
This evening and on other occasions, Members of this House have put great emphasis on equal votes having equal value. If the coalition Government succeed in doing what they are attempting to do, the vote of every person who goes to the polling station will be equal when they enter, but a 48% turnout will give a different value to that vote than it would if the turnout were 70%. Equality is about more than just the number of bodies in a constituency—it is also about votes being cast, and that can cause a disproportionate level of representation.
Mrs Laing
I am sure that the hon. Gentleman is speaking from sincere and heartfelt beliefs, but that is totally illogical. If there are, say, 76,000 potential voters in a constituency and 40,000 of them decide not to vote, that is their democratic choice, just as it is the democratic choice of the other 37,000—I think I got the arithmetic wrong there—to cast their vote. People who decide not to vote are exercising their democratic judgment in the same way as people who decide to vote. There has been a lot of discussion about where the heart is, communities, boundaries, and so on—matters that appear to be anything other than purely arithmetical.
John Mann
Completing the circle of logic in the hon. Lady’s argument, presumably she will want to table, or to have someone else table, an amendment that would prohibit people from registering in more than one place, because those voters, be they students or second property owners, have the opportunity to choose where they would cast their vote. Therefore their vote is not as equal as anybody else’s. Given her logic, she is presumably in favour of such an amendment and will be urging Government Front Benchers to bring it forward immediately.
Mrs Laing
I see the hon. Gentleman’s point. However, the logic and arithmetic of that is that it does of course happen, but it pretty well cancels itself out from one constituency to the next. People often, for various reasons and quite legitimately, register in more than one place, but the fact that it happens all over the country cancels it out.
Mrs Laing
No, I cannot prolong this part of the debate. I am aware that there is very little time and there are a lot of matters to be discussed.
All the other parts of this debate have been froth: the only thing that matters is that in a modern democracy every vote should have an equal value, and every Member of Parliament should come to this House with an equal number of constituents behind them.
Sadiq Khan (Tooting) (Lab)
I rise to speak to amendment 15, on which we will wish to divide the House.
It is always a pleasure to follow the hon. Member for Epping Forest (Mrs Laing). As charming as her speech was, I am reassured that we were in different Lobbies in the last Division, and I suspect that we will be again come 10 o’clock. She has sat through all five days of the Committee stage and all of today, and no doubt she will sit through tomorrow’s debates on remaining stages.
The hon. Lady should understand that many colleagues are frustrated that they have not had a chance to make certain substantive points, and they will be frustrated by the Bill when it leaves the House. That is a metaphor for what will happen when it abolishes the public inquiry. She and many colleagues are frustrated, and some Members shouted “Disgraceful” when the last Division result was announced. Citizens around the country will be shouting “Disgraceful” when the boundaries are changed without their having a chance to argue their case before the boundary commission. Their only option will be recourse to judicial review, which will make lawyers rich and citizens poorer.
John Mann
Is it not the case that where the traditional English counties, for example, are breached, such as by constituencies crossing from Nottinghamshire into Derbyshire, Yorkshire or Lincolnshire, people will want to have a far greater say than they have for many years in a county such as Nottinghamshire? Although the boundary reviews there have sometimes been contentious, they have been within clearly defined parameters, which have been publicly available and generally publicly acceptable.
Sadiq Khan
I thank my hon. Friend for his comment. I will come later to the evidence, which is something the Government seem scared of. It proves his point that at the time when the public inquiries are serving their greatest function, they are being abolished. One has to ask why.
A balance needs to be struck between overlapping objectives, but in the Bill the Government have managed to get the weighting wrong in almost every regard. The limits on disparities between seats are too severe and inflexible, the time scale for the boundary review is far too tight, and the abolition of local inquiries in return for an extended window for written submissions is deplorable.
As I have said, because of the programming of the Bill we have dealt inadequately with the speed of the boundary reviews and with the strictness of the adherence to electoral equality. The abolition of inquiries is entirely at odds with the concept of localism and open politics, which my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) referred to a moment ago and which the Deputy Prime Minister, who has called himself the great reformer, has previously professed. In a speech five months ago, which I will quote because it is important that colleagues in the other place hear it, he said:
“I have spent my whole political life fighting to open up politics. So let me make one thing very clear: this government is going to be unlike any other. This government is going to transform our politics so the state has far less control over you, and you have far more control over the state.”
How does the abolition of local public inquiries empower people?
To suit their rushed agenda, the Government are simply withdrawing any meaningful element of public participation and consultation, thereby reducing the boundary review process to an opaque, bureaucratic and largely mathematical exercise. The loss of transparency and the ability to comment on and amend proposals will seriously damage the reputation of the boundary commissions. It will erode the high level of trust in their impartiality that they rely on for their reports to be accepted, and the quality of their proposals will be compromised.
Any significant boundary change is likely to cause some level of discontent and controversy, but that will be magnified to previously unknown levels of disquiet if the rigid new rules in the Bill are adopted and 50 seats are abolished. In a written submission to the Political and Constitutional Reform Committee, the secretaries of the four boundary commissions were clear:
“The changes to the total number of constituencies, and the tighter limits on the number of electors in each constituency, will result in a complete redrawing of constituency boundaries.”
They continued:
“The electoral parity target may require the Commissions to work with electorate data below ward level in many cases”
and
“will result in many constituencies crossing local authority boundaries…the application of the electoral parity target is likely to result in many communities feeling that they are being divided between constituencies.”
If there is no procedural outlet for that discontent, the boundary commissions and the entire review process will be rapidly discredited.
Nick Smith (Blaenau Gwent) (Lab)
As the Member for Blaenau Gwent, I have a coterminous borough. If I want to get things done, I go to one chief executive and one leader. I talk to the local police inspector or the person who manages the health board locally. According to the Electoral Reform Society, if the proposed change is pushed through, I will have to work with three or four different borough councils, which will make it much harder to be effective as a local politician and to get things done. It will be much more complicated to work on behalf of my constituents, and I will be much less likely to be able to stand up for them, because I will have to deal with numerous officials in all sorts of different places. Surely that is bad for democracy.
Sadiq Khan
That highlights some of the nonsense reasons given by the coalition Government for the Bill. We are told that the Bill will make MPs more effective. Clearly, it will not. We are told that the boundary changes will make things cheaper for MPs. Clearly, they will not. What is clear is that it is not only my hon. Friend who will become a number, but the citizens in his area. That is all for the partisan reasons that I have set out.
Huw Irranca-Davies
Pursuant to the point made by my hon. Friend the Member for Blaenau Gwent (Nick Smith), I should add that, under the ERS proposals, the seat of Ogmore will disappear, and it is no coincidence that the largest majority in absolute terms for any party in Wales is in Ogmore. The seat will disappear and be subsumed into five neighbouring constituencies, all of which will be accountable to two chief executives, two cabinet systems, two sets of social services and two sets of everything, including different police authorities. In terms of simplifying an MP’s accountability to his constituents, and of constituents being able to demand good services in one area, the Government are completely shooting themselves in the foot.
Sadiq Khan
I thank my hon. Friend. [Interruption.] I hear the chuntering from those on the coalition Government’s Front Benches—it is funny how soon some people become arrogant. The Government should test my hon. Friend’s proposition. It would be easy: they could have a public inquiry to test whether my hon. Friend is on a frolic of his own or whether his constituents share his concerns about what the changes will bring. Why are the Government running away from local public inquiries?
Mrs Laing
I am very concerned about the points made by the hon. Members for Blaenau Gwent (Nick Smith) and for Ogmore (Huw Irranca-Davies). Does the shadow Minister agree that they cannot possibly be arguing that they are so inefficient and ineffective as Members of Parliament that they cannot cope with more than one local authority? I am sure they are not. For goodness’ sake, we all have to cope with different layers of local government. The hon. Member for Ogmore is wrong to say that he is any way accountable to local authority chief executives—that is simply nonsense. Such arguments have nothing whatever to do with this debate and do not hold water.
Sadiq Khan
With respect, may I tell the hon. Lady why she is wrong? My hon. Friends’ constituents will have their lives changed because they will have to deal with different people as a result of the boundary changes. Those changes will be made not to make things more efficient, or to save money, but because the system has, for partisan reasons, been based just on numbers. An MP’s ability to do his or her constituency a service will be affected. More importantly, however, a constituent’s ability to contact the person he or she needs to contact to improve things will also be affected.
Mr Heath
I find it extraordinary that we have these complaints from Members representing small constituencies. They say that it is quite impossible to do something that is normal for half the House. I have three local authorities in my constituency. That is normal on our side of the Bristol channel, but it is apparently impossible on the Welsh side.
Sadiq Khan
If the Minister is so confident in his arguments, why does he not allow the public to make objections and to have a local public inquiry, rather than a bureaucrat in a quango taking only written submissions before reaching a view? The Minister has to answer that question.
Another possible outcome of the proposed consultation is legal challenge by political parties, or local cross-party or apolitical campaign groups, such as Keep Cornwall Whole. Boundary commission decisions could be subject to judicial review. It is worth noting that only one judicial review resulted from the previous boundary review, but in evidence to the Political and Constitutional Reform Committee, Professor Ron Johnston, who is an expert on such matters, said:
“I can well see people using it”—
judicial review—as a means of addressing
“the issues that they think they are not able to address because they are not having public inquiries.”
Excluding those cases when the only change was the name of the constituency, in the fifth periodic review of boundaries 27% of English constituencies were altered by one degree or another following a public inquiry into commission recommendations. In many cases, those inquiries looked at the local ties of a particular village or town. Most of the participants were concerned about the integrity of their local constituency.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
What makes the right hon. Gentleman’s argument so unpersuasive to me is that when the people of Northumberland voted in a referendum not to replace their district councils with a single unitary authority, the Labour Government ignored the referendum, which they had organised.
Sadiq Khan
I am not sure what point the right hon. Gentleman is trying to make. We are talking about the abolition of local inquiries. In fact, his is an argument for more scrutiny and checks and balances at local level, with people giving evidence, rather than relying on written evidence in 12 weeks. If he feels that strongly, he should be embarrassed at how he will vote in an hour and a half.
It is noteworthy that Cornwall MPs tonight found their consciences when self-interest was involved, but for five days in Committee they were absent from the Division Lobby. It is also noteworthy that three Tory MPs were willing to vote in their own interests. The Opposition have been consistent throughout in saying that the Bill is wrong. It is wrong on the principle of losing public inquiries, but it is also wrong because as the Cornwall Members pointed out—there is compelling evidence—the remote communities in Cornwall previously managed to convince the commission to amend its proposals. Many of us believe that the attention given to such local issues is the strength of the current system. Here is the key point: in every single case in which the commission proposed an increase or decrease in the number of constituencies in an area, its initial proposals were amended following a public inquiry.
The hon. Member for Epping Forest mentioned citizens and asked why MPs cannot do their jobs. However, this is not about our jobs becoming more complicated, but about citizens and constituents having a right to have their views heard in a public inquiry. In many cases, including Derbyshire, Merseyside and north-west London, substantial changes were made to initial proposals, as in the Deputy Prime Minister’s city of Sheffield. His predecessor appeared at the inquiry and successfully argued for changes to the provisional recommendations. Many times, the commission commented in its report that the assistant commissioner’s recommendations improved as a consequence of a public inquiry.
Mr David Hamilton
May I reinforce my right hon. Friend’s point? There was a public inquiry in Midlothian before the 2005 election. The commission recommended that the borders be brought into Midlothian and that we take Peebles and Galashiels into my constituency, but after public scrutiny the commission recommended that that would be inappropriate. No city of Edinburgh representative has yet complained because they represent 75,000 people and I represent 60,000 or so. Nobody questions that, because they recognise that the geographical layout of Midlothian is different to that of the city.
Sadiq Khan
My hon. Friend makes an important point, and colleagues in the other place will read it with interest.
In Derbyshire and Derby, the commission made provisional recommendations for the creation of a new seat, but they were rejected in favour of another that the assistant commissioner believed better reflected community ties. The amended proposals moved fewer electors and reduced the disparity. In Devon, Plymouth and Torbay, the commission proposed a division of the city of Exeter that was deeply unpopular with residents. The assistant commissioner believed that the counter-proposal better reflected local ties and reduced the electoral disparity.
In Merseyside, the commission proposed a seat containing parts of both sides of the Mersey that was opposed by almost all those with an interest, and the assistant commissioner recommended a counter-proposal that almost wholly redrew most of the constituency. The Boundary Commission for Scotland proposed a Scottish parliamentary seat crossing the River Clyde estuary that was widely opposed and rejected by the assistant commissioner in favour of a scheme of minimum change. I have many examples of where proposals have been made, local residents have looked at the proposals, there has been a public inquiry, and an assistant commissioner has heard the evidence and changed their mind.
Gavin Williamson (South Staffordshire) (Con)
Of all the changes made by the assistant commissioners, how many were instigated by proposals put forward by political parties?
Sadiq Khan
I was coming to that. I am not embarrassed to say that political parties have a huge role to play in a democracy. We are going around the world, not only lecturing, but helping emerging democracies. They have a lot to learn from us, so hon. Members should be careful of what they throw away in the interests of victories at future general elections.
Mr George Howarth (Knowsley) (Lab)
My right hon. Friend prayed in aid Merseyside, but he should not take that argument too far, because Wirral now has a lot of undersized constituencies, while Knowsley, which I represent, has a very large one. It does not always work out perfectly.
Sadiq Khan
My right hon. Friend makes my point for me. There will be many people who are unhappy with how boundaries are drawn up—there always have been, and there always will be—but having a fair process at least makes people believe that they are involved in how boundaries are redrawn. If he is this disgruntled with the old system, let us imagine how he will feel if the only chance to object is by a written submission in a 12-week window that he might not have heard about.
Mr Howarth
My right hon. Friend needs to realise the fact that, because Wirral ended up with undersized constituencies, one constituency in Knowsley disappeared altogether. It was not done as a nice statistical exercise. It was basically done on the prejudices of the people of Wirral, who did not want to be seen to cross the river and be considered as part of Liverpool.
Sadiq Khan
As somebody who does not get the chance to go to Anfield as much as he would like, I take my right hon. Friend’s point. I am happy for him to invite me up and show me the consequences of the changes made.
The Bill’s new inflexible rules and proposals for an arbitrary reduction in the number of constituencies will mean that the situations I have illustrated will occur in many more areas. At exactly the point when public inquiries will be at their most valuable, the Government are proposing to abolish them. Even those who hold reservations about the workings of public inquiries concede that now is not the time to end their use—quite the opposite in fact. Professor Ron Johnston told the Political and Constitutional Reform Committee:
“where public inquiries had a big impact from what the Commission initially proposed to the final solution was where either a seat was being added to a county or being taken away and then everything was up for grabs and, not surprisingly, there was much more fighting over it”.
He continued:
“that is an argument for having public inquiries this time because you are drawing a totally new map with new constituencies and nearly everything will be different…This time you are going to have much more where the local people are going to be concerned because suddenly the pattern of representation is going to be very different from what they have been used to for a long time.”
Importantly, Professor Johnston’s view was echoed by Robin Gray, the former chair of the Boundary Commission for England, who told the Select Committee:
“Particularly with this first round I can see there is a real need for public inquiries particularly to enable those who are interested, political parties and others, to actually argue this through because there are going to be big changes”.
He made another important point. He noted that the main responses under the new system will come in shortly before the end of the 12-week deadline, which means that participants will not necessarily know the counter-proposals made. The main benefit of inquiries is that all those with an objection feel that they have had an opportunity to be heard, and can understand the arguments against them and why they might be unsuccessful.
Mr David Winnick (Walsall North) (Lab)
My right hon. Friend is making a powerful speech about this travesty of democracy. Can one imagine what the Minister responding to this debate would have said about the proposal were he in opposition? He would have been the most vehement opponent of this denial of democracy. He should be thoroughly ashamed that he is willing to justify what is before us.
Sadiq Khan
Given parts 1 and 2 of the Bill, one has to ask what sort of shabby deal was made in those five days when this Government were being formed. It is clear from the history of our country and the way in which reforms have been made that, for big constitutional change, parties either have a mandate from their manifestos or try to reach a consensus across the Chamber or between the two Houses. No such attempt has been made in this case. The Government are rushing through some of the biggest changes in my political lifetime for the sake of expediency. My hon. Friend was very temperate in his comments.
Huw Irranca-Davies
May I point out to my right hon. Friend the inconsistency in principles at work here? In Wales, we are currently redrawing the local authority boundaries. We are able to make submissions and have hearings. Some people are happy and some are not, but at least they feel that they have had the opportunity to be heard. Many Lib Dem and Conservative local associations have made submissions to that process, and that principle has been accepted by everybody, because they have had that opportunity. What is being proposed is the electoral equivalent of a poll tax, and it is going to bite some people on the bum.
Sadiq Khan
One of the reasons why we have a Public Gallery and open democracy is that people can see democracy at work, even though they may not like what we say or how we vote. One of the reasons why we have open trials is to have open justice, so that people can see what happens in a trial. Not only does due process lead to better results; it also leads to people feeling that they get a fair hearing. In just five months, these guys on the Government Benches have been willing to bulldoze through some of the biggest changes in our lifetimes for the sake of stitching up the next general election.
Henry Smith (Crawley) (Con)
We have heard terms such as “denial of democracy” and “inconsistency” in recent interventions, but in a democracy should not everyone ultimately have an equal vote, which should not be decided by special interest groups or the intervention of political parties?
Sadiq Khan
The way it works in a democracy is that candidates stand on a manifesto and people vote for that manifesto, so that those representatives have a mandate. What is not democratic is for two parties to come up with a deal behind closed doors over five days, with no mandate from the British public, and after the election to change their views from what they had wanted to do before the election. Neither of the two parties in government talked about getting rid of public inquiries or about 300 seats, so the hon. Gentleman should ask himself whether he is proud to vote as he will in an hour and a half, to abolish public inquiries.
For the avoidance of doubt, and to answer the important point raised by the hon. Member for South Staffordshire (Gavin Williamson), I do not disparage the active part that political parties play in the inquiry process. It is entirely natural that they are involved and that inquiries are more effective as a result. Indeed, that is what we encourage in emerging democracies.
Gavin Williamson
I actually asked the right hon. Gentleman how many of the changes in question had been the result of proposals put forward by a political party. I wonder whether he has an answer to that.
Sadiq Khan
I will go one better. In a few moments, I will cite for the hon. Gentleman not what I think, but what assistant commissioner Nicholas Elliot QC concluded after he had heard evidence from political parties.
In the fifth review, both Labour and the Conservatives presented carefully researched and reasoned cases to the boundary commissions. That enabled proper arguments and options to be presented to the assistant commissioners. That was hardly illicit manipulation of the process; rather, it was open and transparent, and there was an inquiry. I ask the question: how open and transparent will the process be if people only get to write in and do not have an inquiry, where the public can see what representations are made? It is far better for political parties to get involved than just to have a rigid mathematical formula to decide how seats are drawn up.
Ian Lucas
It is important to highlight the fact that oral representations in a public inquiry will be taken away. Like me, my right hon. Friend is a solicitor. Do oral hearings not very often illuminate far more than written representations ever would, so that all parties, including the person who holds the inquiry, learn much more through that process?
Sadiq Khan
I advise my hon. Friend to be very careful with this coalition Government. In five months, they have got rid of the local public inquiry for the sake of expediency. God knows, next year they may get rid of the right of appeal to the Court of Appeal and just rely on written representations. They may think, “This democracy malarkey is just too expensive. Let’s just have written submissions and then have a vote in our constituencies rather than turning up and having a debate and arguing the pros and cons of an issue.” I am astonished that hon. and right hon. Members on the Government Benches, who should know better, are taking through this shabby piece of legislation.
Another criticism, which came from the hon. Member for Epping Forest, is that the local inquiry takes too long. The final and most lengthy inquiry, the fifth review, was in Greater Manchester and took more than two weeks. The assistant commissioner, Nicholas Elliot QC, made the following observation:
“The advantage, sitting as an Assistant Boundary Commissioner, is that one gets from the two major political parties that they equally look at the overall picture in somewhere like Greater Manchester where it has to be done, whereas others examine it from their own perspective. The difficulty of the Assistant Commissioner is that you do have to look at the overall picture, and it is only those two major political parties who do provide very, very great assistance in trying to come to what may be the best or worst answer.”
John Mann
It is good to use Manchester as an example when one talks about public inquiries. South Manchester has the highest concentration of university students in western Europe. Is not one of the anomalies that boundary commission inquiries might need to take evidence on the fact that university students will be able to register in two locations? Therefore, there will not be equal-sized constituencies. What we will have are university constituencies with a significant number of dual registrations. There could be as many as 15,000 people who are dual-registered and choose to vote in their other constituency. The concept of equal votes in equal constituencies is thrown out of the water. Is that not the sort of thing that the boundary commission, even with this rotten legislation, would want to have a look at?
Madam Deputy Speaker (Dawn Primarolo)
Order. As the right hon. Gentleman rises to answer that intervention, may I remind him that he is supposed to be addressing his remarks to the Chair, and not to have his back to the Chair?
Sadiq Khan
It is with pleasure that I address the Chair, Madam Deputy Speaker. May I tell my hon. Friend that one of the important things about an oral inquiry is the fact that such points can be teased out. The ability of the assistant commissioner to tease out and uncover points is hindered by written submissions. My hon. Friend raises a serious point.
The tradition of boundary reviews is that they tend to be politically uncontentious. All those with an interest—political parties, local authorities, community organisations and individuals—have the opportunity to participate. The commissioners adopt the recommendations of assistant commissioners only because they believe them to be improvements on the proposals. Such recommendations come not from the political parties, but from the assistant commissioner after he or she has heard evidence from the community. Political parties are part of that community—I am proud to be part of that community— and the same judgments are unlikely to be reached based solely on a written consultation. The inquiry allows all those with an interest to comment not only on the commissioner’s proposals but on those of others, so that all counter-proposals are tested in the same way. Such transparency and engagement is what gives legitimacy to the boundary review process. This Bill, with clause 15 left unchanged, would remove the opportunity for the public to have a meaningful say over the reform process and would replace a transparent system with an opaque one.
Huw Irranca-Davies
My right hon. Friend will know individuals who never put pen to paper and who do not have the capacity to articulate their views in written form, but who can stand up and speak eloquently for their communities at a public meeting and turn an argument on a dime. Who are we, as parliamentarians, to deny such people the opportunity to have their say ever again? Are the Government arguing, rather, that those people should go to the offices of their MPs or councillors and sit with them while they write out their complaints?
Sadiq Khan
As ever, my hon. Friend makes a good point. Another, linked, point is that assistant commissioners often visit areas under consideration, once they have been pointed out by members of the public or by MPs. Evidence from such senior people is invaluable when recommendations are being made.
It is in the context of the biggest shake-up of constituency boundaries in modern times that the Government are abolishing public inquiries. The next review will be critical for other reasons as well. Concerns are already being expressed about the legitimacy of the next election.
Geraint Davies (Swansea West) (Lab/Co-op)
Does my right hon. Friend accept that giving primacy to numbers as opposed to community and geography, combined with not having a transparent appeals system, could result in boundaries drawn purely on the basis of political gerrymandering, in the knowledge that those adjudicating on those decisions in private will not be required to take account of geography, community, culture or history and will therefore accept what could simply be bizarre drawings for the party political advantage of the Government?
Sadiq Khan
My hon. Friend’s point would have less force if the coalition Government were taking time to ensure that the 3.5 million electors who are not on the register were put on to it, if they were to wait and see what happens as a result of next year’s housing benefit changes, and if they were to wait for the results of next year’s census. They are rushing this Bill through, however, and my hon. Friend’s point has some force.
The Bill will mean that the next election could be held under a different voting system and with 600 constituencies instead of the present 650,—and also a referendum with differential turnouts. Questions are already being asked about the legitimacy of the next general election. Why add to that by taking away due process and natural justice? By taking away the opportunity to hold a public inquiry, the coalition Government are eroding the legitimacy of a system for redrawing boundaries that is the envy of the democratic world.
Mr David Hamilton
Surely it cannot be right that in Scotland, at the end of the 10-year period between 2005 and 2015, there will be 25 fewer MPs. That means that 31% of the representatives of Scotland will have been wiped out in that short period of time. What does that say about democracy?
Sadiq Khan
This is what we call the respect agenda. I hope that when those in Scotland have seen the Bill rushed through, the way in which the debate has been stopped—the hon. Member for Epping Forest mentioned “truncated” contributions—and the number of MPs who have not been allowed to make a contribution, they will form their own judgment.
We do not want to stop being the envy of the democratic world, and I commend my amendment to the House. I ask those colleagues who are watching the debate in their rooms to do the right thing and support amendment 15.
Mark Durkan
I rise to speak to amendments 194 and 195. Before I address them specifically, however, I shall comment on one of the amendments tabled by members of the Select Committee, with which I have a fair degree of sympathy. I must express my slight reservation, however, about the wording of proposed new subsection A2(a) in amendment 205. I am worried that, by asking a boundary commission to publish the criteria it would use in the splitting of wards, we could end up inviting the commission to split wards more than we want. The Bill proposes that wards should not be split, and I think that most Members agree that local government boundaries should not be split. I am worried that that proposal could result in more wards being split than people would want. I would still support that amendment on a vote, however.
Amendment 195 deals with the Government resisting all attempts to keep local inquiries as a general option. Under my proposal, at least Northern Ireland would be allowed the option of holding a general regional inquiry in relation to all the seats in Northern Ireland. This proposal is a fall-back measure.
I want to make it clear that I absolutely support the amendments that would preserve the opportunity of holding local inquiries throughout the United Kingdom. The right hon. Member for Tooting (Sadiq Khan) made a powerful speech in support of preserving inquiries and their important role. I know that other colleagues will propose other amendments to preserve inquiries.
I thought that the hon. Member for Epping Forest (Mrs Laing) was quite disparaging about the role of inquiries, submissions and contributions to inquiries. First, where political parties make shallow, self-serving submissions about boundaries and where specious and spurious claims of local identity and local interests are made, there is no better way of exposing them than local inquiries. By their very nature, local inquiries expose, counter and introduce other realities.
The hon. Lady’s speech was about the rule of arithmetic, and I agree that this is what the Bill is about—the tyranny of arithmetic for boundaries in the future. She says that it does not matter. For her, traditions do not matter; local conditions do not matter; identity does not matter; community does not matter—it is all going to be driven by a numerical imperative that says “one size fits all” and nothing else can be considered. An official of the European Commission would be proud of that mindset. It is exactly the mindset that the hon. Lady usually criticises in the European Commission. As well as backing the “IPSA-fication” of boundaries in the future, she is now backing a European Commission standard that says, “No, we just deal in numerical arithmetic; we see only one size fitting all; we make no concession to local realities or local conditions.”
Mrs Laing
I rise to defend myself, because that is not at all what I said. On the contrary, communities and local traditions are very important. It is important to have a parish council representing a village and to have Cornishmen feeling Cornish and caring about Cornwall—nobody is changing Cornwall. It is very important to respect local history and the feelings of local communities. That is not reflected in the boundaries of parliamentary constituencies. There are many other ways in which those traditions and communities are respected, observed and upheld. It is not in the boundaries of parliamentary constituencies—
Madam Deputy Speaker (Dawn Primarolo)
Order. Interventions should be short, not a second speech.
Mark Durkan
Thank you, Madam Deputy Speaker. I take no responsibility for the possibility that the boundaries of interventions were exceeded there.
I would take the hon. Lady’s point if she had said that in her speech, but that was not the attitude she conveyed. Then, it was the numerical imperative that was going to achieve an equality that she believed overrode every other possible consideration, including those that she has just outlined. Boundary commissions have been able to ensure that these sorts of local considerations are brought to bear on the construct of parliamentary constituencies. In future, after this Bill, however, that is going to be hard.
I do not accept that we should lose the ability to have local inquiries in general as part of electoral reform, but my fall-back amendments are designed to protect the particular circumstances of Northern Ireland, where, as I said when speaking to earlier amendments, it needs to be borne in mind that the parliamentary constituencies are, by statute, also the constituencies for the Northern Ireland Assembly. Many of the issues that will come up as matters of local contention and perhaps even party political controversy will pertain as much to the Assembly constituencies as to other constituencies. Of course, the Northern Ireland Assembly is elected on the basis of proportional representation, which is meant to be about giving equal weight to votes, including those of minorities in particular Northern Ireland constituencies. That is part of the agreement. We want to ensure that, rather than decisions in Northern Ireland being driven by robotic computer-generated arithmetic suggesting boundaries that will secure the numbers that fit, a local regional inquiry can take account of the different interests—not just party interests, but civic and local community interests.
Mr MacNeil
Is the hon. Gentleman suggesting—and all of us in the islands must bear this in mind—that there will be a particularly destabilising effect on Northern Irish society? We know what a destabilising effect on Northern Irish society might mean. Is that the main cause of his concern?
Mark Durkan
I do not want to dwell on this, because I spoke about it in the context of an earlier amendment, but we should bear in mind that the boundaries will be revised in every single Parliament and Assembly as a result of the Bill. Given the way in which the seats will be distributed in the various parts of the United Kingdom, the chances are that the number of seats in Northern Ireland will fall following one boundary review, rise following the next, and then fall again.
The unsettling nature of the reviews will affect Assembly and parliamentary constituencies. A computer will say, “This is what we have to do,” and it is possible that constituencies will receive the word that the computer says that there must be a reduction from 15 to 14 following the next boundary review. That will be hugely destabilising, and people will feel frustrated when they are told, “Sorry, this pays no regard to the Northern Ireland Assembly.” Another of my amendments, in a subsequent group, would enable the Speaker of the Assembly to be notified formally of all the workings of the boundary commissions. That would make at least some acknowledgement of the impact on the Assembly, which is completely absent from the Bill.
I believe that if the Government are refusing to allow local inquiries elsewhere—and they should not do that—they should at least allow, as a fall-back, a general inquiry in Northern Ireland that will take account of its particular circumstances. I will support any and all amendments that defend local inquiries.
I ask Members to bear my amendment in mind; I ask the Government to continue to acknowledge that there is a deficit in the consideration that they have given to Northern Ireland in the Bill, and to be ready to make up for that deficit.
Mr George Howarth
It is a great pleasure to follow my hon. Friend the Member for Foyle (Mark Durkan), who always speaks with a deep understanding of Northern Ireland, with a great passion for Northern Ireland, and, of course, with eloquence.
I was elected in a by-election in 1986 to represent a constituency that was then known as Knowsley, North. I represented Knowsley, North in the House until 1997. Following earlier boundary changes—a public inquiry had been held before the boundaries were finally fixed—I ended up representing a constituency known as Knowsley, North and Sefton, East. I represented Knowsley, North and Sefton, East for 13 years. In the meantime, the boundary commissioner came along again, and I now represent a constituency known as Knowsley. I therefore speak as one who has experienced dramatic boundary changes in my constituency on two occasions.
I think it instructive to examine what happened on both those occasions. On the first occasion, when the boundary commission proposed that the Knowsley, North constituency should be coupled with Sefton, East, a public inquiry was held. Different views were expressed on either side of the boundary about what was and what was not appropriate. People had their say. I attended the inquiry on more than one occasion, and heard the debates about what links existed between the two constituencies.
Two facts emerged that tipped the balance. The first was that a large number of people living in the Sefton, East part of what subsequently became the Knowsley, North and Sefton, East constituency worked in Knowsley, which was an industrial area. The second was that many people travelled between the two areas for leisure purposes.
The leisure centre in Kirkby, which was in the old Knowsley, North constituency, was heavily used by people from Maghull, Aintree and Melling, so a link was established, but it would never have been established—nobody would have even checked the statistics on this—unless there had been a public inquiry. In the end, the original Boundary Commission proposals stood and the new constituency was formed; it became a parliamentary seat at the 1997 general election.
Mr Dave Watts (St Helens North) (Lab)
My right hon. Friend will be aware that the last time the number-crunching took place the Boundary Commission recommended that one constituency should be half on one side of the river and half on the other. How does he feel he could represent a constituency that had the River Mersey running between its two halves?
Mr Howarth
I do not think that that would be impossible. After all, two tunnels and a bridge run between the two areas, and there is a proposal for a further bridge. I do not think it would be beyond the wit of man, or even my hon. Friend and me, to commute either under a tunnel or over a bridge. The point is that, as I said a little earlier—I do not know whether he was in his place at the time—the consequence of the arrangements is that we have undersized constituencies in the Wirral and oversized constituencies in some parts on the other side of the river.
Sadiq Khan
Is the point not that under the Bill, as drafted—I refer to clauses 11(2) and 11(5)—numbers trump everything? All the points made by my right hon. Friend and by other hon. Friends do not matter a jot, because numbers trump everything.
Mr Howarth
Yes, and my right hon. Friend may not have realised it, but I am actually supporting his argument. The point I am making is that a public inquiry is able to examine any problems that are thrown up as a result of that, and that is why I am supporting his amendment 15, which would create the circumstances in which public inquiries could still be held.
Dr Whitehead
I wonder whether my right hon. Friend, in reflecting on the problems of the Mersey, might also consider the issues of the Solent and the proposition that 40,000 people will be taken away from the Isle of Wight and distributed to a constituency somewhere in Hampshire. They know not where, they would have no say in where that might be and, as far as I can see, the Boundary Commission may not even be able to determine whether a ferry actually connects them with where they might go. Does he think that that is a reasonable way to proceed on a boundary change—with no public inquiry and no input into what might happen in future?
Mr Howarth
It is very tempting to be taken down the road that my hon. Friend seeks to lead me, but having spent a lifetime struggling with the problems of the Mersey I am hardly likely to spend what remains of my life struggling with the problems of the Solent. He makes his point effectively.
My key point is that there are practical implications to such changes. They need to be examined and the best way to do that is in a public inquiry. The hon. Member for Epping Forest (Mrs Laing), for whom I have some affection—she referred to Socrates, so perhaps at this point I should say that it is entirely Platonic—outlined the argument that this issue is not important and that a lot of these inquiries were vexatious and just held for the benefit of political parties. I do not think that is true. My experience of having sat through two public inquiries into major constituency boundary changes is that people from the community—people from community groups or individuals—come along, express their opinion and either it is taken into account or it is not. If there is a valid objection, it will often be taken into account: if not, not. The point is that they are the most important people in that inquiry. It is important to them with whom they are linked in a parliamentary constituency.
I come back to the point that my right hon. Friend the Member for Tooting (Sadiq Khan) was making: of course there needs to be fairness on the size of constituencies, but if we reach the point where they are purely mathematical entities and if everybody changes—if it is like a roundabout, where someone jumps on at one point and jumps off at the next election, finding themselves representing an entirely different constituency—the relationship between the constituency, the Member of Parliament and the people whom that Member of Parliament represents will change dramatically. Not only will those constituencies be a mathematical entity, but Members of this House will start to view them in that light. That will dramatically change the relationship with our constituents.
Mr Howarth
I shall give way to my hon. Friend the Member for Bassetlaw (John Mann) and then to my hon. Friend the Member for Llanelli (Nia Griffith). Then I really do want to finish this speech.
John Mann
I thank my right hon. Friend for generously giving way, and he is making an excellent point. Will the problem not be further and particularly compounded by the fact that with individual registration proposed for 2014-15, there will be a huge ripple effect throughout the country—particularly in areas where there are university residences with large concentrations of students who are automatically registered by the university authorities? If students are not automatically registered, there will be a huge ripple effect throughout the country that will alter the boundaries significantly in every constituency?
Mr Howarth
My hon. Friend is quite right. The ripple effect in a metropolitan county such as Merseyside, which I described earlier, would go right through the country.
Nia Griffith
I thank my right hon. Friend for allowing me to intervene. Does he not agree that the key point about public inquiries is that rule by consent is the basis of democracy? If people, because of the abolition of public inquiries, feel that they have no voice—if they feel that they have no chance to make their opinions heard, whether or not their opinion is the one that is found in favour of—that will do absolutely nothing to get rid of the cynicism about democracy and nothing to help people to take part. That will bring the coalition Government into absolute disrepute.
Mr Howarth
My hon. Friend put that argument very well indeed and I would struggle to find the words to match what she has just said.
Let me conclude. I genuinely believe that what is proposed by taking away public inquiries as part of the process is that the relationship between constituent, Member of Parliament and constituency, which is already fractured, will split completely. I think we will end up in a situation where constituencies are simply ships of convenience. I hope that that day never comes and that the Government will at some point wake up and realise that this is not the right way to do things.
Mr Dodds
I want to speak in support of amendment 209, tabled in my name and that of my hon. Friend the Member for South Antrim (Dr McCrea), as well the consequential amendment 210. It would delete proposed new section 5(2) from clause 12 so that the status quo was maintained and a public inquiry could be held by a boundary commission. As that is the purpose of my amendment, I have no difficulty in lending my support and that of my hon. Friends to amendment 15, proposed by the right hon. Member for Tooting (Sadiq Khan). As regards the other amendments in this group, I am happy to support amendment 194, tabled by the hon. Member for Foyle (Mark Durkan). As he said, it is a fall-back provision if the House decides to do away with the option of having local public inquiries in general. At the very least, I agree that there should be such a provision that would cover Northern Ireland as a region because of the particular circumstances that he so ably outlined.
I want to make a few general comments very briefly, then a couple that relate specifically to Northern Ireland. First, we have had a very good debate. Everyone who has spoken in this and the previous one spoke against the Bill and its provisions. I have not heard many speeches in support of it, other than from those on the Government Front Bench. [Interruption.] I am sorry: the hon. Member for Epping Forest (Mrs Laing), who has returned to her place, strongly opposed part 1 of the Bill on the alternative vote, so she is in the category of having opposed the Bill on some matters but, as she made clear, she would go much further than the Bill does on other matters. I got the clear impression that she would be happy to do away with constituencies altogether and have one great list system in which everyone voted in relation to the entire country. She might be happier with such a system, but we shall not rehearse that debate as we have already had exchanges on it.
Mr MacNeil
It strikes me that there is cross-community agreement on local public inquiries as the Northern Ireland fall-back position. Does the right hon. Gentleman hope that if the Government do not listen here, they might listen in the other place?
Mr Dodds
I thank the hon. Gentleman for his intervention. Given the experience of recent days, and the Minister’s references to the time that has been allowed for debate—a couple of hours this afternoon and this evening to debate these very important matters concerning the number of seats and the abolition of the age-old right to have local public inquiries—I am confident that the other place will examine these matters in great detail and will, I hope, bring common sense to bear.
Paul Murphy
My right hon. Friend is making an important point. Is he aware that, so far as I know, there is an anomaly that in Northern Ireland, Scotland and Wales the Boundary Commission inquiries for UK parliamentary constituencies are to be abolished, but remain for the two Assemblies and the Parliament?
Mr Dodds
In Northern Ireland, the parliamentary constituency boundaries are the Northern Ireland Assembly boundaries. I know the position is different in Scotland and Wales. That is why, at least for Northern Ireland—and for all the reasons that I and others have outlined this evening, it should be the case for the whole country—I appeal to the Government to think very carefully about the implications for our country of the decision to push ahead with abolition.
Dr Whitehead
Almost all of us are aware of the purpose of the abolition of inquiries into boundary changes. It is about expediency, getting the process through as rapidly as possible, and airbrushing out a particularly important part of the process in order to do that.
I do not accept the idea that because boundary commissions have not changed an enormous amount in the past, that is likely to be the case in future. Because of the wholesale changes that are being made in the rest of the Bill, boundary commission public local inquiries will probably be more important in future than was the case in the past.
In the Parliamentary Constituencies Act 1986, the most recent iteration of the rules for the redistribution of seats, we see, as other hon. Members have mentioned, a balancing arrangement between the idea of equality in representation, between various local considerations, and between representation and decision making. As a result of that relatively balanced mechanism, it is fair to say that the boundary commission process has worked pretty well, without enormous public outcry at its past decisions.
Looking ahead, we find that the Government are removing not only most of the checks and balances that were in the boundary commission arrangement, but the very last check and balance whereby, after that whole process has taken place, the public have an opportunity to question, have their say and find out why those changes are taking place in the way that has been suggested. The idea that that should be replaced with a procedure that is simply not transparent is a complete rejection of all those previous checks and balances, and a rejection of the principles put forward—I am sorry if this sounds ad hominem—by a Minister, the Deputy Leader of the House, for whom I have a great deal of respect, but who would have made exactly the same arguments about public representation, the public’s say and the due process of democracy until one day before the election.
I do not know whether a particular event in Greece, and the electoral practices there, caused the hon. Gentleman to change his mind on the matter, but over the years a large number of Liberal Democrat constituency parties have been active participants in those processes, and he will have to go to them and say, “Actually, you can’t do this any more, because I’ve thrown this out of the window as part of a deal to get something else through.” They will be aghast at what has happened to the principles that they previously put forward.
Dr Whitehead
As my hon. Friend will know, peruse though one might, it is not possible to find such a pledge. If any party had put such a pledge in its manifesto at the last election, that itself would have been the subject of an internal public inquiry, because of what it would have said about that party’s commitment to the process of electoral change.
On the differences that the boundary reviews will make, I refer to the Isle of Wight, which is close to my constituency but separated by a substantial body of water, the Solent. The proposal, which is likely to come to pass, is that 40,000 people will be taken out of that constituency and distributed somewhere else in Hampshire—they know not where. [Interruption.] They will stay on the Isle of Wight, but for the purposes of political representation they will join another constituency.
The Boundary Commission will have a certain say in the process, because it will have to decide which 40,000 people on the island go to various other parts for their representation. It may decide that they will go to Portsmouth, to Southampton or to the New Forest. Each area has a connecting ferry service to the island, but I am not sure whether the commission can even take into account whether the people and the ferry service should be connected, given the changes that will be made and the Government’s conditions for the new arrangements.
All that will be done on the basis of a boundary commission decision—no public inquiry, some representations and no explanation. That represents a serious and fundamental change to the representation of, admittedly, just one constituency, but the process will be repeated throughout the country in a substantial if not such an extreme way, and if that is not a negation of the public’s right to understand what is happening to their own political processes, I do not what is or will be.
We must vote for amendment 15, which would reintroduce the idea of a public inquiry within particular boundaries and for particular concerns to ensure that it was conducted seriously and not frivolously. The idea that the public should have their say in who they are represented by, how they are represented and where their representation takes place has been a fundamental part of our electoral system for many years, and to throw it out of the window for expediency is a move that will be regretted and a move that we should reject.
Mr Heath
Let me start by thanking the hon. Member for Epping Forest (Mrs Laing) for speaking to the amendment on behalf of the Political and Constitutional Reform Committee on which she serves. It is a great pity that the Chair of the Committee, the hon. Member for Nottingham North (Mr Allen), is not also present in order to support its view.
Mr Heath
I am grateful to the hon. Lady. The Select Committee has done a very good job in raising some important issues.
Amendment 205 would add a stage to the consultation process that the boundary commissions are required to carry out for the purposes of the review. Prior to making recommendations, the commissions would be required to publish online their proposed approach to the application of the rules and factors. A consultation period of eight weeks would follow, and the commissions would be required to take the results into account. We have set a deadline of October 2013 for the commissions to report to allow parties, administrators and electors to adjust to the new boundaries prior to the general election in 2015.
An increase in consultation time of eight weeks could delay the reports, making it harder to prepare for the next general election. In effect, the time added to the process by the amendment would be much greater, as the commissions would have to publicise their proposed approach and assess the representations received before taking the many and complex individual decisions required to put together their recommendations. The Government believe that the right place to debate the approach that the boundary commissions must take is in Parliament. The importance of that is highlighted by the fact that the Bill had its Committee stage on the Floor of the House. The boundary commissions will carry out the review according to Parliament’s wishes, as has always been the case.
In any event, I do not consider that the commissions’ general approach, divorced from the resulting recommendation for particular constituencies, is a subject on which wide consultation is appropriate. It is the effect of the recommendations on a person’s local constituency or local area on which it is important for them to have a say, and the Bill increases the period for them to do so. Consultation on a general approach is likely to lead to many responses that are based not on genuine concern about the approach but on guesswork as to what the effect of that approach might be in a local area. But until the commission has taken all the many individual decisions necessary to formulate its recommendations, it will be impossible to predict the effect on a particular area.
I hope that it will reassure hon. Members that during the previous review the Boundary Commission for England produced a booklet prior to the publication of recommendations which gave information about the review. There was also extensive use of the commissions’ websites to inform interested parties about all aspects of the review.
Amendment 206 proposes a new set of publicity and consultation rules under clause 10. I hope to reassure hon. Members who tabled the amendment that it is not necessary as it reflects the practice that the boundary commissions are likely to follow in any event. The boundary commissions made extensive use of the internet in publicising the last general review and, although it is for them to decide, I am confident they will do likewise this time. The information that they published at the time of their recommendations included the electorate figures mentioned in the amendment.
I believe that it is important to allow the boundary commissions discretion to present their recommendations and relevant accompanying information as they think best, taking into account the particular circumstances with which they are dealing and the changing way in which people obtain information and communicate. On that basis, while I do not disagree with the principle underlying the amendment, I do not agree that it is desirable for the Bill to particularise the commissions’ practice in legislation to the extent that the amendment proposes.
The amendment would also expressly allow representations to be made by people within or outside the affected constituency. That is presently the case, and the Bill does not change that. New section 5(1)(b) of the Parliamentary Constituencies Act 1986 follows the existing section 5(2) in that respect. The boundary commissions are likely to publish recommendations for a number of constituencies together as a scheme, and the proposals for one constituency will undoubtedly affect those for others. It is important that interested parties both from within a proposed constituency and from neighbouring constituencies may make representations to the commissions for alternative schemes that work within the rules, and the Bill does not prevent that from happening. While I understand the concerns of the hon. Member for Epping Forest, it is not necessary for the wording that appears in the amendment to be in the Bill. On that basis, I hope that she will feel able to withdraw the amendment.
I now turn to more general points about local inquiries. It was interesting to listen to the right hon. Member for Tooting (Sadiq Khan) outline the Opposition’s case. I am glad that in this evening’s debate, we have not heard local inquiries described as appeals, because of course they are not. They are part of the process of information gathering, listening to the views of local people and weighing them up as part of the due process.
The process suggested in the Bill maintains that principle. Indeed, it actually extends it. It is vital that the boundary commissions fully consult all interested parties on proposals for changes to constituency boundaries. We all accept that. Local people in particular must be able to have their say. However, the Government believe that it would be a mistake to imagine that local inquiries achieve that objective, and there is independent support for that view. The Bill abolishes them for three major reasons. First, we simply must speed up reviews.
Mr Heath
I am telling the hon. Gentleman why, if he will just listen.
The boundaries in force in England for the first time at the general election in May were based on electoral register data that were 10 years out of date. I do not think that is acceptable, and nor should Opposition Members.
Mr George Howarth
The Deputy Leader of the House makes a fair point that those registers were out of date. Does he believe it is of equal concern that 3.5 million people will not be registered by the time the new constituency boundaries are drawn up?
Sadiq Khan
The Deputy Leader of the House will be aware that the average time taken for a review in the current system is six years. In his new system it will be three years. Bearing in mind that he has conceded that people will still be missed off the electoral register, is not the real reason for the rush that he wants the change before the next general election rather than the one after?
Mr Heath
It is hardly a secret that we want a general election based on fair constituencies, and I do not think that is an unreasonable aspiration.
The second reason why we are abolishing the public inquiries is that they do not achieve their purpose. They do not provide the boundary commissions with a good indication of local opinion to aid them in the process of drawing up constituencies. [Hon. Members: “How do you know?”] I will tell Members how I know—academics have been clear on that point for a number of years. Professors Butler and McLean, in their evidence to the Committee on Standards in Public Life in 2006, argued that a faster approach could
“simplify the system without leading to any significant decline in equity.”
Oral inquiries were described by Professor Ron Johnston and his colleagues, whom the right hon. Member for Tooting quoted several times, as
“very largely an exercise in allowing the political parties to seek influence over the Commission’s recommendations—in which their sole goal is to promote their own electoral interests.”
That is why the right hon. Gentleman and his friends like the system at the moment. It gives the power to the parties, not to the public.
Sadiq Khan
The Deputy Leader of the House makes an interesting point and quotes a generalised point that the professor made, but did not he and many other experts also make the specific point that bearing in mind the huge changes that are to be made, this is the one occasion if any when a public inquiry is essential?
Mr Heath
No, it is the one occasion when it is absolutely essential that we have the fullest possible consultation process, and that is why we are extending the consultation period for three months, allowing every single person to have their say, not just the political parties that want to turn up at public inquiries. I hope the right hon. Gentleman recognises that.
Mr Heath
No, I have got to make progress.
The third reason for abolishing inquiries is that they rarely lead to significant changes in recommendations. The statistics that are often prayed in aid of local inquiries usually group together many different constituencies and include changes solely to the names of constituencies, to inflate the figure of the proportion that lead to change. The truth, as Professor Johnston told the Political and Constitutional Reform Committee, is:
“Public inquiries often have no impact.”
The changes are frequently minor. For example, at the time of the fifth general review in England, only 2% of wards in counties where inquiries were held were moved between constituencies as a result.
What the Bill does—[Interruption.] No, let us deal with what the Bill actually does. It improves the process of public consultation, so that the public will be better able to have their say on proposals. That is why we are extending the period for representations on proposals from one month to three. Where a boundary commission revises proposed recommendations, the period of consultation on the revised proposals will be the same.
In making that decision, the Government have considered the approach taken in other nations. We looked at the example of Australia, which has a 28-day consultation period for proposed recommendations, followed by 14 days for comments. The Government propose a longer consultation period of three months.
Mark Durkan
The Deputy Leader has said that where a boundary commission reviews its recommendations, they will be subject to a further period of consultation, but a second revision will be final, and there will be no consultation. An appeal will involve people turning to the Secretary of State, who may, under the Bill, prepare an Order in Council with or without modification. The Secretary of State can therefore change things, but the public cannot appeal.
Mr Heath
I would answer the hon. Gentleman in two ways, and I know that he takes a serious interest in these matters. The second inquiry, as he puts it, does not happen now. Once a boundary commission makes its final conclusions, that is the end of the story—and there has to be an end to the process. In the Bill, we are establishing a longer and more thorough process of consultation, all of which will be in the open, rather than in secret, because it will all be published and available for people to see. That is a fairer way of doing things than having highly paid QCs representing two big parties simply making partisan points in front of an assistant commissioner.
Mr Heath
We did not propose legislation on the Boundary Commission at that point, but we are doing so now, and those are the proposals before the hon. Gentleman. He must look at them and see whether they make sense. I believe that they do.
During our discussions, we have had a flavour of some of the arguments that are put before commissioners in public inquiries. We have had people claiming that constituencies can never cross a river. We have had Members complaining that they cannot have a connection to more than one local authority in their constituency. Those are the sorts of spurious argument that a public inquiry throws out of court every time.
Sadiq Khan
The Deputy Leader of the House quoted Professor Johnston out of context and now has issues with lawyers earning lots of money in inquiries. Will he confirm that Professor Johnston said:
“I can well see people using”
judicial review
“as a reason for addressing the issues that they think they are not able to address because they are not having public inquiries”?
Does the Minister agree with Professor Johnston or does he not?
Mr Heath
If each of the boundary commissions does a thorough job, which I fully expect them to, and takes the proper matters into consideration, I do not expect an increase in judicial review. That is my answer to the right hon. Gentleman. He mentions the fact that he is a lawyer and that I do not like highly paid lawyers very much, but I am surprised that he decries the idea of submissions being made in writing rather than orally, because that is a well-known and fundamental principle in law.
The improved process in the Bill will deliver faster reviews. Time-consuming public inquiries that do not bring new arguments to the table and which are dominated by parties attempting to advance their electoral interests are not beneficial in Northern Ireland or anywhere in the UK. I urge hon. Members not to press the amendments.
Hon. Members
No.
Question put, That the amendment be made.
Question negatived.
Amendment proposed: 15, page 12, leave out lines 35 to 41 and insert—
‘(1A) A Boundary Commission may cause a local inquiry to be held for the purposes of a report under this Act where, on publication of a recommendation of a Boundary Commission for the alteration of any constituency, the Commission receives any representation objecting to the proposed recommendation from an interested authority or from a body of electors numbering one hundred or more.
(1B) Where a local inquiry was held in respect of the constituencies before the publication of the notice mentioned in subsection (1) above, that subsection shall not apply if the Commission, after considering the matters discussed at the local inquiry, the nature of the representations received on the publication of the notice and any other relevant circumstances, is of an opinion that a further local inquiry would not be justified.
(1C) In subsection (1A) above, “interested authority” and “elector” respectively mean, in relation to any recommendation, a local authority whose area is wholly or partly comprised in the constituencies affected by the recommendation, and a parliamentary elector for any of those constituencies.’.—(Sadiq Khan.)
Question put, That the amendment be made.
Mr Speaker
Order. I understand that the House is excited, but we must hear the point of order.
Sadiq Khan
Thank you, Mr Speaker. We have today debated the remaining stages of a Bill that were not discussed in Committee. The parts we were supposed to discuss today covered a reduction in the number of seats, a change in the way they are distributed, and abolition of local inquiries. We have also had two statements.
We have had no debate on clause 12, which covers Boundary Commission processes and which was not discussed in Committee, and we had less than two hours’ debate today. There were more than 12 speakers who were not called at the end of the debate. Clause 13 ––[Interruption.]
Mr Speaker
The right hon. Gentleman has made his point, and I understand his concern. He knows that the programme motion is a matter determined by, and in the hands of, the House; it is not a matter for the Chair. The Speaker is always keen to have the maximum debate on matters of concern. The right hon. Gentleman is a very experienced Member, and he has made his point with great clarity. It is on the record, and it will be heard by those on the Treasury Bench: whether it is heeded by others remains to be seen.
Business without Debate
Aircraft Carriers
(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
Before I call Thomas Docherty, may I make the ritual appeal to right hon. and hon. Members who are leaving the Chamber to do so quickly and quietly, because Members want to listen to Mr Thomas Docherty?
Thomas Docherty (Dunfermline and West Fife) (Lab)
I pleased that the question of how our new Queen Elizabeth class aircraft carriers are to be maintained has attracted such widespread interest in the House. My constituents and everyone in Fife can only be reassured by the keen interest shown by right hon. and hon. Members on both sides of the House in this important issue. I hope that the House will consider this important matter seriously and sombrely.
For the benefit of hon. Members who are present, it might help if I explain why this debate is so important, not just to west Fife, but to the wider defence establishment and, indeed, to our national interest. Only two functioning dockyards in western Europe are big enough to take the Queen Elizabeth class carriers: Rosyth dockyard in my constituency and the one in Brittany, France. I hope that the turnout tonight shows the widespread support for the Government to choose the UK dockyard and to support UK jobs and the defence industry.
Rosyth dockyard has a long and proud tradition of supporting our Royal Navy, and of returning warships to active service in prime condition on time and on budget. The House may recall that at the outbreak of the Falklands conflict in 1982, Rosyth dockyard worked night and day to ensure that the taskforce was able to sail south in the best possible condition.
Penny Mordaunt (Portsmouth North) (Con)
The Falklands conflict is a good example to show the importance of operational readiness and the stress that will be on the carriers. Does the hon. Gentleman agree that that means that the bulk of maintenance work will have to be done in their home port of Portsmouth, and is that why the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) told my constituents that they would be based there?
Thomas Docherty
I am grateful for the hon. Lady’s comments, but she obviously needs to work on her pronunciation of my right hon. Friend’s constituency. It is absolutely right that Royal Navy warships receive the best possible care and maintenance, and I hope that she will join me in urging her Government to back UK jobs and the UK’s defence industry.
We would never wish to see events such as the Falklands repeated, but—to pick up on the hon. Lady’s point—I believe that it is a matter of national importance that the United Kingdom retains the capability to send the Royal Navy’s flagship into operations in the best possible condition. We have highly skilled, highly trained staff at Rosyth, and I want to pay tribute not only to the management and work force but to the local schools and colleges that provide excellent training and support.
Lindsay Roy (Glenrothes) (Lab)
I congratulate my hon. Friend on securing this important debate. I am a former head teacher, and my school provided a substantial number of highly motivated and trained people who are currently working in Rosyth. Does he agree that the unique partnership between Babcock, Carnegie college and the schools has assured the high-quality apprenticeship training, vocational retraining and graduate development necessary not only to assemble the carriers but to carry out the excellent refits and refurbishments for which Rosyth is rightly renowned?
Thomas Docherty
I am grateful to my hon. Friend for that intervention. He has a history of 30-odd years of service as a first-class educator of young people in Fife. I also want to place on record my tribute to Professor Bill McIntosh and all the staff at Carnegie college, and, indeed, those at Adam Smith college, for their work with the dockyard in helping to create 350 apprenticeships in a highly skilled work force.
Sir Menzies Campbell (North East Fife) (LD)
This is a non-partisan, all-Fife occasion, and I would like to support the hon. Gentleman in his submissions to the House. He might also care to consider that HMS Ark Royal, which is unfortunately soon to be decommissioned, was recently the subject of a substantial programme of maintenance that was very successfully carried out at Rosyth dockyard. That is an indication of the modern capability of Rosyth to deal with such large-scale projects.
Thomas Docherty
The right hon. and learned Gentleman is absolutely correct to point out the cross-party support that the dockyard has enjoyed. We hope that this will be a bipartisan, measured debate, and I look forward to his continuing support in the months and years to come.
The UK Government’s recent strategic defence and security review produced a couple of significant outcomes on which I hope the Minister will be able to provide some reassurance. First, he will be aware of the uncertainty surrounding the near-term future of the work programme at Rosyth. A large part of the order book for the next three years was to be filled by the refitting of warships that the Prime Minister has indicated in the SDSR will no longer be in service. This is obviously causing consternation locally, as there is the potential for perhaps an 18-month hole in the work stream. I am sure the Minister will appreciate that it will be difficult for the dockyard to hold on to those vital employees for that length of time, and I want to ask him whether he is prepared to meet me and representatives of the trade unions to discuss how we can help to fill that void.
Secondly, we are still unclear about whether the so-called “cat and trap” system will be fitted on to HMS Queen Elizabeth and HMS Prince of Wales, and, if so, when. Can the Minister confirm whether those decisions have been made? If they have not, will he tell us how soon they will be made? It is surely logical—not to mention providing the best price to the taxpayer—to fit them during construction, before the ships embark on operations.
Thirdly, can the Minister confirm when HMS Queen Elizabeth will enter operational service? Will she sail for any period without the joint strike fighter, or will she be delayed further if the JSF is delayed in arriving in service? Will the Minister also tell the House when he expects HMS Queen Elizabeth to have her first scheduled refit? Will it be in 2022, as originally scheduled? Will it be 2024, as has been inferred from the Prime Minster’s statement to the House? Or will it be even later?
The House will be aware that Ministry of Defence civil servants carried out briefings this afternoon, and there is some confusion about their content. I understand that Scottish newspapers have received certain information prior to its being given to the House. If the reports that the Ministry of Defence will award those refurbishment contracts to the United Kingdom are true, it is indeed great news. However, I am sure the House will agree that reports of this nature should be made first by Ministers to this House and not by officials in briefings to selected newspapers.
It is important that the Government be clear on the timetable for their plans so that the loyal work force in Fife will know when it can expect the first refit work to start. Thank you, Mr Speaker.
Mr Brown
At the start of any defence debate, even one on the Adjournment, it is important to recognise the quality and commitment of our armed forces: our Army, our Navy, our Air Force, and the civilian defence staff who work for the security, strength and safety of our country. Speaking as someone who has visited Iraq and Afghanistan on many occasions, I think it is important to pay tribute to all those serving in Afghanistan at the moment and to their contribution to the security of this country.
In the week that precedes Armistice day, I also think it important to recognise those who gave their lives in the service of this country. On this day and in this month, it is important to say that those who lost their lives in Afghanistan will never be forgotten and that their influence lives on in the lives of the people they leave behind.
I have been Member of Parliament for one of the Fife constituencies for 27 years. I am pleased that the other MPs for Fife are with us this evening, and I applaud my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) for securing this debate and for securing this above-average attendance for an Adjournment debate. In the course of those 27 years, the whole history of Fife has revolved around the future and the fate of Rosyth dockyard.
Winston Churchill said that Rosyth was the best defended war harbour in the world, in recognition of Rosyth’s work during the second world war, when it refitted as an emergency all the vessels sent to sea from that area of Scotland. Over the past 30 years, the naval base has closed; the Rosyth dockyard and naval base, which once employed 15,000 people, now employs 1,500 people. Rosyth is the only base that can assemble the aircraft carriers that this country has commissioned. It is also the only base that can serve us by refitting the carriers in the future. When announcements are to be made by the Ministry of Defence, it is important to recognise that Rosyth is the base best able to refit the carriers in the years to come.
I want to be clear about why the aircraft carriers are important to this country. I believe that the debate has been clouded by many things that have been said over the last few weeks. These are military decisions, made on military advice for military reasons. The reason the decisions have been made is that if we are to retain a global presence as a Navy, as armed forces and as a country, we will need these aircraft carriers in the years to come. We will need them not only because they are important to the defence of the Falklands, but because they are important for maintaining the 500-year role of the Royal Navy in being available to assist in any part of the world.
My hon. Friend the Member for Dunfermline and West Fife has put the case for the refitting work to come to Rosyth. He has said that it is better to refit there than to refit in France. He has also said that the work force of Rosyth are skilled, educated and trained people who have devoted their lives to the service of this country. I think it important to recognise that we are talking about the future of people’s lives—those of the people who are prepared to give their lives for the security and service of this country.
Thank you, Mr Speaker, for allowing this Adjournment debate this evening. The words of my hon. Friend the Member for Dunfermline and West Fife in speaking up not just for the Royal Navy, but for the civilian defence workers, will be well heard in Plymouth and in Portsmouth as well as in Rosyth. We owe a duty to the workers in all this country’s dockyard areas.
The Parliamentary Under-Secretary of State for Defence (Peter Luff)
It is right that I should begin by joining the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) and the hon. Member for Dunfermline and West Fife (Thomas Docherty) in paying tribute to the armed services at this time of all times, and also to Rosyth for its work in preparing the country for the Falklands war and for its skills, which were mentioned by the hon. Member for Dunfermline and West Fife.
I seem to pick my Adjournment debates, or perhaps they pick me. On the last occasion, my hon. Friend the Member for Fylde (Mark Menzies) initiated a debate on the aerospace industry which we had thought would last half an hour. It lasted for three hours, and attracted an only slightly smaller audience than tonight’s debate. Tonight we have had the privilege of being footnotes in parliamentary history.
I am glad to be able to respond to the debate in, I hope, a constructive spirit. I am tempted to say some of the things that are on my mind, but I shall leave them for another occasion. [Interruption.] I shall resist the temptation.
Let me begin in the customary way by congratulating the hon. Member for Dunfermline and West Fife on securing the debate, which comes soon after the Prime Minister’s announcement of the details of the strategic defence and security review. The review was, by definition, strategic, and we are now working through the detail that flows from that strategy. Given that some of the issues discussed by right hon. and hon. Members tonight have focused on specifics, I hope that the House will accept that I am not yet in a position to answer all their questions. I will, however, try to provide as much information as I can in response to the issues that have been raised.
I particularly welcomed the contribution of the right hon. Member for Kirkcaldy and Cowdenbeath. I well remember sitting on the Opposition Benches and making similar points on behalf of my own constituents, and I hope that the right hon. Gentleman will find my response as constructive as I found many Government responses then.
Let me say how impressed I have been by the work undertaken at all the shipyards involved in the Queen Elizabeth class project. Although I have not yet had an opportunity to visit every yard, I recently visited the Govan shipyard to see the progress on the Queen Elizabeth carrier. While I was there I spoke to a range of staff, all of whom showed their skills and complete dedication to the project. They were a credit to the programme, and I pay tribute to them.
The progress achieved so far, such as the delivery of the bow unit and installation of diesel generators, is genuinely remarkable. To appreciate the scale of the project, one has to see it with one’s own eyes. That success is largely due to the skills of shipyard workers not just at Rosyth but around the country, at Appledore, Birkenhead, Govan and Portsmouth, and on the Tyne.
I shall not go into the wider issues raised by the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath. Let me merely say that the strategic defence and security review has confirmed that we will build both carriers. The Government believe that it is right to retain, in the long term, the capability that only carriers provide: the ability to deploy air power anywhere in the world, without the need for friendly air bases on land. Once delivered, the carriers will be in service for about 50 years. Indeed, the final commander of the carriers is unlikely even to have been born yet.
At this point we expect to operate only one of the ships, the other being retained in extended readiness. I assure the House, however, that we will maximise the carrier’s effectiveness by adapting it to operate the more capable carrier variant of the joint strike fighter, which will require the installation of catapults and arrester gear. Conversion to CV will take longer, but it will provide greater interoperability with key allies such as the United States and France.
The hon. Member for Dunfermline and West Fife asked a number of detailed questions, but I am afraid that I can travel only a certain distance in answering them tonight. We plan to deliver the carrier strike capability from around 2020, and are now investigating the optimum means of achieving that outcome, working with members of the Aircraft Carrier Alliance and wider industry as well as our international partners. We expect the work to take a number of months, but the building work will continue to maintain the momentum in the delivery of this important capability. We will investigate a number of different aspects, including the type of launch system, the procurement route, the delivery date, and whether one or both ships should be converted and in what order. However, I stress that no decisions have yet been made, as the work has only just begun.
Dr Julian Lewis (New Forest East) (Con)
Can my hon. Friend at least go as far as dispelling any rumour or suggestion that the second carrier will be sold rather than remaining a part of the Royal Navy?
Peter Luff
That option is indeed spelt out in the SDSR document, but I think that it is unlikely to be adopted. Extended readiness is a much more likely option.
I am sure hon. Members will appreciate that until the work on all the options we are looking at has been completed, we will not be in a position to confirm the exact nature of our contracting approach for future support or maintenance work. The main investment decision for support arrangements for the Queen Elizabeth class is expected to be taken before the middle of this decade—that is as precise as I can be tonight—and will reflect the aircraft launch system changes that have been agreed in the SDSR. [Interruption.] An Opposition Member says from a sedentary position, “After the general election.” That is a completely irrelevant consideration; this decision will be taken at the right time for the project.
Thomas Docherty
Does the Minister not understand that if the HMS Prince of Wales does not have a “cat and trap” system, aircraft will not be able to fly off it, and it will therefore just be a big scrap of metal?
Peter Luff
Understandably, the hon. Gentleman invites me to make commitments that I cannot make at this stage. I understand his point and I promise it will be taken fully into account. [Interruption.] An Opposition Member says from a sedentary position that it is a very serious question. I entirely agree, which is why I will not give an answer off the cuff from the Dispatch Box tonight.
Our planning assumptions for the support requirements of the Queen Elizabeth class have been that each vessel will require a period of major maintenance every six years, including a period in dry dock for hull cleaning, survey and preservations, which we expect will take about 36 weeks. In addition, the operational vessel will require up to 12 weeks of maintenance per year, depending on operational tasking. Again, I must stress that these assumptions remain under review as we continue to develop the support solution, which will include consideration of the support requirements for a vessel at extended readiness. I simply cannot answer any specific questions at this stage.
We are also currently examining a number of potential options on which company or companies could undertake future maintenance work for the Queen Elizabeth class. These include, but are not limited to, solutions involving the Aircraft Carrier Alliance—the means by which the carriers are being constructed—and the surface ship support alliance, which will provide efficient, sustainable and affordable engineering support to the Royal Navy.
In addition, I would like to remind the House that although, as my hon. Friend the Member for Portsmouth North (Penny Mordaunt) reminded us in her intervention, Portsmouth has been confirmed as the base port for the Queen Elizabeth class carriers, that does not automatically mean that all the maintenance work will be undertaken there. A number of options are being considered for the future support of the Queen Elizabeth class, including facilities at Rosyth, together with other UK, and possibly overseas, locations, all with sufficiently large facilities. There are more than two yards that can do this work.
Penny Mordaunt
Because of the operational readiness that the carriers will have to provide, does my hon. Friend agree that outside those major maintenance episodes every six years, the maintenance work is likely to be opportunistic and therefore done within the home base, which will be Portsmouth?
Peter Luff
Quite reasonably, my hon. Friend teases me to make the same sort of commitments as does the hon. Member for Dunfermline and West Fife. I am afraid, however, that I just cannot make those commitments at this stage, much as I would like to.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
Does the Minister accept that if one aircraft carrier is on extended readiness and a second, which is being used for operational duties, has to go into dry dock, there will be no aircraft carrier available for use, and would he therefore consider building a third?
Peter Luff
Now, that is a commitment I would be delighted to make at the Dispatch Box if I possibly could. I think the hon. Gentleman will be unsurprised to learn, however, that, sadly, I am unable to give him that assurance.
I recognise that there are many positive reasons for undertaking Queen Elizabeth support work at Rosyth, but we are still some way from taking the main investment decision on support arrangements, and I hope the House will understand why no decisions have yet been—or could be—taken on this issue. That is why the reports in the Scottish media to which the hon. Member for Dunfermline and West Fife referred must, by definition, be untrue. I suspect they may be guilty of over-interpreting certain remarks, but I can assure him that no decisions have been taken at this stage. I think I would know about them if they had. [Interruption.] I think I would; I am fairly confident I would.
I know that the hon. Gentleman is anxious to hear how Babcock Marine’s Rosyth dockyard will fare in all of this. I am sure that the Government’s announcement in the SDSR that both carriers will be built will reassure the hon. Gentleman that Babcock Marine will have sufficient construction work until late into this decade. There are not many organisations that have that kind of assurance over a 10-year period.
Thomas Docherty
I am grateful to the Minister for clarifying that newspaper point. Will he therefore give a guarantee that when decisions are made, they will be made to the House before they are made in media briefings, such as the one given the night before the SDSR was published, as happened last time?
Peter Luff
I did take a self-denying vow at the beginning of these remarks not to say some of the things on my mind. All I would say to the hon. Gentleman is that I will do my best to comply with his reasonable request, although it was not one that the previous Government respected that often. [Interruption.] I just like to get these things on the record from time to time.
In terms of wider surface ship maintenance work, we continue to work with Babcock Marine and BAE Systems Surface Ships to develop the surface ship support alliance. Babcock Marine is in the final stages of a substantial six-month maintenance and upgrade period for HMS Blyth, a minesweeper. I am pleased to confirm that this work is on track to complete on time and to budget, and I wish to thank all who have contributed to the success of this project—this is a tribute to the hon. Gentleman’s constituents. Additionally, Babcock Marine is undertaking a docking period for HMS Illustrious and I am also pleased to be able to confirm that HMS Kent, a Type 23 frigate, is expected to arrive at Rosyth later this week in preparation for her refit period, which is planned to last until next autumn.
Recently, the hon. Gentlemen wrote to me seeking assurances about the future upkeep programme at Rosyth—he sought that assurance again tonight—and I would like to take this opportunity to explain again the Department’s current position. As has been the practice since the start of the alliance programme, discussions have been continuous between members of the alliance about the best allocation of the forward programme of upkeep periods. It is, however, too early to say what changes might be required of the programme at Rosyth and elsewhere in the alliance following the hard decisions made to reduce the size of the Royal Navy as part of the SDSR. I can, however, confirm that decisions will continue to be made on what we describe as a “best for enterprise” basis, and I will be delighted to meet him and his constituents to discuss these issues further. I look forward to making the arrangements for that meeting at the earliest possible date.
Turning to future shipbuild work, we now expect up to three years of additional design and modification work on the Queen Elizabeth class carriers to address the changes needed to install catapults and arrester gear. That may, in part, at least answer the question put by the right hon. Member for Kirkcaldy and Cowdenbeath. In addition, design work is already under way on the Type 26 global combat ship, which is expected to enter service early in the next decade; this is the next generation of frigate.
As the House is aware, the SDSR announced the Government’s intentions for the current and future equipment and capabilities we need to defend this country. It made some tough but necessary choices, removing some projects while keeping others. We are now working hard to provide the level of detail needed to decide exactly how these intentions are turned into reality. With the decision to decommission some of the Royal Navy’s ships—these are decisions that I personally regret, but they were inevitable—we need to continue working with industry to decide how best to support the Royal Navy surface fleet to ensure that we achieve the best value for money. We also know that maintenance work on the Queen Elizabeth class is still some way—some years—from being decided. A key factor in that decision will be achieving a more detailed understanding of what changing the aircraft launch system means for not only the build programme, but through-life support. I said at the start of my speech that I would not be able to provide the House with all the answers today that I know it would like, but we do know that two extremely capable Queen Elizabeth class carriers will be built.
Mr Gordon Brown
Why can the Minister not assure us that the aircraft carriers will be refitted within the United Kingdom?
Peter Luff
I think that it is extremely likely that they will be, but I cannot rule out the possibility that they will not; the assumption is that they will be refitted in the UK, as the right hon. Gentleman suggests, but I am not going to give him that categorical assurance at this stage, for reasons that I am sure he, as a former Chancellor of the Exchequer and Prime Minister, will understand.
Peter Luff
Well, the right hon. Gentleman shakes his head and I am surprised at that. As a constituency MP I am sure he would not understand, but as a former Chancellor and Prime Minister I suspect that he probably does.
With one carrier to be operated, there will be long-term requirements for maintenance, potentially for up to 50 years. In times of austerity across the country, the UK shipbuilding industry and ship repair industry should take great comfort from that, as well as the other naval activity, both surface and submarine, that the SDSR confirmed. Once again, I congratulate the hon. Member for Dunfermline and West Fife on securing this debate and look forward to seeing him at my office at an early date
Question put and agreed to.
Written Ministerial Statements
The Office for Budget Responsibility (Treasury Committee Report)
(14 years ago)
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The Economic Secretary to the Treasury (Justine Greening)
The Government have today responded to the Treasury Select Committee report on the Office for Budget Responsibility (OBR). Copies are available in the Vote Office and the Library. The Government are grateful to the Committee for its assistance in establishing the OBR and the legislation that is now before the House reflects many of the Committee’s recommendations.
Independent Public Service Pensions Commission
(14 years ago)
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The Chief Secretary to the Treasury (Danny Alexander)
Lord Hutton has today published a further “Call for Evidence”, which has been deposited in the Libraries of both Houses.
Periodic updates of the Commission’s work will be made available through the website, located at:
http://www.hm-treasury.gov.uk/indreview_Johnhutton_pensions.htm .
Iraq Historic Allegations Team
(14 years ago)
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The Minister for the Armed Forces (Nick Harvey)
In March my predecessor announced the intention of the previous Government to set up a dedicated Iraq historic allegations team (IHAT) to investigate allegations of abuse of Iraqi citizens by British service personnel that have been brought to the Ministry of Defence’s attention. The Government have endorsed the continuation of this approach, and we are determined to ensure that these allegations are investigated thoroughly and as quickly as possible.
I would like to inform the House that the IHAT now has a full investigative capability and has commenced work. The team is led by a retired senior civilian policeman and consists of military and ex-civilian police detectives who will ensure that each allegation is appropriately investigated. Given the volume of allegations and the complexity of investigating the events in question, we anticipate that it will take around two years to complete the work of the IHAT.
There are those who argue that the Government should hold a public inquiry into these unproven allegations now—we disagree. A costly public inquiry would be unable to investigate individual criminal behaviour or impose punishments. Any such inquiry would arguably therefore not be in the best interests of the individual complainants who have raised these allegations. Nevertheless, the Secretary of State for Defence has not ruled out holding a public inquiry at some point in the future, should serious and systemic issues emerge from IHAT’s investigations that might justify it.
The establishment of the IHAT should not be taken as an admission of fault or failure. These allegations are as yet unproven, but their existence is corrosive to both the morale and reputation of our armed forces. We owe it to them, and the complainants, to investigate properly these allegations and that is exactly what the IHAT has now started to do.
General Affairs Council and Foreign Affairs Council, 25 October 2010
(14 years ago)
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The Minister for Europe (Mr David Lidington)
The General Affairs Council and Foreign Affairs Council were held on 25 October in Luxembourg. The UK was represented by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs and myself.
The agenda items covered were as follows:
General Affairs Council (GAC)
The full text of all conclusions adopted can be found at:
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/genaff/117366.pdf
Follow-up to the September European Council
The Commissioner for Inter-Institutional Relations and Administration (Sefcovic) briefed on EU 2020, covering the ongoing dialogue with member states on their national reform programmes which are due for submission in November.
I and others raised Pakistan and the importance of delivery on trade and development assistance commitments made at the September European Council. The Foreign Secretary repeated the call later at the FAC.
October European Council
Ministers discussed at length the issue of the taskforce on economic governance and possible treaty change at both the GAC session on 25 October, and the ministerial dinner with the President of the European Council (Van Rompuy) on 24 October.
Some Ministers made the case for treaty change, arguing that sanctions were integral to any agreement on the crisis resolution mechanism—and that political sanctions would have more clout than financial ones. Others called for greater consultation and transparency, and argued that the EU should avoid appearing divided on the question.
I underlined the importance to the UK of stability in the eurozone, and that it was therefore right that eurozone members strengthened governance arrangements within the eurozone. I stressed that the UK would not be part of any permanent crisis resolution mechanism and that sanctions would not apply to the UK. I undertook to look closely at what was proposed, but as the Prime Minister had already made clear, we would not support anything that involved a transfer of powers from Westminster to Brussels. Many backed my call for an indicative text to be circulated in advance of the European Council. The presidency concluded by saying that this discussion would continue with Heads at the European Council on 28-29 October.
There was a brief exchange on the EU position for the G20 summit in Seoul on 11-12 November where I pressed for more ambitious language on the Doha negotiations. On climate change, some Ministers expressed concern about the prospects for the UN framework convention to be held in Cancun from 29 November to 10 December. I emphasised the need to be clear about any conditions we should attach to any second Kyoto commitment period.
On the EU’s approach to third-country summits, I and a number of other Ministers argued that conclusions from the summits should focus on clear deliverables. On the EU-US summit, many supported my call for a reinvigorated Transatlantic Economic Council with clear tasks. I also proposed including language on Pakistan. Ministers continued their discussions on third-country summits over lunch at the FAC.
Enlargement/Serbia
Conclusions were adopted that agreed to forward Serbia’s membership application to the Commission, while emphasising, inter alia, the importance of co-operation with the International Criminal Tribunal for the former Yugoslavia (ICTY), the need for constructive regional co-operation, and the importance of progress in the process of dialogue between Belgrade and Pristina.
External Action Service (EAS)
The Council gave political approval to the final EAS decisions on the Staff and Financial Regulations and the 2011 budget, with formal adoption expected after necessary legal procedures have been completed. Additionally, Baroness Ashton announced the appointments of Pierre Vimont as Executive Secretary General and David O’Sullivan as Chief Operating Officer of the EAS.
Foreign Affairs Council (FAC)
The full text of all conclusions adopted, including “A” points, can be found at:
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/117367.pdf
Union for the Mediterranean
Baroness Ashton set out proposals for a one-year transitional arrangement for the EU co-presidency of the Union for the Mediterranean. In response to concerns set out by the Foreign Secretary and others. Baroness Ashton agreed to look again at the proposals with the aim of reaching agreement on a legal basis acceptable to all member states before the 21 November summit.
Middle East Peace Process / Lebanon
Baroness Ashton briefed on her contacts with the US over the EU’s role in supporting the US-led peace efforts. Following a discussion, she concluded that the EU needed to continue its influencing work with key international stakeholders and its support for Palestinian state-building and Gaza access and exports. Ministers agreed to reaffirm the EU’s support for the Special Tribunal for Lebanon.
Cuba
Ministers exchanged views on options for the EU’s approach towards Cuba. They agreed to task Baroness Ashton to reflect on this, working within the EU’s Common Position, and report back to Ministers at a later date.
Sahel
Discussions on the Sahel region focused on the security risks it posed for both the region and Europe. Ministers adopted conclusions tasking Baroness Ashton, in liaison with the Commission, to elaborate a Sahel strategy by the beginning of next year.
European Neighbourhood Policy (ENP)
The Commissioner for Enlargement (Fule) briefed Ministers on developments for reforming the ENP. The ENP review should culminate with a ministerial conference with ENP partners in February 2011. The UK emphasised that the door to EU enlargement must be kept open for partners that met the criteria. Although ENP was not a pre-accession instrument, it nevertheless provided a framework to prepare partners for eventual membership.
Iran
Ministers agreed an EU regulation implementing sanctions against Iran’s nuclear programme.
Grand Committee
Identity Documents Bill
(14 years ago)
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The Deputy Chairman of Committees (Baroness Fookes)
My Lords, if there is a Division in the Chamber, the Grand Committee will immediately adjourn, and resume after 10 minutes. Further, at a convenient moment after 4.15 pm, the Committee will adjourn to hear the Statement. It will resume five minutes after the Statement has been concluded.
Lord Brett
Lord Brett
My Lords, this amendment seeks to retain one part that is enshrined in the law of the 2006 Act; that is, the use of the identity card as a travel document. Identity cards are not a unique phenomena known only in the UK, although you might have thought that from some of the external non-parliamentary criticism some time ago. Across the whole of the European Union, they are the norm rather than the exception. All countries in the EU except Ireland and Denmark have them. Ironically, Denmark, although it does not have ID cards, maintains a national identity register. However, this amendment is solely about travel. This is an issue that caused no controversy whatever before the Bill was introduced, while it was being discussed or after it was passed.
Amendment 2 is simply a mechanism for achieving the aims of Amendment 1; namely, the right of the holders of ID cards to use them as travel documents for the duration of their validity. Given the lack of controversy over this aspect of the Identity Cards Act, there can be no ideological argument against retaining them. The case put forward in the other place for not retaining them was based on technical issues and, in particular, cost issues which, given the Government’s refusal even to offer refunds, must be the most relevant and pressing matter for them.
More than 13,000 ID cards were issued in the UK. However, these are not the only cards containing a UK emblem. The many British residents in Gibraltar are issued with ID cards which are accepted as valid travel documents throughout the EU and the EEA, which includes countries such as Switzerland. I understand that these are issued and maintained at relatively minimal cost. I should like to ask the Minister particularly whether the Government, through the Home Office or the IPS, have consulted the Government of Gibraltar on their experience of ID cards, the processes they use and the costs in this regard. In Europe, the use of ID cards as travel documents is not limited to Gibraltar. Germany, Sweden and a number of other countries, both EU member states and candidate member states, already use ID cards as travel documents.
Among the aggrieved citizens who have approached me and other Members of your Lordships’ House with concerns about being unable to use the ID card as a travel document are, in particular, elderly people who restrict their travel to Europe because of age and insurance issues and business people who frequently travel to Europe. For example, a gentleman from Kent has travelled to mainland Europe—as we used to call it—some 30 times since getting his ID card earlier this year. He values it very highly and does not like the idea of having to carry a passport, which will inevitably get damaged by constant use, while he can have an ID card that fits in his wallet.
For those reasons, and setting aside all the other arguments for or against ID cards, I believe that they should be retained for those who bought them as a valid, legal document. The issue is not one of ideology, and I do not believe that it can be one of cost. I hope the Government will look at the issue again with a view to extending the use of this part of the ID card as a travel document for those who bought them in the honest belief—without a particular view for or against ID cards as a security document—that they could be used as a travel document. I beg to move.
The Earl of Erroll
My Lords, I have added my name to Amendments 1 and 4 because, as I said on Second Reading, when we discussed this matter at length, it seemed a shame to throw out the one good bit of the scheme along with the bad bit. The bad bit comprises the national identity register, whereas having another bit of plastic with which to identify yourself is not a huge concern. As I said then—I may as well put this on record again—I should be very happy to see us have a plastic passport, as you might call it, comprising the photograph page of the passport with an identical chip in it. We are told that retaining this provision temporarily as a travel document for use in Europe would give rise to huge expense as whole sections of the national identity register would have to be preserved. I do not believe that that would be the case; I think the pudding is being over-egged here in order to make the case all one way.
I support Amendment 4 in preference to Amendment 2 because the latter seems to be rather all-embracing whereas Amendment 4 is concerned merely with the information that is relevant to a passport. That information would have to be retained for a passport anyway and would probably be sufficient to prove the authenticity of the card. I have not checked with my expert but I imagine that the card is very secure and that if you are in possession of the Government’s public key you can authenticate the card without having to have any of this background information off a database, and you can tell whether the card has been cloned or tampered with in any way. Therefore, I think we should do exactly as the noble Lord, Lord Brett, suggested and retain the card as a travel document. Perhaps in due course we could also have a convenient European travel card to go along with it, but we should retain the minimum of information that is required, if any.
Lord Rosser
My Lords, I support both the amendments in my noble friend’s name in this group and the related Amendment 4, to which I am one of the signatories. I thank the noble Earl, Lord Erroll, for also being a signatory to Amendment 4. On Second Reading, we heard the noble Earl’s views on the sense and convenience of continuing to use ID cards as travel documents in Europe, and he has re-emphasised those points today. We on these Benches share that view and the annoyance and frustration of those cardholders who, under the Bill, would be prevented from continuing to use their cards in this way. The amendments before us would enable existing ID cards to continue to be used as travel documents in Europe.
On Second Reading, having asserted that maintaining full-life validity of the existing ID cards would probably cost an extra £60 million to £80 million, which she considered to be unacceptably high, the Minister inferred that the alternative proposition of a refund of £30 to existing holders of the ID cards was unacceptable not because it was too much but because it was so trifling, since it was,
“rather less than probably most people pay for a monthly subscription to Sky”.—[Official Report, 18/10/2010; col. 742.]
That was an interesting phrase from the Minister, suggesting that Rupert Murdoch and his interests are never far from this Government’s thoughts.
ID cards were sold as documents that, among other things, would be valid as travel documents in Europe for 10 years. Those who bought the cards, planning to rely on them for future travel, will now have to spend additional money on obtaining a passport, or renewing it when it expires. Of the 12,000 to 13,000 individuals who bought ID cards, some did so because they only travel in Europe and never further afield, others because their passports were about to expire. Some bought ID cards because they were far more affordable than a full British passport. All these individuals have a right to feel cheated. They were sold a product—in this case, an identity card and its associated benefits—only to find, not that the terms of use are likely to be changed by the Government, but that the value and purpose of the document will be completely nullified without compensation. On the point of fairness, the Government's stance cannot be right. As the Minister, Mr Damian Green, eloquently put it in his impact assessment, there would be a reputational issue for the Government,
“in dealing with people who purchased a now-useless card in good faith”.
The Government's argument appears to be that because they said prior to the general election that they would scrap the ID card system, everyone should have known that, and it is their own fault if they bought one. However, the individuals concerned bought one from the Government.
Lord Phillips of Sudbury
I am grateful to the noble Lord for giving way. Are we not now getting on to Amendment 3? The noble Lord seems to be talking entirely about compensation.
Lord Rosser
I am not talking entirely about compensation: I am talking about the issue of scrapping the card and not continuing at all. The amendment deals with it continuing as a travel document in Europe. The individuals concerned bought a card from the Government: not from a Labour Government or a Conservative Government, but from the Government. To those individuals, it is still the Government who are now withdrawing them. Until now, we have not had a culture in which it is acceptable for an arrangement entered into with the Government by an individual for a service in return for a payment to be totally withdrawn shortly afterwards, but for the payment made by the individual to be retained on the grounds that it is rather less than most people pay for a monthly subscription to Sky.
The Minister said at Second Reading that we must have a sense of proportion about this. She should address that comment to herself. Accepting these amendments would be one way for the Government to show a sense of proportion. Perhaps the Minister will tell us whether the same approach as that being shown to individuals with ID cards is being adopted for contractors who have been working for the Government on developing and running the ID card scheme. Have they, too, been told that they should have known that the scheme would no longer continue if there was a change in the political colour of the Government at the election and that, knowing this, they should not have entered into any contracts; and accordingly that no further payments are being made to them and the terms of any contracts are null and void, with no compensation payable? I do not think so. For this Government, there appears to be one rule for their dealings with those who can fight their corner, such as the large contractors and their owners and shareholders, and another rule for their dealings with individual citizens who do not have the resources or muscle to stand up to what some would regard as sharp practice.
The impact assessment refers to the cost of termination of contracts with contractors, and the cost of the refund process. If there are to be no refunds—which is why we are tabling an amendment suggesting that the cards should continue as travel documents in Europe—what refund process is being referred to in the impact assessment? How much would it cost? How much compensation has been paid for termination of contracts?
Using an ID card as a form of travel document is not an unfamiliar phenomenon in Europe, as my noble friend Lord Brett explained. The identity cards of Germany, the Czech Republic, Estonia, Romania, Greece, Slovakia and Sweden are all recognised by all EU members as valid for intra-EU travel. The argument that border agencies would be flummoxed by individuals using our ID cards for travel is not very convincing. Neither, incidentally, do there appear to have been problems with recognition of the limited number of identity cards issued here so far. As my noble friend Lord Brett explained, this is a facilitating amendment to enable the continued use of ID cards for travel purposes. We support the amendment. It is sensible—as is Amendment 4, to which the noble Earl, Lord Erroll, is a signatory. If the national identity register is to be destroyed, it makes sense to transfer data relevant to passports and international travel to the passport database and to the Identity and Passport Service. After all, the IPS is used to handling such information. Practically, such a transfer would not be hard to achieve. Transfer would require the permission of those individuals whose data are held, but these would not be difficult to obtain where, as is likely in most cases, the individual is willing to agree. That is because, on data transfer, the appropriate section of the Data Protection Act 1998 states:
“Personal data shall be obtained for only one or more specified and lawful purposes, and shall not be further processed in any manner incompatible with that purpose or those purposes”.
We do not see that what we are suggesting with this amendment falls foul of that criterion.
The Earl of Erroll
The biometric data held on identity cards are different from those held on passports, so that is not quite right.
Lord Rosser
If that is the case, I take the point made by the noble Earl, Lord Erroll. I think what he is saying is that he does not think it is relevant to the particular issue of the ID card continuing as a travel document, rather than that it is not relevant at all. If so, I accept what the noble Earl says.
The Government are clearly not too sure of the wisdom of their position, as the Minister implied at Second Reading when she said that she did not consider that there was a need to do this “as things stand”. But I hope that, in the light of that, the Minister will reflect hard on the amendment, which seeks to ensure that the identity card can continue to be used as a document for travel in Europe. The disregard now being shown for those who bought ID cards on the basis that they would be valid for a range of purposes, including travel in Europe, for 10 years, is unworthy of any democratic government. This group of amendments seeks to redress the situation by providing that the existing ID cards should remain valid as travel documents in Europe for 10 years and that existing ID card data should, subject to the agreement of the individual, be transferred to the passport database if the information on the national identity register is to be destroyed. The Government ought to be prepared to agree to these amendments and I hope that, on reflection, the Minister will indicate that that is now her position.
Baroness Neville-Jones
My Lords, the noble Lord, Lord Rosser, has just raised a series of issues that are not covered by the amendments in this group, which I will cover when we come to the appropriate amendment. It is important to start our debate in Committee with this group of amendments because they go to the heart of the issues we have to deal with, and we need a debate on the underlying implications of what the opposition Benches are proposing. I owe it to the Committee to explain why, far from being simple, these amendments present a real difficulty.
Amendment 1 would remove the current status of the identity card as an identity document and instead it would become a simple plastic version of a passport. I have to say that if that had been the original intention of the identity card, matters might have been a great deal simpler. Instead, the previous Government indicated that ID cards were essential for security, necessary to prevent terrorism and crucial in detecting fraud. At Second Reading during the passage of the Bill in the other place, we were told that cancelling the ID card scheme would cause the end of civilisation as we know it. The current shadow Chancellor and then Home Secretary said at Second Reading of the Bill in the other place:
“All that we want to do is make it easier for banks, GPs and employers to verify someone's identity and thereby make it much more difficult for people to create multiple identities and commit identity fraud. That crime costs our economy £1.2 billion every year and has increased by 20% in the first quarter of this year alone. Combating identity fraud protects the security not just of individuals but of all of us collectively. Drug dealers, people traffickers and terrorists depend on access to false documents”.—[Official Report, Commons, 9/6/10; col. 358.]
We agree with a lot of the sentiments there; the issue is whether ID cards have performed any of those functions.
The amendment clearly recognises that the ID card was not that panacea. It is unfortunate that, after spending millions of pounds on a scheme which the public did not want, we now have, in effect, a credit-card-sized version of the passport for travel in Europe. That would be the effect.
I want to come back to that in a minute, but I want first to comment on the amendments to transfer the records of ID cardholders from the national identity register to the passport database. There are some problems. Those amendments depend on Amendment 1 being accepted, but the practical issues are these. The passport application and issuing process is governed by a fee structure which provides that the income generated from the fee can be spent only on passports. There is no provision which would allow the passport structure to expend resources, no matter how small, on other areas than passports. The Identity and Passport Service does not hold any other database, so unless the amendments are intended to suggest that a new one be established, it is not clear to me how the transfer of information could occur.
The Earl of Erroll
Is the passport defined as a paper document containing X number of pages, or could the general word passport include a bit of plastic?
Baroness Neville-Jones
It is defined as a travel document. The issue is what the passport database contains. It is able to hold early biographical information and a facial biometric. The NIR, the other database, is going to be destroyed. I can only assume that noble Lords are suggesting that a new database be set up, because the passport database cannot take this stuff. That would require a separate provision—statutory enactment—and resources.
Furthermore, the information held on ID cardholders includes fingerprints. Fingerprints are not held for passports, and the IPS does not have the capacity to store fingerprints, nor any intention to start taking fingerprints for passports, as we have indicated. The amendment fails to consider how the fingerprints would be stored. Perhaps it is not envisaged that fingerprints would be retained, but in that event, it is not clear whether that is an omission or whether it represents a change of policy on the part of noble Lords opposite concerning the need to take fingerprints.
The Earl of Erroll
I am sorry to interrupt yet again, but paragraph (a) in Amendment 4 states,
“which is relevant to an application by a person (“P”) for a passport”.
In other words, it would not include fingerprints or anything which is extraneous to a passport application. I have to admit that I did not draft the amendment, but, on reading it carefully, the reason that I backed it but not Amendment 2 was that Amendment 2 seemed to be a blanket provision for transfer, but Amendment 4 seems to provide for only those things, which would be very few things. It would be a minimal data transfer merely to facilitate the issuing of a passport.
Baroness Neville-Jones
Yes, but the fingerprint process is an integral part of the ID card process. The noble Earl is saying that we should now somehow start tweaking the data as we go through.
The Earl of Erroll
I envisaged that the amendment meant that the fingerprints go, everything on the NIR is scrapped and one or two things—which might be literally just the facial biometric—are transferred to the passport to save time. That is all.
Lord Brett
I seem to have caused part of this confusion with my amendment. As I understood during that brief period when I was the Minister responsible for identity cards, you have the information that is on the passport database and additional points that are on the national identity register. We are scrapping the national identity register, but we are told that virtually everyone who has an ID card is on the national passport database. So, on the national passport database we need to have an indication that some individuals have an ID card as well, as a travel document. To me, that seems to be the only information that needs to be transferred from the national identity register to the database for passports. That does not sound very resource-intensive or difficult in terms of legal base. I cannot see why any other information is required to be transferred if we are getting away from a register and back to just having a passport, albeit a plastic one.
Baroness Neville-Jones
My Lords, the amendment does not contain all that accompanying detail. It is not easy, therefore, to interpret what the noble Lord actually thinks should be transferred. If he wants to make that clearer, perhaps that might help, but, as things stand, these amendments have not been thought through. That is a pity because there is the germ of a good idea here. The idea of a passport card is not new, and Members of this House may be aware that—
Lord Rosser
I have a question in the light of what the Minister has said. If it were possible to produce something with which she agreed that achieved the objective to, as Amendment 1 said,
“remain valid as a travel document in Europe until their expiry date”,
by the moving of data on to the passport database, is that something that she would agree to?
Baroness Neville-Jones
I cannot give advance assent to a proposition that I have not seen in writing, so I cannot concede that point to the noble Lord.
Might I continue? It is the case that transport cards are issued by a number of countries for use with other countries where there is a bilateral or multilateral agreement, and there is a set of standards issued by ICAO that were adopted under a non-binding conclusion by the EU in 2005. It may be that the previous Administration chose not to invest in passport cards; they could have done so then. That might have been because of the work and the level of investment on ID cards themselves.
Another possibility at that stage would have been consideration of the use of vignettes. The ability to store the equivalent of a vignette in the passport card is under development, and we will wait to see how that progresses. At this stage, though, given that none of that base was laid by the previous Administration, we do not think it is possible or cost-effective to invest in passport cards as a priority.
My final point is again on costs. I appreciate that the amendments aim in effect to pass the data currently on the NIR to the passport database. As I have indicated, there is no existing provision, nor is it appropriate, for the IPS to establish a new database. The amendment also fails to recognise that it will be necessary to deal with lost or stolen cards that would have to be replaced. Once this thing is working, you cannot just say, “Well, if you lose your card, that’s too bad”; it has to be a living system.
Issuing replacement cards would require an infrastructure to be in place. Given what was said at Second Reading, I asked the IPS to estimate how much that would cost each year. The results are as follows: to maintain the infrastructure and pay service charges to the contractors would cost about £4 million; to replace lost or stolen cards would cost an estimated £500,000; and to maintain basic customer support facilities and appropriate levels of staffing would be another £500,000. Those are all per annum figures. About £5 million over one year—which, in the lifetime of these cards, means 10 years—gives a total of £50 million. I have tried to cover the issues raised by the Opposition. There are others—such as transgendered people having only one card, as they currently do with the passport, and the question, which we will come to, of refunds and consumer protection—which I shall go into in due course. However, even with the amendment, there is a catalogue of problems. Instead, I recommend that the amendment be withdrawn.
Lord Brett
I am more confused now than I was when we started. I cannot even recognise the replacement costs. But I return to the issue of database transfer. It takes only an asterisk or other symbol on the passport database to indicate that a person is using the same information on the database on a new plastic card which is valid in Europe. If the person loses the card, the cost of replacement will be the cost of the plastic card. Banks do it thousands of times a day. If the cost were remotely as much as is mentioned here then banks would be charging us very substantial sums for card transfers. We are not maintaining a database, so I do not know where the £4 million figure comes from. The passport database, which is well regarded and will continue, will indicate that this small number of people also have a plastic card which will expire on a given date.
I have another question for the noble Baroness. If she does not have the answer to hand, I would be happy to accept it in a letter. How many ID cards does the United Kingdom—the UKBA—accept, and from which countries, as travel documents? If we accept many dozens of them—I think that we are talking a score or more—and if a score or more are used internally in Europe, would it not be a good idea to use this limited number of people as a pilot or experiment to see whether there is value in a longer-term policy of issuing a travel card in Europe?
Those are my questions. I will of course withdraw the amendment, but one can expect the discussion to continue on Report. I beg leave to withdraw the amendment.
Lord Hunt of Kings Heath
“Compensation
The Secretary of State shall, by order, provide for a compensation payment of £30 to persons who have purchased an ID card under the terms of the Identity Cards Act 2006.”
Lord Hunt of Kings Heath
In speaking to Amendment 3, I shall speak also to the other amendments in this group, Amendments 8 and 20. We come to a very important matter of principle—the Government’s decision to refuse to compensate cardholders for the scrapping of the scheme. My noble friend Lord Rosser already picked up some of the points when he spoke to the first group of amendments. I ask the Minister what the Government have to say to the thousands of individuals who have spent money buying cards in good faith. These cards were sold on the basis, and the purchasers were given the impression, that they would be valid for a wide range of purposes for 10 years. However, there has been a change of government, a change of policy, and seemingly no care for those left inconvenienced and out of pocket as a result. I wonder what the Government now have to say to those people. Why do the Government seem happy to penalise them?
We have been told that the cost of £360,000 to compensate all those who will be eligible for a refund under the terms of Amendment 3 is too much. However, that is the maximum figure. It is quite plausible that a certain percentage of those eligible to claim will choose not to do so. It would be possible to entertain a time limit, a date after which claims could no longer be made, which might lower the total compensation figure. However, the important factor is that compensation had been offered.
On Second Reading, the Minister said:
“We realise that some people who spent £30 for a card with a 10-year life expectancy will be disappointed that it will be cancelled later this year without any refund, but those who chose to buy a card”—
this is a remarkable statement—
“did so in the full knowledge of the unambiguous statements by the coalition parties that the scheme would be scrapped if we came to office. They cannot now expect taxpayers to bail them out”.—[Official Report, 18/10/10; col. 715.]
That is, to say the least, unsympathetic. To rely on the public having an in-depth knowledge of party manifestos or coalition agreements—documents that in most cases were published long after most cardholders had spent £30—is a touch unrealistic. The Government's continued reliance on their insistence that people knew well before the election what would happen if a Conservative Government were elected is an extraordinary decision.
I received an e-mail this morning from Mr Nicholas Hodder, who informed me that, since obtaining his ID card in May this year, he had presented it 30 times in order to enter or leave the Schengen area. I ask the Minister why someone like Mr Hodder, who in good faith purchased the ID card and has used it effectively, should suddenly be told, despite the fact that he bought it for a 10-year period, that it will be taken out of use very shortly and that he is not to receive compensation?
I pray in aid the impact assessment produced by the Minister’s department. The IA looked at five options. Under option 3, the return of cards is not required, but there will be a return of fees to current cardholders. The benefit of that option over the do-nothing option 1 is said to be:
“Reputational benefits for the government, in dealing with people who purchased a now-useless card in good faith”.
Is the Minister not concerned about the reputation of the Government? Does she not see that in not agreeing to refund £30, the Government are developing a new principle, which can only reduce trust in Governments generally? Why is it acceptable to compensate companies for termination of contracts? I refer her to the preferred option of the Government. As far as concerns funding, the cost of £22 million is contained in the summary of policy option 1 in the impact assessment. I will come on to whether it should be policy option 1. Option 1 refers to the costs of,
“termination of contracts with contractors”.
Why is it reasonable to pay the costs of terminating contracts with contractors but not with members of the public?
I refer again to the impact assessment. The preferred policy option—that of cancelling ID cards without refunds and with no requirement to return the cards—states that the £22 million includes the cost of the refund process. Clearly, at one point, the Government considered including refunds in the policy option that was being preferred; but presumably at some point they decided to drop this. None the less, it would appear that the £22 million must include the cost of refunding fees. Perhaps the Minister can clarify this point.
My confusion about the impact assessment of 26 May 2010 is that it refers to five options. Option 1, do nothing. Option 2, scrap ID cards, return of cards not required, no return of fees. Option 3, scrap ID cards, return of cards not required, return fees. Option 4, scrap ID cards, return of cards mandatory, no return of fees. Option 5, scrap ID cards, return of cards mandatory, return fees. On page 1 of the impact assessment, signed by the Minister, Damian Green, on 29 May 2010, it states:
“Option 2 is the preferred option”.
But when I turn to the analysis on page 2, this option is described in the heading as “Policy Option 1”. Can the Minister clarify exactly which option we are talking about?
That brings me to Amendment 8. This is a straightforward and, I believe, much needed addition to the Bill. Conservative Party Ministers, when in opposition, made claims about the current cost of the ID card scheme that ranged wildly from nearly £1 billion to up to £20 billion. However, the national identity service cost report of October 2009 stated that the projected forward cost of providing ID cards until 2019 was £835 million. Crucially, this figure does not equate to the savings to be made from scrapping the scheme. We know this because the impact assessment which accompanies the Bill states at the bottom of page 4 that:
“The October 2009 cost report indicated that cancellation of ID cards would avoid future costs of £835m up to October 2019. However, these costs were planned to have been recovered through future fees to ID card purchases. Therefore, there are no benefits to the taxpayer from Year 3 onwards”.
The tables set out in the impact assessment reveal that total savings from scrapping the scheme are £180 million, and the total cost of cancelling ID cards and the NIR are stated as £22 million.
What is clear from the apparent muddle is that the Government have been using rather dubious figures to claim savings on the scale that they would have liked to see. I believe that a definitive and preferably independent audited costs and savings report is urgently required to clarify this matter for all concerned. It would be useful if it were part of the duty of the Government to provide clarity in this area. Amendment 20 is consequential on Amendment 3. I beg to move.
Lord Phillips of Sudbury
My Lords, I have added my name to the amendment moved by the noble Lord, Lord Hunt. To be honest, I am disappointed that we have to spend time on this issue. That is because on any normal sense of simple fairness, we would not hesitate to repay the £30 that individual citizens have laid out for one of these cards. I have also to express disappointment at the reasoning advanced for the refusal to do so. The noble Lord, Lord Hunt, has already gone over this, and indeed it was referred to at length at Second Reading. I cannot resist quoting from the Statement on this made by the Home Secretary in June:
“We made it clear that we were opposed to identity cards … The Liberal Democrat party made it absolutely clear that it was opposed to identity cards. People knew well before the election what would happen if a Conservative Government were elected”.—[Official Report, Commons, 9/6/10; col. 346.]
Frankly, it demonstrates an astonishing lack of reality vis-à-vis the great British public to believe that they read party manifestos. If I am allowed to do so, I would like to ask anyone in the Committee to raise their hand if they read all three party manifestos. I think we can say that the noble Lord, Lord Brett, was the sole person to have paid such attention to the detail.
Lord Hunt of Kings Heath
My Lords, I did, too, but surely the point is that we are not really ordinary people in this context.
Lord Phillips of Sudbury
No, but even if we are not, I am still fascinated to know how many of us did. I will be quite frank—I did not even read my own party’s manifesto. It was 115 pages long, for a start. However, even if we assume that people had read the party manifesto and knew that we were committed to a repeal of the scheme, there was nothing in any manifesto about repayment of the fee. Anybody reading it would, I suspect, have assumed that if the Government were going to do that, they would return the £30 that was laid out for the purchase. That is my first point.
Secondly, in the statement of the deputy director of policy of the Identity and Passport Service, which is annexed to the report of the Joint Committee on the Bill—it was a pre-scrutiny report published in the middle of October—it was made clear that, although all cardholders had been warned that the cards would be made null and void by the passage of the Bill, there was no reference to non-repayment of the fee. It is very simple: if you knew about all of this—and the vast majority of the public did not—there was still nothing about repayment of the fee.
Then we come to the argument which is to be found at page 20 of the Joint Committee report:
“Comment has been raised that the absence of a refund provision in the Bill is denying cardholders access to safeguards set out in consumer protection legislation. However, an ID card would not be considered as a consumer good. That is because the issue and the holding of an ID card are not considered to be in the nature of a consumer transaction and a sale of goods”.
That, again, comes from the deputy director of policy at the Identity and Passport Service. That is his view. As a lawyer, I am extremely dubious about the reasoning. It seems to me that there was a sale and purchase of goods; namely, a card. I do not see any reason why this should be taken out of the normal consumer protection legislation. Even if it is, surely it is bizarre for this Government, who are committed to fairness—and I am passionately committed to fairness—to resile from the general standard that prevails by law between consumers and suppliers, between purchasers and sellers, on the basis that there is no strictly narrow legal requirement under legislation to do so. Surely we should be a model and satisfy the spirit of all that consumer protection legislation.
I am sorry to have gone on but it strikes me that this is an own goal. It may be small in financial terms—£360,000 is scarcely a blink of the Treasury eyelid these days—but not in terms of the message that it sends out. I want this coalition Government to walk their talk and to act fair as well as talk fair.
Lord Brett
My previous confession about having read all three manifestos was somewhat of a wasted investment, given that after the weekend following the election, we had a coalition agreement. However, I recognised at Second Reading that one of the few things that appears in both the Liberal Democrat and the Conservative manifestos was the decision to scrap ID cards. I saw in neither manifesto a reference to a refund or non-refund. When I was, briefly, the Minister responsible for the launch of the scheme, I debated this with Mr Huhne of the Liberal Democrats on the radio, and while he talked about scrapping them, he was silent about the travel document. I was asked what would be the advantage of having one of these documents if the scheme were to be scrapped by the incoming party, and I said that at least they would have value for 10 years as a travel document. Mr Huhne chose not to contradict that and he certainly made no reference to refunds.
As the noble Lord, Lord Phillips, said, it is a question of fairness. In the other place, the Minister of State accepted that there were people who, in these straitened times, would have the hardship of having spent the £30. He did not go on to follow his logic, which is that, if you believe in fairness, you should restore that £30 to the individual.
Leaving aside all aspects of ideology, policy and security, I believe that the reputation of this Government—and the reputation of any democratic Government of this country, irrespective of party—is worth a lot more than £360,000. I hope that the Minister will take that on board.
The Earl of Erroll
My Lords, I did not add my name to the amendment because there was not room, but I spoke about this on Second Reading. It is absolute lunacy not to offer a refund. It could be optional, in which case, as I said, a lot of people might well then decide to keep the cards as a collector’s item and an investment for the future. The concept that we would have to spend £22 million refunding the money is, to my mind, dotty. The Government have clearly fallen into the hands of the large systems integrators again, who are siphoning off our taxpayers’ money to America. I would suggest that they deal with some British SMEs for a change, but unfortunately government procurement rules do not let us do that at the moment. That is just a quick side swipe.
Thinking about the statements of the noble Lord, Lord Phillips, about consumer protection, I thought that there was also provision under the ECHR whereby Governments could not expropriate private property without compensation. I suppose that the ID card is not people’s property, but presumably there is an issue because they paid for it and were expecting something in return. If it is expropriated without compensation, I should have thought that that might be an interesting case to go further up the line—there is nothing like stirring things up a bit.
I find amusing the concept that the general public are better than the weather forecasters, all the pundits and all the experts, and can predict the outcome of the next general election several months ahead. That is wonderful. I would love to know who those members of the public are. Then there is the idea that they could also predict the coalition, the way round that it ended up, which was not expected by many people at all. For a while it was largely thought that Labour and the Liberals would end up together. Then there is each of the parties having the arrogance to say that they will have sufficient control over the next Parliament to get what they want through. This is still a democracy. Opposition parties are still supposed to have some say. I know that after a few unfortunate years under first Margaret Thatcher and then Tony Blair, when majorities were excessive, Governments behaved in that way. Perhaps it is good that we return to the situation where Governments do not have control over Parliament and these things have to be agreed among other people, including Cross-Benchers—who are sometimes very cross.
Baroness Neville-Jones
I appreciate the importance that the noble Lords who have spoken place on the matter of refunds, but it is not at all clear that their anxiety on this matter is widely shared elsewhere. Following Second Reading, I asked the Identity and Passport Service to inquire into exactly how much correspondence it had had about refunds. I would expect that to be the place where letters were sent on that subject. From May to September, it received a total of 297 letters about ID cards, of which 122 included complaints about refunds. We do not know whether all of those 122 letter writers were cardholders, among the 12,000 who have paid for the card, but I do not think that that is a significant indicator of widespread indignation on the part of the public.
Lord Phillips of Sudbury
Does the Minister agree that in September it was not clear that there would be no refund—no one had told them? Does she further agree that if the service were to write round now to tell everyone that there will be no refunds, the response to that would be likely to be very different?
Baroness Neville-Jones
My Lords, I have just said that this survey of correspondence went on after the statement was made in the summer. These figures apply right up to the end of September. If there had been widespread anxiety about whether people would get their money back, we would have heard more from the holders.
Lord Hunt of Kings Heath
My Lords, I am grateful to the noble Baroness for giving way, but will she answer the point made by the noble Lord, Lord Phillips? Is she saying that all holders were written to and told that no refunds would be given, or are they expected to read the statements that appear in the media?
Baroness Neville-Jones
People have been written to. I will come to that in a moment.
Lord Phillips of Sudbury
With respect, I checked this; they have not yet been written to to say that they will not get refunds.
Baroness Neville-Jones
They have, however, been written to to say that the scheme will be cancelled. The key issue is not that of a refund to the individual but how much the taxpayer is expected to pay to end this wanton scheme. We have already seen that the previous Labour Government spent £292 million on the ID scheme and the associated biometric work. That is a staggering amount for a scheme that was predicted to be self-financing through the fees, and given that only 15,000 cards are in circulation in the first year of issue, 3,000 of which were given away free anyway. The amendment’s effect is that the 12,000 cards should be given away free of charge. We cannot go on spending taxpayers’ money in this fashion, particularly when the public have shown overwhelmingly—there is no ambiguity about this—that they do not want ID cards. At the previous election, they showed their unwillingness—
Lord Brett
Will the noble Baroness provide the evidence to back up her conviction that the public do not want ID cards, as all the opinion polls taken by this and the previous Government do not indicate that that is the case? However, more importantly, is she saying that some people are rich enough to write off the £30 without worrying and complaining, while the people who are being punished are the poor people for whom £30 is more than they can afford, even if they can afford Sky Television? That is the logic of it.
Baroness Neville-Jones
My Lords, we do not have a socio-economic profile of those who bought cards. We have other profiles but not that one as we did not inquire about people’s incomes. However, I do not think that the public are very interested in the Government spending a further £400,000 on refunds. Unfortunately, the sum is not £360,000 as an administrative overhead is incurred in refunding the £30 fees, which themselves amount to £360,000. You might say that £400,000 is not a significant sum in the previous Government’s overall scheme of spending on ID cards. Indeed, I hear noble Lords present saying that. However, I am afraid that the Government maintain the contrary view. It is a significant amount and, frankly, noble Lords opposite have not provided a good reason why a refund should be given. Instead they accuse the coalition of being mean-spirited. If mean-spirited means extricating ourselves from an expensive failure at the least possible cost to the taxpayer, I think that we are doing the right thing. We do not accept that yet more money has to be spent on ID cards.
I am happy to ensure that the details of how we extricate ourselves from the ID card mess are placed in the public domain. As the Immigration Minister made clear on Report in the other place—I again confirm this—a Written Ministerial Statement will be made to the House on completion of the destruction process. I will place a copy of the planned destruction process referred to in the amendment in the Library.
Lord Maxton
Will the noble Baroness tell us exactly when this information was made public vis-à-vis those who had bought their cards? Was it before or after they had bought their cards? If it was during the election campaign, many people had already bought their cards before the election campaign had started.
Baroness Neville-Jones
The question of the cards and whether they would be valid after the election, and everything associated with it, was a continuous process. Certainly, a large number of people bought their cards fully aware of the fact that there was controversy about them. As the noble Lord, Lord Bach, indicated at Second Reading, the House has always taken account of the content of manifestos, which is true today of the Opposition Benches.
The noble Lord, Lord Hunt, asked about the impact assessment.
Lord Bach
The noble Baroness quotes me correctly. Obviously, the House does take notice of manifestos, but there is nothing in the manifesto that says that those who had bought cards when they are abolished will not be paid anything. If the manifesto had said that, this might be a different argument. When I said that the House, of course, took note of what is in the manifesto, that is only stating the obvious. But it does not do anything to answer the point so well made by noble Lords in this Committee.
Baroness Neville-Jones
I quite appreciate what the noble Lord has just said. The noble Lord, Lord Hunt, asked about the impact assessment, which simply set out the possibilities in a straight catalogue of options, which ranged from doing nothing through to the option chosen. Today, we are debating the option chosen by the Government.
Lord Hunt of Kings Heath
I am sorry to disagree with the noble Baroness, but, with the greatest respect, first, clearly, this impact assessment was produced in a hurry, because it is such a mess. Clearly, on page 2 of the impact assessment, it is shown as option 1. Yet, on the front page, option 1 is the “do nothing” option, whereas option 1 on page 2 is the option to cancel ID cards without refunds and no requirement to return cards. But when I look at the first section of policy option 1 on page 2, under the cost figures of £22 million, the costs include the cost of the refund process. I rest my case.
Baroness Neville-Jones
I do not think that this Chamber or the House is under any illusion as to which of these options we are debating today. If there has been confusion over—
Lord Hunt of Kings Heath
With the greatest of respect to the noble Baroness, the preferred option says that it includes the cost of the refund process.
Baroness Neville-Jones
Option 2 was the preferred option, as I have made clear. That is the option that we are discussing. I am afraid that there is an error simply on page 2. The figure of £22 million was also queried. That is the cost of decommissioning in the first year.
The Government take the view that it is not a sensible use of public money to throw further costs behind this scheme, and that the right thing to do with taxpayers’ money is to cancel this scheme but not to pay refunds. Accordingly, I invite the noble Lord to withdraw the amendment.
The Countess of Mar
My Lords, I might have got this wrong, but the Minister said every cardholder had been written to and told that the scheme will be withdrawn. Were they told “will be” or “may be”?
Baroness Neville-Jones
Every cardholder has been written to and told that the scheme will be cancelled, yes.
The Countess of Mar
In that case, is that not contempt of Parliament? Parliament has not yet decided that the scheme will be cancelled.
Baroness Neville-Jones
My Lords, it is certainly the Government’s intention to cancel it, assuming that Parliament gives its assent.
Lord Brett
My Lords, would it be helpful if a copy of that letter were placed in the Library of the House so that we could all examine it before Report?
Lord Brooke of Sutton Mandeville
My Lords, the Minister has invited the mover of the amendment to withdraw it, but that still leaves the opportunity to make a brief intervention. I did not speak at Second Reading—indeed, I was not present—but I have had the considerable privilege of listening to the whole of the debate today, except the very first words that the noble Lord, Lord Brett, uttered.
I am a mildly interested party, for quite irrelevant reasons, in the way that the noble Lord, Lord Mandelson, introduced the car scrappage scheme. My car became relevant to it precisely 24 hours after the scheme ended, and I have behaved impeccably towards the noble Lord and indeed all members of the previous Government by not alluding to that fact until this very moment. I am also perhaps the only member of the Committee to be over the age of 75 and therefore entitled no longer to pay a television licence. I have always regarded that as a generous concession by the state—although you do not realise, until you have to do so, that securing it is a little like proving that you are not a money launderer.
The jury must be out on the country’s enthusiasm for the ID project. There was some reaction that the Government were wrong to suggest that it was wholly unpopular, but the fact that only 12,000 people had bought these ID cards since 2006 did not suggest an overwhelming popularity and that they would do well as a loss leader in a supermarket. I think that we can say that there is something to be said on either side of that argument.
Lord Brett
First, it was a phased rollout, starting in 2009 and ending in 2012-13. It was restricted to Manchester Airport, London City Airport and the area of Manchester. It would have been rolled out across the rest of the country over the period. There is also a register of applications for people in other areas who had to wait because the cards were not available, so to say that there was a take-up of only 12,000 is actually to pretend that the whole country could have applied when in fact it was very restricted.
Lord Brooke of Sutton Mandeville
That is an entirely fair point, which I am happy to take. The fact remains, though, that even under the provisions that the noble Lord issues, I still stand by my statement: the figure of 12,000 does not indicate overwhelming popularity for the scheme. People were not fighting in order to get their own cards.
On the fact that compensation is available for contracts but not in different languages with regard to ID cards, presumably that occurred because the original contracts allowed for what would happen in the event of the scheme in any way being interrupted. That is the way in which contracts are usually written. I have heard everything that has been said about what this Government have not done but I notice that the previous Government, in selling the ID cards, did not appear to have built in a provision in relation to compensation calculations, perhaps for the good reason that they did not want the thought to enter the public mind that they might not be returned at the next general election and that therefore the ID scheme would be interrupted.
On the same point, I have to say quietly that although, in their rush towards modernisation, the Government were keen to remove Latin entirely from public life in this country, the phrase “caveat emptor” is presumably one that still rested in their mind when they brought in the scheme in the way that they did.
Lord Hunt of Kings Heath
My Lords, this has been an interesting debate. There is some risk that we will return to debating the broad principle of ID cards. I will desist from doing so, save to say to the noble Baroness that, on the question of popularity, my noble friend Lord Brett was right when he spoke about rollout and the expectation that the number of people purchasing ID cards would increase over time. Secondly, there is no doubt that opinion polls have shown consistently that the public support ID cards. However, we are not here to debate that. The Opposition have accepted that this policy was contained in the manifestos of both coalition parties. That is why we do not seek to obstruct the progress of the Bill. However, as the noble Countess, Lady Mar, suggested, it is important that due process is observed before statements are issued by the Government, and the noble Baroness has graciously accepted that point.
The second point about manifestos concerns their relation to Salisbury-Addison and the Salisbury Convention. We are not quite into that territory. However, I am certain, from my reading, that no statement was made by either party that no compensation would be given to cardholders who will lose many years’ use of their ID cards. The noble Baroness is resisting coming back to the point of principle here. As far as concerns the reputation of any government, to say to the public, “It is your fault, you were silly enough to buy an ID card when some opposition parties said that they would scrap them if they got into power”, is to expect the public to take a punt on the election result. Who could have forecast that we would now have a coalition Government? It is treating ordinary people with a lack of respect.
I say to the noble Baroness, whom all noble Lords respect enormously, that she is digging a hole for herself here. If my party were still in government, the possibility of us getting some proposal like this through the House of Lords would be nil. Obviously, the circumstances of the coalition are different, but I suggest that the Minister should think very seriously between Committee and Report, because the view of the House of Lords will be that this is not the right approach, and that compensation should be offered.
I will not bore away at the issue of the impact assessment. I hope that, between Committee and Report, there will be a clarification of which option we are talking about. Secondly, the preferred option set out in the impact assessment says that the £22 million includes the cost of the refund process. I would be grateful if the Minister will write to me to confirm whether the £22 million includes the cost of refunds. With that, I beg leave to withdraw the amendment.
Earl Attlee
My Lords, as my noble friend Lady Neville-Jones will shortly repeat a Statement in the Chamber on aviation security, I beg to move that the Committee do adjourn until five minutes after the proceedings on the Statement are completed.
“ID card trial for airside workers
(1) The Secretary of State shall lay before both Houses of Parliament a report on—
(a) the outcome of the trial use of ID cards for airside workers; and(b) the measures the Secretary of State proposes to implement arising from it.(2) Any ID card issued to an airside worker under the critical workers scheme, which is valid immediately before the day on which this Act is passed, shall continue to be valid until the report referred to in subsection (1) has been laid before Parliament.”
Lord Bach
My Lords, we turn to a new aspect of the Bill, perhaps an appropriate one at a time when security, particularly aviation security, is at the forefront of our minds. I declare a past interest: for a few months in 2007 I was chairman of the AOA, the Airport Operators Association, before returning to government. I am delighted to be able to move this probing amendment, and I will be interested to hear what the Government’s view is of the points that are made during the debate.
Airside workers fall into the category of those employed in sensitive roles and locations where identity is important to public protection. Effective identity assurance acts as the cornerstone of a good personnel security regime at airports and elsewhere. As part of the introduction of identity cards, as the Committee will know, an 18-month trial was developed at Manchester Airport and London City Airport whereby ID cards would be used in place of existing identity verification processes and documentation. We recognised that the ID card had a capacity, first, to provide a single means of identity assurance across airports and, secondly, to facilitate quicker and more efficient pre-employment checking, with obvious benefits to both employers and employees.
The ID card would have cut the frequency of the need to renew airside passes from every three years to every 10—thus, we argue, cutting bureaucracy and cost. The added identity certainty provided by the ID card offered benefits, we argue, including improving the portability of reference checks between employers and airports, creating greater flexibility for employers and staff; speeding up pre-employment clearances for cardholders moving from one airside job to another or between airports; kick-starting joint work to explore opportunities for streamlining airside pass regimes; and helping to ensure that everyone using airports was confident about their safety while there.
As we learn from reading the Public Bill Committee proceedings held in another place on 29 June, the process of getting an airport ID card used to take eight to 12 weeks from beginning to end. The introduction of the ID card scheme at Manchester Airport reduced this time to just one day for workers renewing their airport passes. The response from workers at Manchester Airport to the scheme was, not surprisingly, pretty positive. I draw the Committee’s attention to Question 66, asked by the honourable Mrs Hillier MP to Mr Mike Fazackerley, the customer services director at Manchester Airport. Mrs Hillier asked:
“You have gone through some of the evaluation. The Bill proposes repealing the scheme, but whether or not the card continues to exist in its current form, can you see the longer term benefits that there would have been, including security improvements, time and cost-saving, and greater convenience, had the pilot scheme been rolled out more widely and made available to others?”.
Mr Fazackerley, an expert witness, replied:
“I think that the principal benefits to airport workers are exactly as we have outlined: there is the ability to streamline and speed up, and to make the process of getting an airport pass easier. There were some marginal benefits; for example, we dramatically reduced the amount of data that we were holding on individuals, because we felt that we did not need data that the Government had, but I guess that that is fairly marginal”.—[Official Report, Commons, Identity Documents Bill Committee, 29/06/2010; col. 28.]
My honourable friend Mrs Hillier contradicted Mr Fazackerley to say that she did not think that was a marginal point—I agree with her—as regards reducing the amount of data held on individuals.
In addition to benefits in time saved and convenience, the Public Bill Committee heard from Mr Fazackerley of the ability to reduce the volume of data held on individuals on account of the introduction of the ID card scheme. The biometric material contained in the card could be relied upon, and much of the other information collected previously on those who applied for security passes could simply be disposed of.
The background to the pilot scheme was carefully worked out by the Department for Transport and developed with airports, the air industry and other interested bodies. They are all rightly eager to discover the benefits and lessons to be learnt from the trial in areas of good practice, cost and time saving, and improved security. In the six months that the scheme was allowed to run, we did see benefits, so why stop the scheme in its tracks now? Even if the Government are determined to scrap the card itself—that is obviously the case—the Minister and her colleagues could apply the lessons that would continue to be learnt from this trial to another identity document—possibly the passport—or simply use them to streamline the onerous and time-consuming security checking processes at airports. They could share the information with other airports and perhaps other industries, such as the nuclear industry where such protection is vital and speed of checking is important.
At Question 74, Mrs Hillier said to Mr Fazackerley that,
“you mentioned that you would like to see some of the benefits of the evaluation continue, although the evaluation only got to a certain point. Would you like to keep that going and see the full benefits, perhaps in an attempt to reignite such uses, even with another document?”.
He replied:
“Very much so. If we could leave with the same benefits, perhaps through use of the passport, that would be a very positive move”.—[Official Report, Commons, Identity Documents Bill Committee, 29/06/2010; col. 30.]
If the Minister decides not to accept what we think is a sound amendment, will she help us with the plans that the Government have to reform security processes with regard to airside personnel at UK airports? As recent events have shown, the issue of airport security is far from going away. In many ways, it has been a central issue of the past few days. As the noble Baroness has just said in the Chamber, the Government will be addressing it with great concern.
The trial was a good idea. From this side of the Committee, we argue that it should be allowed to continue in order to allow all the lessons that can be learnt enough time to reveal themselves for the benefit and safety of all.
The Countess of Mar
The noble Lord, Lord Bach, kept saying that the airside ID cards would help to prevent what has happened in the past few days. Is he really suggesting that? It was not people who were involved; it was parcels. Does every parcel have to have an ID card? I cannot see how having an ID card would have prevented what has been happening in the past few days with parcels.
Lord Bach
I am grateful to the noble Countess for asking that question. I have tried to be extremely careful. Of course, I am absolutely not saying that. But security at airports—airside and the other side— is obviously a crucial issue. In this limited scheme of six months, it seemed as though the airside part of it was convenient for employers and employees from various companies who worked that side. I would also argue that there were some security conveniences as well. But, of course, recent events—as far as we know today, which I accept—are nothing at all to do with ID cards.
Baroness Hamwee
It is important to mention that the noble Lord has just used the word “convenient”. I am sure that he would like to confirm to the Grand Committee that he is not suggesting that there would be any detriment to security by losing this scheme.
Lord Bach
I think that there might be some advantages for security in this scheme, and I would like to know the Government’s view on that. From the exchanges I have been reading from, it seems that there may well have been some advantages so far as security is concerned. Indeed, I am reminded that Mr Fazackerley was asked a question by the honourable David Simpson:
“On a point of clarification, Mr Green asked Mike—
I presume that is Mr Fazackerley. I do not think that we would call an expert witness by their Christian name in this House, but perhaps I am being old-fashioned—
“a question about the fact that it takes eight to 12 weeks to carry out the security side of the process, but if a card is lost or misplaced, it can be replaced within 24 hours. Did you say that no further security checks were carried out?”.
Mr Fazackerley answered by saying:
“At that point. The benefit that we got from the system was that you were absolutely sure that the person who was standing in the pass office was the right person”. —[Official Report, Commons Public Bill Committee, 29/6/10; col. 28.]
Whether what he said about the issue goes to the question of security or not is a matter for the Committee to decide.
Lord Brett
My Lords, when I was involved in this, it seemed potentially to be a win-win situation. We have heard from my noble friend about the impact on airports and their ability to clear people airside for security purposes in a much shorter period. We know also that there was initial resistance from the staff, not to the detail but to the fact that the system was being made compulsory. It was only when the potential of what the system was about that the hesitation, to put it mildly, expressed by the staff turned into at least into an enthusiasm to investigate without necessarily committing to the results.
The third area is that of the airlines. The experiment was being carried out at Manchester and at London City airports, although any two airports could have been chosen. Carriers flying in and out of those airports do not have resident senior technical staff. They may have a contractor with airside passes who provides the general maintenance of an aircraft, perhaps unblocking a sensor or putting right a temperature gauge. If a more serious technical problem arises, engineers have to be brought in either from a repair facility or the headquarters of the airline involved. Those people will arrive at the airport with no airside security clearance whatever, but they cannot be allowed just to wander in and repair the aircraft. Therefore, another period of delay is built into the clearance of those individuals. However, with the provision of an identity card and the security it offered, this was another area in which a considerable advantage would have been gained for the airline industry, for passengers who could be delayed, and by making a saving in costs to airports themselves. Aircraft sitting like parked vehicles is not an advantage. At the start of the experiment, these were things that were seen to be potential advantages, so in a sense it is sad that we will not see the outcome unless the costs are exorbitant.
Let us look at the costs of aviation. A 747-400 airliner costs well in advance of £100 million, and even more modest aircraft cost tremendous sums. The daily cost of keeping an aircraft inactive is also very high. At the moment, the airline industry feels slightly battered by the costs that have been imposed by government, and this is an area where we could have formed a degree of coalition, if I may use the word, between the interests of airports, staff, passengers—we are the victims when aircraft are delayed—and the airlines themselves. I am sorry if the experiment will not be completed because there are powerful arguments for why it should be done. If not, how are we going to provide an equivalent over the coming period because, as sadly we have heard today, the problems associated with airport security are not going to go away?
The Earl of Erroll
My Lords, I had not intended to intervene on this amendment, but I will say two things. First, I suspect that a report before Parliament might be an unnecessary expense, but I hope that people will look at the experiences from it and incorporate them into future policies. Having heard what noble Lords have said, there seems to be confusion between nailing down a particular name or body to an identity card, and security. The trouble is that one does not know when someone goes bad. There can be a complete dissociation between issuing a pass to someone and them committing a crime. One has to go on checking whether someone has gone bad. Possession of a particular identity token does not show that someone is okay.
On the point raised by the noble Lord, Lord Brett, a lot of work is going on on the interoperability of identity systems. That is the way forward. There is a body of work going on from EURIM, which is an offshoot of the parliamentary group PITCOM. It is an interesting area. The problem is that different organisations vet people for different purposes. It may be totally safe to entrust someone with the secrets of the country, but you might not want them to babysit your children—and vice versa. I note that the noble Lord is laughing. I am citing extremes here to highlight the fact that someone may be perfectly all right working in airside security, but quite dangerous in a totally different situation. We must be careful not to confuse these things and not to think that possession of a nailed-down identity card or token that shows you have been given a certain name proves that you are okay. That is the underlying problem. We should move forward, looking at the interoperability of identity systems, so that if we have to take engineers from somewhere else, we know whom we can rely on and what it is safe for them to do, and can work out how to get them through quickly. I suspect that the bigger problem is the bureaucracy involved in issuing these things. People think that that is the clever place, but it is not.
Baroness Neville-Jones
My Lords, those arguing for this amendment have made a case based on the value of these cards to airport security. I will say straightaway that there is nothing between the Government, the Opposition and other Members of the House on the importance of airport security. That should not stand between us. Would these cards really be valuable? The noble Earl, Lord Erroll, made a point that I would otherwise have made. A card will give you an indication of a person's identity. It does not tell you whether they are a fit and proper person to conduct security operations at an airport. That must be done separately. It involves checking. You have to check somebody's record. You have to do this not only when you employ them, but on a continuing basis. A good deal of the burden—the burdensome part of the burden—is not relieved by the existence of a card supplied by government.
Secondly, there is a philosophical difference between this side of the House and the other on the question of databases. We believe that it is wise and democratic to distribute information, and that information should be given by individuals for the purpose for which it should be used. One way of doing that is to specify the purpose. We have no embarrassment in saying that the issuing of identity cards, and the drawing up of an identity procedure, to enable somebody, under supervision, to have access to sensitive parts of the airport, should be done on the basis of relevant information given to those who will then operate the security system. It is neither necessary nor desirable for the Government to have more than 50 pieces of information on a central database that itself is a honey pot in order to perform these functions.
We are not impressed by the argument that this will relieve airports of some of the task of putting together a valid ID card. ID cards for airports already exist. We know that they have to exist, that they will continue to exist and that airports will issue them. We shall ensure that they are used according to stringent procedures. The card does not itself guarantee security at an airport. It must be associated with procedures that tie down access as well as ensuring that the individual who has access is a fit person.
We come to the question of what the value would be of evaluating the scheme, which has not been in existence for even a year and which is now ending. I asked for a calculation to be made. We reckoned that it would cost more than £100,000. We do not think that that is a sensible use of money. I entirely agree that we should look to see whether the existing scheme gave advantage, and draw the lessons from that, but we do not believe that it is necessary or desirable to have the formal evaluation which had been provided for in the legislation at the cost that would be incurred. I therefore propose that the amendment be withdrawn.
Lord Bach
I am grateful to all noble Lords who have spoken in this debate: my noble friend Lord Brett, with his expert knowledge of systems at airports; the noble Earl, Lord Erroll, for the points that he made; and, of course, the Minister, for her response. This proposal does not depend on whether it, in the end, improves airport security or not. We certainly think that it cannot do any harm, to put it at its mildest, and probably has some positive effects. Obviously, on its own, an ID card system of this kind is nowhere near enough; of course there has to be continued checking, as the noble Baroness said in her response. We accept all that. I am not sure that her point about a philosophical difference between the two sides carries very much water. We are arguing that you can put security on one side, if you want, for the moment; we are talking about an attempt to save hard-pressed businesses costs and a degree of effort that they do not otherwise have to use. This is a very important industry for this country, and if anything can help to save legitimate costs, expenditure and time, I would argue that it is the duty of government to look carefully at it.
What is Amendment 5 intended to do? It states that the trial should continue for a longer period and that, at the end of it, the Secretary of State shall lay before both Houses of Parliament a report on,
“the outcome of the trial use of ID cards for airside workers”,
and,
“the measures the Secretary of State proposes to implement arising from it”.
It obviously does not find favour with the Government, but I would be interested to know what they intend to do with the information that has been gleaned from the six months of the trial. As the noble Earl, Lord Erroll, said, no doubt there were some benefits to be gained and it would be useful for the future to know what they might be.
I find it difficult to understand how that could possibly cost £100,000, bearing in mind that the cards have already been given out free. What would be the costs of carrying on the trial? I find that hard to understand.
Baroness Hamwee
As the noble Lord said, there may be lessons to be learnt, and I, too, should be interested to know them. He described what the new clause does. I think that I am right to say that, implicitly, it requires the continuance of the register until the end of the process described here. It seems to me that that must follow. The noble Lord has not referred to it, but the two go so closely hand in hand that I assume that that is the case. Perhaps he could confirm that or correct me.
Lord Bach
I am not sure whether the register would have to continue or not. The data would continue to be collected and we would see at the end of the period whether the trial had made life easier and more secure for those who have to run our airports. I take the noble Baroness's point; I know that it is an essential part of the Government's case that the register should be closed at the earliest possible moment. I suggest that the effect of having an identity card as passport might be to make it possible to get the information that would be of assistance.
I see that the Government are not attracted by the wording of the amendment. I am very grateful to the noble Baroness for her response, and I beg leave to withdraw the amendment.
Lord Phillips of Sudbury
Lord Phillips of Sudbury
My Lords, I will speak to this quite briefly. Clause 3 is about the destruction of information recorded in the national register. It is of paramount importance that that be done without let or hindrance, so that at the end of the destruction process everyone is satisfied that there are no loose ends. This is a probing amendment, because I am not entirely sure that the wording of Clause 3 is comprehensive. Of course, I am not privy to the complex arrangements that are no doubt being considered about how the destruction process will proceed. However, we must be absolutely sure that all the data on the national information register are destroyed, including data that are stored or co-stored elsewhere, because, in the process of unrolling this massive scheme, a great deal of information went out to various contractors.
The amendment would add the words “or under its control” at the end of the sentence:
“The Secretary of State must ensure that all the information recorded in the National Identity Register”.
It is designed to catch any information that derives from the register and exists beyond its boundaries in order to ensure that it is wholly and irretrievably destroyed. I would be grateful if the Minister would confirm that such contracts as do exist ensure that the Government can, in pursuance of Clause 3, make sure that any information held elsewhere is destroyed, and that they have the right to check that that is the case. I beg to move.
The Countess of Mar
My Lords, I support the noble Lord, Lord Phillips, as does the Joint Committee on Human Rights. On page 3 of its summary, the Joint Committee states:
“Clause 3 of the Bill requires the Secretary of State to destroy all information recorded in the NIR within two months of the Bill receiving Royal Assent. We recommend that Clause 3 be amended to ensure that not only information held on the NIR but all other information collected in connection with the NIR be destroyed in line with the requirements of the Data Protection Act 1998, and without delay”.
I support the amendment of the noble Lord, Lord Phillips.
Lord Hunt of Kings Heath
My Lords, although there are different views about the ID scheme—as we identified in our earlier debates—clearly there is a general understanding among all noble Lords that, given that the ID card scheme will be scrapped if the legislation is passed, the destruction of the data needs to occur properly and efficiently. I agree with the spirit of the amendment of the noble Lord, Lord Phillips. The question is, what is the best way to achieve the desirable policy outcome? Clearly, destruction must be thorough, transparent and successful in order to provide sufficient public confidence in the process. Those whose data are held on the national identity register deserve reassurance that their personal information has been destroyed to an acceptable standard.
I was grateful to the Minister for saying at Second Reading that the Government were committed to producing a Written Statement to Parliament on the event of the destruction of the data contained in the national identity register. It is absolutely right, and I welcome the fact, that the Government will report on the process and delivery of the destruction of the data. However, given the report of the Joint Committee and the comments of the noble Baroness and the noble Lord, and given that it is such a sensitive area, it would be helpful if that were to be made a statutory requirement. In reporting to Parliament, the Government should specify what data have been destroyed, the process involved and the standard by which destruction occurred. I recognise that the Minister is having a tough day with the Statement as well as this Committee, but it would be helpful if she were able to give a little more information in respect of that.
I would also like to follow the noble Lord’s amendment and its implication. Will the Minister confirm that the destruction will occur in line with the standards of the Data Protection Act 1998 to ensure that the process is recognised as being fully comprehensive? On Report in the other place, the Minister, Mr Damian Green, revealed that the Government were in contact with the Information Commissioner’s Office about the destruction process. As part of the Government’s stated wish to ensure transparency and openness about the physical destruction process, will the Minister consider making available communications with the Information Commissioner as soon as possible and, at the very least, include this information in the report that the amendment calls for?
Finally, Clause 3 requires destruction of data within two months of Royal Assent. I would be grateful to have confirmation from the noble Baroness that the Government are confident that that deadline can be met.
Baroness Neville-Jones
My Lords, I thank the noble Lord, Lord Phillips, for the time that he has taken to discuss this aspect of the Bill with the Bill team. His experienced views on these matters were very much appreciated. The best thing that I can do to reassure the Committee is to describe what we are going to do. I ask noble Lords to forgive me if that takes a moment or two. The national identity register is a generic term applied to the process of collecting and storing personal biographical and biometric data on ID card applications. At the moment, the core database is maintained in secure conditions on behalf of the Identity and Passport Service by its main contractors. Data held for dealing with applications, for subject access requests or for marketing purposes are similarly held in secure conditions by IPS staff and by contractors, such as Teleperformance.
IPS and any other party which has or had access to information gathered in connection with the NIR is required to comply with data protection legislation. We certainly will ensure that that is the case throughout. IPS has adopted an active approach and has identified all sources where information recorded as part of the NIR is held. As a result of that exercise, three categories have been identified. The first is the core data where the central records for the NIR are held. Core data containing biographical and biometric data are held by contractors on secure production systems. The storage media such as hard disks and back up tapes containing the data will be physically destroyed by shredding. That shredding process will comply with requirements for destroying secret data set out in Her Majesty's Government Information Assurance Standard No 5—the Secure Sanitisation of Protectively Marked or Sensitive Information. This category represents by far the largest element in the destruction process.
Lord Phillips of Sudbury
My Lords, I am grateful to my noble friend for giving us such a comprehensive description of the process that is now in train, and I am sure that it will reassure a lot of people. I must confess that I did not understand half of it, but when I get around to reading it for the seventh time, I might do so. However, what I could not quite gather from her reply is this. She did not say that she objects to my suggested additional words, and it seems that adding them would do no more than what is being done. Given that it is such an important process, I would have hoped that, on further consideration, the matter could be resolved by agreement before we reach the next stage. On that basis, I thank all those who have taken part in the discussion, particularly the noble Countess, Lady Mar, for repeating an appropriate extract from the response of the Joint Committee on Human Rights. I am content to withdraw the amendment.
Lord Phillips of Sudbury
Lord Phillips of Sudbury
This group of amendments—Amendments 9, 10 and 11, in the name of the noble Earl, Lord Erroll, as well as mine—is partly probing and certainly simplifying. When I read Clause 4, I found myself completely baffled by quite a bit of it, especially subsection (3). Being a bit of an old lawyer warhorse, I just kept at it. I read it and reread it and I concluded that anyone suffering from insomnia should put subsection (3) by the side of the bed for 2 o'clock in the morning. If you read subsection (3) six times, I almost guarantee sleep. I shall read it for the sake of Hansard. It states:
“In subsection (2)(b) the reference to P or anyone else does not include, in the case of a document within subsection (1)(c), the individual to whom it relates”.
I may be getting daft—I notice assenting groans from the noble Lord, Lord Bach—but I have tried in these amendments to clarify what that means. I am encouraged to do that because I am following Clause 4(2)(b) in the Identity Cards Act. I suspect that the parliamentary draftsman was trying to make things clearer by pulling out subsection (3) rather than allowing the sense of it to follow on from Clause 4(2)(b).
In Clause 4(2)(a) and (b), we have a definition of what is called improper intention. That definition is, I think—and I have consulted the very helpful Bill team, and they agree—exhaustive of what improper intention is for the purpose of this very important clause. I do not see that paragraphs (a) and (b) are exhaustive of improper intention sufficient to base a prosecution under Clause 4(1). I am anxious that there should not be events of dishonesty around identity documents—the holding of them or whatever else. I do not want there to be loopholes where some clever barrister can say, “This may have been a dishonest act by my client but it is not within Clause 4(2)”.
My Amendment 10 would add a further paragraph which reads as follows:
“the intention of using or allowing or inducing another to use a document for any dishonest purpose”—
for any dishonest purpose. I cannot see why that much broader subsection can be offensive to the purport of the clause. Indeed, it may be argued—the noble Baroness may shortly argue—that my subsection renders superfluous paragraphs (a) and (b). If so, we have knocked out two paragraphs for the sake of one. On my reckoning, that is good going.
In another life, I was for 26 years Jimmy Young's legal eagle, trying to explain to the baffled British public a little bit about the law of our land. If the amendments do anything to make it a bit clearer, I think that that is a job worth doing. I beg to move.
The Earl of Erroll
My Lords, I put my name to these amendments because I, too, had read the clause and got myself into complete confusion, so I thought that anything had to be better. I started trying to unravel this in my mind, and given that this challenge fell on a sleepless night, I thought that it might be quite interesting to try it.
What the noble Lord, Lord Phillips, has just said is true. The essence of it all is there is no point in having these laws if you cannot actually catch people. If we leave a loophole here, there is no point to a lot of the Bill. People will possess false identity documents and we will not be able to lock them up or punish them for it, and what is the point of the whole exercise if we cannot? It is critical that we get this clause right.
I read the amendment with interest. I thought that if I put some plain English in, that might help. I worked out that if person P, who is basically the crook, nicks my driving licence, which is covered by the wording Clause 4(1)(c),
“an identity document that relates to someone else”—
in other words, it relates to me—we then have to look at what he uses it for. On the question of “improper intention”, I was interested by the word “establishing”, and I would like an answer about that. Clause 4(2)(a) talks about,
“using the document for establishing personal information”.
Does that mean that, having grabbed my passport or driving licence, person P, in impersonating me, is trying to get information about himself on to the database so that he can establish and build up a false identity on the database that will take over my identity,? In other words, is he changing my address to his own, and things like that? If he sticks to driving licences, that is probably easier in the first instance because the checks are lower.
That is what the word “establishing” could mean, but equally it could be used in the other sense of person P ringing up to check that it is indeed my address. I do not know which way round “establishing” is meant. Is it active or passive? Is the crook pushing or pulling the information? That ambiguity could be dangerous. The word may be meant both ways, but lots of people are allowed to establish my personal details. A policeman, for example, needs to do so when he stops me and finds out whether mine is a genuine address. I do not know which way round the word is meant.
Then we come to the next bit, Clause 4(2)(b), which says that the crook can use the document to try to verify personal information about himself. Why would the crook want to verify personal information about himself? It is not personal information about the crook if he has established a new identity for me; it is actually personal information about a fictional person who appears to have my identity. I can see that we are going to have great fun about what is “personal information” with regard to a stolen identity.
So, we get into the little problem about verifying the personal identity of a person who does not exist, but then we come to Clause 4(3). I rewrote this myself to say that the actions detailed in subsection (2)(b) are not an improper use if my driving licence—the identity document mentioned in subsection (1)(c)—is used by the crook, person P, to verify my personal information, the person to whom it relates. In other words, it says that the crook can use that document to find out information about me. Okay, big deal. I do not see why that is so dodgy. That is the one exception that does not matter one way or the other. If that is not the case, I am not really sure what subsection (3) means and I would love to know, but that, after a lot of tortuous back and forth and rewriting, is what I arrived at.
The only other thing that occurred to me just now about improper intentions is that it is an improper intention,
“to have in P’s possession or under P’s control”.
This is where the matter becomes critical, because I know that the word “possession” has huge implications in law. You are in possession of a car if you have the car keys, from the point of view of drunk driving, whether you have an intention of using those car keys or not. If someone else has your shotgun but does not hold a certificate, and they drive 100 yards to get it back to your house because you have just fallen ill and have to go to hospital, they are in possession of that shotgun at that point without a proper certificate. So, if someone takes your driving licence off you in order to verify something about you, they are in possession of your driving licence at that point. I do not know if there are any issues around that, but as I was reading this I suddenly started thinking, “Hang on, we’ve got possession issues here as well”.
The whole thing is a ghastly muddle, and anything that could be done to sort it out would be better. Hence I back the amendments of the noble Lord, Lord Phillips of Sudbury.
Lord Brooke of Sutton Mandeville
My Lords, sitting between the Cross Benches and my noble friend’s Liberal Democrats, I have to confess that the difference between myself and them is that whereas they could not understand the Bill as it was originally written, I cannot understand it now that it has been rewritten by them. I grew up on childhood problems which involved Mr Black, Mr Brown, Mr Green and Mr White who lived in houses that were—but not necessarily respectively—green, white, brown and black. Then you were given a certain amount of information and you had to decide who was living in the right house. All I can say is that the Minister now constitutes my road to sanity because if she can explain what the original Bill meant and why this measure does not improve it, at least I shall sleep at night.
Lord Rosser
My Lords, some of the points made by the noble Lord, Lord Phillips of Sudbury, and the noble Earl, Lord Erroll, are interesting. Those are the points that I understood. Other points were made which—through my own ignorance, not their failure to explain them—I could not fully understand. I am extremely grateful that I am not left with the hapless task of having to respond to them. No doubt when we have heard the Minister’s response, we will find out the validity or otherwise of the points that have been made. For people such as myself who are not lawyers and who do not profess to understand some fairly obscure wording, will the Minister please give the reasons why she is not accepting the amendments in a layman’s terms, not a lawyer’s? If she is accepting them, presumably there is no problem in that regard.
The Countess of Mar
My Lords, may I return to the report of the Joint Committee on Human Rights? It says, in relation to Clauses 4, 5 and 6:
“The practical use of these offences could engage the right to private life and we call on the Government to provide Parliament with a more detailed justification of why these offences are necessary and an explanation of what conduct is criminalised by these offences that is not already caught by existing legislation”.
I hope that the Minister will respond to that point as well.
Baroness Neville-Jones
My Lords, speaking as a non-lawyer, I hope that I may be able to give the noble Lord some comfort on this amendment. We certainly recognise that the intention of these amendments is to bring clarity to what might otherwise seem complex provisions of the Bill. As your Lordships will be aware, the provisions in Clause 4 re-enact the Identity Cards Act 2006. As the purpose of the Bill is to scrap the ID card scheme and destroy the NIR, that gives rise to questions about how we describe these offences and where we put them. However, law enforcement remains important. Last year, there were 3,000 convictions for offences under the 2006 Act. That is a significant number of successful prosecutions and the powers that are being re-enacted are being used on a daily basis by the police and other enforcement agencies and provide important operational tools to tackle fraud-related offences, so we are anxious to ensure that the law remains effective in this respect.
We do not see great benefit in considering amendments that are aimed at improving the clarity of the legislation which is successfully applied in the investigative and judicial enforcement stages of the criminal justice system. ACPO fully supports the retention of the existing powers. However—this is where I come to the next set of issues—we do not believe that everything should stand still. While re-enacting the provisions to maintain the effectiveness of tackling fraud, the coalition Government have undertaken to review the number of offences on the statute book and to consider the scope for repeal. Therefore, we are on the same track as noble Lords in wanting to ensure the appropriateness of the offences and the powers to ensure their enforcement.
Over this autumn, we will look at whether these offences should stand alone, or whether they can be accommodated within existing offences under fraud and counterfeiting legislation. I am aware that the offences in the Act derive in some part from the paper issued in 2004 by the previous Administration, entitled Fraud Law Reform: Consultation on Proposals for Legislation. We will examine the common ground, or overlap, that exists between the Identity Cards Act and other legislation to see if there is scope for simplification and rationalisation of the offences. I hope that this answers the noble Lord’s point. We will undertake that work this autumn alongside colleagues in Wales, Scotland and Northern Ireland. It may be that in the end we decide that the offences should remain in place; but possibly they could be combined with others. Clearly there is an operational need for them, so the issue is how they are best described and where they are best placed.
While Amendments 9 and 11, tabled by the noble Lord, Lord Phillips, do not change the meaning of that provision, Amendment 10 does, because the effect is to widen the scope of the offence so that it is no longer limited—here, perhaps, there is a substantive disagreement—to the use of cards to establish aspects of the person’s identity. The common factor in relation to all documents listed in Clause 7(1) is that they may be used as identity documents. It is the improper use of these documents as identity documents that the offence is targeting—nothing beyond that. Other dishonest uses to which the documents may be put are likely to be covered by other legislation. We are not neglecting the issue, but we do not see it as relevant to the Bill.
Obviously, this legislation is to get rid of the ID card system. In view of our intention to look at the law enforcement aspects and related offences, and bearing in mind in the mean time the need for these powers, I hope that the noble Lord will feel able to withdraw his amendment. I have no doubt that, in consideration of how we deal with these offences in future, his help and views will be greatly appreciated.
The Earl of Erroll
Would it be possible later to have a written explanation of what Clause 4(3) means? I am sure that I read it wrongly and it would be interesting to find out. Also, I do not know what “establishing” means in this context, and it would be nice to know that when I am asked by other people.
Baroness Neville-Jones
My Lords, Clause 4(3) excludes the scenario where a person uses another’s card to establish personal information about the other person. It would allow a carer, for example, to assist an elderly relative by using that person’s document to collect a parcel or avail themselves of a service on behalf of that person. In other words, that is a perfectly proper intention—what is intended to be excluded is improper intention. The term “establishing” could have two meanings, as suggested. It could mean proving certain facts, or finding out certain facts.
Lord Phillips of Sudbury
My Lords, the Minister has—I nearly said “dealt manfully”, but that would not be right—dealt with her usual sophisticated aplomb with this impossible matter. One wonders whether, for a provision in a Bill such as this, our methods are adequate. I suspect that if one could have a conversation, one might get further. In moving the amendment, I thought that I made it clear that Amendments 9 and 11 do not alter to the meaning of that provision, but just make clearer—
Baroness Neville-Jones
Indeed—I may not have spoken clearly. I did indeed say—at least I thought that I said—that we are in entire agreement that these two amendments do not change the sense of the provision.
Lord Phillips of Sudbury
I am grateful for that, but I shall still come back to the point. The noble Baroness said that Clause 4 is a re-enactment of the provision in the Identity Cards Act 2006. This part of the clause diverges from the 2006 Act in a seriously unhelpful way. The changes mean that there has been a shift into subsection (3) of the language that is there. The noble Baroness did her best to explain it, but all I can do is to go back to the 2006 Act, which is better and clearer on the point. In withdrawing the amendment, I would ask the noble Baroness if she would think a little more about it before we come to the next stage.
I want to make one other point. The noble Baroness made the important point that my attempt to create in Amendment 10 through proposed new paragraph (c) a catch-all provision in terms of the definition of improper intention was unnecessary. However, she was less than categorical. I would be comforted if she and her advisers would put their thinking caps on and make sure that that is the case. I ask that because I am still worried that paragraphs (a) and (b), which provide the exhaustive definition of improper intention, would not catch circumstances where the Government would wish there to be an offence in terms of the possession of false identity documents. However, as I say, we are all reassured by the review that is to be undertaken in what is a very difficult field.
The Earl of Erroll
It may assist the Committee at the next of the stage of the Bill if I say that subsection (3), which the Government may look at again, is probably otiose. It is only an offence for person P, with improper intention, to have in P’s possession. The defence just stated was “not with improper intention”. A carer trying to collect a parcel has no improper intention. It means that either we have “improper intention” wrong or subsection (3) is otiose. I still believe that this should be taken back so that people can think about it.
Baroness Hamwee
The part of the noble Baroness’s argument that I found conclusive was that this clause reproduces existing offences, so I relaxed after that. But my noble friend has been diligent in looking back at the 2006 Act and, indeed, as he says, it is different. If the Government are concerned—I support them entirely in this—not to undermine what has been established through case law, then I think that the Committee would be interested to learn the reasons for the changes. This clause is noticeably shorter than the section in the 2006 Act. If there has been a well-intentioned effort to compress it, quite apart from the confusion that I too have been caused, there are dangers inherent in changing the language, in however minute a fashion.
Lord Phillips of Sudbury
On that basis and with the prospect of some further conversation before Report, I beg leave to withdraw the amendment.
Lord Brett
“Identity fraud
(1) The Secretary of State must lay before Parliament a report on the impact of the repeal of the Identity Cards Act 2006 on combating identity fraud and the lessons learnt from the operation of the identity cards scheme.
(2) The Secretary of State must lay the report before Parliament within one year of the coming into force of this Act.”
Lord Brett
My Lords, the contribution of the Minister in the previous debate has provided a purpose for putting down this probing amendment and, possibly, a small part of the answer. I do not think that anyone would argue the point that identity fraud is increasing. It is very troublesome for those who are victims of it, as well as for retailers and those in business who are misled into dealing with people who are not the genuine persons with whom they believed that they were dealing. The previous Government believed that the ID card was a valuable tool in that regard.
I was moved to put down this amendment by a case which shows that the identity card has great value; that is, for a person whose identity has been stolen. A colleague of mine moved flats. Someone collected the mail that was delivered later, stole the identity of the person concerned and purchased a cell phone or such like. The case was investigated, which took time and trouble, and it was resolved—except that the person was not caught. Time and again during the next two years, he or she continued to use that identity. On each occasion—whether a retailer or a utility company was involved—my colleague had great trouble going through all the rigmarole of proving her identity by supplying documentation from a number of sources. The identity card would have proved simply who she was for the benefit of anyone involved and for her own peace of mind.
We can argue the degree to which the ID card was of value in fraud detection, but I do not think that we can say that it would not have been of great help in this case of identity fraud. We know that the National Fraud Authority and our national intelligence bodies, under Home Office supervision, are looking at some form of national strategy. I presume—no doubt the Minister will correct me if I am wrong—that that is part of the review of which she spoke. This amendment seeks a commitment from the Government to tackle the growing crime of identity fraud; to evaluate, in the absence of having the identity card, what other measures need to be put in place; to learn the lessons; and to report to Parliament. That would provide, in time, a review that we can meaningfully look at in relation to what we know the identity card could have provided; and, more importantly, in its absence, to the alternatives.
It is always terrible to have your house broken into: you feel violated. It has happened again and again to this individual and it got to the stage where her health was really suffering. If nothing happened this week, her fear was that it would happen the next week. Each time it happened was that much worse. I believe that in this case, an ID card of the kind that we have in law would have helped the victim considerably. More importantly, as the Minister said, the central purpose of the legislation before us is to remove ID cards. I seek the assurances set out in this amendment, if not in the form in which they are written then at least in terms of the spirit and intention behind them.
Lord Phillips of Sudbury
My Lords, Amendment 19 is in my name and that of the noble Earl, Lord Erroll. The provision is covered by Clauses 22 and 23 of the Identity Cards Act. The only difference is that that constitutes 60 lines of legislation, with 14 subsections, whereas my amendment is infinitely more modest. I would like to think that its modesty and open-textured nature is a plus and not a minus. I well appreciate that the dismantling of the identity card scheme is not the same as its creation. Some may think that this is superfluous and that it is enough to rely on the statements that the Minister has made about what the Government may do. I take a cautious view about that. With issues of citizens’ basic rights, it is incumbent on us as legislators to be cautious. I also have in mind the fact that the noble Baroness is here today but may be gone tomorrow.
Lord Phillips of Sudbury
Of course, to higher and greater things. It is notorious in our system that Ministers remain in post for less than two years, and that one Minister does not feel bound by the statements of another. If anyone doubts that, I can give them half a dozen chapters and verses now. Therefore, the soft soap, even from the mouth of as distinguished a Minister as the noble Baroness, is not enough where one is dealing with issues of citizens’ basic rights. For this side of the House, and no less for Members opposite, the destruction of the national identity register is a crucial matter. If ever there was a situation where somebody beyond the Minister is needed to give reassurance that what has to be done has been properly done, this is it.
Subsection (2) of the proposed new clause requires the independent person appointed to review the arrangements to make an annual report of his or her findings not just to the Secretary of State but also contemporaneously to Parliament. That ensures that the absence of specifics in the proposed new clause is adequate, because any independent reviewer, because they know that they have to report to Parliament as well as to the Secretary of State, will be on their mettle.
I finish by saying that this deals in the Bill with a number of anxieties expressed by the Joint Committee on Human Rights when it reported in October. For example, it stated that,
“the Government should report to Parliament on the progress towards the destruction of this information and the decommissioning of the NIR”.
It says that “the Government” should report. However, as I have attempted to justify, it should go a step further. The committee made other recommendations, particularly with regard to Clause 10, which entitles the Secretary of State to require verification information from not only a long list of government bodies, but from others; and, in subsection (10), gives discretion to the Secretary of State to disapply subsections (8) and (9). Subsection (8) requires that information in relation to passports should be destroyed no later than 28 days after the passport is issued. Subsection (9) contains another provision related to that. The clause gives discretion to the Secretary of State to disapply those subsections where he or she thinks it is “desirable” for the purposes of preventing or detecting crime and so on. That is fair enough, provided there is an independent reviewer who can look at that and make sure that no slackness has entered the system, and that any use of the discretions in the clause has been sensible and justifiable.
Finally, the Joint Committee expressed concern about the proportionality of some of the rights given to the Secretary of State by the Bill. For those reasons, I commend Amendment 19, and the inclusion of an independent review in the Bill. I beg to move.
The Deputy Chairman of Committees (Lord Faulkner of Worcester)
I hope that the noble Lord, Lord Phillips, will forgive me. The Committee is considering Amendment 12, and Amendment 19 is grouped with it. I assume that what the noble Lord is doing is speaking to his amendment, not moving it.
The Earl of Erroll
I thought we had leapt ahead of ourselves for a moment; it was great. I also put my name down to Amendment 19 because it is always important to have independent scrutiny. It makes people feel much happier and much safer. I do not see that in this case it needs to be very expensive; you do not need a huge office, a huge outside body or anything like that. Public confidence can otherwise be destroyed. Sometimes things go wrong, so it feels much happier having external independent scrutiny. We forget that at our peril.
Having someone reporting up the same chain of command to the same boss is never quite the same as getting a report straight out to Parliament. On something like this, which potentially involves civil liberties and citizens’ rights, it is very important to have a direct report to Parliament, which is outside the normal chain of command, just in case. It is not that I mistrust any of the people in the system; they are trying to do a good job under difficult circumstances, particularly as the politics of it are shifting and changing on a monthly basis. There is no bad will on my part. Rather, we should always do this as a matter of principle, and it is dangerous to start not doing it.
Something the noble Lord, Lord Phillips, read out reminded me of the phrase in RIPA,
“for the purpose of preventing or detecting crime”.
That was the general-purpose provision that was slotted into RIPA. We were told that the Act would apply only to serious and organised crime but it ended up with local councils using it for other things. At that point, everyone realised that we had a political problem on our hands because uses can change. There could be similar issues buried within the Bill that I remember noticing when I first went through it but then forgot about.
The Earl of Erroll
Absolutely. It is important to have an external view of these things that will report directly to Parliament, because it is our duty to protect the rights of citizens against the Executive.
Lord Rosser
My Lords, I want to speak to my noble friend Lord Brett’s amendment as well as to the amendments of the noble Lord, Lord Phillips of Sudbury, and the noble Earl, Lord Erroll, which seem to raise a different issue. Primarily, though, I shall address my comments to the issue of identity fraud, which is raised in my noble friend’s amendment.
I think that it was on Second Reading that my noble friend Lord Bach pointed out that ID fraud is one of the UK’s fastest growing crimes, with nearly 2 million people a year falling victim to it and it costing the country some £2.7 billion. A huge proportion of people are affected; more than nine out of 10 people in the UK consider themselves to be at risk from identity fraud.
Minimising the paper trail of one’s identity details is an important part of facing up to the threat of fraud, and ID cards helped to do that, as the evidence that was presented in another place by the representative from the Manchester Airport group and the comments made today by my noble friend Lord Brett have indicated. The ID card scheme, of course, did not provide a panacea when it came to addressing identity fraud. The cards offered some help in that area, and we feel it is important that that is acknowledged, but with regard to, for example, identity fraud committed online, the ID card did not offer added security.
My noble friend’s amendment calls on the Government to produce a report on the lessons learnt for tackling identity fraud from the ID card scheme and its cancellation. It is interesting to refer back to the evidence given by the representative from the Manchester Airport Group to the committee in another place. I draw attention once again to points that he made. He said that the benefit that they got from the system was that they were absolutely sure that the person who was standing in the pass office was the right person. He was asked by committee members whether it might have been possible to achieve some of the benefits by other means—which is also important in relation to the amendment—for example, by using passports. He said that, yes, that was something that they would like to hold on to, but added:
“At the moment we are not getting very positive indications that that would be possible, but we will keep pushing”.
Later, he was asked whether he was saying that some of the innovative ideas in the identity card scheme could be replicated using the passport database or something similar. He said:
“I believe that if there is a will to do that, yes, we can. At the moment we are not actually feeling that will, but I believe that it is possible”.—[Official Report, Commons, Identity Documents Bill Committee, 29/6/10; cols. 29-30.]
Those observations suggest that there would be real benefit in having a report on the impact on combating identity fraud of the repeal—as that is the intention—of the Identity Cards Act 2006. The comments made in that evidence certainly suggested that the scheme had benefits, but that some of them might be achieved in other ways if it was scrapped. It is a case of looking not just at what may have been lost but at whether the benefits which were worth keeping, particularly relating to identity fraud, could continue to be achieved by other means. Reference was made in the evidence to the use of the passport database.
At page 7, paragraph 15 the impact assessment states:
“For Government and business, the benefits were expected to derive from simpler, quicker business processes and reduced cost of identity related fraud. However, the realisation of benefits depends very strongly upon high take-up rates for the card, because these are the key to engaging public and private sector organisations in offering card-based services”.
The point has been made that there was not a very high take-up; the system had only just come in. However, in the Government’s impact assessment there is a clear recognition that the identity card scheme could produce benefits for government and business by reducing the cost of identity-related fraud. Once again, that would seem to be an argument for the Minister to accept the amendment moved by my noble friend Lord Brett, which simply calls for a report on the impact of the repeal of the Act on combating identity fraud.
The noble Baroness told the House on Second Reading that an action plan was being developed by the National Fraud Authority and the National Fraud Intelligence Bureau, following their strategic threat assessment of the harm impact of identity crime, and that that was being overseen by the Home Office. If there is an exercise or if an action plan is already in the process of being drawn up, it is surely not irrelevant to look at the impact of the repeal of the Identity Cards Act 2006 on combating identity fraud and the lessons learnt from the operation of the scheme. Once again, I say, particularly given some of the evidence presented in the other place and the statement in the Government's impact assessment, that there would have been benefits in relation to identity fraud—albeit that of course I accept that the document said that that would relate to a high take-up of the cards.
Can the Minister tell us any more about the action plan—obviously, not the details of what is in it but the progress being made, what it might involve and when we might hear more about it? I also take this opportunity to ask whether, as part of the action plan, the Government are following the rollout of the new generation of identity documentation in Germany, which will include the radio frequency identity chip—which, as I understand it, will facilitate secure online transactions. At least, that is the theory; whether it does in practice is presumably something that still must be seen. Does the Minister think that anything can be learnt from that new technology to address the very serious problem, which everybody recognises, of identity fraud?
I hope that the Minister will feel able to accept these amendments. My comments are mainly related to the amendment moved by my noble friend Lord Brett, as clearly everyone has an interest in devoting the maximum resources and the maximum amount of information gained from operating other relevant schemes to trying to combat identity fraud.
The Countess of Mar
My Lords, I am not normally in favour of reports being put before Parliament. We have far too many reports and most of them lie unread on dusty shelves. The argument put forward about identity fraud is a question of proportionality. I understand that a very high proportion of identity fraud—up to 90 per cent—is internet fraud, although I am not exactly sure of the figure. Identity cards would do nothing to prevent that. However, I support the call for a report to be made to Parliament in the amendment of the noble Lord, Lord Phillips, and of the noble Earl, Lord Erroll, because of the human rights implications. I do not wish to detain the Committee for long, but those are my concerns.
Baroness Neville-Jones
My Lords, we are discussing two akin but not entirely identical amendments. I shall deal with them separately. The substantive point that is being made concerns the importance of combating fraud and identity fraud. I say straight away to noble Lords that the Government take fraud and identity fraud extremely seriously. The noble Lord opposite quoted something that I said relatively recently in the House. That reflects the Government’s preoccupation with organised crime generally, and particularly with fraud and identity fraud. I assure the Committee that this is being pursued with purposive intent and as speedily as possible. We need to get a good strategy together but we are hoping to publish a cybercrime strategy that goes to the heart of these issues by the end of the year. Therefore, there is no lack of purpose and attention being given to what we entirely agree is a very important issue that poses a growing threat to the prosperity of this country if it is not tackled effectively. Of course, it also has national security implications. I think that the issue which divides us is the question of whether the Bill is the right way to tackle that. I cannot see that what is proposed would greatly add to our knowledge but it would certainly add to complexity and cost.
The purpose of Amendment 12 is to hold the Government to account for something that will no longer exist. It would require resources to be committed to determining, in effect, why ID cards were not successful. However, the offences relating to identity fraud are being re-enacted; we are not letting them drop. The impact of identity fraud will continue to be monitored through the crime statistics. We are pursuing the evil of identity fraud in government policy. We therefore consider that we are on the case, but we are against the setting up of yet a further quango to monitor it. There is nothing between us on the importance of the issue but we do not think that this is the right vehicle with which to pursue it; it would add complexity but not value.
On the other amendment, we are similarly concerned about the implications because again this proposal would add to the bureaucracy on how the Government report on offences within the existing passport process. The proposals would involve the creation of a new post to oversee arrangements for the use and retention of data in connection with passport applications. I have to say that we already have the Office of the Information Commissioner. The IPS, like any other organisation, is required to comply with data protection. It is also required to comply with the provisions of the Bill when it is enacted and is subject to the rigours of government audit procedures. This Government have undertaken to report in detail to Parliament on all the processes.
Lord Phillips of Sudbury
I am sorry to interrupt the Minister’s flow. She has just made an important statement, which is that the Information Commissioner has a duty. The question is whether the duty of the Information Commissioner extends to the Government dismantling the national identity register. If it does, most of my concerns will go away. Can the Minister assure me of that?
Baroness Neville-Jones
The Information Commissioner needs to be satisfied that the destruction process has been proper, thorough and complete. That is why we are in touch with the Information Commissioner. We really do not see the need for yet another layer of oversight that could get in the way of the exercise of his functions. In fact, it would duplicate what he is already charged to do—effectively, I would hope.
I would also say that the Government are committed to transparency in this process. We have nothing to hide and we are absolutely committed to the citizen’s rights in the matter. While I realise that I might not last for ever—the thought of being translated to a higher place is rather worrying—nevertheless, I will say with absolute confidence that this Government, whether I am in your Lordships’ House or not, are committed to ensuring that this process is carried out properly and that there is no doubt about its integrity and thoroughness. I hope that, in the light of my comments, the noble Lord will feel able to withdraw his amendment.
Lord Brett
My Lords, personally I am sure that the reference by the noble Baroness to a higher place was simply to a more senior position in the Government, if only because I am not sure that anyone who is a politician can hope to go to heaven.
I am disappointed with the Minister’s reply. I do not think that we are looking for bureaucracy in the amendment I have tabled. I believe that the Government are just as concerned as the previous Government were about issues of identity fraud and we know that things would have come from the identity card scheme that would have helped. However, it is not to be persevered with and we have been told that a plan is to be put together by the end of this year. The Bill requires a report to be made only within one year. I would have thought that, without too much bureaucracy, it would be possible to look at the extent to which the Bill will provide for those things that were provided for by the various parts of the Identity Cards Act, particularly in relation to individual identity fraud. We have seen that, online, someone’s identity might be used again and again.
So, I am disappointed, but I hope that between now and Report, the Minister will look at this again with her advisers. Transparency requires other people to be able to see something. In some ways, the only people who can report back with all the facts at their command, which we can then scrutinise, are the Government. Even at this stage, I hope that the noble Baroness will feel able to reconsider the matter. In the mean time, I shall withdraw the amendment.
Earl Attlee
My Lords, this may be a convenient moment to adjourn the Committee until Wednesday next at 3.45 pm.
House of Lords
Elections: Fraud
(14 years ago)
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Baroness Royall of Blaisdon
To ask Her Majesty’s Government which are the “specific complaints” about electoral fraud referred to by the Deputy Leader of the House on 5 October (HL Deb, col. 10).
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, my reference to “specific complaints” referred to paragraph 2.58 of the Electoral Commission’s report on the administration of the 2010 UK general election, which says:
“Because many of the cases of alleged malpractice are still under active investigation by police forces, it is not possible at this time to give any definitive figures for the number of cases which relate to the 2010 UK general election”.
Baroness Royall of Blaisdon
My Lords, I thank the Minister for that reply. In essence, the noble Lord has confirmed that these cases have now been referred to the police, which is absolutely the correct procedure. However, in October, it was stated in the BBC “Newsnight” programme that two of the constituencies concerned were in Halifax and Oldham. I understand that the police are now quite properly involved, but can the noble Lord confirm the BBC’s claim? Many people are in a state of perplexity and extremely worried because they do not know what the situation is.
Lord McNally
I would not want to verify or otherwise many of the claims that are made by “Newsnight”. I can say that the police are investigating and that, as the noble Baroness rightly says, the Electoral Commission will report in January. We have to be patient. It may be difficult for the individuals concerned in the constituencies where complaints have been made, but the due process has to be gone through and we just have to be patient.
Lord Rennard
My Lords, does the Minister agree that as only around one in 20 of the crimes committed in this country is thought to be reported to the police, there is probably far greater prevalence of electoral fraud than we are generally aware of? Does he further agree that if many more people were aware of how easy it is to commit fraud under the present system, it would be even more prevalent? Could he indicate what steps the Government may be taking with the parties and the Electoral Commission to reduce the possibility of such fraud?
Lord McNally
I am not sure that I agree entirely with my noble friend. Most of the inquiries about the conduct of our elections show a good performance in complying with the law. Many colleagues in this House must feel, as I do, that we went through most of the 20th century with the integrity of our voting system unquestioned. We were very confident about it. It is only in the past 10, or perhaps 20, years that we have become concerned about it. We are bringing in various measures to make it more difficult to perpetrate fraud in our elections, as did the previous Government. We have made it clear that, whatever the party, anybody who commits fraud will be prosecuted and may well face jail for that fraud.
Lord Touhig
In answer to my noble friend Lady Royall on 5 October, the Minister said:
“The Government do not have information and neither is this the Government’s direct responsibility in these matters”.
Then, in answer to my noble friend Lord Hughes, he said:
“As far as I understand it, specific complaints have been made in a range of constituencies and are being investigated”.—[Official Report, 5/10/10; col. 10.]
At that time, did the Government have information—yes or no? I refer the noble Lord to the Ministerial Code. Part 1.2(d) says:
“Ministers should be as open as possible with Parliament and the public, refusing to provide information only when disclosure would not be in the public interest”.
Why is it not in the public interest to tell Parliament if there is an investigation into fraud?
Lord McNally
I think that is straining things a little. What I said was that I am not directly involved: the police and the Electoral Commission are involved. There would be a lot more questions from that side of the House, and probably from this side too, if Ministers were directly involved in investigating electoral fraud.
Noble Lords: Oh!
Lord McNally
It is a matter for the Electoral Commission; it is going to produce a report in January, and my recommendation, as an elector and a citizen—never mind being a Minister—is that all three political parties study that report very carefully and then see if we can come together to try to tighten it up still further. Nothing I said either the last time or today suggests any impropriety as far as I am concerned. I am leaving it to the Electoral Commission, the police and the returning officers in the constituencies concerned, which is exactly as it should be.
Lord Naseby
Is my noble friend aware that he is absolutely right in the position he takes—not least as someone who has sat through a fair number of recounts? However, is he not also correct in saying that, when the police have investigated, they do report? We have the case of Bristol East, where the newly elected Labour Member has been cautioned by the police for the use she made of—it is reported— the postal votes on her Twitter, and, rightly, that is fraud under Section 63 of the Elections Act 1983.
Lord McNally
I am not going to make comments on individual constituencies at the Dispatch box. I note what my noble friend says.
Baroness Taylor of Bolton
Would the Minister agree that probably everybody in this House would acknowledge that Ministers should not investigate electoral fraud? However, is there not a responsibility on the part of Ministers and, indeed, all of us, to acknowledge that we should not be fanning the flames and making wild accusations as has happened in the past?
Lord McNally
I agree with that, but after a general election, when there are close fights—we have all been through this—comments are made. What is important is that all parties co-operate in ensuring that the machinery we put in place works. Let us see what the Electoral Commission recommends, and then, if further action is needed, further action will be taken.
Lord Wright of Richmond
I note that the Minister referred to himself as an elector. Does the coalition have plans to allow Members of the House of Lords to vote?
Lord McNally
I regularly vote in local elections and I am particularly looking forward to voting in the AV election in May next year.
Lord Teverson
Is not the real electoral fraud that a party that gets 23 per cent of the vote gets only 8 per cent of the Members of Parliament?
Lord McNally
I think that is undeniable, and I noticed that there were nods from all around the House in response to my noble friend.
Banking: Bonuses
(14 years ago)
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Lord Myners
To ask Her Majesty’s Government what action they intend to take to discourage the payment of excessive bonuses to senior executives in United Kingdom banks.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the Government have taken action to tackle unacceptable bonuses in the banking sector. The Financial Services Authority is updating the remuneration code, which will ensure that bonuses are deferred and aligned with the underlying risks, and significant portions of any bonus will be paid in shares or other securities. Employees in this industry will no longer receive all their bonuses in cash while leaving their shareholders, and potentially the taxpayer, exposed to the long-term consequences of the risks they take.
Lord Myners
My Lords, the Minister said that the Government have taken action to deal with unacceptable bonuses. Can we therefore conclude that, as far as this Government are concerned, all future bonuses declared are deemed to be acceptable?
Lord Sassoon
My Lords, what I said was that we have indeed taken action, including, among other things, requesting the Financial Services Authority to take certain factors into account in its consultation on the remuneration code. We have said that we will look at—and we are looking at—the costs and benefits of a financial activities tax, consistent with, among other things, not driving banks abroad. The banking sector remains an extremely important part of this country’s economy.
Baroness Williams of Crosby
Does the Minister agree that, while undoubtedly a commendable degree of restraint has been shown by small businesses in the past year, the position of FTSE 100 company executives is very different, with, we now learn, a 55 per cent increase in bonuses last year? Will he consider, first, adopting the proposals in the Walker report on the buying out of bonuses, which is an increasing and troubling practice? Secondly, does he agree that we should consider taxing share-based bonuses, even if they are delayed for a couple of years, to be paid at the same rates that the rest of us are obliged to do?
Lord Sassoon
My Lords, the Walker report, which was commissioned by the previous Government and reported in November 2009, made a number of important recommendations, some of which have already been incorporated by the Financial Reporting Council in its governance code. Sir David Walker made other recommendations on disclosure which remain to be considered. As for taxation, I have already said that we are considering the costs and benefits of a financial activities tax in relation to banks and remuneration. We are doing that by working with our international partners to make sure that, if we produce proposals along those lines, they are consistent with international practice and with keeping the banks operating in this country.
Lord Sassoon
My Lords, lots of people threaten to do all sorts of things when they are in the middle of a negotiation. Whatever we continue to do to tackle unacceptable bonus structures in banks, we want to ensure that, among other things, they are incentivised to align their remuneration structures with the reduction of risks that bankers entail, and that we continue to have an important banking sector in this country.
Lord Hamilton of Epsom
My Lords, does my noble friend accept that one reason why there is so little finance for people to buy houses, and for small businesses, is that during the financial crisis many of the foreign banks took their money back to where they came from? They are not returning to London because they regard it as highly taxed, they regard certain members of the Government as extremely hostile to bankers, and they are worried about the degree of regulation. We must get these people back—contrary to what the noble Lord, Lord Dubs, said—because otherwise we will not have enough finance in this country to get the economy moving again.
Lord Sassoon
I certainly agree with my noble friend that we need a vibrant banking market to underpin the economy’s recovery. The action that the Government have taken to make sure that interest rates remain low is absolutely critical. We welcome the first steps taken recently by the British Bankers’ Association task force, which made a range of proposals that go to the heart of tackling the need for a continued flow of credit to British business.
Lord Barnett
My Lords, would not the straight answer to the Question on the Order Paper have been to say that the Government do not have any plans whatever to deal with future bonuses?
Lord Sassoon
My Lords, I have said that we have already taken action and are continuing to consider other possible actions in this area.
Lord Eatwell
My Lords, I was intrigued by the Minister’s identification of remuneration with risk taking. Are not bonuses usually paid to bankers for taking risks with other people’s money?
Lord Sassoon
My Lords, that is precisely why we want to make sure that there is a better alignment between the way that remuneration is paid and the mitigation of risk that should be there. It is precisely to get a better alignment with the risks that are incurred that we are supporting the measures that are being taken globally—limiting the amount of bonus taken up front in cash and deferring a significant proportion of bonuses in line with the proposals of the G20.
Lord Brooke of Sutton Mandeville
My Lords, can my noble friend remind me which Administration were in power when this problem developed?
Lord Sassoon
My noble friend is completely right that this problem arose under the watch of the last Administration, who implemented a one-off bonus tax that is now widely regarded to have been a failure—so we have to take the time to find a better way of dealing with this in the medium term.
Lord Brooke of Alverthorpe
In considering other possible action, as he mentioned, will the Minister have a look at the Private Member’s Bill which was promoted by my colleague the noble Lord, Lord Gavron, last year to try to get all companies, including banks, to put on the front page of their annual accounts the proportion of the highest paid compared with the lowest paid? A good deal of cross-party support was given to that and, while the Minister was not in the House at the time, would he go back and have a look at it again?
Lord Sassoon
My Lords, I am always up for looking at good ideas; this sounds a bit extreme, but disclosure of remuneration for bankers is indeed unfinished business.
Food: Labelling
(14 years ago)
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Baroness Seccombe
To ask Her Majesty’s Government what proposals they have to improve the labelling of British foods in retail stores.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)
My Lords, the Government have made a commitment to clear and honest food labelling. Through negotiations on the proposed EU food information regulations and national initiatives, the Government are working to improve the accuracy of origin labelling. We are also discussing with the food industry ways that food businesses can provide clearer information on the origin of food and food ingredients, particularly for meat and dairy products.
Baroness Seccombe
I thank my noble friend the Minister for his reply, but what irritates me is that when one goes into a supermarket, one sees our luscious British fruits packed in containers identical to others, and similarly priced, so that shoppers very often do not realise that they have bought foreign goods until they get home. This year, British raspberries have been excellent; our plums are in a different league from their foreign cousins; and there is nothing that can be said about British apples except that they are superb. Therefore, can encouragement and guidance to stores be given so that they promote our wonderful British home-grown fruit?
Lord Henley
I echo the “Hear, hears!” from around the House and congratulate my noble friend on paying tribute to the UK food industry, in particular to United Kingdom fruit. We are, as I said, trying to facilitate a number of voluntary industry agreements to try to encourage more labelling of food. On this front, we want to pursue—dare I say it?—a stick-and-carrot approach in terms of encouraging greater development. The stick, as it were, is being provided by the EU food information regulations; the carrot will be by food industry voluntary agreements.
Lord Borrie
Does the Minister agree that one of the major problems with food labelling, especially in supermarkets on tins and packages, is that there is a superfluity of it in very tiny print, which is impossible to read—and that it is impossible there and then, in the supermarket, to distinguish what is important, what is significant, and what is not?
Lord Henley
I agree that very often there can be too much information. That, too, is why it is far better to try to pursue a lot of these matters through voluntary agreements, whereby a simpler process can be developed that is of greater use—to, for example, the noble Lord—than something more complicated and more bureaucratic that ends up producing too much information which the noble Lord, and many others, find rather difficult to read.
Baroness Finlay of Llandaff
Are the Government considering using clearer labelling on food that contains nuts, as was recommended by the committee on allergy which I chaired, given the number of cases of anaphylaxis that occur when people are unaware that there is a nut content in food?
Lord Henley
My Lords, I understand that work is being undertaken in this area. I also understand that all packets of nuts have a serious health warning on them saying, “Warning—this packet might contain nuts”, which should be of help to noble Lords as well as to others. More seriously, the noble Baroness makes a very important point, as nut allergies are increasingly common and that needs to be addressed. We need to make sure that any food that contains nuts has the appropriate warning on it.
Baroness Trumpington
My Lords, I agree with the noble Lord on the opposition Benches, but I ask the Minister not for an increase in the number of words on packages but simply for words, such as “Boil for five minutes”, to be in big print.
Lord Henley
My noble friend always has the best suggestions. I did not say that we should increase the number of words on packages but, rather, that we should make sure that the wording on any package is user-friendly and can be accessed by as many people as possible. That is why we believe that voluntary, rather than compulsory, agreements are often the better way of addressing this issue.
Baroness Quin
My Lords, given that labelling is the subject of European as well as national decision-making, and given that the Government, like the Opposition, have said that they are in favour of clear labelling and a colour-coded traffic-light system, can the Minister tell me why Conservative MEPs voted not only against such a traffic-light system for Europe but against continuing such a system here in the UK? Should not the Government be consistent in pursuing policies in the interests of Britain and our consumers?
Lord Henley
The noble Baroness will be aware that, although I was formerly a Chief Whip in this House, I have no responsibility for Conservative MEPs on the other side of the channel. However, we are continuing to negotiate on the EU food information regulations and will ensure that they are as user-friendly as possible. We will also try to ensure, for example, that it is made quite clear where meat comes from. Therefore, even if, for example, the labelling says that bacon is British when the meat itself comes from Denmark, it will also say that the primary product, the pork, comes from another country—that is, Denmark.
Baroness Parminter
My Lords, can the Minister inform the House how, without compulsory labelling on egg products, consumers do not unwittingly purchase eggs from Spain’s illegal battery cages and undermine British producers, who will comply, unlike those in Spain, with the deadline for phasing out battery cages?
Lord Henley
My Lords, my noble friend is right to draw attention to the very serious problems relating to animal welfare. They are concerns that have always been at the forefront of our mind in negotiations on the EU food information regulations, and we will certainly take them on board in those continuing negotiations.
Lord Tomlinson
Will the noble Lord reflect on his earlier answer that the conduct of MEPs has nothing to do with him, particularly when he reflects that the leader of his party forced Conservative MEPs to leave the Christian Democrat group where they were and join every odd-bod racist, right-wing group, losing all influence that they had in Europe?
Lord Henley
My Lords, the noble Lord makes a point but it is a pretty silly point. He knows perfectly well that I—and, for that matter, the Prime Minister—have no influence over what they do. In the end, they will decide what they do, and the noble Lord knows that perfectly well.
Foreign and Commonwealth Office: Educational Allowances
(14 years ago)
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Lord Campbell-Savours
To ask Her Majesty’s Government what was the total cost of educational allowances paid to Foreign and Commonwealth Office and associated departmental officials in the last 12 months for which figures are available; and whether they intend to amend the cap on those allowances.
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, we contribute only towards the education costs of children of staff who are required to work in posts overseas. These officials pay UK tax wherever they work and are entitled to have their children educated at public expense. In 2009-10, we spent £13.3 million on children educated in the UK and £11.5 million on children at schools overseas. The ceiling on the amount that parents can claim towards boarding schools is reviewed annually and was reduced in September this year.
Lord Campbell-Savours
Is it not true that excellent quality, state boarding-school education is available in the United Kingdom at an average price of around £9,000 per annum, plus a £3,500 contribution towards tuition by the state as against public school fees of between £22,000 and £30,000 a year? Why cannot the Foreign Office save tens of millions of pounds by capping the amount of money that a Foreign Office official can claim to the level of state boarding-school fees?
Lord Howell of Guildford
I am grateful to the noble Lord. It is true that state boarding-school places are excellent, but unfortunately it is not true that they are available. Diplomats with children who need to be educated when they go abroad to places where they cannot take their children—I have a list of 48 countries to which children are not allowed to be taken—need to find places quickly. However, they find that they are not at the top of the queue for the 5,000 boarding places available in state schools in this country. I appreciate very much the point that the noble Lord makes but it does not add up if you are trying to find a place for your child.
Lord Deben
Does my noble friend agree that it is a very important part of keeping the best people in the Foreign Service that we provide this service for their young children, as without it we would not have the quality people whom we expect? It is about time that people stopped sniping at the Foreign Service on this issue.
Lord Howell of Guildford
I am grateful to my noble friend for that support. He is absolutely right but I shall correct him on one thing, if I may. It involves not only senior staff as 75 per cent of the children helped are of parents with quite junior salaries. The Foreign Office sends junior people to very difficult posts and they may have young children who need to be educated.
Lord Wright of Richmond
My Lords, I declare two interests. First, I was a beneficiary of these allowances for a large part of my career. Secondly, 19 years ago I gave evidence to the noble Lord, Lord Sheldon, and the Public Accounts Committee in support of these allowances, so I am somewhat biased. Does the Minister agree that the continuation of these allowances is essential as members of the Diplomatic Service are often posted abroad with very little notice and such allowances are necessary for the uninterrupted education of their children? Does he also agree that they are very much in line with those given by practically all international companies, and so are essential if recruitment and retention in the Diplomatic Service is to be preserved?
Lord Howell of Guildford
I agree with the noble Lord, who obviously speaks with enormous authority on this subject. I would just add, referring back to my Answer to the noble Lord, Lord Campbell-Savours, that we are looking at ways of bringing the cost of this operation down. However, the basic requirement is that these children are educated; we do not want only childless diplomats. Therefore, we have had to make the provision that the noble Lord has just described. I believe that it should continue and that it is essential for an effective diplomatic effort by this country.
Lord Harrison
Further to his first Answer, will the Minister say in simple pounds, shillings and pence what is the annual maximum tax-free contribution that can be made to the education at a secondary school of a child of a Foreign Office official? Secondly, will he rebut in their entirety articles in the Daily Mail and the Telegraph suggesting that this Government will abolish the continuity of education allowances which are so important to our Armed Forces and, indeed, the Foreign Office?
Lord Howell of Guildford
There is no suggestion, as I made clear, that these allowances will be discontinued for the Diplomatic Service. I cannot comment on other branches of the Crown service or other public services because that is another question for which a rather different set of arrangements apply. The figures for which the noble Lord asks are that the ceiling for junior boarders in the current year is £7,239 per term and £8,236 for senior boarders, which is a reduction of £100 since last September. The figures are considerably lower for those attending as day pupils.
Baroness Falkner of Margravine
Will my noble friend comment on whether, given the large sums involved and these rather austere financial times, there are any efforts to have negotiations with DfID and the Ministry of Defence for a collective purchase agreement at a limited number of schools so that the costs might be constrained in that way?
Lord Howell of Guildford
That is a very valuable thought. As far as Foreign and Commonwealth Office is concerned, the numbers are rather small. We are talking about a maximum of 2,000 children, of which only 500 are being educated in the United Kingdom. Given the circumstances of where these children go—whether to be near their grandparents or to where an available space is found—it is very difficult to concentrate on a single discount operation. This is slightly outside the question, but I believe that the Armed Forces are large enough to have a kind of discount arrangement, but we do not have the numbers or the weight to engineer that kind of system for the Foreign Office.
Lord Campbell-Savours
My Lords, if the cap were to be reduced from over £25,000 per annum to the £13,000 to £14,000 that I am suggesting, surely that would create the demand in the state boarding school sector that the Minister said in his first reply is missing?
Lord Howell of Guildford
My Lords, the difficulty that the noble Lord must appreciate is that although there are state boarding-school places, and perhaps there ought to more, they tend to be filled up very rapidly with children with real boarding needs from domestic households and families. Diplomats inevitably come along at the last minute, because postings sometimes have to be on an emergency basis, and they find that those places are filled. If the sums were reduced to the levels that the noble Lord is talking about, parents who are already on fairly modest salaries and are paying a contribution to meet the total requirements of the school where their children are being educated would simply not be able to afford it and the children would not be educated. We have to face it: if we want good diplomacy, we have to allow the children to be educated.
Deputy Chairmen of Committees
The Chairman of Committees
That Lord Paul be discharged from the panel of Members appointed to act as Deputy Chairmen of Committees for this Session.
Arrangement of Business
Baroness Anelay of St Johns
My Lords, at a convenient point after 4.30 pm, my noble friend Lady Neville-Jones will repeat a Statement entitled “Statement on Aviation Security Incident”. Grand Committee will be adjourned for the Statement because it is involved in Home Office matters and it will resume five minutes after the end of the Statement.
Terrorist Asset-Freezing etc. Bill [HL]
(14 years ago)
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Lord Lloyd of Berwick
“( ) For the avoidance of doubt, “person” in subsection (1)(a)(i) means–
(a) United Kingdom nationals as defined in section 33(2);(b) A body incorporated or constituted under the law of any part of the United Kingdom;(c) Persons or entities within the territorial jurisdiction of the United Kingdom.”
Lord Lloyd of Berwick
My Lords, the purpose of Amendment 1 is to clear up an ambiguity that emerged only during Report on the Bill. The amendment thus falls within the type of amendment that is normally allowed on Third Reading.
The question is whether Clause 2, which gives Treasury Ministers the power to designate a person and freeze his assets, has extra-territorial effect. On Report, the noble Lord, Lord Sassoon, argued that Clause 2 has such effect; indeed, that was a crucial step in his argument generally, as it was in the argument of the noble Lord, Lord Bach. The noble and learned Lord, Lord Wallace of Tankerness, made the same point in Committee when he told us that the Treasury had designated many individuals outside the jurisdiction in the past. I do not know whether they were British subjects, but the fact that something has happened does not necessarily mean that it was lawful. My argument was that Clause 2 does not have extra-territorial effect, so “person” in Clause 2 means a British subject or foreigners within the territorial jurisdiction. Whether I am right or wrong about that, I had hoped that we could have cleared up the point before the Bill went to the Commons. I had hoped the Treasury might table an amendment to say what its understanding of Clause 2 is. After a longish discussion on Friday morning, the Treasury failed to do that so I felt obliged to table this amendment late on Friday afternoon.
What does “person” in Clause 2 mean? The noble Lord argues that it includes foreigners outside the jurisdiction. Of course, Parliament can legislate to cover foreigners outside the jurisdiction; there is no question about that. However, the presumption is that Parliament does not intend to do so unless very clear words are used. That presumption has been around for a very long time, as I hope to show. It is stated in section 130 of Bennion’s Statutory Interpretation. The presumption has also been applied in so many cases that it is difficult to know which to pick, so let me choose one case—about the meaning of the word “debtor” in the Bankruptcy Act of 1869—that I think illustrates the point.
The case concerns two Chilean subjects who carried on business in Liverpool. They had assets here within the jurisdiction and they incurred debts within the jurisdiction but they were not resident here. An English creditor wished to start bankruptcy proceedings against the Chileans. It was argued that the general word “debtor” in the 1869 Act should be given a wide meaning so that it included debtors all over the world, just as it has been argued that “person” in Clause 2 covers persons everywhere. That argument was, however, decisively rejected by the Court of Appeal. It was held that “debtor” covered only British nationals or foreigners within the jurisdiction, which of course the Chileans were not. That case—I refer to ex parte Blain, decided in 1879, volume 12, Chancery Division, at page 522—has been followed on innumerable occasions ever since. There is no doubt that the presumption to which I refer exists and is applied as a matter of course.
What is the reason for the presumption? The answer was given by Lord Justice James in the same case when he said that it rests on the broad general principle of comity, the comity which should exist between independent states. Applying that to the facts here, I ask whether, if the French authorities were to designate a British subject resident in England and freeze his assets because they believed him to be a terrorist, we would regard that as a friendly act. Clearly, we would not. The same must also apply the other way round. If the noble Lord, Lord Sassoon, is right and Clause 2 has the extra-territorial effect that he suggests, the Treasury could designate a French subject, freeze his assets here in London and require him to come to London in order to appeal against the designation under Clause 26. If a Treasury Minister did that, how would it play in France? It may be argued that in the real world we would never dream of designating a French subject. That might be right—I hope it is—but it is the power to designate contained in Clause 2, if the noble Lord’s construction is right, that is repugnant to comity. There is no doubt that the presumption exists and it is based on a sound principle of international law.
Lord Pannick
My Lords, to achieve its purpose this Bill needs to confer powers in relation both to persons and to assets within the jurisdiction. I understood the Minister to assure the House on Report that the Bill, as currently drafted, covers both categories of case. I do not understand that to involve extra-territorial effect, although the descriptive term may be less significant than the substance. My concern is where we find in the Bill a clear statement to the effect that a person may be the subject of a designation order because he has assets in this country even though he otherwise has no connection with this country. I hope the Government will give further thought to that matter as the Bill proceeds through the other place.
Baroness Hamwee
My Lords, I cannot bring the same academic knowledge to this debate as the noble and learned Lord and the noble Lord, Lord Pannick, but I start with the question of what this Bill aims to achieve and what it is directed at. As I understand it, it deals with assets that are in the UK. For me, other questions flow from that. I agree with the noble Lord, Lord Pannick, that if there is a query over the scope of the Bill, it should be clarified. One would hope not to have an argument such as this repeated either in the other place or, indeed, in court. However, having been involved with this Bill and its predecessor, I do not have the anxieties that have been expressed this afternoon.
Lord Davies of Oldham
My Lords, on behalf of the Opposition, I too would not dream of seeking to put myself in the same category of argument as the noble and learned Lord and the noble Lord who have spoken on these issues. The Minister has an argument here that he will need to respond to effectively. We in the Opposition thought that most of these issues were covered effectively on Report by the Minister. Like the noble Baroness, Lady Hamwee, who has expressed her reservations about other aspects of this Bill in the past, we see no argument for this amendment at present. Therefore, if we were to move to a Division, the Opposition would support the Government if, as I anticipate, they present an accurate and effective case for the rebuttal of this amendment.
Lord Wallace of Tankerness
My Lords, I am grateful to the noble and learned Lord, Lord Lloyd of Berwick, for introducing this debate. I am also grateful to other noble Lords for their contributions. I am particularly grateful to the noble Lord, Lord Davies, and my noble friend Lady Hamwee for indicating that, subject to what I may say, they are generally satisfied with the position which the Government have adopted.
This amendment goes back to the debate we had on Report about the scope of Clause 2 and whether it should allow the Treasury to designate non-UK persons who are outside the United Kingdom. We are grateful to the noble and learned Lord for having written to my noble friend Lord Sassoon, following our debate on Report, to explain his concerns with the clause as drafted, and for having taken the opportunity to discuss the matter in some detail with officials before he tabled his amendment. I readily recognise that this amendment stems from the noble and learned Lord’s very strong belief, which he clearly expressed in moving his amendment, that it is the right and responsibility of each country to make laws that affect their nationals and those within their jurisdiction. Generally, we would not dissent from this principle but, if the House will permit me, I will explain why we cannot accept the noble and learned Lord’s amendment.
The noble and learned Lord referred to United Nations Security Council Resolution 1373, which requires that states shall,
“Prohibit their nationals or any persons … within their territories from making any funds, financial assets or economic resources or financial or other related services available, directly or indirectly, for the benefit of persons who commit or attempt to commit or facilitate or participate in the commission of terrorist acts”.
I think it is clear that a key aim of Resolution 1373 is to prevent acts of terrorism anywhere in the world. To that end, the definition of terrorism in this Bill is borrowed from the Terrorism Act 2000 and is used in other legislation. The definition makes it clear that terrorist activity anywhere in the world against persons or Governments falls within the scope of the legislation.
It is also clear that Resolution 1373 puts an obligation to prevent terrorist finance not only on the state where particular terrorists and terrorist groups reside but on the states from which the funding of those terrorists may originate. If, for example, a foreign terrorist holds assets within the United Kingdom or relies on funding coming from the United Kingdom, it is not only right but essential that the United Kingdom should be able to freeze those assets and prevent funds being transferred for terrorist purposes. That is what the language of United Nations Security Council Resolution 1373, which I have just quoted, clearly requires.
Relying purely on the country where the terrorist resides to take action has two fundamental drawbacks. First, that country cannot control funds or other assets that may be available for use overseas by the terrorist. This is why the Security Council resolution is worded as it is. Secondly, we know, as was acknowledged in our short debate, that terrorists are often based in countries where the authorities cannot or will not take action: for example, in failed states or in states where the authorities turn a blind eye to terrorism.
Clause 2 therefore provides the Treasury with a power to identify those whom we consider to be terrorists, based on activities that could take place anywhere in the world. The effect of the designation is twofold. First, any funds and economic resources within the United Kingdom of such persons are required to be frozen. It will be a criminal offence for anyone in the United Kingdom to deal with such assets without licence from the Treasury.
Secondly, persons in the United Kingdom will be prevented from providing any funds or economic resources to designated persons. I shall try to make it clear; the fact that some persons designated by the Treasury are ordinarily not in the United Kingdom does not give extra-territorial effect to the provisions. The effect of listing such a person is to freeze only their United Kingdom assets and prevent persons within the United Kingdom or United Kingdom citizens abroad assisting them. It has no further effect.
The noble and learned Lord, Lord Lloyd, asked what would happen if we were to designate a terrorist who was in France. He suggested that it might lead to a breakdown of international comity. That we are taking these measures in pursuance of a United Nations Security Council resolution indicates where the balance of international comity may lie; it is in United Nations member states taking the resolution and implementing it. We have not so far designated a French national. However, if we were to do so, I would certainly expect close co-operation between United Kingdom and French authorities in such a matter. The French might indicate to the United Kingdom that a French national was a terrorist of concern to them, whose assets they wanted to freeze. Working with French counterparts, the United Kingdom’s law enforcement agencies would identify whether that suspected terrorist held assets in the United Kingdom that the French Government then wished to be frozen. The French would provide United Kingdom authorities with the relevant evidence to support a UK designation, showing that there was at least a reasonable suspicion that person X was involved in terrorism and that a UK asset freeze was necessary for protecting the public from the risk of terrorism.
Finally, a Treasury Minister will consider the case and, if the legal test that is set out in this Bill is met, will designate person X, with the Treasury taking the necessary steps to inform the financial sector and to freeze person X’s assets within the United Kingdom. We accept that other countries may use domestic asset-freezing powers to designate United Kingdom nationals, but again we would expect this to be done in co-operation with United Kingdom authorities.
The power in Clause 2 relates to designated persons, including non-UK nationals; it is not a radical departure. Sanctions legislation is by its very nature often targeted at persons outwith the United Kingdom, but the prohibitions bite only on those in the United Kingdom or when United Kingdom nationals are elsewhere. An example is the prescription regime under the Terrorism Act 2000 and this legislation. There is a list of prescribed groups, almost all of which operate outside the United Kingdom, but the effect of proscription is to prohibit persons in the United Kingdom from membership of such groups or from providing material support to such groups. As with our Bill and sanctions legislation generally, the target is outwith the United Kingdom but the prohibitions apply solely in relation to persons in the United Kingdom or UK citizens operating abroad. That accords with the fundamental jurisdictional principle that the country should normally legislate to criminalise only acts committed within its territory or by its citizens abroad. Here the acts that are being criminalised are the provision of finance for the purposes of terrorism.
I understand the noble and learned Lord to be concerned about interfering with the sovereignty of other states. I hope that he can see from an indication of how we might act in the event of getting intelligence or representations from France that this measure would not offend another state but would promote co-operation. At the risk of repeating myself, the effect of a designation is to freeze only those assets of a designated foreign national that are within the United Kingdom, and we believe that that is the sensible way in which to proceed.
Clause 1(b) refers to persons listed in Council Regulation 2580/2001. This regulation is the means by which the European Union implements Resolution 1373; it does so by requiring member states to identify persons against whom the state has taken action, for example by way of a domestic asset freeze. Persons put forward and included on the list are then subject to financial sanctions throughout the EU. The reference to “persons” here cannot be confined to those within the UK and the same term cannot have different meanings in the same clause. The EU regime emphasises, I think, the essential territoriality of an individual member state’s actions, and the need for each member state to take action against assets in their country and to prevent those in the country from providing material support to terrorists.
The noble and learned Lord referred to Clause 33, which provides for cases in which UK nationals and UK incorporated bodies commit an offence outside the UK. This is not an unusual extension of the application of a statute, and I do not think—nor did he suggest—that it is in any way controversial. The purpose is straightforward—to prohibit UK nationals and companies from committing acts abroad that would be offences under the Bill if committed here.
The noble Lord, Lord Pannick, asked whether we should be able to designate overseas persons only if they hold assets in the United Kingdom. I have answered that. The asset-freezing regime not only freezes assets but prevents persons in the United Kingdom making payments to a designated person. That is why we need to be able to designate overseas persons, even if they do not hold funds in the UK, so that we can prevent people in the United Kingdom or UK persons overseas providing designated persons with funds.
In summary, we believe that Clause 2 does not limit the Treasury to designating only persons who are in the UK, and nor should it. While we have listened carefully to the noble Lord’s arguments today, on Report and in the exchanges that he has had with my noble friend, we are satisfied that the wording of Clause 2 as it stands is sufficiently clear in this regard. It does not make the provision extra-territorial. Clause 2 merely identifies those persons involved in terrorism whose assets persons in the UK cannot deal with and whom persons in the UK cannot assist by providing funds or economic resources.
For this reason, the Government cannot support the amendment, and I urge the noble and learned Lord to withdraw it.
Lord Lloyd of Berwick
My Lords, I am extremely grateful for that full response. The problem remains, I fear, the meaning of the word “person” in Clause 2. Somehow underlying the Minister’s reply is the idea that a Treasury Minister has a power to designate assets, but of course the power can designate only persons. The Minister dealt with that clearly in relation to the example of us suspecting a French terrorist; indeed, he gave the same answer as I did. The way that it is meant to work is as follows: if we suspect someone in France of being a terrorist, we approach the French authorities and ask them in the spirit of co-operation—as the Minister rightly says, that underlies all this—to look at this, and the French will agree. If they come back and say, “Yes, we think you’re right”, they will designate the terrorist in France. There is nothing wrong with that. That is what Regulation 1373 envisages. What it does not envisage is us, without consulting the French, simply designating a Frenchman resident in France. All the cases show that a general word such as “person” in this clause, whatever may have been the Government’s intention, does not mean—I respectfully suggest—what they think that it means.
I will look closely at what the Minister has said and, more important, I hope that others will look closely at what the Minister has said and what I have said. I hope that in due course they will reach what I believe to be the correct result, which would require only a small amendment to Clause 2. That having been said, I beg leave to withdraw the amendment.
Lord Sassoon
Lord Sassoon
My Lords, I hope that this will be a little briefer. In Committee, I tabled, and this House accepted, a minor amendment to remove any doubt that disclosure of information obtained under Part 1 of the Bill to the law officers of Jersey or Guernsey is permitted. I said at the time that the ability to share this information is essential to the maintenance of an effective asset-freezing regime. The Government have tabled a further amendment to Clause 23 to make it clear that the disclosure of information obtained under Part 1 of the Bill can also be to the law officer of the Isle of Man. This is a minor amendment, which is intended to ensure that Clause 23 achieves its original intention. I hope that your Lordships will support me in making this technical amendment to the Bill.
Amendment 2 agreed.
A privilege amendment was made.
Bill passed and sent to the Commons.
Comprehensive Spending Review
(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, in another place, my right honourable friend the Chancellor of the Exchequer set out the conclusions of the Government’s spending review. This represents a clear plan to tackle the nation’s deficit and demonstrates the Government’s commitment to investment in growth, in jobs and in the future of the British economy. It is a plan that has at all times been guided by three core principles: growth, fairness and reform. These are the right priorities for making some of the most difficult decisions that any modern Government have had to make. We should never forget the financial position that we inherited when we came to office. Our country was borrowing £1 for every £4 that we spent. We had the largest budget deficit in our peacetime history and interest payments on our debts will total £43 billion for this year, or £120 million a day.
We need to take control of our country’s finances and put them back on a sustainable path because, if we lose that control, our priorities will be determined no longer by the needs of our people but by the demands of our debtors. This loss of control would threaten higher interest rates, rising inflation and more cuts in the future. Indeed, failing to restore credibility to our finances is the most fundamental threat to the recovery, to our jobs and to the growth of our economy. Therefore, I dispute the claim, which some have made, that there is a choice between fiscal discipline and supporting growth. That could not be further from the truth. The choice is between a sound platform to support growth and a lack of control that would undermine it.
In June’s emergency Budget, the Government therefore set out the road map to recovery. The independent Office for Budget Responsibility looked at these plans and forecast the economy growing and unemployment falling in every year. It has also assessed that we are on course to eliminate the structural current deficit and see debt falling by the end of this Parliament, one year ahead of our mandate. The emergency Budget set out the Government’s credible plan to balance the books, while the spending review has shown how we will deliver on it and find £81 billion of savings by 2014-15.
The Chancellor’s Statement set out the levels of departmental budgets for the next four years. I will not repeat every decision here. Instead, I want to focus on our priorities: growth, fairness and reform. They have guided our every choice. We are a pro-growth Government who have focused our capital resources on key infrastructure projects in transport and green energy. We are a Government with fairness at our heart and we are a reforming Government who leave no stone unturned in the search for waste, while devolving power and funding away from Whitehall. I shall address each of these principles in turn, starting with growth.
Before I do, among all the contributions to today’s debate I will be particularly keen to hear what principles the party opposite would apply to spending reductions and what specific measures it would propose. I will also be listening with particular attention to the maiden speeches of the noble Baronesses, Lady Nye and Lady Healy of Primrose Hill, and to that of my noble friend Lord Allan of Hallam.
On growth, I have already said how our plan as a whole will deliver macroeconomic stability, which is crucial to restoring growth and giving businesses the confidence to invest. However, we are not standing on the wayside waiting for growth to happen. We have prioritised spending on the areas that will deliver the best returns to growth. Over the spending review, capital spending will be higher than that planned by the previous Government. With investment in transport capital across the country, more cash will be spent over the next four years than the past four. We will maintain, in cash terms, resource spending on science. A new green investment bank will lead the way to the economy of the future. Last week, we also published our Local Growth White Paper, which included a £1.4 billion regional growth fund, focusing our resources on the areas that need them most. These actions, and many others, form a major part of our strategy to secure and support sustainable economic growth.
Our second priority is fairness. Fairness means that, across the entire deficit reduction plan, those with the broadest shoulders will bear the greatest burden. It means that, even in tough times, we focus our resources on extending the ladder of opportunity. It means that we look carefully at whether we are doing right by those who receive welfare, as well as by those working families whose taxes pay for it. These are our aims and we have met them in full. We have published distributional analysis that clearly demonstrates that those on the highest incomes will contribute more towards the consolidation. This is not just in cash terms but also as a proportion of their income and consumption of public services combined.
Our progressive approach also places responsibility on the banks to make their fair contribution. We will continue pressing banks to do more and bring forward reforms that improve our financial system. That is why we have introduced the bank levy. Because banks need to follow the spirit, not just the letter, of the law, we have engaged in a concerted effort to get our banks to sign up to the code of practice on taxation by the end of November.
We must ensure that everyone pays their fair share. That has been the motive behind agreeing a new £900 million package for HMRC. This investment will fund a clampdown on criminal behaviour, bringing in £7 billion each year by the end of the Parliament. There is no place for tax cheats in our society and there is no place for people who cheat the benefit system.
That brings me to welfare, with a budget that accounts for nearly £1 in every £3 that we spend. It is certainly right that the Government should help those who need it most. However, in many cases, the current approach has trapped people in a system where it simply does not pay to work. These are people who have been dumped on benefits by the previous Administration and then left there, indefinitely, with no prospects for improving their position. That is not fair on them and it is certainly not fair on the taxpayer. The case for reform is clear; the real question is how we can strike the balance.
Our approach has been this: we are moving to a universal credit system over the course of two Parliaments to do away with the complexity of the current system, ensuring that work always pays. We will introduce a new work programme to provide personalised support to those who need the greatest help back into employment, with private and third sector providers paid on the basis of the additional benefit savings that they secure. We will fund significant increases to the child tax credit to ensure that this spending review has no measurable impact on child poverty over the next two years.
Through the welfare reforms in the spending review, we will find £7 billion net savings on top of those identified at the Budget. Some £2.5 billion comes from removing child benefit from households with a higher-rate taxpayer. This is the most progressive welfare measure in the spending review, but we are making other reforms, too. For instance, we will cap household welfare payments at the average earnings for working households. This has to be right. The welfare system should provide an effective safety net, but it should not pay some workless families far more than the amount that most working families earn. Our reforms mark a historic shift from state dependency to independence.
Throughout this review, we have been clear on one thing: our decisions need to be fair and, in being so, to improve the chances of the poorest and most disadvantaged in our society. Fairness is about opportunity—a chance for a better life, especially for the next generation. Therefore, we have chosen to invest in our children. We have introduced a new pledge for 15 hours’ childcare for disadvantaged two year-olds. Cash spending on Sure Start services will be maintained, with a renewed focus on life chances. Although it has meant a greater challenge for other departments, the schools budget will not just match but outstrip inflation in each of the next four years. When you factor in reduced pressures from pay restraint and back-office savings, that amounts to a very significant boost for the classroom. A new £2.5 billion pupil premium will target additional resources on those with the most to gain, because fairness runs through the very heart of this spending review.
I now move on to our third principle: reform. It manifests itself in three separate ways. The first is by bearing down on back-office costs. Each main government department has found at least 33 per cent in administrative savings. We have announced our plans to share services, cut down on waste and abolish unnecessary quangos.
Secondly, we will oversee a massive devolution of power from the centre. Apart from in schools and public health, we will end the ring-fencing of all government grants to local authorities from April next year. We will reduce the number of separate core revenue grants to councils from 90 to fewer than 10. Our new tax increment financing borrowing powers will allow councils to fund key projects and, last week, we announced that we are considering options to enable local authorities to retain locally raised business rates. This puts more power into the hands of local government—the people who know best what is needed in their own towns, villages and cities.
Finally, reform means recognising where the old ways of doing things were not working, so we will overhaul the failed system of social housing. The terms for existing tenants, and their rent levels, will remain unchanged, but some new tenants will be offered intermediate rents nearer to market levels. Together with capital investment, that will enable a more flexible and responsive model, enabling the Government to deliver up to 150,000 new and affordable homes over the next four years.
There will be reform, too, in the justice system. We have a prison population that has been steadily rising out of control. This is not right, let alone affordable. The guilty must be punished, but rehabilitation should not be ignored. In fact, it should be the priority.
I conclude by saying that the coalition Government faced the worst economic inheritance in modern history. The debts that we were bestowed threatened every job and every public service in the country. Our response has seen us make some tough choices on spending, but we have protected health, schools and investment in growth. We have cut welfare and waste, pulled the country back from the brink of bankruptcy and put it on a more stable footing. Ours is the right plan and it is a plan that will help to build the more dynamic, prosperous and sustainable economy that this country deserves.
Lord Myners
My Lords, I congratulate the Minister on mastering something which it took me a long time to understand as a Minister: when you have to convey unpalatable messages or to spin messages, it is best to keep your eyes firmly fixed on the notes in front of you and avoid any eye contact with those opposite through fear of not being able to maintain a straight face. I congratulate the Minister on maintaining a straight face throughout that speech.
I appreciate that we have more than 50 contributions today, so I shall endeavour to make my remarks as brief as possible. Like the Minister, I look forward to the maiden speeches from the noble Baronesses, Lady Nye and Lady Healy of Primrose Hill, and the noble Lord, Lord Allan of Hallam, who are all significant and important additions to your Lordships' House.
The structure of my response is very similar to the structure of the Minister’s speech, which is perhaps not altogether surprising as his speech was almost certainly written by the same people who were writing speeches with completely opposite views for me when I was a Minister, barely a few months ago. I recognise the structure.
We need to ask ourselves the following questions. Are the cuts necessary in scale and in terms of pace and are there alternatives which are worthy of consideration? Are the proposed cuts fair? Are they progressive? Do they fall on the broadest shoulders? I will not speak specifically to that issue, as I am sure that a number of my noble friends on these Benches will wish to do so. It is quite clear from the Institute for Fiscal Studies that the broadest shoulders are not bearing the greatest burden in terms of these cuts. To the extent that this programme can in any way be described as progressive—that is, limited to the top 2 per cent of all income earners—that is specifically as a consequence of the tax changes which the previous Government introduced in their Budget. This is not a fair programme; it is not a progressive programme; and I am sure that others will speak to that effect later in the debate.
Next, I ask myself whether the proposal is, to use parliamentary language, well put. Finally, are the issues of growth sufficiently addressed? The Chancellor presented cutting the fiscal deficit and the share of public spending as a proportion of gross domestic product as unavoidable. It is simply not true. There is a choice in terms of the target and the pace—whether the focus should be on expenditure or taxation and whether the expenditure cuts should fall most heavily on welfare. It is the Government’s decision to make cuts on this scale, at this speed and with the greatest burden bearing on the poorest, the most deprived and the most vulnerable in the community. The Minister nodded his head for most of my statement until he saw the consequences of what he was nodding in agreement with.
There was no risk of national bankruptcy. I can say that with confidence, having been a Treasury Minister in May. There was no talk in the Bank of England or the Treasury about national bankruptcy. It is a complete figment of the imagination—a convenient truth that is now peddled by the Government. Let us remind ourselves that the average maturity of funding for government debt is 14 years. Let us remind ourselves that the Government are borrowing at the lowest interest rates for 40 years. That was true before the general election, as it is now. Interestingly—I am sure the Minister would point to this as being a sign of confidence in government—the spread of gilt yields over US dollar yields has expanded. I am afraid the Minister is wrong. His hand movements went in the wrong direction. He will no doubt wish to check the facts and find that I am correct. The spread has widened, so this is not a positive response to the Government. It is a very clear statement from the markets that there is now a real risk of recession. That is the consequence of the policy that the Government are pursuing.
We went into the global financial crisis with the second lowest debt as a percentage of GDP in the G7 countries. It was 36.5 per cent of GDP in 2007-08, which was lower than 42.5 per cent when the party opposite was last in government in 1996. Borrowing as a percentage of GDP in 2007-08 was only 2.4 per cent. That was largely being used for capital investment—for schools, hospitals and infrastructure. Let us remember that the Opposition were committed to the public expenditure programme as late as 2008. Indeed, David Cameron endorsed it as a tough approach. However, we then had a global crisis. It was absolutely right in those circumstances, when we saw a significant reduction in demand in the economy, for the Government to step in to create that demand in a typical Keynesian response.
However, the deficit needs to be addressed. We not only made a clear commitment to address the deficit—to halve it as a percentage of GDP within four years—but had already made a significant start on it. Remember that the deficit was lower at the end of our period in government than was forecast 12 months earlier and economic growth was stronger than had been forecast 12 months previously. Again, the Government’s argument now that the crisis they confronted was far greater than they had imagined or envisaged simply is not borne out by the truth. The deficit as a percentage of GDP was lower than we were forecasting, as confirmed by the OBR. Economic growth was faster than had been forecast 12 months earlier. Of course the deficit needed to be addressed but we had a programme to do that. We had a programme to reduce the deficit from 11.1 per cent of GDP in 2009-10 to 5 per cent in 2013-14. The Government’s own Office for Budget Responsibility has endorsed the fact that the programme we outlined would have achieved that degree of reduction.
One of the fallacies of the Government’s thinking is that, somehow, borrowing is wrong. The family budget analogy—a good family always lives within its means—is used here. The Government miss the point entirely. Borrowing is sensible from a government perspective in a situation where there is endemic, pervasive overcapacity, as there clearly is at the moment; or when there is underutilisation of capacity and higher unemployment of people and capital than would otherwise be available. It is equally sensible to borrow for investment. The Government miss this point because their analysis of the economy is based solely on liabilities, not on assets.
It is absolutely sensible to pass on to future generations the benefits of capital investment—in education, hospitals, roads and infrastructure—and the costs of that investment in a fair and proportionate way. This Government, in fact, are slashing capital investment at precisely the time when we should be increasing capital investment because of the existence of surplus capacity. Now is the time to commission new building work because there is excess capacity in the building and construction industry. I should like the Minister, in his closing speech, to confirm that, under the Government’s own economic forecasts, the economy will still be producing at 10 per cent below theoretical productive capacity at the end of the CSR period. If that is, as I believe, correct, then I think it underlines the fact that the Government’s policies are pushing us back into a recession and not ensuring that the economy recovers in the way it should.
On the issue of fairness, the Minister has spoken about children. He says that the Government have chosen to invest in children and that investment in children will outstrip inflation. However, we know from public statements that there will actually be a significant reduction in investment and expenditure per pupil in the education system. We know the pupil premium is a sleight of hand—a deception played by one of the coalition partners on the other. We have seen a fairness programme that is going to put the greatest burden on young families, on women, on the disadvantaged, and on local authorities. The Minister talked in a straight-faced way about devolving responsibility from central government to local authorities, but the only thing they have devolved is the axe for cutting, because they have not had the guts to make the cuts themselves; they have passed most of these cuts on to local authorities. I fail, for the life of me, to see how that squares with the big society.
Thirdly, I ask whether the CSR was well put. There were presentational tricks. I will be the first to admit that the current Chancellor is not the first to use presentational tricks: the mixture of numbers and percentages, the combination in single statements, paragraphs and sentences of cash amounts and inflation-adjusted amounts. We had more on the widening of the A11 in Norwich than we had on the loss of half a million jobs in the public sector. I hope that the Office for Budget Responsibility will be asked to look at ministerial statements on the economy to ensure that, in the future, they meet certain minimum tests for veracity, balance, and completeness.
What was most striking about the Chancellor’s Statement—this is my fourth and final point—was that there was no compelling supply-side narrative and no macroeconomic analysis at all. There was no evidence to support the contention that crowding out was working, or that there was some form of Ricardian Equivalence. There was no acknowledgment at all of what was necessary for the private sector to grow. The absence of a growth narrative was the most significant deficiency from an economic perspective of the Chancellor’s Statement. What we do know is that the proposed cuts will reduce economic activity by something in the region of 0.5 per cent per annum through the CSR period. I believe it will be more when one takes into account the multiplier effect. I am confident that the OBR will shortly reduce growth assumptions significantly. That is because we are seeing more unemployment; consumption will be affected by the increase in VAT; demand for credit remains low; the export outlook does not look at all encouraging; and investment by business in the private sector is clearly going to be curtailed until a more certain economic future can be seen.
We need a supply-side agenda, which is simply not being produced by this Government. The Government are fixated on cutting, cutting, cutting and reducing the size of the state. They have no alternative other than keeping fingers crossed and assuming that if the state consumes less, the private sector will somehow more than make up for that—something that is clearly at odds with the fact that we currently have considerable excess capacity in the economy. Cutting back on investment at a time such as this is a tragedy.
The Government have created further uncertainty for the banking industry. They have slashed spending on business support programmes and have abolished the RDAs, replacing them with mere shadows. They are cutting investment programmes in innovation and applied research. Some of the consolations offered in terms of a green investment bank or a carbon-capture demonstration model are, frankly, trifling by comparison. Instead, the Government are increasingly relying on monetary policy. I strongly advise them to avoid compromising the independence of the Bank of England in this respect. I also urge the Bank of England to be very careful about introducing further quantitative easing until it can produce clear evidence that existing quantitative easing has worked. Certainly, the scale of existing quantitative easing exceeds anything which we envisaged was likely when it was first introduced by the Monetary Policy Committee as a possible response to low interest rates.
I have already said that Labour would have taken decisive action to reduce the deficit. What else would we have done? We should have introduced a much more activist programme to support industry and new investment by facilitating investment in innovation and, importantly, putting in place better infrastructure and making sure that private capital was increasingly available to support public needs in terms of infrastructure. I am pleased to read in the Sunday newspapers that the Minister has been travelling the world making the case to sovereign wealth funds for investment in infrastructure. If those reports are correct, that is sensible, although it is slightly at odds with the Chancellor feeling that paying interest on borrowings to non-domestic lenders is somehow unpatriotic, while giving ownership of infrastructure to non-nationals is acceptable. I should like to believe that the Government would invest in and create a new national investment bank. There are important opportunities here to use private capital from interested pension and insurance funds that would give fixed and predictable returns to support investment in infrastructure. However, to date, we have seen very little original thinking from the Government on that.
Finally, what I found shocking about the Chancellor’s presentation was the waving of Order Papers and the cheering at the end of his speech. This was deeply insulting to those who will have to bear the burden of this cutting programme. To see the Chief Secretary demoted to a position of being glass filler in chief—filling the Chancellor’s glass of water from time to time until he received a note telling him that it would perhaps be sensible if he shuffled up the Bench a little, so he was not as visible to the television cameras, and sat immediately behind the Chancellor—speaks volumes about the discomfort that those on the Liberal Benches must now be feeling. The Chief Secretary said he did not come into politics to cut government expenditure and public funding of needy services. That is what he has done; that is what the Government have done; and in doing that, they have completely failed to put forward a clear growth strategy that is fair and reasonable and which would ensure that the country delivers to its full potential.
Lord Newby
My Lords, no doubt the CSR makes me, like many other noble Lords, angry and frustrated—angry that the US and British banking systems landed us in a major financial and economic crisis; angry that the previous Government had been spending like there was no tomorrow, with big government deficits in every year since 2002; and angry and frustrated that in attempting to clear up the mess we have often been portrayed, as the noble Lord has just done, as latter-day scrooges who take a perverse delight in reducing public expenditure, when nothing could be further from the truth.
There is no doubt that the deficit had to be tackled decisively. We can argue whether the aim should be to eliminate it over the lifetime of this Parliament or over a slightly longer timescale. Labour argues that the timescale that we have adopted is a gamble. Perhaps it is, but Labour’s policy—to the extent that we can discern it—is simply a gamble of a different sort. The noble Lord today failed yet again to spell out how Labour would save even £1 of the tens of billions of pounds which it is committed to cut from public expenditure. Frankly, until it does, it has no credibility with me.
These arguments are, however, in my mind now secondary to the main challenges facing the British economy and the operations of the state when it comes to taxation and expenditure. There are two principal challenges which I believe we face and against which this CSR should be judged. First, almost every aspect of our taxation and expenditure systems is no longer fit for purpose. Secondly, we have not responded effectively to the fundamental change in the world economy that is now in full swing.
Take the way we do things. Almost wherever one looks, our public expenditure and regulatory systems have become so complex that they cannot deliver effectively the outcomes that they seek. We have a benefits system that makes the Schleswig-Holstein question look like child's play; we have a pensions system that is confusing and obscure; we have a tax system that is now the most complex in the world and which almost certainly no one—literally no one—fully understands; and we have a regulatory system that stifles initiative in almost every area of public life.
Because we have to cut public expenditure, we are being forced to look afresh at the way we do all these things. This is long overdue and can lead to positive outcomes. I shall give examples. The Building Schools for the Future programme is being cut, but not before another 600 new schools are built. It has been announced that these schools will have to be built at 40 per cent less cost than has been the case until now. This sounds an impossible aim, until you read the document produced by Balfour Beatty that explains how it thinks it can save 30 per cent on new-build schools, and a massive 60 per cent on non-structural refurbishment, simply by being more efficient in the process.
In social care, Sandwell healthcare, a social enterprise, was able literally to halve the costs of delivering services previously run directly by the local council, with no loss of pay or other conditions for the staff, by among other things being able to reduce the number of sick days per employee from 32 to one. The challenge now is to ensure that this kind of saving is identified and delivered across the whole range of public spending.
On benefits, the Government have embarked on fundamental reforms. I welcome the plans to introduce a universal benefit and the plans for a citizens' pension, as they are major simplifications of the system and will mean that many people who currently lose out—in the case of the citizens' pension, principally women who stayed at home to have children—will for the first time get the benefits they deserve.
The second challenge we face is how to rebuild the economy in circumstances where the main drivers for growth are the emerging economies and not simply, or even primarily, the US and Europe.
Analogies are often drawn between the current crisis and the 1930s. They are largely misconceived because they ignore the fact that large parts of the world economy are booming and are likely to continue to grow strongly, whatever happens in Europe and the US. Emerging markets now account for a third of the world economy and two-thirds of its growth, which helps to explain why the world economy is now larger than before the financial crisis. All the evidence shows that companies are planning for further cross-border growth. A recent study by BDO showed that 95 per cent of ambitious mid-cap companies are confident about international growth for the year ahead. This is a far cry from the 1930s.
The high levels of growth in the BRICs and the appetite for international expansion by companies offer the UK huge opportunities, but ones that under the previous Administration were simply not adequately exploited. This is not simply or even primarily a matter for government, but government has a crucial part to play. The new Government appear to recognise this potential and have taken some positive steps towards realising it. The early visit of the Prime Minister to India was a good start. However, there is much more to be done. For a start, we must stop making things more difficult for those wanting to trade with or invest in the UK.
Over recent weeks, we have exhaustively discussed the immigration cap, but the current policy, which among other things denies multinational companies with large-scale operations here the opportunity to bring in the highly skilled staff they need to expand their activities, is highly damaging and must change soon.
We must also create the conditions that help companies to grow. We need, for example, a 21st-century infrastructure. In this area, the transport infrastructure announcements are highly welcome, but they deal with only part of the need. The establishment of the green investment bank is also a welcome development, but it needs to attract significantly more capital if it is really to bring our infrastructure up to speed. This should be possible as pension funds, other fund managers and sovereign wealth funds are all looking for long-term, secure vehicles in which to invest. Like the noble Lord, Lord Myners, I was pleased to read of my noble friend’s success in discussions with sovereign wealth funds in this area.
We also need a more highly skilled workforce. Here the Government’s announcements on the science budget, on funding part-time higher education students on the same basis as their full-time equivalents and on expanding funding for apprenticeships are welcome developments. However, the new system for the bulk of university students needs to include incentives for those of modest backgrounds to attend all our universities if we are to make the best use of the talent which we as a country possess. We also need to do more to reduce the level of functional illiteracy among school leavers and the adult population as a whole.
Regional development is clearly going to be crucial if we are to get a more balanced overall economy. The Government have introduced the regional growth fund but, with less than half the funding of the RDAs and an apparently weak bias towards spending outside London and the south-east, it will struggle to make much of an impact. Indeed, it was rather depressing to see that the initial local enterprise partnerships announced last week covered nearly all the south-east, including some counties already doing extremely well economically, but not large parts of the north. It is hoped that those gaps will be filled, but it is crucial that the limited money available goes to the parts of the economy with the largest amount of spare capacity.
In the CSR, the Government have set out a clear programme for this Parliament. If they meet their stated aims of making the delivery of our public services more effective and efficient and of creating the conditions for businesses to grow, they will deserve to succeed.
Lord Bilimoria
My Lords, I have always believed that a wise person learns from other people’s mistakes, a sensible person learns from his previous mistakes, and a fool makes the same mistake over again. The question before us is: is the Government’s spending review wise, sensible or foolish?
As regards past mistakes, it is widely held that it was Franklin D Roosevelt’s failure to provide prolonged stimulus during the great depression, combined with fiscal tightening, that prolonged the slump and was responsible for the double dip during that period. On the other hand, the Canadian and Swedish examples of making severe cuts in the 1990s that led to their economic recovery are cited as examples of why a country in our position should take similar measures by having our own “bloodbath budget”. Well, we have had our “Axe Wednesday”.
However, the world was very different in the 1990s. Canada was able to make those cuts, first, because the rest of the world was emerging into a prolonged boom time—a sharp contrast to today—and, secondly, because Canada is a country with enormous natural resources whose exports have accounted for 45 per cent of GDP. Sweden had, 50 years ago, the same level of public sector expenditure as a percentage of GDP as the United States—at 30 per cent of GDP—but, by the 1990s, the figure was well over 60 per cent. However, when those countries began wielding their axe to public expenditure, they were surrounded by a benign and increasingly booming global economy. Furthermore, both countries had the flexibility to use fiscal and monetary measures to compensate for huge public spending cuts.
Just look at the world situation over the past four years. In 2006, the sub-prime crisis started to unfold. In 2007, there was the credit crunch. In 2008-09, there was the great recession. By 2010, we had the sovereign debt crisis. In the same year, we now have the potential global currency crisis, increasing economic protectionism and beggar-thy-neighbour policies around the world. That is a classic domino effect, with one thing leading to another. What is next?
Here in Britain, there is no question that the previous Government squandered away an economy in excellent shape that was handed to them on a silver platter in 1997. They used that period of prolonged growth and low interest rates to take public expenditure to well over 50 per cent of GDP, from the 40 per cent level that it had historically been. I am delighted to see that the comprehensive spending review plans to bring public expenditure as a percentage of GDP back to 40 per cent by 2014. I would appreciate hearing the Minister confirm that that is the Government’s target.
Today, we have the non-dom levy and the 50p high rate of tax, both of which are driving people away and deterring the best talent from coming into this country. On top of that, the current Government have introduced a madcap immigration cap. In addition, the forthcoming VAT increase will hit every man, woman and child in this country. Those things combined with interest rates of 0.5 per cent—how low can we go?—mean that as a country we have boxed ourselves into a corner, with no room for manoeuvre. We have high levels of unemployment, especially youth unemployment; our housing market has come to a standstill; the spectre of inflation looms; our people have low levels of confidence and high levels of uncertainty; and our banks are not lending. We have to prevent not just the danger that we bump along the bottom for the next few years but the risk that we become another Japan—in the doldrums for two decades.
Our only hope is to play to our strengths and to address our weaknesses. Our weaknesses include nearly £200 billion of welfare and pensions expenditure. I am delighted to see the measures in the CSR to deal with this head on. As much as we all appreciate and love the NHS, there are still tens of billions of pounds of efficiency savings to be made.
With 500,000 public sector jobs predicted to be lost over the coming years, are the Government doing enough to encourage the private sector to provide those jobs? Are they doing enough to promote growth in the economy today? I welcome the £1.5 billion fund and the £200 million enterprise fund to help businesses in this country, but by comparison with the United States, which has created a $30 billion loan fund along with $12 billion in tax breaks specifically for small business, we seem to be falling very far short of the mark. The proposed measures are even more piffling when compared to the hundreds of billions of pounds spent on bailing out the banks, given that it is the small and medium-sized enterprises that will lead the charge to recovery in this country.
Our strengths include our higher education sector, but we are cutting that by 40 per cent over the next four years to try to save £3 billion. Our higher education is the cornerstone of our competitiveness and is one of our biggest export earners through the foreign students that we attract. Surely such a cut is foolishness.
We have had a hastily rushed-through defence review when our brave troops are making the ultimate sacrifice in Afghanistan—a war that is almost 10 years old—and despite the uncertainties that the world throws our way all the time. We did not predict the Falklands war, but it happened. We did not predict 9/11, but it happened. We do not know what is going to happen next, so to skimp on our defence at this time is foolishness.
Our creative industries, our design capabilities and our tourism are strengths, yet we are planning cuts in those. That is foolishness indeed.
I am president of the UK India Business Council, which is funded by UK Trade & Investment, which in turn is funded by the Foreign and Commonwealth Office and the Department for Business, Innovation and Skills. Surely to cut funding that helps UK firms to go global is folly. The Indian economy is booming even in these times. The Goldman Sachs BRICs report predicts that China and India will become the world’s two largest economies by 2050, yet Gerard Lyons, who is the chief economist of Standard Chartered Bank, told us yesterday that Britain exported more to Ireland in 2009 than it did to Brazil, India, Russia, China and South Africa combined—countries that have a population of 3 billion. Instead of encouraging the spirit of global enterprise, we make cuts. “Penny wise and pound foolish” seems to be the mantra of the comprehensive spending review.
The amounts involved in those cuts to our areas of strength are tiny compared to the big-ticket items in our areas of weakness, but the effect of destroying our abilities and competitiveness is potentially catastrophic. We are shooting ourselves in the foot. Our Nobel Prize-winning economist Christopher Pissarides has said:
“Unemployment is high and job vacancies few. By taking the action that the chancellor outlined in his statement, this situation might well become worse”.
No one denies that cuts need to be made, but the timing, severity, pace and priorities of the cuts and their indiscriminate nature are a cause for worry not just here but in the United States and all over the world.
We are still in the eye of the storm and the global uncertainties continue to whirl around us. Our only chance of getting through depends on our strengths. I implore the Government not to hamper this country’s great and special strengths. Help us unleash our strengths and play to them. Then, and only then, will we get through this nightmare and come out stronger than ever.
The Lord Bishop of Leicester
My Lords, I must crave the indulgence of the House for speaking to your Lordships with laryngitis, but my presence is an earnest of the Church of England’s profound concern about the issues before us today.
There are aspects of the comprehensive spending review that we on these Benches would be happy to acknowledge and applaud, not least the commitment to protect overseas aid spending, the re-emphasis on the rehabilitation of prisoners and the proper commitment to prevent structural and personal debt running out of control. However, noble Lords will not be surprised to hear that, like most bishops, I am hearing a great deal of genuine anxiety and concern in my diocese among serious people—vice-chancellors, local authority chief executives, health managers and businesspeople—since the Chancellor sat down after delivering his spending review Statement. Local government chief executives express profound concern about the termination of the so-called specific grants and are deeply concerned about the £2 billion black hole in local authority support that was reported in last week’s MJ.
I cannot help coming to the conclusion that there is a gap between a London-centred debate about debt reduction and a different debate in the regions about the extremely painful consequences that are having to be managed by those not privy to the initial decisions. There is genuine fear among some of the most vulnerable people that their already difficult lives are to be made effectively impossible by the assault on benefits. As we all know, there is a growing sense of indignation, which I do not necessarily condone but which I certainly understand, that in the City of London and in the boardrooms of too many companies, it is business as usual with inflated salaries, enormous bonuses and apparent disregard for the Government's rhetoric that we are all in this together.
I am not an economist, but I am well aware that professional economists by no means agree that the Government's approach to the deficit is necessarily the right one. Where the discipline of economics is divided, we expect the Chancellor to be light on his feet and ready to change direction if the impact of his policies turns out to be dramatically different from what is predicted. The Treasury does not know, any more than I do, which group of economists is correct, but the well-being of millions of our fellow citizens depends on the Chancellor getting this right and having the courage to change direction if necessary.
I want to make one key point that is not dependent on economic expertise but is about the kind of society that we think that we are building. How on earth is the so-called big society vision of stable, mutually supportive communities to be enhanced by changes to housing benefit that will drive poorer people into what amount to townships in the undesirable areas of our towns and cities? That is the inexorable logic of capping housing benefit. More than that, how will limited tenure of social housing help us to build the big society? It is precisely the long-standing residents whose family commitments have begun to recede who are the linchpins that bind a neighbourhood together. The very people who will be the foundation of a bigger, more mutual and caring society are being told that they cannot take security of tenure for granted. The importance of stable populations in neighbourhoods and communities appears to count for nothing. I am led to suspect that any money saved by moving people out of their homes will have to be spent many times over on supporting and managing the problems that follow when formerly stable communities become home to transient populations of insecure tenants who have no incentive to act as though they belong to their neighbourhood. Why should they try to belong when successive governments’ housing policies have created, not a big society, but a very thin, rootless society among those who rely on social housing?
The reason why people rely on social housing is, basically, not fecklessness or inadequacy but simply because our mismanaged housing market has fallen out of step with our deeply unequal labour market. When hard work does not pay enough to pay for decent housing, we had better act to raise wages or create more houses to bring their price down. On both counts, successive governments have been too shy of acting. The present belief that cutting housing benefit will depress the market and reduce private sector rents might just work if there were more houses to meet the demand. As it is, all the risk is being borne by the vulnerable, not the comfortable.
Lord St John of Fawsley
My Lords, what the country now needs is not blame for the deficit—we all know who is responsible for that. What we want is hope for the future, which is the second of the theological virtues faith, hope and charity. Anybody listening to the Minister’s speech will note a very subtle but clear change in what he was saying. It was shot through with hope for the future, and also flexibility. Congratulations to him for doing so.
The Lord Bishop of Leicester
My Lords, it seems to me that hope for the future depends on ensuring that those who are most vulnerable, those who are most excluded and those who most depend on the state for any kind of security are made secure by these changes. Hope for the future depends on recognising the widespread damages to society and to social justice from ever-widening inequalities, which have been widely researched and established by many authorities. We do not create a fair society—let alone a big society—by placing some of our fellow citizens beyond the reach of social solidarity. I hope that such is not the intention of the Chancellor but I fear that it may be the effect of some aspects of the review. I hope that the indignation of many people in my diocese turns out to be uncalled for, but I fear that this may be just the beginning, for the cuts have not yet begun to bite deeply.
I trust that the Chancellor will prove quick to turn again if the harm caused by his policies becomes a price not worth paying for merely economic rather than fully social recovery. The Church of England remains committed to work with government and with others to respond to the vision of the big society, but I fear that the comprehensive spending review has made that vision much harder to realise and even more necessary.
Lord Lamont of Lerwick
My Lords, I welcome the comprehensive spending review. The noble Lord, Lord Myners, made a point of saying that there were choices open to the Government. Indeed there were. I particularly welcome the choice that they made to stick more or less to the ratio of 75 to 25 per cent in the balance between expenditure cuts and tax increases. I believe that the emphasis had to be on public expenditure cuts in order to correct at least part of the overspending of recent years.
Undoubtedly this was a bold set of announcements, for which praise is therefore due. Bold it may have been, but the idea that this was the biggest fiscal consolidation since the dissolution of the monasteries seems somewhat overdone. We are cutting spending by 7.4 points of GDP, which, as the noble Lord, Lord Bilimoria, said, compares with what Canada did in the early 1990s. Sweden, after its banking crisis in the early 1990s, reduced expenditure by nearly 15 per cent, as did Finland. Spain and the Netherlands at the same time reduced spending by much the same amount as the Government are reducing it today. The early 1990s were not at that time a benign environment internationally. Indeed, there had been other fiscal consolidations, such as that of my noble and learned friend Lord Howe in the early 1980s, of a similar magnitude. In this country, from 1993 onwards, we moved from a deficit of 7 per cent of GDP in five years to a surplus. All these fiscal consolidations were achieved without Armageddon arriving.
Of course there are risks, but there are risks also in not acting. The Government were for several reasons right to move more quickly than the previous Government to reduce the deficit. First, the sovereign debt crisis in Europe has altered the balance between the merits of delay and the merits of action. Secondly, as the Minister said, Britain has one of the largest structural deficits in the world. It is true, as the noble Lord, Lord Myners, said, that we compare quite well with other countries in terms of the stock of debt, but the size of our annual deficit means that we are adding considerably to the stock of debt each year. Indeed, the predictions have been that this would top off somewhere at 80 or 90 per cent of GDP. However, if we go on adding at a rate of 10 per cent—or, if it is modified, at a rate of 7 or 5 per cent—we shall increase it considerably, at great risk.
As the Minister said, debt interest is taking an increasing proportion of total public expenditure. After the CSR, there will be savings in debt interest payments, but debt interest is to go on rising during the whole of the expenditure period. With an uncorrected deficit, we would see more and more public expenditure silted up with interest payments. Ken Rogoff, the former chief economist at the IMF, has argued that the relationship between interest rates and debt is not a linear one. Interest rates can rise quite suddenly when a country hits its debt ceiling and he has demonstrated in his work time and again that, when a stock of debt reaches a certain point, it is a dampener on the growth of that economy. We have been running a deficit that is something like one and a half times the level of deficit run by Franklin D Roosevelt in the 1930s, which his own Treasury Secretary at the time confided to his diaries had not done much good or made much difference.
These cuts will not come into effect until next year and they will take four years in total to implement. How long do noble Lords opposite think we can take? What are their criteria for when we should act? One answer that is often given is that we should act when the economy is showing signs of recovery and that recovery is firmly established. It is not easy to say what “firmly established” means, but so far the economy has recovered remarkably quickly. Growth in the past three quarters has been 0.4 per cent, 1.2 per cent and 0.8 per cent, which surprised the markets in general. The ONS has said that the difference between the first and second quarters in underlying growth was much the same, implying that the economy is growing at an annualised rate of 3.2 per cent, which is above its long-term trend rate of growth of 2.35 per cent as found by the previous Government. I am the first to say that there are risks to this growth rate—it may well slow down—but the recovery is faster than that following the recessions of either the 1980s or the 1990s. We have recovered 40 per cent of the loss between the first quarter of 2008 and the third quarter of 2009.
An answer that we sometimes get to the question how we should judge when it is appropriate to tighten policy is that we should wait until the output gap is closed—that is, the difference between output as it is now and where it would have been had there been no recession and the economy had grown during that period at the long-term rate of growth. But how does anybody know what the output gap is? It is a concept that is extremely difficult to measure precisely. Also, it might take years to close the output gap, in which case we would go on adding to the structural deficit by 10 per cent or 5 per cent, or whatever the chosen rate was each year.
There is much concern, understandably—the noble Lord, Lord Myners, referred to this—about the loss of 490,000 jobs in the public sector. That is to be spread over four years but it also has to be seen in the context of a labour market of nearly 30 million people. That labour force increased by over 315,000 in the period between December/February and June/August. If the economy continues to grow—and of course there are risks and huge uncertainties in this—there is every prospect that this sort of redundancy in the public sector can be absorbed.
The noble Lord, Lord Myners, seemed to see the cuts ideologically as part of the desire for a smaller state. Indeed, there have been a lot of headlines about rolling back the state. However, they seem somewhat wide of the mark when one realises that public expenditure in money terms is going to go on rising every year to the end of the survey period and that, at the end of that period, spending in real terms will be where it was two years ago. Spending as a proportion of GDP is going to fall from 47 per cent back to 41 per cent, where it was for much of the 1980s and 1990s. With all due respect, that does not seem to be a radical restructuring of the state but rather a common-sense reversal of part of the overspending that we have seen in recent years.
The right reverend Prelate talked about fairness. There never will be consensus on fairness; fairness is in the eye of the beholder. Some noble Lords opposite think that the entire burden should be shouldered by the better-off, but any objective person will see that the Government have laboured long and hard to try to spread the misery and the pain around. Any cuts proposed in welfare would lead the Opposition to say that this was unfair. Perhaps they should remember what James Purnell said when he was Secretary of State for Work and Pensions, specifically about housing benefit, which was that he wanted to consult in order to see that
“people on benefits do not end up getting subsidies for rents that those who work could never afford.”
This has been a difficult package to assemble. I believe that it will gain acceptance by having been assembled by a coalition Government of two parties and that the exercise of doing it has strengthened the coalition. I welcome the CSR. After a decade of recklessness, the Chancellor of the Exchequer and the coalition have laid the foundations for a decade in which we could earn our prosperity in the future rather than borrowing it.
Lord Peston
My Lords, my contribution is based on three premises: this is the most reactionary economic statement of modern times; the proposals will do serious damage to our economy; and, to echo the remarks of my noble friend Lord Myners, there is no immediate crisis and the Government should have adopted a much more deliberative approach.
The first sentence of the spending review Statement by the Chancellor said:
“Today is the day when Britain steps back from the brink”.—[Official Report, Commons, 20/10/10; col. 949.]
There was no brink; there is no brink. Britain is not, and never was, on the verge of bankruptcy. There was no financial catastrophe. The Chancellor’s reference to financial catastrophe merely indicates something that I deeply fear—namely, that he has entered into fantasy land. As one sees from reading the whole Statement, he never leaves it. As a devoted watcher of the “The Wizard of Oz”, I deeply appreciate his frame of mind, but I thought that this was a serious matter of economics confronting the country and that fantasy is not what the Chancellor really does. I regard his document, despite the damage that it does, as intellectually frivolous.
My noble friend Lord Myners referred to the alleged burden on future generations. Are the Government suggesting that we should have fought the Second World War on a no-borrowing principle? We have all gained from the defeat of the Nazis. The period did not strike me as being terribly bad, although I was only a child. We paid taxes then to finance the national debt that resulted. If we are now to defeat terrorism, are the Government asking us to believe that, if necessary, we should not borrow to finance the resources that we need to do so? The Government are in fantasy land. As my noble friend pointed out, we donate so many good things to future generations that there is, as far as I know from my limited knowledge of economics, no reason not to place a bit of the burden on our children. They will thank us for what we gave them.
The noble Lord, Lord Lamont, referred to recent GDP figures. There have been three good quarters. However, it has been overwhelmingly established by all the economic research that I know that what happened in that period was determined during the previous two years. Not a single bit of the recovery that we observe is remotely attributable to this Government. I looked in vain for the Chancellor in his Statement to thank his predecessor for the legacy that had been left him. He did not even have the courtesy to admit that that was the foundation that was given to him.
The Chancellor devoted a whole hour to a speech that, apart from being reactionary, was one of the most uninteresting of all time. He referred to the IMF. The IMF and the European Central Bank are the two last repositories of completely outdated and erroneous monetarism. They, too, believe in the doctrine, “Private expenditure good, public expenditure bad”. The noble Lord, Lord Lamont, et al tell us that this is not ideological; I tell them that it is entirely ideological. It is all about the kind of society in which we would like to live. We cannot avoid that.
The Chancellor said in his Statement:
“The creation of an independent Office for Budget Responsibility has brought honesty back to official forecasts”.
Since the official forecasting was done by the economists in the Treasury, who I assure your Lordships are of the highest quality, his remark is totally defamatory. If he had made it outside the Commons Chamber, I wonder what would have been said. The idea that those economists did not give a Chancellor of our time or the Chancellor of this time their best and honest views is preposterous. The Chancellor continued:
“I can confirm to the House that the OBR and its new chair”—
I always use the word “chairman”—
“have audited all the annually managed expenditure savings in today’s statement”.—[Official Report, Commons, 20/10/10; col. 949.]
Is there any published documentation corresponding to that statement and, if so, where can I find it so that I can read it?
Lord Peston
No, it is not in there. That is not a document from the OBR; it is a document from the Government.
To what extent is the Chancellor talking to the head and other members of the OBR, who are meant to be independent? If they are meeting, were minutes taken? If so, could we have copies of them so that, for the sake of transparency, we know the nature of the argument that we are dealing with?
The Chancellor tells us that we are all in this together. I refer to the great economist Michal Kalecki, who in 1943—note the date—wrote a brilliant article in Political Quarterly. He said, apropos of exactly what the Chancellor has said:
“For here a moral principle of the highest importance is at stake. The fundamentals of capitalist ethics require that ‘you shall earn your bread in sweat’—unless you happen to have private means”.
I wonder whom Kalecki, if he were alive today, might have in mind. Of course, they are not laughing, because they know what this is really all about.
Lord Marlesford
I was brought up on the great Kalecki and my recollection of one of his fundamental theses was that the only rescue and hope for capitalism was armament and war. That has not been proved true.
Lord Peston
That is not true—that was not his view. What is interesting, if I may give a lecture on the history of economics, is that we can distinguish Kalecki from Keynes, although Kalecki made the great mistake of publishing in Polish and therefore was never fully appreciated. Keynes was attacked, particularly by the American right, for being left wing, but he really believed that capitalism could be saved and advocated his policy so that we could go back to capitalist free enterprise. Kalecki believed that the ideology of capitalists was such that they would prefer to destroy the system rather than to allow Governments to intervene to save it. I am glad that the noble Lord is aware of Kalecki; the sadness is that his name still rarely appears in any of the economic textbooks.
I refer again to the problem of what we should be doing. The noble Lord, Lord Sassoon, said that none of us was telling him what he ought to do. I shall not send him a bill when I do tell him. I am a Back-Bencher so I speak only for myself. The first thing that I would do to save money, after what one of our major newspapers called the fiasco of the defence review, is to redo that review and realise that our whole future on the defence side depends on conventional weapons. We should announce immediately that we have no intention of wasting any money on the renewal of Trident; our nuclear deterrent is not a deterrent, because no one can tell us whom it deters and, in any case, it is not independent. What this country needs is a much improved set of conventional armed forces. The Government should go back and think about that.
My second recommendation to the Government is to abolish immediately the raising of VAT at the beginning of next year. It is the last thing that the economy needs. I speak only for myself; I have no idea whether others are deeply committed to raising VAT. My view is that abolishing the increase is the stimulus that the economy needs.
Thirdly, the Prime Minister, instead of looking for headlines in his attack on the European Community by telling us that he is a Eurosceptic, should realise that the biggest waste of money in the whole of Europe is the common agricultural policy. If he had any backbone, he would seek a row with the Europeans to abolish that policy. That would save us enormously more money than the trivial sums that we are talking about.
Lord Oakeshott of Seagrove Bay
Well, my Lords, that was the noble Lord, Lord Peston, at his peppery professorial best. I welcome what he said about Trident. I hope he will be paying tribute to the Liberal Democrats in Government. We are not meant to brag about this too much but I am still going to mention it. By a feat of negotiation we have managed to get the renewal of Trident put off until after the next election, which, we hope, will at least give time for Labour to change its policy as well. So there is a really serious chance that we will not be committed to a replacement of Trident which the other two main parties were putting forward at the general election.
It is always interesting to hear from the noble Lord, Lord Lamont, with his experience. He certainly does know all about markets losing confidence in governments. I was particularly impressed by the wise words of the right reverend Prelate the Bishop of Leicester about the importance of maintaining stable communities in social housing. I am afraid the real problem about the housing benefit situation is the way the social housing stock was run down disgracefully under Thatcher, Blair and Brown. That is the real reason we are in this mess on housing today.
The Chancellor announced £81 billion of cuts in the CSR and the official estimate of the tax gap—the total of tax avoidance, evasion and fraud—is £42 billion. We must close the deficit, but to do that in a fair and sustainable way, we must repair Britain’s broken tax collection machine. Volunteering is all very well, but not when it comes to paying tax. Just like any business in the real world, we must get our revenues up as well as our costs down. I declare my interest as a pension fund investment manager for the past 34 years. It is one of life’s rather strange twists that I went from advising a Labour Minister, Roy Jenkins, to working for Warburgs in the City, and the noble Lord, Lord Sassoon, went from working for Warburgs to advising a Labour Minister, Gordon Brown, at the Treasury. Today he is a Conservative Minister and I am a Liberal Democrat Treasury spokesman. With all his top-level experience at the Treasury in the Brown years, the Minister will know where all the bodies are buried and be ideally placed to answer our questions and respond to our concerns in this House.
My right honourable friend Danny Alexander told Parliament last week and the Minister repeated today that there is no place for tax cheats in our society. How we deal with tax cheats will be a crucial test of fairness for us. We will never persuade the great majority of hard-working British taxpayers who pay their dues and cannot afford expensive accountants and solicitors that we are all in this together unless we make fair tax our watchwords. This is not just some airy-fairy academic issue. At the Arsenal on Saturday we were having a moan at half-time about our failure to score against West Ham, when the man behind me suddenly said:
“I liked your piece in the paper, you know. These non-doms get away with murder”.
We know a fair bit about dealing with non-doms in this House. I pay tribute again to the fantastic support I have had from noble Lords sitting on all sides of this House for our long and successful battle against delaying tactics and outright opposition from the Front Benches to make all of us here pay full British tax. The House showed itself at its independent and robust best last June when we passed our amendment to the Political Parties and Elections Bill to ban non-dom and non-resident donations. That is now law and just needs a touch on the statutory instrument button. What are we waiting for?
Did your Lordships know that you inherit non-dom status from your father? Just like an hereditary peerage, it passes down the male line, and like an hereditary peerage, you are born a non-dom and you stay one unless you disclaim it. Leading accountants advise me that between three and four million people living in this country, most of whom have lived here all their lives, are non-doms and could claim non-dom tax status for tax purposes if they wanted. Does the Minister agree with that figure, or what is the Government’s best estimate if he does not? Can he give us the latest figures for the numbers paying the £30,000 flat charge? What is the Treasury’s best estimate, in its detailed review of Liberal Democrat proposals on tax avoidance, of the amount of extra tax which will be raised by limiting non-dom tax status to seven years—the Treasury always initially works these things out— in the absence of behavioural change? The really big benefit of paying no British tax at all—on your income, capital gains or inheritance tax—on all the assets and earnings that you have offshore goes, of course, to the really rich. That is because a £30,000 a year poll tax payment—a non-dom poll tax, if you can call it that—is really just a fleabite for the fat cats.
Our coalition agreement says:
“We will make every effort to tackle tax avoidance, including detailed development of Liberal Democrat proposals”.
The Chief Secretary has made a good start in announcing a beef-up of the tax avoidance operation in HMRC. Yet if we can really close the tax gap, as it is suggested, by £7 billion a year in four years by investing £225 million a year in HMRC over the spending review period, why are we not investing far more? Anything like those rates—a 3,000 per cent annual return—would make Bernie Madoff blush, and if it is anything near that, we should be doing far more. If it is that easy to boost the tax take, what a condemnation that is, I am afraid to say, of Gordon Brown’s long years at the Treasury, when he tried to run every department but his own.
Very rich people are also past masters at cheating the rest of us on stamp duty. Anyone who knows their way around the property market will tell you that precious few luxury houses or flats worth more than, say, £5 million today ever feature on Land Registry records with stamp duty having been paid. There is an especially abusive scheme using a loophole in the law on Islamic finance to dodge stamp duty, which is sold to Jews, Christians and atheists with no questions asked. Rich tax cheats and their advisers know no shame. More resources for HMRC will help, but the way really to boost the tax take is to simplify the system and close the loopholes. Non-dom status is an open invitation to tax avoidance on a massive scale. That is why our policy on these Benches is to make non-doms come fully onshore after seven years. That gives plenty of time for visitors and people on short-term contracts, but then we say, “If you’re in our club, you pay the sub—full British tax, like all the rest of us”.
The Treasury is reviewing non-dom status as our coalition promised. I asked the Minister a question 10 days ago on the non-dom review which he did not answer, so he has kindly written to me as follows:
“This is a complicated policy area involving considerations of fairness as well as competitiveness. The Government is aware of the need for interested parties to be engaged on this issue and will make a more detailed announcement about the form and timing of the review, including any formal public consultation, at the appropriate time. I am sorry that I am not able to provide you with a more specific answer at this time”.
So am I. Who are the interested parties? Not just the non-dom bankers, we hope, who choose to be British when it suits them and foreigners when it does not. Those words are Vince Cable’s, by the way, not mine; he has not changed his mind. Let us act now to limit non-doms to a seven-year free ride and make Britain a country where the rich pay their fair share of tax.
Terrorism: Aviation Security
(14 years ago)
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The Minister of State, Home Office (Baroness Neville-Jones)
My Lords, with the leave of the House, I shall repeat a Statement made earlier in another place by my right honourable friend the Secretary of State for the Home department. The Statement is as follows.
“With permission, Mr Speaker, I would like to make a Statement on the recent airline bomb plot. The House will know that in the early hours of Friday morning, following information from intelligence sources, the police identified a suspect package on board a UPS courier aircraft which had landed at East Midlands Airport en route from Cologne to Chicago. Later during the morning, police explosives experts identified that the device contained explosive material. A similar device was located and identified in Dubai; it was being transported by FedEx to Chicago.
Since then, an intensive investigation has been taking place in this country and overseas. COBRA met on Friday to assess progress. I chaired a COBRA meeting on Saturday. The Prime Minister chaired a further COBRA meeting this morning. The House will appreciate that much of this investigation is sensitive and that the information I can give is necessarily limited. Disclosure of some details could prejudice the investigation, the prospects of bringing the perpetrators to justice, our national security and the security of our allies. But I want to give the House as full a picture as possible.
We know that both explosive devices originated in Yemen. We believe that they were made and dispatched by the organisation known as al-Qaeda in the Arabian Peninsula. This group, which is based in Yemen, was responsible for the attempted downing of an aircraft bound for Detroit on 25 December last year.
The devices were probably intended to detonate mid-air and to destroy the cargo aircraft on which they were being transported. Our own analysis of the device here—analysis which has to proceed with great care to preserve the evidential value of the recovered material—established by Saturday morning that it was viable; this means not only that it contained explosive material but that it could have detonated. Had the device detonated, we assess that it could have succeeded in bringing down the aircraft. Our forensic examination of the device continues. We are receiving valuable assistance from a wide range of partners. The analysis has some way to go.
At this stage, we have no information to suggest that another attack of a similar type by al-Qaeda in the Arabian Peninsula is imminent, but this organisation is very active. During this year, it has repeatedly attacked targets in Yemen. On 26 April and 6 October, it attacked and attempted to kill British diplomats based in San’a’. It continues to plan other attacks in the region, notably against Saudi Arabia.
We therefore work on the assumption that this organisation will wish to continue to find ways of also attacking targets further afield. We will continue to work with international partners to deal with this threat. We have for some years provided assistance to the Yemeni Government and will continue to do so. The Prime Minister has spoken to President Saleh to make clear our desire for a closer security relationship.
Following the Detroit incident, Ministers in the last Government took the decision to stop all direct passenger and cargo aircraft flying from Yemen to and through the UK. Over the weekend, we took the further step of stopping all unaccompanied air freight to this country from Yemen. This will include air freight from Yemen carried on both courier flights and hold-loaded in passenger aircraft. The small number of items in transit prior to this direction have been subject to rigorous investigation on arrival in the UK, and no further suspicious items have been discovered.
We are now taking further steps to maintain our security. I can confirm to the House that we will review all aspects of air freight security and work with international partners to make sure that our defences are as robust as possible. We will update the guidance given to airport security personnel, based on what we have learnt, to enable them to identify similar packages in future. From midnight tonight, we will extend the suspension of unaccompanied air freight to this country, not just from Yemen but also from Somalia. This decision has been made as a precautionary measure and it will be reviewed in the coming weeks. It is based on possible contact between al-Qaeda in Yemen and terrorist groups in Somalia, as well as concern about airport security in Mogadishu. From midnight tonight, we will suspend the carriage of toner cartridges larger than 500g in passengers’ hand baggage on flights departing from UK airports. Also from midnight tonight, we will prohibit the carriage of these items by air cargo into, via or from the UK unless they originate from a known consignor: a regular shipper with security arrangements approved by the Department for Transport.
We intend that these final two measures will be in place initially for one month. During that time, we will work closely with the aviation industry, screening equipment manufacturers and others, to devise a sustainable, proportionate, long-term security regime to address the threat. Department for Transport officials are already in technical discussions with the industry and my right honourable friend the Secretary of State for Transport will chair a high-level industry meeting later this week to discuss next steps.
These initiatives are in addition to those which we have set out in the Strategic Defence and Security Review. We are already committed to widening checks on visa applicants to this country. Following the Detroit incident, we are also committed to making changes to pre-departure checks to identify better the people who pose a terrorist threat and to prevent them flying to the UK. We are also committed to enhancing our e-borders programme which provides data on who is travelling to this country and is, therefore, an essential foundation for our counterterrorist and wider security work.
We have an increasingly active and important border co-operation programme with counterparts in the United States. The Detroit incident led to the introduction of further passenger scanning devices at key airports in the UK. COBRA will continue to meet throughout this week. The National Security Council will also consider this issue. We will continue to work closely with our partners overseas.
Finally, the House will wish to join me in expressing gratitude to the police and the security and intelligence agencies in this country for the work they are doing to understand the threat that we face and to deal with it so effectively”
My Lords, that concludes the Statement.
Lord Hunt of Kings Heath
My Lords, I thank the Minister for repeating the Statement made by her right honourable friend the Home Secretary in the other place and for the detailed information contained in it. The whole country has been shocked by the events of the past four days and by the discovery of two concealed and hard-to-detect explosive devices, one at East Midlands Airport and the other in Dubai, and by the very serious and challenging threat that such terrorist activity constitutes to public safety and our country’s security. There can be no complacency when it comes to preventing and dealing with terrorism.
The noble Baroness has said that the devices were probably intended to detonate in mid-air and that had they done so, they could have succeeded in bringing the aircraft down. Today, my right honourable friend the shadow Home Secretary, Mr Ed Balls, has commended the Home Secretary for the calm way in which she has led the response to these threats. I join him and the Minister in commending our police, intelligence and security services for the vital work that they have undertaken in the past few days, in close co-operation with our allies around the world, to save lives.
It is the job of the Opposition to ask questions, to probe statements and to hold the Government to account. We will do that but we shall also be mindful, at all times, of our wider responsibility to support necessary actions, to keep our citizens safe and to protect our national interests. In that spirit, I pose a number of questions to the Minister in three areas: first, the detailed events of the past few days; secondly, the implication of the events for airline security; and, thirdly, the implications for wider security policy.
On the first point, we all appreciate that where intelligence and international co-operation are involved, events move fast and things are always clearer in hindsight. At what point were the police, the Home Secretary and the Prime Minister first told about the potential threat? Were there delays in getting precise information to our security and police officers on the ground? Can the noble Baroness say why the device was not discovered by police officers during the first search? Would early information have made a material difference? What operational lessons will be learnt from dealing with such events in the future?
The second area concerns the fact that these two live explosive devices were intercepted only by an intelligence tip-off after they had already been carried on a number of different planes, including passenger planes, giving rise to serious questions about the security of our airspace. Some security experts have referred to cargo security as a potential blind spot. The noble Baroness will be aware of comments made by BALPA to that effect over the weekend. I understand that the noble Lord, Lord Carlile, drew attention to the potential risks of cargo transit in his annual reports in 2007 and 2008. As a result, significant actions were taken to improve intelligence and international security co-operation, and a tougher search method—explosives trace detection—was introduced for passenger flights following the Detroit attempted attack.
I appreciate that this is a complex problem to solve, that a review has already been established and that the Home Secretary has already acted to ban unaccompanied cargo packages from Yemen. The Minister has also set out, in the Statement, a series of measures that the Government have already taken. What conclusions does the Minister draw about the reliability of current checks from the fact that the device was not spotted on first check by police experts at East Midlands Airport? Will the review consider extending explosives trace detection to cargo flights? Will the scope of the review cover cargo being carried in passenger aircraft? Are there other immediate actions that we should take now to improve the security of cargo coming into, out of or transiting through the UK while the review is being undertaken?
The events of the past few days raise wider issues for our national security and counterterrorism strategy. It is clear that terrorists operating from Yemen constitute an increasing threat. Can the Minister assure the House that the Government are in urgent discussions with the Yemeni Government and our allies around the world with a view to interrupting terrorist activities at source? Given the wider evidence of a mounting threat, the judgments that underpin the Government’s current review of counterterrorism powers will be especially important. While we will reserve judgment until we see the outcome of the review, we have said that we will support the Home Secretary where we can and that consensus should be our shared goal.
I raise the issue of resources. Given that these explosive devices were intercepted through vital intelligence work, is the Minister confident that a 6 per cent real-terms cut in the single intelligence account over the next four years can be managed without compromising this vital work? Given that the device was discovered by specially trained police working closely with our security and border services, is she confident that a 10 per cent real-terms cut in counterterrorism police over the next four years, and a 50 per cent cut in capital available to the UK Border Agency, will not undermine our operational capability?
The Olympics, when the eyes of the world will be on this country, are now just two years away. With a planned 20 per cent real-terms cut, front-end loaded, in police budgets—a 6 per cent cut in the year before the Olympics and an 8 per cent cut in the year of the Olympics—can the Minister assure the House that, given the extra strain that police resources will face, this does not pose an unacceptable risk to fighting crime and to our national security? Finally, does the Minister agree that, in the light of the events of the past few days, the issue of resources should now be looked at again alongside the counterterrorism review?
Baroness Neville-Jones
My Lords, I am grateful to the noble Lord opposite for his willingness to support the Government in the next measures that will have to be taken in what the House will agree is a challenging task concerning the transport of freight around the world. I am sure the police and the security services are grateful for his joint commendation of them.
The noble Lord asked a number of detailed questions, and I will do my best to answer them. First, he asked when people were informed. I can say that the device was removed from the plane at 3.30 in the morning and work continued through the night. In the early morning, the information was fed to London, and Ministers began to be informed shortly after 8 o’clock. The Home Secretary was personally informed nearer lunchtime. The Prime Minister was also informed then, and at that stage they were given a significant analysis of the investigations that had taken place and the information and assessment that was then available.
The noble Lord asked about the police investigation at the airport. There are two aspects to this: the intelligence tip-off and the process of investigation of the device. He rightly remarked that these packages were looked at following an intelligence tip-off. I might say that any implication—I am not suggesting that the noble Lord was implying this—that this was somehow accidental and that we were very fortunate, as we undoubtedly were, is slightly beside the point. I think the House will agree that we pursue a multilayered approach in this, and that it is the combination of the physical measures that we take, the protective procedures that we put in place and the intelligence context that we maintain around the world that enables us to give the people of this country the security that they are entitled to receive. It is very fortunate that our security relationships worked on this occasion and that the tip-off proved extremely accurate.
The police investigation proceeded in stages. Of course, the police are extremely careful about the way in which they dismantle a device not only because it may be dangerous but because they need to retain the evidential information. It is fair to say that they did not discover the device immediately, but they were still proceeding with their investigation when information came from Dubai that it had found evidence of a device. Subsequent work done at East Midlands Airport unravelled the precise nature of the device, which was then explored in detail.
The noble Lord also asked about the precautions that may be taken for cargo security while the wider review, which I mentioned, is under way. Those regulations are pretty stringent; they require any cargo that does not come from a trusted, listed consigner known to the airport authorities and approved by the Department for Transport to undergo stringent security tests. Therefore, only those items whose origin is known have a relatively easy passage, but I can assure the House that these regulations will be enforced with the utmost stringency in the foreseeable period. Very clearly, we will need to look in great detail not only at the procedures that we ourselves enforce in this country, but at what happens to cargo coming towards the United Kingdom—obviously something on which we will need to consult widely. There obviously has to be international co-operation and, in co-operation with other countries, we might wish to lay down new standards.
The noble Lord also asked about the relationship between what this episode tells us and our wider counterterrorism policy. Clearly, this episode tells us that we face a threat not just to passengers but to cargo and freight, unaccompanied and accompanied. It is perfectly possible, after all, for these people to do what they were doing on the basis of accompanied freight. Therefore, the Government are not relaxed and will not confine their investigation or the measures that they take to unaccompanied freight. We will look at a number of measures that may be necessary, and the Transport Secretary’s consultation and investigation will be quite wide-ranging, because we clearly need a higher level of assurance about cargo transit and transport.
On the relationship between our wider counterterrorism policies and on the Security Service, which the noble Lord asked about, I can assure the House that, based on an assessment by the head of the Security Service, we will be able to maintain, on proposed funding, the same assurance about our coverage and knowledge of terrorist activity in this country and elsewhere that we have had previously. That also applies to the role of our police in counterterrorism where we are protecting the Olympics budget and where we have confirmation from the head of counterterrorism command that he is able to carry out his duties on the basis of the funding that he will get. There is no reason to suppose that the measures that the Government are taking will in any way detract from, inhibit or prevent this country taking care of the security of the population of the United Kingdom.
Lord Harris of Haringey
My Lords, I declare an interest as the Home Office appointee on the Metropolitan Police Authority, with responsibility for overseeing counterterrorism and security. I, too, am grateful to the Minister for the full account that she has given. With what degree of certainty does she feel that these devices would have been detected had they been in checked-in passenger baggage on a flight embarking in the United Kingdom? Given the variations in standards of airline security in different parts of the world, what degree of certainty does she have regarding incoming flights that such baggage would have been detected at airports elsewhere in the world? What will her answers mean in terms of current levels of aircraft security for passenger airlines in this country?
Baroness Neville-Jones
The noble Lord asks some pertinent and, I have to say, extremely difficult questions. My honest answer to his first question must be that we do not know the answer. This explosive is extremely difficult to detect. Technologies are known for detecting PETN and one consideration that we will have to take advice on is whether we should extend PETN testing to cargo going on board aircraft—most particularly passenger aircraft, but also other aircraft. We have to do this in a way that is consistent with assuring the public that they can travel safely, while not crippling the country’s economy and international commerce. Therefore, an international effort will be needed and we shall talk not only to other operators but to those who may be able to help us technologically. Part of the Transport Secretary’s review will consist of talking to the companies. Many of them are well advanced in increasing—and we will be increasing—the screening processes, including capabilities that are not necessarily at the moment distributed as a matter of course.
Baroness Hamwee
My Lords, in the wider context to which both Front Benches referred, can the Minister confirm that control orders are simply not relevant to this situation and that, had they been in place, they would not have prevented it? Would she also like to comment on the remarks made by Michael O’Leary of Ryanair, who talked today about “ludicrous” airport security? He said that,
“we have another … lurch by the securicrats into making travel even more uncomfortable and an even more tedious ordeal for the public”.
I say this not as a cheap shot—although one might say that, if anyone knows about that, he would—but because I think that these are serious points, which should be responded to.
Baroness Neville-Jones
My Lords, I do not think that we are discussing the control orders today. As for what Mr O’Leary of Ryanair said, he does perhaps have extraordinary timing. The view that the Government take is that airport security is extraordinarily important and we cannot let our guard down. That does not mean, of course, that there is never any room for improvement, for review or for looking at those things that could constitute an assurance of greater security. My right honourable friend the Transport Secretary said the other day that he intended to look at whether procedures could be improved and, in particular, whether we could proceed to some extent by way of audit rather than by laying the emphasis on the input side and insisting on lots of layers of security. However, we will wish to proceed extremely cautiously, in the light of events, in lowering or in any way interfering with the current security precautions, which I think give the travelling public a measure of assurance about the seriousness with which these issues are taken by the Government.
Lord Clinton-Davis
My Lords, I speak as the president of BALPA. The Minister spoke about widespread consultations. Has BALPA been included in this? If not, why not? Should not BALPA be included in the review? Is it not absurd that pilots, with all their expertise, should be subjected to stringent inspection before they board the aircraft? Finally, will pilots be consulted further on the relevant rules concerning cargo?
Baroness Neville-Jones
My Lords, I am absolutely certain that the Transport Secretary will consult everyone who has a contribution to make and BALPA would certainly not be excluded from that. The noble Lord mentions the degree of stringent control over the pilots when they board the aircraft. The House will agree that it is important that those controls are exerted. What we clearly need, however, is to raise controls in other areas.
Lord Elystan-Morgan
My Lords, the Minister will recollect that the Statement said that the device seized at East Midlands airport “could have detonated”. Am I placing too slavishly literal an interpretation on that to assume that that refers to a timing device of some nature or, indeed, that the device could have been detonated by remote control? If it could have been detonated by remote control, within what range could that have been achieved?
Baroness Neville-Jones
My Lords, we are not entirely at the stage when we can answer all those very detailed questions—and we may never be. The “could” rather than the “would” relates to a number of factors, including the precise power of the explosive material and the power of the detonator. Also relevant would be where these devices were located in the aircraft—had they been in the middle of the fuselage, they would have been less likely to cause an accident than if, say, they were near the outer skin of the aircraft. There are a number of imponderables. It is fair to say that those who put the devices on board—these were cargo routes, which can vary at the last minute—could not have known in practice where, if they were able to cause a detonation, it would have taken place. It would be hard for them to know exactly how accurate their ability to detonate was.
Lord Marlesford
My Lords, given that terrorists travel both in and out of countries, does my noble friend share my deep concern that at present only people travelling into the United Kingdom have their passports properly examined electronically? Is she aware—I assume that she must be, because any of us who travels must be—that immigration officers make very little attempt to look at the passports of those who are leaving the United Kingdom? Indeed, in April I travelled out of terminal 3 at Heathrow where there was no one at all at the immigration desk to look at one’s passport. When I asked why, I was told that there was nobody available. When is the electronics border system—the e-Borders system—which is meant to record both the departure and the arrival of passengers, going to be in full effect? As a result of what is now happening, will the Minister ensure that scrutiny of people departing from the United Kingdom is properly and electronically achieved?
Baroness Neville-Jones
My Lords, it certainly is the intention that in due course we will be able to record not only incoming travel but outgoing travel as well. The noble Lord is right to say that that is not happening at the moment. It is certainly not happening electronically. I cannot give him, I am afraid, a precise date, but I can say that we are doing our very best to speed up the introduction of e-Borders to enable us to have this information. That would not have necessarily borne directly on this episode, but of course everything helps in giving us greater information about those who are travelling. As I said at the beginning, it is relevant to know not only about cargo but about those who are potentially travelling in the same aircraft.
Lord Malloch-Brown
My Lords, is there not a tremendous disproportionality between the attention with which an individual passenger’s luggage is microscopically examined and what she described as the trusted consigner, whose large packages cannot be examined in anything like the same detail? A second contradiction relates to the long-term interest that we share in the foreign policy of this. We have had many tragic examples now and many budgerigars in the mineshaft, so to speak, of Yemen’s role—growing role, sadly—in international terrorist incidents and of the links between Yemen and Somalia, which she mentioned. I ask her to take to her colleagues the concern of all of us that we look at this not just as a border security issue but as a development issue, an intelligence-gathering issue and a diplomatic issue, which we must not shy away from just because of its difficulty.
Baroness Neville-Jones
My Lords, on the noble Lord’s first point, the House would agree that we clearly have to increase the capacity to understand and guarantee that cargo travelling around the world is not a danger to the aircraft that it is in or, indeed, to any people who happen to be on that aircraft. As regards what he said about Yemen, the Government are in full agreement. As your Lordships know, the UK is a leading member of the Friends of Yemen, a group that seeks to underpin and help the Government of Yemen to increase the welfare and economic situation of the people of Yemen. A number of countries are contributing to that and a programme is being formulated that should help to put the Yemeni Government on a much more coherent policy of economic development. Other things are happening, including bilateral actions by the UK. Obviously, one policy object is to increase the local Government’s capacity to combat terrorism and engage in effective counterterrorism. As I said, the Prime Minister assured the President of Yemen of our continued support. However, underpinning that is quite a lot of technical assistance to that Government to enable them to, in a sense, take charge of their own affairs, because ultimately the Yemenis have to create conditions in which terrorists do not flourish on their soil.
Lord Craig of Radley
My Lords, it has been suggested that it is likely that these bombs would have been exploded in the air. However, earlier it was suggested that they were intended for the recipient of the parcels in Chicago. Can the noble Baroness say any more about why there has been this change of view?
Baroness Neville-Jones
Given the destinations of the packages—one was destined for a synagogue in Chicago and the other for a shared Christian/Jewish centre—there was certainly speculation that these presents were intended for the recipients. I cannot give a precise answer and I would not want to suggest that there is total certainty about what we now assess to be the case—that these devices were intended to explode in mid-air—but the technical analysis tends to suggest that that was more likely to be the intention of the perpetrators.
Lord Brooke of Sutton Mandeville
My Lords, I have a question on a related issue but it is one that comes into the category of “It’s an ill wind”. Can my noble friend say what proportion of the companies engaged in making the security equipment, to which reference has been made, falls into the SME category? These companies have a significantly greater reputation for building employment in growing markets than do much larger companies.
Baroness Neville-Jones
I thank my noble friend for that question. I cannot give him a precise percentage figure, although the implication of his question is that it is considerable, and in that he is absolutely right. In this country we have some big companies that tend to be both defence and security contractors. Underneath and alongside them are myriad small companies, or SMEs, that are indeed the source of much of the innovation and inventive technology and some of the science. In this respect, I should also mention our universities, which, as I think is widely acknowledged, are going to contribute to and underpin the strength of this country in the defence and security technologies. This Government’s policy is greatly to encourage them to grow and to be real contributors to future security, as well as earning a good living for themselves and this country.
Lord Campbell-Savours
My Lords, are we not deeply indebted to foreign national intelligence officials who risk their lives in gathering intelligence to send to us in the democracies? Is a message going out from the British Parliament to thank the people and officials involved in those countries?
Baroness Neville-Jones
The noble Lord has put it extremely well and I endorse what he has just said. Certainly our intelligence effort cannot be just one-sided—it cannot just be a case of what our own people do, although that should also be the object of our commendation. However, the intelligence that we received on this occasion was undoubtedly extraordinarily valuable and was illustrative of the extraordinary importance of developing these relationships and keeping them in good repair. I entirely endorse what the noble Lord said.
Lord Stoddart of Swindon
My Lords, it was reported on the “World at One” that the Saudi authorities had not informed the Yemeni authorities that there was a suspect package that originated in the Yemen. Was that perhaps a mistake that should be remedied in the future?
Baroness Neville-Jones
My Lords, I am afraid that I do not have any knowledge of that and cannot confirm it. However, it is clear that international co-operation between the parties is extremely important and we are very grateful to those who have helped us on this occasion.
Comprehensive Spending Review
(14 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Kennedy of The Shaws
My Lords, I became aware during the Thatcher years that, if something that was untrue was repeated often enough, it acquired a life of its own and took on the clothes of truth. That political tactic meant, for example, the monstering of all trade unions rather than just of trade union excess, the demonising of single mothers and the trashing of the 1960s. That period of civil rights and of great progress for women, homosexuals and ethnic minorities was depicted as though it were the root of subsequent ills. Then there was the invention of hoards of feckless welfare scroungers, when in fact those who have fallen into the abyss of permanent unemployment have always been a minority. Very few people live well on benefits.
What politicians learned then was that, in the new world of soundbites and short concentration spans, the replaying of the same loop could create a sound track that stayed in people’s heads. Now the coalition’s mantra is, “We have to take terrible measures because of the horrifying financial mess we inherited from Labour”. Not a speech is made in this House without those on the government Benches claiming that they are faced with the “Labour mess”. We are back to the old saw that the only people who can run the economy are what Orwell called the “striped-trousered ones”.
The myth about the inherited state of the economy has to be nailed. We did not hear a peep out of David Cameron or George Osborne about Labour profligacy before the global crisis. Why were they not howling in protest if Labour was throwing money around with such recklessness, as they now suggest? Why did they promise to match Labour’s spending plans pound for pound right up to November 2008?
My sadness is, and was, that Labour was, in my view, far too Thatcherite in its economic policies. While it was absolutely vital that Labour worked well with business and the banks and encouraged entrepreneurship and wealth creation, Labour was far too sycophantic towards the City and the financial sector and too desirous of pleasing new friends. That was neither necessary nor, I think, in the national interest. New Labour was so anxious not to seem “old” that it even vacillated before taking Northern Rock into public ownership because it was fearful of excoriation by the Murdoch press and the Daily Mail.
If I may take us back, let us remember that the Conservatives did not want to take the dramatic action that the Prime Minister, Gordon Brown, took to save the banking sector and global capital. He led the world in that stance. Had that not been done, we would have seen interest rates rising through the roof, massive job losses, reclamation of houses on a grand scale and the economy going bust. For the coalition, in its new-found togetherness, to pretend that the vast majority of the deficit is due to Labour’s mishandling of the economy is a shameless spin on the truth—I say that as someone who has never been afraid to speak of new Labour’s flaws. For the Conservatives to pretend that their party would have been more regulatory or that they would have constrained banking excesses is absolutely risible. Enough former Conservative Ministers and friends of the Conservative Party who sat on the boards of banks failed to ask the questions that should have been asked to give us an idea of what the Conservative position was, and remains, on regulation.
Under Labour, the country entered the recession with low inflation, low interest rates, low unemployment and, as has already been said, the lowest net debt of any large G7 country. Our structural deficit in 2007 before the banking crisis was 3 per cent of gross domestic product. Two-thirds of that was borrowing for investment, as the House has heard. Therefore, our black hole was only 1 per cent of GDP. The reason that the structural deficit increased to 8 per cent is that we bailed out the banks and dealt with the subsequent downturn. Therefore, a lie is being told and repeated about the mess that was apparently left, when in fact that was where it came from. The larcenous greed of the bankers is now never mentioned. A vast part of the deficit is the consequence of the colossal borrowing that Labour had to undertake to prevent a crash.
Those on the Benches opposite insist that theirs is not an ideologically driven agenda, but I am afraid that the picture of Conservative Members of Parliament waving their Order Papers and cheering for the largest spending cuts in a generation made me feel sick and it defied that claim. The cuts will put 500,000 public sector workers out of jobs as well as thousands more in the private sector whose employment derives from public sector contracts. How will that help growth or regenerate the economy? The gamble that the private sector will create replacement jobs is a monumental one, and many businessmen who are Conservative supporters admit that it is a step into the unknown. This is voodoo economics. To reform welfare at the very time that the Government are taking a scythe to jobs and throwing people on the dole is a double whammy. Services upon which millions have come to rely will be scaled back or shut completely. Think what that will mean to disabled people and the elderly. The aim is a fundamental reconfiguration of the British state with the ultimate destination being a society that is less equal and less humane.
I ask noble Lords whether they have ever seen the hurt and despair in the eyes of those suddenly told that they are redundant or the fear that floods their soul at the prospect of being forced to be “idle”—a word that haunted my childhood—and possibly unable to find other work. Has proper thought been given to the destruction and demoralisation that joblessness wreaks? There are currently people up and down this country waiting in fear for news on whether the axe will fall on them. The impact of such experience on families is huge. The sheer audacity of the programme is such that it is peppered with claims that we will all feel the pain equally, but that is a sleight of hand. The poorest in our society will be hit hardest. They are being used as guinea pigs for this experiment, as the Institute for Fiscal Studies has made clear.
I accept, like everyone, that cuts are necessary, given the banking crisis and the consequent debt that it has placed on our shoulders. The Government talk of creating a country that is fair. If austerity is the need of the day, it must mean more than money. There has to be a corresponding set of ethics. However, I have heard insufficient about tackling tax havens used by the rich. Large companies continue to minimise their tax bills by basing their operations abroad. In the spirit of fairness, surely non-dom status should be abolished altogether. That might not mean a lot in money terms, but it would mean a lot in terms of fairness. America does not tolerate it, so why should we? Sir Philip Green, the Government adviser on waste, holds almost all his assets in the name of his wife, who is resident in Monaco and pays no UK tax. Why do we not renegotiate the tax treaty with Monaco? What about Mr Murdoch and News International? What is his and his company’s tax status? As for the contribution made by the banks, the coalition levy of £2.5 billion is not nearly enough. It should have been much closer to £5 billion or £6 billion. Then we might have been talking about fairness.
Memories are short, so let me remind people of the state of public services when Labour took office. Our schools and hospitals were in a disgraceful state of neglect, but Labour radically renovated our public services. Like many others, I am not content with all the ways in which that was done. The introduction of phoney markets has not been a productive way forward and has, indeed, been disastrous in some areas. Increased layers of management within public services have become a serious handicap to effective service delivery. Bureaucracy and red tape blight our health and social services. I also think that aspects of our welfare system are in need of reform, but any reform at this time must be carried out with very great care.
Communities where there is intergenerational unemployment need to have those cycles broken, so we should look with care at projects such as the Harlem Children’s Zone project, which is innovative in tackling the horrifying consequences of urban poverty. I remind noble Lords about the other economists, not just those who have been mentioned in this debate, who have reminded people of the folly of our Government’s policy. The Nobel Prize-winning economist Paul Krugman says that our Government’s boldness is going in completely the wrong direction. That view is reiterated by Robert Engle, Eric Maskin, Daniel Little McFadden and, indeed, Christopher Pissarides, all of whom say that the Government’s policy did not work for Herbert Hoover and will not work for us. Welfare benefits have more social value in a recession when jobs are scarce, and it is capital spending that creates jobs. That has not been accepted in the policies that are now being promulgated. Having worked in the law all my life and seen up close the effects of deprivation, job loss and poverty, I dread the consequences of such divisive and unjust policies. The social as well as the personal cost will undoubtedly be great.
I understand very well why the Liberal Democrats entered into the coalition after the election. It is perfectly right to want to be in power. We on these Benches want to be in power, too. What I cannot accept is that these are policies that decent Liberal Democrats can condone. I hope that, with noble Lords on these Benches, they will make their voices heard in opposing much of what is being advanced. I remind noble Lords about power. Martin Luther King said:
“Power without love is reckless and abusive”.
There is not enough love being shown just now.
Baroness Campbell of Surbiton
My Lords, I welcome this debate on the impact of the comprehensive spending review. For the benefit of new Members of the House, I should say that my noble friend Lady Wilkins will assist me when I run out of breath, as agreed by the usual channels.
There is so much to debate, so I have decided to speak to one area only: where disabled people are being asked to pay a price that far outstrips the potential saving to the Exchequer. I know that my noble friend Lord Low will later cover other new financial policies that will affect for good or bad the lives of disabled people. Let me be clear from the outset that I do not deny the need to address the deficit in part through cuts in public spending. It is in everyone’s interests, including society’s poorest and most disabled, that the books balance. However, to face reality, we must understand reality. Doing so requires us to recognise the full implications of cuts to people in their everyday lives. Only then can we make sensible choices, not just for the individuals who are directly affected but in the public interest.
That is why I have decided to concentrate today on what some may think is a small and insignificant cut to independent living services for disabled people but which has the most disproportionately devastating consequences for their lives. First, before I say what it is, I declare an interest as someone who receives public care and support services targeted by the CSR. I am also a trustee of the National Centre for Independent Living and chair of the Government’s Right to Control advisory group. In fact, I often give expert advice to the Minister on disability matters.
A Government proposal under the heading “Welfare Reform” is to,
“remove the mobility component of Disability Living Allowance for people in residential care, where such costs are”—
supposedly—
“already met from public funds, saving £135 million by 2014-15”.
To claim DLA, you must be under 65 at the time of the claim. The Government estimate that this cut will affect 58,000 disabled young people and working-age adults.
This proposal is seriously flawed for four reasons. First, it will have negative and costly effects on disabled people's health and well-being, their ability to develop social and community networks and their capacity to move on from residential care to be, as the Government want, independent, participating citizens, not dependants. Secondly, it conflicts with the Government's policies for personalisation, independent living and encouraging disabled people to gain or retain employment. Thirdly, it is based on a misunderstanding of the purpose of modern residential care and the potential of disabled people living there. Fourthly, it is incompatible with the UN Convention on the Rights of Persons with Disabilities.
I am sure we all agree that people living in care homes today are full citizens. We should therefore expect and want them to exercise their human and civil rights and to contribute to civil society like everyone else. Residential care homes are no longer, or should not be, places to hide people away in or to deny them opportunities the rest of us take for granted: independence, choice, access to public life and maybe, for those who can, eventually the possibility of work and independence. Residential care homes are not intended to be prisons. We all enjoy activities outside our homes. It should be no different for those living in residential care homes.
At this point, Baroness Wilkins continued the speech for Baroness Campbell of Surbiton.
Since the CSR announcement on this DLA saving, disability organisations have been receiving alarmed calls from people desperate at the prospect of losing this entitlement to hard-won independence. Last week RADAR heard from Patricia King. Her son and daughter-in-law are both disabled and live in residential care. Without the mobility component, they will no longer be able to visit the doctor, dentist, bank, church, library or shops, let alone relatives and friends. The proposed changes will remove over 45 per cent of her son's total allowances and over 69 per cent of his wife's. Neither the local authority nor the care home is in a financial position to offer free transport as part of its service to the residents. Patricia King, rightly in my view, calls this a cruel cut. She says:
“Some politicians are accepting a 5% cut, but would they accept a 45% or 69% cut to the money that buys them their personal freedoms?”.
The DWP argues that the measure would bring care-home residents into line with hospital in-patients, who lose access to the benefit on the same basis. However, the comparison is false. People of working age living in care homes are not in the same position as patients in hospital. In hospital, you are sick and therefore do not need an allowance to go out. Residential care is disabled people’s home and the base from which they go out to engage in education, training, work, leisure, travel, family and social contact. For many, it is a stepping stone to living independently in the community. Noble Lords may know that care-home residents must surrender almost all their income to support the cost of their care. They are allowed to retain only about £22 a week for personal expenses, so a basic mobility scooter—a mobility aid often bought with DLA finance—costing about £1,500 is out of reach without the DLA mobility component of £49.85 a week. Removing that component takes away over two-thirds of the care-home resident's income. It makes Britain's most severely disabled people the group who lose most from the CSR; it literally removes their mobility.
At this point, Baroness Campbell of Surbiton resumed.
Could this House consider, even for a moment, denying me my electric wheelchair or the noble Lord, Lord Ashley, his scooter? I am sure noble Lords would be outraged and would defend our right to contribute to the work of the House. I do not accept that the national finances are such that we should now deny people living in care homes the same rights. To be clear, the DLA mobility component helps residents to maintain contact with families and friends, access the big society as a volunteer, participate in leisure and fitness activities and be active members of their local community. Such activities promote physical and mental well-being. They help to sustain one's sense of identity and prevent the loss of confidence and the low morale often associated with depression. The proposed modest savings in DLA are likely to be outweighed by increased demands on the NHS and the costs linked to preventing severely disabled people joining society. It makes neither moral nor financial sense.
I am deeply concerned that this cut in spending was not subject to a disability, equality and human rights impact assessment, that it was not discussed with those of us who have had years of experience of advising Governments on disability matters, and that the Treasury failed to run it by its own expert department, the Office for Disability Issues, which found out about the policy on the morning of the CSR announcement. I hope the Minister will explain that to me.
The big fair society can be achieved only if support structures are there to enable disabled people to play their part. Otherwise, we will go back to a time when most disabled people were caught in a culture of dependency with no alternative but to beg for charity or to be jolly grateful for what they got. This fills me with dread. I am sorry that if this debate continues beyond 10 o’clock, I will not be here or, if I am, I will be bedding down on the Back Bench. I have to be home as my CSR-dependent support service dictates my moves. Please think again on this very small cut that illustrates where we are heading.
Lord Knight of Weymouth
My Lords, it is a great privilege to follow that speech by the noble Baroness, Lady Campbell, and I look forward to the Minister’s response. I, too, am looking forward to the maiden speeches from the noble Lord, Lord Allan, and my noble friends Lady Healy and Lady Nye.
I served on the National Economic Council for the last year of the previous Government, and I noted what the Chancellor said, which was repeated by the Minister in his opening remarks, that the Government,
“faced the worst economic inheritance in modern history”,
and that the country was on,
“the brink of bankruptcy”.—[Official Report, Commons, 20/10/10; col. 965.]
This was an inheritance of a growing economy, very low interest rates, low inflation and falling unemployment, but with a growing deficit. It is important to distinguish deficit from debt. Clearly, a rising year-on-year deficit adds to debt, but it is in the context of the overall debt-to-income ratio of the nation. As we heard from my noble friend Lord Myners, in 1997 that was 42.5 per cent. By fixing the roof while the sun shone, we got that down to 36.5 per cent in 2007-08 when the global financial crisis hit. At that point, we had the second lowest debt-to-income ratio in the G7 after Canada. That meant that when the crisis hit—when, as we heard from the noble Baroness, Lady Kennedy, the Conservative Opposition were pledging to match our spending and wanted more, not less, banking deregulation—we had the room to borrow to make up for the collapse in tax revenues that is at the root of the deficit.
With London as the global centre for finance we were especially hard hit and the deficit is very high as a result, but it is important to remember that tackling the deficit is as much or more about increasing revenue through growth than it is about cutting public spending. We borrowed to buy bank shares, assets that can be sold in time; we borrowed to invest in housing to keep people in construction employment and in their homes; we borrowed to invest in jobs and defeated all expectations of a year ago that youth unemployment would exceed 1 million and general unemployment would exceed 3 million. The fiscal stimulus worked and still left room to continue to borrow if further investment in growth were needed, alongside necessary reductions in spending.
There is also room for less haste, with fewer mistakes and fewer contradictions along the way. We do not have to have the fiasco of the implementation of the child benefit cuts that have been described by experts as “unworkable”. We could buy time to iron out contradictions. For example, today we hear that the noble Lord, Lord Young, is to address the Prime Minister’s concerns about,
“the shocking way in which small and medium sized firms are locked out of procurement opportunities by central and local government”.
How does this square with the work programme procurement, mentioned by the Minister in his opening remarks, which is an essential plank in the Government’s economic strategy and is effectively closed to any but the very largest contractors?
We also have time to get the phasing right. I support the principles behind the work programme. We were developing the pilots to test the risks behind this idea as we left office. How do the Government think that a programme that pays by results of sustained job outcomes will work if there are no jobs in the labour market? Should we not wait until private sector jobs growth is secure? PricewaterhouseCoopers estimates that the CSR job losses will be half a million each from the public sector and private sector. I make that a total of about 1 million. In government, we estimated that 1 million job losses cost £4 billion in benefit and lost tax revenues. Is that being properly accounted for?
Will those jobs come back? Vacancies are falling, claimant numbers are rising, and last month saw the first rise in youth unemployment for many months. Current employment growth is largely in part-time work and is not showing through in falling claimant figures. Many employers—very responsibly during recession—put staff on short time and will now grow output through increasing hours and productivity rather than through rushing to take on more staff.
Jobs growth comes through four possible sources. Will it be through consumer growth? Looking at the current retail figures, and with VAT going up in January, I suspect not. Will it be through housing-led growth? The housing market looks pretty flat, and government spending on housing is being cut by 60 per cent. Could it be through trade-led growth? Admittedly the IMF predicts that virtually every other major economy will grow faster than that of the United Kingdom, but the signs remain poor. Could it be through investment-led growth?
I welcome the Prime Minister’s late conversion in his speech last Monday to the Confederation of British Industry, but I have to say to him, “too little too late”. If he was serious he would not have cancelled the regional development funds, Sheffield Forgemasters, Building Schools for the Future, or support for the creative industries. He needs his version of last year’s excellent New Industry, New Jobs strategy which my noble friend Lord Mandelson introduced. Nor would he be cutting the entitlement to free training for first level 2 qualifications for adults over 25 or charging fees to those over 25 wanting A-level equivalents. He would not be slashing the educational maintenance allowance, which has done so much to persuade those from poorer backgrounds to carry on learning. Skills and long-term growth do go together.
These training cuts are also the tip of the iceberg of unfairness in this spending review. As we have heard, the Institute for Fiscal Studies has been clear that families are the biggest losers, and the poorest are hit hardest. For example, the VAT increase means that compared with the richest 10 per cent, the poorest 10 per cent lose double the proportion of their income.
It has been said by the Minister and the noble Lord, Lord Lamont, that we are in effect opposing for our own sake and not offering anything in return, but alongside our focus on jobs and growth we agree with continuing the migration off incapacity benefit that we started, we support aspects of the reform of the disability living allowance—although I have listened carefully to the noble Baroness, Lady Campbell, and I hope the Ministers have too—and the principles of the work programme build on what we did in government. There is room to make reforms of the welfare system, but we oppose the changes that will make it harder to get back into work, that are unfair and that undermine the basis of our welfare state. The real-terms cut to working tax credits, especially the childcare element, will reduce the incentives to work and make those in low-paid employment significantly worse off.
And what of those who now lose their jobs? As the labour market continues to be difficult, they will get a cut of 10 per cent in housing benefit after 12 months on jobseeker’s allowance, regardless of how hard they are working to get back into employment. They might also have a large family in an inner city and find themselves having to move because of the housing benefit cap. They might be unable to work because of sickness and have paid national insurance through their working lives, find themselves still sick 12 months later, on the tougher work capability assessment, and then lose entitlement to contributory employment support allowance and get no money until the family falls within the means test. Under no version of fairness could the Minister pretend any longer that this CSR is fair.
That takes me to my final point. In their haste, the Government have pulled the rug from under the basics of the welfare state—the universal principle and the contributory principle. No more the idea that everyone pays in and everyone gets out: that we are taxed as individuals and assessed for benefits as households. The changes to child benefit and employment support allowance need careful debate and consideration, not the unseemly haste, the high risk or the shambolic delivery plans that are unfolding as this spending review unravels.
Lord Haskel
My Lords, I am not going to speak about the economics of the CSR. My noble friend Lord Myners did that with devastating logic. My concern is about the process. Can the Government and the local authorities carry it through? It is easy to put numbers on a spreadsheet; it is a lot more difficult actually to deliver the proposed savings, as the Government, with the housing benefit and child benefit problems beginning to become apparent, are beginning to find out. Is this project a sound platform, as the Minister put it, or is it fantasy land, as my noble friend Lord Peston put it?
I start with Sir Philip Green’s report. I feel qualified to do this because for 30 years I was in the textile business and on the receiving end of exactly the sort of thing that Sir Philip proposes. Unfortunately, he told the Government only half the story. After you get the hard talk, most firms will then carefully send someone round to ensure that the goods or the services that have been ordered will be delivered on time and satisfactory in quality and that there will be no problems. They know that the problems of the suppliers become the customers’ problems, only magnified. Is Whitehall set up to be the kind of enlightened customer who is needed to do that? Is it more Toyota and less Topshop?
Writing in the Financial Times on 20 October, my noble friend Lord Adonis has his doubts. He says that, based on his experience as a Minister over many years, the intensive Whitehall support, as he calls it, is just not there. Last week, when debating government contracts with consultants, we were reminded that the National Audit Office said that the Government lack the information, skills and strategies to manage them.
What are the Government going to do to make sure that the budgeted savings are actually delivered? With this lack of time and skills, the Government are right on one thing; cut a service entirely rather than trim it and do it badly—do it properly or not at all. However, they are seeking to economise by encouraging the outsourcing of some of the services on the principle that the private sector does it better and cheaper than the public sector. This is sheer dogma, as my noble friend Lord Peston explained. What has produced the improvement is not privatisation but competition, and where the public sector has had to compete with the private sector, the public sector has done pretty well. We need look no further than the National Health Service. Where some NHS operations have been contracted out to the private sector, the private sector has had to be paid between 30 and 50 per cent above the tariff of the NHS hospitals. The chief economist of the King’s Fund also pointed out that the private sector takes the less complicated cases.
On Welfare to Work, independent reports state that there is no hard evidence that the independent sector does better than Jobcentre Plus. Indeed, when Pathways to Work was rolled out for people on incapacity benefit in 2008-09, the private sector providers performed worse than Jobcentre Plus, and private sector prisons are certainly not consistently at the top of the performance tables.
Instead of sacking civil servants and contracting out services or closing them, why have not the Government allowed them to compete with the private sector? If we are all in it together, surely they deserve a chance too; or is it again too much rush, too little thought, all in the name of no alternative?
The experience of the London Borough of Barnet proves my point. It had its own mini-CSR some time ago, and last week the council leader said that the savings for this year will be less than half those projected in its budget precisely because of the problems that I have outlined. Surely there is a red light flashing there. However, a decision has been made; people will be sacked and it is up to the private sector to employ them. Let us consider how realistic that hope is. I know that the Government have the support of many business leaders in this policy, but you will notice that they are careful to give their support in their private capacity. This is because when it comes to business, things are different. Again you get only half the story. My noble friend Lord Knight pointed out that, yes, they may be creating new jobs, but old jobs are being destroyed at a faster rate because of the continuous search for innovation and increased productivity. This applies to every sector. A typical British manufacturing worker today produces four and a half times as much as their equivalent did in 1980. That is why there are far fewer jobs in manufacturing even thought manufacturing output is about 70 per cent higher than it was then. This applies throughout business and industry.
The Government tell us that 176,000 vacancies are known to jobcentres, implying that these are jobs for people on the unemployment register. Last week, the noble Lord, Lord Sassoon, told us that 300,000 jobs were created in the second quarter, and the noble Lord, Lord Lamont, repeated it. Again we get only half the story. What we are not told is how many jobs ceased to exist and how many jobs were taken up by the 40,000 or 50,000 people a week who are in employment but change jobs. It is easy to cherry pick the labour market figures, but it is very difficult to give a true figure.
Like other noble Lords I ask where these extra jobs are going to come from. I welcome the plans to invest more in our infrastructure; I welcome the plans to develop Britain’s offshore wind power industry. Certainly these should create new jobs but, like the noble Lord, Lord Bilimoria, I ask whether this is enough. I welcome the new innovation centres—a Labour innovation, I might add—but do not expect quick results; it will take three or four years before they show results. The Technology Strategy Board and the knowledge transfer networks have been doing this kind of work for some years and, yes, there are several projects in the pipeline. I declare an interest as the honorary chairman of perhaps the largest knowledge transfer network. However, this is a pretty thin supply-side narrative, as my noble friend Lord Myners put it. Growth in the economy does not necessarily mean more jobs; it may mean more output, but the two do not necessarily go together.
Where is the money for these new jobs going to come from? Big business has money but is looking to cut its costs by destroying jobs while most new jobs are created by small and medium-sized enterprises—the very sector that is being starved of investment capital. Like the right reverend Prelate the Bishop of Leicester, I, too, think that there is something wrong when banks are making a fortune trading the very debt for which the rest of us are making sacrifices. Is it because quantitative easing does not get beyond the banks? Banks do not create jobs—innovation and demand do. Perhaps the quantitative easing should go straight to business and industry.
I am concerned about the Government’s ability to manage their strategy and budget. Will the promised savings be delivered? Will the private sector be able to absorb the jobless from the public sector and still remain competitive? I am concerned about where all this is leading: about the direction of travel. The Minister portrays the CSR in economic, fairness and reorganisational terms; others see it differently. I am a bit of an old leftie and I see it in terms of the Government failing in their duty to protect the public good from private interests, an issue to which several noble Lords have referred. Whatever our perspective, it is testing the limits of our tolerance. The CSR should be given more time and approached with a lot more caution and humility.
Lord Tugendhat
My Lords, like other noble Lords, I look forward to hearing the maiden speakers who are yet to come in the debate. I hope that they will not be put off by the length of the list and that they will contribute not only on this occasion but on many others when it is to be hoped that the speakers list will not be so long. It is also a great pleasure for me to follow my noble kinsman, the noble Lord, Lord Haskel. It is the first time I have had the opportunity to say that in this House and I am pleased to have been placed at this position in the pecking order. However, we will not be approaching the problems in hand from quite the same vantage point.
There can rarely have been an occasion when an incoming Government have moved so quickly and decisively to grapple with the country’s economic problems. They were right to do so: not because we were in the position of Greece or Ireland—we were not—but because the situation was running out of control and, after the denials and prevarications of the previous Government, any dawdling or delay could have provoked a crisis. In saying that, I am not referring to the noble Lord, Lord Myners, or even to the previous Chancellor of the Exchequer, Alistair Darling. I am of course referring to the previous Prime Minister. It was he who set the tone of his Government, and his denial of the nature of the problems facing the country meant that the incoming Government had to move quickly and decisively.
My noble friend Lord Lamont was right to draw attention to the deepening of the sovereign debt crisis in the eurozone. At the moment it is dormant, but it has certainly not gone away and no doubt we will have to deal with it again during the coming months. So this was a time for boldness and the Government have shown that. As a result, they have got themselves ahead of the markets. They do not have to worry about international confidence, their credit rating, or funding the deficit. This is a much better position to be in than not having done enough and being subject to speculation that they were going to have to come back and do more. There are, of course, as any army that advances very rapidly knows, dangers in getting ahead of the game. The question now is whether, in their determination to eliminate the structural deficit so quickly, they are putting growth and jobs at risk. By placing so much emphasis on this particular economic measure and fiscal consolidation as the means to achieve it, there is the question of whether it will stifle economic growth. In my opinion, there is such a danger. Faced with the protracted pain set out in the Chancellor’s programme, will companies now cut back on investment and hiring?
Banks, as we well know, are under attack for the low level of their corporate lending. But banks have not gone on strike. They are not lending because they do not want to lend. The reason they are not lending is that the value and volume of viable applications reaching them are not as high as we would like them to be. That is the problem. Consumers are also being affected. We are told that half a million public sector jobs will go. Many times that number of people will be fearing for their futures and cutting back on their household spending. That will be true not just in the public sector but also in those sections of the private sector that will be hit by the cutback in the public sector. The Governor of the Bank of England called recently in his speech in the Black Country for half a million jobs to be created in our export industries. How good that would be. I hope they are, but it is a big ask when times are so hard in so many of our principal export markets.
So, having got ahead of the game, established their credentials, ensured that their credit rating is secure and that the funding will be possible, I hope that the Government, by acting quickly and decisively, will take advantage of the room for manoeuvre that they have created. Room for manoeuvre is a precious commodity in economic policy-making and the Government now possess it. I believe that they should not now regard an arbitrary target of deficit reduction by means of fiscal consolidation as the be-all and end-all of their economic policy. Rather, they should be willing to calibrate that programme in accordance with the needs of the real economy, by which I mean growth and employment. When the record of this Government comes to be judged, it will be on the basis of those criteria. The debt reduction programme should contribute to that and not dominate their overall economic policy. It is through economic growth and high employment that tax revenue is generated and that benefits are held in check, and that can make a considerable contribution to the reduction of the deficit. This aspect of policy now needs to be given more emphasis. The speeches which the Prime Minister gave last week and the initiatives which he took show that he appreciates that. I believe that the Government have put themselves in a strong position and they deserve credit for that. They have room for manoeuvre and I hope they will show the pragmatism and flexibility that the economic situation will require.
Baroness Hollis of Heigham
My Lords, the Minister has insisted today that the CSR cuts are fair and that they support the DWP’s 21st Century Welfare paper for a universal credit to bring people back into the labour market, mainly through making work pay. Really?
On fairness, the Budget cuts and the CSR, as the IFS and some of my noble friends have said, have hit the poor more than all but the wealthiest 2 per cent. But there are other forms of redistribution—horizontal, if you like. This hurts women more than men. The analysis of Yvette Cooper shows that three-quarters of the Budget cuts and two-thirds of the CSR cuts fall on women, as well as the fact that 40 per cent of women work in the public sector. So they are hit through their wage, their job, their tax, their benefits, and public services. It also takes from children rather than the childless. The Government say they want to end child poverty by 2020. The JR Foundation believes that there will be 3 million more children below the poverty line by 2020. Instead of redistributing from the healthy to those who are not, as the noble Baroness, Lady Campbell, said, disability benefits will be threatened, frozen or cut. As for geographical distribution, the cities in the north which depend on public sector jobs and social housing are savaged while prosperous suburbs remain unaffected. Yet generations of Government have deliberately relocated Civil Service agencies and bodies out of high-rent and high-employment London and the south-east to the more depressed north. The CSA went to Dudley, the Patent Office to Newport, the Inland Revenue office to Nottingham, and the NHS executive and the DSS to Leeds. It is profoundly unfair for a Prime Minister representing wealthy Witney to talk about the north’s unhealthy dependence on public sector jobs when that relocation was supported by all parties as part of sensible regional economic policy. So the CSR hurts women, children, disabled people, the inner cities, and the north disproportionately. In all of these dimensions it is unfair.
The one redistribution I have not mentioned is between those who are in work and those who are not. The Minister made much of this, as though the CSR would encourage people into the labour market, given the jobs economy. Like many noble Lords on both the opposition Benches and the government Benches, I welcome the 21st Century Welfare paper of Mr Duncan Smith and the noble Lord, Lord Freud, for a universal credit underpinned by ensuring that work always pays and that mini and part-time jobs are supported to keep a toehold in an increasingly difficult labour market until those jobs can gradually become full time. What is bizarre—I hope that the noble Lord, Lord Freud, is aware of this—is that the CSR actively discourages entry into work, and if you are in work, it caps any aspirations you may have to seek better prospects. In my view, it is goodbye to this Green Paper, which we all know, given that the Treasury is extending its implementation time to two Parliaments, is loathed by the Treasury.
Increase your pay by £1,000 into the higher rate tax category and you lose twice as much in child benefit as you gain in pay. If you create cliff edges, do not be surprised if people are not too keen on walking over them. The father on £42,000 will not take that pay rise. Supporting work incentives by punishing improved work prospects—brilliant social policy. It is perverse. Similarly in social housing, increase your pay and risk losing your home as an insecure tenancy. Social housing is for the down and out; if you climb the work ladder you will be up and out. Of course you will not work those extra hours or take that pay rise if it costs you your home. It is perverse—brilliant social policy again. Staying with housing and non-dependent adult deductions, the adult son, we will assume, is living at home and in low-paid work. The parents will now lose almost their whole housing benefit as his notional contribution to their rent increases by a third or more. What will happen? Either, he will leave, the parents will get full housing benefit again, and he will get housing benefit on his new place, in which case the housing benefit bills will rise and more housing will be needed. But the parents will now be under-occupying and therefore they may be evicted, even though there are no small properties available around them. So the result will be higher housing benefit, more housing used up and insecurity all round. Or he can stay at home, save his parents’ housing benefit, and stop work—the intelligent, rational strategy. It is brilliant social policy again. It is perverse. I will say more on housing on Thursday because carnage awaits us there.
The employment and support allowance has been mentioned already. After one year, it is to be means-tested. Who will it means-test? It will not just be him and any savings, but his wife. If she holds down a part-time job as well as caring for him, she may find that his ESA is withdrawn. What would you do in her situation? Either you reduce your hours right down to the minimum or you probably stop work altogether. Well done: the CSR has ensured that they enter retirement much poorer than they are now. She as a part-time carer has lost her place in the world of work. If in a few years she is unfortunately on her own, she will not be able to regain it. She will remain poor, workless and isolated into retirement. We have all spent the past decade trying to help parents stay in work as far as they can. The CSR may now destroy that. It is brilliant social policy again.
The same goes for the move from 16 to 24 hours’ work for a couple with children, of which one job has to be at least 16 hours, before they can get tax credits. That is not just cruel, it is perverse. It will affect more than 200,000 families. Many men are now accepting substantially reduced hours at work, but, without working tax credit, which is worth up to £70 a week on top, that work may not pay. Yet if they stop working, it will be very hard to regain a full-time job. If he loses his full-time job, she will give up her part-time job because the tax credits are not there to make that work pay. Neither of them will have a foothold in the labour market to keep them in the knowledge economy of work and, as the economy, we hope, strengthens, to work full time. Brilliant social policy, pulling them both out of the labour market. It is perverse.
The child care element of working tax credit will go down from covering 80 per cent of costs to 70 per cent and affect half a million poor families, who will lose up to £30 a week. At the very same time as the Government are seeking to propel lone parents of five year-old children back into work, they are ensuring that, for many, with the increased cost of child care and transport, work will not pay. Brilliant social policy.
The Minister and the noble Lord, Lord Freud, want a single universal benefit, incorporating housing benefit and council tax benefit, to make work pay. I support that. But the Government intend to localise—balkanise—council tax to 500 local authorities, which will make that universal credit impossible to deliver. It is brilliant and unbelievably stupid. I could cite another dozen examples from the CSR, each one of which undermines 21st Century Welfare, which I am sure all your Lordships welcome. I respect the efforts of Iain Duncan Smith, the noble Lord, Lord Freud, and Steve Webb, and I want to support them, but what on earth are they doing allowing the CSR to destroy those proposals detail by detail, forensic cut by forensic cut, before the DWP has even published the results of its consultation paper? The best way of getting fairness between poor families out of work and other hard working families is to help the workless into work, provided we can create the growth economy. That is what the consultation paper seeks to do; that is what the CSR will destroy.
I did not expect the CSR to be fair, not from this Government—and the IFS has shown how unfair it is—but I expected the policies of the DWP, the DCLG and the Treasury to be coherent and consistent. Not on your life. The CSR has made a shambles of future welfare reform and, as always, it will be the poor who pay the bill.
Lord Foulkes of Cumnock
My Lords, it is a great pleasure to follow my noble friend Lady Hollis, who is probably the greatest expert on welfare in this House. I hope that the Government will take some account of her very carefully argued contribution today—they would be well advised to do so. When we eventually get to the end of this debate, I shall go outside and look at the colour of the moon because today is an interesting day, for I agreed with almost everything that the noble Baroness, Lady Kennedy of The Shaws, said. That is most unusual. Given such a coalition, we must be arguing in the right direction.
Speaking very much as a layman and not as an economist—we have heard contributions from some very eminent economists on our side—I want to make only three points. The first is a detailed but vital matter relating to the budget of the Department for International Development, in which I used to work. That budget is rightly protected in the CSR, but it is protected because of the pressure that we put on the Government when they were in opposition. We got assurances that they would protect that budget. However, it is vital that DfID’s budget is not raided for funds by other departments, especially the FCO, which has its beady eyes on some aspects of DfID’s budget, and the Ministry of Defence. The latter’s expenditure in Afghanistan needs to come under the defence budget and the work being done by DfID needs to be clearly humanitarian. Great pressure will be exerted by the FCO and the Ministry of Defence, but it must be resisted.
My second point relates to the manifestly false claim of fairness in the CSR, which all my colleagues have commented on. The cuts to welfare have been swift and severe—as we heard from my noble friend Lady Hollis and from the noble Baroness, Lady Campbell of Surbiton, in a powerful and moving contribution—but there has been almost nothing at all relating to tax dodgers, who could contribute a huge amount more to our revenues. There has been some indication that HMRC will get some more money to deal with illegal tax evasion, but there has been nothing at all about tax avoidance, which has been described by the Deputy Prime Minister, who I remind some Members opposite is still a Liberal Democrat, as immoral. It is immoral at the best of times, but particularly at present. Nothing has been done to start closing the loopholes offered by the tax havens of our own overseas territories. There is no international co-operation with other countries to deal with tax avoidance. The noble Lord, Lord Oakeshott, made a powerful argument in that direction, but the power of his argument is perhaps detracted from by the fact that he is in the strange limbo of being a Liberal Democrat spokesperson rather than a Minister. If he was a Minister who was incorporated into the Government, we might have greater confidence that some work would be done on tax havens and tax dodgers.
Reference has also been made to the bankers. I find it appalling that some of those who caused this crisis in the first place are still in charge of the banks and stuffing their pockets with huge amounts of money.
One lighter moment came in a delightful spat over the cap on housing benefit, when our well beloved Mayor of London described the effect as being like that of ethnic cleansing in Kosovo. He was then forced to withdraw the remark, no doubt due to some public school loyalty. However, what was missing from that argument was the reality. Housing benefit payments are so high in the centre of London because rents are so high, and they are pushed up by people who are rich. Ordinary workers can no longer afford to stay and live in London, whether in rented or in any other kind of accommodation, without some support.
My third and main point is that, although I agree with everyone who has said that we must cut down waste and increase efficiency in the public sector—indeed, that is what the Labour Government wanted to do—I cannot accept, having thought about the matter again and again, that the pressure on government to cut the deficit is as strong, compelling and powerful as Ministers pretend. I just do not believe it. To whom do we owe this money? Who are the debtors? We have not had any mention of them so far. Do we owe the money to some celestial pawnbroker or some global loan sharks, who will come and do us in if we do not repay?
If the Chancellor and the Government’s spokesman today in the Lords are to be believed, the money is owed to foreign Governments and to foreigners, who are prospering at our expense. I wondered whether that was right, so I tabled a parliamentary Question, which the noble Lord answered. In fact, the debts to all the foreign countries and foreign private bodies taken together represent less than 30 per cent of our total indebtedness. Of the rest, which is more than 70 per cent, 30 per cent is owed to UK insurance corporations and to pension funds—no doubt some of our pension funds here—and 27 per cent is owed to the Bank of England, 10 per cent to other financial institutions, 7 per cent to banks and the rest to households, local government and public corporations.
In his introduction, the Minister claimed that the coalition Government’s actions are responding to the demands of our debtors. Perhaps in his reply he could say where those demands are coming from. Which of our debtors are demanding that we take this action? I certainly do not see it. Perhaps the credit rating agencies were demanding it, but I sometimes wonder whether too much attention is paid to them, given that they are private organisations based in the United States, Canada and Japan. Surely we as a country can join together with other countries and take some responsibility, and some control and authority, over what the credit rating agencies say.
I believe that the CSR is not only unfair but unnecessary. The Tories are using it as a totally false pretence to justify what they have wanted to do for a long time for ideological reasons. The Liberal Democrats are their hapless human shields. They deserve the greatest blame for these cruel and unfair cuts, because of what they said before the election and what they are now doing, which is entirely the opposite.
Lord Low of Dalston
My Lords, I hope that the Minister will have got the message that we are beginning to get rather tired of the partisan rhetoric about train crashes and the like, to which we are habitually treated as a characterisation of the situation that the coalition faced on coming into office. Such rhetoric is, for one thing, exaggerated and, for another, quite wrong. I would expect a greater degree of clear-sighted objectivity from this House in considering the origins of our present difficulties, which clearly lie with the excesses of finance capitalism rather than with the Labour Government. It was Gordon Brown, not George Osborne, who brought us back from the brink. Gordon Brown may not have been a very good fox, but he was a pretty good hedgehog—noble Lords will remember that the fox knows many things but the hedgehog knows one big thing.
I have taken some trouble, with the help of the Library, to try to get an objective handle on our financial position, amid all the claims and counterclaims that are made. As always, it is not difficult to use the statistics selectively so people will refer to structural deficit or debt and use OECD and G7 countries as the comparator as best suits their argument. The most dispassionate assessment that I can make is that our structural deficit was larger than that of most OECD and G7 countries as we entered the recession and our level of public sector net debt was higher than that of most OECD but not most G7 countries—not the big ones. However, our total public sector borrowing requirement was a manageable 2.6 per cent of GDP, similar to that inherited from the previous Government, and the level of public sector net debt was actually lower. The level of indebtedness has since gone up sharply for what I would argue were unavoidable reasons—much more unavoidable than the measures contained in the comprehensive spending review.
Those measures are intended to reduce the debt, but the results of attempts to do the same thing by similar means in the 1920s and 1930s are not encouraging. Between 1919 and 1923, national debt rose from 135 per cent of GDP to 180 per cent; between 1929 and 1933, it rose from 160 per cent to 180 per cent. The OECD says that about half of fiscal contractions in the EU in the past 30 years have led to growth in the economy, and it cites Canada, Denmark and Ireland as examples—though Ireland might not provide such a good model at present. There was recovery following the fiscal contractions of 1931 and the early 1980s, but in a very good article in this week’s New Statesman, the noble Lord, Lord Skidelsky, argues persuasively that that had much more to do with the abandonment of the gold standard and the loosening in monetary policy than with fiscal consolidation.
Whatever view you take, it seems that the macroeconomic judgment of the CSR is just that—a judgment—and some would say it is a gamble. Whatever it is, the proposed measures are certainly not unavoidable. As the noble Lord, Lord Haskel, said, they put the interests of bankers, markets and the institutions of finance capital—what used to be referred to as the ruling class, although that perhaps makes me even more of a lefty than the noble Lord, Lord Haskel—before the interests of the ordinary citizens of this country. To be honest, it does not seem to me that Labour’s ideas are a whole lot better; I would describe them as “coalition-lite”. At all events, in circumstances when the harm done to the fabric of our society by the CSR is palpable and certain but its benefits are at best speculative, I agree with the noble Lord, Lord Haskel, that it is incumbent on the Government to search for an alternative strategy that subordinates the interests of the financial system to those of ordinary people.
The financial system is only a means, not an end. Instead of terrorising us with spectres of debt so that we forget our own interests, the Government should be demystifying the debt, a good part of which is owed only to ourselves in the form of pension funds and the like—as the noble Lord, Lord Foulkes, clearly demonstrated—and is not nearly as astronomical as we are asked to believe. At the end of the Second World War, according to the UK Debt Management Office, the national debt stood at 252 per cent of GDP, as opposed to a mere 50 per cent or so at present. That debt was paid off over a much longer period than is currently proposed and, during that period, we managed to implement the Beveridge reforms and found the National Health Service. That is the sort of framework in which we ought to seek the solution to our present difficulties.
Moving on from the strategy to the specifics of implementation, although a great deal could be said—I associate myself with the remarks of the noble Baroness, Lady Campbell, about the withdrawal of the mobility component of DLA from those in residential accommodation—I shall concentrate in the short time that I have left on the Government’s decision to limit contributory employment and support allowance to 12 months. I believe that that will cause great hardship. The Government’s decision fails to recognise three key points. First, those who have paid into the system through tax and national insurance have a right to expect that, if they become sick or disabled, the benefits system will support them as they come to terms with their impairment, gain access to rehabilitation services, retrain, learn new life skills and then move towards work. They paid in in the belief that they could rely on such support. The proposed change has not been consulted on and is a radical redrawing of the contract between the citizen and the state.
Secondly, it is completely arbitrary to say that everyone must find work within 12 months or lose a benefit for which they have contributed. Every individual is different in their journey towards work. Most important of all, there are simply not the jobs to enable everyone on ESA to get a job within 12 months. Since 2008, long-term unemployment has almost doubled to 797,000 while vacancies have fallen to 467,000. That leaves a deficit of 330,000 jobs. The impact is therefore clear. The Government will be means-testing large numbers of people on the work programme and ending their contributory ESA before they find work. Not only is that sadistically harsh, but it comes at completely the wrong time, as the noble Baroness, Lady Kennedy of The Shaws, has said. It is also self-defeating, and will completely undermine the welcome objectives set out in 21st Century Welfare, which, as the noble Baroness, Lady Hollis, has said, we all support. I will not be surprised if the time limiting of ESA, together with the changes to DLA and housing benefit contained in the CSR, come to be totemic symbols of coalition heartlessness such as the ending of free school milk in an earlier age.
Finally, the majority of the 1.5 million incapacity benefit claimants who are due to be migrated on to ESA over the next three years will face the same 12 month limit and means test. That is because the majority of those are expected to pass the new work capability assessment and be allocated to the work-related activity group. The vast majority of IB claimants have been on the benefit for five years or more, which means that they have complex needs in terms of making the journey back to work. Complex needs require time to address them; the time-limiting policy completely disregards that. Have the Government made any assessment of the proportion of claimants who will qualify for income-based support as they come off ESA? I should be grateful if the Minister could enlighten me.
The damaging and unjust consequences of time limiting ESA are just one of many reasons—the noble Baroness, Lady Hollis, has instanced a string of further examples of perversity—why the Government should seriously rethink the CSR. If they refuse to do so, I would not mind betting that they will be forced to do so in due course.
Lord Davies of Stamford
My Lords, that was a very eloquent and well-informed speech and I hope that the Government have taken careful note of it. I am delighted to follow such a substantial and distinguished contribution.
I think all of us were delighted and greatly relieved at the good performance of the economy in the third quarter and the fact that the growth rate was at 0.8 per cent. But it is quite ludicrous—actually embarrassingly ludicrous—for the Chancellor to go around almost in an orgy of self-congratulation about that. Anyone who knows anything about how an economy works and the time lags in an economy knows perfectly well that there is nothing that could have happened in fiscal or monetary policy since the middle of May which would have affected the output of the economy three or four months later. There was no change in fiscal policy over that period. Quite clearly, if tributes are to be given, they are to be given to the former Prime Minister and to the former Chancellor for the course that they had correctly set during the difficult international conjuncture of the past two or three years.
Undoubtedly the Government are now embarked on economic policies which are very risky. It is not just I who says that—there have been eloquent supporters of the Government today in this Chamber, the noble Lords, Lord Lamont and Lord Tugendhat, who have acknowledged the same thing. You cannot take £133 billion out of the economy over five years—taking the combination of expenditure reductions and increases in taxation—with impunity. That is roughly on average 2 per cent of GDP per annum. That is an enormous reduction in aggregate demand and begs a tremendous question as to where that aggregate demand is going to come from, particularly in present international circumstances. There are obviously great risks. No sensible person denies that and sensible Tories today have acknowledged that.
I am worried about two aspects. I may be right or I may be wrong but my inclination is that Government are cutting expenditure too far too fast. I may be completely wrong, but there are two slightly more objective factors here, which concern me deeply. The Government do not seem to be helping themselves very much. I have several examples in mind. It seems to me extraordinarily ill-chosen, in the situation in which we find ourselves now, to increase the VAT rate from the beginning of January. Every fool knows that January and February are the low point seasonally in the economy when consumption is at its lowest. Increasing a consumption tax like VAT at that point is likely to exacerbate the volatility of the economy rather than stabilise it. Why 1 January or perhaps 4 January? Why then? Any sensible person would have done it perhaps in April, or in two stages. It is extraordinary.
I put another example to the noble Lord, Lord Sassoon, at Questions the other day. Why allow the publication of a forecast that there are going to be 490,000 job losses in the public sector over five years—a calculation that must be based on knowledge of which particular departments and functions are going to be affected—without saying what those departments and functions are. As a result it is not just 490,000 people and their families who are going to be desperately worried and cutting back on their consumption expenditure and increasing their savings ratio, but it is going to be millions on millions of people in the public sector—other than those who have been explicitly protected— any of whom could feel that they are going to be targeted. It is not a sensible thing to do when you are trying to replace with enhanced consumption spending your explicit and deliberate reduction in public spending. I am worried about that.
I am also worried that the Government do not seem to have much of a fallback position. If you ask them, the reply is “monetary policy”. There are two problems there. One is because of the time lags. If the Government find that they have cut expenditure too far and too fast and killed the recovery, it will be too late to use monetary policy then because monetary policy does not feed through into output for a year or two. Again they will have exacerbated the volatility of the economy and have got the thing badly wrong.
The next thing that concerns me in this context is that monetary policy at present levels of interest rates means of course quantitative easing. I am concerned that the Government are getting rather addicted to quantitative easing—rather like an adolescent discovering drink or drugs. It tastes pleasant, it makes you feel good—let us have some more. There is a big question about quantitative easing which the Government need to answer. The Government have never answered it as far as I know—in fairness I am not sure the question has ever been asked—so I shall do so now explicitly and ask for an answer. It is very easy for the Bank of England to buy in this paper, creating automatically bank deposits and generating an increase in the monetary aggregates. That is an easy and apparently painless thing to do. But when is the Bank going to sell back that paper? Is the Bank ever going to sell back that paper? Is this part of the Government’s debt that is being bought in by the Bank of England going to be permanently monetised? If so, how much do the Government plan permanently to monetise in this fashion? Is there a ceiling? May I have an answer please from the Minister? If there is no intention to monetise, when and in what circumstances is it planned to sell back this paper, bearing in mind of course that selling it back will be in direct competition with government new issues in the gilt market at the relevant time. That is a problem that does not exist when you increase and use interest rates to manage demand. It is an important question to which the country needs a clear and explicit answer. When and in what circumstances is that paper to be sold back?
I was going to speak at slightly greater length about some of the perversities in the measures on benefits in the comprehensive spending review. However, my noble friend Lady Hollis made an absolutely brilliant analysis and she was followed by an extraordinarily distinguished analysis from the noble Lord, Lord Low. They have done so well that I am going to do something quite different. I ask the noble Lord, Lord Sassoon, whether he would be good enough to commission from the DWP and the Treasury a reasoned response to all the perversities that were set out by my noble friend Lady Hollis and the noble Lord, Lord Low. He should not only send that to them but put a copy in the Library for the benefit and elucidation of us all.
I am of the view that welfare reform is a very good thing and that Iain Duncan Smith’s single benefit idea is much to be commended. As I see it, it forms a coherent progression with the measures taken by the previous Administration to make sure that people had a greater incentive to work and that there were fewer perversities in the system. That was created by the introduction of the minimum wage and by the tax credit scheme which were, again, very important measures of welfare reform. Similarly, I would welcome other measures in the same direction. There were egregious abuses with regard to housing benefit. I am perfectly happy to acknowledge that and it is good that we are addressing them. Indeed, I have always felt that housing benefit was inherently problematic because it tends to drive up rents. Too often, landlords assume that the maximum that the benefit office or local authority will pay is the minimum that they will demand. It becomes an engine for driving up rents and therefore contributes to the problem that it is designed to alleviate: homelessness. Yet that does not mean to say that the Government are very clever to have produced a situation in which literally tens of thousands of people—so we are told by no less a figure than the Mayor of London—will be forced out of their homes.
My noble friend Lady Kennedy spoke movingly about people who are confronted with redundancy. I think that would have moved noble Lords on all sides of the House. Yet if you go home and tell your children that you are to be evicted, it is only scarcely less horrible than having to go home and say, “I’ve got the sack”. We should think carefully about the tens of thousands of our citizens being forced to leave their homes in that way. I put it to the Minister that there was a solution which was, at once, more practically sensible, more economically judicious and more humane in all these matters—this goes for child benefit as well. It was to introduce the new, more stringent rules for new applicants, to phase in the new rules for existing claimants, to use transitional relief; and to withdraw benefits at a certain level—whatever effective rate of taxation that might be. That could have been done in a less economically disruptive and less dramatic way in terms of the human impact on families.
It is never too late, I say to the noble Lord. What is the point of having these debates if the Government come here with a closed mind before they start? I hope that some of the thoughts that have come out of this debate will indeed be taken back by the noble Lord, Lord Sassoon, to his colleagues and that we might get a slightly better result than the one we have before us at present.
Baroness Turner of Camden
My Lords, I want to concentrate on what I believe to be the general direction of government policy, as revealed by the review, and its possible effect on all of us as individuals. To put it simply, the Government’s approach seems to be based on the perception “public bad, private good”. Hence the emphasis on privatisation, which was also a feature of the previous Government of which some of us were critical. Yet the present coalition is taking this much, much further. Hence the so-called reform of the welfare state, although, as the shadow Work and Pensions Secretary has pointed out in the other place, welfare reform and welfare cuts are quite different. It looks as though we are mostly going to get cuts.
First, there will be public sector unemployment, which the Government’s own figures indicate will be almost half a million lost jobs. Secondly, there will be a decline in welfare benefits, on which many of our fellow citizens depend. I believe that, in both instances, the impact on women will be disproportionate and certainly not fair. The unemployment resulting from the public sector cuts is likely to be mostly of women, as a large number of women are employed in the public sector. I have already had letters from women working in the public sector who are scared that they will lose employment in areas where alternative employment is virtually non-existent. We heard some explanations today from my noble friend Lady Hollis of exactly why that is.
We sometimes forget just how women’s rights were improved in the last century. At the beginning, women really were second-class citizens with no right to vote, limited access to jobs and limited access to higher education. There was widespread discrimination. If women had jobs, they were expected to leave when they got married. In many large companies, women were employed only in non-career jobs and were not included in pension schemes until they were over 30 and presumed to be “on the shelf”—that is, unmarried. There was widespread discrimination in unequal pay and, of course, a lack of promotion opportunities in employment. The widespread discrimination that existed has now disappeared, although some complaints can still justifiably be voiced nowadays. Those improvements were achieved as a result of a continuous campaign by previous generations of women. It is sometimes not appreciated just how much was due to women’s access to the job market and to equality legislation, for which Labour Governments were largely responsible. That meant that women achieved independence. They did not have to stay in relationships that were impossible for them.
The spending review, with its impact on women’s employment, could put at risk the achievements of past generations. The Government believe that the private sector will create alternative jobs. In fact, the loss of jobs in the public sector could result in further job losses in the private sector. A number of speakers have explained that today. Many experts do not think it credible that the private sector will be able to create jobs on the scale that will be needed.
As to the review’s proposal on public services, local government has been threatened with cuts and some councils are already responding by cutting staff. Services likely to be at risk involve the provision of social care for elderly people. This is already a problem in many areas and, again, an area where the impact is most likely to be felt by women. Many of the elderly will be older women, whose carers, if they have them, are also likely to be women. I remember when, during a previous employment crisis, those seeking work were famously told by the noble Lord, Lord Tebbit, to get on their bikes and look for work. Well, many did, with the result that family members often do not live close to one another any more; they no longer live round the corner and some even live abroad, hence Age UK’s current campaign on behalf of older people living alone.
Perhaps the Government think that all necessary social services will in future be provided by volunteers in the so-called big society. We should greatly respect those who volunteer to help others, but caring for elderly and disabled people is a service that should be provided regularly in any civilised and developed society. I shall perhaps be told that the review provides for social care some £2 billion from 2014-2015. I welcome that, but it is some years ahead and the need exists now. Moreover, local government will, presumably, be responsible for administering it along with other services and is already suffering from cuts in income. Will this new money be ring-fenced? Other services under threat, including the provision of social houses, have already received much attention and will, no doubt, be further debated in this House.
I believe that the spending review is ideologically motivated. It is presented to the public as if there is no alternative and as if it is all the fault of the previous Government. Yet alternatives have been suggested by many experts, including a number who have spoken from this side of the House in this debate. What is being proposed could disrupt many lives, mostly of poorer people.
I find it ironically amusing that the talk of the big society often refers to a variety of voluntary organisations, when one of the largest voluntary organisations in this country—with a leadership elected by its membership—is the trade union movement. But unions do not get a mention—oh no. They are apparently not part of the big society as far as the Government are concerned. It is the job of unions to represent their members—many thousands of ordinary workers—and we can expect that they will endeavour to do so. As a former union official, I hope that they will succeed.
The welfare state was created after the Second World War because no one wanted to return to the poverty of the 1930s. The policy direction outlined in the spending review is neither fair nor just and puts at risk some of the achievements of previous generations.
Baroness Anelay of St Johns
My Lords, following inquiries from many of those taking part in this important debate and discussions with the opposition Chief Whip, it may be helpful if I advise the House that, at the current rate of progress, with speeches of around eight to 10 minutes, the House is likely to rise after midnight.
Lord Higgins
My Lords, by a quite extraordinary coincidence I was about to raise that very matter in my opening remarks. Indeed, I was going to say how glad I was that my noble friend the Chief Whip did not say at the beginning of business that we should try to rise by 10 o’clock or that speeches should be curtailed accordingly. Particularly with the ever increasing size of the House, we will find more and more pressure to reduce speeches to a length at which, in a debate of this sort—of great importance and considerable complexity—it would not be possible for the House to fulfil its job of holding the Government to account as effectively as it should. It is very much a question of balance. I understand my noble friend’s point, but we should beware of excessive curtailment of the length of our speeches, as that may frustrate our very purpose. We are in fact barely half way through the list of speakers and are therefore likely to go rather late. However, I do not think that anyone has gone over about 10 minutes and many speeches have been of an extremely high quality. They have raised a number of questions, such as fairness and so on. I intend to concentrate on a rather different aspect.
As I said at the time of the Statement on the spending review, it is quite extraordinary that the Treasury officials and Ministers should have managed to carry out such a comprehensive review in the time that they took. It was desirable that they should do so and, overall, they have done a remarkably good job. There are some obvious omissions—for example, I simply do not understand why winter heating payments should not be means-tested—but, by and large, they got the balance pretty right.
The basic controversy raised before, through and after the election was summed up rather cleverly, as always, by the noble Lord, Lord Myners, who said that this was a question of scale and pace. He took the view that the scale was too large and the pace was too quick. I take the contrary view. Experience shows that it is extremely difficult to cut public expenditure quickly. It almost always takes much longer than people expect. The pace proposed by the Government is probably the minimum at which we ought to aim, because we will almost certainly undershoot it. That was a matter of great debate among all parties but, on the whole, the Government got the pace about right.
With scale, we are faced with a rather strange situation. Individual cuts are clearly a matter of great controversy and depend on many of the arguments that we have heard deployed this afternoon. However, the reality is that, even after all these cuts, public expenditure will go on rising, from £702 billion to £713 billion next year and to £724 billion and £740 billion in the years after that. With cuts, that is strange and therefore important, particularly given the interest that we have to pay, which has been shown to be going up from £43 billion now to £63 billion in 2014-15—a massive increase. I assume that the Treasury’s calculation has been done on the assumption that the rate of interest at which it is able to borrow remains the same. Perhaps my noble friend will confirm that.
My noble friend Lord Tugendhat raised big issues about the situation with the international financial markets. We are fortunate in having most of our borrowing spread over a lengthy period of time, but it would not take a large increase in the average rate at which we could borrow—particularly at the margin—for that £63 billion by 2014 to look much bigger. We are making the most optimistic assumptions that we can. Worldwide record low rates of interest are being used. That may be very dangerous for the future.
The other problem is aggregate demand. I raised this at the time of the relevant Statement and my noble friend referred to the forecast of the Office for Budget Responsibility, which said that, on aggregate, demand in the economy would go up. Again, that is strange against the background of a programme of what the Opposition would call “savage cuts”. What will happen to aggregate demand? Is it my noble friend’s view that the situation will get worse or better? There was much joy in the City over the past few days at the fact that the quarterly rate of growth was 0.8 per cent. However, if I understand it correctly, that was before the cuts. They have not yet had any perceptible effect. I would have thought that the level of aggregate demand would go down. These are extremely difficult calculations. For example, what is the effect on aggregate demand of large numbers of civil servants becoming unemployed and their spending power being correspondingly reduced? It would be helpful to know the views of the Treasury and the Office for Budget Responsibility on what will happen to aggregate demand.
If aggregate demand is going to decrease, the question whether there should be further stimulus arises. My final point, which I have raised previously, is on quantitative easing. The noble Lord, Lord Myners, seemed to be recanting somewhat in his opening speech. The £200 billion of quantitative easing that he introduced was widely publicised as an increase in the money supply. In reality, following that quantitative easing, the money supply went down. That fact has not registered. We will therefore need to assess carefully what the effect of further quantitative easing would be on the level of demand. Against that background, we have the problem of not knowing what has happened to the country’s productive potential as a result of the recession and crisis and whether it is much less than it was at the beginning of that period.
These are complex issues. However, so far, the spending review has not been placed in the overall context of the management of the economy, which is now significantly divided between the Treasury and the Bank of England. We need a much more detailed analysis presented to us, by either the Government or the Office for Budget Responsibility, if we are to assess the true economic impact of this spending review over the next four years.
Baroness Sherlock
My Lords, I wish to focus on the impact of the spending review on families with children. Having looked through the measures, I have three broad concerns. First, it seems quite clear that the measures taken together have a disproportionate effect on families with children. There are £7 billion cuts in welfare spending in the spending review, on top of the previous £11 billion in the Budget. The charity Family Action, which works with some of the poorest families in this country, has calculated that there are 21 separate welfare cuts affecting working families. The IFS has pointed out that one key effect of the CSR is to refocus benefit spending away from families with children. That cannot be reasonable. Even the proposal to withdraw child benefit from a fairly random selection of higher-rate taxpayers is, in effect, not a redistribution from rich to poor but a movement of resources away from some families with children to society as a whole. Once again, a group of families with children is bearing the cost.
Secondly, the measures appear to add complexity and to get in the way of helping working families, as my noble friend Lady Hollis has so ably pointed out. Some of the cuts affect only families with one or more parents in work, such as the changes to working tax credit. I am particularly concerned about the decision to reduce the amount of childcare help that working families receive. That could cost up to £1,500 a year for a family. I spent some years running a charity that works with single parents. We ran schemes that helped single parents into work and I learnt two things: first, that most single parents want to work if they can find a job that they can combine with looking after children; and, secondly, that many of them live right on the edge financially. Every single penny is counted. A rise of 50p an hour in the cost of childcare can prove disastrous. Parents, who may find themselves £1,500 a year worse off in relation to childcare, could find that they simply cannot afford to pay the nursery or pay the childminder. If the childcare falls apart, so does the job. If we want lone parents to work, we have to make that possible for them.
This comes on top of the measures in the Budget that include something that sounds very technical, as my noble friend Lady Hollis has pointed out: a disregard of £2,500 in working tax credit for in-year falls in income. As the Minister will realise, this may sound technical but the results can be quite significant. Let us suppose that a mother loses a cleaning job or her husband's hours in his factory are cut and the family loses £2,400 a year in wages. This change will mean that their tax credits cannot be recalculated to take account of that fall in income. They could lose £975 a year from that one measure alone compared with the tax credits that they should be getting. That is not supporting work.
On complexity, there is also the proposal to localise and cut the funding for council tax benefit. The assumption seems to be that council tax benefit will be replaced in April 2013 by grants to local authorities, which can choose the best way of using the money to try to provide rebates for council tax bills. The budget will be £500 million a year less, so clearly poorer families will lose out, but it also means that we will end up with 100-plus local authorities deciding the best way in their authority to rebate council tax. As the IFS has pointed out, that goes directly against the principles behind the Government’s universal credit; it goes directly against a single national policy, against clarity and against simplicity. As the IFS points out, it also creates a postcode lottery in which some local authorities may choose to use the money to persuade low-income families to live somewhere else. Therefore, it fails both the fairness test and the complexity test.
Finally, I am concerned about the measures that could hit the very poorest families. Poor families with children will be disproportionately hit by many of the housing measures that the Government have proposed. The measures to cap benefits must surely affect mostly large families who live in high-rent areas, often because that is where the jobs are. Even the flat-rate measures will strike terror into the heart of families more than others. My noble friend Lord Knight of Weymouth referred to the proposal to cut 10 per cent from the housing benefit of people who have been on JSA for more than a year. I truly cannot understand what that measure is designed to achieve. It obviously cannot assume that your rent goes down if you are on the dole for a year; and it cannot presumably be to motivate you to look for a job because the JSA already does that. If you do not look for a job, your benefits can be sanctioned. If you are offered a suitable job and you do not take it, your benefits can be stopped altogether. It cannot be to motivate you to do that. What, then, can it be for? I simply do not understand it. Is it simply a punishment for having failed to find a job? Do the Government believe that it is impossible not to find a job? If the Minister thinks that, I would be very happy to take him to parts of County Durham where I could demonstrate only too readily that that is not the case.
What would be the effect of that? If you have been out of work for a year, you have probably already exhausted all your savings; you have probably already been round all your friends and family and anyone else in your network who has money, many of whom will be in a similar position in some areas. So what do you do? If, at that point, your housing benefit is cut by 10 per cent, even if that were only £15 a week, that could be an enormous amount of your disposable income. Frankly, it might as well be £1,500 a week for all the difficulty you will have in finding it. What would that do to a family with children? You are out of work, your housing benefit has been cut and your landlord will not randomly reduce the rent for those who happen to have been on JSA for more than 12 months, so you cannot make the rent and at some point your arrears build up and you are likely to be evicted. Then we have a homeless family. How is public policy advanced in any way? Even if we simply wanted to make it likely for them to get back into work, how would they do that? What are the consequences for the children? I simply cannot understand what this policy is designed to achieve.
We all accept that there must be some pain as we try to lift our country out of this global recession, but we all agree that it must be done fairly. I suggest that fairness requires two things, and I hope that the Minister will take careful note of these. First, fairness requires—a phrase I think he likes—that those with the broadest shoulders should bear most of the burden. Sadly, the IFS has already proved that the CSR is clearly regressive and that that is not happening. Fairness also requires that the most vulnerable, those with the least ability to cope, should be protected from the worst effects of the cuts that we must all bear. How could poor families with children be anything other than in that category?
Lord Allan of Hallam
My Lords, I thank all those officials and Members who have helped our class of 2010 to have such a smooth and warm introduction to the House. I wish the officials in particular well with the class of 2010B, which I understand may soon follow.
In choosing this debate for my maiden speech, I am conscious that I have to work to two constraints: first, to be concise, a quality which I am sure is always appreciated in debates in this place but especially when so many noble Lords wish to speak; and, secondly, to avoid being too contentious on a subject that naturally arouses strong opinions when it is so important to so many citizens of this country, as has been demonstrated by the many interesting and powerful speeches already made today.
Mindful of those constraints, I want to make a few short remarks on the way in which the Government have been opening up their vast store of data about the workings of the public services and how that is having an impact on the spending decisions that we are considering today. First, I declare an interest when speaking on information technology, as my employment outside this place is with the company Facebook. Although Facebook is not generally directly involved in public sector IT projects, some parts of the company have had commercial relationships with the Government. I hope that that position will equip me with up-to-date knowledge of trends in the information technology sector that will prove valuable to this House, as it informs my contributions to your Lordships’ work.
I turn to the agenda of opening up government data in the context of the spending review, which has very much been a cross-party agenda. In the last Government, it had several champions, most notably Tom Watson when he was a Minister in the Cabinet Office, and the noble Lord, Lord Knight of Weymouth, when he was in another place and very much engaged in that agenda. It has been enthusiastically taken forward by this new coalition Government, and has also engaged many experts outside the party political realm, notably Sir Tim Berners-Lee, Professor Nigel Shadbolt, Tom Steinberg and Rufus Pollock. A common objective shared by all those contributors may not necessarily be to support directly the Government’s policies; it may be to ensure that this is not an esoteric exercise for those in the technical community but an exercise that realises the potential of information to transform public services more generally.
I believe that that process is impacting the spending review in several important ways. First, the Government decided to release a database from the Treasury called the combined online information system, or COINS, proving that some in the Treasury clearly have a sense of humour, contrary to public perception. The COINS database provides a wealth of data to anyone interested in modelling the country's finances. It means that more people than ever before will have the key data that they need to analyse the Government’s spending decisions and performance.
Secondly, decisions have been taken in both local and central government to publish information about individual items of public expenditure. This will dramatically increase the level of scrutiny of purchasing decisions and allow many minds to take a view on whether value for money has been achieved.
Thirdly, there is a significant opportunity for growth in the UK economy—again, something we have heard about in the debate tonight—by building services based on the data provided by government. Rufus Pollock, in a study commissioned by the Treasury during the time of the previous Government, calculated this value at £6 billion per annum.
Fourthly, public services can be enhanced through innovation around these data. For example, anyone who has used a Boris bike to get around London will know that apps for the iPhone and Android phones, which let you see how many bikes are free in any location, are a real and often necessary complement to the bike service itself. This is a small example of how data around public services can both contribute to significantly enhancing economic efficiency and, in the case of transport services, to minimising environmental cost.
Finally, new online channels provide ever greater scope for people to engage in debates on such policy issues as the spending review. This is not a substitute for the process of policy deliberation in Parliament but, handled correctly, can be a valuable complement to it as a broader range of well informed citizens can bring their perspective directly to our policy debates.
In closing, I refer back to the fact that outside this place I work with many people in their 20s and 30s who are building great technology businesses and creating significant new economic and social value. To me, this is a reminder that while technology projects can and do sometimes go badly wrong and end up costing the taxpayer more than they are supposed to save, we should certainly not turn our backs on the transformative power of technology-led innovation. The question for the public sector should not be whether technology can make its services both more cost effective and better for citizens—it certainly can do this, just as it has transformed many other parts of our lives—but how to realise this potential most effectively. This is a much bigger subject than I can cover today, but it is one to which I have no doubt that I will return during my service in this House.
Lord Bates
My Lords, it is a privilege to follow my noble friend Lord Allan after his excellent maiden speech, which observed all the conventions that he rightly outlined at the beginning of his speech. As someone who is relatively new to this House and made a similar journey from the other end of the Corridor, I think that the speed with which he has adjusted to the climate of this House bodes well for the future. One of the great joys of following the maiden speech of someone who is so intertwined with the world of information technology is that there is an embarrassment of material that one can refer to. I shall not mention much of it, other than to say that it is highly impressive and worth viewing, especially the noble Lord’s weblog. He began his undergraduate studies at Cambridge in anthropology and archaeology. I am not quite sure which of those areas will be of most value in understanding the workings of your Lordships’ House, but I am sure that they will both come in very handy. He also had remarkable prescience in giving way in the 2005 general election in his Sheffield Hallam constituency to an unknown politician from across the pond called Nick Clegg, who went on to achieve some rather impressive things, as I am sure the noble Lord will do in his contributions in this House. His contribution this evening has been very much welcomed.
Given the time constraints, I want to add something new to the debate, which I am thoroughly enjoying and have found provocative and interesting, as always. That newness will come from speaking about the region that I come from—the north-east of England, where I am involved in two small and medium-sized enterprises. I have a passion for the region, which is often cited as being one of those that will be most severely hit by the forthcoming public spending constraints. There is a great deal of fear in the region about the consequences of those decisions that are coming down the track. It is not easy. However, I have to preface my remarks by saying that we would not be in this position had the foot been applied gently to the brake two years ago in public expenditure rather than heavily to the accelerator. This accelerated the level of debt and, therefore, the initiatives that are necessary for this Government to take to correct the national macroeconomy. It is important that that is said, but it has been said many times already this evening and I think that it is generally accepted. I want to focus on what can be done and what the consequences might be.
The north-east of England has a higher dependency on the public sector than any other region in the United Kingdom. The public sector accounts for 56.4 per cent of the north-east economy. A study by PricewaterhouseCoopers—I retrieved it from the UNISON website, so I hope that it is accepted on both sides of the House as a reliable source—estimates that the impact of the public sector cuts on the public and private sectors over the next five years will be around 43,000 jobs or 4.1 per cent of the workforce in the north-east, which currently numbers around 1 million. Every single one of these job losses will be a personal tragedy for those affected, but if handled correctly these changes in our economy can put the north-east economy on a more sustainable and upward path for the future.
As evidence for this, I cite a collection of data that has been produced by the north-east public relations firm Recognition PR, which has tracked the new private sector job announcements in the regional press from September to the end of October. The total number of new jobs announced in the private sector was 4,451 in two months, which is very encouraging. Moreover, the same regional newspapers identified some £271 million of new investment by the private sector in its businesses in the north-east. That is more than the entire annual budget of the regional development agency, so it is a significant sum. It comes not from bureaucrats picking winners but from business owners investing in their own businesses, so the likelihood of its succeeding and leading to further growth is also there.
One of the great strengths of the north-east is that it is one of the few regions that exports more than it imports. Exports from the north-east in the second quarter of 2010 were at their highest level ever, at £2.29 billion. Again, that is a cause for some encouragement to believe that the private sector can, if freed up, fill the gap that will necessarily be created by adjusting the national public finances.
We are not an island in the north-east of England. Therefore, when you talk to businesses about what is necessary, they will tell you first that what we need is macro-stability. Unless there is macro-stability, investors will not invest in the region and customers will shy away. Therefore, it is essential that these actions are taken so that we retain low interest rates.
I am also keen that we create an enterprise economy—one that is very much focused on growth. In that effort, the decisions to reduce corporation tax rates, to do away with the previous Government’s proposed increase of 1 per cent in national insurance contributions, which would have ripped another £250 million from the north-east economy, and to freeze business rates will all help, as will freezing interest rates. The sooner we get back to growth, the faster the new jobs will come. If the economy of the north-east grows by 2 or 3 per cent, that is another £1.2 billion of investment in the regional economy. It is like adding a new Sage or companies the size of Greggs and Northumbrian Water to the regional economy every year. That will create jobs and wealth.
In the two minutes remaining, I will focus on the lessons that we can learn from the past. I was involved in public life in the 1980s when changes were made to the heavy, nationalised industries. I know the heartfelt pain that was caused in many communities, including to many members of my family who were involved in those industries at that time. One thing that I thought was a great mistake that we made as a Government, even though we did what was necessary at that time, was not to reskill and retrain people, allowing them to drift into the benefit culture, from which many of those communities still have not emerged. I think that there are some real opportunities. When people are leaving the public sector, we should provide them with the skills and retraining necessary to contribute to the private sector. As an example of this, the Northern Recruitment Group has set up a course called “Leadership Enterprise Opportunity”—a great title for a course. It takes senior executives who are leaving the public sector and retrains them to apply their skills to the private sector. That is having a hugely beneficial effect. Not only are those individuals securing jobs, but they are realising that a lot of the skills that they have—particularly in the areas of finance and IT—are easily transferable into the commercial sector and can contribute to the growth of that sector.
Finally, I love the imagination that was shown in introducing a cut or a break in national insurance contributions for new businesses that are setting up outside London and the south-east. This is an imaginative approach to providing incentives for businesses and for people to set up enterprises. However, I think that we could go further. I wonder whether the Minister would consider starting a discussion about whether we could recreate some of the attributes of the old enterprise zones, which did so much to bring about the physical regeneration of parts of the north-east of England. We could say that in certain black spots—for example, Middlesbrough, Hartlepool, Easington and Blyth—if you set up a new business, not only will you not pay national insurance contributions on the first 10 employees, but you could also get breaks in corporation tax, business rates or capital allowances. This would use the difficult choices that have to be made at this time in order to build a more sustainable footing for the regional economy going forward.
Lord Berkeley
My Lords, I congratulate the noble Lord, Lord Allan of Hallam, on his speech. He managed to be non-contentious, as is required, but I can see that his independence of ideas on matters technological will enable him occasionally to challenge the coalition’s thinking. I look forward to hearing him often in this House. I was also interested in the comments of the noble Lord, Lord Bates, about what a great job the regional development agency for the north-east has done. He will be aware that, in Schedule 1 to the Public Bodies Bill, it is down for abolition. I am assuming that he will oppose its inclusion in the Bill and I look forward to joining him in doing so, as I think that the agency has done a fabulous job in the past.
I am going to speak about transport, which features strongly in the CSR documentation. The coalition policy document sets the scene by stating:
“We will support sustainable growth and enterprise balanced across all regions and industries … giving new incentives for green growth”.
In the same document, in the transport section, there is an interesting mix of projects large and small, capital and revenue-related, long and short term, including a new system of HGV road user charging, no more funding for fixed speed cameras, a new dual carriageway in Norfolk, support for sustainable travel initiatives and the establishment of a high speed rail network,
“as part of our ambitions for creating a low carbon economy”.
Finally, there is an emphasis on the “green economy”. That seems to be a sustainable green policy across government. It needs to be, as the Stockholm Environment Institute, which is associated with the University of York, published a report in August saying:
“Transport is a major source of greenhouse gasses, and it is increasing emissions faster than any other sector of the economy. Growing levels of car use, road freight and flying have created difficulties in reducing transport’s greenhouse gas emissions”.
Perhaps we should examine what the Government are going to do about it.
What is good in the CSR is that the funding for many capital projects has largely been retained. We can read about rail projects: the Midland main line and the east coast main line are going to improve, but there is still no news about the Great Western main line electrification or the Thameslink upgrade and new rolling stock. It is interesting that the Chancellor, in his Statement, announced electrification between Manchester, Liverpool, Preston and Blackpool, but the Department for Transport is still failing to confirm that. Perhaps Mr Osborne is going to be the new Secretary of State for Transport as well.
Elsewhere it is cuts, cuts and increasing fares on public transport, while, frankly, the road sector is getting off pretty scot free. The bus subsidy has been drastically reduced, by something like £200 million. Therefore, there will be fewer services, costing more, particularly in country areas, which I would have thought Conservative and Liberal Democrat MPs would oppose. The consequence will be that more people will use their cars. Train fares are due to rocket, with regulated fares to increase by 25 per cent over the next four years and, I think, about 33 per cent over five years. What I find interesting is that, less than two years ago, the current Minister for Railways, Theresa Villiers, who was then shadow Transport Secretary, stated that a fare increase of 3 per cent above inflation would price people off the railways. Norman Baker, who was then the Liberal Democrat transport spokesman, said the same thing:
“We will cut rail fares, changing the rules in contracts with Train Operating Companies so that regulated fares fall behind inflation by 1 per cent each year”.
They both agreed, even before the coalition was formed, that fares were going to be too high, but they have now done a massive joint U-turn. It means that fewer people will travel by rail because they cannot afford it; they will use their cars more. As my noble friend Lord Foulkes said, the housing benefit changes will force people out of London and other major cities, which will mean that they have to pay even higher rail fares to get into the cities. There is not much alternative to getting into London. Perhaps I can offer the Mayor of London, Boris Johnson, another phrase: transport is getting like Kosovo, too.
Roads are going to become a free-for-all in places where there are no traffic jams; there is no more funding for speed cameras, so more motorists will be speeding. There will be £37 million of cuts in the road safety grants and operating expenditure this year. More people will get killed or injured. There is always the option of increasing charges for road use to match the increases for using bus and rail. There may be road user charges for foreign lorries, if the Department for Transport can find a way of doing that legally, but we have heard of no constraints or charges for cars. The Mayor of London is even scrapping the Kensington congestion charge scheme because motorists do not like it. Well, they wouldn’t, would they? However, it would bring up the charges to balance the increase in rail and bus fares. This is the policy of a potential Prime Minister and it epitomises the coalition, which, to me, appears to be allowing motorists to do what they like, with less and less fear of being fined, pricing people off public transport and on to roads and, after less than six months, dumping any policy associated with green initiatives and lower-carbon transport.
Clearly, the coalition accepted in its programme for government that a sustainable growth policy was necessary across all government departments, and transport is one of the worst offenders. However, on the basis of numerous independent reports, as well as evidence in the UK and parts of Europe, we will actually have higher carbon emissions. It is rather depressing that the Liberal Democrats in coalition are not diluting the worst excesses of the Tories in their love of motor cars and belief in the divine right of drivers to do exactly what they like, where and when they like. The Government could have raised revenue from the highest polluters—cars and lorries—which would have reduced emissions, because road transport’s emissions are about five times more polluting than rail’s per passenger mile or freight mile. It is possible to change behaviour and reduce carbon emissions at the same time, but that needs a consistency of policy that has so far and so quickly eluded the Government.
One project that the Government are praying in aid as important is High Speed 2—the new line that Ministers have been announcing for some time—but the problem is that many in the industry feel that the Government are not really serious about it. Members of Parliament along the whole route are campaigning against it and making the most outrageous statements about high-speed lines. All that they need to do is to go and look at HS1 in Kent to realise that it is a good scheme. The Government need to do a lot more to promote HS2, otherwise they will be just saying that they are doing it and it is not going to happen.
Returning to the coalition document, I believe that on present evidence the Government are not supporting sustainable growth across all regions and industries and are not giving incentives for green growth. They are doing exactly the opposite, taking us back to some of the Tory policies of yesteryear.
Lord Judd
My Lords, we certainly faced a very severe global financial challenge. Corrective action at national and international levels was essential. There can be no argument about that, but, as this debate is well illustrating, the issue is about what action and what timetable.
Adam Smith was a highly ethical man. His first writing was about ethics. He approached economics with ethical commitment as a given. The roots of this crisis lie in an ethical vacuum into which greed relentlessly moved. The heaviest burden of the measures proposed for recovery compounds the lack of principle. It falls on the less affluent and particularly harshly on the poor, on people who struggle to live at a lower or lowest level of society. Those are the innocents who had absolutely nothing to do with generating the crisis, save that they were too often wickedly seduced into grotesque personal debt.
The bankers and self-indulgent rich who live at the top of the pile appear to be escaping with very little real hurt. We live in an age in which wealth and profits are privatised, but in which risk is socialised. This makes a total nonsense of market theory. The self-correcting disciplines are absent. The innocent are crushed and punished to pay for the transgressions of the gamblers.
The Prime Minister likes to talk of broken society and of family, but it is the Government’s response to the crisis which is smashing society and crushing families. The greatly respected Institute for Fiscal Studies has underlined that the poorest are to be hardest hit, with families as the biggest losers. All this is compounded by insensitivity and remoteness from the harsh realities of struggle, of the pressures and acute stress that affect life for millions of ordinary people. Listen to Grant Shapps, the Housing Minister, as reported in yesterday’s Observer. This is what he said:
“I don’t deny some people may well need to move. Not tens of thousands. The impact assessment says that there are about 17,000 people in London whom the cap would affect”.
Seventeen thousand people would be stressed beyond endurance on what matters most for their security and any chance of a constructive life—a home. That is something that all of us, not least those in the Cabinet, take for granted.
The Government have also launched an attack on universalism in benefits. Universalism is about inclusiveness and social cohesion in a healthy community, where people are not stigmatised and institutionally patronised. It is about all belonging with the same rights as citizens. Of course this must mean a convincing system of progressive direct taxation, with all of us paying according to our ability to ensure a society worth living in. For too long, the concept and values of service have been, in effect, denigrated. Service is not seen as being for clever people. Money is their game. But the quality of mutual service is essential for an integrated society. Do any of us really want to be reliant on health provision driven by markets, as distinct from vocational commitment and a culture of service and care? Do any of us really want our children to be at schools and universities driven by markets, not by dedicated teachers and professors in a culture of unyielding commitment to learning and the generation of enlightened self-confident citizens? Are we really happy at the thought of older years dominated by anxiety and the ruthlessness of market forces, as distinct from a national culture of concern and national care?
The Prime Minister talks of big society, but that was exactly the vision of the so-called welfare state—the dignity of secure citizenship as against the insecurity of a rat race for survival, with volunteers scurrying about to put patches on the wounds. Why have we allowed the word “welfare” to become associated with failure? Welfare is about well-being for us all. No; Galbraith was right when he described the stark grimness of private affluence and public squalor. For social justice, progressive taxation, not cuts, is the route which clearly should be taken.
Save the Children, with all its experience and integrity, is convinced that the eradication of child poverty can be achieved only if the income of the poorest households is increased. Save the Children argues that boosting family incomes is the most effective way to improve children’s health, educational attainment and life chances. Its impressive analysis indicates that the comprehensive spending review measures will hurt families experiencing in-work and out-of-work poverty and are likely to reduce the incomes of families with children living on incomes below the 60 per cent median. I fervently hope that the Minister has had time to study the detailed policy brief prepared by Save the Children. Has he? Have the Government? If not, can the Minister give a firm undertaking to do so and put the considered response to that brief in the Library?
It is very welcome that the Government are standing by their pledge of 0.7 per cent of gross national product for overseas development assistance. This is for the most disadvantaged people of the world, although, as a former director of Oxfam, I would be happier if the pledge were to be fulfilled in the context of a demonstrably greater commitment to a fairer society within the UK itself. Within that pledge there are points still to be clarified. Will all the DfID staff cuts to be imposed affect the effectiveness of front-line staff? How will that effectiveness be guaranteed? How will the Government ensure that there are adequate essential human resources to support front-line workers with the policy analysis, research and international advocacy which are indispensible to the quality of aid spending and the best possible use of taxpayers’ money? If the increase to 0.7 per cent by 2013 is to be back-loaded, as seems to be the intention, there will be a steep increase—perhaps as much as 33 per cent—in spending in 2013, rather than straight-line increases from 2010. This will surely require careful scrutiny. How will this scrutiny be provided?
Andrew Mitchell has indicated that the spike in spending in 2013 will be facilitated in part by delaying the UK’s contribution to the 16th replenishment of the World Bank’s International Development Association. As the United Kingdom is the largest donor to IDA this could mean that the World Bank is unable to maintain current levels of disbursement to low-income countries for the first two years of the next IDA round. What reassurances can the Minister give us on the implications of this and how they are being met? The Government have committed themselves to spend 30 per cent of aid, both bilateral and multilateral, on fragile states by 2014. Some of that reprioritisation will presumably take place in the next two years. This coupled with the IDA payment delay could mean that more stable, but nevertheless poor, nations could lose out as the aid budget does not increase and spending priorities are put elsewhere. Again, can the Minister reassure us on this point?
On the Government’s highly welcome commitment to conflict resolution and security sector reform—here I should declare an interest as a trustee of Saferworld—does the Minister agree that addressing root causes of conflict and security in fragile states is about more than spending money on security interventions, that promoting lasting and sustainable security necessitates a holistic approach to security and development and not siloing them off as separate issues; in other words, that development needs security and security needs development? Is it not vital that any security interventions HMG do support must have practical concern and support for poor marginalised and vulnerable populations at their heart?
Climate change is having a devastating impact in poor countries, keeping vast numbers of people trapped in poverty. It is imperative to move towards a global low-carbon economy. At more than 552 million tonnes, the UK’s CO2 emissions are the seventh largest globally—more than those of the 112 lowest-emitting countries put together. We have an inescapable responsibility. In doing what we should be doing to fulfil that responsibility, can the Minister assure us that raiding the aid budget will not be the easy option, depriving as this would the poorest? Will the Government press for raising climate finance by alternative measures such as aviation and shipping fuel taxes or a tax on international financial facilities?
As the Government squeeze, if not in part throttle, the BBC, how will they make certain that where the BBC is most needed—in its overseas reach, keeping hope and values alive among tyranny and oppression—it will remain fully committed and effective? And where, in places such as Russia, the BBC can help to keep the struggle for accountable democratic government alive, will the Government make certain that there will be no further cuts? Do the Government agree that it is not just a matter of size of audience—a market matter—but a matter of qualitative significance, where this is crucially required? How will the Government use their influence to ensure that the expertise, analysis and in-depth knowledge, which have won the overseas service its outstanding reputation, are not dumbed-down and diluted as overseas news services are combined with mainstream BBC news services?
There has been a severe global financial crisis—of course there has been—from which we have not been immune. This has been aggravated by the greed and irresponsibility of the banks and others. The tragedy is that we do not seem to have learnt—we are drifting back already to the old ways. The gamblers and opportunists are there again. Just as the Government have rejected an imaginative Keynesian approach, so they have failed so far to call the financial system to account. As they increasingly put the burden of the inevitable consequences on the less rich and the poor, they rub salt in the wounds by talk of our all being in it together—of volunteers being mobilised to tend the casualties and victims. One day, the sooner the better, we shall have to rediscover national solidarity and start building a real sense of just community.
Lord Skidelsky
My Lords, it is a sign of the jittery state we are in that a slower-than-expected slowdown in the rate of growth is hailed as strong evidence of recovery. Of course it is nothing of the sort. It marks the end of a period in which the economy has been supported by fiscal policy, with some help from the depreciation of sterling. The direction of fiscal policy has now been reversed. In their recent comprehensive spending review, the coalition Government confirmed that they will embark on cuts that will withdraw between 1.5 per cent and 2.5 per cent of nominal demand from the economy every year for the next four years.
The Government’s own independent watchdog, the Office for Budget Responsibility, has estimated that every 1 per cent decline in current government spending knocks 0.6 per cent off economic growth. I have never been able to understand how cutting the budget deficit in present circumstances is supposed to help employment and growth. The noble Lord, Lord Higgins, asked a very pertinent question: what do the Government consider to be the effect of the cuts on aggregate demand? Well, he did not get an answer. We are never told what the answer is. Instead, we are assured that private spending will miraculously spring to life on a wave of confidence induced by the Government’s very announcement of the deficit plan. Well, the most recent data show that in September bank lending posted its largest drop by more than £4 billion since January. If that is an indicator of the private sector’s new appetite for spending, I must remain sceptical about the newly fashionable doctrine of contractionary fiscal expansion, as it is known; the idea that if you contract the budget deficit, the economy will expand.
The present policy bears the strong personal imprint of the Chancellor. His rhetoric prepared the ground for it; he implemented it; and his political future depends on its success. Mr Osborne is not a reluctant cutter; he is an enthusiastic cutter; he is a conviction cutter. Normally I applaud conviction politics. It is rare enough for a politician to have convictions. But it is a great shame that the Chancellor’s convictions are so little-rooted in theory or in experience.
“Even a modest dose of Keynesian spending—say, increasing it by an additional 1 per cent of GDP—is a cruise missile aimed at the heart of a recovery”,
the Chancellor said in October 2008, barely a month after the collapse of Lehman Brothers, with the global economy going into a tailspin. No wonder Vince Cable said at the time:
“George Osborne is clearly way out of his depth”.
I wonder what Vince Cable thinks now. Mr Osborne is clearly a man of ability and determination, but I have to say in all seriousness that in his present position he is a menace to the future of the economy.
The Chancellor believes that any stimulus that needs doing should be done by monetary policy. In present circumstances, that means quantitative easing, or printing money. I do not accept the argument that the last quarter’s figures make this less likely. What matters for monetary policy is the state of the economy in six months’ time, not six months ago. So I expect that in due course the Bank of England will follow the Federal Reserve Board and probably Japan’s central bank down this path. The question is: will it work?
We have the experience of last year to go by. Between March 2009 and February 2010, the Bank of England injected £200 billion of liquidity into the economy. Over the year of quantitative easing, reserve balances at the banks quadrupled but the quantity of bank lending hardly budged. The same story is told by the money supply figures. In the years leading up to the crisis, M4—the Government’s preferred measure of broad money, including bank and building society deposits—grew consistently between 6 and 9 per cent year on year. However, in the past 12 months, M4 has grown at only 1 per cent and M4 lending has fallen by 0.7 per cent, the weakest number since records began in 1998. What has happened is that the “money multiplier”—the ratio of money supply to monetary base—has continued to fall as banks absorb the influx of money into their reserves without increasing their lending.
The same story can be told in other areas. Quantitative easing failed to bring down long-term interest rates—the spread between the bank rate and the long rate hardly fell. Nor was there any evidence of the so-called wealth effect—the argument that firms use quantitative easing to buy assets and the rising asset prices enable them to raise money by issuing new shares and bonds. There was indeed a rally in the stock market in 2009 but this was accompanied by a sharp decline in company flotations. Paper wealth went up but there was no effect on corporate issues, investment and activity as in the quantitative easing storyline.
The failure of quantitative easing should come as no surprise to a Keynesian. As Keynes said, if money is the drink which stimulates the system to activity,
“there’s many a slip twixt cup and lip”.
Quantitative easing is simply the expression of the monetarist view that, if you increase liquidity, money GDP will rise proportionately after a short lag. However, it is not the printing of money that causes GDP to rise but the spending of money, and the spending of money depends not on the quantity of bank reserves but on the willingness of the private sector to borrow and the willingness of banks to lend at rates of interest at which they can borrow. However many trillions of dollars or pounds Governments pump into the economy, this will not stimulate borrowing or lending if consumer demand is not there.
Ministers are constantly exhorting banks to lend. Banks say that there are no borrowers, by which they mean borrowers at the going interest rate. However, here is a suggestion for overcoming this blockage which is consistent with the deficit reduction programme. The Government should set up a national investment bank, which they would capitalise and mandate to spend £X billion a year on investment projects at interest rates low enough to fulfil the investment mandate. We are already promised a tiny prototype of this in the proposed green investment bank. Candidates for such investment would be infrastructure projects such as the high-speed rail link mentioned by the noble Lord, road building and repairs, house construction by local authorities, or projects to do with carbon emissions—insulating houses, solar panels and so forth. Lending by the investment bank would not affect the deficit and so would not spoil Mr Osborne’s austerity story. True enough, subsidised interest rates imply a lower expected return on equity than from current lending, but a lower return is still better than no return, which is what idle capital now earns.
There may be better ways but the goal is clear: to unblock the channel of spending when orthodox fiscal and monetary policy is, for one reason or another, disabled. Unless we succeed in doing that, we will be doomed to years of interminable recession.
Baroness Billingham
My Lords, let us not beat about the bush but focus our attention on one specific area by considering the impact of the Government’s actions. In the spending review, the Government claim that they have been forced into making a series of choices, which they allege are based on seeking “fairness” and “reducing … wasteful spending”. My question for the Minister is how wiping out all the advances made in school sport in the past decade can be seen as either fair or a reduction in wasteful spending.
Yes, it has been hard making those advances. I can recall many Members from all sides in this Chamber taking part in those debates. There have been passionate debates, but we have always had a consensual and positive view about sport. How we fought and railed against the couch potatoes. How furious we were at the selling off of school playing fields. How we moaned about the loss of grass-roots sport and, equally important, the demise of competitive sport in all our schools.
I can name all of you—from the alliance to the Cross Benches and my own side—who challenged the Labour Government to put sport back into the curriculum and into extracurricular activities as well. How we all rejoiced when a minimum of two hours of sport in the curriculum was announced, and how we cheered even louder when we heard of the “Kelly hours”, which gave us the prospect—at long last—of an additional five hours of sport in state schools. That was a triumph, of which we could all be justly proud.
How could the Secretary of State, Jeremy Hunt, be so docile when Michael Gove announced that £162 million that was previously earmarked for annual sports funding was to be redirected to general schools funding? The outcome of those changes is inevitable. School heads, desperate to do well in Ofsted inspections and in league tables, will inevitably be led to transfer money from PE into their more academic programmes. Michael Gove will thus be able to hide behind the human shield of heads’ self-determination—a cowardly and sneaky way to behave. At the same time, the specialist school system, under which some 400 schools became sport focused and 3,200 sports co-ordinators were introduced—one in every secondary school in the country—was wiped out.
As for the timing of these disastrous cuts, are the Government aware, or do they even care, that the 2012 Games were supposed to set our young people alight and encourage others to take up new sports? Their legacy was to include thousands of others making a new life for themselves in the sporting framework. In fact, the successful bid stressed the value of sporting heroes time and again. The 25 per cent cuts in total spending will decimate school and grass-roots sport and make a mockery of Seb Coe’s promises that the legacy is as important as the Games themselves. That will adversely affect not hundreds or thousands but millions of children. It is carnage and it is grossly unfair.
We will reap the rewards with more obese and disaffected youngsters and the loss of the skills and international sporting success that we are all so proud of and eager to attain. I guarantee that more than 80 per cent of any medals that we win in the London Olympics will be won by competitors from private school backgrounds. The future will be more unfair and divisive. When I hear the head of Eton College announcing the sale of its famous playing fields, I will know that the alliance is indeed playing fair and that school sport will be taken from all youngsters, irrespective of their background and schooling. I await the response to that possibility from the Prime Minister and, indeed, from many of his Cabinet colleagues. At that time, I might be convinced that we are all in it together, but I doubt it.
This weekend we put the clock back an hour for totally misguided reasons and not based on the greater good. The coalition Government have just turned the sporting clock back to the 1980s, to the previous time that the Conservative Government wrecked school sport. They should be ashamed of themselves. They have a chance to think again and reverse this appalling strategy. If not, a whole generation will be lost to sport. That surely is too high a price for any nation to pay.
Lord Plumb
My Lords, we have had the privilege of listening to some interesting, varied and sometimes provocative speeches today, but I have not yet heard anyone speak of British agriculture, which is the one group that can really help our country’s economy. I am proud to be involved in British agriculture—I declare my interest as a farmer—so I will speak on the spending review’s implications for agriculture and horticulture as well as for the future role of the Department for Environment, Food and Rural Affairs, which faces substantial cuts. We have to examine where those cuts will come and what effect they may have.
Defra has not always been the flavour of the month with many farmers because the unnecessary complications in the single farm payment and the rural development schemes cause burdensome expense. Every tree, building, rock, hedge, ditch, pole or pond that impinges on grazing or cropping areas has to be identified as a result of the gold-plating of European policies. I hope that, following the spending review and the reduction in bureaucracy and red tape, farmers can get on with their farming and show much more effectively and clearly the economic value of food and energy production to the nation, through growth, efficiency and innovation.
However, it is necessary to look way beyond the farm gate to the food chain as a whole. Collectively, the agrifood sector accounts for 6.7 per cent of the total economy of this country and generates some £85 billion in GVA to the United Kingdom economy. Many people are surprised to learn that 3.6 million people are employed in agriculture, which equates to 14 per cent of total employment in this country. The United Kingdom food and drink industry accounts for 5 per cent of total exports, with over £14 billion generated through overseas sales last year.
The credit crunch has awakened food patriotism among consumers and has increased dedicated supply chains, which are a feature of the agrifood sector. We know that farmers are more aware than most of the challenges of limited resources and climate change. Farmers recognise that they can contribute to developing renewable energy markets and emerging technologies. The biofuel market is a classic example. That market is developing very quickly—we should catch up with some other European countries before too long—and is often delayed only by planning consent.
We recognise that Defra has undergone substantial restructuring in recent years, so it is important to determine its future structure as soon as possible. There is obvious uncertainty and speculation among the bodies under review, including the Agriculture and Horticulture Development Board, the Environment Agency and Natural England. Natural England plays an important part in teaching through school visits to farms. I speak from experience, as 34 schools have adopted my son’s farm so that children can see what is going on in the countryside. At the same time, it is appropriate for Government to restructure antiquated regimes, such as the Agricultural Wages Board, and to refocus spending priorities and delivery.
I have many questions for the Minister about the details of the spending cuts that I know are under consideration. With a 33 per cent cut in expenditure, am I correct in assuming that £174 million will come from a reduction in running costs? What are the savings in administration? Money is overdue for payment from Brussels for the higher level scheme. Will that be delayed? Farmers are telling me that the scheme has already been delayed for some considerable time. Will the savings on the rural development programme of £66 million apply just to the environment scheme? If the sterling-euro exchange rate is a factor, is there any provision for unexpected movement? What exactly are the department’s spending commitments on animal health? One could go on with these questions, which have to be put.
Minister, I do not expect an answer tonight, but please take note of those questions, because they are real and they are being asked. I hope that in doing so, you will know that farming is at the heart of the financial recovery and is willing to play its part in doing everything possible to reduce the deficit. I am confident that it will.
Lord Clark of Windermere
My Lords, the noble Lord, Lord Plumb, has spent a lifetime in politics very successfully defending and advocating the interests of the farming community. He tempts me to mention another side of the rural community—that of the forestry industry. As a former chairman of the Forestry Commission, I am going to yield to that temptation. Like every other government department, the Forestry Commission has taken a hit with the comprehensive spending review—a 25 per cent cut. I think about what it has done in recent years in timber production, biodiversity, conservation, access, climate change, health promotion; the list goes on and on. When I consider that the net cost last year to the Exchequer of the Forestry Commission in England—and it is only the Forestry Commission in England that the Treasury can actually touch—was a mere £10 million to deliver all those public benefits, I just wonder what the Treasury is up to.
Having yielded to temptation, I now take up the invitation of the Minister to take note of the spending review. The House will be pleased to hear that I am not going to deliver what I had originally planned because, quite frankly, there have been some brilliant contributions in this House this afternoon. Not all have come from this side, although they mainly have. They have also come from the Cross Benches; the noble Lords, Lord Skidelsky, Lord Low of Dalston and Lord Bilimoria, all made real, pertinent and thoughtful points. If the Minister believes that he can leave this debate with his case accepted he is, I am afraid, going to be disappointed.
We tend to think of the spending review as an economic issue, but it is as much, or perhaps more, to do with politics as it is with economics. I must credit the Government for the way they have managed to swamp the media and persuade them that there was no alternative to these cuts; that they had to be done, and done immediately; and that the Labour Government had left an unwholesome mess. That case has been refuted time and time again, but it needs repeating time and time again that this is an ideological battle. In this respect it divides both sides of the House. It is to do with the power and the size of the state. I know where we on this side stand, and I know where the majority of Members on the Conservative side stand. I am a bit unsure where the Liberals stand or whether they stand anywhere. They seem to be sitting on the fence yet again, and I am sure this causes a great deal of anguish to a number of Members.
Most honest and neutral people were horrified by the Chancellor’s announcement in the other House and the reaction of Conservative MPs. The bigger the cuts, the louder the cheers—and yet every one of those cuts will mean that tens of thousands of ordinary, decent citizens are going to lose their jobs. This will apply not only in the public sector but in the private sector because, as we have been reminded constantly today, roughly for every job lost in the public sector the multiplier effect means that a similar job will be lost in the private sector. That has never actually reached the airways or the pages of the newspapers; it has never been spelled out that we are talking about cuts not only in the public sector but in the private sector as well.
I have also noted the letters in the press—obviously co-ordinated—from business leaders saying that they will make up the losses. I should like to write to every one of these business leaders and say, “Tell us how many jobs you are going to create in addition over the next four years”. That is the only way in which can we judge them. We can judge the Government because it is a matter of public record, but they have called in their supporters from industry and they must be challenged.
I take the point greatly that we are risking the economy of this country. There has been talk that the Labour Government did not invest for dark days when it was sunny. What is investment in education and higher education? If this country is to survive and prosper—and I want it to do so—we shall have to get out and win markets. Although we are talking about a recession, the reality is that the economies of the world are bigger now than before the recession. There are opportunities for our exporters in the growth economies—China, Brazil, India and so on—and the pound is at a level at which we should be taking advantage of them. However, we will do that only if we use the skill, the ingenuity and the brains of our young people. I believe that one of the best capital investments that the previous Labour Government made was in the field of education. I could also refer to other fields.
I challenge the point about the level of indebtedness. The key yardstick is the size of the national debt against the size of the GDP; that is the way to judge it. If you read the British press, listen to the British radio or watch the British TV you would think that we were at the top of the league: that we were in the most difficult position. That is not the case. The top country—I think that a Member on the other side of the House referred to this—was Japan, with indebtedness of 225 per cent of GDP. Running down the list you find the United States at 93 per cent and France at 84 per cent. You have to go down to 12th position before you come to the United Kingdom at 77 per cent. That is far too high—I concede that straightaway—but it is only 2 per cent higher than the model that is always held up in Europe: that of Germany.
Of course the problem is difficult and real and the deficit needs to be decreased, but I would argue that to try to decrease the deficit through cutting public spending and reducing demand is not a very propitious way to move forward.
Lord Stewartby
My Lords, I nearly forgot to get up, I was so interested in what the noble Lord, Lord Clark, had to say. It has been a very vigorous but extremely interesting debate. I have not prepared a speech of any length, which is a good thing, because much of it has already been said by my noble friends Lord Lamont, Lord Tugendhat and Lord Newby, so I just want to pick out some of the main themes of my rather attenuated speech.
There can be no doubt that the figures of deficit and interest charges have been at a dreadfully dangerous level. Interest is now at over £40 billion a year, which is much larger than the whole of the schools budget and the whole of the Ministry of Defence’s expenditure. One cannot run the economics of a country on the basis that it can hold those levels of debt. The same is true of the scale of the structural deficit, which is over £100 billion, according to the Budget and CSR papers, so clearly tough measures were going to be necessary. There is no doubt that in a situation like this, making changes early is always going to be the right course, because if you leave problems to fester, they normally get worse in the process. I think the Chancellor has done right to see that immediate action was taken, and the CSR now sets out a way ahead after a very bruising period. I am afraid I cannot follow the noble Lords, Lord Myners and Lord Peston, in their defence of the state of the British economy that they bequeathed to their successors, but I thought it was a very bold attempt.
I cast my mind back to nearly 30 years ago and the 1981 Budget, because I think it contains some interesting matters that are relevant in any period of tight budgetary squeeze. I used to carry the then Chancellor’s bags at that time, so I had to field a lot of representations from individual Back-Benchers who were not happy about the composition of the 1981 Budget, to put it mildly. Because the Chancellor was always so busy, I got fielded to talk to these people and it has made an indelible impression on me because that was a classic case of tax increases in a recession. It is a lesson which we would do well to remember today. One of the great moments in that period was a letter written to the Times by 364 academic economists, who said:
“Present policies will deepen the depression, erode the industrial base of our economy, and threaten its social and political stability”.
Well, what happened? From the very moment they signed the letter, the economy turned and began a course of recovery. It made me feel that, although sometimes latent, there was a sort of energy in the British economy if it was left to get on with its work and not hindered by too many regulations or unattractive fiscal situations.
I have been concerned in recent weeks about the supposed “double-dip” recession that may be around the corner. I would be the first to say that there are many uncertainties in the economic world at the moment, not only in this country but abroad. The situation in many countries, particularly in Asia and the Far East, is much more serious, but you do not see much comment about it in this country. When I ask people what the case for the supposed double dip is, I do not get an answer. There has been much talk, but no explanation. People just toss in the double dip as if it was some shadowy possible event hanging over us.
This brings me back to my original point; there is a tendency to be pessimistic about our economic performance and potential. Just as the 364 economists gave an extremely pessimistic assessment of what the 1981 Budget would do to people, so there has been a pessimistic slant in the response to the CSR and the public reaction to it. Of course, two or three quarters of better GDP do not guarantee a strong recovery, but they are more likely to point to an improvement than a deterioration, so I was not surprised that the figures were a bit better than people had expected.
When we are asked where growth is coming from, I would give greater emphasis to something that has hardly been mentioned: investment by the corporate sector. The banks may not be lending very much because they cannot find decent borrowers. One of the reasons for that is that many of the people who were borrowers have strength in their own balance sheets to the point where the corporate sector has far more resources than are needed for the level of activity that is taking place. It could afford to do a lot more.
It is important in a recovery that companies should have confidence that there is stability and that there are further improvements to look forward to. There has been a reduction in corporate taxes and other measures to help businesses. The latest output figures are encouraging. There are other straws in the wind. Those in business whom I talk to or meet say that there are far more examples of companies looking for opportunities to do things, having sat on their hands for quite a long time. The noble Lord, Lord Knight, spoke about investment. That could be one of the stronger elements of recovery.
However, there is still a long way to go. The Government must hold their nerve in implementing the plans set out in the CSR in the face of the criticism and challenges that will certainly follow. I believe that they have the commitment and determination to do so and that the double-dippers may be disappointed. I have moved in the past few months from being moderately pessimistic to being moderately optimistic. I just hope that it will work out that way.
Baroness Nye
My Lords, I should like begin by thanking your Lordships for the generous and warm-hearted welcome which I have received from all sides of the House. The staff have done their utmost to help me settle in, and I am very grateful indeed for the kindness that was shown to my family on the day that I was introduced. I should particularly like to thank my sponsors, my noble friends Lady Kinnock and Lady Royall. When I say friends, this is not simply the normal courtesy given to a colleague from my own Benches. I can genuinely say that they have been among my closest friends and mentors for—I am almost afraid to say this—nearly 30 years.
Having spent those three decades working in the precincts of the Palace of Westminster, I was labouring under the misapprehension that I knew my way round. I soon discovered that my knowledge ended as soon as the green carpet gave way to the red. I recognise that I have a very great deal to learn.
In a working life dedicated to the Labour movement, I have had the good fortune to have worked for three leaders of the Opposition, two Prime Ministers and one Chancellor of the Exchequer. I have endured 18 long years of opposition—and, yes, 12 very long years of government. Yet I have only one claim that is, I believe, virtually unique in the world of politics: in all that time, I have never before delivered a public speech. So this really is a maiden speech. Be kind!
The background to this debate on the spending review is the events of 2008 and the financial storm that began in America but then spread to all parts of the world. Prior to the global financial collapse, the UK had by far the lowest ratio of public debt to GDP of any of the G7 economies; in fact, it was about half the G7 average. Our budget deficit, the subject of some subsequent criticism, was actually very close to the average for the advanced economies. When the storm hit, there were serious choices to be made. The UK played a leading role in ensuring that the choice of the international community was to intervene in the markets on an unprecedented scale. We can now see that this extraordinary action prevented a very major recession from developing into a slump. We can perhaps too easily forget how close the world came to an economic calamity which could have rivalled the 1930s in its severity and social consequences.
The nationalisation of Northern Rock was not a choice that the Government wanted to make, nor was the injection of capital into other UK banks. But this action meant that no British saver lost money, and virtually all other advanced countries followed the UK's lead. It was not action to bail out the bankers; it was action to protect people's savings and, ultimately, to protect their livelihoods as well. There was also direct government action to restore the wider economy to growth; help for small businesses that were in need of credit; targeted tax cuts to help families at the lower end of the income scale; and investment in infrastructure projects to maintain employment. A housing collapse was avoided by special government support to people who were threatened by the repossession of their family home.
In February 2009, the UK had a historic opportunity to lead the way out of recession when the G20 meeting came to London. The co-ordinated global action agreed at that meeting will stand as a landmark when the history of the recession comes to be written. The global financial crisis caused tax receipts to fall and public spending to rise. It is common ground across the political spectrum that action now has to be taken to reduce the government deficit, and everyone recognises that the incoming Government have a difficult task in choosing the right path for deficit reduction. One thing is certain: the deficit will not be reduced without a plan for growth and a focus on maintaining employment.
I am especially worried about the future for our 16 to 19 year-olds. I was born not far from here geographically into a family where the sole provider, through no fault of her own, was my mother. Although she had left school at 14, her father had made her train as a shorthand typist so that she had a skill that would be her means to support herself and her family. I also left school early, at 17, but I was one of the lucky ones. Opportunities came along which I was able to grasp. For many of today's 17 year-olds, that will not be the case. They need our help.
I know that all sides of the House share the aim of raising the educational achievement of all young people, especially for children from low-income households and disadvantaged backgrounds. This is not only critical for social justice; it is also vital for the competitiveness of the British economy. Young people have always borne the brunt of increased unemployment, and it is the same again this time. The IFS recently reported that,
“low skilled, low-educated and young workers are seeing a bigger deterioration in their job prospects than skilled and educated ones”.
That is why the education maintenance allowance was designed to encourage young people from less well-off households to participate in educational training after the school leaving age. I wish it had been around when I was 17. This allowance is no free lunch. Young people have to turn up, on time and participate fully in their learning agreements. If they do not, then they are penalised by losing their weekly payment. If they do, then a bonus is paid, linked to performance.
The Chancellor has said that the education maintenance allowance is to be replaced by “more targeted support”. I should be grateful if the Minister could provide some detail in his response today. For young people contemplating their future, it is important to know as soon as possible what that more targeted support is likely to mean. This is especially important for students who will find themselves studying in the period between the abolition of EMA in 2011 and the introduction of the raising of the participation age to 18 in 2015. For them, the future starts now, and a great number of them will need our help to achieve their full potential. In an era where some cuts are necessary, this sort of support would be one cut too far.
I should like to end by thanking the noble Lords on both sides of the House who have played formative roles in my political life. One thing I do know about the red carpet is that this is a place where old political foes can become the best of friends. And in that spirit I should like to thank the Minister for his work in the Treasury on financial regulation, when he gave invaluable advice to the then Chancellor of the Exchequer and the Labour Government. I wish him well on his return to the Treasury in his new role.
Baroness Liddell of Coatdyke
My Lords, it is a real privilege for me to respond to the maiden speech of the noble Baroness, Lady Nye. I do not think that either of us believed that this day would come when we met in the old North British Hotel in Edinburgh in about 1978. The noble Baroness was at that time a civil servant working for the then Prime Minister, Jim Callaghan, and I was the general secretary of the Labour Party in Scotland. We were moving towards one of the most difficult general elections that we have ever experienced. Shortly after that, with a certain Gavyn Davies, I wrote a report for Jim Callaghan on the truck dispute that was then causing chaos. For some reason, that report was never given to the Prime Minister and he made the famous “Crisis? What crisis?” speech. However, Gavyn Davies was to go on to do better things and to become the husband of the noble Baroness, Lady Nye.
I can think of no one from this side of the House who would have anything other than the utmost respect and affection for the noble Baroness. She is held in high regard by members of the Labour Party the length and breadth of the country. Always silent, always calm and always good-humoured, in her working life from the 1970s onwards she has worked for four Labour leaders and two Prime Ministers. They were always much better when they took her advice. The noble Baroness has today made what she says is her first public speech. We have heard eloquence and, for the first time in this lengthy debate, we have heard the global financial crisis put into context. Many of us had forgotten the circumstances around it in its detail and it was for the noble Baroness to put it into context. This House is much enriched by having her among us and those of us who are her friends are delighted to see her here.
Going on to the context that the noble Baroness set out, I watched the global financial crisis develop from the other end of the world. We have perhaps forgotten the extent to which the rest of the world looked to Britain to provide leadership. That initiative, taken with the Prime Minister of Australia at that time, Kevin Rudd, to make the focus not the G7 or the G8 but the G20, was of real significance. It was a moment when the financial architecture of the world changed, because it involved the emerging markets, many of them critical to our long-term well-being in this country.
Like many noble Lords, I am concerned about the lack of attention to growth in the economy, because growth will be much needed to get us out of the situation that we find ourselves in. The noble Lord, Lord Skidelsky, put it in very blunt terms, but I notice that the Chancellor was celebrating the fact that the recovery has proved to be stronger than we had anticipated. Quite frankly, that was as a result of the Labour Government’s policies. I draw to the Minister’s attention the fact that a key part of those growth figures are construction figures. Many of those construction figures came as a consequence of actions taken by the previous Government. While I am not in the league of the noble Lord, Lord Skidelsky, I know that in economics there is a very important law: the law of unintended consequences. When the Minister reflects on Sir Philip Green’s prescription for the Government to get themselves into a new kind of shape, would he reflect that he advocates getting rid of government property? Now, all of us might think, “Yes, get rid of some of the buildings and sell off some of the stuff that we do not need”, but that means £25 billion of commercial property coming to a city centre near you. That is a troubling and disturbing aspect for future economic growth.
I shall move on to an area that is close to my heart: SMEs. I shall talk just a little about tourism. With all respect to the noble Lords, Lord Plumb and Lord Clark, both of whom made very convincing cases for economic regeneration in rural and remote areas through agriculture and forestry, I argue that one thing that can bring rapid economic growth to remote areas is tourism. In this country, tourism is one of our major industries; I should say at this point that I am a member of the board of VisitBritain, the international marketing arm of our tourism industry. Tourism supports 2.6 million jobs. One in 12 jobs in the UK is in tourism and, with over 200,000 small and medium-sized businesses, it already contributes £115 billion, or 8.2 per cent, of the UK’s GDP. It is set to be one of the best-performing sectors over the coming decade, better even than some of our technology-led industries.
One reason why I am concerned about tourism in the future—I am not going to whinge about more than a third of the budget being cut from VisitBritain—is that if we do not give rapid support to our tourism industry we run the risk of losing the opportunity of a lifetime. The depreciation of sterling has meant that Britain is a much more affordable marketplace. Allied to that is the run-up to the Olympics in 2012, the Commonwealth Games in 2014 and the Decade of Sport. Tourism can get to those parts of the British economy that other economic instruments cannot reach and I urge the Minister to look carefully at the opportunities that can exist for tourism.
VisitBritain has already taken substantial cuts; its aim is to do better with less. Over the past two days, it has been named as the only public sector organisation to come in the top 30 Twitter sites in the UK, as modern marketing tools are used to market British tourism abroad. While the B&B in Truro, the chocolate factory in Oban and the inn in Glenelg cannot market internationally, VisitBritain can. We need to allow our tourism industry to fill the market gaps that are created. Through no fault of anyone, there is market failure in the international marketing of tourism, because it is an agglomeration of small businesses.
I have one final point, although I do not want to take up too much of the House’s time. The noble Lord, Lord Haskel, pointed to the supply-side issues that have not been properly addressed in the comprehensive spending review and spoke about innovation centres. Innovation centres are a great idea. They were a great idea in the 1970s, 1980s, 1990s and 2000s. They are a critical way of taking the genius of our universities and turning it into businesses. However, that is not an easy job for the simple reason that, contrary to what many people believe, the banks are an inhibitor to the development of SMEs. Public sector involvement through innovation centres brings in the public sector and its aversion to risk. Raising money for SMEs and business start-ups in high-tech areas is a nightmare. I know; I have done it. There is the dilemma of risk in the public sector. There is an understandable venture capital gap in this country. It takes more to promote an investment of £1 million than an investment of £100 million. Many people set up high-tech businesses based on personal guarantees to banks and the banks are not lending. In conclusion, I ask the Minister to look closely at how the financing of innovative businesses can be secured when we have this dearth of lending from the banks and at how a framework can be created to allow a more adventurous attitude to risk. Without risk, we will not get innovative companies developing.
Baroness Browning
My Lords, it is a great pleasure to follow the noble Baroness. I apologise to my noble friend the Minister; I very much regret that I arrived just after he had sat down. However, I was here for the opening speech from the Labour Benches and am pleased to say that I heard it in full.
It was a great pleasure to listen to the maiden speeches today from my noble friend Lord Allan of Hallam and the noble Baroness, Lady Nye. I am looking forward to hearing the speech of the noble Baroness, Lady Healy of Primrose Hill, in due course. This is the first speech that I have made since my introduction and maiden speech to your Lordships’ House.
The CSR is extremely radical and wide-reaching. We all appreciate that. I expected there to be challenges and criticism of it on all sides of the House; indeed, I alert my noble friend the Minister to the fact that I have one or two criticisms myself, on disability, which I will come to in a moment. None the less, I have been surprised by the collective amnesia on the Labour Benches. It is almost as though, after 6 May, the mists of Brigadoon descended over the Labour Party, not just in this House but in another place. I have observed some of its debates on the inheritance—the state of the economy and the state of the country generally as it was left by the outgoing Labour Government. I was in another place for many years. I understand what a bitter pill it is to swallow when you lose office. It takes a little adjustment. Sometimes I think that a period of quiet reflection is not too harmful. However, I have been surprised tonight by the total collective denial that there is a problem of the scale that has required the sort of actions that the coalition Government have needed to make in this CSR.
The thrust of the CSR is absolutely right and the scale of the problem is as outlined. It is not political shenanigans. We have a serious problem. In his opening speech, the noble Lord, Lord Myners, said that the problem with the national economy was sometimes likened to a domestic situation, which he did not feel was appropriate. That may well be the case, but every household in this country understands that, if you borrow and borrow on your credit cards to the extent that you have to take out new credit cards to service the debt on the existing ones, there is a problem that must be addressed. We now need to borrow to service debt that we have already incurred.
The questions—your Lordships have addressed them in this debate—are of the scale, the timing, the measures and the choices. All of them are quite legitimately subject to a debate on how the coalition Government have brought forward their proposals. The main thrust is right, but I will draw to the House’s attention some issues about how they are put into practice.
The Government have certain options. They can look at taxation and at cutting expenditure, which, of course, they have done. It is much easier to cancel projects that are already in the pipeline, many of which did not carry a purse of money to fund them, but nationally it is not popular to cut something that has already been announced or of which people have an expectation. However, these are perhaps some of the easier ways to bring down expenditure.
I wish to draw to your Lordships’ attention and that of my noble friend the fact that in another place I spent several years on the Public Accounts Committee, where, twice a week, we received well researched and well presented reports from the National Audit Office on matters right across government. The reputation of the National Audit Office, across the parties, was that it was reliable. You paid attention to its findings. I want to talk about the reports on procurement that we received. There is a systemic problem with procurement on larger projects across government departments. It is not just a matter of cutting expenditure, because the Government will still be spending money, as we know; it is a matter of addressing these problems. They go right down to basics. They involve how procurement works, how contracts are issued, how the specifications are drawn up prior to contract, how the project is managed—sometimes the project management goes on for many years—and how a project is delivered on time and on budget.
In some departments—I have to name the Ministry of Defence as being the worst—there has been the most outrageous waste of public money. We are not just talking about a few beans; we are talking about big sums of money. If we can address this problem, I believe that it will make a huge contribution to the need for the Government to bear down on waste, on the way in which public money is spent and getting value for money. The House will be relieved to hear that I shall not go into all the issues, but that is something that needs to be addressed.
People who come into politics from a business background, whether to your Lordships’ House or another place, often find the legislative process frustrating. There is no doubt that what happens in the two Houses is very different from what happens in the business world. I came from a manufacturing background, having worked for a market leader, after which I ran my own business for 10 years. I found it very frustrating. Often people make comparisons with business, saying, “Business does things this way and we need to be more businesslike”. We have not even scratched the surface as regards the way in which the Government do business and procurement. Businesses out there would have gone bust years ago if they had followed the procedures that government departments follow in procurement. Everyone has heard of the classics, such as the big IT project. I am glad to have my noble friend here, who I am sure will point us in the right direction. However, it is not just about expenditure, although we are concentrating on that in this take-note debate; it is about the consequences for those who are the end users of those policies and procurements. I urge my noble friend to take some specialised advice to ensure that, in the future, the Government address these problems and get them right.
Taxation is another arrow in the quiver. As someone who believes that tax should be used as much as an incentive as a penalty, I hope that in the next few years the Minister will bear in mind, in the interests of fairness, the need to ensure that taxation and bureaucracy do not overburden particularly the small business sector, on which I believe he will rely quite considerably for the growth that is being talked about in today’s debate. This is where the jobs and growth will come from. One of the big problems that we face in this country is with the growth of small businesses into medium-sized enterprises. Other countries have been much better than us in the past at making that leap from small business to medium-sized business. Again, I ask my noble friend to take a look at the microbusinesses that employ fewer than five people. I particularly draw attention to the requirements on them in providing pensions for staff, but there will be other areas as well. If we really want those businesses to grow, we need to ensure that we recognise that point.
My final point is about disability. I thought that the speech of the noble Baroness, Lady Campbell of Surbiton, was very well made. It is a fact that there is no like-for-like comparison between people who are in residential care and people who are hospitalised. When we talk of residential care, all too often we think of very elderly, infirm people who cannot move and whom it would be difficult to take out. However, there are many people who are able get out to lead lives at some level of independence and maintain family contacts.
In that spirit, on disability, I say to my noble friend that one group of 250,000 people are still on severe disablement allowance, a benefit that was stopped in 2001. They were allocated that benefit at the time because they were deemed to have lifelong disabilities. Many of them—most of them, I would suggest—have never been in work. I declare an interest as a carer for one such adult. When we talk about getting people back into work, it is very worrying to me, as a carer. I am not saying that all of them could not be helped into some sort of work, but the nature of their lifelong disabilities—I am speaking particularly about conditions such as autism and people on the autistic spectrum—means that these are not people to whom we will be doing any service if we suddenly turn up one day and say, “It’s time for you to go to work after 38 years”. I hope that my noble friend will take that into account.
Baroness Healy of Primrose Hill
My Lords, it is with great pleasure and equal trepidation that I rise to speak for the first time in this House. I thank the Government for giving time for this debate on such an important issue. The CSR will have a great impact on the future of this country and the kind of society we will become.
First, however, I wish to thank the Labour Party for a long and interesting career in politics, dating back to the 1970s. In opposition I worked for great Labour parliamentarians, some sadly no longer with us, notably John Smith, Robin Cook and Donald Dewar. I have also been fortunate to work in government as an adviser to many extraordinary politicians. I wish to acknowledge two women in particular. First, there is the late Mo Mowlam, Northern Ireland Secretary during the Good Friday agreement; and secondly, Harriet Harman, Leader of the House of Commons in the previous Government and a formidable campaigner on behalf of women.
I will always be indebted to my sponsors: my noble friend Lady Ramsay of Cartvale, whose wisdom and knowledge of international affairs are hard to match; and my noble friend Lord Macdonald of Tradeston, to whom I acted as adviser when he was Minister of Transport and again when he was in the Cabinet Office. He is a man of immense talent and wide-ranging experience. To both I am profoundly grateful for their support and guidance on the mysteries and magnificence of this House. I am also delighted to be reunited with many other friends who I have worked for in the past, most notably my noble friend Lord Cunningham of Felling. I am thankful to have been warmly welcomed by the staff and officers of this House. Their reputation for kindness, patience and general helpfulness goes before them. It is well deserved. My family still talk of the day of my introduction. Not about me, I hasten to add, but about the amusing stories our Doorkeepers regaled them with.
My family came from the west of Ireland—from the villages of Barnatra in Mayo and Mountbellew in Galway. They arrived here in London in the 1950s. They settled in Primrose Hill in the borough of Camden, where I was born. The welfare state was already making an impact on people’s lives and Britain was the beacon of hope for many migrants, just as the USA had been for earlier generations. My grandparents had left Galway to make a new life in America, arriving at Ellis Island, New York, in 1910. They returned to Ireland before the great depression.
I grew up in London. I benefited from the welfare state, free education and the National Health Service. I believe in the importance of maintaining these for future generations. Today we debate what kind of future Britain can look forward to following the global economic crisis. I believe that the previous Labour Government had to incur the deficit to help keep as many people in their jobs and homes as possible. All parties acknowledge the need to tackle that deficit and it is in the debate on how best to do that where opinion varies. Noble Lords have so ably demonstrated that today. There are different views as to how far, how fast and how deep these cuts must go. We on these Benches suggest a different balance between cuts and tax rises to bring down the deficit, boost growth and protect the recovery.
Today, however, I wish to raise some concerns about the possible unintended consequences of the CSR. When I worked for the MP John Cruddas—and here I should declare an interest: he is my husband—I was continuously struck by the absolute determination of many struggling families to do what was best for their children. But the harsh realities of life, like ill-health or loss of work, could trigger a series of events that could lead to family break-up and loss of a home. This is what concerns me with the CSR. For example, housing benefit changes might mean that families have to leave their homes, removing children from schools and away from support networks of extended families, friends and churches. The CSR also announced that the percentage of child care costs covered by tax credits will be reduced from 80 per cent to 70 per cent. This could cost a low-paid worker with two children up to £30 a week, and, after one year, some people will lose their entitlement to employment and support allowance. A family where one adult is in paid work and the other receives ESA could lose up to £91.40 a week. Even if they then claim jobseeker’s allowance, they will still lose more than £30 a week.
I am also concerned about the effects of the CSR on carers. A report just published by the charity Grandparents Plus states that welfare reform and spending cuts could penalise the forgotten army of grandparent carers. According to this report, there are 200,000 family and friend carers—mostly grandparents—raising some 300,000 children. They save the Government some £12 billion a year. Over half these carers had to give up work or reduce their paid hours because of their caring duties. A third are dependent on benefits for their income and one in three is on discretionary local authority allowances. Many families could really struggle over the next few years.
I want the welfare state to remain the beacon of social progress and the foundation of a good society—the society that was so admired from the west coast of Ireland. One generation on, I am proud to stand in this place on behalf of the party I love. In this House, I will seek to speak up on behalf of those who have most to lose if society’s safety net is weakened.
Baroness Gould of Potternewton
My Lords, it gives me enormous pleasure to congratulate the noble Baroness, Lady Healy of Primrose Hill, on her very thoughtful and excellent maiden speech. I should also like to add my congratulations to the noble Baroness, Lady Nye, for it must be a unique occasion to be able to welcome two such good friends—both of whom I have known for more than 30 years.
I first met the noble Baroness, Lady Healy, when she joined the staff of the Labour Party in the press department in 1978. I think her boss at that time must have been the noble Lord, Lord Mandelson. I worked with her as a colleague for the following 10 years, until she moved over to work here in Westminster—first for the Parliamentary Labour Party, and then as a special adviser to shadow Ministers and Ministers. The noble Baroness has many friends on these Benches because of the long service she has given to the Labour movement, service that we have all appreciated over the years. Very often, though, she has been behind the scenes, but we have known that Anna has always been there giving good advice and support and we all appreciate that enormously. Your Lordships will, without doubt, benefit from the knowledge that she has gained over those years. Although she has a calm and dignified demeanour, do not be fooled. She is very determined and positive of views, which I know will come across in the significant contribution that she will make to your Lordships' House. I congratulate her again and welcome her enormously to our Benches.
Fairness, we were told earlier today, runs through the heart of the Government’s decision-making. I make no apology for repeating that there is certainly no fairness to poor families, pensioners, women or the disabled in either the emergency Budget in June or in the comprehensive spending review. It is difficult to comprehend how, using the Treasury’s own figures, it can admit that the poorest 10 per cent of the population will bear the brunt of the cuts, and then have the audacity to say that that is fair.
There is another element to the package—the increase in VAT. I need to refer to the Prime Minister. He said—I paraphrase—that an increase in VAT is very regressive; it hits the poorest the hardest. It is a great pity that he has forgotten those words. Nor is it fair that direct support for children is being cut by £66 billion—three times more than the banks. Is it fair that almost half a million low-income families are to be affected by cuts in childcare support and lose up to £30 a week? That may seem to be a small amount to some, but, as my noble friend Lady Sherlock said, for families on low incomes it is an enormous amount of money, which they certainly cannot afford to lose. It is the difference perhaps between being able or not to put something decent on the table to eat. The loss will also make it harder for parents to be better off in work. We have been told about the ladder of opportunity, but where is the ladder of opportunity for those parents? Perhaps the Minister can tell us.
We have been told that the spending review provides compensating measures and that child poverty will not increase for the next two years. That was an extraordinary statement; we do not want child poverty to increase at all. I do not understand what will happen when the two years is up. Many of the cuts in welfare spending will come into effect after 2012 and reduce the income of families in poverty unless compensatory measures are announced in the interim. Will they be announced?
The analysis by the End Child Poverty campaign makes it clear that,
“these compensating measures don’t go nearly far enough to stop this being a dark day for any family struggling to stay out of poverty”.
A consequence of the lowering of standards of living will be that such families will need greater support from health and social services. We also find that for the health service, which we are told is to be protected, the baseline has been changed, and money switched from health into social care, and the personal social services budget moved from the Department of Health to councils, which are to be strapped for cash. What guarantees will there be that the social services budget will survive?
We are told that work pays—and that is right—but it pays only if you have a job to go to. Not only will there be job losses in the private sector, as we have heard, but the Government forecast half a million job losses in the public sector. We have heard that the job losses, on any analysis, will impact more heavily on women, who make up 65 per cent of public sector workers, 77 per cent of the NHS workforce—many thousands of whom will be affected by the cuts in public health front-line services and the abolition of primary care trusts and SHAs—and 75 per cent of local government employees. The Local Government Association predicts that the cuts will mean the loss of many dedicated women workers in local government. These measures are already taking effect. In September, 79 per cent of those newly signed on for unemployment benefit were women. We need to ask why. However, it does not stop there. That loss of income will go on to affect future pensions. Will these women be joining the older women who are currently facing cuts in pension credit, public sector pensions, attendance allowances and carers’ allowances?
Many other noble Lords have referred to the effect of cuts in public services. But it is the poorer households and women who need public services the most—because of pregnancy, longer life-expectancy, lower earnings and assets, and assistance in managing caring responsibilities. There are already signs of crucial services under threat, including children’s services, support for teenage parents and midwifery support. Similarly, because of women’s relative inequality and poverty, women are the main recipients of benefits and tax credits—they receive 70 per cent of tax credits, 60 per cent of housing benefit, and 94 per cent of child benefit. In spite of the importance to women of receiving those benefits, it is proposed that there be a universal benefit to be paid to the main earner in the family, which is almost certainly, in the vast majority of cases, going to be a man. This move will put women’s access to an independent income under threat and reverses at a stroke all the redistribution from wallet to purse—mostly in recent years, but it was a redistribution that was started with the introduction of child benefit in 1977. That date is fixed in my mind, because myself and other colleagues on these Benches fought very hard with the then Labour Government to ensure that child benefit—which had previously been the family allowance—went from the father to the mother. How important that has been over the years. That independent income has been crucial to so many women and has on many occasions enabled a mother and her children to escape an abusive relationship. That is going to be impossible for her in the future—a very backward step.
The Government insist that it is impossible to say that women will be disproportionately affected by the cuts, because they have conducted an equality assessment of the measures in the comprehensive spending review. The impact assessment on gender that was carried out covered only two of the nine departments. The Government have avoided looking at the gender impact on tax and benefits because they said they could not determine how income is shared within a household. It sounds more like an excuse than an actual fact. Clearly there has been no in-depth analysis, in spite of the law requiring that all public authorities, including the Government, have to assess the impact of their current and proposed policies and practices on gender equality to ensure that neither sex is disadvantaged. The proposals fail to take into account the different barriers to employment faced by women, their particular reliance on benefits and tax credits as social protection, and the value to society of women’s employment. If they had done a proper analysis, perhaps they might have been convinced to distribute the burden a little more fairly, to focus a little more on tax cuts as opposed to spending cuts, but somehow I doubt it because, as my noble friend Lady Turner said, it is all about ideology—it is certainly not about fairness.
Lord Greaves
My Lords, this very great debate has concentrated on four aspects of the spending reductions: the timing, the speed, the size and the distribution. Along with other noble Lords, I want to concentrate particularly on the last of those—the distribution. In doing so, I follow some excellent contributions from the right reverend Prelate, the Bishop of Leicester, and the noble Baronesses, Lady Campbell and Lady Hollis, among others. I want specifically to talk about the situation in local government, and in doing so I declare an interest as a member of Pendle Borough Council in Lancashire.
If there are to be cuts, no one in local government believes that local government should not carry its fair share; the question is what the fair share is. There is an increasing concern and realisation within local government that the sector is perhaps being hit rather worse than others. The figure of 28 per cent over four years has been given as the reduction in the government grants. The problem with local government finance is that it so is complicated that, as the Government have not yet made any crucial announcements about the distribution of the cuts, it is difficult to be certain what will happen. However, there seem to be at least three major problems.
The first is that the cut to the main grant to local authorities—the formula grant—is to be front-loaded. That will put local authorities in an immediate difficulty because, of the four years of cuts that are to come, the highest cuts are to be in the first year. The treasurer of my council suggests that the cuts will be 10.7 per cent in the first year, then 6.4 per cent in the second year, 0.9 per cent in the third year—which is a curiosity that I do not understand—and 5.6 per cent in the fourth year. My view is that, as the fourth year will be a general election year, that 5.6 per cent cut will probably not happen, but the first two certainly will and they will cause real difficulties.
The second general problem is that, for the very best of reasons, specific grants are being abolished and “rolled up” into the formula grant. The way in which that will impact on individual authorities is problematical, to put it mildly. Many of the specific grants—area-based grants and others, such as the working neighbourhoods fund—have been specifically allocated to authorities on the basis of indices of disadvantage. There is a real danger that, if those grants are wrapped up in the general grant, the authorities that have been defined as being in the most need will miss out the most.
The third problem is that the proportion of council budgets that is accounted for in formula grant and revenue grants varies enormously from council to council. The figures that I was given in a Written Answer just before the summer suggest that the proportion varies from 10 per cent to two-thirds of a council’s budget. Most of the councils that you would think of as being in disadvantaged areas—if I may use that phrase—are clearly those that receive a higher proportion of grant. That is for very good reasons: namely, their needs are greater and their local resource base is smaller. However, there is a real risk that, in rolling everything up into the formula grant, the councils that will be hit hardest will be those most in need of support. In other words, the changes in local authority grant will result in a redistribution from poor areas to rich areas, to put it in fairly basic but accurate terms.
For my council and neighbouring councils such as Burnley and Blackburn, which are in the top 50 in the country under the indices of disadvantage, it is suggested that the revenue grant reduction, taken as a whole, may well be over 20 per cent. Similar-sized councils in leafier areas—not all but many of them in the south of England—may get by with significantly lower reductions. This is, I believe, a major test for the coalition Government. If the fears turn out to be true, the coalition will be wide open to accusations of favouring rich Tory areas against perhaps less rich Labour and Liberal Democrat areas. That is not what I am saying, but that is the accusation that will be made and it will be very difficult for people like me to defend it. In fact, I shall be standing up and saying it myself if that happens.
I want to give the House one example of the difficulties caused by the move from specific grants to rolled-up general grants. The example relates to the position of the Lancashire Police Authority—which covers the area in which I live—on police community support officers, or PCSOs. There are 427 full-time equivalent PCSO posts, of which 409 PCSOs are in post at the moment. The police authority has started a formal 90-day consultation process with a view to disestablishing all 427 PCSO posts from 31 March 2011. In other words, there is the potential for all the PCSOs to lose their jobs and for the work that they do in the county to be closed down.
The basic problem is that the PCSOs are all funded by specific grants to the police authority rather than from the police authority’s general budget. If that grant was taken away and the police authority general budget was secure and not being reduced, the authority might be able to cope, but at a time when the grant towards its core budget is being reduced, the police authority will find it impossible to fund the £10.5 million a year that the PCSOs cost. Some £8.2 million comes from direct PCSO grant from the Government and the rest—£2.3 million—comes from other contributions, many from district councils and unitary authorities within the police authority area that will obviously be under very severe pressure in respect of their own services. Therefore, the relationship between the specific grant and core funding—and whether the new system in which all the grants are rolled up takes account of the existing provision provided by those specific grants—is crucial. We will wait to see what happens.
Why do PCSOs matter? They are the basis of an extraordinarily successful community policing system in Lancashire, which was a pioneer of modern community policing about seven years ago. That system has been rolled out throughout the county and is a fantastic success. Every ward in the county has a small community policing team consisting of a constable called a community beat manager and a community support officer—a PCSO. They act as friends and support for residents. They do an enormous amount of useful work in the community among traders, schools and wherever there are problems. They act as the eyes and ears of the police in the community. There are residents meetings called PACTs—police and communities together—as well as a community safety partnership involving councillors, residents, traders and voluntary groups. It is incredibly successful. It works. I have received two pages written by a local PCSO that have been provided to me by the county’s UNISON branch.
What PCSOs do is fantastic. They are involved in everything from keeping a friendly eye on well-known local criminals, and making sure that they know what those people are up to, through to road safety for kids. It works. The levels of local crime—burglaries, drug offences, vehicle crime, criminal damage, less serious assaults and, in particular, anti-social behaviour—in my part of the county and throughout the county have plummeted. PCSOs are there on the ground doing what everybody wants them to do when we talk about bobbies on the beat. They are a modern form of bobbies on the beat. They do not just walk up and down every street in a regulated way; they are part of and work with the community. As somebody who attends the PACT meetings in my ward and works with the local community police, I can say that it really works. The detection rate in Colne at least, which is the highest in the county, is about 40 per cent. That is incredibly high. In the case of serious and organised crime, the PCSOs are the people on the ground who have the basic information when something important happens, so we do not have to start from scratch.
Community policing has been a Liberal Democrat talisman policy for many years; the Conservatives have always stood as the party of law and order. These are front-line services—the front line of the thin blue line, if you like—and they are the big society, because the whole community is involved in what goes on. I do not believe that a Government consisting of Liberal Democrats and a majority of Conservatives can possibly tolerate a situation in which the incredibly successful scheme that has been created throughout Lancashire in the past few years is done away with. Building things up takes time; doing away with them can be achieved overnight. I do not expect the Minister to give me detailed answers on this, but I hope that he will bring my remarks to the attention of his colleagues in DCLG and the Home Office.
Lord Watson of Invergowrie
My Lords, this view has been expressed on numerous occasions in the six or so hours over which we have debated the spending review, but I believe that it bears repeating. Contrary to what we have heard from coalition Ministers—including the noble Lord, Lord Sassoon, in his opening remarks—the measures announced in the spending review on 20 October were not inevitable. In point of fact, the economic crisis is the opportunity that many Conservatives—although I can see just three Conservatives opposite, apart from those on the Front Bench—have been waiting for. That was demonstrated by the crass and vulgar waving of Order Papers at the end of the Chancellor’s speech almost two weeks ago.
The coalition has seized the chance to reshape the economy by announcing an £83 billion shrinkage of the state. In the Financial Times on the day after the Chancellor’s Statement, Martin Wolf, who is widely considered to be one of the world’s most influential writers on economics, dismissed the Chancellor’s claim that cutting the fiscal deficit and reducing the share of public spending in GDP was unavoidable. Martin Wolf said:
“This is not so. It was a choice to concentrate so much of the fiscal adjustment on spending. Similarly, the UK government was never Greece or Ireland … The chancellor presents the hypothesis of looming national ‘bankruptcy’. If so, the UK must have been bankrupt for much of the past two centuries”.
I am not suggesting that reducing the fiscal deficit could be avoided, but the choice of how and how quickly it should be done is a matter of political judgment—or, perhaps, of ideology. The coalition has adopted the maxim that a good crisis should not be allowed to go to waste. That view is propounded by the Chicago school’s spiritual leader, Milton Friedman, who is on record as saying,
“Only a crisis … produces real change”.
He also wrote that, after a crisis has struck,
“a new Administration has some six to nine months in which to achieve major changes; if it does not act decisively during that period, it will not have another such opportunity”.
That helps to explain why the coalition is forcing through a raft of cuts for which it has no mandate. The coalition is doing so not because the economy is on the verge of collapse—it is not—but, as the Nobel Prize-winning economist Paul Krugman has said, because,
“the Tories are using the deficit as an excuse to downsize the welfare state”.
That point has been made by many noble friends on these Benches today.
Not only does the spending review herald the harshest public spending cuts since the 1920s, but the coalition is using the economic crisis to reign in the state and to reorganise society. I can understand the Conservatives doing that, but my main point is that, to their shame, the Liberal Democrats are allowing themselves to be used in this iniquitous process, which is nothing less than social engineering. Neither party has a mandate to embark on this course or for the string of decisions that have been announced in blatant violation of pre-election pledges, from the abolition of universal child benefit to the privatising transformation of the NHS. That is what most people voted against in May.
Following the months of leaks about cuts that were used to soften up the public with the fatuous theme of “We are all in this together”, I would like the Minister to say how exactly the Cabinet and their families—with their trust funds and prep schools for their children—will suffer. We should be told just what sacrifices they feel they will have to make. I will not be holding my breath.
When the Labour Government proposed any policy perceived as affecting the well-off disproportionately, the usual media suspects would characterise it as a class war, but the silence from those same mouthpieces over the past two weeks has been deafening. Just what is different about the coalition attacking the poor? Millions of people really will suffer as a result of these cuts. Over the next four years, Government departments face average cuts of 19 per cent in real terms, of which the heaviest—of at least some £18 billion—will be to welfare, which is targeted at the most vulnerable.
Much has been said and written since the spending review was announced about the distributional impact, but the bottom line is that the Institute for Fiscal Studies—which, incidentally, is described even by the Daily Telegraph as the country’s most respected economic forecaster—states:
“Our analysis … shows that … with the notable exception of the richest 2% … the tax and benefit components of the fiscal consolidation are, overall, being implemented in a regressive way”.
The IFS is an independent body, whose former director, we should not allow it to be forgotten, is now the head of the coalition’s Office for Budget Responsibility.
There are to be deep cuts to public services that are disproportionately used by the poorest households, such as social housing and social care. The Chancellor’s insistence that those with the broadest shoulders would bear the greatest burden and that his cuts would hit the richest hardest would be laughable if it were not so serious. His own figures show that the poorest 10 per cent will bear the largest share of the spending review announcements. Even when all tax and spending measures are taken into account, the poorest 10 per cent end up second worst off of all income groups—and that is only because the Government’s calculation boosts the impact on the top 10 per cent by including the 50 per cent tax rate announced by the previous Government.
The coalition appears to be relying on the private sector to ride to its rescue by hoping for public acceptance of the endlessly repeated falsehood that Labour profligacy created the deficit that the coalition now faces. The facts tell a rather different tale. Britain’s budget deficit has mirrored the average deficit rise across the 33 most developed countries. The deficit increased from 1 per cent of GDP in 2007 to 9 per cent in 2009 as tax receipts plunged and benefit payments increased due to the crisis of 2008.
There are many other areas that could be highlighted, were there the time. For instance, why should universities be expected to face deep cuts when we need to maintain the expansion of higher education to help grow the economy? Why should the Government continue to pay to schools and academies a greater amount of money to educate each 16 to 19 year-old than they do to FE and sixth form colleges, despite evidence that colleges recruit a more disadvantaged group of students?
One area that I must highlight—as many have already done, not least my noble friends Lady Turner of Camden and Lady Gould of Potternewton—is the effect of the spending review on women and, by extension, on families. The coalition’s cuts will fall disproportionately on women, who are more likely to work in the public sector. According to research by the House of Commons Library, measures announced in the spending review will hit women twice as hard as men. That seems hard to believe, but it is because benefits typically make up one-fifth of women’s income as opposed to only one-tenth of men’s. For instance, 1 million more women than men claim housing benefit and many of those will be lone parents who now face poverty as a result of the cuts and restrictions about to be imposed. Of the £8.5 billion that will be raised by cutting direct payments to individuals, two-thirds will come from women—again that is revealed by the House of Commons Library. In June’s emergency Budget, £5.8 billion was raised from women and £2.2 billion from men. Of the £16 billion in total that is being clawed back through direct tax benefit changes, £11 billion will come from women. Yet we are told the spending review is fair.
Tories and Lib Dems do not seem to understand the way that many poorer families live. Clearly, they believe that supporting families makes them dependent, whereas the reality is that such support helps working parents to become more independent. Everyone knows that women in general live on lower incomes, yet the coalition has chosen to force them to bear a greater share of the burden.
In finishing, I will say a brief word on the effects of the cuts in housing benefit, which has also been referred to by many noble Lords. I just wish that Ministers would admit that housing benefit is not just for the unemployed. Some 300,000 people in employment receive housing benefit. The issue is about much more than a few well-off areas of London—although you would be hard-pushed to know that given the media coverage of the past two weeks—and more than 750,000 claimants could be affected by the changes to the way local housing allowance levels are calculated. That will involve families in many communities across the UK. Indeed, Department for Works and Pensions figures show that Scotland will be hard hit. Around 40,000 people in Scotland will have their housing benefit cut from next year and will lose £7 a week—over £350 a year on average—because of the changes, even before the 10 per cent reduction for the long-term unemployed is taken into consideration.
On that issue, the coalition has been forced to think again, and rightly so if it genuinely intends that the effect of the spending review should be fair. I have to say that that claim has already been revealed to be a hollow one, as millions of people will, I fear, discover to their cost in the years ahead.
Baroness Hughes of Stretford
My Lords, it is with great pleasure that I have listened to the maiden speeches tonight. They were all excellent, particularly those of my noble friends Lady Nye and Lady Healy. There were also a number of other very notable speeches on this subject. In the short time that I have, I wish to address the four spurious claims that the Government are making to justify the plans that they have produced in their comprehensive spending review.
The first is that the current crisis is the legacy of the Labour Government’s handling of the economy. When the credit crunch started in 2008, as we have heard in great detail from the noble Baroness, Lady Nye, and the noble Lord, Lord Low, Great Britain had one of the lowest debt-to-expenditure ratios among comparable countries. It also had lower debt as a proportion of GDP than the debt which the Conservative Government left us in 1997. It was a time of low interest rates, low inflation and low unemployment. It is quite clear that public spending did not cause the scale of the credit deficit. That was caused by a global financial crisis in relation to which the Labour Government took decisive action, not to shore up the banks as an objective in itself but to protect people’s savings, people’s jobs, people’s homes and livelihoods and to protect businesses. As a result, unemployment rose by only half as much as in previous recessions, and there was a more rapid return to growth, the momentum of which is still with us, just about, in the quarter 3 figures published this week, although it is clearly dwindling because of the lack of a growth strategy from the Government and their slashing of capital projects. Construction is still the main contributor to the growth that we have seen so far.
My noble friend has just touched eloquently on the second claim: that the scale and pace of these cuts are avoidable. In his opening remarks the Minister said that it was about striking the right balance. He is right, but implicit in that acknowledgement is that choices are being made. I have been in government for 12 years and I know that in meeting and solving a problem you always have choices. Generally speaking, you try to make the choices that most fit with your value set, ideological position and political objectives. As several of my noble friends and others have commented today, the Government have chosen to make the cuts deeper and faster than necessary. This is a political agenda, not an economic objective, which will have serious long-term consequences for this country and our citizens.
The third claim is that in the midst of these proposals the Government are protecting key public services. This is, frankly, incredible. We need only look back at what happened under the previous Tory Government—this is, of course, a Tory Government despite the fact that it is called a coalition—when Margaret Thatcher’s cuts, which pale into insignificance when compared with what is being proposed in this spending review, led to long-term damage for our country. The noble Baroness, Lady Browning, who is not in her place, referred to amnesia. There is amnesia on that side of the Chamber, too, because Members there seem to have forgotten the dilapidated state of schools and hospitals, the leaking roofs, school standards that had flatlined, people waiting 18 months to two years for elective surgery and outpatient appointments, unemployment rising dramatically, youth unemployment hitting record highs, pension poverty doubling during the 1980s and 1990s and child poverty more than doubling. It is inconceivable that the impact of the cuts now proposed will not be even worse than the ones that we saw in the 1980s and 1990s.
The damage the country sustained then was long term and, despite all the improvements and investment that the Labour Government made to redress that damage, we are still left with that legacy in part. Key public services will not be protected; they will be decimated by these cuts. People do not yet understand the depth of the damage that will be done.
The fourth and final claim that the Government are making—again already referred to by many Members—is that the cuts are fair and will fall on the broadest shoulders. I wish to draw attention to their impact on those least able to speak for and protect themselves against the Government—that is, children and young people. Cuts from a variety of different sources will impact negatively on children and young people, and on the most vulnerable children and young people the worst. First, there will be an impact on schools. We have heard about the pupil premium for schools with disadvantaged children. We were told by the Prime Minister and the Deputy Prime Minister that this would be paid for by money outside of and additional to the Department for Education’s budget. We now know that the Secretary of State has had to admit that that is not true. He also admitted that the settlement for schools will mean real-terms cuts because there is no element in the settlement for schools to cover the rise in pupil numbers over this period. The IFS has estimated that 60 per cent of primary school children and 87 per cent of secondary school children will experience cuts in their school’s budgets.
Secondly, there is the non-school budget, because in order to sustain the settlement for schools, such as it is, the Department for Education will experience a 12 per cent cut in its non-school budgeting, achieved by, and I quote from the Government’s document here,
“rationalising and ending centrally directed programmes for children and young people and families”.
This means that some of the things that we have not yet heard about, because we have not seen the Department for Education’s budget plan, have gone. Support for the strategy to reduce the rates of teenage pregnancy across the country has gone; support for the strategy to reduce the number of young people not in education, training or employment has gone; the Youth Taskforce, working to help some of the most vulnerable young people to reduce antisocial behaviour, has gone; and the City Challenge in Greater Manchester, the Black Country and London to raise aspirations and standards among some of the most disadvantaged children has just been scrapped. Young people’s services, support for parents, and support for disabled children and their families have simply all been stopped, and I think we will see a severe impact from the cessation of those programmes.
Thirdly, there is the reduction in local government spending of 7.1 per cent in each of the four years covered by the spending review. I have been talking to a number of chief executives and directors of children’s services over the past few weeks who tell me that such is the level of cuts they are facing that their councils cannot protect children’s services, that they will be able to preserve only the minimum level of statutory provision, and that a lot of the progress we have seen in local children’s services over recent years, with a focus on early intervention and prevention to stop some of those problems escalating, will simply go.
Last but not least, it is families with children, as my noble friend Lady Sherlock mentioned earlier, who will be the biggest losers from the array of tax and benefit changes that are proposed. Page 98 of the document published by the Government says that the negative impact of freezing child benefit and withdrawing it from those who pay higher-rate tax will be offset by the indexation of child tax credit and ensure,
“no measurable impact on child poverty”.
That is simply risible.
What we do not have in the documents produced by the Government is any comprehensive assessment of the cumulative impact of all these cuts from different sources on children and young people. It is not simply about child benefit; it is about the cumulative impact of the four housing benefit changes and the changes to working tax credit, to childcare tax credits and to parents losing their jobs and going on to time-limited benefits, as well as the service issues that I have outlined. It is inconceivable, frankly, that child poverty will not rise as the Joseph Rowntree Foundation predicts. I know that there are Members on the Benches opposite who are also concerned about children, and I hope when the time comes that they will scrutinise all these proposals for their cumulative impact on children and young people.
I also ask the Minister if he will commit in his summing-up to producing a comprehensive impact assessment of all these changes together on children and young people. These cuts will not fall equally across the income distribution but will be concentrated on some families rather than others, so some children and young people will be very severely damaged.
The Earl of Listowel
My Lords, I shall endeavour to be brief, as the hour is late. I thank the Minister for his opening remarks and particularly for the emphasis that he put on protecting the vulnerable in society, especially children, in this very difficult time. It is an honour to follow the noble Baroness, Lady Hughes, who championed children, particularly children in care, during her term in government. I acknowledge the support that she gave to support workers and the introduction of newly qualified social worker status, which is so important. I share her concerns.
I understand and applaud the Government’s general emphasis on devolving decision-making to those who are nearest the front line, whether they be doctors, social workers or local authorities. I applaud the principle of that. But every principle needs a balance; there is an exception to every rule. I recall particularly the role of Louise Casey, employed by the previous Government to tackle the problem of rough sleeping. During her three years as the homelessness tsar—I followed her progress from the very beginning—she managed to reduce the level of rough sleepers on our streets by a third. She could do this because she was able to knock heads together; she could act strategically. Although charities had been doing a good job for many years, they were not succeeding in getting adults and young people off the streets. They were pushed to work together and achieve their goal. Some issues require a strong central focus if they are to be addressed.
I also share the noble Baroness’s concerns about councils not being able to protect the most vulnerable children. Each year, inspections show the difficulty surrounding thresholds for access to services. Those thresholds will inevitably be pushed up if those services are not funded adequately.
I ask the Minister to consider the impact of budget cuts particularly on child and family social work. I know that it goes against the grain of all current policy, but will he consider ring-fenced funding to support such work? I ask him to monitor closely the impact of cuts on child and family social work numbers and on child and family social work caseloads. Will he examine the early intervention guidance—I welcome the early intervention fund that the Government have introduced—to examine how that might benefit child and family social workers?
History tells us what happens when child and family social workers are neglected. It is arguable that the whole profession has been demoralised after decades of neglect. In evidence to the inquiry led by my noble friend Lord Laming into the death of Victoria Climbié, Haringey Council was described as being overwhelmed by the demands on its child protection service. The principal social worker involved was young and inexperienced, and had above the recommended caseload.
The right honourable Ed Balls, the Secretary of State for Children and Families in the previous Government, said shortly before the last election that if he had one regret, it was that he had not done more for social work earlier. Tim Loughton MP, when shadow Minister for Children, published a report for the Conservatives, assisted by the noble Baroness, Lady Morris of Bolton, entitled No More Blame Game, considering how the profession of child and family social work could be given the status it deserves. Many have welcomed the measures that the previous Government and the new coalition have taken to raise the status of child and family social work, to address its variable quality and to recruit and retain sufficient good social workers.
In the past week, the chief executive of the Children and Family Court Advisory and Support Service, Anthony Douglas, has told me that, every month so far this year apart from June, there has been a rise in the number of children being taken into public care. Paul Ennals, chief executive of the National Children’s Bureau, has told me that the number of children classed as at risk, the number of children for whom care orders are being sought and the number of children for whom a court order is secured are all rising. In a time of recession, and following the Baby Peter case, the burden on child and family social work increases. At the same time, local authorities will see a cut of 28 per cent in their budgets—7.1 per cent per annum.
I welcome what the Minister said about the £2 billion additional funds for social care. However, that is somewhat of a small amount compared with the amount being cut. I am sure that local authorities will not wish to touch child protection and wish to support children in care. However, many may feel obliged to, as the noble Baroness, Lady Hughes, said. One risk will be the decline once again in the quality of child and family social work.
Indicative of the success of past investment is the rise in the number of children leaving care to enter university. About 10 years ago, Professor Sonia Jackson put this at 1 per cent of care leavers—a shocking figure. Recent research from the Institute of Education has pointed to a rise to 9 per cent of care leavers now attending university. That is well below the 40 per cent national average, but still a 900 per cent improvement on 10 years ago. I hope noble Lords will agree that that is very significant and good progress.
One of the many highlights of my short career in the Lords was becoming acquainted with a young woman who was in her final year at Oxford University. She had left care with no qualifications, but she had been befriended by the head teacher of an independent sixth-form college, who supported and encouraged her. She kindly corresponded with me and wrote to me when she successfully graduated. It is so marvellous to think that there are possibilities for more young people to have that sort of achievement. A significant section of those young people might have done so much better in their education and careers. I am afraid that we have let them down; we have not met the challenge of supporting them to achieve their goals. Many of them are very intelligent but they have not had the support to have a go at it.
If the quality of child and family social work is compromised, fewer young people in care are likely to make it to university. We are also likely to have more cases similar to that of Baby Peter. The reputations of local authorities will once again be besmirched. Some of the stain may also stretch to the Government, undoing the work that the right honourable Iain Duncan Smith and others have done to show that this Government serve all and have a particular interest in vulnerable children.
What can the Minister do? First, I ask him to consider ring-fencing some funds and offering them to local authorities for investment in their child and family social workers. Every rule should have an exception; child and family social workers provide a service almost exclusively to the vulnerable. There are no confident, eloquent, well educated middle-class parents to take up their cause. Savings in social work could be made in several ways; the noble Lord, Lord Newby, alluded to some in adult social care. He may wish to know of the work of Paul Fallon when he was director of services at Barnet, where he reduced the vacancy rate of social workers from 30 per cent to 3 per cent in three years. By taking money in advance, he could take so many social workers employed on a temporary basis and turn it into a permanent basis, thereby saving a great deal of money for the buyer. There is also the model at Hackney, which has been employed for the past two or three years and has produced a saving of 5 per cent and turned around cases much more quickly, so saving money in that fashion. So there are means to save money, but even with these, a service starting from such a low base must be at grave risk in the face of such severe cuts. I urge the Minister to consider a ring-fenced fund for child and family social work for the next three years to help social work to survive the transition to the new funding climate.
The Options for Excellence ring-fenced funding for children in care provided 10 years ago for a three-year period has contributed to the dividends that I have described, and was very much welcomed at the time.
I ask the Minister to consider the guidance on the early intervention fund. I welcome Her Majesty’s Government’s introduction of such a fund to protect early intervention with families. I ask them to consider whether guidance on this fund might encourage local authorities to apply it to child and family social work, to child protection and to supporting children in care.
If child and family social workers are not replaced as they move on, if vacancies and caseloads rise, we will have more Victoria Climbiés and Baby Peters. I ask the Minister to consider how he will work with local authorities to prevent this happening. Also at stake are the reputations of local authorities and this Government.
Lord Graham of Edmonton
My Lords, at the end of such a long debate, one tends to hear phrases such as, “Everything that can be said, has been said”. However, if you listen carefully, you hear a small voice, which is mine, saying, “Yes, but not by everybody”. I intend to make a contribution not relying remotely on the forensic way in which my colleagues have dealt with the case put forward by the Minister. They were brilliant. When I heard the noble Lords, Lord Myners, Lord Peston, Lord Haskel and Lord Watson, and the noble Baronesses, Lady Hollis and Lady Hughes, among others, quite frankly I thought that they had done my job for me. They have all collectively made this old man very happy. We have on the Labour Benches now—we have had this before, but it has been renewed since the election—a bevy of politicians who I can sense are going to make a great impression here.
The main point that I want to deal with is that the case that the Minister and other colleagues on his side of the House have made is based on an untruth. That untruth is that the situation economically rests wholly at the door of the Labour Government. In my view, that cannot be sustained. The case that was made devastatingly in a wonderful maiden speech by the noble Baroness, Lady Nye, and supported by the noble Baroness, Lady Hughes, indicated quite clearly the genesis of the matter. Having been in both Houses for more than 30 years, I can read very well the tactics of the Government. A noble Baroness said to us that there has been a bout of amnesia on this side of the Chamber. Well, I think that I know where we got it from; it came wafting from the Benches over there. It does not do the House any good when we are seen to be so one-sided and so tardy in recognising the past that it is completely ignored. What has been said is not true.
When we look at the economic situation that was inherited by this Government, or left by the last Government, we are led to believe that the stewardship of this economy was unique. What about Ireland, Greece, Spain, Portugal, Germany, France and Italy—all European countries and all victims of the global collapse in financial support? If one is going to point to anyone in this country who had a share in the demolition of financial support in this country due to the subprime mortgage fiasco, one should not point at the people whom I represented, or my family, or the community that I work in. It was the financial sector, especially the banks. They were greedy, all right? Lax regulations might have allowed them to act as they did and no doubt we will hear ever more that it is the intention of this Government to tackle the greed of the banks. I will believe that when I see it. I will believe it when the banks squeal—not the pips—that they are being unfairly treated. If any one sector in our community carries responsibility for landing us in this trouble, it was the banks. Completely forgotten by the other side are the activities of Gordon Brown and Alistair Darling in persuading the rest of Europe to get behind economic policies to such an extent, as the noble Baroness, Lady Hughes, said, that they rescued not just the banks but the people whose money was in them. They were saved then, so the Government have a difficult job in trying to persuade us that they are on the right lines.
The Labour Party admits, as I certainly do, that we did not win the election. The Conservatives did not win the election and the Liberal Democrats did not win it. We are where we are with this situation. Quite frankly, it is not my job to thrash about and try to pick points in that way. When a professor was asked what he thought the effects of the French Revolution would be, he said, “Well, it’s too soon to say”. That is my comment on the coalition. I wish it well, sincerely, in solving the economic problems of the country because I have as big a stake in it under this Government as I did under the last, but it will have to go some in order to get out of this. The phrase was used earlier, “We have to keep our fingers crossed”. That is right. I believe that the Government, with the best of intentions, are going about this in the wrong way.
I do not have the time to deal with or duplicate the arguments that have been made, but I make the point that people are looking forward—not with relish—to the economic situation of the country. Because of my age, I can remember back to the 1920s and 1930s. For nine years—most of the 1930s—my dad was on the dole and in 1937 my mum and dad had 37 shillings a week to feed seven of us. Children at that time were worth two shillings a week; there were five of us, so 10 shillings came into the house. When I left school at the age of 14, I was the head boy and had passed my secondary exams but could not go on because, like many children, although I had the ability and had earned it, my circumstances were such that the cost of having to buy boots, shoes, PT kit and other things was beyond us. I had to wait until 50 later for the Open University. I am not looking at him now but I know that the noble Lord, Lord Shipley, will be pleased at the reference: I got my degree from the Open University and an honorary degree thereafter. When Harold Wilson was asked, “What would you like to be remembered by?” he said, “The Open University”—that was the one thing. If I was looking at the one thing out of many from the Labour Government that I would be proud to be associated with, it could be equality, the minimum wage or a number of things. It is a canard to say that all we are concerned about now is the economic situation that we inherited.
Yesterday was a red letter day for me, because Newcastle beat Sunderland 5-1. I sang, as I always do. My boys think that it is not on, but whenever Newcastle is on I join in with the crowd and sing the “Blaydon Races”:
“Gannin’ alang the Scotswood Road”.
I was born on Scotswood Road. The Geordies will be as resilient as other communities throughout the country. They will be able to survive, come what may. All I say to the Minister and his colleagues is: I give you a fair offer. If you stop telling lies about us, we will stop telling the truth about you.
Viscount Eccles
My Lords, it is complicated to follow the noble Lord, Lord Graham of Edmonton. I will not even compete on the subjects of the Scotswood Road and the Geordies, although I have a daughter who lives in Newcastle.
Listening to this debate, what can one conclude? Certainly that the Government have made a big call, sometimes described as a gamble. They have made a call to reduce and reform public expenditure, most notably welfare expenditure, to end the structural deficit within the Parliament and to set a date for peak national debt. In doing so, they have predicted that economic growth will continue and will provide the necessary returns. Of course, nothing is certain. Unfortunately, Governments of any complexion do not command economic growth; they only set the scene. To expect supply-side policies, however elegant, to do the trick, as the noble Lord, Lord Myners told us, is to deny all our post-war experience.
Is there an alternative big call on offer? Yes, possibly. It seems to be unreconstructed Keynesianism—basically, a call to leave well alone. “The deficit is not too big, the debt is sustainable. Protect aggregate demand and all will work itself out. There is no need for reform or change”.
This is not the time for a detailed analysis, but I have three points. No two recessions have ever been the same. Therefore, we cannot rely on past experience alone. Our economic circumstances are so different from those of the 1930s that we must be cautious before reading too much into a Keynesian solution. Then, the world was not global. Then, manufacturing was a much larger proportion of our economy. Who will march from Jarrow today? Then, the real incomes were a quarter of those of today. Then, we believed in high interest rates and a strong pound, no matter what.
The timing of the coalition coming into power demanded decision. People expected firm action and they were right to do so. The Government have made their call. They are right to have done so and need our full support. If they get that support, the economy can continue to grow. Science and technology have seen to that. There are plenty of opportunities. Confidence will ensure that they are seized.
Baroness Farrington of Ribbleton
My Lords, as other noble Lords have said, this stage of the debate is quite difficult. However, I refute what the noble Viscount, Lord Eccles, said, when he said that others say that nothing should be done. I cite the noble Lord, Lord Bilimoria, who said that it is a question of timing, severity and pace, and the current Government have got it wrong.
The noble Lord, Lord Stewartby, who is currently not in his place, spoke about people talking about gloom and doom in 1981 which did not happen. When I was on the Lancashire County Council with the noble Lord, Lord Greaves—now a member of a government party—Lancashire was knocked for six by government policies in 1981. Some of the Conservatives down in London never noticed it happen. Lancashire County Council's response concerned the discretionary element of local government—educational maintenance awards—particularly for young people in areas such as Skelmersdale. It is pretty horrific to see that progress being withdrawn.
The reduction referred to in local authority budgets is approximately 27 per cent over four years. The noble Lord, Lord Greaves, referred to the community and officers in Lancashire. All around the House, noble Lords know about the various local initiatives that have come from the flexibility of that part of local authority budgets where they can choose what to do. We are about to see the decimation of that across the country.
I have news for the noble Viscount—he may have missed it yesterday—but the Minister for children in another place suggested that local authorities could save money by recruiting volunteers to complement the work of social workers. I listened very carefully to the right reverend Prelate the Bishop of Leicester and others in the Chamber. I am a passionate supporter of and I declare a non-pecuniary interest in the Scouts and the youth service in Lancashire and I have local government experience. If we look to the big society to replace social workers, to replace all the services currently undertaken at local authority level, things will go wrong.
The day the Prime Minister was expanding on the big society, I happened to be in the garden at Dolphin Square speaking to a Republican Presbyterian minister from a small town in Texas. He said to me, “It’s very funny in this country. Ronald Reagan had that idea. He came to visit our community in Texas and we worked it out that, to replace the publicly funded services, a church with the population of 200 regular communicants would have to raise $600,000”. That is the issue.
The issue is not that those of us who argue with the concept of the big society are opposed to voluntarism. Like people across this Chamber, we have all been involved in the voluntary sector, worked with it and supported it. The right reverend Prelate the Bishop of Leicester was quite right to say that there is a lot going on out of there, but there is a great deal that can be damaged out there. The history of the charitable sector and true localism—by “true localism” I mean not cutting the discretionary budgets of local authorities—is innovation, initiative and meeting demand, which has then been taken over as a general universal right. My heavens, this Government’s budget, with its crippling timing, pace and severity, is about to destroy what centuries of people have put right. My heart goes out to the right reverend Prelate the Bishop of Leicester on the issue of family and community stability. I represented part of Preston called Ribbleton for years. Terrible actions cause damage to the whole community and a whole generation of workers was wiped out because Courtauld moved in to get a grant and then moved out when the grant stopped and it was cheaper to go somewhere else. In that community we have some severe problems. The majority of people are stable, local people. They go to local churches. They will work with voluntary organisations. They help each other out. They visit the elderly down the street. However, if you start smashing their right to live in their social housing, all that will happen is that you will take the guts out of what is good in that community. That will be replicated up and down the country.
I did not think I would ever criticise the noble Lord, Lord Newby, for this in this Chamber but today the noble Lords, Lord Plumb and Lord Newby, raised the issue of public sector funding. The noble Lord, Lord Plumb, was probably the most honest; he got very close to saying, “What about more money for agriculture?”. The noble Lord, Lord Newby, said that the previous Government were spending too much money. My heavens, I look around this Chamber, where people have said, “Why can we not have more money for cleaning up the sea? Why can we not spend more on footpaths? Why can we not spend more on roads? Why can we not spend more on trains? Schools want more”. This has come from all around the Chamber. When we were in government the Conservatives and Liberal Democrats never once stood up and said, “When will this Government stop spending money on the things we think are important?”.
I accept that growth is critical. I accept that reform is necessary—not reform imposed by Whitehall but reform through innovation at local level. Yes, there should be fairness. But, please, as we go through what will be a very grim experience—not for me or, I suspect, for many people in this Chamber—can we add the qualities of honesty and transparency?
Lord James of Blackheath
My Lords, I do not know what you have done to deserve me this late in the evening but I am afraid that is where it is. It has been a fascinating day. I particularly enjoyed the comments of the noble Baroness, Lady Browning, on the subject of “Brigadoon”, which was the first play I ever saw in the West End. I do not think she delivered the punchline. The whole point about “Brigadoon” was that it came out of the mist for only one day in every 100 years. That is a lovely idea for the Opposition.
We have heard today a great many tales of woe and dismay about the future, and some of optimism from this side. I am concerned about where the common ground is in that. One of the lessons of what is now quite a long life is that nothing is ever quite as bad or quite as good as you expect. It is probable that there will be a little more common ground between us than we might foresee at the moment. We might assist that process because growth will be what brings the two sides together. The more growth we can achieve, the more scope there will be to deal with some of the greater calamities that might occur unforeseen—since everything is unforeseen in politics.
I will talk a little about some of the growth opportunities that we might be able to harness and what we can do. As I have mentioned before, one of my great messages is a lesson from Sir Kenneth Cork, who taught me most of what I know about corporate rescue. It is that you cannot rescue a business that does not have a successful past. Anything that does not have a successful past is a failed start-up. Get rid of it and concentrate on the businesses that have a successful past. Where, today, are the businesses with a successful past? They are languishing in the intensive care units of the banks. They cannot get out because most of them have been the victims of expanding their capacity beyond the demands of the marketplace. That is a very expensive situation to get out of once you are in it. It was done with some dexterity and considerable success in the early 1970s through the initiatives that were forthcoming from three Is: investment in industry. One of the great tragedies of our economy at present is that we do not have three Is functioning in that form today. Boy, do we need them.
I am very much a believer in the principle of the collective collapse of generic groups of businesses as entities. Let me give some examples. At the present moment this year, we have probably lost half a million cars in our British export market. They would have been a very big additional factor to the economy, both in production—the wages that would have gone to the people who built them—and in the export value they would have had. Why? It is because the banks played their usual dirty trick a year or two ago: they saw that there were big markets outside—big back-orders—so they let the businesses have the money that they needed to fund the delivery of the order books that they had. The orders came in; they took the cash, reduced the facilities and the automotive component industry did not have the working capital to gear up for the massive turn to the diesel engines, which were demanded, and the British export market could not maintain the export requirement necessary to maintain its position on the international scene.
That has largely been corrected now but a similar problem may well happen. The next big crisis is going to come in the second week of February next year when the huge crisis that comes cyclically every year afflicts the retail sector worse than ever. It is already bereft on the high street—with shuttered shops and redundant staff, and a very dismal sight it is. What happens in the banking industry is that it knows that in the first two weeks of February every year, all the credit cards that have been used to buy goods going into Christmas pay, and the retail industry has the lowest borrowings of the year. The banks lie in wait and they grab them. Remember Woolworths? Who is coming next?
So we need someone who can take a grip on a general strategy to save the retail industry from another calamity. One of the great regrets I have at the moment is that the person who would best be able to do that is Sir Philip Green, and he is doing something else. I hope that the Government will hold on to him, and once he has actually finished his present task, he will be told to go and cherry pick the entire retail industry languishing in the hands of the banks, and put together the next version of British Home Stores as a government subsidiary which needs funding and which can be imposed on the banking industry by grabbing each bit, despite the fact that there will be minority bank interests that will not want to sell out for the benefit of the major bank interest, which will get the cream of the equity conversion. That is what three Is should exist to do, and what it did so brilliantly before, and that is why we need it back now.
Another element of the world out there at the moment which is potentially waiting for the pratfall of a massive collective bankruptcy is the food processing industry. The more the accent is moved from the small corner shop to the big grocers, the more production has been stepped up by the food producers to satisfy the ever-increasing demands for cheap food coming through the grocery chains. Of course, they have fallen into the trap again of funding themselves to too high a capacity for the market demand with the result that the grocers can rub their hands with glee and say, “We can screw the margins down so tight you won’t be able to breathe” and the suppliers are going to go collectively “pop” at some point in the next few months, because they will not be able to keep up and there is a big social factor coming. We will have the present dependence on cheap food to keep some sort of society structure fed, but we will actually end up being forced up on prices as the industry goes out of business in terms of its ability to keep supply going and prices are forced up in the grocery chains. This is going to be another calamity coming, and we need to have a top-down view as to what to do with it.
I have given your Lordships three examples of why I think we need something, but the creation of the three Is along the lines that I have been talking about would be of the order of a £5 billion cheque required to do it. However, we do not have £5 billion; we do not have half of £5 billion to put in to the creation of this at the moment, so what do we do about it? At this point, I am going to have to make a very big apology to my noble friend Lord Sassoon, because I am about to raise a subject that I should not raise and which is going to be one which I think is now time to put on a higher awareness, and to explain to the House as a whole, as I do not think your Lordships have any knowledge of it. I am sorry my noble friend Lord Strathclyde is not with us at the moment, because this deeply concerns him also.
For the past 20 weeks I have been engaged in a very strange dialogue with the two noble Lords, in the course of which I have been trying to bring to their attention the willing availability of a strange organisation which wishes to make a great deal of money available to assist the recovery of the economy in this country. For want of a better name, I shall call it foundation X. That is not its real name, but it will do for the moment. Foundation X was introduced to me 20 weeks ago last week by an eminent City firm, which is FSA controlled. Its chairman came to me and said, “We have this extraordinary request to assist in a major financial reconstruction. It is megabucks, but we need your help to assist us in understanding whether this business is legitimate”. I had the biggest put down of my life from my noble friend Lord Strathclyde when I told him this story. He said, “Why you? You’re not important enough to have the answer to a question like that”. He is quite right, I am not important enough, but the answer to the next question was, “You haven’t got the experience for it”. Yes I do. I have had one of the biggest experiences in the laundering of terrorist money and funny money that anyone has had in the City. I have handled billions of pounds of terrorist money.
Lord James of Blackheath
Not into my pocket. My biggest terrorist client was the IRA and I am pleased to say that I managed to write off more than £1 billion of its money. I have also had extensive connections with north African terrorists, but that was of a far nastier nature, and I do not want to talk about that because it is still a security issue. I hasten to add that it is no good getting the police in, because I shall immediately call the Bank of England as my defence witness, given that it put me in to deal with these problems.
The point is that when I was in the course of doing this strange activity, I had an interesting set of phone numbers and references that I could go to for help when I needed it. So people in the City have known that if they want to check out anything that looks at all odd, they can come to me and I can press a few phone numbers to obtain a reference. The City firm came to me and asked whether I could get a reference and a clearance on foundation X. For 20 weeks, I have been endeavouring to do that. I have come to the absolute conclusion that foundation X is completely genuine and sincere and that it directly wishes to make the United Kingdom one of the principal points that it will use to disseminate its extraordinarily great wealth into the world at this present moment, as part of an attempt to seek the recovery of the global economy.
I made the phone call to my noble friend Lord Strathclyde on a Sunday afternoon—I think he was sitting on his lawn, poor man—and he did the quickest ball pass that I have ever witnessed. If England can do anything like it at Twickenham on Saturday, we will have a chance against the All Blacks. The next think I knew, I had my noble friend Lord Sassoon on the phone. From the outset, he took the proper defensive attitude of total scepticism, and said, “This cannot possibly be right”. During the following weeks, my noble friend said, “Go and talk to the Bank of England”. So I phoned the governor and asked whether he could check this out for me. After about three days, he came back and said, “You can get lost. I’m not touching this with a bargepole; it is far too difficult. Take it back to the Treasury”. So I did. Within another day, my noble friend Lord Sassoon had come back and said, “This is rubbish. It can’t possibly be right”. I said, “I am going to work more on it”. Then I brought one of the senior executives from foundation X to meet my noble friend Lord Strathclyde. I have to say that, as first dates go, it was not a great success. Neither of them ended up by inviting the other out for a coffee or drink at the end of the evening, and they did not exchange telephone numbers in order to follow up the meeting.
I found myself between a rock and a hard place that were totally paranoid about each other, because the foundation X people have an amazing obsession with their own security. They expect to be contacted only by someone equal to head of state status or someone with an international security rating equal to the top six people in the world. This is a strange situation. My noble friends Lord Sassoon and Lord Strathclyde both came up with what should have been an absolute killer argument as to why this could not be true and that we should forget it. My noble friend Lord Sassoon’s argument was that these people claimed to have evidence that last year they had lodged £5 billion with British banks. They gave transfer dates and the details of these transfers. As my noble friend Lord Sassoon, said, if that were true it would stick out like a sore thumb. You could not have £5 billion popping out of a bank account without it disrupting the balance sheet completely. But I remember that at about the same time as those transfers were being made the noble Lord, Lord Myners, was indulging in his game of rearranging the deckchairs on the Titanic of the British banking community. If he had three banks at that time, which had had, say, a deficiency of £1.5 billion each, then you would pretty well have absorbed the entire £5 billion, and you would not have had the sore thumb stick out at that time; you would have taken £1.5 billion into each of three banks and you would have absorbed the lot. That would be a logical explanation—I do not know.
My noble friend Lord Strathclyde came up with a very different argument. He said that this cannot be right because these people said at the meeting with him that they were still effectively on the gold standard from back in the 1920s and that their entire currency holdings throughout the world, which were very large, were backed by bullion. My noble friend Lord Strathclyde came back and said to me that he had an analyst working on it and that this had to be stuff and nonsense. He said that they had come up with a figure for the amount of bullion that would be needed to cover their currency reserves, as claimed, which would be more than the entire value of bullion that had ever been mined in the history of the world. I am sorry but my noble friend Lord Strathclyde is wrong; his analysts are wrong. He had tapped into the sources that are available and there is only one definitive source for the amount of bullion that has ever been taken from the earth’s crust. That was a National Geographic magazine article 12 years ago. Whatever figure it was that was quoted was then quoted again on six other sites on the internet—on Google. Everyone is quoting one original source; there is no other confirming authority. But if you tap into the Vatican accounts—of the Vatican bank—you come up with a claim of total bullion—
Lord De Mauley
The noble Lord is into his fifteenth minute. I wonder whether he can draw his remarks to a conclusion.
Lord James of Blackheath
The total value of the Vatican bank reserves would claim to be more than the entire value of gold ever mined in the history of the world. My point on all of this is that we have not proven any of this. Foundation X is saying at this moment that it is prepared to put up the entire £5 billion for the funding of the three Is recreation; the British Government can have the entire independent management and control of it—foundation X does not want anything to do with it; there will be no interest charged; and, by the way, if the British Government would like it as well, if it will help, it will be prepared to put up money for funding hospitals, schools, the building of Crossrail immediately with £17 billion transfer by Christmas, if requested, and all these other things. These things can be done, if wished, but a senior member of the Government has to accept the invitation to a phone call to the chairman of foundation X—and then we can get into business. This is too big an issue. I am just an ageing, obsessive old Peer and I am easily dispensable, but getting to the truth is not. We need to know what really is happening here. We must find out the truth of this situation.
Lord Shipley
My Lords, back to the spending review, which is understandably a tough settlement for the public sector. The reasons for cutting the overall deficit are clear in the face of the largest budget deficit in peacetime history. Cuts, however, need to be fair and deliverable.
I declare my interest as a member of Newcastle City Council and a vice-president of the Local Government Association. This is because I wish to concentrate on the impact of the spending review on local government: the overall cut, its front-loading to the first year, 2011-12, the distribution of the cuts through the spending formula and, finally, place-based budgeting, which I believe must now be speeded up.
Councils in England will have an average loss of grant of 7.25 per cent in real terms for each of the next four years. This will be accompanied by new financial freedoms and flexibilities as part of a decentralisation and localism agenda. Those new powers will be welcome. However, the level of savings required for local government is higher than had been anticipated and the front-loading of the savings into 2011-12 makes the settlement extremely challenging. There is a real cut of 28 per cent over the four-year period, despite growth in funding for a council tax freeze and £1 billion extra for social care. The formula funding in the CSR also includes further grants which have been rolled up into the baseline. Put simply, comparing the existing formula grant with that in 2014-15 without those transfers or the new adult social care and council tax support funding shows a real cut of 36 per cent in the formula grant.
Of particular concern is what appears to be a very large reduction in the existing formula grant in 2011-12—the first year of the settlement. It is reduced by £3.5 billion, or 14 per cent in cash terms and approximately 16 per cent in real terms. This is approximately double the average cut of 7.25 per cent quoted as part of the spending review by the Secretary of State.
My concern is compounded by the abolition of the working neighbourhoods fund. The ending of this grant was not, so far as I can see, included in the Chancellor’s Statement on the spending review, in the Treasury’s executive summary, in the Secretary of State for CLG’s letter on the spending review or in any of the regional analyses of the spending review. I am unclear whether it has been included in the impact assessment included in the spending review document. The only certain reference appears to be on page 48, paragraph 2.35, of the main spending review document:
“As a result of this settlement, programmes including the Working Neighbourhoods Fund, Growth Area Funding and the Thames Gateway programme will end, in order to rationalise funding streams, make savings and take a more disciplined approach to Government spending”.
It is unclear which of these three reasons relates to the working neighbourhoods fund grant.
The fund has been used across the country to tackle worklessness by investing in voluntary sector partnerships, thus securing additional leverage and ERDF matched funding. It has helped to address community health and community safety issues. It has tackled economic deprivation and has targeted resources to those young people not in education, employment or training. The fund, worth £0.5 billion, has vanished. With substantial funds now flowing through to the voluntary and community sectors, the loss of the grant could have a serious impact on the viability of some of these organisations, which appears contrary to the desire to support and promote the big society and the third sector. As examples of the scale of this loss, Birmingham will lose £37.1 million, Manchester £27.7 million, Bradford £12.5 million and Leicester £8.3 million. There are also significant losses for London councils—Hackney at £12.2 million and Newham at £11.9 million. The north-east of England will lose £73 million, including £9.2 million from my own council. In total, 65 councils in England stand to lose. In the absence of the working neighbourhoods fund, we need to be much clearer about how the needs of areas of high deprivation will be addressed.
We have heard quite a bit recently about the need to do more with less. There is no doubt that we can, so long as we define carefully what we mean. For example, I doubt that we would do more adult social care if we had less money to spend on it. That we could do more with the same or the same with less is certainly true, but more with less in adult social care? I doubt it. As more money has been found for it—£2 billion by 2014-15—because of pressures on the service, it seems that these doubts are more generally shared.
Nevertheless, doing more for less would most certainly apply across the public sector as a whole in terms of place-based budgeting. The Local Government Association has concluded that £100 billion could be saved over five years if councils, and thus local people, were put in charge of spending on all front-line local services, overseeing economic regeneration, planning, housing and regeneration, home energy efficiency, managing flood and climate risks, adult skills, local transport, primary healthcare, policing and probation and support into employment for the long-term unemployed and workless, most of which currently lie outside local government’s immediate responsibilities.
England has become too centralised and I welcome plans for the localism Bill later this month and for the first-phase pilots in 16 areas of England from April next year in community budgeting in some service areas. However, in my view, these pilots in localism are insufficient in scope and will prove too slow at meeting the challenge of budget reductions. We should never confuse localism with the atomisation of England, where central government continues to control local decisions by controlling the budgets directly through spending departments rather than handing the power and responsibility to local government. Silo central management with silo central cuts is not localism, but it is what will happen unless councils get additional powers more quickly.
There are three issues that I hope my noble friend will consider. First, there is a need to protect areas and people more deprived than others through the revenue support allocation, but how will that be done? Secondly, there is a need for real devolution to local councils to empower them to deliver more for less. How soon might this be addressed? Thirdly, why has the cut in formula grant been front-loaded in year one, well above the average of 7.25 per cent each year for four years? Is that front-loading wise?
Overall, councils will continue to have some of their income from council tax, fees and charges, which are not being cut. However, the rising costs for local councils, not least because of pension costs, general inflation and future workforce remodelling, require understanding and support to ensure that they do not compound the problems of cutting the grant and front-loading that cut into 2011-12.
Baroness O’Loan
My Lords, we have heard much about the seriousness of the position in which the United Kingdom finds itself and the hard decisions that have to be made. Equally, there is no doubt that savings can be made, although often with some pain. It is important that the pain be managed.
First, I associate myself with the compelling and robust remarks of the noble Baroness, Lady Campbell, on the proposed removal of the disability allowance for those in care. She is right.
There are three further issues to which I want to refer. The first is the situation in Northern Ireland. At this juncture I refer to the effect of the Troubles on the people of Northern Ireland. In 2009, living standards were around 80 per cent of the UK average, while 22 per cent of those of working age have no qualifications, compared with 12 per cent in the rest of the UK. The Troubles had the greatest effect in disadvantaged areas. According to the latest figures, the largest inequality gaps between disadvantaged areas and the Northern Ireland average were evident in alcohol and drug-related deaths, which were 121 per cent higher, in admissions for self-harm, which were 94 per cent higher, in teenage births, which were 80 per cent higher, and in suicide, which was 73 per cent higher. This comes as no surprise, for the suffering of these areas was and continues to be extreme. It is in that context and in the context of the employment situation, as in so many other contexts, such as the ongoing and increasing dissident republican violence, that Northern Ireland will face the proposed cuts.
The current situation is that some 28.5 per cent of our population is economically inactive for a variety of reasons, as opposed to the UK average of 23.2 per cent. Some 32.3 per cent of all employees are in public sector employment—a figure that is significantly higher than the 21.1 per cent in public sector employment in the rest of the United Kingdom. That situation, as noble Lords know, has arisen in part from the Troubles and the understandable reluctance of private sector investors to invest in territory in which there was a risk of Troubles-related violence, such as bombings, shootings, kidnapping and extortion. The consequence is that we have a significantly larger reliance on public sector employment than the rest of the United Kingdom. PwC, in research commissioned for the Northern Ireland Assembly, predicts a reduction in public sector employment of 41,200. The local private sector has continued to be slow to grow. Growth, such as we have had, has been largely in low-value jobs, such as in call centres. PwC estimates that Northern Ireland, with its existing high unemployment levels, could be facing potential job losses in the private sector of 5 per cent. There has been discussion of the possibility of a reduction in corporation tax, which would significantly improve the situation.
However, the consequence of the current situation associated with the 40 per cent reduction in capital spend over the next four years is that Northern Ireland will be particularly vulnerable by comparison with the rest of the United Kingdom. Given the vulnerability of so many people and given that the decisions as to how the cuts will be applied will rest with the devolved Government, it will none the less be profoundly important that the Government adhere to their commitment to fairness in relation to the reduction in spending on welfare. The impact of some of the proposed cuts on those who suffer from higher levels of physical and mental illness and disability and who are so much more likely to commit suicide will be very hard. It seems that across the United Kingdom there is an element that from those who have so little, much is to be taken.
Over the years of the Troubles, during direct rule, there was a consistent underspend on infrastructure in Northern Ireland. Our water and sewerage system was neglected for years and now requires massive investment to maintain levels of health and safety consistent with the first world. Our roads and transport system are significantly underdeveloped. Parts of our schools and hospital estate are in very poor condition. The cuts in capital spending will impact massively on the ability to sustain the infrastructure that is critical to society. I ask the Government to review the effects and extent of the proposed massive cuts in capital spending, with a view to alleviating some of the hardship imposed, consequential on the combined effects of the revenue and capital cuts on a part of the United Kingdom that has suffered so much.
There is one final issue to which I wish to refer and I crave noble Lords’ indulgence. It involves relatively little cost, but it is profoundly important. Today, digging is beginning on a beach in Waterfoot in County Antrim as the Independent Commission for the Location of Victims’ Remains seeks the body of 21 year-old Peter Wilson, who disappeared from his home in Belfast in 1973. The commission was established by Acts of Parliament here and in Ireland and is highly respected by the community and the families of the disappeared. It has achieved some remarkable results in profoundly difficult circumstances. On Friday night, in pouring rain and high winds, Peter Wilson’s family and friends and a group of local people gathered to pray for the return of his body for Christian burial.
Of the 16 missing people, seven have been recovered and buried. One more body was found two weeks ago and is thought to be that of 24 year-old Gerard Evans, who disappeared while hitchhiking in 1979. Eight bodies are still missing. Two bodies have been found this year, but there are concerns that funding will cease this year as a consequence of the cuts. This is historic business relating to the time when Northern Ireland was governed in its entirety from Westminster. I ask the Government to ensure that, despite all the current fiscal difficulties, if further information is received about the location of the remains of any more of the disappeared, funding will be made available to enable the necessary searches. In UK terms, it will not involve huge spending, but the expenditure will further enhance confidence in the commitment of the United Kingdom to the often forgotten victims of the Troubles.
Lord Eatwell
My Lords, this has been a remarkable debate. There have been some very fine speeches, mostly from these Benches, but also from the Benches opposite. We heard three remarkable maiden speeches from the noble Lord, Lord Allan of Hallam, my noble friend Lady Healy of Primrose Hill and my dear and noble friend Lady Nye.
Two questions have been central to the whole debate. The first is whether this policy is necessary and the second is whether it will work. Is it necessary? That depends on an assessment of the economic state of the nation and, in particular, the Government’s inheritance from the previous Labour Government. Let us reflect on that inheritance for a moment. In 2007, before the recession struck, the economy was growing steadily at a little under 2.5 per cent a year and maintaining the continuing steady growth that characterised Labour’s decade in office. Interest rates were lower than in the US and the cyclically adjusted fiscal deficit—as chart C6 of the Government’s Budget Report shows—was less than a quarter of 1 per cent of GDP. Crucially, the ratio of public debt to GDP was, at 36 per cent, the lowest in the G7 and well below the 42 per cent that Labour had inherited from the previous Conservative Government. This was a time, as many noble Lords have reminded the Minister, when the main plank of the Conservative Party’s economic policy was a commitment to match Labour’s spending plans.
In response to the recession, the Labour Government acted decisively, devising the much copied model for rescuing the banks, cutting taxes and accelerating expenditure, particularly on construction. There were two main results. First, in the very depths of the recession, which, given the size of our financial services industry, hit Britain particularly badly, unemployment was the lowest in the G7 countries other than Japan. Secondly, as a result of the anti-recession policies, the deficit grew rapidly, faster than in any other country, although, because we started from such a strong point, even today it is still the lowest of the large G7 economies.
The strength of the British economy going into the recession meant that even in the face of a severe fall in tax revenues the Labour Government could afford to stabilise the financial sector to save jobs and to save businesses. When the Minister sums up, perhaps he will say what he would have done differently. Would he have spent less and taxed more? How much deeper would he have wanted the recession to be?
In his Budget of March this year, my right honourable friend Alistair Darling put in place a plan for growth and deficit reduction. The OBR Pre-Budget Report states that,
“cyclically adjusted borrowing falls from 8.8 per cent of GDP in 2009-10 to 2.8 per cent in 2014-15”,
and in that fiscal year public sector debt reaches 74.4 per cent of GDP—still lower than any other major G7 country today.
The noble Lord, Lord Sassoon—he was echoed by the noble Lord, Lord Newby—is fond of telling your Lordships’ House that Labour has no recovery plan, yet in the CSR Statement Mr Osborne cited the impact of Labour’s plans and even costed them. He said:
“I have examined this proposal carefully and I have consulted the published documents of my predecessor”.—[Official Report, Commons, 26/10/10; col. 965.]
Was the Chancellor making it up? No, he was not. It is the noble Lord who has been making up this fairy tale.
What has happened as a result of my right honourable friend’s March Budget? Everything has turned out better than expected. Debt is lower than predicted and growth is higher. This Government’s inheritance was an economy on the path to recovery. This year to date, as a result of Labour policies, the economy is growing at an annual rate of 3.25 per cent and is set to beat the target of halving the deficit in four years.
What was the new Government’s balanced assessment of their inheritance? The new Ministers declared Britain “bankrupt” and “shattered”—that was a Liberal Democrat, by the way—and even, as a Tory Treasury Minister said, a “basket case”. This hysterical nonsense became the considered foundation of economic policy. The party opposite seems to have entered the most dangerous realm of all—they believe their own propaganda. The hysteria has produced the policy before us today. At its core is the attempt to eliminate the deficit in four years, even at the immediate cost of lower growth and higher unemployment—hence 25 per cent cuts in total expenditure, heavily weighted towards cuts in welfare. Yet by 2014, the Budget Report states that there is a 50 per cent chance that growth will be at the level that Labour’s plans would have achieved. How is that possible with the size of these cuts?
The predicted performance, the very core of the Government’s policy, depends crucially on a fast and sustained recovery by the private sector to fill the gap left by the fall in public sector spending, and not of course on growth in private consumption; that is cut by higher taxes and unemployment. Instead, private sector investment and house building are forecast to contribute more to the growth of the economy than they did even in the good times before the recession.
Will it work? A little history may help us. As we all know, Tories love cutting the public sector. That is what they came into politics to do and that is what the noble and learned Lord, Lord Howe, did in his Budget of 1981, as the noble Lord, Lord Stewartby, reminded us. As he also reminded us, in response, 364 economists issued a statement that,
“present policies will deepen the depression”—
and—
“erode the industrial base of our economy”.
That statement has been much derided because, as we all know, the economy grew after 1981. However, what is not noticed is that “present policies” were not continued; they were radically altered. The next five years witnessed the most dramatic change in monetary policy since the war, resulting in an extraordinary explosion of consumer borrowing. Consumer demand filled the gap left by government cuts.
Can history repeat itself? It cannot in the liberalisation of credit—that has been done; nor in lower interest rates—they cannot go any lower; nor, of course, in growing consumer demand. As my noble friend Lord Myners pointed out, there is only one monetary policy weapon left: quantitative easing. I have severe reservations about the strategy of maintaining demand by quantitative easing. It may keep interest rates down at the short end, but the lack of long-term bonds is seriously increasing the riskiness of insurance companies and pension funds. It may mean that there is more cash in corporate hands, but will they spend it on investment when expectations of growing demand are so depressed? Is quantitative easing simply pushing on a string? In truth, no one knows.
The other leg of the Government’s policy is their claim to have increased confidence. Confidence in the commitment to cuts, yes; confidence in the loss of jobs, yes. I know that the noble Lord is fond of fairytales but will the confidence fairy really wave her magic wand over a growing Britain? In truth, no one knows. That is why this policy is a huge gamble. For the sake of Britain we pray that it works, but there must be a high probability that it will not; as Mr Osborne says, there is no plan B.
We have the answers to our questions. Is the misery and destruction of this policy necessary? No, it is not; Labour had set Britain on a growth path to recovery. Will it work? No one knows, least of all the party opposite. What we do know is that vital political and economic debate in this country is debased by the Government’s hysterical fantasies of bankruptcy and financial collapse and by their failure to recognise the strength of the policies put in place by Alistair Darling. Labour dealt with the recession and laid the foundations for recovery. It is the responsibility of this Government not to squander that inheritance.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, today we have had an important debate on the Government’s spending review and I thank everyone for their contributions. I add my congratulations on the three notable maiden speeches. The hour is late and I will pick up on only a few of the points raised today. I have listened carefully and I will write in response to many of the detailed points.
Two weeks ago my right honourable friend the Chancellor of the Exchequer stood in another place and set out a clear plan to deal with our debts and to put the nation’s finances back on a sustainable path. When we came to power we inherited an economy that was in turmoil, with no clear strategy for recovery, no ideas for reform and not a single penny of savings having been identified. That was at a time when we were borrowing £1 for every £4 we were spending. I do not know who runs the household budget for the party opposite, but it is not sustainable. We were, and are still, running the highest deficit in our peacetime history, the highest in Europe and the highest in the G20. We can wrap this up in all sorts of statistics and economic theory, but the simple fact is that Britain was not living within her means and the world knew it. That is why last year the IMF warned that we needed to accelerate the deficit reduction, and the World Bank, the OECD, and the Governor of the Bank of England all agreed. So in May we announced immediate reductions to in-year spending, avoiding the sovereign debt crisis that was engulfing the eurozone; in June we set out our emergency Budget, returning credibility to the nation’s finances; and this October we have had the spending review, bringing years of irresponsible borrowing to an end. We have had to tackle the deficit and it has been unavoidable, but the decisions behind the reduction in the deficit have not been unavoidable.
We have made choices and we have chosen to spend our money on the areas that matter most to Britain: the education of our children, the healthcare of our people, and the infrastructure that sustains a prosperous economy. As I mentioned at the start of today’s debate, underpinning all our decisions have been three guiding principles. The first of those principles is the need to support growth, and I am struck by the contrast today between the optimism—
Lord Foulkes of Cumnock
We have sat through nearly eight hours of debate to which a large number of Members have contributed. Would it not be courteous to this House if the Minister actually replied to the debate instead of repeating the speech he gave earlier?
Lord Sassoon
I am struck by the contrast of the optimism that we have heard today from businessmen in this House and those who are not businessmen but have clearly been talking to business people on the one hand, and the pessimism on the other hand of the academic economists and others who, even though we have had three quarters of strong growth, want to see disaster coming round every corner. I do not make any judgment about who is responsible for the growth, but I think we can agree that we have had three quarters of strong growth. Yes, the recovery will be choppy, but we have heard from my noble friend Lord Bates just how business in the north-east of England is looking forward and generating jobs for the future. We have heard similarly from my noble friend Lord Plumb about how agriculture will play its part. My noble friend Lord Allan of Hallam has explained how the use of data and technology will assist the recovery. These are the pointers that show us how the economy is going to generate sustained growth. The noble Lord, Lord Eatwell, keeps saying that nobody knows. It is the businessmen of this country who write letters to the papers, urging us on with the deficit reduction we are set on, who know how the recovery is going to be sustained for the future.
While I do not agree with the doubts of noble Lords opposite about the overall judgments made by the Government, I do agree with some of the noble Lords opposite in a lot of what they said—the noble Lords, Lord Myners and Lord Haskel, for example, on the need for better infrastructure. That is precisely why we added nearly £9 billion of expenditure on infrastructure in this spending review. I agree with them on the need for investment in innovation, which is why we are investing £220 million in innovation centres and why we are investing £1 billion in the critical new technology of carbon capture and storage. Similarly, my noble friend Lord Newby identified science and apprenticeships as critical to growth. That is why we are protecting science spending in cash terms and why we are significantly gearing up on the number of apprenticeships compared with the plans of the previous Government.
Overall on growth, I was particularly struck by the contributions of my noble friends Lord Lamont of Lerwick and Lord Stewartby. They remind us that Conservative Governments have been here before, that Conservative Governments have taken us out of recession and rebalanced the economy, and we will do it again. For example, in the early 1990s, the public sector was reduced not by 490,000 but by 690,000 employees. At the same time, in the 1992 to 1996-7 period, the private sector generated 1.7 million jobs. I have every expectation—Members opposite may not—that the private sector again will rise to the challenge.
The second principle that I set out at the beginning is that our choices should be fair. We have heard some powerful speeches today, particularly from the noble Baronesses, Lady Hollis of Heigham and Lady Campbell of Surbiton, reminding us just how difficult it is to reshape the welfare system in the radical way that we intend at a time of considerable retrenchment in the public finances. I shall take away the points that they and others have made. In particular, I note carefully the concerns of the noble Baroness, Lady Campbell, about the mobility component of disability living allowance.
The spending review focuses support on those who need it most. It shifts the focus from welfare payments to services that improve social mobility in the longer term and to work incentives. The Government have sought to protect the most vulnerable. Working-age women, for example, tend to benefit disproportionately from health spending, which we have protected, and older women also benefit from additional resources for social care.
The universal credit will clarify and increase work incentives. Work will pay and will be seen to pay, but we must not rush the universal credit. As the noble Baroness said, it will take us two Parliaments to do that, because it is a difficult project and we must get it right.
We have also heard a lot on how young people will progress from care to university—points were made in different ways by the noble Earl, Lord Listowel, and the noble Baroness, Lady Nye. The Government are concerned to make sure that young people from the most disadvantaged homes get every opportunity. We are encouraging social mobility through maintaining Sure Start and extending early-years care. From 2012-13, we will introduce for all disadvantaged two year-olds substantial school premiums. The Government are also protecting the ability of those on lower incomes to go into higher education, including through a scholarship fund of £150 million by 2014-15.
Baroness Farrington of Ribbleton
My Lords, will the Minister care to fill in a little gap concerning the 16 to 19 year-olds?
Lord Sassoon
As I have said, we are coming forward with a £150 million fund that, by 2014, will enable those on lower incomes in that 16-to-19 age group to transfer into higher education.
Lord Knight of Weymouth
I have no wish to delay the House, but the Minister cannot be allowed to get away with that. The noble Baroness’s question was about 16-to-19 year-olds in schools, but he gave an answer about access to higher education, which is the next phase. The concerns expressed during this debate by the noble Baroness, Lady Nye, were about the abolition of the education maintenance allowance. What is his response?
Lord Sassoon
My Lords, one of the responses is that if we give children who would not otherwise have the opportunity to go to the best universities the ability to look forward to a fund that will enable them to do so, that is one way in which we will help disadvantaged children, right through the chain, from the start, through higher education and beyond. In that context, the £2.5 billion pupil premium will be another critical component.
Baroness Farrington of Ribbleton
Will the pupil premium be taken from funding for those young people aged 16 to 19 in schools?
Lord Sassoon
The pupil premium will be used to ensure that those schools that have a particular proportion of disadvantaged children will get a premium to ensure that there is an appropriate rebalancing.
Baroness Anelay of St Johns
My Lords, I remind the House that it is a courtesy for a Minister to give way during the debate to answer questions. It is not a courtesy then to interrupt repeatedly. The House has had a long and testing debate and I am sure that we will return to these issues in detail in departmental debates.
Baroness Anelay of St Johns
I do not need to protect my Minister. My Minister is here to protect the economy of this country.
Lord Sassoon
My Lords, I have got all night. I am very grateful to my noble friend. It is late, and we will have an opportunity to come back to these matters again. Specific funding for 16 to 19 year-old learning will be announced in the statement of priorities for the Department for Education later this year, so we will have opportunities to come back to that.
I move on briefly to one or two further points on reforms to our public services. We will leave no stone unturned in our search for waste, while we devolve power and funding away from Whitehall. I was very struck by the contributions by my noble friends Lady Browning and Lord Newby, who reminded us just how much more we can get from Government by better procurement and cutting waste. It is in those ways that we will be able to target expenditure going forward on those who need it—whether that is for 16 to 19 year-old education or those with disabilities. We have to remember at all times that the attack on waste continues to be a high priority.
Rightly, concerns have been expressed about the transitional effects of the job losses from the public sector. The Government are also very concerned about easing the transition, which is why we have announced the initiative such as the £1.4 billion regional growth fund.
I conclude today’s debate by saying that the decisions that we have taken have restored credibility to our public finances and stability to our economy. When we came to power, this coalition Government did face the worse economic inheritance in modern history. We have had to make tough choices—
Baroness Royall of Blaisdon
My Lords, the House will forgive me for delaying the Minister once more, but I thought that the noble Lord, Lord Shipley, and others raised incredibly important issues to do with local government funding in the forthcoming year. Would the Minister care to reflect or answer those questions?
Lord Sassoon
A lot of points were raised today, and I said at the outset that I cannot address them properly today. On local government, one critical issue is that we have removed almost 5,000 targets. Of course local government will live within lower spending settlements, as the great majority of central government departments have to do, but we are balancing that by lifting a huge burden of ring-fencing of their decision making, which will enable them, within what is of course a lower settlement, to have much more power to decide where the money goes, without the heavy hand of Whitehall bureaucracy on them.
We are investing in growth, in schools and in the health of our people. We have cut welfare, we are cutting waste, we have made sure that everyone pays their fair share—
Lord Myners
My Lords, the Minister is getting close to the point where he will not answer any further questions. He quite correctly said that there are some issues that he will have to go away and reflect on and reply to in writing. However, there was one contribution from the government Benches that was targeted specifically at the Minister, which alleged incompetence and lassitude on the part of the Minister, and those were the comments from the noble Lord, Lord James. They were very specific and I think the House deserves a response on the issue that the noble Lord raised. Clearly, the noble Lord has access to the solution that, with one leap, will take all the Government’s problems of financing to a better place. The Minister has clearly been remarkably bad at responding to the noble Lord and we look forward to the Minister’s explanation now.
Lord Sassoon
I am very grateful to the noble Lord, Lord Myners. He had great trouble keeping a straight face. I have to say that I took extremely seriously my noble friend Lord James of Blackheath’s suggestions that there were people who could help us out with our financial difficulty. The noble Lord, Lord Myners, thinks it is all a joke. I have been in detailed discussions over the past number of weeks with the noble Lord, Lord James of Blackheath, and of course we take seriously anyone who wants to invest in our economy. I know many people believe that there will be great opportunities in our infrastructure programme to invest in rebuilding our networks to underpin growth.
Baroness Farrington of Ribbleton
On a minor point of information, were any of the Minister’s Liberal Democrat noble friends present at any of these meetings?
Lord Sassoon
My Lords, if we start getting into who was present at which meetings at this hour of the night, we will never get home. I do not start counting off who is a member of which party in coalition Government meetings. That seems to be an obsession of the opposition party.
I will conclude briefly. It has been a very difficult and challenging spending round but we have made sure, as far as we possibly can, that everyone pays their fair share. We have taken the country back from what was—I am happy to say it—the brink of bankruptcy.
Lord Sassoon
My Lords, our plan will help drive growth in this country. Our plan will create the jobs of the future and it will build the more dynamic, more prosperous and more sustainable economy that Britain deserves. I beg to move.
Motion agreed.