House of Commons
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09:34 - The House divided: - Ayes: 1 / Noes: 35 - Question accordingly negatived.
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Mr Philip Hollobone (Kettering) (Con)
I beg to move, That the House sit in private.
Question put forthwith (Standing Order No. 163).
Mr Peter Bone (Wellingborough) (Con)
On a point of order, Mr Speaker. The Deputy Prime Minister has been expounding in the media today a new Government policy in a major announcement of billions of pounds being spent on getting people into work. There is allegedly a written statement, but I have not seen it and it was not available to Parliament at the start of the day. It seems to me, Mr Speaker, that that announcement should have been made first in the House and not to the media. Is there any further action I can take on this point?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. I have seen no such written ministerial statement and at the time I came into the Chamber none was available. I note what the hon. Gentleman has said about media coverage and I reiterate the point I have repeatedly made from the Chair: statements of Government policy should be made first to the House of Commons. That is an obligation upon all Ministers, without exception. The hon. Gentleman is an experienced parliamentary hand and he will know that avenues are open to him to pursue this matter—if not today, on subsequent days. I hope that is clear and helpful.
Public Services (Social Value) Bill
(13 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
New clause 2—Local authority strategies—
'(1) Section 4 of the Local Government Act 2000 (strategies for promoting wellbeing) is amended as follows.
(2) After subsection (1) insert—
“(lA) A local authority’s sustainable community strategy must include—
(a) their proposals in connection with promoting engagement in social enterprise in their area; and
(b) a statement of measures proposed for enabling persons or bodies engaged in social enterprise in their area and such other persons as they consider appropriate to participate in the implementation of the proposals referred to in paragraph (a).”.
(3) After subsection (4) insert—
“(4A) For the purposes of this section a person or body is engaged in social enterprise if—
(a) the person or body is carrying on a business;
(b) the business’s activities are being carried on primarily for a purpose that promotes or improves the social or environmental wellbeing of the United Kingdom, whether the purpose is pursued in relation to all or any part of the United Kingdom or all or any of the persons resident or present in it; and
(c) the greater part of any profits for distribution is applied for such a purpose.’”.
New clause 3—Annual report to parliament—
'(1) The Secretary of State must prepare and publish an annual report on the operation of the Government’s strategy for social enterprises in the preceding year and must lay a copy of the report before Parliament.
(2) The Secretary of State must, during the preparation of each report, consult—
(a) the National Audit Office;
(b) the Charity Commission;
(c) Co-ops UK;
(d) the National Council for Voluntary Organisations;
(e) Social Enterprise UK;
(f) the Association for Chief Executives in Voluntary Organisations;
(g) the Office for National Statistics; and
(h) such other organisations or persons as the Secretary of State considers appropriate.
(3) Each report must include statistics on the performance of social enterprises.’.
Amendment 1, in clause 1, page 1, line 3 after first ‘of’, insert ‘goods and’.
Amendment 2, in clause 4, page 3, line 36, after ‘Services (’, insert ‘Social Enterprise and’.
Amendment 3, in title, line 1, at beginning insert—
‘To require the Secretary of State and local authorities to publish strategies in connection with promoting social enterprise; to enable communities to participate in the formulation and implementation of those strategies;’.
Amendment 4, in title, line 1, leave out from ‘Require’ to ‘and’ in line 2 and insert
‘that public sector contracts include provisions relating to social outcomes and social value;’.
Mr Thomas
I congratulate the hon. Member for Warwick and Leamington (Chris White) not only on his choice of subject but on the way in which he has steered the Bill through the House thus far.
The Opposition want a comprehensive change programme to boost social enterprise further. I hope to set out this morning a more ambitious approach to the Bill than the Government and the Minister, sadly, have been willing to countenance so far, but before I do so let me explain how my amendments seek to build on some of the issues raised in Committee.
In new clause 1, I have sought to respond to the appetite shown in Committee for more certainty about the definition of social enterprises, and in particular how an asset lock might be worked into the Bill. In new clause 3, I have sought to provide a clear means of encouraging the Government to be accountable for their work in social enterprises. Amendment 1 offers the Minister an opportunity to clarify the arguments that he used in Committee to justify the limited scope of the Bill in relation to commissioning.
In Committee, we had an interesting discussion about the merits or otherwise of a national strategy for social enterprise. I fear that the absence of a clear requirement for such a strategy poses the risk of a loss of momentum behind the sector when ministerial attention is diverted, as it inevitably will be. An example is the point of order on which you ruled earlier, Mr Speaker. No doubt ministerial attention has been diverted, quite rightly, to youth unemployment and the return of the future jobs fund in another guise. There is a risk that other issues might also divert Ministers’ attention from their commitments to social enterprises in the future, and a clear strategy would help to avoid any such loss of focus and interest.
I fear that things that could and should be done by other Whitehall Departments to help social enterprises cannot be done without a requirement for a cross-Whitehall strategy. I fear, too, that some parts of the country will miss out, and that many communities that could and should benefit from what social enterprise can offer will not be able do so because of the absence of a clear strategy framework for Whitehall’s work.
The Minister claimed in Committee that there was a strategy for social enterprise, and cited social investment as one part of that strategy. I must point out gently to him that he did not seem to be willing to give many more such examples. He did, however, go on to say that the Cabinet Office was working with the Department for Business, Innovation and Skills, suggesting that that somehow proved that the whole of Whitehall was united behind work for social enterprises.
I believe that a strategy for social enterprise should touch on a series of issues. Access to finance is clearly a key issue, as are access to commissioning opportunities and the role that social enterprises can play in assisting the process of modernising our public services, making them more flexible and personal. Access to advice and support for fledgling or “wannabe” social enterprises is clearly a further aspect of such a strategy. Ongoing support and representation from—ghastly phrase—infrastructure organisations to help social enterprises to share best practice, to solve legal problems that they may face, or to tackle difficult human resource issues would also be worthy of inclusion.
A strategy could explore the scope for more work with, or indeed instead of, the private sector. It could also consider issues relating to coverage: which communities are likely to need more help to enable more social enterprises to emerge, and what should that help look like in practice? It could outline the role not only of other Whitehall Departments but non-Whitehall players in developing the Government’s endeavours to help social enterprise.
Hazel Blears (Salford and Eccles) (Lab)
Does my hon. Friend share my regret that the original Bill, which was genuinely about social enterprise, has been reduced—as a result of, I believe, arguments within the Government—to a Bill that simply talks about the very minimal bit of social value that is left, rather than giving what could have been a really good boost to the social enterprise sector?
Mr Thomas
My right hon. Friend makes an important point. The Bill represents a huge missed opportunity for the Government to embrace the other elements of the Bill. This is a Government who made much of their commitment to the big society, yet here is, arguably, a big society Bill that they have—as my right hon. Friend rightly says—gutted. The absence today of Conservative Members who might have been present to defend and advocate this big society Bill is, I fear, further testimony to the lack of support for it in practice.
Let me now deal with some of the issues relating to access to money that might constitute part of a national strategy.
Mr David Nuttall (Bury North) (Con)
On the subject of money, may I ask whether the hon. Gentleman has assessed the possible cost of producing a national strategy?
Mr Thomas
I have not, but the explanatory notes prepared by the hon. Member for Warwick and Leamington for Second Reading contained an assessment of the cost, which, if I remember rightly, was approximately £41,000.
Many social enterprises clearly have a strong trading and enterprise ethos, but most have required start-up finance or transitional funds, or funds for specialist advice. For voluntary sector organisations wishing to become social enterprises, strong grant income can help to provide a cushion allowing a business model to be properly developed. If there is no clear, thought-through process to make appropriate funding available, the huge cuts in Government funding for the third sector may not only put at risk the services provided by voluntary and civil society groups on which so many of our constituents rely, but hold back the growth of the social enterprise sector.
It is, I would gently suggest, not enough for the Government to talk about a strategy for social investment. I do not doubt the Minister’s commitment to growing the market for social finance, and the Government’s interest in social impact bonds and support for the big society bank—both Labour ideas—are welcome, but when those initiatives are set against the scale of the cuts in direct funding from national Government and, as a result, local government, there seems to be little hope that the social finance market will have grown sufficiently robust to replace the estimated £3.2 billion—possibly as much as £5.1 billion—of direct funding that will be lost. That estimate of the potentially huge loss to the third sector over the coming comprehensive spending review period was provided by the independent analysts New Philanthropy Capital.
Richard Fuller (Bedford) (Con)
I am listening to the hon. Gentleman’s speech with great interest. He is making a point not only about the need for a strategy, but about the impact of cuts in the near term. Does he agree that, in essence, the Bill in its present form retains the opportunity to support social enterprises, and that the Social Enterprise Coalition and other leaders of social enterprises support it?
Mr Thomas
The hon. Gentleman makes a valid point when he says that the Bill, although its scope is substantially restricted, offers some opportunity for progress to be made in support of social enterprises. The Opposition welcome and support that, but, as my right hon. Friend said, this Bill provided the Government with an opportunity to be far more ambitious in scope, and it is a tragedy that the Minister has not been able to persuade his colleagues in Government to support the more far-reaching measures.
New Philanthropy Capital has assessed the funding situation facing the voluntary sector in the coming years. It noted how the scale of the cuts would be far too big for public foundations or other forms of philanthropy to be able to compensate for, and also noted that charities funded by local authorities, which will bear particularly heavy cuts, are at great risk. The Minister will not, I suspect, be surprised by these difficulties facing the third sector, especially those resulting from the Government’s cuts on local authorities. This is yet another example of their cutting public spending too far, too fast. I am sure the Minister will know about the cuts at Hillingdon Community Transport, Hillingdon Law Centre, Hillingdon Arts Association and Hillingdon Women’s Centre. Those are just a few examples of local organisations that are being affected by the coalition’s economic strategy.
Social enterprises that trade directly with the public are all too aware of the extremely difficult trading environment on the high street. The latest news, which came out today, is that Sir Philip Green is having to axe a whole series of shops. That proves the error of the Government’s economic strategy, and if his business is facing such difficulties, it is unsurprising that social enterprises that trade with the public are also experiencing falling incomes. The crisis facing the economy, and therefore the circumstances facing social enterprises trading with the public, are yet another reason why the Chancellor should consider introducing a temporary cut in VAT and adopting the plan B proposed by the shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls).
Hazel Blears
I wonder whether my hon. Friend shares the following concerns, particularly in respect of the national health service. If it is truly to become the biggest social enterprise in the world, as the Secretary of State for Health has said, there needs to be a lock on public sector assets that have been paid for by taxpayers, so that they are not transitioned into the private sector. That has already happened in some instances. I have made that point to the Minister on several occasions, and I am very concerned that public assets will be transferred to private companies, making private profit for people in the private sector.
Mr Thomas
I entirely agree with my right hon. Friend. It is precisely because of the concern she has raised on this issue—and the support she received, including from Members of the coalition parties, in Committee—that I propose a revised definition of social enterprise in this new clause. It seeks to provide in legislation the asset lock facility. Central Surrey Health is owned by the nurses and managers who work in it, and it was the first employee-owned spin-out from the national health service—that occurred back in 2006, under the Labour Government. It is a classic employee mutual. The Cabinet Office has confirmed that Central Surrey Health has delivered substantial improvements in quality and efficiency in the services provided. However, it would appear that quality counted for far less in the tendering exercise than the ability to raise capital.
The chief executive of Social Enterprise UK, Peter Holbrook, put it as follows:
“If Central Surrey Health, the government’s flagship mutual social enterprise, which has demonstrated considerable success in transforming health services, reducing waiting times and increasing productivity can’t win”—
in a commissioning contract process—
“what does this say for the future of the mutuals agenda?”
He went on to say:
“Public sector workers will be understandably anxious about spinning out from the NHS and setting up a social enterprise on the back of this news. The government needs to take action to reassure them that they will not be operating in markets weighted against them.”
The thought, consultation and preparation required in a proper strategic review of how to support social enterprises might begin to give those public sector workers the confidence they need to be part of employee spin-outs.
The sense that nobody has a proper joined-up grip of how to transform commissioning has perhaps left many public sector workers sadly sceptical about being part of creating an employee mutual. The Minister for the Cabinet Office and Paymaster General has bravely pledged that by 2015 the country will have 1 million more public sector workers in mutuals. I have tabled parliamentary questions asking each Department how many applications Ministers have received from employees to run services for which their Department is directly responsible. Sadly, the overwhelming majority of Departments had received absolutely none.
A strategy for social enterprises could also explore where and how social enterprises can get the advice, the support and even the training that they need in commissioning, and in the legal and human resources issues that they would face, for example, in respect of TUPE. Where do social enterprises go for that support now? Clearly they can go to the excellent Social Enterprise UK or Co-operatives UK, but are they well enough funded for the scale of the Government’s future ambitions? I pose that question in the context of Rise, the south-west social enterprise agency, having decided to close its doors because of a lack of income. As a result, there is understandable concern that Ministers have not thought through the external support required to grow the social enterprise sector. Social Enterprise UK has suggested that there should be more social enterprise hubs offering a combination of business support, shared work space and peer support to support the growth of the sector. That is a very interesting idea, and if there were to be a proper strategy, the Government could explore it in more detail.
What thought have the Government given to encouraging the growth of social enterprises to take on tasks that have traditionally been the preserve of the private sector, for example, in the areas of finance or energy? The Government want social enterprises to help them to roll back the state, but have they thought through the opportunities for social enterprises to do more in those traditional private sector areas? Let me give one example. Access to loans and the level of personal debt have been issues of huge concern across the House. Social enterprises that do not need to fund profits for shareholders could offer cheaper loans and could do so in areas where traditional businesses might not operate. Credit unions are a powerful example of the potential in that area. The London Mutual Credit Union, which I believe operates in Southwark and Lambeth, wants to offer a cheaper payday loan in competition with similar private sector products and it would charge far less than the very high rates of interest that private sector payday lenders currently offer.
Mike Freer (Finchley and Golders Green) (Con)
Before we move off new clause 1, may I draw the House’s attention to subsection 5(b), which contains a definition of “social enterprise”? As I read it, Barratt Homes would qualify here, because one could argue that by building houses it is improving social infrastructure; the provision of affordable homes meets the criteria. Section 106 agreements, which provide affordable homes for rent, housing facilities and health facilities, all meet those criteria. In addition, the definition could exclude those seeking to provide fair trade services, because they do not provide or improve social or environmental well-being in the United Kingdom. Will the hon. Gentleman clarify how that provision would actually be applied? Would it not, in fact, open the door to every business?
Mr Thomas
The hon. Gentleman makes an interesting point about Barrett Homes. I draw his attention to subsection 5(d) of new clause 1, which refers to the business being
“majority-owned and controlled in the interests of improving the social or environmental well-being of the United Kingdom.”
Given that Barrett Homes has a substantial shareholder base, it would be difficult to justify in any court of law that it met that definition.
The hon. Gentleman's interesting point relates to Fairtrade, too, and if the Government accept the new clause, a small amendment in the other place could help to ensure that Fairtrade organisations were not excluded. I am open to the idea that his suggestion might work and I gently suggest that it would require the Minister to have a slightly more open mind than he demonstrated in Committee. Perhaps the hon. Gentleman will have more luck in encouraging the Minister behind the scenes than I did in Committee.
New clause 2 highlights the key role that local authorities will play in helping to grow the social enterprise sector. Indeed, many of the representations I have received about the Bill stress the importance of local authority commissioners for social enterprises. A requirement for a proper strategic look at the needs of social enterprises in each local authority area would mean that Conservative councils, desperate simply to privatise services, would have to at least to consider the merits of the social enterprise sector. They would do well to look at the example of the many Labour-run co-op councils around the country that are already doing much to encourage social enterprises to develop.
In Committee, a number of Members noted the danger of strategy documents gathering dust and achieving little, which none of us in the House of Commons would want to see. I accept that that is a risk, and new clause 3 is designed to help minimise that risk. I have been struck by the enthusiasm of many of the organisations included for consultation on new clause 3. New clause 3 requires an annual report to be laid before Parliament with the clear involvement through consultation of a diverse range of representative bodies from the sector and others, such as the National Audit Office, which, if it wanted to do so, could comment effectively on the success or otherwise of the commissioning for social value part of the Bill. The Charity Commission would be able to provide a view on the effectiveness of the Government’s strategy to encourage further charities that are social enterprises, while the Office for National Statistics clearly needs to be encouraged to develop statistics to enable the sector’s strength and performance to be properly understood.
Evidence-based policy making and proper evaluation of what has worked and what has happened so that one can learn from mistakes is surely always a sensible approach for Ministers and Parliament to encourage. The National Council for Voluntary Organisations, the Association of Chief Executives of Voluntary Organisations, Social Enterprise UK and Co-operatives UK are all strong, excellent bodies that could offer insightful comments to help Ministers and, crucially, Parliament, to assess the effectiveness of the Government’s policies for encouraging the sector to grow.
I was struck by the recent Public Administration Committee’s report “Change in Government: the agenda for leadership”, published in September. The Committee noted the Prime Minister’s promise on, among other things,
“re-empowering…communities as part of the ‘Big Society’”.
Two paragraphs on, it stated:
“The principal message of this report is that unless there is a comprehensive change programme for government, there will be little of the real change”
that the Conservative manifesto promised. There are three new clauses before the House today that all offer the chance of that comprehensive change programme for social enterprise to be embedded across Whitehall.
My final point on the three new clauses is to draw the House’s attention to the new suggested definition for the sector. In Committee and in her intervention today, my right hon. Friend the Member for Salford and Eccles (Hazel Blears) rightly raised the issue of an asset lock to protect taxpayers’ assets to stop them simply being transferred to the private sector. In Committee, my right hon. Friend received support for the principle of an asset lock from the hon. Member for Bedford (Richard Fuller) and even from the Minister.
As I said in response to the intervention from the hon. Member for Finchley and Golders Green (Mike Freer), subsection 5(d) of new clause 1 seeks to add a key description to the definition of social enterprise which locks in any public assets transfer to the social enterprise. That matters because the Opposition remember the bus privatisation scandal of the 1980s. The bus industry was transferred lock, stock and barrel from public ownership to employee mutuals. It was not that long before the employee mutuals handed themselves over to what had become big corporate bus businesses. Those businesses gained the assets on the cheap while the community and employees lost some of the social value implicit in those public assets, which were taken out as profits of those private businesses to reward their shareholders.
I do not criticise the entrepreneurs who set up and now run the bus industry, as the rules at the time allowed them to do what they did. I am certainly not against privatisation. It has its place, although that is not everywhere and not all the time. If that is the Government’s intention for an industry or a particular part of a sector, however, we should have proper, transparent debate about its merits.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I appreciate the point made by the right hon. Member for Salford and Eccles (Hazel Blears) about how some overage must be retained by the taxpayer when surpluses are gained later, but the hon. Gentleman is rewriting the history a little, I think, of the effect of bus privatisation. I remember that when I was a schoolgirl in Liverpool the introduction of choice and competition meant that we had better services, not worse, as a result of the privatisation.
Mr Thomas
My recollection is slightly different; we remember that in the 1980s there were substantial cuts in bus services after privatisation. Arguably, that is not the point. The key point is whether the assets should remain in the ownership of the public sector or, if not, in that of members of the public who are combining in a social enterprise. The asset lock clause seeks to achieve just that.
Ian Murray (Edinburgh South) (Lab)
I thank my hon. Friend for allowing me to make a small contribution on this point. The publicly owned bus company in Edinburgh, Lothian Buses, has won bus operator of the year for five of the past 10 years. It is 90% owned by the city of Edinburgh council and 10% owned by each of the surrounding authorities in the Greater Edinburgh area, including Midlothian, East Lothian and West Lothian. That investment in public buses has made it one of the best bus companies in Europe—holding fares down and being responsive to local communities. I wholeheartedly agree with what my hon. Friend has just said.
Mr Thomas
My hon. Friend makes the interesting point that public sector-run organisations can be extremely successful and often are extremely efficient. The key issue we focused on in Committee is that when assets are transferred out of the public sector we need to ensure that if they have been built up over the years as a result of taxpayer investment, there will be proper protection for the social value that the assets have generated. My revised definition of social enterprise seeks to achieve that objective.
The last amendment on which I want to focus is amendment 1, as the others are all consequential on the three new clauses. Amendment 1 would ensure that the one part of the original Bill to which we know the Government are committed is widened in scope. The Government want and the Opposition support further reforms to the public procurement process to encourage the Government in their various forms to take account of wider economic, social and environmental well-being in the commissioning process.
Hazel Blears
My hon. Friend will recall that in Committee I raised the example of B4Box, a construction social enterprise that refurbishes houses, does construction work and employs people who have a difficult and troubled employment history. The Minister was unable to satisfy me at that time—and I have heard nothing since—about how that amazing social enterprise could be covered under “social value”, because it deals with goods and services, and sometimes the goods might well exceed the services.
Mr Thomas
My right hon. Friend made a very valid intervention in Committee on exactly this point, and I shall return to that issue in a moment.
The Minister also said in Committee that he wanted to
“strike a proper balance between our”—
the Government’s—
“objective to encourage more commissioners to think about wider values, such as social and environmental values, in their considerations, and our determination to try to streamline the process and to reduce the number of additional duties on commissioners.” ––[Official Report, Public Services (Social Enterprise and Social Value) Public Bill Committee, 19 October 2011; c. 19.]
However, he did not explain why it is reasonable to encourage commissioners to think about social value in the context of services but is unreasonable to ask the very same commissioners—as it is usually, although not always, the same commissioners—to think about social value when awarding contracts for work or, crucially, for goods. Will he clarify a little further how he arrived at the view that services could be covered but that contracts for work and for goods should not be covered? Was there a discussion across Government in which he lost out? Perhaps the Secretary of State for Communities and Local Government saw this as a step too far. I note that there was a huge gap between the Bill’s Second Reading and Committee, which suggests there was a fairly intense debate behind the scenes in Government—was it on this issue?
If there was not a political problem in Government about the inclusion of contracts for work or for goods, perhaps there was some research basis for suggesting that only contracts for services mattered in legislative terms for encouraging and embedding that concept of social value in commissioners’ thinking. If that is the case, will the Minister enlighten the House as to the research evidence in question? The whole House believes in transparency and I am sure that we all want to see clear, evidence-based policy making. Will he tell us with whom he discussed such research, if it exists? Was it with Social Enterprise UK or with Co-operatives UK, either of which would have been a logical choice? Was it with the Charity Commission or just with officials? It would be helpful to know the thought process he went through in deciding to omit contracts for work and contracts for goods from the scope of the Bill so that not only those of us in the House today but people in the third sector, particularly public sector commissioners, who consider our debate can better understand what is expected.
During our Committee discussions, my hon. Friend the Member for Stretford and Urmston highlighted the issue of books and publications, which are goods, and the fact that publications providing information about the social security system are arguably providing a service. She noted the potential dangers of confusion and difficulty for commissioners with contracts for goods being excluded from the Bill’s scope.
My right hon. Friend the Member for Salford and Eccles raised in Committee the issue of construction, as she has just done, and whether it would count as a service, a good or work. I gently point out to the Minister that he did not answer her question on that. Following our Committee discussions, I have received further representations suggesting that construction contracts could be outside the scope of the Bill. The organisation in question suggests that legal advice might be necessary, but surely the Minister, having had so much advance notice of the concerns of many Committee members on this issue, can clarify the situation today. I have also received representations that if the Bill covered the provision of food, furniture or plants, the civil society organisations bidding for contracts would be more likely to benefit from the socially and environmentally responsible manner in which those goods are or could be produced.
Similarly, I have received representations suggesting that statutory guidance and training are required on how and where social value can legitimately be considered and inserted into tender specifications. Does the Minister intend to bring forward such guidance for commissioners and for those third sector organisations, social enterprises and others that could benefit from this clause? The Bill could achieve so much more. My amendments seek to do justice to our debates in Committee and, above all, to the huge potential that social enterprise and social value offer.
Chris White (Warwick and Leamington) (Con)
I thank all those who have enabled the Bill to get to this stage today. It is a rare feat for a Bill to go this far and it is a credit to all the political parties and Members who have been involved in the process that so much has been achieved. I again thank the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd) and the hon. Member for Harrow West (Mr Thomas) for their continued support for the principles enshrined in the Bill.
It is wise, at this juncture, to take a step back and remember what has been achieved so far. During the Bill’s progress through Parliament there has been significant national debate on the way that public money is spent. Across the country, local authorities, public sector commissioners, charities, social enterprises, chambers of commerce, community groups and politicians have been seriously considering how we should commission the services we need. In addition, all the political parties have signed up to the principles of social value commissioning. That cross-party support has been one of the most distinctive features of our deliberations on the Bill.
We are very close to being in a position to send out a message to commissioners across the country that we want to do things differently and that although we consider value for money as being important, we mean “value” not in its narrow sense but in its true sense—recognising the importance of social, environmental and economic well-being across our communities and in our lives. This has been welcomed by organisations throughout the country. Only this week a letter from the chief executive of Social Enterprise UK in support of the passing of the Bill was signed by the Association of Chief Executives of Voluntary Organisations, Action with Communities in Rural England, CAN, Children England, Co-operatives UK, Community Matters, Locality, the National Association for Voluntary and Community Action, the National Council for Voluntary Organisations, the National Council for Voluntary Youth Services, the Race Equality Foundation, Urban Forum and Social Firms UK. That is just the tip of the iceberg.
Across our communities, thousands of organisations are looking to us here today to give them a vote of confidence. Yes, we want to see those organisations able to deliver more of our public services. Yes, we want to support them doing the excellent work that they do. Yes, we appreciate the extra miles that they go to support our communities. The biggest show of support that we can give to these organisations is to pass the Bill today.
I appreciate that the hon. Member for Harrow West has only the best of intentions for the Bill. I am pleased that many hon. Members have taken the opportunity to engage seriously and considerately in the process leading up to today, and have sought to do what they can to help make the Bill a success. Every single Member of Parliament who has participated in discussion of the Bill should be proud of the role they have played in ensuring that we do something positive for charities, voluntary organisations, small businesses and social enterprises, but we cannot allow the best to become the enemy of the good.
I recognise that the shadow Minister is seeking to return to some of the clauses that were included in the original Bill, and I sympathise. Of course I want to see, and I believe we all want to see, a more strategic approach to supporting social enterprise in local and central Government. I believe, like him and like most of those in the Chamber, that social enterprise is the way forward and that social enterprise is good for our communities, but the best thing we can do for social enterprise is to focus not on reports or strategies, but on social value. Social enterprises, like other organisations, want more than words. They want concrete action, and the Bill has the potential to deliver that action.
In 2006, the then Parliamentary Secretary, the Cabinet Office, now the Leader of the Opposition, the right hon. Member for Doncaster North (Edward Miliband), produced a social enterprise action plan through the Office of the Third Sector. The action plan outlined 24 separate actions that it wanted to achieve, but nearly half of them were never acted on. That is not to say that we should not have strategies and plans, but strategies and plans by themselves do not necessarily lead to actions that benefit those whom they are meant to support. The social enterprise sector, like voluntary and community organisations up and down the country, see the Bill as a positive action that we can take today that will directly help them and potentially help thousands of others in the years ahead.
The social value aspect has always been the most important part of the Bill, and I am sure that all hon. Members recognise how imperative it is that the Bill goes through with that social value section intact. We should also remember that the Bill in no way prevents the Minister, his successors or local authorities from producing their own action plans and strategies to boost social enterprise, and if they were to do so, they would find in me one of their strongest supporters.
We should recognise that a great deal of the ideas generation that the sector needs comes from within it. The Social Enterprise Coalition, as it was before the last general election, produced an excellent manifesto for social enterprise which outlined a range of specific measures that could be taken to support the sector. We should take on board those ideas and encourage central and local government to work with organisations such as Social Enterprise UK and their regional bodies, to keep a constant dialogue going about how to boost the sector. However, if we are faced with the choice of having strategies within the Bill and it failing, or having strategies removed and it passing, I think we all know which is the more important. This is an opportunity that we simply cannot afford to miss.
Hazel Blears
The hon. Gentleman has shown a great deal of courage, determination and tenacity in getting his Bill this far, and he will certainly have my support. He was speaking about the sector being disappointed if the Bill does not pass. Would he admit to a tiny degree of disappointment himself that his original Bill, which I believe was tremendous news for the social enterprise sector, has been reduced in scope, in scale and in effect by the Government?
Chris White
I thank the right hon. Lady for that intervention. I appreciate the tremendous work that she has put into getting the Bill to this stage. All the work that she does with social enterprises is well recognised. Do I feel a touch of disappointment? I am a practical and pragmatic person. I want to see something that works, something to build on. That is why I am making the remarks that I am.
Chris White
I am about to conclude.
I appreciate that we all have a duty to ensure that the best legislation gets through the House. It is true in this case that some legislation is better than no legislation. This is a chance for us to send a message that when it comes to these important issues, we can all work together, we can prevent politics from getting in the way of good policy and we can be trusted to do the right thing when the time comes. I hope that given the hon. Gentleman’s well-documented support for the principles of the Bill and for the social enterprise, voluntary and community sectors, he will withdraw the amendments today so that we can push forward with much-needed reform of procurement. This is a chance that we may not get again for some time, so let us take it and see the Bill through to the other place and from there, we hope, on to the statute book.
Hazel Blears
I support new clauses 1, 2 and 3 and the amendments tabled by my hon. Friend the Member for Harrow West (Mr Thomas). They are excellent amendments that enable us to debate how we want to see things develop, even if the Bill passes today, as I hope it will, in its current truncated form.
The Bill originally had five clauses. It contained a specific commitment to a national social enterprise strategy and strategies for local authorities. I said on Second Reading, some time ago, that I thought the Bill was small but perfectly formed, and that if it went through in that form, it could have a transformational effect on the commissioning that took place in our public authorities.
This is no judgment on the hon. Member for Warwick and Leamington (Chris White), but I am afraid that the Bill in its current form represents a huge missed opportunity to drive forward with momentum and impetus the growth and flourishing of the social enterprise sector. The original Bill would have tilted the scales in favour of social enterprise through social value and economic, social and environmental well-being. That would have sent a strong message to public commissioners that the Government really wanted to put their weight behind it as commissioners and would have produced quite a transformational effect.
The hon. Gentleman’s original clauses about a strategy have been deleted. I have no time for strategies that are just pieces of paper, because in my experience harnessing the full power of every Department requires a central spine that says to those Departments, “This is what we want to do. We will hold you to account. We want to see what you have done over the past 12 months and how you can take it forward.” I worry that without such a mechanism the push towards social value commissioning will be taken up only by the best local authorities, which are good at commissioning and understand, particularly in areas such as social care and education, that social value means more impact for the money spent. Good local authorities understand that and are becoming quite complex commissioners. They are commissioning with the users and clients involved and going out to the public and asking what they want to see. That is a holistic approach to commissioning.
However, as I mentioned in Committee, I am worried about the local authorities that lack the capacity, skill and understanding to carry out complex commissioning. The Minister gave some assurance in Committee that there would be support for those local authorities to ensure that they can take this forward. What the Bill says is really good, but I fear that it will fall somewhat short of the transformational effect that the hon. Member for Warwick and Leamington wants to achieve.
The annual report proposed in new clause 3 might be dismissed by some as bureaucracy, but I know from my experience in government that requiring Ministers to come to the Dispatch Box once a year to report on what they have done and what the impact of that has been is a tremendous discipline to ensure that during the rest of the year they ask for regular reports and push for implementation. Unless there is a way of measuring and evaluating the social value achieved through a change in the commissioning process, I do not think that we will see the results that the hon. Gentleman talked about.
The hon. Gentleman says that he is pragmatic and practical, to which I can attest. My view is always to get what one can and then build on it incrementally, and I think that that is probably where he is now. However, I think that he is also quite determined to make a change, so I ask him to press his right hon. and hon. Friends in the coalition Government to say how they will measure social value and assess what difference it has made. In a year’s time, more commissioning will have social value at its heart. What work are we doing to hone in on how we measure social value so that we get a grip on this, because otherwise it will remain a fairly nebulous concept that is very easy for people who do not share the values to wriggle out of? I am sure that that is not what he wants.
Richard Fuller
The right hon. Lady has a lot of support for the work she has done in her career to support social enterprise. Will she add to her point about urgency and immediacy the fact that social enterprises provide one of the most exceptional ways to enhance productivity in public sector areas? As we are looking for the opportunity to grow our economy, it would be beholden on the Government to make every effort to look at ways in which social enterprises can enhance the productivity in that sector of the economy.
Hazel Blears
I absolutely share the hon. Gentleman’s point. The economy is difficult, there is less money around and public authorities have less resource to spend, so we must ensure that we get as much value as possible out of every pound we spend. The social enterprise sector is often very innovative and comes up with new ways of working and doing business, and that has been one of its particular advantages. There is good innovation in the public sector, but small organisations that have a complete passion for something will often take the system apart, look at how things are currently done, and get more value and productivity.
Mr Nuttall
I entirely agree that there are many instances of innovation in some public sector organisations and in social enterprises, but does the right hon. Lady agree that there are also thousands of examples of innovation in the private sector?
Hazel Blears
I entirely agree. I was about to say that this is not just about the social enterprise sector. One of the good things about the Bill is that it is about social value wherever the commissioning take place, whether in the public sector, the private sector or the voluntary and community sector. There was perhaps a tendency in the past to limit social value to a particular niche in the market for the voluntary and community sector. That sector does fantastic work, but not exclusively. If we can get social value into some of the big private sector organisations, we will see more productivity and a greater impact. A range of large corporate organisations are recognising that doing good is good business. Getting that combination of people using their existing business model to achieve social action and social change is a big movement in this country. We have heard talk about responsible capitalism. There are moments when something happens in society, and I think that we are at one of those moments. Many big organisations have recognised that for their own sustainability—not for charitable purposes, but to do good business—using their procurement, supply chains, product development and investment for social action in communities will be very beneficial. I think that there will be a move from the traditional concept of corporate social responsibility of doing some charitable work once a year to embedding a social action model at the heart of business, small and large, in this country. It is a development that I welcome hugely.
I want to make a few comments about that change. The amendments that my hon. Friend the Member for Harrow West has tabled refer to the definition of social enterprise, which is important, and I hope that the Minister will address it, but I also think that the system currently has barriers to big corporations taking the agenda forward. If we are to have commissioning in the private sector that focuses on social value, we need to think about that. A social enterprise called Create opened its doors in my constituency only a week ago. It provides work opportunities for young people and older people who have been homeless. It brings them through a production kitchen to gain catering skills and provides outside catering services. It is a business that describes itself as being “for more than profit”, which I think is an interesting description. It started in Leeds and also operates in Doncaster, Liverpool and, now, Salford. In Leeds it now runs a five-star, top-class restaurant—a little like Jamie Oliver’s Fifteen—which teaches homeless people catering skills. It has a relationship with Morrisons supermarket, and if the people it trains do not go into catering, they are often job-ready and can go into the world of work. That fabulous partnership works for everyone involved and, increasingly, big companies want to work in that way.
Perhaps the Bill can do something to say to the private sector, “Commissioning for social value is good business for you.” John Lewis and the Co-op have done that for decades, but I want us to be able to have a range of different examples that are big in retail, manufacturing and the important sectors of our economy that use the power of their businesses, whether employing former offenders and people who have had difficulties in their lives. That is why I pressed the Minister on whether we can have goods and services, because I think the artificial distinction that this is just about services could limit the ability of the big corporate sector to come into this field. That is something that he might think about remedying if there are legislative opportunities in future.
When I pressed the Minister in Committee on whether there ought to be a definition of social enterprise, I was grateful for his answer:
“The right hon. Lady’s fundamental point is right...there is a spectrum, from pure charitable activity to social businesses. Some blurring of lines might not have mattered until now. She may be right that we have reached the point at which some definition in law is needed.”––[Official Report, Public Services (Social Enterprise and Social Value) Public Bill Committee, 19 October 2011; c. 16.]
He indicated that, in the review of charity law, there were perhaps two legislative opportunities for that.
Fiona Bruce (Congleton) (Con)
May I, too, pay tribute to my hon. Friend the Member for Warwick and Leamington (Chris White) for the foresight, diligence and perseverance with which he has brought forward the Bill? He has already achieved much by influencing mindsets and stimulating public debate, and those involved in the commissioning of and bidding for public services have already become much more aware of the importance of social value to the process. So, even before the Bill has passed into law, I congratulate him on all that he has achieved.
In opposing the new clauses proposed by the hon. Member for Harrow West (Mr Thomas) I must say that if a key aim of the Bill is to stimulate and encourage creativity and innovation in the growth of social value and social enterprise, particularly locally, and if, as I think we all agree, we are on a journey in that respect, much can be achieved, as my hon. Friend has already demonstrated, without unnecessarily defining or delaying the process through a national strategy. Let us get on with it and see the Bill passed into law.
The broad potential improvements and impact of the Bill are substantial. I shall touch on some of them now and, if time permits, on some of the ways in which, in my local authority already, there is refreshed thinking about the importance of considering social value when awarding contracts.
One of the key merits of the Bill is its proposal to expand and embed the concept of social value in the bidding process for public sector funding, and that is true not just when social enterprises are involved, but when private sector providers compete against one another. Providers are likely to lever social value into many more submissions for public funding, and in that respect the Bill will have an exponential effect on the bidding landscape.
The Bill will, I hope, introduce more flexibility to tendering. When I discussed it with the head of CVS Cheshire East, she said that the tendering processes need reviewing and
“need to be relevant to the service that is being commissioned”.
She went on to say that
“grants are often used to encourage creative solutions to a need or problem…A tender often doesn’t enable this to happen, as the method for solving the need has already been set.”
Another way in which I hope the Bill will add social value is by opening up the often complex and baffling area of public procurement to smaller local social enterprises. They work at the grass roots of their community and with an ear to the ground, and they are often best placed to work most effectively for their communities and to add social value by levering in, for example, volunteering, but until now they have felt that the bureaucratic barriers to tendering have been just too great. For local authorities to say, “We welcome you, recognise what you have to offer and are going to proactively work with you through the application process to help you successfully bid,” will be a real step change for such enterprises.
Many faith-based organisations augment our local communities, adding so much social value through youth work and work with the homeless, the elderly, the addicted and the lonely and in many other areas, but in recent years they have felt discouraged from applying for public sector funding, perhaps because of concerns that in procurement their ethos does not tick all the right boxes. I therefore hope also that, as a result of the Bill, they will be encouraged to make such applications in future. So often, what injects faith-based organisations with their tremendous energy, dedication and perseverance springs from that very ethos, and in a truly diverse society let us celebrate, not seek to neutralise it, because at the end of the day all organisations have an ethos; none can be wholly devoid of one, or totally neutral. So let us welcome such valuable organisations fully into the public procurement process. The Bill sends out the right signals in that regard, and I welcome that aspect of it.
I now quote some specific comments on the Bill from social enterprises in my constituency and cite some examples of good practice among them, showing how very much they welcome the Bill. Plus Dane is a housing association based in Cheshire and Merseyside that manages 12,500 homes and works as a neighbourhood investor. Mike Doran, its manager, who is based in Congleton, said:
“I believe the Bill will be of great benefit both to organisations such as ourselves but also to the wider community of locally based social enterprises…The need to demonstrate social value within procurement activity will ensure that a double bottom line of both economic and social good can be generated.”
I congratulate Cheshire East council as a forward-thinking council in this respect which absolutely recognises the value that organisations, community groups and social enterprises can add to our community livelihoods. I am delighted that in the recent past it has worked with Plus Dane on various projects. Plus Dane is delivering grounds maintenance and environmental services to the local authority. It is providing training and work for young people who have been long-term unemployed or have a history of getting into trouble with the law, enabling them to go on to gain full-time employment elsewhere. Plus Dane is working with the council in the provision of house building, with 35 apprentices, and it is supporting the development of a local apprenticeship initiative in Congleton that has involved the chamber of commerce, Congleton town partnership and local schools. This type of project is laudable, and this Bill will encourage a far greater recognition of such partnerships across local communities, which can make an exponential difference.
Another example is an enterprise called Visyon, which provides advice to young people who are suffering from abuse, the results of family breakdown, bullying and so on. It recently acquired devolved premises in my constituency through the local authority community transfer of assets scheme. In this respect, I commend the work of the right hon. Member for Salford and Eccles (Hazel Blears), who did so much to instigate that scheme. The hon. Member for Harrow West, who is not in his place, talked about the possibility of assets going out on the cheap. Visyon has received a local hall that was not being used to its maximum potential. The local authority has awarded it a contract that will enable those premises to support the development of many other groups across the constituency and their work within the local community. It is not about assets being passed across on the cheap but about a broader, better and more beneficial use of those assets for the whole community.
I pay tribute to my hon. Friend the Member for Warwick and Leamington. I feel privileged to have been able to support him on the journey that this Bill has undertaken, and I will continue to do so in future. I look forward to its outworking right across our nation.
Mike Freer
I, too, pay tribute to my hon. Friend the Member for Warwick and Leamington (Chris White) for getting his Bill this far. I characterise the remarks of the right hon. Member for Salford and Eccles (Hazel Blears) in that my business career was in the private sector but I also led one of the larger councils in the country. To be honest, when I first saw the Bill my heart sank, because I shared the prejudices that so many others have had regarding social enterprises. It was only when I started to see the Bill progress and to understand more of what was being done that the scales fell from my eyes and I became a supporter of it. It is better that a sinner repenteth than not change at all, if I may mix that analogy.
Although I support the Bill, I have some concerns that I hope the Minister can deal with. I believe that the definition of “social enterprise” needs to be clarified. As I said in my intervention on the hon. Member for Harrow West (Mr Thomas), there are many private sector organisations that we may not believe to be social enterprises but of which we could argue that part of their business is to improve the social welfare of the United Kingdom, although we may disagree. That is why unless we specify what is a social enterprise—including types of ownership, not just outcomes—we could end up with a lawyers’ charter as many companies argue that they have a social angle to their enterprise and should therefore qualify.
Mr Nuttall
It is, as always, a great pleasure to follow my hon. Friend the Member for Finchley and Golders Green (Mike Freer), who brings his experience in local government to this debate.
I rise to oppose new clauses 1, 2 and 3 and amendments 1, 2, 3 and 4. That is primarily because, while I appreciate that there is sometimes a time and a place for strategies, and that it is sometimes a good thing to have a strategy, I agree with what the Minister said in this House on Second Reading:
“I believe that, particularly in this context, strategies should be governed by the need of the moment, and should be driven by conviction rather than by a requirement to comply with some bureaucratic process. I do not want the process of drawing up strategies to be bureaucratic. I do not want it to be simply an exercise in producing more glossy brochures that fill up the bookshelves in our offices, which are not read and which do not have real traction.”—[Official Report, 19 November 2010; Vol. 518, c. 1217.]
I could not agree more. There is a real danger that the new clauses will have the effect of introducing a level of bureaucracy to this procedure that will not add anything to the overall aim of the Bill.
I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on his perseverance and determination in piloting the Bill through to this stage. He should be commended for that. Although it has been over a year since Second Reading, and some might think that that is slow progress, it has been positively sprightly when compared with the glacial progress made by the Bill promoted by my hon. Friend the Member for Castle Point (Rebecca Harris), who I see in her place—the Daylight Saving Bill, which, after a year, has yet to reach its Committee stage.
On the cost of these strategies, when I intervened on the hon. Member for Harrow West (Mr Thomas) he referred back to the cost of £41,000, which was cited by my hon. Friend the Member for Warwick and Leamington on Second Reading. I was not present on that occasion, but when I read the record of the debate shortly afterwards, I thought that estimate slightly optimistic, if my experience of the costs of achieving anything in government are anything to go by. I am still of that opinion today. In fact, I think that the figure is wholly unrealistic.
The costs are compounded by the solution that is given to the question of how one comes up with a mechanism to ensure that the strategies are actually carried out, provided in new clause 3, which is to produce an annual report—yet another cost and yet another obligation on the Secretary of State. The Secretary of State would have not only to produce a report, but consult several bodies including the National Audit Office, the Charity Commission, Social Enterprise UK, the Office for National Statistics and many others. I do not think that that would help to achieve the overall aims of the Bill.
I am often concerned when a Bill has cross-party support. I notice that there were no Divisions on Second Reading or in Committee.
Mr Nuttall
Oh, there were Divisions in Committee.
This Bill plays a large part in the big society agenda. Once or twice today, anybody listening to this debate would have thought that it was a Government Bill. Of course, it is actually a private Member’s Bill. I am sure that even in its slimmed-down form, thousands of social enterprises across the country will welcome the progress that it has made. Having said that, there seems to be little in the Bill that could not take place regardless of whether the Bill makes progress and without the passage of new legislation. What is needed by those involved in the commissioning and procurement of public sector services is the will to secure diversity of provision. Users of public services are not concerned about whether the services are provided by the public sector, the private sector, the third sector, voluntary organisations, charities or social enterprises; what matters is the quality of the service they receive.
We need the process of bidding for public sector contracts to be made a great deal easier, not just for social enterprises, charities and voluntary organisations, but for small and medium-sized enterprises in the private sector. In that regard, I associate myself with the remarks made by my hon. Friend the Member for Congleton (Fiona Bruce). Smaller organisations, whether in the third sector or the private sector, often need a helping hand to guide them through what can seem to be a burdensome, complex and bureaucratic procedure. One thing that we need to do, as a Government and as a society, is to make that whole process much easier.
I hope that the Bill will encourage more social enterprises to develop and to take over, where feasible, areas of service from the public sector. From my point of view—I appreciate that this will not be welcome in all parts of the House—I would not worry if this was seen as a stepping-stone towards services being provided by the private sector. Of course when assets leave the public sector, the true and full price must be paid. Provided that that is done, there should be no loss to the public sector. We need dynamism in the procurement of public services, with contracts moving. Sometimes contracts might be kept in-house, sometimes they might go to the—
Madam Deputy Speaker (Dawn Primarolo)
Order. I have given the hon. Gentleman quite a lot of latitude, as I have with other Members, but we are not on Third Reading or Second Reading; we are discussing new clauses and amendments. Perhaps the hon. Gentleman could anchor his remarks in the debate that we are currently having, not the one that we have not started.
Mr Nuttall
I am obliged to you, Madam Deputy Speaker. In fact, I was just making my final point, so if I may, I will complete that sentence and finish my remarks there.
I was saying that we would see contracts going from the public sector into the private sector, on to the third sector and then back again. There would be dynamism in the sector, which would mean that sometimes contracts would be lost by social enterprises and go back into the public sector or the private sector, and then be regained again. With that, I will not seek to catch the Chair’s eye on Third Reading, which I am sure you will be pleased about, Madam Deputy Speaker.
The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)
May I start by adding my voice to those who have congratulated my hon. Friend the Member for Warwick and Leamington (Chris White) on the way in which he has led this Bill? I have said that on every occasion and I mean it. I thank him in particular for reminding the House, in what was a statesmanlike response to the shadow Minister, of the importance of the cross-party support that has built up over some years behind this agenda. That is essential if we are to make further progress.
I was delighted by the contribution of the right hon. Member for Salford and Eccles (Hazel Blears). She may have been described as unhinged in the past, but she was perfectly hinged today in her comments. She made it clear that, whatever her frustrations with the Bill, she recognises that it is a start and is happy for it to progress.
The hon. Member for Harrow West (Mr Thomas), my Harrow neighbour, is entirely right that we must not lose momentum. This agenda is more important than ever. We have a highly risk averse public sector system and a traditional business sector that is too stagnant in many areas. They must take this opportunity to create space for the change makers and the people who have the vision to stand up and say, “We see what you are doing. It can be done better.” This is exactly the time to do that. I have a lot of sympathy for the thrust of the hon. Gentleman’s remarks, which was about encouraging the system to go further. What he neglected to mention, in complaining about the playing field not being level, was who has tended the playing field for the past 13 years.
The hon. Gentleman also forgot to mention that it was a Labour Secretary of State for Health who reversed policy and made it clear that the NHS was to be the supplier of choice—a statement that sent shockwaves through the social enterprise and charity sector. I am glad that we are back on track and giving new momentum to the message that we must diversify our base of public sector delivery partners and that we must create more space for the change makers who are prepared to challenge the system.
That message is being recognised in some bizarre places. I wish that the hon. Gentleman had been with me this time last week in Brussels—I could have done with the company. I was at a conference where 800 people gathered from all over Europe, summoned by President Barroso and Commissioner Barnier for the launch of their social business initiative. Here we are in the middle of the greatest crisis facing the eurozone and the Commission is taking time, with leadership from the top, to state the importance of the whole area of social enterprise and social entrepreneurship. Speaker after speaker came to the podium to congratulate Britain on its leadership in Europe on this agenda. We must not lose sight of the big picture. We have the opportunity and the need to keep the momentum going.
I differ from the hon. Member for Harrow West on his view that simply legislating to require the Government to produce a statutory document will be transformational. We had a good debate on this matter in Committee, so I will not labour the point. However, I am extremely grateful to my hon. Friend the Member for Bury North (Mr Nuttall) for quoting what I said on Second Reading. I agreed with every word of it—I was on good form that day—and I stick to it. My hon. Friend the Member for Warwick and Leamington usefully reminded the House that we have had action plans before, and it is about not the publication of a plan but delivery and action.
The hon. Member for Harrow West bemoaned the lack of a strategic framework, but I would argue that in fact the coalition Government set a strong lead and set out a very strong framework in the agreement for government, which contains an explicit statement about our commitment to support the creation of mutuals and social enterprises and encourage them to play a bigger role in public service delivery. From that, a flow of action is increasingly evident in various areas, which I will summarise briefly.
Hazel Blears
Will the Minister acknowledge that it was in fact the previous Labour Government who introduced the legislation that enabled social enterprises to be established in the health service, and who provided significant financial support to get them off the ground? That was a Labour initiative. There are organisations such as Six Degrees, Unlimited Potential and the Angel health centre all across my city now, and they are providing excellent services. That was an initiative of the Labour Government.
Mr Hurd
I am very much prepared to accept, as I have in public on many occasions both in the House and outside, that we are building on some excellent work, to which consistency is fundamental. The point that I made earlier was that it was a Labour Secretary of State who sent a very mixed message to the market by giving an explicit statement that the NHS was to be the supplier of choice. I am delighted that there now seems to be cross-party support again for a message that is more positive for, and supportive of, social enterprises and charities and the opportunity for them to deliver public services.
The hon. Member for Harrow West mentioned the Work programme, and he is right that it is early days. There is certainly some frustration and cynicism out there in the social sector, and I am listening to it and liaising closely with the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), on it. However, we cannot lose sight of the fact that under one of the most important of the Government’s programmes, deliberately structured as a payment-by-results system to incentivise primes to work with organisations that have a track record and a good opportunity to deliver results, we have 300 social enterprises and charities in the supply chain. Depending on their delivery, I believe they are set to earn several hundred million pounds over the life of their contracts. That is definitely a step forward.
The Work programme is not just about encouraging different suppliers of existing services. We are trying to get the system to think differently about how services are commissioned, so we are working with four local authorities on troubled families with multiple problems. I think we all know from our constituencies that the state has historically not done a very good job of supporting such families. We are encouraging those local authorities to consider working in a different way and structuring a more holistic service based more on prevention and an openness to working with different suppliers under a payment-by-results contract. We hope that will lead to four new social impact bonds, to encourage social investors to come in and share some of the risk and return.
That action and activity is intended to break down what the right hon. Member for Salford and Eccles and others know is a tremendous aversion to risk in the system. No one can pretend that that is easy, or that publishing a strategy document or even Government guidelines will instantly break down the culture of risk aversion in the public sector. She rightly talked about the need to support commissioners better, because they are operating in systems that are tremendously averse to risk. I have sat around tables with commissioners who get what we are talking about and want to make progress and work more with social enterprises and charities to restructure services. However, I have had queues of people at the door saying, “You can’t do that.” I am sure she knows—she has been there—that the more we consider the matter, the bigger the challenge gets.
We are thinking afresh about how we support commissioners, and the Minister for the Cabinet Office has talked about our plans to set up a commissioning academy to try to support commissioners, develop more intelligent commissioning and raise the status of the profession and the qualifications in it. We want to develop learning resources that build on the best practice that is being developed around the system, and that is a serious project.
The Bill will add value to that process—perhaps not in ways that every Member would like, because we all know that politics is the art of the possible at a given moment and that there are compromises to be made, but we are on a journey. The Bill will complement the best value duty, which Opposition Members did not mention but which my hon. Friend the Member for Finchley and Golders Green (Mike Freer) brought up. That was an important piece of guidance from the Secretary of State for Communities and Local Government to local authorities, setting out an expectation that commissioners should consider the overall value of service provision, including economic, environmental and social value. That covered the full procurement chain for services and goods, and was a very clear new piece of guidance.
We believe that the Bill will complement that useful guidance by sending an additional signal to commissioners outside local authorities that, where it is relevant and proportionate, they should consider social value at the pre-procurement phase when they are considering commissioning services. That is how we can balance out the areas in which we think the biggest impact can be made now and our desire not to impose too many disproportionate duties and burdens on people who are doing already very difficult jobs. That is where we are comfortable with pushing the agenda forward.
Mike Freer
I am grateful to the Minister for his clarification of the guidance from my right hon. Friend the Secretary of State for Communities and Local Government. Guidance is fine, but from memory I believe it is still open to a local council tax payer or resident to challenge a local authority’s accounts if they believe that the local authority has not achieved best value. We need to go beyond guidance and ensure that the legislation all lines up.
Mr Hurd
I accept that point, and to some degree that is what we are doing today. We are moving forward on that. My hon. Friend mentions the concept of the right to challenge, which had not previously been mentioned in the debate. Again, we are moving forward on that, because we are moving into a world in which there will be much more information about what commissioners are doing and how public money is being spent. Through the Localism Act 2011, which I am delighted to say has completed its passage through Parliament, the right to challenge is now set in statute, with regulations to follow shortly to clarify how it will work. That is progress on the journey that I have described.
Mr Hurd
I have nothing to add to what I said in Committee. The Bill is reasonably clear about where it will apply.
The right hon. Member for Salford and Eccles mentioned B4Box in her constituency. The position will be enhanced by the new best value guidance, and there is nothing to prevent the local authority from working on the basis that she described. I am grateful to her for bringing Aileen in to talk about the matter. Aileen is doing it. There is space in the system for her to do it. She and I would probably agree that we need to send a stronger signal that it is okay, but it is okay and people are doing it. The best value guidance from the Secretary of State moves things on further by sending a signal of permissiveness.
I have always made it clear that the Government have from the start supported the principle of the Bill because of the value that it adds to the process, and it goes with the grain of what the previous Administration were trying to achieve. The system, risk averse as it is, is getting a consistently stronger signal about the need to take account of wider social value considerations when spending taxpayers’ and constituents’ money and to be more alive to opportunities to commission intelligently. Lots of examples have been cited in our debates of fantastic organisations, such as Create, that are adding value to our communities. I cited that example in my Brussels speech because in many ways it embodies exactly what we are trying to encourage.
We can do more. The hon. Member for Harrow West goaded us to come up with more ideas to support social enterprises in this movement. I have talked about the need to open up new market opportunities to help these enterprises grow and to help more people, but the Government can do more to make life simpler for the social entrepreneur. I shall come later to the question of definition but these are businesses first and foremost, and the guidance and requirements that we place on people trying to run businesses in this country are ridiculously disproportionate. A rigorous process is under way. It cannot be undertaken lightly and it does not lend itself to soundbites. It is a rigorous process of going through each subsector of the economy to look at the regulatory burden and to discuss with the players in those sectors what we can remove and what is no longer proportionate or necessary. That process is well under way.
We can also help social enterprises with the increasingly important question of how to measure social impact. That is their currency. Many of us know that the money providers, whether private or public, are increasingly demanding that social enterprises, charities and, I hope, other organisations measure and communicate their social impact and social value, which is their unique selling point. Many of us are also aware that arguably there is too great a profusion of initiatives in this area and of the risk that this will only confuse the landscape. I want greater coherence and consistency not least so that we, as funders, and other stakeholders can agree on what is worth measuring and how it can be measured affordably by all organisations.
Hazel Blears
This is a really important point. There is a plethora of ways to measure social value. I mentioned in Committee an organisation called Connectives, which has moved on from the social return on investment transactional model towards a much more in-depth assessment of what social value means. Is the Minister prepared to meet the two female accountants behind Connectives to explore their ideas?
Mr Hurd
I would be delighted. I thoroughly enjoyed the first meeting that the right hon. Lady invited me to, and I am sure that this one will be just as informative. I also thank her for reinforcing my instinct that the Government can take a lead in trying to make life simpler for all parties, not least in our role as a major funder, and to help people to reach greater coherence and consistency when working out what is worth measuring and how it can be measured by all organisations, not only those with the deepest pockets.
Mr Thomas
We have had an excellent debate on new clause 1 and its associated new clauses, with an excellent speech from my right hon. Friend the Member for Salford and Eccles (Hazel Blears) and similarly strong speeches from the Bill’s promoter, the hon. Member for Warwick and Leamington (Chris White), and the hon. Members for Congleton (Fiona Bruce), for Finchley and Golders Green (Mike Freer) and for Bury North (Mr Nuttall), as well as the Minister.
The hon. Member for Warwick and Leamington encouraged us in the view that he was a practical and pragmatic person; I hope that I, too, share those characteristics. I say gently to him and his hon. Friends who are not convinced of the merits of a strategy that if one is comfortable with unintended consequences or outcomes that one does not necessarily want, a strategy is certainly not required. However, if one has a clear vision and a sense of the possibilities for a sector, a strategy can help to unlock the incremental steps required to allow it to flourish. The hon. Gentleman mentioned the social enterprise plan, which my right hon. Friend the Leader of the Opposition developed when he held the position currently held by the Minister. The hon. Gentleman said that some parts of that strategy were not implemented, but that is often the case with strategies. Not everything is successful, but if one is trying to grow a sector strategically, one learns from the things that have not worked in order to enjoy even more success in future.
My right hon. Friend the Member for Salford and Eccles suggested that the Government were moving too slowly and not deeply enough on this agenda—a succinct and accurate summary of some of the problems that parts of the Government face in implementing it. She rightly talked about the potential benefit of the one bit of the Bill that the Government support, which is that on encouraging businesses in the private sector to continue the journey that many are already on and think about how best to use social enterprises in their supply chains. Many businesses recognise that CSR reports, corporate donations to charity and corporate philanthropy are important, but not enough on their own, and that building social enterprises into their supply chains—she gave the example of how Morrisons is working with social enterprises in her area—can make a genuine difference to the private sector and, similarly, help to grow social value.
The hon. Member for Congleton praised the social enterprises in her constituency and highlighted how the social value element of the Bill could help them to grow further.
The hon. Member for Finchley and Golders Green explored in his speech some of the issues that he raised in his intervention on me about the definition of a social enterprise. I was struck by the benefit that a proper strategic conversation on how to grow the social enterprise sector might have for one very interesting idea recently presented to me—the idea of developing the concept of a social enterprise limited liability partnership to help ease investment finance from the City into social enterprises.
The Minister began his remarks wishing I had been with him in Brussels. He is, as ever, charming and I would have found it hard to resist if he had indeed called me in time to accompany him. He is absolutely right that the Government have taken some positive steps on this agenda, but, sadly, there have also been negative steps backwards for the sector. I welcome the progress made on the big society bank, but even the £600 million with which the Minister hopes the bank will be capitalised will not plug the huge amount of grant income being taken out of the sector.
I was encouraged by the Minister’s recognition that the Work programme has not gone well for the sector. He said that he is listening, but I fear that his colleagues in the Department for Work and Pensions are, sadly, out of touch with just how badly things are going for many charities and social enterprises that had hoped to be part of the Work programme.
Let me leave the House with one further statistic about the failure to date of commissioning in this area. The London Voluntary Sector Consortium surveyed some 25 tier 2 providers, 23 of which had had no referrals from their prime contractors—hardly a ringing endorsement of the success of commissioning for social enterprises under this Government to date.
Lastly, the hon. Member for Bury North almost appeared to lament the cross-party support for the Bill. I thought he was encouraging me to press my amendments to the vote. I recognise that there are insufficient Members in the House today, which means that if a vote were called the Bill’s progress would be stalled. Although the Minister has made a slightly better fist, if I may say so, of answering the concerns of Labour Members about the Bill’s narrow scope, I would have been tempted to press some of my amendments. I want the Bill to make progress, however, so I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Third Reading.
Chris White
I beg to move, That the Bill be now read the Third time.
I will be brief, as a great deal of what needs to be said has already been said. The Bill before us may not be perfect, although it is perfectly timed. It comes at a time when social enterprises and voluntary community organisations across our communities are looking to the Government and all political parties to show support for the work they do.
There is still a long way for the Bill to go. I hope that it will continue to find support on all sides in the other place and when it comes to implementation. People want to see more of this kind of politics. It is not partisan politics, motivated by getting one over on the other side. It is politics that puts society first, recognising that when it comes to the better use of public money for the benefit of our communities, we can all benefit from it. There is much more work to be done, and I hope it will be done in the same cross-party and consensual manner that we have seen on the Bill so far.
Mr Thomas
Let me again congratulate the hon. Member for Warwick and Leamington (Chris White). He has done a masterly job in nursing his Bill through the corridors of Whitehall, where I suspect that he has engaged in some particularly interesting conversations, and through its various stages in the House. He took his party’s leaders at their word and presented a big society Bill, and it is certainly not his fault that the Government have gutted it. What remains is nevertheless useful, and, as many Members have observed, could begin to make a difference in local communities as commissioners think a little more carefully about how to maximise social value.
Mr Philip Hollobone (Kettering) (Con)
The hon. Gentleman has correctly described this as a useful Bill. Will he give the House the assurance of his party that in the other place everything possible will be done to ensure that it is passed before the end of the current parliamentary Session?
Mr Thomas
I will certainly do all that I can to encourage its passage. I hope that I have demonstrated to the hon. Gentleman, as well as to the hon. Member for Warwick and Leamington, the spirit of co-operation that was needed for it to make progress today, and I sincerely hope that it is passed in the other place and becomes law.
A week or so ago, on social enterprise day, I visited Hackney Community Transport, a remarkable social enterprise. I met not only its chief executive, but some of the staff who have been selected as this year’s social enterprise champions for the organisation. It is a remarkable outfit. In the early 1980s, finding it increasingly hard to obtain the grants that it needed in order to continue to meet the demand for transport from pensioners’ clubs, community swimming groups and the local Guides and Scouts, it set out to try to win commercial transport contracts. Last year its turnover was some £28 million, and over the past five years it has sustained a 20% to 25% annual rate of growth. That is a remarkable success by any definition.
Hackney Community Transport creates social value by reinvesting the profits from its commercial contracts in transport services for community groups in its area, and by training the long-term unemployed to help them prepare for a return to work. In its small way, the Bill will reinforce the extra value that it creates in its local community. Let me point out gently to Conservative Members that Hackney council has been a supporter of that social enterprise, working with it and commissioning contracts in ways that give it a fair chance. Here is the state in action at its most innovative, working with the community to create real social value and community benefit.
The Bill has the potential to help two more excellent social enterprises, as well as, I am sure, many others. Greenwich Leisure is another part local government, part enterpreneurial employee-led social enterprise, born in response to John Major’s cuts in the early 1990s. Winning contracts from local authorities to provide leisure services, it has created many new jobs and offered a range of initiatives to persuade those who have previously been unable or unwilling to use leisure centres through its doors. I am delighted to say that my own council has a contract to run our leisure centre with that excellent social enterprise.
The superb Coin Street Community Builders, 10 minutes away from this great House, was formed as a result of a challenge from the private sector. Big hotel groups wanted to take over the frontage of the River Thames, not for the community’s benefit but purely in their own interests. The tenacity of the community—and, to be fair, the skill of the Greater London Council planners at that time—led to the site being protected. Through a mix of legal forms—a housing association, a co-operative, a company—the community gradually generated new social housing. It has also refurbished the striking Oxo tower, created new work spaces for businesses, and helped regenerate the surrounding area. That has created considerable community benefit, and real social value.
The Labour party champions social enterprise and social value, not because we want to roll back the state or provide cover for tax cuts for the few and huge cuts in services for the many, but because we believe in strong communities and we recognise that we need to allow the ideas and imagination of the brightest and the best in our communities to flourish. Social enterprise and social value, along with Government, have key roles to play in that regard, and we support the Bill on that basis.
Richard Fuller
I wholeheartedly support the Bill promoted by my hon. Friend the Member for Warwick and Leamington (Chris White), as it enhances both supply and demand in a very important part of our economy: social enterprise. I think that this Bill can achieve more than my hon. Friend the Member for Bury North (Mr Nuttall) has said can already be done. I encourage my hon. Friend the Member for Warwick and Leamington to continue his efforts and, indeed, to continue to challenge the Minister to do more.
The aspects of the Bill that I find most intriguing and to which I give most support concern its role in enhancing our country's ability to meet the challenge of our economic situation. We hear every day about the demands for growth, the challenge of deficits and the overhang of debt, and we look for the remedies that we may have to overcome all those great challenges. We look at our televisions screens and see elderly people in many of our social services lacking in the care that they need and being denied the dignity that they deserve, and we ask why such things happen in our country.
The solution to those challenges lies not in some technological innovation or substantial additional contribution of funds, but in understanding and enhancing the entrepreneurship of every man and woman in this country. I often struggle to understand all the reasons and rationales for people wanting to become entrepreneurs, because it is not simple; it is not straightforward. We have heard many examples from both sides of the House today of people who started social enterprises and businesses. Underpinning all that is the fact that the individual wanted to step up. He or she felt motivated to step forward and do something that was different and innovative. Their motivation could be the desire to make money; it could be that they want to do something for their community or their country; or they could be motivated by some spiritual values at the core of their heart. This Bill takes us a step forward in saying to those whose motivation is to help the community that this Government believe in them, want them to step forward and want them to achieve things on behalf of our country.
The right hon. Member for Salford and Eccles (Hazel Blears) made a pertinent point about the social value rather than the organisation. Social value is what we are looking to achieve—not to define some particular circumspect or corporate identity—and it is at the core of my hon. Friend's Bill.
For people who have the motivation to step up, the Bill creates a market and demand. Members on both sides of the House have raised concerns about whether the provisions should cover services alone, or if goods should be included too. That is a fair point. We have heard that, perhaps, we are not pushing boldly enough for a strategy, and therefore condemning ourselves to dealing with just two or three local authorities rather than the country as a whole. That is a fair point, too. What we are doing is creating a market. We are creating an opportunity for people now to say to local authorities across the country, “What are you doing to promote what I see in my heart and what motivates me to do better in my community?” The Bill does not define a document; it creates that space for these entrepreneurs, and it could not come at a more opportune time to meet the challenges that our country faces.
I commend the Minister for his support for the Bill. We understand the scale of the challenges that we face, we support all the initiatives outlined today, we understand that there must be caution in financing initiatives, and we understand that there are limitations on what the public purse can support, but he needs to understand that the group of people who sit behind him—those individuals who want to step up and do better in their community—are looking to him to see this Bill not as the ending point of a particular piece of work, but as the start of what we hope will be a radical Administration in this area. I thoroughly and wholeheartedly support the initiative of my hon. Friend the Member for Warwick and Leamington and encourage the House to support the Bill.
Hazel Blears
I shall be brief, because I had the opportunity to make my comments at length during the debate on the new clauses. I just want to put on the record my thanks to the hon. Member for Warwick and Leamington (Chris White) for using the precious opportunity to introduce a private Member’s Bill to introduce this Bill about social enterprise and social value. It is also part of a journey, as the Minister said, to transform the way in which we commission and provide essential services in this country and to unleash the innovation that the hon. Member for Bedford (Richard Fuller) has just talked about.
There has been a great deal of consensus on these issues. I hope that that consensus will continue and when we get the Health and Social Care Bill back in this House, Government Members will support us in trying to move forward with a definition of “social enterprise” in the health context. If the NHS is to be the biggest social enterprise in the world, we certainly need more clarity and reassurance about what that organisation should look like, what its legal responsibilities are and whether it will have an asset lock on the spin-outs in employment. I hope that the consensus will continue.
Having said that, there are differences between the parties, even on this agenda, as the speech made by the hon. Member for Bury North (Mr Nuttall) illustrated. So I have no doubt that we will continue to have a lively debate about the role of social value. I am very keen to see it extended into the private and corporate sector, and I think that there is a genuine move among businesses to want to be bigger players in this area than they have perhaps been in the past. Again, I am looking to the Government to think about what incentives can be put into the system to encourage corporate bodies to shepherd social enterprises and to use them in their supply chain. Big construction companies such as Wates Construction are beginning to get that argument but, again, the Government can send messages to push the system along to ensure that we do not have to wait 10 years for that kind of development to take place.
The Bill is an important step on that journey and helps to reinforce the idea that the economic situation gives us a huge impetus to try to get more value out of the taxpayers’ money that we spend. The innovation of this sector can help us to do so much more. If, in the process of doing that, we can persuade people in business that making a contribution to the community is not just a good thing in itself, but that it helps them to augment and enhance their company, we will have made an excellent contribution.
I am delighted to have been a part of this Bill from the very beginning, and it is lovely to see it through to the end. I am not that used to private Members’ business, but I have certainly learned a lot on this journey and I am grateful to the hon. Member for Warwick and Leamington for his courage. I will do everything I can to ensure that the Bill gets a swift passage in the other place so that we see it on the statute book.
Mr Hurd
My hon. Friend the Member for Warwick and Leamington (Chris White) is bathing in the warm glow of the House’s approval and he deserves it, because he and his Bill have reached a milestone that very few people pass. He is to be very warmly congratulated on it. I have been in his position, so I know how frustrating the journey can be and how much patience is required—he has demonstrated all that. I would particularly like to congratulate him on the way in which he has worked with stakeholders outside this place to bring them together and keep them together on this journey. I know that it has been deeply appreciated.
My hon. Friend can take some comfort from the fact that I believe sincerely that the Bill has not been gutted—far from it. It has been focused on what is most important and valuable right now, which is sending a much clearer signal to those who are doing the very difficult job of buying services on our behalf. At the critical pre-procurement phase—the importance of which is so often underestimated and at which those buying are thinking hard and consulting about what is needed and about what they are buying, shaping the market of potential supply for that service—they should receive a clear message from us that we expect them to consider social and environmental value, when relevant and proportionate. That is a very useful addition and complements the other initiatives that are all pushing for space, not least the best value guidance from the Department for Communities and Local Government.
I am delighted to stand at the Dispatch Box on behalf of the Government to congratulate my hon. Friend, to confirm our support and to wish him every good fortune in the other place. If he succeeds, his name will be on the milestone of a very important journey that will help to unlock the entrepreneurial energy that wants to be part of this process. We will then be able to deliver what we all want: better public services for the people we serve.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Taxation Freedom Day Bill
(13 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Philip Hollobone (Kettering) (Con)
I beg to move, That the Bill be now read a Second time.
It is a privilege to move Second Reading of the Taxation Freedom Day Bill. It is a small Bill with an important message to Her Majesty’s Government from the Great British taxpayer and provides for an annual taxation freedom day to reflect the proportion of tax paid by individuals from their income. The idea is that each year, the Chancellor of the Exchequer must, by way of a statutory instrument, specify a day that will be observed as taxation freedom day. The purpose of this taxation freedom day will be to mark the day in any given calendar year on which the United Kingdom’s net national income reaches the level of the United Kingdom’s estimated level of national taxation for that calendar year.
In the Bill, total national taxation includes all forms of direct, indirect and local taxation and it will be calculated not by Her Majesty’s Government and not by me, but by the independent and trusted Office for National Statistics. Likewise, the Office for National Statistics would also be charged with calculating net national income.
Each year, the Chancellor of the Exchequer will determine the day in the year when taxation freedom day will fall using the proportion of the United Kingdom’s estimated level of national taxation to the United Kingdom’s estimated net national income. Under the terms of the Bill, an order would not be able to be made unless it was laid before and approved by resolution of each House of Parliament. Each year, before 30 November, the Chancellor of the Exchequer will have to lay before Parliament the estimated date of taxation freedom day in the following year and, before 31 May, the Chancellor will have to lay before Parliament a report setting out whether the estimated date of taxation freedom day in that calendar year was correct.
The purpose of the Bill is to try to provide some transparency for the British taxpayer about the burden of taxation on them and on the national economy. It is essentially politically neutral and is not an argument for or against any particular level of national taxation. I have my own views on that, on which I hope to elaborate later, but all I seek to do is to get across, in a readily understood and straightforward way, the proportion of our economy that is taken up in taxation. The Bill is one of almost a dozen that I have put before the House in this Session. I should like to place on record my thanks to Jonathan Isaby at the TaxPayers Alliance for his contribution to the Bill’s drafting. I thank also the Adam Smith Institute for its germ of an idea about having a readily understood national taxation freedom day, as well as the Freedom Association, which has been extremely supportive.
Taxation freedom day in 2011 was 30 May—three days later than last year—which means that, on average, every British taxpayer had to hand over all their income to Her Majesty’s Government for the first 149 days of 2011. Only after 30 May did they get to keep for themselves any income they earned. Having recognition of such a calendar date would reflect and get across in a very simple and straightforward way the burden of taxation on our economy.
The date of taxation freedom day varies from year to year, and the point is to make it easy to understand how the burden of taxation changes each year. In 1964, taxation freedom day was 23 April, whereas in 2011, as I have mentioned, it fell on 30 May. So, over that period, taxation freedom day moved by 37 days. In 1964, the average British taxpayer had to work for only 114 days before they could keep their income for themselves, but in 2011 they had to work for 151 days before they could keep their income.
Mr David Nuttall (Bury North) (Con)
My hon. Friend is making a very cogent speech. Is he aware that these figures have been calculated back to the turn of the 20th century? In 1900, the figure was only 22 days and in 1910 it was only 19 days.
Mr Hollobone
I am grateful to my hon. Friend for that most helpful intervention. Such interventions highlight how well he serves his constituents with the depth of his knowledge and research into legislation such as this. The figures he gave put into context the horrifying advance in the burden of taxation that we all have to pay. The fundamental truth is that Her Majesty’s Government and Ministers such as the Economic Secretary to the Treasury, who is on the Front Bench, do not have any income or resources of their own. Everything that the Government spend on our behalf either comes from the British taxpayer or is borrowed. The burden of that taxation demand is of concern to everyone.
There may well be Members, perhaps on the Opposition Benches, who believe that the burden of taxation should go up. That is a perfectly respectable argument. There are those who believe that the state can marshal the resources of the British people better than the individuals themselves. I do not happen to agree with that, but it is a perfectly respectable point of view. I would expect them to welcome taxation freedom day going up the calendar, so to speak, perhaps into June, July or even August. My Bill does not say that that is a bad thing. What my Bill says, in a politically neutral way, is, “Let’s let the British people know what the burden of taxation is so that they might make a judgment about whether it is acceptable or not.”
The figures that my hon. Friend the Member for Bury North (Mr Nuttall) cited from the turn of the 20th century demonstrate how far we have come, in an adverse way, since those days. My humble remarks go back only to 1964, which happens to be the year in which I was born. In 1964 British taxpayers had to work for only 114 days until taxation freedom day, and now, in 2011, the equivalent figure is 141.
Taxation freedom day has moved around quite a lot in the past 47 years. The House might be interested to know, for example, that between 1964 and 1970, taxation freedom day moved by 40 days, from 23 April to 2 June. Those were the days of the devaluation crisis, a great deal of trade union militancy and the public finances being in some disorder. The burden of taxation went up by more than a month’s worth—40 days’ worth—over that period. Then, from 1970 to 1973, taxation freedom day fell by 21 days, from 2 June to 11 May.
Mr Hollobone
Indeed. Before the U-turn the burden of taxation on the British economy went down but then, as we know, it all started to go wrong, and from 1973 to 1975—three calendar years, in effect—those 21 days were reversed and taxation freedom day went back up to 2 June. One of the major reasons for that was the very high price inflation of that period. The Government of the day did not re-index all the taxation allowances and there was a huge fiscal drag effect, taking people into high rates of income tax.
Taxation freedom day did not change much until 1978. Between 1978 and 1982, it moved by 24 days, from 27 May to an all-time peak, 20 June, in 1982. In that period we had the rapid appreciation of sterling, particularly against the dollar, there was the doubling of VAT from 8% to 15% in Geoffrey Howe’s first Budget, a huge collapse in gross domestic product—not as sharp a fall as we are currently experiencing, but nevertheless a very dramatic slow-down in the economy—and another period of high inflation fuelled, in part, by a second big rise in oil and petrol prices. That meant that in 1982 the average British taxpayer had to work for 172 days, with all their income for those 172 days going, in effect, to Her Majesty’s Government.
There then followed quite a long period, from 1982 to 1996, just before the end of the Conservative Government, when taxation freedom day fell back by 25 days, from 20 June to 26 May. In 1997, when Tony Blair came in, taxation freedom day started to rise once again. Interestingly—I hope that this will convince the two Opposition Members present that I am trying to be as politically neutral as possible—taxation freedom day in 1997, when Labour took office, and in 2010, when Labour left office, fell on exactly the same day: 27 May. It rose in the middle of that period to 4 June, an increase of nine days, but in other years it fell by three days.
Robert Halfon (Harlow) (Con)
I congratulate my hon. Friend on his excellent Bill. Despite what he has just said, does taxation freedom day not generally fall earlier under long periods of Conservative government than under periods of Labour government?
Mr Hollobone
I am most grateful for that penetrating intervention from my hon. Friend, who serves his constituents with great enthusiasm and ability. Although I would like to think that there is an obvious correlation, my honest answer is that it might not be as strong as we would like it to be. That reflects the overall bad picture of all modern Governments settling a burden of taxation on the economy that is rather higher than he or I would like. Although brave attempts have been made to reduce that burden, particularly by Conservative Governments, they have not always been successful as problems have got in the way. For example, the oil price crisis in the early 1970s and the big increase in trade union militancy blew the Conservative Government of the day off course, which meant that they had to increase the burden of taxation in response. Likewise, in the first years of the Thatcher Government the burden of taxation increased sharply. As I have said, between 1979 and 1982 taxation freedom day moved from 30 May to 20 June, which was a sharp ratcheting up.
Philip Davies
I commend my hon. Friend on introducing his Bill. I presume that his aim is to try to shame the Government into making taxation freedom day fall as early as possible each year, which is certainly the basis on which I support it. With that in mind, has he considered specifying a date beyond which no Government can allow taxation freedom day to fall, to ensure that we guard against excessive taxation?
Mr Hollobone
I am most grateful for that intervention from my hon. Friend, who is a legend not only in his constituency, but in this place, precisely because of that sort of contribution. I also take it as a bid to serve on the Bill Committee. I for one would welcome that as an amendment that would improve the Bill, because I know that one of the major roles he performs in this place is providing helpful ideas to Members and the Government on how legislation might be improved, and what he suggests is one of the best examples I have heard. Like me, he believes that the burden of taxation in this country generally is too high and would like to see it fall. However, Members need not share our views to support the Bill. It is possible to be an enthusiast for more taxation to provide more public services and still to support the Bill. The Bill would make the burden of taxation transparent to everyone.
Robert Halfon
I hesitate to correct my hon. Friend, but it is possible to have more public services without necessarily increasing taxation.
Mr Hollobone
My hon. Friend is absolutely right. That is what Her Majesty’s Government are currently trying to do.
Mr Hollobone
Indeed. We can have better public services that are less dependent on public subscription. By making the burden of taxation transparent, through this calendar mechanism, the arguments for the more efficient use of public resources can be strengthened by the simple idea of trying to make taxation freedom day fall earlier.
The Conservative party has supported the idea of taxation freedom day in the past, but I am disappointed to see that, in the handout from the Government machine, the Government are going to oppose the Bill today.
Mr Hollobone
I know that my hon. Friends are shocked by that news, and I very much hope that I am mistaken. When our hon. Friend the Economic Secretary to the Treasury rises to make her remarks, I hope that she will disabuse us of that notion, because in 2003 Lord Saatchi in the other place launched a Bill to make taxation freedom day a bank holiday. It was official Conservative party policy, supported at the time by the then shadow Chancellor, the right hon. Michael Howard, and a great deal of news was made about it.
I do not propose in my legislation to make taxation freedom day a bank holiday.
Mr Hollobone
That is a very good question, and it may well be the subject of another amendment that my hon. Friend tables in Committee, because I for one support the idea of a bank holiday to celebrate taxation freedom day. I personally think that it should replace the May day bank holiday, which for most of my constituents and most people throughout the country is not an appropriate day for a public holiday. If it were replaced by taxation freedom day, that would be a very good thing, but that is not in the Bill.
Philip Davies
I commend that idea to my hon. Friend. It might encourage the Labour party to bring forward taxation freedom day each year so that it coincides with May day.
Mr Hollobone
That is a very good suggestion, and yet another reason for Opposition Members to support the Bill today.
My Bill does not propose that taxation freedom day be a bank holiday. What it does propose is that, basically, Her Majesty’s Government make official recognition of what taxation freedom day does. In the Taxation (Information) Bill, the Conservative party Bill that was launched in the other place in 2003, Lord Saatchi suggested the following mechanism for calculating how taxation freedom day should be arrived at. He said that taxation freedom day is
“determined by taking total tax revenue, including direct and indirect taxes, local taxes, capital taxes and national insurance contributions as a percentage of total income”,
and that it is
“calculated as general government tax revenue as a proportion of net national income”. —[Official Report, House of Lords, 9 July 2003; Vol. 651, c. 380.]
Net national income differs from the more familiar gross domestic product, or GDP, in two ways: first, net national income adds in net property and the entrepreneurial income of UK citizens from abroad; and secondly, it subtracts capital consumption. Net national income is therefore smaller than GDP, making the ratio of tax revenue to net national income larger than that to GDP.
I do not particularly mind what mechanism the Office for National Statistics uses for calculating taxation freedom day, because there are all sorts of suggestions about how it be done, but whatever mechanism is used, it ought to be clearly explained and consistent year on year, with lots of backdated calculations—perhaps even to the start of the 20th century, as my hon. Friend the Member for Bury North suggests—so that we can track consistently how taxation freedom day has moved around. There we have an official Conservative party suggestion from 2003, however, and it is a helpful contribution to the idea of pushing this Bill forward.
None other than the current Chancellor, before he became Chancellor, has spoken about taxation freedom day on two occasions. First, interviewed by Polly Toynbee in The Guardian on 2 June 2006, he said:
“This Saturday—June 3—we celebrate Tax Freedom Day. That is the point in the year when people stop working for the chancellor and start earning for themselves.”
In 2006, according to this enlightened quotation, the then shadow Chancellor saw the value of taxation freedom day. I very much hope that now he is the actual Chancellor he can put his words into practice. On another occasion, when interviewed in 2007 about taxation freedom day having slipped to 1 June in 2007 from 27 May in 1997, he was quoted in the Daily Express as saying:
“Here’s the proof that Gordon Brown’s stealth taxes hit us every hour of the working day. Hard-working people hand their money over to the Chancellor and the tragedy is that they cannot trust him to spend it wisely.”
In his role as shadow Chancellor, my right hon. Friend the Member for Tatton (Mr Osborne), has on two occasions publicly backed the idea of taxation freedom day. That is extremely helpful, and I hope that point of view is now consistent with Her Majesty’s Treasury in its present form.
On 6 June—D-day—2000, Mr Deputy Speaker, none other than your boss, the Speaker, tabled a ten-minute rule Bill called the Taxation (Right to Know) Bill, which had three main elements. If I may quote Mr Speaker in his absence, he said:
“In my Bill, the Treasury is required to prepare and send to every household and business an annual statement of the rates of each tax and excise duty…My second proposal is that the proportion of the purchase price of key products that is represented by tax and excise duty should be publicly displayed on the bills that customers pay…My third suggestion is that each year the Treasury should publish an assessment of the merits of each tax, considering not only its yield but its administration cost, its compliance cost and its economic cost in terms of lost output and diminished competitiveness.”—[Official Report, 6 June 2000; Vol. 351, c. 175-176.]
In his remarks to the House, the right hon. Member for Buckingham (John Bercow) stressed that our taxation freedom day, which in 2000 was on 29 June, was no fewer than 20 days worse than in the United States, where it had fallen on 10 May. The Bill proposed by Mr Speaker—before he was Speaker—in 2000 and my Bill essentially try to do very similar things. We are trying to make the burden of taxation on every individual business and organisation in this land far more transparent so that taxpayers can understand how much of their money is going to the Government and what it is being spent on.
That drive for transparency is being promoted by all sorts of organisations, not least the TaxPayers Alliance, which, in a major tax transparency campaign, has launched a tax app. For those of us who are rather technologically challenged, that might not be immediately appealing, but that will not be so for enlightened individuals such as my hon. Friend the Economic Secretary, or even my hon. Friends the Members for Harlow (Robert Halfon), for Bury North, and for Shipley (Philip Davies), who are at the forefront of IT developments. The Tax Buster app for smartphones allows shoppers to find out how much they really pay when buying everyday items. With a few details about any particular purchase, it can calculate how much money from an item went on VAT and duties.
Robert Halfon
Can my hon. Friend confirm whether this app would be compatible with BlackBerrys?
Mr Hollobone
I am most grateful for that intervention. I think that the answer is yes. One would have to access the Tax Buster website to find out how to do so. I think that the app is available for all kinds of cellphone technology. I know that my hon. Friend has the very latest gadget.
When an individual puts into the app a few details about their purchase, it tells them how much they had to earn before they paid taxes to have enough money to buy the product. For example, 20 cigarettes that cost £6.49 would have cost £1.24 without indirect taxes. Paying the £6.49—I am looking at my hon. Friend the Member for Dover (Charlie Elphicke), who I believe might occasionally buy the odd cigarette—requires earnings of £11.35 before income and corporate taxes.
Charlie Elphicke (Dover) (Con)
I would like to put it on the record that I share wholeheartedly my hon. Friend’s concern that cigarettes are over-taxed. That is a clear case for reform, which I hope Treasury Ministers will take on board.
Mr Hollobone
I am most grateful for that helpful intervention.
My next point will be of interest to my hon. Friend the Member for Harlow. Filling the car with £60-worth of petrol would cost only £23.86 without indirect taxes. Paying that £60 requires £104.84 in earnings before income and corporate taxes. For higher rate taxpayers, the equivalent figure is £122.91.
Robert Halfon
I thank my hon. Friend for being so generous in giving way. Does he agree that if the Government do not raise fuel duty as planned in January, the day on which taxation freedom day falls will be much earlier?
Mr Hollobone
That is a very good point and the Economic Secretary has heard it. She will also have heard the voice of the House expressed only the other week in support of my hon. Friend’s motion. The burden of petrol taxation has got to such a level that it is probably constraining economic growth in an unacceptable way, at a time when growth from anywhere would be most grateful.
Mr Nuttall
My hon. Friend said what the gross figure would be for a higher rate taxpayer. Of course, we now have two rates of higher tax at 40% and 50%. Does he know to which of those rates his figure applies?
Mr Hollobone
I believe that the figure I quoted is applicable to the lower of the higher rates. The figure would be even worse for those who pay the top rate. I am sure that the Tax Buster app has a facility to calculate the tax burden for those on the very highest rate.
The aim of the app is to bring greater clarity and to illustrate for taxpayers the need for more transparent taxes. The Government have been pushing for more spending transparency, which is welcome. I hope that in her remarks, the Economic Secretary will welcome this effort to make our taxation system more transparent and offer the TaxPayers Alliance the Government’s support.
Another great concern for taxpayers is that this country has two big taxes on individual incomes: income tax and national insurance contributions. There are many in this Chamber and many organisations outside who believe that those two should be combined. That would make the taxation system more readily understandable for taxpayers. To most people, national insurance is almost indistinguishable from income tax. Its function is now essentially the same—raising revenue for the Government. Despite performing essentially the same task, the two systems operate in a different manner in eight key ways, for example in the collection period and the definition of earnings. That is unnecessarily complex and adds to the expense of collecting revenue for Her Majesty’s Treasury. Most importantly, national insurance contributions obscure the public’s understanding of how much they are being taxed. Most debate at the time of the Budget or the autumn statement focuses on the level of income tax. National insurance, despite being extremely important, is often overlooked.
I would support reforming national insurance to align it with income tax, which would cut costs, reduce complexity and improve transparency. I therefore believe that the Government should abolish national insurance for both employers and employees, and combine it into one taxation system. Abolishing national insurance would make the whole thing simpler, cheaper and more transparent.
I have spoken about the simple version of taxation freedom day, but of course we can take the matter a step further. As well as having a national taxation freedom day, we could break it down into regional variations. The Adam Smith Institute has done that for the United Kingdom. It calculates that in 2011, there are huge variations. In Wales, the regional equivalent is after 35 days, and in London it is after 51 days. The taxpayer in London is having to work for 51 days with all their income going to the Treasury, but in Wales it is far less. In the east midlands, where the constituency that I have the privilege to represent is located, it is 38 days.
The institute has also calculated the number of days that it takes Britons as a whole to pay off each individual tax. For example, income tax takes up the first 39 days of the year; national insurance the next 26 days; VAT the next 29 days; corporation tax the following 12 days; fuel duties and petroleum revenue tax the next seven days; local taxes including business rates and council tax the following 13 days; capital gains and inheritance tax the next two days; duty on alcohol and tobacco the next five days; and all other taxes the following 17 days. Again, that helps to clarify the burden of taxation on the hard-pressed British taxpayer and how it is split up by each of the individual taxes that we are all obliged to pay.
I mentioned earlier the briefing that the Government information machine has circulated about my Bill. I have to say, I am very disappointed by it, and it makes a number of points that need to be tackled head-on. I will do that now, so that instead of reading out those points the Minister can respond to them. The Government’s first attack point is:
“The methodology for calculating Tax Freedom Day includes all forms of direct, indirect and local taxes. This gives an exaggerated sense of the tax burden on an individual level and does not recognise the progressive elements of the tax system.”
I do not share that concern. I do not want to exaggerate anything; all I want is a transparent system.
I would welcome comments from the Government about how they feel the burden of taxation on the average British taxpayer ought to be calculated. I am not particularly fussed about the methodology of that, as long as it is consistent year on year and can be backdated for a reasonable number of years so that we can get a sense of the progression either way. As I stressed at the beginning, my Bill is politically neutral in that sense. It does not argue that taxation is a good or bad thing; it is simply intended to make the way of getting that across to the public as transparent as possible.
The Government’s second attack point is:
“Acknowledging the need for freedom from taxation disregards the public benefits that flow from the revenue raised, through public spending. These include some of the country’s most important priorities—the healthcare of our people, the education of our young, our nation’s security, and the infrastructure that supports our economic growth.”
Of course, that is right. We need taxation and public services. I am not arguing with that. My Bill is politically neutral in that sense and does not disregard the public benefits of taxation; it simply aims to get across to the British people how much they are obliged to cough up to pay for those public services.
The third point:
“In the past decade the date for Tax Freedom has varied very little. How can those supporting the Bill justify the expense and Parliamentary time that will be taken up designating a specific date each year?...What assessment have those supporting the Bill made of the costs to the Treasury of the proposed legislation?”
The Government must have been struggling to come up with attack points when they got to that one because I cannot imagine that much expense would be involved in designating taxation freedom day.
Mr Nuttall
Furthermore, as my hon. Friend has demonstrated, over the years tax freedom day has fluctuated wildly.
Mr Hollobone
Indeed. The Office for National Statistics is a thoroughly competent organisation whose judgment we all respect, and I cannot believe that to get this exercise under way would place a massive burden on it or Her Majesty’s Treasury. The Adam Smith Institute, through its good offices, has published its version of this information. That is a small, privately funded organisation. Given all of Her Majesty’s Treasury’s resources, at taxpayers’ expense, I am sure that getting this exercise under way would be a small matter. On parliamentary time, we are talking about one statutory instrument a year, and we know that passing hundreds of statutory instruments accounts for only a small fraction of the cost of running Parliament.
Philip Davies
Is it not bizarre that the Government, who are happy to give £18 billion a year to the European Union without so much as a by-your-leave, are quibbling over the cost of setting out when tax freedom day is each year?
Mr Hollobone
It does rather put it into perspective, does it not? I shall not be led too far astray, Mr Deputy Speaker, but I cannot resist adding to the strength of my hon. Friend’s point. Our bill to the EU for the last five years of the previous Government was £19 billion, but in the lifetime of the coalition Government to 2015 it is set to be £41 billion. It will more than double.
Charlie Elphicke
May I suggest one saving that could be made to help fund the cost of these regulations? The excellent TaxPayers Alliance recently published a document showing that we could save £113 million by getting rid of all the full-time paid union officials, which would also enable people to work more effectively.
Mr Hollobone
That is right. That so-called facility time is of huge concern to taxpayers up and down the land. [Interruption.] I know that this point exercises some Labour Members, and I can understand their concern —they have their views—but the Bill is a transparency exercise, so those, like Labour Members, who believe in facility time and recognise its value will have no problem recognising that that facility time, which costs hundreds of millions of pounds, will shift taxation freedom day. They can argue the benefits of facility time to the British taxpayer. I happen to disagree with facility time because I do not think that public money should be spent on such things, but I recognise that there are views on the other side. My Bill does not state whether such spending is good or bad; it simply tries to demonstrate its effect on the public purse. That is why I hope that Members on both sides of the House will support the Bill on Second Reading.
My Bill is a small Bill—it does not even run to two pages—it is concise and it proposes the establishment of a simple and straightforward mechanism to let British taxpayers know how much of their money goes each year to Her Majesty’s Government through all the different burdens of taxation. It is not just about income tax or national insurance contributions; it tries to add up the total burden of taxation on every man, woman and child in the country. There is a need for transparency, because a particularly enthused member of the public who was trying to work out the burden of taxation might, for example, go to the Finance Bill, which is typically more than 500 pages long, with hundreds of different clauses, or one of the Budget reports, with its supporting documentation, which also run to hundreds of pages, containing huge amounts of detail. However, a taxation freedom day—a calendar point each year that simply illustrated the burden of taxation—would be a lot more readily understood.
Importantly, a taxation freedom day would also help to expose the increasing burden of stealth taxes on our economy. It is all very well concentrating on the headline rates of income tax, the thresholds at which they kick in or national insurance contributions, but as we have seen over the last decade, one of the big increases has been in stealth taxes, particularly council tax, in the hope that the British public would not spot that. However, by having an effect on taxation freedom day, the burden of stealth taxation on our economy could also be exposed.
In closing, I would like to stress that my Bill is politically neutral. It is an attempt to make our country’s taxation system more transparent, in a way that, crucially, every individual in the land would readily and easily understand. I very much hope that my hon. Friend the Minister has been persuaded by the power of my arguments and that she will confirm that the Government will support the Bill, because there is enough time in the current Session for it to complete its passage.
Philip Davies (Shipley) (Con)
I commend my hon. Friend the Member for Kettering (Mr Hollobone) for introducing his Bill. He is a great champion in this House not just of his constituents, but of common sense. This Bill is a prime example of the common sense he is trying to bring to bear on this House and on the Government.
I am optimistic, and would urge my hon. Friend to be optimistic too, because in the Minister we have someone who is broad-minded. She will not just be persuaded by the drivel that was written by the Government machine—as I think he so delicately put it—but will listen to the force of his argument. I was certainly persuaded by the power of his argument, and I am sure that other hon. Members were. If we were persuaded, I see no reason why she would not be persuaded either, given her qualities and her open-mindedness. I therefore look forward to a rethink of the briefing from the Government machinery. Indeed, I am sure that her speech is being torn up as we speak, to reflect the points that my hon. Friend made.
My hon. Friend is a reasonable man—something that probably I am not—and he made the point that his Bill is neutral. He did not say whether taxes should be higher or lower; he is merely trying to introduce some transparency. Therein lies the weakness of his Bill, if he does not mind me saying so. I return to the point that I made in my earlier intervention. The Bill would be much healthier if it were far more partisan and made the point that taxes are too high and should be lower. I would therefore love to insert in the Bill a date each year beyond which tax freedom day must not fall, thereby acting as a safeguard to prevent taxpayers from excessive taxation, however bad the Government were in future. When his Bill goes to Committee, as I am sure it will, I would wish to move an amendment proposing that. I think that most taxpayers would welcome it.
My hon. Friend made the perfectly reasonable point that there is a slight discrepancy in how tax freedom day is calculated. I would therefore wish to guard against Governments obsessed with spin—I am sure he can think of some from the not-too-distant past—trying to manipulate the calculation of tax freedom day to suit their own ends and their own agenda. I do not know whether he considered this in preparing his Bill, but although the Government may well be strapped for cash—it seems that they cannot afford to announce when tax freedom day is; I am not entirely sure what the cost incurred in doing so is, but it is clearly substantial—perhaps we should encourage them to state where the UK is in the league table compared with other countries. If every country is being calculated on the same basis, at least we will know, however it is done, that every country is being calculated on the same basis, so we can look at where Britain stands in the league table and see whether we are doing relatively better or worse than other countries. Helpfully, the Molinari Economic Institute has provided such a document based on the reports it produces each year.
Relevant to this debate is the issue raised by my hon. Friend the Member for Kettering about the differences in calculations. He and I think that tax freedom day fell on 30 May this year, which was three days later than it was in the previous year, which might be one reason why the Government have changed their minds about the publication of tax freedom day. They might not wish to draw attention to the fact that tax freedom day is three days later this year than it was last year. I put that out there as a possible explanation for the change of policy.
Those who produced the document that calculates tax freedom day across Europe are clearly more generous because they have this country’s day as falling on 17 May —13 days earlier. I do not think we should be led astray by what date it is; what is important to me is where the United Kingdom falls in relation to other countries in the European Union—and, indeed, countries outside the EU, which also appear in the table. The figures show how competitive our economy is in comparison with our neighbours.
My hon. Friend may be surprised to know that the UK does reasonably well, even though 17 May might seem too long for those who believe that taxes are too high. I would urge my hon. Friend, however, to avoid Belgium like the plague, as Belgian tax freedom day, according to this document, is 4 August. I certainly urge people in Belgium to rise up against their Government and demand lower taxes.
In order that people do not become complacent, I point out that in Cyprus tax freedom day is 13 March. I do not know about my hon. Friend, but I would certainly urge the Government to move more towards a Cypriot level of taxation than to a Belgian one. This gives the Government something to aim for—perhaps a target. I am not usually a big fan of targets, but perhaps the Government could target themselves to beat Cyprus.
Mr Hollobone
My hon. Friend is making an excellent speech, which I am hugely enjoying. Does he have the figures for Greece? Can he confirm whether the Greek Government actually collected any taxes at all?
Philip Davies
My hon. Friend makes a good point. According to the document I have with me, Greece’s tax freedom day is 12 June. Whether that was simply an academic exercise rather than a real one, I am not entirely sure. I probably share my hon. Friend’s implied view that, for far too many Greeks, tax freedom day was 1 January. I am not advocating that this Government aim for a 1 January tax freedom day, but I am sure they can do better than they are at the moment—on the best analysis I have seen, the middle of May or what we think is actually the end of May.
Charlie Elphicke
Is not a central point about tax freedom days in relation to Greece the need to avoid the risk of creative accounting? We must be sure that accounts are accurate, especially where there has been a change of Government. I believe that the Labour party has so far spent its bank tax nine or 10 times over. We must ensure that, whatever happens, there will be no creative accounting; we must be able to trust the figures.
Philip Davies
My hon. Friend is right, and I believe that the Bill will provide a good safeguard against Governments exercising sleight of hand in their presentation of figures. If we have an independent body—I do not really care whether it is the Office for National Statistics, which is mentioned in the Bill, or the Office for Budget Responsibility—and a set of figures that can be trusted, no matter how many times the Government announce the same tax increases or tax cuts, we would at least know where we stood as we would have trusted figures that overrode the spin. I think that the Bill is a particularly good safeguard against that.
The Adam Smith Institute has been on to this for quite some time, and has helpfully informed people when tax freedom day falls in this country. Although the transparency element is important, what I find most striking is the fact that British people must work for 149 days just to pay their taxes. I was also interested by the regional variations mentioned by my hon. Friend. The Welsh, for instance, spend 35 days paying their income tax, while people in London spend 51 days paying theirs.
I do not understand why the Government do not want to make people aware of how difficult the Government’s financial position is. The Adam Smith Institute used a tax freedom day-style mechanism to illustrate the extent of the United Kingdom’s debt problem. It calculated that our burden of debt was so great that UK taxpayers would need to work for nearly a year and a half, with their entire wage packet going to the Government and not a penny being spent on public services, just to pay off the national debt.
When the Government talks of our being heavily in debt, whether they are telling us that we are adding £150 billion a year to our debt or that the debt burden is more than £1 trillion, it is difficult for people to get their heads around the figures. Millions used to sound like a lot of money, but nowadays no one is interested unless it is billions. Explaining to people in simple terms that they would have to pay tax for a year and a half without any of it being spent on public services would make the extent of the debt clear to them.
We could also be shown a way out of our financial problems. Sam Bowman, head of research at the Adam Smith Institute, says:
“Tax Freedom Day underlines the huge burden of government on working people’s lives. For five months of the year, we are slaves to the state. No wonder growth is so slow—we need robust tax reform now, bringing lower, simpler, flatter taxes. The government should resolve to make Tax Freedom Day something we can celebrate earlier and earlier each year.”
I think that Sam Bowman is on to something. When we can see the facts for ourselves, when we worry about where growth in the economy will come from and conclude that it depends on people having more and more disposable income so that they can go to the shops and buy things—thus helping businesses—and when we are made aware of how long people are having to work just to pay their taxes without even having a disposable income, the way out of our debt problem begins to become clear. If we can indeed make tax freedom day arrive earlier and earlier, people will have more and more disposable income that they can use to try to get the economy going. I think that that would help the Government to see a way towards economic growth, which is what will solve our debt problem—together with, I hope, a cut in Government expenditure at some point. They do not seem to have been able to manage that so far.
Let me draw my hon. Friend’s attention to the position in other parts of the world, particularly America. Traditionally, America has been far better at generating economic growth than the wretched European Union ever has. This year, tax freedom day in the United States will arrive on 12 April, well over a month before it arrives in this country. Whereas in this country people must work for 149 days just to pay their taxes, in America they need work for only 102. Many of my constituents would much rather work for 102 days than 149.
The great recession has reduced tax collections even faster than it has reduced income. After a long debate, President Obama and the Congress extended the Bush-era tax cuts for two additional years, which is very welcome. Despite those tax reductions, Americans will pay more in taxes in 2011 than they will spend on groceries, clothing and shelter combined, despite the fact that tax freedom day falls much earlier in America.
The statistics in America are calculated by state—my hon. Friend the Member for Kettering gave figures for different parts of the UK—and they are very revealing. Mississippi has the lowest average tax burden of all the states, and its tax freedom day falls as early as 26 March, whereas in Connecticut it falls on 2 May and in New Jersey it falls on 29 April. There are massive regional variations, therefore, and drawing comparisons can serve to promote competition between states. If voters in America can see how their state compares with other states, they might be encouraged to say, for instance, “Well, hold on a minute; if Mississippi can have tax freedom day on 26 March, why can’t we have that in Connecticut, too?”
One of the best ways to get Governments to reduce the tax burden is to introduce an element of competition. That is why I want the Bill’s provisions to be strengthened so that we encourage the Government to set out in the calculations how the UK compares with other countries in respect of a tax freedom day, and in particular how we compare with countries such as America whose economic growth has traditionally been stronger than ours. After all, if we want to grow the economy, we should want to adopt best practice. Any business that wants to improve its performance will look at what its competitors do. That is how most organisations seek to improve; they benchmark their own performance against that of similar organisations to see what they might do better. I would like the Government to start doing that in respect of taxation rates. If they are forced both to show that lower taxes can be delivered in other parts of the world and to consider how those countries achieve that, they might then try to introduce a similar discipline and focus to this country.
Mr Hollobone
I am sure there will be intense competition for places on the Committee, but does my hon. Friend share my optimism that the Bill might be able to pass through that stage and complete its passage during this parliamentary Session, so that many of his welcome ideas become legislation?
Philip Davies
My hon. Friend is very kind. I would not be so bold as to say that my amendments would improve his Bill, as it is perfectly good in its current form. I am merely using this opportunity to suggest some ways in which it could, perhaps, be strengthened. If my hon. Friend is seeking cross-party consensus and therefore does not entirely share my agenda, I could, perhaps, be persuaded to ditch some of my more strident amendments in order to get the basic measures through. I merely offer these amendments up now to show that the Bill could be improved.
Mr Peter Bone (Wellingborough) (Con)
My hon. Friend was making a very good speech up to that point; the idea that he should retreat or give in on any issue is appalling, but when he is absolutely right, as he is on this one, I must ask him to press it very firmly in Committee.
Philip Davies
Again, my hon. Friend is very kind. I am probably more strident than my hon. Friend the Member for Kettering, and my hon. Friend the Member for Wellingborough (Mr Bone) is clearly more strident than I am, so I invite him to take part in more debates that I am involved in to show what a moderate I am. His presence is very helpful in that regard and I thank him for that.
The country is in a massive financial hole. I want to stress that I do not think that the Bill is simply something that will add transparency to the situation so that people can see where they stand; I think it has the potential to be much better and more radical than that. It will give an opportunity for people in this country to start questioning seriously why our rates of tax need to be so high, given that other countries, often ones doing better than us, seem to manage with a much lower rate of tax. If we can get that agenda discussed in politics, we can do something that will transform the British economy—it does need transforming.
We cannot carry on as we are, trying to get ourselves out of huge debt by scoring a few quick singles here and there. We need to go for some boundaries—we need to go for some fours and sixes if we are to get ourselves out of this. Quick running between the wickets, on its own, is not going to make any impression. The Bill has the potential to change radically the way we think about taxation in this country, and about how we press our Governments to do the right thing and be more efficient in the way they do government.
I do not want to overstay my welcome, Mr Deputy Speaker, so I will close on that point, but I say to my hon. Friend the Member for Kettering that, once again, he has put a vital issue on to the political agenda. Although my speech will certainly not have persuaded the Government to support his Bill, I still see no reason why his speech would not have done so. I look forward to the Government supporting the Bill and at least allowing it to go into Committee.
Mr David Nuttall (Bury North) (Con)
As always, it is a great pleasure to follow my hon. Friend the Member for Shipley (Philip Davies), who has demonstrated the great need for this Bill. I start by congratulating my hon. Friend the Member for Kettering (Mr Hollobone) on preparing the Bill and bringing it before the House today. In his opening remarks, he said that he thought that this was a simple and straightforward measure and, of course, in many ways it is. I have a great deal of sympathy for the measure, and I would have thought that hon. Members on both sides of the House could agree on the issue of transparency on tax matters.
I start from the position of broadly supporting the principle of ensuring that taxpayers should be given clear information about the size of their tax burden. I was initially very encouraged that the Bill would go a long way towards improving the transparency of our tax system, but when I began to study the detail of the Bill and consider all the issues involved, I found that in many ways it is far from simple and straightforward. Indeed, this is a fiendishly complex matter, which is not as simple and straightforward as it may appear at first sight.
I wish to deal with several issues in my contribution, the first of which is why making the tax burden more transparent is so important. Taxation legislation is incredibly complex, covering a wide variety of taxes and duties. Indeed, it is worrying that the list is so long. Most people, when they hear the word tax, automatically think of income tax, but that is just one of several taxes with which the individual might be burdened. To income tax, we can add value added tax, national insurance, capital gains tax, stamp duty, fuel duty, alcohol duty, tobacco duty, air passenger duty, insurance premium tax, landfill tax, corporation tax, petroleum revenue tax, council tax, the climate change levy and the aggregates levy. Then, for anyone who has still managed to live frugally enough to be left with any assets after paying their way through life while paying all those taxes, subject to the various exemptions and the nil rate band, those assets are taxed again, with the imposition of the inheritance tax.
Mr Nuttall
There is a great need for simplification of our tax system and a flat tax might well have a part to play in that.
Mark Twain is often attributed with the quotation that the only two certainties in life are death and taxes, and throughout the ages Governments have always cast around for things to tax. Over the years, we have had window taxes, beard taxes and brick taxes. I particularly like—only because it will give me the chance to mention that great son of Bury, Sir Robert Peel—the glass tax that was introduced in 1746, in the reign of King George II. At that time, glass was sold by weight and manufacturers responded to the tax by producing smaller and more highly decorated objects, often with hollow stems, which are today known as excise glasses. If anyone has ever wondered why the crystal glassmaking industry flourished in Cork and Waterford, it was because in 1780 the Government granted Ireland free trade in glass, which continued until 1825, when the tax in Ireland was restored. That led to a gradual decline in the industry until the glass tax was finally abolished by that great son of Bury, Sir Robert Peel, and his Government in 1845.
The complexity of today’s tax legislation is perhaps best illustrated by the fact that Pythagoras’s theorem can be set out in 31 words—I was told it was 24, but when I counted there were 31—the Lord’s prayer contains 66, the 10 commandments contain 179, the US declaration of independence contains 1,300 and the entire United States constitution, with all 27 amendments, apparently contains 7,818, but to get to grips with the United Kingdom’s tax system, one would have to purchase several weighty volumes such as Tolley’s tax manuals, setting one back several hundred pounds.
Jacob Rees-Mogg (North East Somerset) (Con)
Is it, however, shorter than the acquis communautaire?
Mr Nuttall
My hon. Friend makes a very good point. That would weigh even more, I am sure, and it is certainly weighing more on the efficiency and competitiveness of British business. As he will be aware, my view is that the sooner we can free ourselves from the acquis communautaire the better.
When one considers those facts, it is no wonder that adopting a simple way of demonstrating to people the size of their tax burden by calculating and publishing the number of days the average individual would have to work to discharge it is such an attractive idea. The result of all the complexity, of course, is that people do not understand how much tax they really pay, but putting it in terms of how many days the average person has to work solely to pay taxes would start to bring it home to people.
Philip Davies
May I float another idea past my hon. Friend? Not only should the day on which people have paid off their taxes be announced as tax freedom day, but there should also be an announcement of the day on which the Government’s spending programme has been matched fully by taxation. In America, tax freedom day is on 12 April, but if all the money to pay for all the Government spending had to be collected—$1.48 trillion more—the date would be 23 May. Perhaps we should also see what the gap is between taxation and the amount that the Government are incurring in expenditure.
Mr Nuttall
My hon. Friend makes a very good point. That could be dealt with in Committee; we could amend the Bill to include that date as well. That opens up a whole new area of complexity, because there is not only the difference between income, expenditure and the actual spending programme to consider but the effect of existing debt that needs to be paid off.
Let me deal with the Bill in a little more detail. Clause 1(1) requires the Chancellor of the Exchequer to specify one day each year that
“shall be observed as Taxation Freedom day.”
Unfortunately, the Bill is silent on how we as a nation are to observe this great day. I understand the reluctance of my hon. Friend the Member for Kettering to suggest having another bank holiday, but I submit that it might be appropriate to mark the day with an annual debate in the House on the ways in which the burden of taxation could be reduced in future years and hence the day brought forward.
Mr Hollobone
I am enjoying my hon. Friend’s speech hugely, and that is a most constructive suggestion. In formulating the Bill, I had in mind that at the very least the Chancellor of the Exchequer could make an oral statement to the House and we could then question him or her on the taxation freedom day proposals, but an annual debate—with a motion, one would hope—would be excellent.
Mr Nuttall
Yes; in view of recent publicity I am sure that all Government Ministers will want to make announcements to the House first.
The purpose of tax freedom day is set out clearly in clause 1(2), as being to mark the day in each year when
“the United Kingdom’s net national income (calculated from the beginning of the calendar year) reaches the level of the United Kingdom’s estimated level of national taxation for that calendar year.”
At this point the whole matter becomes more complicated. The term “total national taxation” is helpfully defined in clause 1(3) as including
“all forms of direct, indirect and local taxation”,
and as my hon. Friend the Member for Kettering mentioned, the task of making this calculation is given over to the Office for National Statistics. However, the problem with that approach is that very few people’s personal tax freedom day would actually coincide with the day specified under the Bill. Levels of council tax vary throughout the country and dwellings are divided into several bands within council tax. It seems to me that in this age of personalisation of services, the Bill could usefully go on to provide for the notification to each individual taxpayer of their personal tax freedom day.
That is not a new idea. In Canada, the Fraser Institute provides a personal tax freedom day calculator which takes into account variables such as the age of the head of the household, their marital status and the number of children they have. I wonder whether the TaxPayers Alliance app for mobile telephones and tablet computers that my hon. Friend mentioned earlier could be adapted to provide a personal tax freedom day for individuals.
What about so-called non-taxpayers? I am always mystified by the term “non-taxpayer”. I accept that there are people who, for various reasons, might not pay income tax, and thanks to the steps that this Government are taking, fewer and fewer people are paying income tax. I am pleased that we are moving towards the target of a £10,000 personal allowance each year. That is a huge improvement in the field of tax simplification and it has meant, for example, that this year’s £1,000 increase in the personal allowance has removed an additional 800,000 people from the burden of paying income tax.
However, we should not fall into the trap of thinking that those who do not pay income tax are non-taxpayers. They could still be liable for council tax. They may still have to pay insurance premium tax. If they travel, they will have to pay air passenger duty. Whenever they purchase goods or services that are liable for VAT, they will have to pay value added tax. The list goes on.
Charlie Elphicke
I thank my hon. Friend for giving way; he is being extremely generous in taking interventions. My own research has indicated to me that the effective tax rate on the least well-off in the past 10 years, under the previous Government, was higher than the effective tax rate on the richest. That is the inequality fostered under the previous Government.
Mr Nuttall
Yes, and we must not allow ourselves to think that people who are non-income tax payers are non-taxpayers. There is a great difference. They would, I suspect, be very surprised if the total tax liability from all the various forms of indirect taxation was calculated and expressed, as the Bill seeks to do in a general way for the nation, as their own personal tax freedom day.
We should ask ourselves why this approach to transparency has not been adopted before now by the Government and by previous Governments. The idea of a tax freedom day was developed decades ago in 1948, in the aftermath of world war two, when a Florida businessman who went by the great American name Dallas Hostetler trademarked the phrase “tax freedom day”. He proceeded to calculate it for the nation for the next two decades until he retired in 1971, when he transferred the trademark to the Tax Foundation, which ever since has continued to calculate the American tax freedom day. It is used as a mechanism for illustrating the proportion of national income that is diverted to fund the annual cost of Government programmes.
As my hon. Friend the Member for Shipley mentioned, since 1990 the Tax Foundation has been calculating a separate tax freedom day for each state. The concept of calculating a nation’s tax freedom day is enormously popular around the world. Dozens of countries produce their own calculations. There are too many, the House will be relieved to hear, for me to list individually. What is important for the purposes of comparison is for the calculations to be based on the same year. Fortunately, that can be done in the case of the European Union.
Last year a newspaper in Brussels entitled L’Anglophone compared the tax burdens for workers earning a typical wage in each of the 27 member states of the European Union. It took into account the income tax contributions and the social security contributions made by the employee and the employer, and included a projected value added tax contribution. From this research we see that the latest tax freedom day in one of the member states occurred in Hungary. It was 6 August, the 218th day of the year, representing a tax burden of an eye-watering 59.4%. The earliest tax freedom day in the EU was in Cyprus—this endorses the statistics produced by my hon. Friend—where it was calculated to be 13 March, or day 72, representing a tax burden of just 19.4%.
The importance of establishing a correct basis for calculation is perhaps best illustrated by looking at just one of those countries: Belgium. The accountancy firm PricewaterhouseCoopers calculated that for the second year running tax freedom day in Belgium fell on 8 June, whereas L’Anglophone research indicated that it fell almost two months later on 3 August, or day 215, representing a tax burden of 58.5%. The authors of L’Anglophone explained the discrepancy by noting that PricewaterhouseCoopers’s figures
“count revenue from all taxes (including those on corporate profits, petrol, cigarettes, &c.) and thus present a more complete picture of the country’s total tax burden.”
They added that it is
“an average applied to all Belgians—not all Belgian workers; in 2008, less than half of Belgium’s population (4.99 million working out of 10.67 million citizens) was legally working. Consequently, a huge share of Belgium’s tax burden is borne by the working population.”
That demonstrates the need for consensus around the world on an agreed formula for calculating tax freedom day, and I submit that that should be discussed and agreed at a future meeting of the G20. It also demonstrates the complexity of the tax involved and why for many people a personalised approached might be the way forward.
Another complication that would become apparent when comparing one year with another is the effect of a leap year. Indeed, next year will be affected, as 2012 is a leap year. It is worth noting that leap years have a slightly distorting effect on comparisons, to the extent of 1/366, or 0.27%.
I must deal with one of the major criticisms I have heard levelled at the idea of publishing a tax freedom day: the notion that that somehow devalues the importance of the work done by those engaged in public service. I do not accept that for one minute. I think that the British people are quite capable of recognising the need to pay our armed forces and police forces and all those who are essential public sector employees. The introduction of a taxation freedom day will provide citizens with a reminder of the amount of tax they pay and an opportunity to consider whether what they pay is reflected in the value of the public services they receive.
I have another concern, about the requirement set out in clause 1(2) stating that the UK’s net national income will be
“calculated from the beginning of the calendar year”.
I understand that the Adam Smith Institute calculates tax freedom day in that way. Indeed, having looked at the systems used around the world, it seems that calculating it from the start of the calendar year is the usual way. However, I suspect that that has arisen because in America the tax year is the same as the calendar year and, as the concept of tax freedom day started in America, that is what has been adopted in other countries.
Here in the United Kingdom, however, we of course run our tax year from 6 April, so I wonder whether it would not be simpler and easier to calculate the figures for notional income and the level of taxation on the same basis as the tax year, rather than the calendar year. Again, we could consider that in more detail in Committee.
The calculation period is particularly relevant when one considers the Chancellor of the Exchequer’s duties, which are set out in clause 2. The Chancellor will be required before the last day of November to estimate the taxation freedom day in the following calendar year, which will mean having to estimate the levels of taxation and spending for the following year before the annual Budget. The whole process might be better aligned with the annual Budget, however. Indeed, it could become a centrepiece of each year’s Budget, so that when the Chancellor made the annual statement he announced the annual tax freedom day.
It would of course be simple to base the calculation on the traditional tax year, and for the number of days required to be calculated on that basis. For example, if the 2011 Adam Smith Institute figure for the UK of 149 days—representing 40.8% of the year—had been calculated from 6 April, taxation freedom day would have been 1 September, and for the purposes of international comparison it could then, as it is now, be given as 30 May, the equivalent date from a 1 January start.
There is a further problem with calculating a national figure, and it arises in respect of Scotland. The Scottish Parliament now has limited tax-raising powers of its own, and if it exercised them it would lead to a distortion of the national figure. The existing power to increase income tax by 3p in the pound has not been used, but, when the new powers become available after the passage of the Scotland Bill, and with a Scottish National party Government in power in Scotland, they could be used, so a separate figure ought to be calculated for Scotland. It would not be fair or equitable for the UK Government to be criticised for spending decisions taken in Holyrood.
In conclusion, the Bill raises important issues about the levels of taxation and spending. Increased transparency in Government spending is vital, and I warmly welcome the measures that the Government have already taken to reveal the detail of public expenditure. Shining the searchlight of public scrutiny on the spending decisions of politicians is without doubt one of the best ways to control Government spending, and such moves help at the micro-level, but this Bill will extend the principle of public scrutiny, openness and transparency to the macro-level.
A single, simple day can be tracked each year. It can be monitored, and I venture that it could become a feature of general election contests, with the parties including in their manifestos their target for tax freedom day over the lifetime of the following Parliament.
I sincerely hope that the Bill receives its Second Reading and is able to proceed into Committee, so that we can take it through its remaining stages when we meet again on 20 January.
Rachel Reeves (Leeds West) (Lab)
I congratulate the hon. Member for Kettering (Mr Hollobone) on securing this debate, which is clearly of great importance to him. He referred to two dates: 1972, when tax freedom day would have been earliest in the year, and 1982, when it would have been latest.
In 1972 we had a three-day week, so there was not much happiness, and there would not have been much to celebrate on taxation freedom day. In 1982, we had unemployment of 3 million. The reason taxation freedom day came so late that year might be that there were not enough jobs and more was being paid out in benefits with not enough coming in via tax revenue.
The hon. Member for Shipley (Philip Davies) said that he would like us to be more like Cyprus and less like Belgium. The Belgian economy has grown by 1.8% over the past year, and Cyprus is one of just three countries in the European Union, along with Portugal and Greece, that has had a slower rate of growth than the anaemic growth that we have seen in the UK this year. I think that many of our constituents would rather we were a little more like Belgium, with stronger growth and lower unemployment, and a little less like Cyprus, but we may differ on that.
Philip Davies
I take it from what the hon. Lady has said that the Labour party’s official stance is that it would like taxation freedom day in this country to be 4 August.
Rachel Reeves
No, that is not our stance. If the hon. Gentleman would like us to be a bit more like Cyprus, he might want to look at it in the round, because, as I said, Cyprus is one of just three countries in the European Union that has grown at a slower rate than the UK this year.
Conservative Members have spoken about the difference between taxation freedom day in the US and in the UK. One of the reasons taxation freedom day in the US will come a little earlier is that it does not have a national health service, and, as a result, people have to pay from their own income for the health service. If hon. Members took into account how much individuals and businesses contribute towards health care insurance in the US, they might find that its taxation freedom day came a little later in the year—perhaps even later than in the UK.
My main question is why we need a Bill on this. Hon. Members, particularly the hon. Member for Kettering, have spoken about the work of the TaxPayers Alliance and the Adam Smith Institute. If they have all the facts and figures, why do they not organise a celebration for taxation freedom day? Why do we need Government legislation? If we had Government legislation on taxation freedom day as a result of passing this Bill, the day might fall a little later in the year because of the additional costs.
Rachel Reeves
I am sure that the hon. Gentleman would agree, though, that there would be costs associated with the legislation, the statutory instrument, and civil servants’ time. I wonder why hon. Members want more legislation when presumably they really want less legislation and less money spent on civil servants and so on.
Jacob Rees-Mogg
The hon. Lady has converted me. I always thought that Palmerston was right when he said that the House of Commons would eventually run out of things to legislate on. It is a thoroughly good idea that we should run out of things to legislate on and not legislate for everything we feel like. For once, I have been converted by a Labour Front Bencher.
Rachel Reeves
I am not sure whether to celebrate that, but this does seem to me to be a strange thing to want to have a piece of legislation on.
Mr Hollobone
An interesting comparator would be the interest that my hon. Friend the Member for Wellingborough (Mr Bone) has taken in human trafficking. Her Majesty’s Government have designated an anti-slavery day and given it official recognition. All the Bill asks the Government to do is officially to recognise taxation freedom day.
Rachel Reeves
That does not seem necessary to me, but I guess that the hon. Gentleman and I disagree. If the work of the TaxPayers Alliance and the Adam Smith Institute is as fantastic as he thinks, why could they not organise a celebration, as other groups organise days to celebrate things? One does not necessarily need legislation in order to celebrate a day that one thinks important.
Rachel Reeves
I guess that we disagree on that. There are costs associated with all these things and I do not think this is a cost that my constituents and many hon. Members’ constituents would want to bear.
That brings me to my main point. This is a worrying time for businesses and families throughout the country. They are struggling with higher food prices and fuel bills, and are worried about their jobs and their children’s future. I am not convinced that the hon. Member for Kettering has explained what the Bill would do to help an ordinary family in Kettering who are struggling with stagnant wages, high unemployment and high inflation. In Kettering, there has been an increase in long-term youth unemployment of 127% since January this year.
It seems to me that the most important thing that Members of Parliament can do in representing our constituents is to put in place policies to address those issues. I am not sure that celebrating tax freedom day would help get young people back to work, help families facing a squeeze in their living standards or help businesses that are seeing demand dry up. I am certainly not sure what it would do for the 4,000 people who are unemployed in my constituency of Leeds West.
One tax that the hon. Member for Kettering might want to change is VAT. I wonder whether next Tuesday he and other Government Members will support the Opposition when we argue that VAT should be cut temporarily. That would bring forward tax freedom day and put £450 in the pocket of the average family. It would be a real step to help families and businesses across the country.
The hon. Member for Dover (Charlie Elphicke), who is no longer in his place, spoke about the tax on cigarettes. Many people would think—[Interruption.] Oh, here he is. Welcome back. It seems that if anyone mentions cigarettes, he is automatically in his place. Most of our constituents recognise that cigarettes should be taxed because they have social costs beyond the cost of producing and selling them. However, if one looks at the increase in the cost of petrol that we all face when we fill up our cars, reducing VAT back down to 17.5% would reduce the cost of petrol by 3p in the pound.
Philip Davies
If the hon. Lady is so keen for people to have an extra £450 back in their pocket, which I could certainly support, will her party propose a reduction in income tax to deliver that? If her party proposed cutting income tax to give £450 back to people, I might even be tempted to support it.
Rachel Reeves
The hon. Gentleman mentioned earlier—or it might have been the hon. Member for Bury North (Mr Nuttall), but I am sure that they agree—that the increase in the income tax threshold means that fewer people are paying income tax. The good thing about reducing VAT is that it has a progressive effect, because people on lower incomes spend a higher proportion of their income on VAT than people on higher incomes. A reduction in VAT would therefore help to get money in the pockets of the people who most need it at the moment in a way that a cut in income tax would not.
Robert Halfon
I am grateful to the hon. Lady for being so generous in giving way. She said that one way to reduce petrol and diesel prices would be to cut VAT. Is it not the case that the majority of businesses get their VAT back? What most people want is a fuel duty cut, which is why I welcomed the Government’s cut in fuel duty in the last Budget and hope that they will not increase it next year.
Rachel Reeves
The reduction in VAT would put money in the hands of families. Of course, most people who run businesses are also part of a family, so they would benefit from the reduction in VAT. Labour’s five-point plan for jobs and growth also includes a national insurance holiday for small businesses taking on new employees, so that plan would help families and businesses up and down the country.
Rachel Reeves
I think my hon. Friends are where I would like to be today—in the constituency meeting constituents, rather than here. I usually try to go back to my constituency on a Thursday, as do many other MPs. Of course, the Members who are here today think that this issue is more important than doing work in their constituencies.
Charlie Elphicke
A few moments ago, the hon. Lady mentioned the taxation of cigarettes. Seeing my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) in the Chamber, it is only right that I remind her that the Roman emperor Marcus Aurelius said in his “Meditations”:
“Into every life a little rain must fall.”
Those of us who smoke have enough rain with the health hazard, without massive taxation on top.
Rachel Reeves
I am afraid I only went to a comprehensive school, so I did not study Latin. Maybe the hon. Member for North East Somerset (Jacob Rees-Mogg) would like to do some interpretation.
The hon. Member for Kettering reminds me of my holidays when I was at school. As he knows, I used to go to Kettering in all my school holidays, because my grandparents lived there. I still have many family members in Kettering.
Rachel Reeves
I expect not.
I was just thinking about the lives that my grandparents led and the things that mattered to them. Every day, they benefited from what happened in both the public and private sector. They worked in the shoe factories in Kettering, as the hon. Member for Kettering knows—we have discussed it before. However, they also lived in a council house, when they were ill they used Kettering general hospital, and their children went to state schools in Kettering. My father went to Kettering grammar school.
Having a tax freedom day suggests that until that date in May, June or whenever it falls, people are contributing to someone or something else, or to the Exchequer. Actually, the money that they pay in taxes every day from the beginning of January until the end of December is used for things that matter to them, for instance building council houses such as my grandparents lived in, paying for teachers and for schools such as they went to and paying for nurses and doctors in the hospital that treated them when they were ill. It seems a little irrelevant to have a tax freedom day, because whether it is 5 February or 25 November, people need both what they pay their taxes for and disposable income to pay for things that matter to them. That is why those suggesting a tax freedom day misconstrue the situation.
Charlie Elphicke
The hon. Lady makes the point that public services need to be funded. Does she not recognise that tax is needed also to fund the interest on the Government’s debt, much of which was added by the previous Government? Does she share my regret that we have so much debt as a nation?
Rachel Reeves
The reality is that because the current Government have failed to get a grip on growth, and because unemployment is rising and inflation is higher than forecast, borrowing is now expected to be £46 billion higher over the course of this Parliament than they had previously planned. When the Office for Budget Responsibility reports next week, we are likely to see that Government borrowing will be higher still.
The point is that we cannot reduce the budget deficit just through tax increases and spending cuts. We also need economic growth, and we can see the difference between the UK’s growth rate of 0.5% over the past year and the higher rates of other countries such as the US, Canada and even Italy. We cannot reduce the deficit and get debt down unless the economy is growing again and creating jobs; otherwise, we will end up paying more out in benefits and getting less in through tax revenues. That is why the Government’s deficit reduction plans are not bearing fruit—they do not have the strategy for growth upon which all that hinges. I believe that if we want to reduce the deficit and get our constituents back to work, we need a plan for jobs and growth. Without that, borrowing will continue to get higher and tax freedom day will be a little bit later in the year.
I was looking earlier at Labour’s five-point plan for jobs and growth and wondering how much of it Conservative Members, particularly the hon. Member for Kettering, might support. The first point is a temporary reduction in VAT, which he might support because it would bring forward tax freedom day to slightly earlier in the year. I suspect that he would not support the second point, which is a £2 billion tax on bank bonuses, although most of our constituents would not be affected by it. The bank bonus tax would be used to fund 100,000 jobs for young people, which would get more people back to work and paying taxes and mean that less was being paid out in unemployment benefits. Perhaps that, too, would bring forward tax freedom day.
The third point is the introduction of long-term investment projects. That might sound like something that the hon. Gentleman would disagree with, but if it helps people to get back to work, particularly in the construction sector, perhaps Conservative Members would support it. It would get more people back to work and paying taxes. The fourth component of Labour’s five-point plan for jobs and growth is a one-year cut in VAT—to 5%—on home improvements. Perhaps Conservative Members could also support that, given that it is a tax cut. The fifth point is a one-year national insurance tax break for every small firm taking on new workers. I hope that they could support that, too, because it would help small businesses to take on more employees and get the economy moving again.
Charlie Elphicke
The hon. Lady mentions a long wish list but what would be the total cost in extra public spending?
Rachel Reeves
The Government will be borrowing more this Parliament because they are paying the costs of economic failure: they are paying the costs of having 2.62 million unemployed people, including 1.02 million unemployed young people; they are paying because growth, at 0.5% over the past year, is lower than the Office for Budget Responsibility forecast; and they are paying for the higher levels of inflation, which was 5.2% in September compared with the 4.3% that the OBR forecast, which means that we are paying out more in benefits.
The Government are borrowing £46 billion more this Parliament, and as I said earlier, that number is likely to rise next week because the Government have not done enough to get the economy moving, to get people back to work and to contain inflation. The VAT increase led directly to that increase. I accept that these policies would cost money but they would get people back into jobs, get the economy growing again and reduce the budget deficit at a more balanced pace. As Conservative Members have said in the past couple of days, it is clear that although targeted tax cuts now might mean a bit more borrowing, they would help to get the economy back on track, which would also help to reduce the budget deficit in a balanced way.
Charlie Elphicke
But would that extra borrowing not put at risk our interest rates? I do not know whether the hon. Lady is aware, but today the interest rates on UK gilts are lower than those on German bunds. I do not know when that last happened. The risk is that if we borrow more, interest rates will be higher, which will have vastly more negative effects on our economy than the current spending squeeze—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I do not want this turned into a general economics debate. I ask the hon. Lady to focus on the Bill.
Charlie Elphicke
May I finish first, Mr Deputy Speaker? That would delay tax freedom day.
Rachel Reeves
It is good to know that the hon. Gentleman will talk about more than just the cost of cigarettes. The last time I looked, yields on German Government bonds and UK gilts were 2.14% and 2.16% respectively. I do not know whether that changed when he nipped out of the Chamber for a cigarette.
Market traders are looking for a deficit reduction plan, but they are also looking for economies that will grow. Economic growth is a component of reducing the debt and tackling the budget deficit. Unless we have growth, we pay out more in benefits and get in less in taxes. If we want tax freedom day to be a bit earlier in the year, we need more people in work and more businesses succeeding, which is why Labour’s five-point plan for jobs and growth is so important to getting people back to work and achieving the balanced deficit reduction that we need.
In conclusion, I do not support the Bill. It is not a good use of Government time, parliamentary time or taxpayers’ money to celebrate a tax freedom day. Our constituents would all prefer us to concentrate on the things that matter to them: jobs, growth and the squeeze on living standards. The Minister said earlier in the week that the Government were on track to meet their deficit reduction plans. It would be interesting to hear what she has to say about that today, ahead of the OBR’s numbers’ coming out next Tuesday. I believe that a policy of targeted tax cuts to help families is more in touch than the Government sticking doggedly to plan A. I thank the hon. Member for Kettering for giving us a chance to debate these issues today, and I am sorry that I am unable to support his Bill.
The Economic Secretary to the Treasury (Miss Chloe Smith)
I congratulate my hon. Friend the Member for Kettering (Mr Hollobone) on securing this debate and those who have spoken in it. By way of a preamble, you, Mr Deputy Speaker, may know that, like Kettering, my Norwich North constituency has a fine history of shoe factories, which sits alongside a history of manufacturing chocolate, mustard and many other fine products that Members are welcome to come and enjoy on their holidays.
The House will be aware that my right hon. Friend the Chancellor will make his autumn statement on Tuesday, so I will not set out the Government’s plans for the future in this debate. However, with that caveat, I will address—or attempt to address—the extensive points made by my hon. Friend and others, with reference to the principles for good taxation, tax simplification and transparency and, of course, the public finances and public spending.
In many ways, tax freedom day is an absolutely excellent idea. We all insist on knowing what we are paying for our goods and services, whether they be chocolates, shoes or anything else. Where we have ongoing payments, we adjust our direct debits so that we know what we owe and pay only that. Understanding the value of paying tax in some simple way should not be sniffed at. To quote the HMRC slogan—I cannot quite believe I am doing this on the Floor of the House—“Tax doesn’t have to be taxing”. Tax and our understanding of its value to the Government should be simple. None of us wants tax to be imposed sneakily, through the back door. We want tax to be proudly transparent.
There is a problem, however, which is that our lives are not that simple. If I paid only income tax, perhaps a basic “money in, money out” assessment could be made, but we have a variety of taxes in this country, which helps to maintain a balance for the individual and the state. Tax provides carrots for some activities and sticks for others. Talking of sticks, I suppose I should note what my hon. Friend the Member for Dover (Charlie Elphicke) said, which surprised me somewhat, because I am told that he told the Finance Public Bill Committee in 2010 that he was giving up. Perhaps he would like to confirm that—or not—in the remainder of this debate. [Interruption.] I beg my hon. Friend’s pardon.
Let me return to the more serious content of the debate. Tax rightly provides carrots and sticks, and people will experience taxation differently, depending on their circumstances and choices. For example, my personal tax freedom day may vary if I go out for dinner tonight or drive an extra 30 miles—my hon. Friend the Member for Harlow (Robert Halfon) will remember what I said in a debate with him only a few days ago. If my daily income varies depending on my daily work, my personal tax freedom day might also be different. In summary, if, like some television personalities, I was a supercar-driving, spirit-consuming, cigar or cigarette-smoking, house-buying, asset-selling additional rate payer, I would experience an entirely different tax freedom day from many others.
If our intention is to bring about a better understanding of what happens to our income and how much tax we pay, let us try to do that by striving to improve the perception and interaction of our taxes. We need to be clear about what tax revenue does and about the value of the interaction between the individual and the state. These are complex issues, which sadly are not captured in the calculation of tax freedom day, as set out in the Bill.
Let me work through some of the points raised by my hon. Friend the Member for Kettering and others. I applaud his championing of the great British taxpayer, and I absolutely applaud his drive for transparency. One strong point of the Bill is that it turns to the independence of the Office for National Statistics. At this point, Mr Deputy Speaker, you would expect me to underline the independence of the Office for Budgetary Responsibility, too, and the benefit it can bring to the way we look at taxation and public spending.
I have heard the point that national tax freedom day has moved by more than 30 days. I was extremely interested to hear the historical point made by my hon. Friend the Member for Bury North (Mr Nuttall) who noted, if I recall correctly, that in 1900, it was 22 days —[Interruption.] Does my hon. Friend want to intervene?
Mr Nuttall
I do not have the figures with me, but I think the Minister is giving the figures for America. There was, however, a clear link between them and the figures for here, demonstrating that there has been a massive increase in the tax burden since the turn of the 20th century.
Miss Smith
I thank my hon. Friend for that clarification. I was briefly about to exercise my mental arithmetic by suggesting that while it was 22 days in 1900, it was 19 days in 1910, demonstrating that these figures, like all good things in life, can go down as well as up.
I particularly note the birth date of my hon. Friend the Member for Kettering. May I briefly wish him a happy birthday—with, dare I say it, his 50th birthday falling only the year before the next general election? What a miserable time to have one of one’s major birthdays—in 2004 and 2014! We must do our best to give him a happier birthday in this place than he would otherwise look forward to.
My hon. Friend rightly pointed out that the Government have no money of their own. Taxation is not the Government’s money; it is never that. Taxation is people’s money pooled for the common good. That is my view of taxation. I should note that we spent a good deal of time earlier this morning talking about the value of society in debating the previous Bill. Margaret Thatcher spoke about there being “no such thing as society”, but only individuals. The current Prime Minister has moved the point forwards by saying that there is such a thing as society, but it is not the same as the state. I put myself in both those traditions and, I hope, alongside the views of my hon. Friend the Member for Kettering in feeling myself to be on the side of people who work hard, want the Government off their backs and want to be left with as much money as possible in their pockets to spend according to their own choices.
I was interested to hear the debate about whether tax freedom day would be better under a Conservative or a Labour Government. I note that there might be a cricketing correlation here. I suspect that my hon. Friend the Member for Shipley (Philip Davies) is a cricketing fan, as am I. He might be interested to think about the successes of the national side in 1981-82, when I regret to have heard tax freedom day might have been at its peak. He is interested in fours and sixes and not singles, so let us see what we can achieve now that England is once again at the top of the cricketing league. Let us hope that Britain is at the top of other leagues.
My hon. Friend the Member for Shipley wishes, I think, to oblige the Government to make tax freedom day as early as possible. I note briefly that his comparison to the United States could be unfortunate, given that a number of American politicians have recently pledged never to increase taxes, which has led to some gridlock in the US political system. I am not sure that we would want to see that here, given the attendant impact on the credit rating of that great country.
Some interesting points of difference have emerged, which it would no doubt be delightful to iron out in Committee. One is about how we might celebrate tax freedom day: should we have a bank holiday or achieve it in some other way? An additional bank holiday will always impact on the economy. Many business people in my constituency and doubtless elsewhere express concern at the idea of having an extra bank holiday.
Philip Davies
Thanks to organisations such as the Adam Smith Institute, we are aware that tax freedom day this year is on 30 May. Does the Minister think she could get the combined brain power of the Treasury on to the case to work out when, if the Government were planning to collect enough in taxes during this year to finance all their spending, tax freedom day would fall?
Miss Smith
I am sure that the combined brains of the Treasury could make those calculations, but I regret to say that my brain, combined or otherwise, is not agile enough to engage in such mental arithmetic on the spot for my hon. Friend’s benefit.
I think that learning of the existence of a “tax app” has enhanced all our lives today. I have only recently acquired a more sophisticated phone. I could not possibly reveal the brand name, but Members should note that I am now tweeting. They may wish to begin following my tweets, as no doubt others will.
As I have said, I noted what was said about taxation on items such as cigarettes and fuel.
Regional variation has been mentioned. My hon. Friends clearly do not want centralised uniformity in any shape or form, and I do not imagine that they would want taxpayers in London, by dint of legislation, to have to pay the same as taxpayers in Wales, or vice versa. I am sure that they support the Government’s actions in not only rebalancing the economy in the direction of a thriving private sector everywhere in the United Kingdom, but creating a thoroughly localist agenda to give people as much freedom locally as possible.
My hon. Friend the Member for Shipley mentioned Belgium and Cyprus. He will be aware that Belgium has had no Government at all for the past 528 days. He might welcome that in principle, but regrettably I am not sure that the average Belgian punter does.
My hon. Friend the Member for Bury North took us for a canter through many different types of tax. He cited Twain, mention of whom, as a lover of literature myself, I always welcome in any debate. He also succeeded in teaching me about the crystal and glass industry—and perhaps you as well, Mr Deputy Speaker. I do not know whether you knew that the stems of some glasses are hollow, but I had no idea that that was the case. In the words of Abba, if I had a little money in a rich man’s world, I might know more about expensive glass and crystal.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Had I heard a filibuster I would have stopped it, as the hon. Gentleman knows.
Miss Smith
Thank you, Mr Deputy Speaker. I had assumed that my hon. Friend the Member for Wellingborough (Mr Bone) would appreciate a Minister’s taking the points made by Back Benchers seriously and dealing with them individually, which is what I am endeavouring to do.
Let me return to the subject of tax freedom day, as it is right for me to do in the remaining minutes that are available. My hon. Friend the Member for Kettering invited me specifically to rebut four points. He felt that an aspersion had been cast on the methodology proposed in the Bill. The aspersion that I would cast is that there is no such thing as the average person. That is what chiefly concerns me about the calculation establishing when tax freedom day should fall: I do not believe that it would represent the average citizen in a meaningful way.
My hon. Friend asked me to deal with the way in which the proposed methodology does or does not regard or disregard public benefits. I am glad that he welcomes the fact that taxation has another side, namely what can be done with the money once it has been collected. I shall say more about that in a moment.
My hon. Friend also asked me to discuss whether tax freedom day had or had not varied very little in the last decade. I think that that has been covered by earlier remarks, and by the clarification offered by my hon. Friend the Member for Bury North. The numbers do go up and down by small amounts. Like other Members, I have reservations about whether we should burden the Office for National Statistics with this further task—and, indeed, whether we should burden the Treasury, which, as Members will know, is one of the smaller Departments in terms of the number of people who work there. No doubt Members welcome that, and do not wish it to become any larger.
Philip Davies
Given that the Economic Secretary has made such great play of the burden this would impose on Government, will she tell us what estimate the Treasury has made of the increased costs the Government would incur by introducing this measure?
Miss Smith
Unfortunately, I do not have that figure to hand, but I will be happy to look into the matter.
As I suspect my hon. Friend has often argued, both small and large businesses find regulation burdensome, as do citizens. The Government have therefore endeavoured to reduce the amount of regulation, and I question the need for this measure as it is an extra piece of regulation. My hon. Friend also noted that as we can spend on Europe, we should be able to spend on this measure. I agree with his point: we all wish to keep firm control on what we spend in respect of the European Union.
In the March Budget, the Chancellor set out the Government’s principles of good taxation. Our taxes should be efficient and support growth. They should also be certain and predictable: they should be simple to understand and easy to comply with. The tax system should be fair, and should reward work, support aspiration and ask for the most from those who can afford it most. Those are the principles to which we are committed, and against which our tax system should be judged.
In trying to meet those principles, our taxes will necessarily become clearer, a goal to which we all aspire. In debating tax in general, its role in our economy and why the burden of taxation may be felt more keenly at certain times, we must bear in mind our current economic situation. Britain had endured the longest and deepest recession in living memory, we were borrowing £1 for every £4 we were spending, and we had the largest budget deficit in our peacetime history—one of the largest in Europe, and the largest in the G20—yet following the 2010 general election no detailed plan to deal with all that had been left in place by the previous Government.
That was not the end of the story. In the preceding decade Britain had slipped down the international league of competitiveness, falling from fourth to 12th. We had seen our share of world exports decline. We were considered to be a worse country in which to start a business than many of our European neighbours. That was this coalition Government’s inheritance.
We have therefore set about restoring confidence and stability to our economy, with a clear strategy for growth. At the heart of that strategy is a credible plan to tackle the enormous budget deficit, which we are already implementing.
One part of that plan is making changes to taxation. We must understand the changes this Government have made in order to see that a tax freedom day does not fully accord with what we want to achieve. For any taxation, we must, of course, make it clear why we are asking for a contribution, what we are doing in terms of public spending to balance changes in taxation, and why it is important to strengthen the public finances.
Growth is a key component of a strong economy; all parties agree on that. In the Budget we set out four economic ambitions: that Britain should have the most competitive tax system in the G20; that Britain should be the best place in Europe in which to start, finance and grow a business; that we should seek to be a more balanced economy by encouraging exports and investment; and that we should have a more educated work force, who should be the most flexible work force in Europe.
For the past decade Britain has been losing ground in the world economy. Other nations have reduced their business taxes further and faster, and some have removed barriers to enterprise, while ours have grown higher still. We cannot afford for that to continue.
Our plan for growth is based on private sector enterprise, not public sector borrowing. It is based on growing businesses, not growing debts, and on securing sustainable long-term investment. An essential aspect of that is creating a competitive tax system that enables our businesses to compete on the global stage and that gives value to businesses in ways that this Bill would struggle to measure.
Mr Hollobone
claimed to move the closure (Standing Order No. 36), but the Deputy Speaker withheld his assent and declined to put that Question.
Miss Smith
I shall briefly move on to something that will be of significant interest to hon. Members and to the businesses that I have just begun speaking about, which is modernising the administration of the personal tax system and creating proper tax transparency for individuals. I note that a fine document is being given out by Her Majesty’s Revenue and Customs at the moment. Hon. Members could encourage businesses and individuals in their constituencies to respond to it and help in the effort that we all want to see to improve the understanding of taxes—
Mr Deputy Speaker (Mr Nigel Evans)
Before we deal with the other Bills, may I ask the House to wait until the Clerk has read the name of the Bill and the mover has moved it? Will Members acting on behalf of another Member please state that they have permission? Members proposing a date must have the authority of the Member in charge of the Bill.
Business without Debate
The Treasurer of Her Majesty's Household (Mr John Randall)
I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Bill, has consented to place her prerogative, so far as it is affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 20 January 2012.
parliament (amendment) bill
Resumption of adjourned debate on Question (4 March), That the Bill be now read a Second time.
Hon. Members
Object.
Debate to be resumed on Friday 20 January 2012.
electoral law (amendment) bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 16 December.
apprenticeships and skills (public procurement contracts) bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 20 January 2012.
gangmasters licensing (extension to construction industry) bill
Resumption of adjourned debate on Question (3 December), That the Bill be now read a Second time.
Hon. Members
Object.
Debate to be resumed on Friday 20 January 2012.
smoking in private vehicles bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 20 January 2012.
children (access to parents) bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 20 January 2012.
sunday trading (amendment) bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 20 January 2012.
safe standing (football stadia) bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 20 January 2012.
common fisheries policy (withdrawal) bill
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 13 January 2012.
contaminated blood (support for infected and bereaved persons) bill [lords]
Motion made, That the Bill be now read a Second time.
Hon. Members
Object.
Bill to be read a Second time on Friday 20 January 2012.
house of commons disqualification (amendment) bill
Resumption of adjourned debate on Question (9 September), That the Bill be now read a Second time.
Hon. Members
Object.
Debate to be resumed on Friday 13 January 2012.
live music bill [lords]
Bill read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).
building regulations (review) bill [lords]
Motion made, That the Bill be now read a Second time.
Economic Growth (Waveney)
Peter Aldous (Waveney) (Con)
I am very pleased to have secured this debate. Its timing is particularly appropriate, coming as it does just before the Chancellor’s autumn statement on Tuesday.
The Waveney constituency is in north-east Suffolk and its main town, Lowestoft, is the most easterly point in Britain. Lowestoft has a proud history, and much of its heritage is based on fishing. Some 40 years ago it could be viewed as the model of how the economy in a coastal town should operate, with a diverse and prosperous economic base underpinned by fishing and its allied industries, the Richards and Brooke shipyards, the emerging oil and gas sector, food processing factories such as Birds Eye and Beechams, the Eastern Coach Works, the Co-op canning factory, the Boulton and Paul timber yard and the Pye television factory, as well as a flourishing tourism sector.
Gradually, over the years, those businesses have gone, though Birds Eye remains. Some people feel forgotten and neglected by the Government, but new businesses are arriving, many in the emerging energy sector, and there is a real desire across the whole of the Waveney district for them to succeed and for the area to play a full role in the economic recovery, creating jobs and helping rebalance the economy away from its over-reliance on financial services and London and the south-east. In many respects, Waveney is now at a crossroads. We can take the low road of limited aspirations and just trundle along or we can take the high road and be ambitious and a key player in working with the Government to deliver the growth strategy, creating jobs and helping Britain emerge from the most savage economic downturn for a generation.
Over the past 18 months, the coalition Government have laid the foundations on which the Waveney economy can grow. The deficit reduction strategy means that interest rates remain low, and although there is no such place as a safe harbour in today’s global economy, the Chancellor has steered Britain out of the eye of the storm. We should not forget that, last May, Britain was viewed by many as in the same category as Greece, Italy and Spain.
The New Anglia local economic partnership, formed at the beginning of the year and covering Norfolk and Suffolk, can play a key role in creating jobs across the two counties. The LEP has hit the ground running and is approaching its job in a targeted, pinpointed and coherent way, focusing on three areas: food production and processing; tourism; and, most importantly for Waveney, the energy sector, building on the opportunities along the coast from the gas terminal at Bacton, the oil and gas sector, the nuclear industry at Sizewell and offshore renewables. Lowestoft is at the centre of the world’s largest market for offshore wind energy, and the UK’s most dense area for offshore development is between the Humber, the Wash and the Thames estuary.
The LEP and the four councils—Waveney district council, Great Yarmouth borough council and Suffolk and Norfolk county councils—are to be congratulated on their successful enterprise zone bid for Lowestoft and Great Yarmouth, which is aimed at the energy sector. That can also play a crucial role in creating jobs. Also welcome is the creation of the Green investment bank, which will play an important role in leveraging in the large amount of private sector investment needed to transform our energy sector.
The Government’s ambition to provide superfast broadband across the UK by 2015 is also good news, with the granting of funding from Broadband Delivery UK to Suffolk county council to reach the “not spots”, many of which are in Waveney, whether on the south Lowestoft industrial estate or in the rural area around Bungay and Beccles where the market will not deliver on its own.
The Government’s emphasis on apprenticeships and skills is important, as there is a need to provide people in Waveney with the skills that energy businesses and those in their supply chains are looking for. Much has been done in the past 18 months, but with the problems in the eurozone, now is not the time to be resting on our laurels. We need to redouble our efforts and work overtime to ensure we do everything possible to create economic growth in Waveney.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
My hon. Friend and neighbour is making a very eloquent case for his constituents—there is no greater champion of Waveney than he. I share Waveney district council with him and our area is known for tourism, with Southwold. Will he pay tribute to the students and particularly to the teachers and supporting schools who help the North Suffolk skills centre in Halesworth, which does a lot to help people with vocational careers, especially in engineering?
Peter Aldous
I am very happy to do that. The North Suffolk skills centre, which serves the northern end of my hon. Friend’s constituency and much of mine, plays a vital role in giving people vocational training in engineering and other such skills.
As I was saying, the endgame is not the announcement of a policy—that is only the beginning. We need to be driving policies through and ensuring that they deliver what they are intended to achieve. There may be times when we need to take stock of a particular initiative and ask whether it is working and whether we need to be tackling the problem in a different way.
In the time remaining, I shall outline the areas in which I believe we need to redouble our efforts. As I have said, the Government are to be commended for their focus on skills and apprenticeships. In Waveney, that focus has already had positive results, with a provisional 810 apprenticeships having been delivered in the 2010-11 academic year—an increase of 48% on 2009-10. However, more needs to be done not only to provide businesses with the support they need but to work with business, Lowestoft college and the high schools, all of which are very much up for the challenge. The creation of guilds that concentrate on a particular industry such as energy could well be a way forward. We also need to tackle deep-rooted worklessness: in some places, there are three generations of families who have never worked.
If Waveney’s contribution to Britain’s economy is to be successful in the long term, our poor infrastructure links must be improved. In making small talk, the British talk about the weather, but East Anglians talk about roads and railways either because we do not have any or because those we do have are substandard. There are reasonable prospects for upgrading the railways to Waveney with the provision of funding for the Beccles loop, which will enable an hourly service to operate on the east Suffolk line. Longer franchises will provide opportunities for further improvements to the railways and I am working with Network Rail to ensure that everything is done to upgrade Lowestoft and Beccles stations, which are both in a shocking condition.
The road network provides a greater challenge. It is vital that regional links across East Anglia are improved and that the roads in Waveney are upgraded. The dualling of the A11 at Elvedon is good news and work needs to be done at the A14 bottleneck between Cambridge and Huntingdon. Locally, the Beccles southern relief road will open up further employment opportunities at Ellough and it is vital that the road system in Lowestoft is improved. I am working with Suffolk county council and Waveney district council to come up with a blueprint of the roads we need, which will include a new crossing of Lake Lothing, which divides the town. The enterprise zone challenge fund provides a means of promoting and building new roads. I issue a challenge to the Government: if we can demonstrate that jobs will flow if new roads are built, will they provide the money to do the work?
Let me address the issue of the 21st-century highway—broadband. As became apparent at the Suffolk broadband conference that I hosted in April, broadband is a huge enabler of economic growth. It will help the retention and growth of small businesses and will provide access to a global market. It will also help to raise and modernise skills and achievement levels. Broadband Delivery UK has made it clear that community engagement is the key to the roll-out of superfast broadband, very much in line with the big society and localism agendas.
The reference to the big society provides me with the opportunity for a short commercial break to congratulate the Beccles Lido on winning the Prime Minister’s big society award. In 2010, Beccles Lido bought the swimming pool from the local council, and has since raised over £300,000, carried out significant improvements and this year attracted nearly 30,000 visitors, up from 8,500 in 2008, turning a £60,000 loss into a profit. I congratulate the organisation on its great work and I wish it all the best with its new project, the public hall.
As I said before the interlude, community engagement with broadband is the right approach, as it is only local people who know what their communities need and the challenges they face. It appears that small local providers may be having difficulties in their attempts to provide services as part of local broadband plans. This is due to a combination of the sheer cost of procurement and other factors, such as European state aid rules and network security. I urge the Government to do all they can to resolve these issues so that we can ensure that the remote rural parts of the country, and Waveney in particular, from my viewpoint, have every opportunity possible of receiving next generation broadband.
Turning to the energy sector, there are encouraging signs. Orbis Energy in Lowestoft is a global centre of excellence for drawing together innovation and technology, supporting supply chain development and acting as a catalyst for development in the offshore renewables sector. SSE’s operations and maintenance base for the Greater Gabbard wind farm is already in Lowestoft port, and last month Scottish Power Renewables and Vattenfall signed a memorandum of understanding with both ABP Lowestoft and East Port in Great Yarmouth for the development of the East Anglia Array wind farm.
On Monday, SSE submitted its development consent order to the Infrastructure Planning Commission for the Galloper wind farm. It is vital that the planning process operates in a smooth and timely fashion, and also that the Government provide a clear, consistent and stable framework in which investors can operate, making long-term financial commitments in the offshore renewables sector. This means that there should be no sudden change in the fiscal regime, and electricity market reform must be addressed at an early stage in the next Session. It is important that the Government liaise with the industry now on this issue.
A particular feature of the East Anglian and Waveney economies is the large number of small businesses and SMEs, as well as a spirit of enterprise, which needs to be properly harnessed. In 2009, Lowestoft won the award for being the most enterprising place in Britain. More needs to be done to help small businesses set up and then flourish. That means, first, reducing red tape. I am conscious that the Government have already done much work in this area, though from what local businesses tell me they have yet to see the full benefits of that on the ground. Red tape is like Japanese knotweed—once it is there, it takes a superhuman effort to get rid of it.
Secondly, more work should be done with banks to ensure that they work with and support small businesses. The bid made by NWES and others, along with Barclays bank, to the regional growth fund for funding a national start-up programme, which will also operate in Waveney, will help to address that. Thirdly, it is important that in promoting business, Ministers do not just hold press conferences and stage PR announcements at high-profile showcase companies. It is important that they also visit smaller start-up and early-stage businesses so as to encourage entrepreneurship. So many people will be able to relate to and identify with such businesses and take inspiration from them.
I am fully aware of the impact of high fuel prices on small businesses and those travelling long distances to work. Waveney is out on a limb and, although the public transport network is gradually being improved, many have no choice but to use private transport. People in Waveney spend on average £68.09 a month on fuel, while those in the City of London, who have far higher incomes, spend on average only £26.93. I urge the Minister to reinforce the message to the Chancellor to cancel the fuel duty rise due in January.
In conclusion, in the summer of 2010, the CBI for the east of England launched its blueprint for growth. It highlighted a variety of factors: East Anglia is a world leader in many emerging sectors, including renewable energy; the east of England is forecast to create 400,000 new jobs by 2031; the area produces more entrepreneurs per head than the UK average, and the businesses they create survive longer; and £1 for every £5 of venture capital investment in the UK flows to east of England businesses.
My message to the Government is that if they work with us and invest alongside us, Waveney and East Anglia can play a pivotal role in promoting sustainable growth and creating new jobs. A good start has been made. We now need to deliver and to take that high road so that Lowestoft is again the model economy for a coastal town.
The Minister of State, Department for Communities and Local Government (Greg Clark)
I congratulate my hon. Friend the Member for Waveney (Peter Aldous) on securing the debate and on a commanding speech that offered a comprehensive survey of all the key challenges facing his local economy. I am also delighted to see our hon. Friend the Member for Suffolk Coastal (Dr Coffey) in her place.
My hon. Friend the Member for Waveney said that everyone should work overtime to promote growth. It was clear from his speech that no Member of the House works harder, more persistently or more effectively to promote their local economy than he does. Indeed, it is worth reflecting on the contributions he has made during his short time in the House. He has had debates and questions on the fishing industry, which I know is close to his heart; the offshore renewables sector; local transport; strategic transport, whether rail or road; the local enterprise partnership and enterprise zones; planning; and economic development. In a short period he has become a persistent and eloquent advocate for all the needs of his area. His constituents in Waveney and residents in the local area should be proud of the service he gives them, in alliance with our hon. Friend the Member for Suffolk Coastal. They are very well represented in these matters. He also takes matters to the top, having questioned the Prime Minister, the Chancellor of the Exchequer and the Business Secretary.
My hon. Friend the Member for Waveney will know that many of the issues he has raised today will be responded to in the weeks ahead. We are all looking forward to the Chancellor’s autumn statement next week. There will be statements in the weeks ahead on some of the transport matters he referred to and many of the decisions that will be taken by the local enterprise partnership will be made in the coming weeks. He is absolutely right that we have put the groundwork in, and some of the decisions in the weeks and months ahead, which will increasingly be taken locally, will determine and shape the future success of the local economy. I know that his leadership, and that of our hon. Friend the Member for Suffolk Coastal, will mean that those opportunities will be taken keenly.
Let me say something about the context. Although Waveney is the eastern-most point of England and geographically distant from our motorway network—my hon. Friend the Member for Waveney has told me before that the nearest motorway to Lowestoft is in Holland—it is very much connected with the wider global and European economy. The overall context of the economy, of course, affects Suffolk as it affects everywhere else in the country, but the most essential building block of our economic future is fiscal discipline, which he acknowledged.
We inherited a situation in which our deficit was set to overtake that of Greece. We had a lack of fiscal responsibility which needed to be sorted out urgently, so the fundamental basis of our economic reforms is to secure the fiscal discipline that we need in this country. My hon. Friend knows that businesses in Suffolk and throughout the country regard that as essential to our economic credibility.
I spent some time this week at the CBI conference, where there was not a single business representative who did not think that it was absolutely in our interest to cleave to the record of fiscal discipline that we have established in recent months—and absolutely essential to send to the rest of the world a signal that we are resolute in that. The situation affects us all.
I was struck by the comments this week of one of our leading businessmen, the managing director of the John Lewis Partnership, one of our most successful businesses, who, speaking in his capacity as the chairman of the Birmingham and Solihull local enterprise partnership, said that the Government get the idea that they must stick decisively to the deficit reduction strategy, which, in his personal view, he endorses.
That is typical of comments that the business sector generally has made, and the reason is that the strategy has an impact on interest rates, which are crucial to the investment decisions that need to be made over the months and years ahead. Despite the deficit that we inherited being of Greek-style proportions, interest rates in this country are more comparable to those enjoyed by Germany, and that is in very large part due to international investors’ confidence in the seriousness of our intentions.
Of all the contributions that the Government can make to the economy, and to making setting up and expanding businesses easier than it might be, the interest rate is crucial, because any investments are likely to involve borrowing and capital investment. It is important that we do not take for granted our environment of low interest rates; it is an important feature of our economic policy, and it is important that all our constituents and my hon. Friend’s local businesses understand that it follows from our fiscal demeanour.
There is an additional aspect, however. If we secure our fiscal discipline and have low interest rates, there is a major role for local leadership, which my hon. Friend exemplifies, because local economies, like local councils and local businesses, can be well run or badly run, and one thing that has been most impressive in Suffolk and, indeed, East Anglia over recent months is the flying start that the local enterprise partnership has made.
That LEP is particularly impressive, and it reflects the close work of some of the best businesses and the local authority leaders in the area. I know that my hon. Friends the Members for Waveney and for Suffolk Coastal and others throughout the region worked hard to bring together business leaders and councillors to ensure that the partnership was in place.
The LEP has also been particularly innovative in establishing an enterprise zone that crosses boundaries between not just districts, but counties, and the fact that the case was made so persuasively for such an unusual arrangement, linking into the great potential of that part of the world to secure investment in offshore renewables, underlines the progress that the partnership has made. I, through him, congratulate all members of the LEP on their work in recent months.
The benefits will begin to accrue very quickly. There is already the potential for investment to be made on the basis of the exemption from business rates that will be available in the area. It is estimated that by 2015, 2,000 jobs will have been created in the enterprise zone. Many of the features that will be enjoyed by the local enterprise partnership can be made available elsewhere in his district. The Localism Act 2011, which received Royal Assent only last week, allows, for the first time, business rate discounts to be allocated by local authorities in a way that they consider to be in the best interests of their businesses. For example, they may be provided for new business start-ups, for businesses in a particular sector, or for businesses that are outside the enterprise zone but in an area that needs to be regenerated. I hope that there will be great flexibility and, as my hon. Friend the Member for Waveney said, great encouragement to take up some of the new powers and freedoms that are available.
This also applies to planning powers. Of course, planning powers are vested in local authorities. Another feature of the Localism Act is to have swept away the regional spatial strategies, as well as the regional development agencies. Those strategies imposed on local people a form of administration that many had recognised as bureaucratic and did not reflect sufficient local knowledge and local interest. My hon. Friend made a comparison with Japanese knotweed regarding some of the regulation, bureaucracy and red tape that has emerged, and said that it should be uprooted. I would go further. We need to ensure that the bodies that promoted and created this red tape are finished once and for all—to cut the head off the snake to ensure that this cannot happen again. We have done that with the regional strategies and with many of the regional bodies.
The Government’s reforms make more powers available so that areas can benefit from economic growth locally. It has always struck me as ridiculous and counter-productive that if an area is led successfully by a local authority and encourages the location of businesses in that area, it shares scarcely at all in the economic benefits, which have all been spirited away to the Treasury. The reform of business rates that we are consulting on and intend to introduce very soon will provide a clear incentive and a sense of justice in that if an authority such as Waveney benefits from having success in attracting businesses, it should be able to keep some of the upside. That becomes a virtuous circle whereby knowing that some of the business rates can be retained allows investments to be made in anticipation of the economic effects, and that unlocks some of the infrastructure investment that my hon. Friend mentioned. If one adds to business rates reform the community infrastructure levy and the new homes bonus, one sees that there is a new ability for local authorities to invest proactively in, especially, infrastructure in their area.
My hon. Friend is right to say that there are challenges in the local area. One of the impressive features of the local enterprise partnership bid was that those challenges were very well addressed. He spoke eloquently about skills. His part of the world has underperformed, compared with some other parts of the country, in terms of skills at national vocational qualification level. It is absolutely right that he puts down a challenge to us in Government to ensure that his local enterprise partnership and his local authorities are given every assistance with raising the skills level in East Anglia, particularly in Lowestoft and Waveney. The new industries to which he refers are important in their demand for engineering skills. The commitment we can make to him is that they can invest for the long term.
Waveney may be the most easterly point of the United Kingdom, but this, far from being a disadvantage, can be a positive advantage given that a lot of opportunities will be available in the North sea and on the continent. We need to capitalise on those opportunities. With the very well-led local enterprise partnership and the representation of exceptional Members of Parliament, I am greatly encouraged by the prospects for Lowestoft. I know that my hon. Friend will continue to do what he has done over his first 18 months in the House—keep us constantly up to date and on our mettle to ensure that we do everything we can for a very important part of the country.
Question put and agreed to.
Written Ministerial Statements
Rural Fuel Rebate Pilot Scheme
(13 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (Danny Alexander)
I am today announcing that the Government have secured EU clearance for a rural fuel rebate pilot scheme. The scheme will apply a 5p per litre discount on petrol and diesel in the Inner and Outer Hebrides, Northern Isles, the islands in the Clyde and the Isles of Scilly.
The scheme will provide much-needed relief to these remote island communities. Pump prices in these areas are particularly high due to the high costs of transporting and distributing fuel.
The Government intend to introduce a retailer-based scheme. Registered retailers will be required to reduce their selling prices of road diesel and petrol by 5ppl. Retailers will claim a 5ppl rebate on the fuel they purchase, by submitting a monthly claim to HMRC.
To support retailers in covering the initial costs of the scheme HMRC will provide an up-front rebate. From 1 January 2012, retailers will be allowed to claim a 5ppl refund on fuel purchased in each of their first two months in the scheme without having to pass on the discount to customers. Following this, retailers will then be required to fully pass on the 5ppl discount. This design will ensure that there are no adverse cash-flow problems for the retailers and that from 1 March 2012 motorists will benefit from a 5ppl reduction in pump prices.
HMRC have today published the draft legislation for the pilot scheme.
Cyber-security Strategy
(13 years ago)
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The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
I have today published the new cyber-security strategy for the United Kingdom. I have placed a copy in the Library.
The growth of the internet has transformed our everyday lives.
But with greater openness, interconnection and dependency comes greater vulnerability. The threat to our national security from cyber-attacks is real and growing. Organised criminals, terrorists, hostile states, and “hacktivists” are all seeking to exploit cyberspace to their own ends.
This Government have moved swiftly to tackle the growing danger posed by cyber-attacks. Our national security strategy published last year classed cyber-security as one of our top priorities alongside international terrorism, international military crises and natural disasters. To support the implementation of our objectives we have committed new funding of £650 million over four years for a transformative national cyber-security programme (NCSP) to strengthen the UK’s cyber-capabilities.
The new cyber-security strategy we have published today sets out how the UK will tackle cyber-threats to promote economic growth and to protect our nation’s security and our way of life.
One of our key aims is to make the UK one of the most secure places in the world to do business. Currently, around 6% of the UK’s GDP is enabled by the internet and this is set to grow. But with this opportunity comes greater threats. Online crime, including intellectual property theft, costs the UK economy billions each year. So we must take steps to preserve this growth, by tackling cybercrime and bolstering our defences, to ensure that confidence in the internet as a way of communicating and transacting remains.
The Government cannot tackle this challenge alone. The private sector—which owns, maintains and creates most of the very spaces we are seeking to defend—has a crucial role to play too. This strategy outlines how we will cement a real and meaningful partnership between the Government and private sector in the fight against cyber-attacks, to help improve security, build our reputation as a safe place to do business online, and turn threats into opportunities by fostering a strong UK market in cyber-security solutions.
Together with the private sector, we are pioneering a new national cyber-security “hub” that will allow the Government and businesses to exchange information on threats and responses. This promises to transform the way we manage cyber-attacks and greatly strengthen our security capacity. We will work with the business services sector to raise industry awareness. We will also work with industry to develop private sector-led standards for cyber-security that help consumers navigate the market in security products and give firms which are good at security the means to make it a selling point.
The UK is a world leader in cyber-security research, development and innovation. GCHQ is the lead in this area and the new strategy aims to capitalise on this through an innovative approach which will explore options with UK industry to harness this expertise and know-how for the benefit of the UK economy.
This strategy also outlines our plans for a new cybercrime unit with the National Crime Agency, to be up and running by 2013. This unit will build on the groundbreaking work of the Metropolitan police’s e-crime unit by expanding the deployment of “cyber-specials”, giving police forces across the country the necessary skills and experience to handle cybercrimes. We will also ensure that the police use existing powers to ensure that cybercriminals are appropriately sanctioned as well as introducing a new single reporting system to report financially motivated cybercrime through the existing Action Fraud reporting centre.
To defend against significant threats we need to continue the work we are doing to protect and prepare our critical national infrastructure. We also need to update our military defence capabilities for a new cyber-world; this strategy outlines the creation of a new joint cyber unit hosted by GCHQ which will develop our military capabilities to give the UK a comparative advantage in cyberspace.
We will also strengthen the role of the Centre for Protection of the National Infrastructure to increase its reach to organisations that have not previously been considered as part of the critical infrastructure, thereby augmenting our ability to protect critical systems and intellectual property.
Prevention and education are also crucial. Get Safe Online is a very good example of how Government, industry and law enforcement can work together to address this issue and improve the website by early 2012. In addition, we will work with ISPs to seek a new voluntary code of conduct to help people identify if their computers have been compromised and what they can do about it.
Cyber-risks are transnational in nature. We will work with other countries to tackle them. Through the London cyber conference, hosted by the Foreign Secretary earlier this month, the UK is taking a lead in addressing international discussions on how we can establish a more focused international dialogue to develop principles to guide the behaviour of Governments and others in cyberspace. We will continue to foster this level of international dialogue through various forums and through international co-operation on tackling cybercrime.
This strategy sets out the change that is needed; we now need to work together to deliver it. The Government will update the House in a year’s time on how we are doing.
Music Education
(13 years ago)
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The Secretary of State for Education (Michael Gove)
“The Importance of Music: A National Plan for Music Education” has been developed jointly by the Department for Education and the Department for Culture, Media and Sport following a review of music education in England by Darren Henley, managing director of Classic FM, published on 7 February 2011. The Departments intend to publish the plan today.
The plan sets out a vision for music education—to enable children from all backgrounds and every part of England to have the opportunity to learn a musical instrument; to play music with others; to learn to sing; and to have the opportunity to progress to the next level of excellence.
Key announcements are for:
Department for Education funding, to 31 March 2015, available for music education on an area-by-area basis.
Funds distributed to music education hubs following an open application process, conducted by Arts Council England operating as a fund holder.
A new Initial Teacher Training add-on module to boost new teachers’ skills and confidence in teaching music.
Development of a music educator qualification ensuring the wider music work force is better skilled, more professional and recognised for their role in and out of school.
Continued Department for Education funding, matched by Arts Council England, for the successful In Harmony Sistema England programme, targeting children and communities in areas of exceptional deprivation.
A national plan monitoring board, chaired by and answerable to Ministers, to hold those responsible for delivery across the national plan to account.
A national network of music education hubs, building on the existing music education provision, will bring together partnerships between music services, schools, education and arts organisations. Hubs will deliver at least some core roles, which are to:
Ensure that every child aged 5-18 has the opportunity to learn a musical instrument (other than voice) through whole-class ensemble teaching.
Provide opportunities to play in ensembles and to perform from an early stage.
Ensure that clear progression routes are available and affordable to all young people.
Develop a singing strategy to ensure that every pupil sings regularly and that choirs and other vocal ensembles are available in the area.
Copies of “The Importance of Music”, together with funding allocations, have been placed in the Libraries of both Houses.
Consulate General (Recife)
(13 years ago)
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The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)
I wish to update the House on recent changes to the Foreign and Commonwealth Office’s overseas network. The Foreign Secretary said in the House on 11 May, Official Report, column 1165, that there will be no strategic shrinkage of Britain’s diplomatic influence overseas. He announced plans for the opening of up to six new embassies and seven new consulates general in emerging powers, including in Recife, Brazil. We are further strengthening our network by sending more diplomats to a total of 22 countries. The Foreign Secretary made clear in a speech in London on 8 September that he intends to strengthen the long-term capability and international effectiveness of the Foreign and Commonwealth Office, and to improve our country’s capacity to pursue effective foreign policy for decades to come.
So I am pleased to confirm to Parliament the inauguration on 28 November of a British consulate general in Recife in north-east Brazil. The consulate general will open up opportunities for Britain in this gateway city to the dynamic north-east of the country. There are existing British interests in the region’s petrochemical industry, and growing co-operation in education and culture. An expanded presence on the ground will enable Britain to increase co-operation in a range of areas.
North-east Brazil is currently the most economically dynamic region in the country. Pernambuco State, of which Recife is the capital, is leading the regional charge, with 8.4% GDP growth in 2010. The whole region has a population of 50 million. Over the last eight years north-east Brazil has undergone an intensive economic diversification process. To sustain growth, the region needs to invest heavily in infrastructure and other areas where the UK can offer expertise.
The United Kingdom first had a diplomatic presence in Recife as early as 1808. The consulate general will be a considerable upgrade from the small consulate and British Council office in the city and is part of our conscious diplomatic advance in Latin America. We are putting more staff on the ground to expand co-operation on trade and investment, science and innovation and cultural links, as well as to strengthen our consular service in Brazil.
As the Foreign Secretary said in the House on 11 May, the strength of our embassy network is a signal to the world of our engagement and commitment to international peace and security. By strengthening Britain's diplomatic network in Brazil, we will ensure that the UK has the necessary reach and capacity to respond quickly and effectively when British companies need our assistance or British nationals are in danger. The extension and strengthening of our global diplomatic network, with staff who have the necessary abilities and diplomatic skills, are key objectives of this Government and the Foreign and Commonwealth Office have made funding these goals a priority.
Conventional Armed Forces in Europe Treaty
(13 years ago)
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The Minister for Europe (Mr David Lidington)
I would like to inform the House of measures being taken by the United Kingdom in relation to the Treaty on Conventional Armed Forces in Europe (CFE). These measures were formally announced in the treaty’s Joint Consultative Group in Vienna on 22 November.
Since December 2007, we have continued to fulfil our CFE treaty obligations, and attempted to exercise our treaty rights. We, our North Atlantic Treaty Organisation (NATO) allies and other states parties to the treaty have also made considerable efforts to engage the Russian Federation in negotiations aimed at finding a mutually acceptable resolution, but without success.
The Russian Federation has failed to fulfil its obligations under the treaty since December 2007 to provide information to the United Kingdom and other states parties and to allow entry to the Russian Federation in order to verify that the information provided was correct. The United Kingdom, alongside other NATO allies, has repeatedly called on the Russian Federation to return to full compliance with its treaty obligations. We and other NATO allies publicly stated at NATO summits in Strasbourg/Kehl and Lisbon that a situation where 29 states parties fulfilled their treaty obligations and one did not could not continue indefinitely.
As a result, alongside a number of CFE treaty signatories, the United Kingdom announced that for as long as the Russian Federation fails to fulfil its obligations towards the United Kingdom under the CFE treaty, we will cease fulfilment of our key obligations towards the Russian Federation. In effect the United Kingdom:
Will no longer provide information to the Russian Federation in the annual data exchange that takes place under the terms of the CFE treaty on 15 December;
Will no longer provide any notifications to the Russian Federation under the terms of the CFE treaty;
Will no longer accept inspections requested by the Russian Federation pursuant to the CFE treaty.
The United Kingdom remains committed to conventional arms control in Europe and will continue to fulfil our treaty obligations with respect to all other states parties to the CFE treaty. We will also continue to abide by and respect the numerical limitations on conventional armaments and equipment established by the treaty.
We remain open to negotiations with the Russian Federation should they demonstrate a willingness to address constructively the key issues which are currently preventing progress.
Youth Contract
(13 years ago)
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The Minister of State, Department for Work and Pensions (Chris Grayling)
I am pleased to announce today the details of a new Youth Contract, which includes a range of additional help for unemployed young people, building on the support already available through Jobcentre Plus and the Work programme.
This will include more intensive support for all 18 to 24-year-olds including additional adviser time and weekly signing requirements, extra work experience and sector-based work academy places, and a new wage incentive scheme delivered through the Work programme.
We are also making extra funding available for the Department for Education to support the most vulnerable NEET 16 and 17-year-olds into learning, an apprenticeship or job with training.
The package of support follows extensive discussion with businesses about the practical help Government can provide to make it easier for them to take on fresh talent. The new support is worth nearly a £1 billion over the next three years.
The Government’s offer to young people who are unemployed is based on a clear strategy for supporting young people into work whether they need short-term or more intensive long-term support, and ensuring that work pays.
This is supported by work experience, apprenticeships, sector-based work academies, the Jobcentre Plus Flexible Support Fund and an increasingly robust conditionality and sanctions regime. Young people who need more intensive support or who become long-term unemployed are referred to the Work programme.
The support we already have in place is helping many young people into employment, indeed our existing programmes will support 350,000 young people over the next two years. However, we recognise that the current economic situation means that some young people are still finding that getting work is not easy. This new support is designed to ensure that they are not left behind.
We know that different young people need different types of support, so this package includes a range of measures to ensure that every 18 to 24-year-old who finds themselves unemployed has the right support, at the right time, to help find a job and move into employment.
The Youth Contract brings together our existing support and also announces new measures, which include:
A total of 160,000 wage incentives to make it easier for employers to take on young people aged 18 to 24. A wage incentive will be worth £2,275, available as part of the Work programme. This will be more than enough to cover the cost of an employer’s National Insurance contributions for employing a young person for a year, and exceeds the recommendations by the CBI in their recent report on youth unemployment.
An offer of a work experience place for every unemployed 18 to 24-year-old who wants one, before they enter the Work programme. We are providing an additional 250,000 places.
Extra support through Jobcentre Plus in the form of weekly, rather than fortnightly, signing-on meetings; more time to talk to an adviser and a careers interview with the National Careers Service.
At least 20,000 extra incentive payments worth £1,500 each for employers to take on young people as apprentices.
A new £150 million programme for the most vulnerable NEET 16 and 17-year-olds to get them learning, on an apprenticeship or in a job with training.
The measures differ from previous schemes over the last decade, as they are focused on equipping young people with the experience and opportunities to gain long-term sustainable employment.
We are providing more support and more opportunities for young people but we also expect more in return. The signing regime will be more demanding of them than the current one. And those that drop out of a work experience place or a subsidised (or other) job without good reason will lose their benefits.
The Department for Work and Pensions components of the Youth Contract are Great Britain-wide, with Barnett consequentials for Northern Ireland. Apprenticeships and the Education Department component for 16 and 17-year-olds are England only with Barnett consequentials included in the package for Scotland, Wales and Northern Ireland.
House of Lords
Arrangement of Business
(13 years ago)
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Lord Shutt of Greetland
My Lords, as noble Lords will be aware, it is a firm convention that the House rises at around 3 pm on Fridays. There are 42 speakers signed up to speak today. If Back-Bench contributions are kept to six minutes then all the Bills scheduled for today should be able to receive a Second Reading. I think that I ought to say just a little bit more. If those times are exceeded, it could prejudice the third Bill. Therefore it is important for all colleagues to stick to those times so that we can conclude by 3 pm and cope with the three Bills.
Lord Campbell-Savours
My Lords, would it not be wise for the noble Lord to intervene on the sixth minute to help the House?
Lord Shutt of Greetland
My Lords, I am very happy for either myself or the duty Whip to intervene if we find that there is transgression, but in the end it is up to noble Lords to be self-regulating and I hope that they will be.
Lord Pearson of Rannoch
My Lords, the noble Lord may not be aware that when my Bill was put down for Second Reading I informed the Whips Office that it had never run for less than four hours and that I rather doubted that it would in the present circumstances. In those circumstances, perhaps the noble Lord would agree that his strictures should be addressed not so much to us as to those who table our business.
Baroness Noakes
My Lords, initially a third Bill was not scheduled for today; it appeared rather late on the list. It has always been clear that the first Bill would attract a large number of speakers. I mean no disrespect to those proposing the second and third Bills today, but the first Bill deals with a matter of national importance and I do not believe that it would be right to restrict the speeches on it.
Lord Grocott
My Lords, I support the 3 pm finishing time, but why is the Deputy Chief Whip so ferocious about the finishing time today when we are on Back-Bench business when time and again during this Session on days that government business has been considered the agreed rising times have been exceeded with apparently relaxed views by the Government? There seem to be dual standards going on.
Lord Shutt of Greetland
My Lords, perhaps we can deal with one thing at a time. Today is Friday and, as I understand it, there is a convention about rising at 3 pm. I think that the reason for that is that people want to know where they stand: they know what time their trains and aeroplanes leave and what time they hope to see the hills that the Bishop spoke about. Therefore I hope that we can stick to this time. People may well also have lined up evening engagements because they knew that the finishing time was 3 pm. I hope that we can proceed on this basis.
The noble Lord, Lord Pearson, mentioned another point. In organising the business there is a sense of taking account of the number of speakers lined up. If, ultimately, there is a late rush, these are the circumstances that we get into. I hope that we can proceed now with four hours and 50 minutes. That could diminish.
Lord Hughes of Woodside
I know that we want to get on with it but I want to draw the noble Lord’s attention to the fact that the Bill of the noble Lord, Lord Steel of Aikwood, ran over by 20 minutes to accommodate him. Why can we not sit late to accommodate these Second Readings?
Lord Low of Dalston
My Lords, in the interests of not making things any worse than they already are, would it not make sense if we made immediate progress on the business in hand?
European Union Membership (Economic Implications) Bill [HL]
(13 years ago)
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Lord Pearson of Rannoch
My Lords, I am truly grateful to all noble Lords who are to speak today. This is not the first time that your Lordships have debated this or a similar Bill at Second Reading. We did so last some four and a half years ago, on 8 June 2007, and we had similar debates on 11 February 2004, 27 June 2003 and 17 March 2000. The series would not be complete without mentioning 31 January 1997, when your Lordships’ House voted at Second Reading for a Bill that would have taken us out of the European Union altogether.
For more than 30 years, our political class has done its best not to talk about our membership of the EU. But the wheel of history turns and the question as to whether we should leave the European Union is now firmly back on the national agenda. But this Bill does not deal with that question—it is an altogether milder and more innocent little creature. It merely requires the Chancellor of the Exchequer to set up an impartial inquiry into the economic costs and benefits arising from our membership of the EU.
As presently drafted, the Bill suggests that the committee of inquiry should consist of seven people: two who favour our staying in the EU, two who favour our leaving, two who have no firm view, and an independent chairman. The Bill excludes from the committee anyone who is or has been an MEP or who is or has been an employee of the EU or any of its institutions. The thinking behind those exclusions is that no one who is in the EU's pay or in receipt of an EU pension that they could lose if they went against the EU's interests should sit on the committee. But the wording of the Bill may be at fault here, because I now understand that MEPs do not receive such a pension, so perhaps their experience would be useful to the inquiry. The Bill could be amended in Committee, if your Lordships think fit; it could also be amended to extend the date by which the inquiry must report to the Chancellor beyond July 2012. Noble Lords may feel that that does not give it quite enough time. Be that as it may, the Bill requires the Chancellor to give the inquiry’s report to the Comptroller and Auditor-General and lay it before Parliament with his views attached. The Bill goes no further than that. Of course I hope that the ensuing debates in your Lordships' House and the House of Commons would increase the public pressure for a referendum on our EU membership, but that remains to be seen. It will depend on what the inquiry comes up with. I submit that the cost-benefit analysis proposed by this Bill is long overdue, and that it is made even more urgent by the long-foretold crisis in the eurozone.
I dare to hope that the Government will support the Bill and that the Minister will not repeat the misconceptions that all Governments have steadfastly repeated in all our debates so far. Perhaps I could sum them up now and warn the Minister that I shall press him to justify them if he intones them yet again today.
The first is that a cost-benefit analysis is unnecessary because the advantages of our EU membership are so obvious that it would be a waste of time and money. On the money point, I note that the Stern report on climate change cost a little over £1 million. Surely that is a rather more complicated subject than the simple economic facts of our EU membership. So we are not talking about an expensive inquiry, especially when set against the colossal costs of our membership, to which I shall return.
The second misconception is to suggest that the 40 per cent of our exports that go to clients in the European Union, supporting some 3 million of our jobs, would all somehow be jeopardised if we left the political construct of the European Union. I can only assume that the bureaucrats who invented that one did so because they simply do not know how international business actually works. I repeat that nobody trades with the European Union, except perhaps the Mafia. We have hundreds of businesses exporting to clients who happen to be in EU countries, and there are hundreds of businesses in those countries exporting to us. This two-way traffic benefits from free trade, but none of it needs to be affected if we resile from the treaties of Rome. There are good commercial reasons for this. First, we have some 3 million jobs exporting to customers in EU countries, but there are 4.5 million jobs in those countries exporting to us. So collectively they need us more than we need them. We are, in fact, their largest client. So not even the Martians in Brussels would attempt any retaliation if we left the EU as such, and the Martians would face other realities if they tried anything so silly. The World Trade Organisation has brought the EU’s average external tariff down to below 1 per cent and would also prevent any retaliation. The EU has free trade agreements with 63 countries worldwide and is negotiating a further 63—some 80 per cent of the countries in the world. So we, as its largest client, could have one too, as good or better than the one enjoyed by Switzerland, which is not in either the EU or the European Economic Area.
Switzerland is, of course, smaller than us, but its economy is very similar to ours and it exports three times more per capita to clients in the EU than we do. Looking at it the other way round, would the French stop selling us their wine or the Germans their cars just because we were no longer being bossed around by Brussels? Of course not.
The Government do not have to take my word for it. “Channel 4 News”, in its “FactCheck” programme on 1 November, revealed that economists at Southbank University, who first estimated that 3 million jobs depended on our trade with Europe, never said that any would be lost if we left the EU. The programme ended with the following quote:
“According to the people who did the research, talk of mass redundancies if Mr Cameron goes for a European exit strategy is just scaremongering”.
So please can we hear no more about 40 per cent of our trade and 3 million jobs being a reason to stay in the EU and not to have the inquiry proposed by this Bill?
The third misconception is that if we were no longer in the European Union our exporters to European markets would still have to obey all its rules and our Government would not take part in their making—and that this is somehow a frightening prospect. Those who peddle this one assume that we would stay in the European Economic Area, like Norway, which we would not. Our position would be like that of Switzerland, or better; we would have our own arrangements for free trade, free movement and so on. Our exporters to clients in the EU would of course have to meets its requirements, as do exporters from every other country on the planet which exports to the EU. That is really no big deal. But only 9 per cent of our GDP goes in exports to clients in the EU, while 11 per cent goes in trade with the rest of the world and 80 per cent stays right here in our domestic economy. So the 91 per cent or so of our economy which at the moment does not go in exports to clients to the EU would be set free from the heavy burdens imposed by Brussels. That begins to sound like quite a good deal to me. I will come to what those burdens might be, but conclude the third misconception by saying that I hope that the Minister will not repeat it today.
A fourth misconception was put forward by the noble Lord, Lord Howell, at Questions last Tuesday at col. 942, when he claimed that our influence in international trade bargaining is greater from within the EU than it would be if we had our own seat at the WTO. To answer this, I can do no better than to quote from a brilliant new publication by Civitas of Mr Ian Milne’s Time to Say No. On page 15, he says:
“British influence at the WTO is sometimes claimed to be stronger as part of the EU Single Market than it would be if the UK spoke and negotiated for itself in WTO councils. That claim has validity only in so far as British commercial and geostrategical interests coincide with all or a majority of its EU partners—all 26 of them. When British interests do not so coincide—for example in the regulation of the City, or in agriculture and fishing—it follows that British influence is weaker than it would be if the UK were outside the EU and able to make its own decisions at the WTO. Since the structure and pattern of UK global trade is quite different from that of its EU partners, there is no a priori reason to suppose that, on balance, British interests and those of its EU partners coincide more often than they diverge”.
The proposed inquiry would have to examine what I have called the four fundamental misconceptions about our economic relationship with Brussels and form its own opinion. I hope that it would also look at a number of very short briefing notes by Mr Ian Milne on the www.globalbritain.org website, which I have extolled before to your Lordships. I declare an interest as a founder and supporter of Global Britain. For instance, I hope that it would read briefing note No. 70, which shows how customs unions such as the EU have become redundant in the modern world; No. 68, which analyses The Non-existent “Benefits” of Belonging to the EU Single Market; No. 36, entitled Cherry-Picking, which analyses in two pages the differences between the European Free Trade Association, the European Economic Area and the Swiss-EU trading relationship; and No. 69, The Coming EU Demographic Winter. The last of those is rather like being shown the film “Titanic” before you had got on it, and gives another reason why so many of us want to get off. Dare I ask the Minister whether he or any of his officials have read these and other briefing notes on the Global Britain website; and if not, whether they will do so, and meet with Mr Milne if they disagree with any of them? I am of course happy to offer them lunch.
The inquiry will also have to examine the range of figures put forward by our Eurosceptic movement of the annual cost of our EU membership, mostly from EU overregulation. These, as summarised in Global Britain briefing note No. 65, average around 6 per cent of GDP, or £90 billion per annum—equivalent to £1,500 per person in this country. It is interesting that a similar figure was put forward by the European Commission in 2006 and that the highest estimate came from the Treasury itself in 2005, under the signature of a Mr Gordon Brown, entitled Global Europe: Full-employment Europe. The Treasury estimated the cost of our EU membership as follows: EU protectionism, 7 per cent of GDP; competition gap with the United States of America, 12 per cent of GDP; EU overregulation, 6 per cent of GDP—broadly in line with our Eurosceptic studies—and transatlantic barriers to trade, 3 per cent of GDP. Those four categories add up to 28 per cent of GDP. Mr Brown did not say whether there might be some degree of overlap in that but even if we are generous and divide it by four we still come to about 7 per cent of GDP, or around £100 billion a year today. Anyway, I suppose that the inquiry will want to interview Mr Brown and the officials who wrote this report.
There are other areas which I hope it will examine. What, for instance, is the cost to our economy of the decimation of our fishing industry? Would it not be useful to have an accurate figure for the extra amount that each family in this country pays for the cost of food? That has been widely put at about £1,000 per annum per family, but the world price of sugar is now apparently higher than the EU cost. So there is no doubt that this figure fluctuates, but it would be useful to be clear about it.
By the time the inquiry reports we will have a better idea of whether we are going to get back the £12 billion that we have borrowed to bail out the euro—I fear not, but time will tell. Then there is a big one, and talk about being flogged by a dead horse: by the time the inquiry reports, the damage done to the City of London and our financial services elsewhere by Monsieur Barnier and his cronies in Brussels will be clearer than it is today. Is it not simply grotesque that an organisation which has not had its own accounts signed off by its internal auditors for 17 years, there being no external audit of how our funds are wasted, should now be telling us how to order our financial affairs? I think “grotesque” is accurate.
Finally, there is one area in which there is no room for doubt: the amount of cash that we send to Brussels every year. Please remember that our expenditure cuts last year came to some £6.2 billion. The Pink Book came out this week, revealing that we sent £18.5 billion gross to Brussels last year, of which it was pleased to give us back some £8 billion for projects designed to improve its image, such as agriculture and regional aid. That leaves a net cash contribution of some £10 billion—£10,340,000,000 to be precise—which comes to £28 million net cash every day, never to be seen again, with perhaps none of it spent in our national interest.
To put that figure into perspective, £28 million pays for the salaries of 940 nurses at £30,000 per annum each. So every day we throw away, thanks to our EU membership, 940 nurses—or policemen, or soldiers, or any other public servant you care to mention.
Yesterday in your Lordships' House we had a well-informed and moving debate on the latest report into the future of social care in this country: the care of our elderly, infirm and dying, and of our learning disabled. The report suggests that we should spend another £1.5 billion to meet our obligations to these most vulnerable people in our society, but the Government are not sure that we can afford it. Yet we are sending £10 billion in net cash to Brussels. It is against that sort of background that I suggest the inquiry envisaged by this Bill should be set, and I beg to move that this Bill be read a second time.
Baroness Noakes
My Lords, if I have a sense of déjà vu in approaching today's debate it is indeed because we have been here before, as the noble Lord, Lord Pearson, whom I still like to think of as my noble friend, has already reminded us. I supported his last Bill and I support him today. The previous debate on a Bill of his was handled by a Foreign Office spokesman and I am very pleased today that the Government have recognised that this Bill is, first and foremost, about the economic analysis of our membership of the EU. I look forward to my noble friend Lord Sassoon responding for the Government later. I hope that when my noble friend winds up, he will confirm that an understanding of the costs and benefits of our membership of the EU is crucial. It has to be in the public interest that the debate that is already happening about our future in the EU is well informed.
The noble Lord, Lord Pearson, has an immaculate sense of timing in bringing forward his Bill, with the turmoil that is happening in the eurozone. The eurozone is not the subject of this Bill, but it is inextricably linked with the EU. President Barroso has been telling us frequently that the euro is an essential part of EU membership. The euro was meant to be the crowning glory of the European project, but it is now threatening not only its own members, as Germany found out this week with a failed bond auction, but the rest of Europe, which includes us, and the global economy.
The euro was flawed at the outset. It was constructed on two downright lies: first, that the eurozone countries met certain economic tests; and, secondly, that their economies were genuinely convergent. The euro was then flawed in its operation. The European Central Bank delivered the German economic preference for low interest rates. Ireland and Spain have paid the penalty for this one-size-fits-all madness with property booms that have bust their economies, and now the euro is flawed in its inability to deal with failure. The foolish architects of the euro designed it with no emergency exits. Germany and France, as self-appointed guardians of the euro, are still ducking the real issues, and so the profligate, unreformed, book-fiddling Greece and Italy have nowhere to go and suffer the indignity of unelected officials now running their countries.
Fortunately, we have our opt-out. I have absolutely no doubt that our country would be in a very much worse economic position had we become a part of the eurozone. Even though we have kept out of the euro, there is still a centrifugal force in the EU that keeps sucking us in. Mr Blair saddled us with the Social Chapter. That, together with the inexhaustible stream of single market directives, has resulted in our businesses being weighed down by rules and regulations that choke the life out of them. We ceded significant powers when the Labour Government colluded with the rest of Europe and allowed the constitution to be dressed up as treaty changes, thus denying people a referendum, and I am not proud of my party’s failure to rectify that. Brussels has used the recent financial crisis to pursue policies that are naked attempts to ruin the UK’s successful financial services industry. Our Government have woken up to that, but it may be too late.
The noble Lord, Lord Pearson, has already explained the existing analysis of the costs and benefits of the UK’s membership of the EU. Suffice it to say that the best the studies ever show is that the effects might be marginally positive, but most show the disbenefit rising to as much as a quarter, as the noble Lord pointed out. Since the trend in Europe is of an increase in regulation, the trend will be for that analysis to get worse over time for the UK.
The main point for those of us on this side of the argument is that it is pretty clear that there is a cost of staying in the EU, that the cost is significant and that the benefits are limited. Those on the other side of the argument tend to avoid being drawn into the specifics of cost-benefit analysis. They tend to rest instead on rather broad, often irrelevant or incorrect, assertions of benefit, and the noble Lord, Lord Pearson, dealt with some of them. I very much regret that even Conservative Ministers in the coalition Government do this, although I hope my noble friend the Minister will not do so today.
I am not advocating today, as the noble Lord, Lord Pearson, is, that we withdraw immediately from economic membership. I note in passing that the committee that this Bill would set up is entitled a “committee of inquiry” into withdrawal from the EU, although it is very clear that the matters to be covered as set out in Clause 1 deal with the costs and benefits of membership, so I think that the noble Lord has indeed prejudged the outcome of the inquiry by calling it a withdrawal study. I would like to see whether there is any mileage in a Europe in which we can assert more positively the rights of nation states to run their own affairs. We have to be able to have less Europe in our daily lives, not more.
Until recently, I had some hope that a way could be found for the UK to participate in Europe on a more voluntary and less extensive basis. I still think that it is worth a try but I am becoming less optimistic. In particular, the turmoil in the eurozone has emphasised that if the euro survives—and that is now a big if—it seems likely to involve more central control within the eurozone. The prospect of caucusing within the eurozone will become a very real threat to our interests, and I firmly believe that we should remain outside that. So, ever closer union within the eurozone means ever more likely divorce from the EU for us. On this basis, it would be wise for the Government to prepare for all eventualities in our relationship with Europe. That is why I support the Bill.
Of course, there ought to be no need for the Bill. The Government are aware that the EU is not popular, that three-quarters of the population want a referendum on it and that over half think that we should withdraw. The debate is already out there and the Government should positively want to have good-quality information guiding that debate.
There are some things in the noble Lord’s Bill that could be improved in Committee, but for today I hope that the House will give the Bill a Second Reading and that the Government will give it their full support.
Lord Davies of Stamford
My Lords, I congratulate the noble Lord, Lord Pearson, on bringing his Bill forward and on getting his Second Reading today. I disagree with him on European matters almost the whole time—I think that many of his arguments are very unconvincing and his plans for the future of this country would be disastrous—but nevertheless I genuinely admire his persistence and ingenuity in pushing his, to my mind, very misconceived views. That is what democracy is all about, and I hope that he will at least take that tribute. He will not get any more tributes from me in the course of my remarks; I thought that we had a series of unconvincing and indeed sometimes specious remarks from him, so I decided to throw away my originally conceived speech and spend my few minutes trying to set out where I think he has gone very badly wrong.
It was quite fatuous to suggest that the City of London was at threat from our membership of the European Union when the City’s enormous international prosperity has coincided with our EU membership.
On fish, I have to say to the noble Lord that fish have an unfortunate habit of not recognising national frontiers. Therefore, if you share a continental shelf with other coastal states, you have to have agreements about fish, because if one of those states overfishes then everyone else’s fishery is equally destroyed. If we left the European Union’s common fisheries policy, the very next day we should have to set up some international agreement under which we established quotas, and in order to do that we would have to set up the scientific machinery to advise on what the quotas ought to be. In order to ensure that the quotas were effective we would have to set up some enforcement procedure and some penalties—in other words, we would have to recreate the Commission and the European Court of Justice and the whole structure relating to fish. It does not seem to be very intelligent to leave a union one day and the very next day to have to set the thing up again in a new fashion.
The noble Lord seemed to think that we could save a lot of money by leaving the common agricultural policy. He falls into two errors there. The first is the assumption that we ourselves would not wish to support our own agriculture, which is unlikely. If we did support it, we would have to deduct the costs of doing that from his proposed savings.
The second error is something I would like him to reflect on for even longer: if we had left the European Union but remained in the single market in some way, as Switzerland has done—I think that that is what he wants to do—we could not avoid accepting agricultural imports from other EU states. They would never agree, and never have done, to a single market involving purely manufactures and services and not agricultural products. Up to now they have set up commercial agreements with countries such as Switzerland and Norway that have a higher level of agricultural protection, so the problem has not arisen, but with us they insist on a free market in agricultural products. If we did not support our farmers and the continentals and the Irish went on with the CAP, we should find that our farmers were at an enormous competitive disadvantage. They would be completely undercut by competitive products from the EU where a large part of the fixed costs of farmers is being met by various forms of subsidy and payment. The noble Lord’s formula there would lead the devastation of the British countryside.
The noble Lord mentioned a net cash figure of £10 billion. That is less that 1 per cent of GDP, which has always seemed to be to be a pretty small subscription for the enormous benefits of the single market, which I will come on to in a moment, and of our being at the decision-making centre of it. I have to tell the noble Lord that a lot of that money has to go to regions that are net beneficiaries. The country as a whole may pay out cash of £10 billion, but I am not sure that the part of Scotland that he lives in is not a net beneficiary—I suspect it is. Many other parts of the country would have to be compensated for the money that they were losing, so that would be a burden on, for example, the people of the south-east, who may think that at present they get the benefit of the £10 billion that he is talking about but they certainly would not. That, again, is very misconceived.
Even more importantly, some of that £10 billion goes to causes that surely we continue to want to support. Is the noble Lord suggesting that we should not be spending money on the neighbourhood policy and the stability of countries in north Africa and the former Soviet empire—Georgia and so forth? Does he want to cut that? If not, we have to pay that anyway. What about the EU’s overseas aid policy? Presumably, if we pulled out of that budget, we would still want to spend that money on those poor countries, or is he suggesting that we should pull out from supporting starving countries like Ethiopia? It is a thoroughly flawed argument, if I may respectfully say so.
Finally, but very importantly, he misunderstands entirely the important distinction between current business flows, which we might be able to preserve through some trading agreement with the EU, and investment in new capacity and new job creation. For example, if you speak to the three Japanese automotive companies that set up in this country, they should not have dreamt of setting up here if we had not been part of the EU and indeed part of its decision-making structure. We were going to be involved in any discussions about the future of the car industry, health and safety, consumer protection measures, international trade measures, environmental measures or whatever it might be. He would find exactly the same if he were to speak to Tata, which now owns Jaguar Land Rover; it would not have dreamt of moving into this country if that had not been the case. Similarly, no one would dream of setting up in the pharmaceutical industry in this region of the world without being able to benefit from the one-stop registration policy that you get if you are part of the European Union. An enormous number of jobs depend on decisions that would not have been made if we had not been part of the European Union.
On the other side of the coin, it would be at zero. I challenge the noble Lord to cite a single case of someone who would have invested here if we had not been in the European Union but did not invest because we were. If only one job was created, that would be infinitely greater than zero—
Lord Davies of Stamford
I will give way to the noble Lord when I have finished my sentence, if I may. Even one job would be infinitely greater than zero, so if you have a balance on which there is a positive number on one side and zero on the other, the result that the noble Lord gets from his commission inquiry will be quite clear.
Lord Pearson of Rannoch
My Lords, I will come back to at least four of the noble Lord’s points in my summing up. As he has challenged me on the question of investment in this country, is he aware that our UK Trade and Investment agency does not list our membership of the European Union among the eight top reasons for investing in this country? It is not mentioned at all.
Lord Davies of Stamford
If that is the best that the noble Lord can do by way of argument, to find a bureaucracy that does not mention the European Union in some handout, then I am even more confident of my position.
I do not want to take more than my fair share of the time. I have dealt with a number of the noble Lord’s points. As he can see, I disagree with him profoundly on the arguments but he will be pleased that I do not disagree with him about the Bill. I think that it is an excellent idea, and am quite confident that any such inquiry would come to the conclusion that the facts would indicate.
Baroness Falkner of Margravine
My Lords, I, too, start by paying tribute to the noble Lord, Lord Pearson of Rannoch. He is indefatigable in pursuit of making our country think again about its role in the European Union. It is right that we periodically debate the big picture of our relations with our neighbours, our allies in our relationships with the rest of the world and, of course, our largest trading partners, the European Union.
The Bill is a modest measure on the face of it, but of course has profound implications. The committee that it calls for is intended to merely state the economic facts so presumably, and despite the lessons of the last few years in terms of the global economic crisis, we are still to have a blind faith in economists and economic theory as the basis for decisions which will have the most significant impact on our country's welfare for both our and future generations. That is quite astonishing.
I will return to the broader case in a few minutes. Let me concentrate narrowly on the measures in the Bill right now. The composition of the committee is rather fanciful: two members for; two against; and three neutral. One wonders which planet we will find the three neutrals from. The idea that we might be able to find persons of exceptional calibre—potentially economists, businesspeople, academics or lawyers—presumably of considerable sagacity and professional experience, who will have no opinion on the biggest single issue of their generation is slightly cloud-cuckoo-land, is it not?
The question also arises of the representation of the views of people from other nations on this committee. I appreciate that the United Kingdom Independence Party obtains a rather limited mandate in elections in three of the four nations of the United Kingdom. In Scotland, it obtained under 1 per cent of the vote, in Wales 2.3 per cent and in Northern Ireland just 0.6 per cent. It should infer from this showing that the views of these nations do not chime with its sentiments for withdrawal from the EU. I wonder if the noble Lord might be able tell us in his concluding remarks how the committee might reflect the views of people in Scotland, Wales and Northern Ireland on his proposals.
My final point on the Bill relates to the need for it in the first place. If a narrow cost-benefit analysis is what the noble Lord believes should form the basis of big strategic decisions that states make, then I fear that his interpretation of statecraft is rather different from that of these Benches. A fundamental of international relations over centuries has been the recognition that the national interest changes over time. It needs to account for a country's security needs, its geographical position in relation to its neighbours and, above all, its understanding of the world around it, against a backdrop of history. If all we need is a quantification of costs and benefits, we can obtain that in numerous library papers, think-tank reports and business analyses. We would not need a committee to tell us the answers. The noble Lord himself is prodigious in obtaining information on these matters at considerable effort and cost.
The evidence already tells us that the economic case is persuasive. The UK is part of the world’s largest single market in GDP terms: some £10.5 trillion in 2009, with 500 million consumers interacting without tariffs. If the internal dynamics of so many people trading is not sufficient, it also attracts benefits in the form of investment flows into the UK. Half of the overall stock of foreign direct investments in the UK now comes from EU member states. This investment has been augmented through our membership by an increase in non-EU FDI as well. That has been growing since the implementation of the single market, probably as a consequence of our membership of the EU. If we look at the US share of inward investment stock—some 27 per cent of the total in 2007—it is estimated that a significant proportion of this has come here because we are a hub into EU markets.
The implications of withdrawal would immediately be felt in a drying up of external investment. Why would a large corporation wish to base itself in the UK, when Ireland offers a considerably lower corporate tax rate, where skills levels are at least equal if not superior, and where English is spoken as well? What of FDI from the EU itself? Those companies own £315 billion of stock in the UK, which is about 50 per cent of total UK inward stock. Would they still feel the climate was conducive to a presence in the UK if we were no longer part of a common standards and regulatory regime?
At the current time of such singular austerity, it is also surprising that UKIP appears unconcerned about the impact on employment. The House of Commons Library research papers estimate that 3.5 million jobs, 10 per cent of the UK's workforce, are linked to the export of goods or services to the EU. So UKIP’s message would be that we must have our splendid sovereignty, and if all it gives us is an unemployment rate of some 20 per cent, well, that is no matter.
However, the case for sovereignty is also mistaken. It is collaboration with partners that UK companies want. Ask BAE Systems what European collaboration means for research, development and jobs. Would we have played a part in Airbus or the Eurofighter from our splendid isolation? EU membership gives us greater clout through collective action. In the geopolitical sphere, this becomes all the more important. Does the noble Lord believe that our membership of the UN Security Council would be sustainable today if we were not, with France, speaking for the EU? Could we have mounted the action in Libya without support from all the EU countries which worked alongside us? Could we take part in the quartet on Israel/Palestine if we were outside? Could we be part of the E3+3 negotiations on Iran without EU membership? Would we be capable of effective action on the environment without working through the EU, or have the clout to negotiate beneficial trade agreements on our own with some of the most important emerging economies outside the EU?
I could go on and on, but we will have considerable time when the Bill comes to Committee, so I will stop here. I look forward to pointing out the manifold benefits of our membership of the EU as we go on.
Lord Bilimoria
My Lords, we are caught between Utopian ideology and harsh reality which, throughout the eurozone crisis, has yielded to illogical, irrational arguments and behaviour. Just this week we have had President Barroso imploring Europe to unite. In a way, he is saying, “United we stand, divided we fall”. We have a constant clamour for whether we should have an “in or out” referendum. We have the noble Lord, Lord Heseltine, saying that we will ultimately join the euro. One of the best decisions this country made was not to join the euro.
We have people calling for and predicting a two-track euro, with the inner core consisting of France, Germany and a few other countries, with an outer core of the PIGS et al, and then you have others saying that there will be a shrunken eurozone with the PIGS et al going back to their own currencies. Then you have those saying that the euro will disintegrate altogether, which would have a catastrophic domino effect around the world. Then you have everyone putting pressure on Germany to save the euro, including our own Prime Minister and Chancellor, while just this week the Bundesbank had to pick up 39 per cent of the German bond sale after commercial banks bought just €3.6 billion of it. What a lot of confidence we have in Germany. We have German Chancellor Angela Merkel saying that Germany would be prepared to give up a piece of national sovereignty in order to survive. Then she said:
“No one should take it for granted that there will be peace and affluence in Europe in the next half century … If the euro fails, Europe fails”.
We are just refusing to accept the elephant in the room. The European project, which has been so brilliant, and instrumental in keeping the peace and promoting free trade and the free movement of people between the countries of the European Union, has pushed the envelope too far with the creation of the euro. We talk about countries being run by technocrats, but to satisfy the Utopian dream of our Eurocrats—of creating a United States of Europe—we stand where we do today.
We may have a European Parliament but we do not have a federal Europe and we need to wake up to this. I have said from day one that the only way that the euro can work is for us to have complete political, fiscal and emotional union. That means being an India or a United States of America, which have true federal systems and where the centre is in control of currency, interest rates and national taxes. That is a fiscal union. Most importantly, the centre is responsible for the defence of the united federal country. A true fiscal union needs to have a central bank as a lender of last resort. The European Central Bank has shown itself to be completely powerless. It is the IMF that we must rely on, although the IMF showed itself to be useless in the financial crisis three years ago and needs to be reformed.
Being a federal system means a complete surrender of any sovereignty by the states that make up these countries. Can we realistically see that ever happening in Europe? If we are relying on political will to make this happen, we are fooling ourselves. With the euro, a one-size-fits-all approach cannot and does not work. You cannot have countries and economies as extreme as Germany and Greece under one exchange rate and one interest rate: they will never be in sync at any one time.
Now is not the time to get out of Europe. I am a supporter of Europe. Now is the perfect time for Britain to lead in restoring the European Union to what it should be: a trading bloc of goods and services, and of people with shared principles and values. However, even with those shared values, the European Union has lost the plot. Day after day we are being hampered by European regulations that are stifling our businesses and removing the flexibility of our labour force.
The noble Lord, Lord Pearson, suggests that a committee should be formed to perform a cost-benefit analysis of being in or out of Europe. Surely such a committee is unnecessary. Surely the Government carry out this cost-benefit analysis every single day. I am confident that the Minister, in his response, will give us this cost-benefit analysis in detail in this House today.
We have huge strengths in Britain. We are by far the most international country in Europe. We are looked upon as the gateway to Europe. That could be because we have London, the most global world city and the greatest of the great cities, because of our financial markets or because of the English language. We are not to be led by Germany and France. Kipling’s words were:
“If you can keep your head when all about you are losing theirs”.
In spite of our awful financial predicament, we have the confidence of the global financial community with our interest rate yields, which are better than Germany’s, and our AAA rating.
Trying to keep the euro together in a shrunken eurozone, or trying to keep the whole project together, is just postponing the inevitable. Logically, the euro cannot work without full fiscal union and I cannot see that happening in Europe. Historically, it has never happened. We need to work towards an orderly, staged shrinking—and perhaps even eventual dismantling—of the euro and, most importantly, redrawing the European Union and going back to basics to make it what it is meant to be. We have to wake up; these are dangerous times. Even the Governor of the Bank of England is saying, “I don’t know what’s going to happen tomorrow”. Will we go back to when Her Majesty the Queen, on a visit to the London School of Economics during the financial crisis, asked, “Why did nobody notice this?”?
To conclude, as a country, we are best when we are bold. That is the spirit of this country. Now is the time for Britain to take leadership. It was not many years ago that Britain was referred to as the sick man of Europe. Today we should be seen as the sensible man of Europe. The euro is not only underwater but dead in the water. I quote:
“The era of procrastination, of half-measures, or soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences”.—[Official Report, Commons, 12/11/36; col. 1117.]
Those were the words of Winston Churchill in the House of Commons in 1936. We have to wake up and face the consequences.
Lord Ryder of Wensum
My Lords, I congratulate the noble Lord, Lord Pearson, on producing the Bill and, while quibbling with many of the details, I applaud the principle. For years, the noble Lord has displayed consistency over Europe, always coupled with courtesy and patience in your Lordships’ House.
We require an audit of the costs and benefits of our place in the European Union. Europe is in economic chaos, chiefly of its own creation, as my noble friend Lady Noakes underlined in her forensic speech a few minutes ago. Almost 20 years ago, the Maastricht treaty was supposed to restrain public spending in member states. However, in no time Greece joined the eurozone under entirely false pretences as every member state ignored the Maastricht conditions. Before long even the Germans fractured the so-called stability pact. What was good for this core cat became better still for the peripheral PIGS. The European project may have appeared desirable, if not essential, at the outset, but it was always Utopian, as the noble Lord, Lord Bilimoria, has just reminded us. I have always shared Macaulay’s view on Utopia. He said that he would prefer to own “an acre in Middlesex” than “a principality in Utopia”.
In passing, I observe a slight Utopian resemblance between the European project and Marxism. When the failure of their creed is pointed out to Marxists, they invariably respond by claiming that it has never been tried in its correct form. The same excuse is offered by proponents of the European project. Day after day, as the project dithers to a halt, we hear that the absence of fiscal and even political union caused the eurozone breakdown. Now I read that even our Prime Minister and Chancellor are in favour of fiscal union. I wonder whether they know what it entails. Fiscal union requires a centralised treasury, shared tax and spending, common sovereign debt, huge transfers of cash from north to south and, of course, the ECB to act as lender of the last resort. I expect the Prime Minister and Chancellor are confusing fiscal union with what the Commission and Mrs Merkel call a stability union, whereby stronger discipline and convergence will be imposed in the European Union. They say that member states would be obliged to submit draft budgets to Brussels before they are introduced to sovereign Parliaments. This is part one of the plan to prolong the life of the eurozone. However it will not survive, if ever it exists, because the debt markets will behave like the currency market did over the narrow band exchange rate mechanism 19 years ago.
Other proponents of the euro, or the project, expect the IMF to act as the cavalry. They overlook the fact that IMF action is always locked into budget deficit reductions, monetary policy and interest rates. However, Greece cannot respond like a sovereign nation because it lacks powers over monetary policy and interest rates. Nor can Greece devalue its currency. Greece and Italy, as well as other countries, belong to the wrong currency. For them, austerity is insufficient. Devaluation is a necessity. Their currencies are misaligned by as much as 40 per cent. Nor can the structural imbalance be rectified by debt deflation, even if the Germans chose to reflate themselves. The Greeks and Italians should secede from the euro in a managed manner. The short-term shock to Europe will be better than the inevitable longer-term disaster.
Parents of the euro promised greater economic stability. How could this possibly be achieved when each economy, as has been underlined in the course of our debate, advances at a different rate and in a disparate direction? The euro has generated uncertainty and volatility, producing new and perilous—yes, perilous—divisions across the continent. There is no credible historical example of a currency union without political union and no precedent for a currency lacking a lender of last resort. The eurozone experiment resulted from political leaders failing to grasp the essence of economics. Now the greatest danger to the continent comes from quack potions designed to keep the euro alive. Better an orderly break-up now than a disorderly one later. No wonder the chairman of the China Investment Corporation refuses to offer assistance to the EU as long as it persists with the currency as well as outdated labour markets and welfare systems. It is against this background that the noble Lord, Lord Pearson, is entitled to demand answers to the question posed in his Bill. I go back, if I may, to Macaulay, who declared:
“A single breaker may recede; but the tide is coming in”.
In time it will wash away the Utopian euro referred to by the noble Lord, Lord Bilimoria, and myself earlier in my speech.
Lord Empey
My Lords, since I came to your Lordships' House the issue that seems to get everybody’s blood up more than anything else is Europe. It is hard to plot a middle course but it seems that we have not resolved the arguments of the 1970s, which continue apace. I have no doubt that after his gruelling visit to the Gulf states this week, the Minister looked forward to nothing as much as three or four hours of us going on about Europe. I knew that that would bring his week to a perfect end.
I hope that I will be able to stay for the wind-up but I should say at the outset that the European Union has benefited my region to an extent. Indeed, I pay tribute to it for the money it gave to the fund for the peace and reconciliation process in Northern Ireland. It gave that money on exceptional terms and it was greatly appreciated. However, I hear people continuously complaining about this or that European regulation, and in many cases rightly so. The question one has to ask is why and how these regulations and directives are being made. They are being made because the successive Governments we have sent to negotiate in Brussels have put their hands up for all these directives and regulations. The Commission does not manufacture them. It is taking these decisions because we have agreed in principle to allow it to do so. That is where I believe the core of the problem lies. We can demonise the Commission, and rightly so in many regards, but it is taking those decisions because we agreed to the treaties that allow it to do so. The Commission is not acting irregularly; it has the authority to take those decisions. That authority—in many cases, regrettably—has been given by successive Governments and Parliaments because we are in the European Union as the result of a referendum.
I agree with the noble Lord, Lord Bilimoria, that the essence of this Bill is about providing a cost-benefit analysis. Like him, I had assumed that that would be an ongoing piece of work. If you are a member of any organisation, whether that be a golf club or whatever, every year you weigh up the balances of remaining a member. I had assumed that the Government were doing that consistently. I have no doubt that the Minister will confirm that when he winds up. How did we get to the present position? The idea of a wide, powerful, large single market is very attractive; there are geopolitical, emotional and other good reasons for having it. I have no objection to any of those things but I increasingly object to the suffocation of our initiative and enterprise by a plethora of rules and regulations which are being imposed on us.
As regards the single currency, people are focusing on Germany. The Germans connived and conspired with the European Commission to fiddle the books when the euro was introduced. It was perfectly obvious to everybody that the Greek, and perhaps the Irish, Portuguese and Spanish economies, were not on a par with those of northern Europe, but the Germans fiddled the books for political reasons. That is what is poisoning the whole system, which is dominated not by economics but ultimately by the politics of a small elite who believe—they are perfectly entitled to do so—that we are aping the United States and effectively becoming a single state in all but name. That fiddling of the books by the Germans in particular has been done for political reasons. One hears Angela Merkel complaining but the fact is that she and her predecessors have created this situation even against the advice of their own central bank, which made it clear that the other economies were not at the stage of development that allowed them to have a single currency. I know from our neighbours in the Irish Republic that the single interest rate led it into the mess that it got into because it caused a flood of cheap money. The interest rate was kept low to allow the Germans to rebuild their industry and become more competitive but at the same time it destroyed the weaker economies that should not have been in the eurozone in the first place. We can see that the generally good idea of co-operation with one’s neighbours, which I fully support, has become corrupted.
The whole question of investment has been raised by a number of noble Lords. I have tried to seek investment in other places. The single market is an attractive proposition but having the right labour force and cost base are far more attractive. However, our membership of the European Union pushes against us in those regards as it is raising our energy costs and other regulatory costs. Therefore, the costs and benefits are very hard to judge.
Trade imbalances are the other reason for this fundamental difficulty with the eurozone. If you keep on selling less than you are buying, sooner or later there is a problem. We have that problem now. We should be developing our economies and developing stronger relations with the Commonwealth, with its balance of developed and underdeveloped economies. We should be looking outwards and seeking trade in a much more aggressive manner. Despite our efforts in Iraq, we are already being outtraded by other countries which did not lift a finger to help it. The same will happen in Libya.
I hope that the Government will look more rigorously at how we can promote our trade because the fundamental imbalances in our trade are causing the instability in Europe. As long as you are a debtor, you will always find the person to whom you owe money will follow you up and demand proper payment in due course. I have little sympathy for the Germans because I believe that they have brought this on themselves; and brought it on us.
Lord Risby
My Lords, I add my warm congratulations to the noble Lord, Lord Pearson of Rannoch, on the sheer timeliness of this debate. Whatever one’s view of the European Union is, as we survey it today it is certainly not a happy picture. We have a crisis of legitimacy; the rise of disconnect of the peoples of Europe from the institutions of the European Union; a collapse in economic growth, including now in Germany; a lack of competitiveness, big demographic challenges; high unemployment and high budget deficits and debts right across the European Union. I entirely agree with my noble friend Lord Ryder that it would appear that the euro is now fragmenting. I think that this is inevitable and, ultimately, desirable.
As we look at austerity in our own country, it is fair that any sizeable contribution by the British taxpayer to any external organisation should be looked at carefully. We also need to look at whether burdens on our businesses are generated from elsewhere, such as the European Union, or whether they are domestically generated or a mixture of both. That is certainly true, but it is also fair to say that in any objective assessment of our relationship with the European Union, we have to look at benefits that are difficult to quantify. For example, how do you measure freedom of movement or the mutual recognition of qualifications? Of course we need to co-operate in areas such as environmental protection, criminality, the drugs trade and money-laundering. It is difficult to quantify how the EU impacts on the life of this country in this regard, when also you consider these issues.
At another level, we need occasionally to take collective action. I have a particular interest in Syria. There is no doubt about it—EU-wide sanctions are an important force in trying to deal with the situation that is so tragically happening there. If we were doing that on an isolated basis, of course the impact would be much less. However, the Bill stresses economic implications and I simply point out that any overall assessment needs to look at non-financial aspects too.
Public opinion has quite rightly been enraged by the inability of the Court of Auditors to approve the EU accounts. The error is something like €4.6 billion. Indeed, it is the 17th year that the Court of Auditors has been unable to give an unqualified statement of assurance. Additionally, our net contribution to the European Union has trebled between 2008-09 and 2014-15 in a way that makes it difficult for many people to understand what the advantages of that process have been. A number of organisations have looked at the proportion of the cost of regulation from the EU that has impacted our businesses and they have concluded that it is substantial.
Any relationship between two countries, whether organisational, bilateral or multilateral, has to be based on a whole number of frankly unmeasurable criteria. This will include collective action on a global basis and co-operation in spheres that inevitably directly impact the well-being of individual EU states. However, there is another aspect. Are countries such as Switzerland or Norway, with populations that are smaller than Greater London, free of financial contributions and single market rules? They are not. Whether in consumer or environmental protection there is the internal market. If, for example, we were to seek membership of EFTA—we may not do so if we were to leave the European Union—would it necessarily accept us? The simple truth is that through our very long history and connection with the continent of Europe, this country has quite rightly been reluctant to be involved in European Affairs at different times. However, in the end, we cannot escape our geography and the links that bind us with our neighbours. Frankly, we cannot preclude or exclude ourselves. Of course, this does not stop us from fighting for our national interest in the European context. However, it would be unfortunate to believe that somehow we could wish away our geography and links.
I should like simply to end with two points. As we look at the EU and the turmoil today, it would be madness if we were to divorce ourselves from other major European countries when whatever happens will directly affect us. I am happy to say that that is not the view of the British Government because I believe that we are trying as hard as we can to be involved in trying to unpick the mess that the European Union has fallen into.
It was Willy Brandt who once said that politicians go into politics to resolve a given set of problems, but once those problems are resolved they fail to move on. That is the case with the European Union today. It is frozen in time and failing to adjust to the way that the world now operates. I do not know, as we enter into this very difficult time, whether we are in unknown unknown or known unknown territory, but it is vital that there is a new structure within the European Union; that may emerge out of the crisis that is happening now. It is important that we then try to draw the advantages of EU membership and reconnect the peoples of Europe with the lack of democratic underpinnings that exist. I believe, however, that that will be our role. What the peoples and markets of Europe and our country in particular are now saying is simply this: the European Union as presently constituted is past its sell-by date, but we should be there to influence the future.
Lord Desai
My Lords, let me first say that I very much compliment the noble Lord, Lord Pearson, on getting this Bill for Second Reading and, over the years, on pursuing what he strongly believes about the dubious case for being inside the European Union. He reminds me of my former noble friend Lord Bruce of Donington who used to go through every document published by the EU, and he knew more about auditing than anyone else that I can think of. I should also say that the noble Lord, Lord Pearson, is a great champion of liberty, because he is always championing the maverick and unpopular view. Given that we inhabit the same space on the Back Benches, which is for mavericks, I very much feel at one with him.
This Bill is not about whether the European Union is a good or bad thing. It is about whether we should have a commission to examine our case for it. Those who are very strongly in favour of the EU have nothing to fear because they should say, “Once and for all, we will establish the case for the European Union and send the Pearsons and the Stoddarts of this world far away into exile, and they will never again question our membership of the EU”. Those on the other side say, “Once and for all, let us prove our case and we will show that the costs exceed the benefits of our membership, and that will settle the hash of those who support the Union”. That is fine.
What has happened over the years is that many opinions have changed. My party used to be very anti the Common Market, as it used to be called. In the teeth of opposition, Harold Wilson managed a referendum—in which I voted yes, incidentally—but it was not until Jacques Delors came to the TUC meeting in 1988 and told us that the European Union would bring us back the trade union rights that Mrs Thatcher had taken away that we suddenly became pro-EU. I also noticed that on the Front Benches of all parties, perhaps with the exception of the Liberal Democrats, there are no giants in favour of the European Union. There is no longer Sir Edward Heath, Lord Jenkins or my late and lamented friend John Smith. They were doughty champions of and enthusiasts for the EU. My noble friend Lord Mandelson is the only one who is senior enough to claim that title now and that he is strongly and positively for the EU.
My opinion has changed. I used to be a federalist. I wanted a single market and a single currency in 1992—no questions asked. That might have been easier, but no—our views have changed. Some have gone from anti to for, and some have gone from for to anti, but the truth is that the general public and political mood is of sullen indifference. The Government may be doing a cost-benefit calculus every day, but we do not really want to admit to whether we should make the threshold decision of being in or out. We say, “We are in. Why bother? Just let it go along”. That is not a healthy situation. If there was in this country a great enthusiasm for Europe, we would be clamouring to get into the euro. We are not. We would be strongly in favour of a closer political union. We are not. Nor are we strongly arguing—despite what every Conservative leader has said—in favour of breaking up the EU or making it more decentralised. Whatever we may say about getting our powers back from Brussels, no political leader has seriously put forward a scheme for getting us back to whatever the situation was in, say, 1975 or 1980. We are where we are by our own volition, as the noble Lord, Lord Empey, pointed out. We agreed to everything that has happened, but without enthusiasm. We agreed but said, “Why bother? Let it go. It is not worth questioning”. Therefore, we have had this debate for 40 years and people have changed their views.
I would say one thing about the noble Lord’s Bill. Like the noble Baroness, Lady Falkner, I do not know whether I would find two people for, two people against and three neutral people who could swear to me that they had always been for, against or neutral. The situation is important enough not to confine it to just seven members or to just the economic implications. I quite agree that there are other—strategic, geopolitical or whatever—implications. This is a big constitutional issue for the country. The Government should take it up and arrange for a proper, deep inquiry and, perhaps by 2013 or whichever year is the 40th anniversary of our passing the Bill to join, we will have a thorough and comprehensive report and we can ask ourselves whether it is worth staying in or leaving, what the different alternatives are, and what the different scenarios are, as people in business often say—being completely out, being in EFTA or being in the EEA. Let us see the full menu of costs and benefits, economic and otherwise. There are ways of doing that—it is not rocket science.
Let us not shy away from debate or inquiry. Let us not conclude that just because the noble Lord, Lord Pearson, is in a minority, he must be wrong. There is no proof as to which is wrong and which is right. I should love to see this committee set up; I should like to see what comes out at the end of the day about the costs and benefits of membership. Let us keep an open mind and go for knowledge rather than dogma.
Lord Willoughby de Broke
My Lords, I join other noble Lords in thanking my noble friend Lord Pearson for introducing this debate. This is the fourth such inquiry that he has asked for and it seems perfectly reasonable to ask the Government to take a dispassionate look at the costs of our membership of the EU. The noble Lord, Lord Desai, described my noble friend as a maverick; others have sometimes been less generous, but events have shown that my noble friend the maverick has been right and the purveyors of the nonsense about our destiny being in the EU have been comprehensively shown to be wrong.
The arguments that some of us have been making over the years about the financial costs to this country of our membership remain as valid as ever. There is our annual cash tribute of £18 billion gross a year, which my noble friend mentioned, and there is the common agricultural policy. If the noble Lord, Lord Davies, were in his place, I would say that of course we would support our farmers in Britain. We did so before we joined the EU and we will do so when we leave. What we will not be doing if we leave the CAP is to support French, Italian and Greek farmers as well, and we should not do so. The common fisheries disaster and all the regulations that the noble Baroness, Lady Noakes, talked about that are hamstringing the City were deliberately introduced by Mr Barnier and the Commission, probably at the instigation of the French and the Germans, who are jealous of the preponderance of the City of London. Those are enormously damaging.
I would add one other thing which no noble Lord has mentioned yet and that is the extraordinary folly of our emissions policy as part of our renewable energy policy. It has meant that we are building an extraordinary number of very inefficient windmills over some of the most beautiful parts of the country with no benefit at all other than to the manufacturer of those windmills and with a great disbenefit to the taxpayers of this country. That is an EU-proposed measure.
Lord Lea of Crondall
I am grateful to the noble Lord for giving way. Is he not aware that it was Britain that at every stage pushed for tighter and tighter EU targets? It was not the other way round.
Lord Willoughby de Broke
I am not sure that is right. The target of 20 per cent of our energy from renewable sources by 2020 is entirely an EU target, so I cannot agree with the noble Lord on that.
I think that the penny has finally begun to drop in the City of London, and I hope that it is indeed not too late for something to be grabbed back from all this. I wonder sometimes what UKREP is doing in Brussels. This tide of regulations, directives and thousands of rules seems to come almost entirely unamended, but UKREP is supposed to be looking after our interests in Brussels. I should like to find out whether that is what it is doing. I had a quick look at its website and saw that the EU flag was right at the top, with the Union Jack being almost invisible right at the bottom. I hope that that is not a sign of its priorities.
Leaving that aside, recent events have brought this whole debate into very sharp focus. The Government must recognise, however reluctantly, that we should stand back coolly and look at the economic benefits and disbenefits of our membership. Things have gone completely pear-shaped in the euro. What was supposed to be the cement is not even holding together the tottering edifice of the EU, which seems to be falling apart by the day. It is rather a cruel spectator sport to watch the daily news bulletins to see which domino is to fall next. All that the European politburo—the so-called élite—seem to be able to do is stand on one leg and sing “Ode to Joy”. They do not seem to have an answer at all to what is happening. Surely we have now reached a tipping point. The Government must take up the challenge in this Bill and try to identify where our interests lie. As my noble friend said, it is no longer good enough to say that the benefits of our membership of the EU are self-evident. That is simply no longer the case.
Let us take a brief look at the economics. The euro, as the noble Lord, Lord Ryder, said, was always a badly flawed project. The eurozone has turned out to be an economic disaster for the weaker members. They can never compete with Germany in the same currency—there is no chance of that at all. Ireland, Greece, Portugal and Italy have gone down the pan and Spain seems to be on the brink. However, for them—this was presciently put by Mr William Hague—the euro is,
“a burning house with no exits”.
The euro has turned out to be an incendiary device—a weapon of mass economic destruction.
However, almost incredibly, there are still voices telling us that we should be in the euro. From a padded cell in Conservative Central Office just last week the noble Lord, Lord Heseltine, said that we should join the euro. Frankly, I suggest that they throw away the key. However, cheerleaders such as the noble Lord, Lord Heseltine, and others—of whom there are examples in this House—owe it to us to explain how a system that was supposed to engender prosperity and democracy has turned into the very opposite: a Caliban that is causing hatred and conflict, and turning people against their Governments and against each other. Already we have in Greece anti-German jokes, perhaps regrettably. When the EU economic task force imposed on Greece by the EU arrived, one Greek newspaper had the headline “The prison guards have arrived”. Unfortunately and unluckily, the head of that task force was a German called Mr Horst Reichenbach, who was instantly dubbed “Mr Horst Thirdreichenbach” by the Greeks. That sort of thing may be amusing to read about but it is actually a disaster when it comes to democracy and co-operation between member states and democracy in those countries.
The fact is that the economic cost is enormous, as my noble friend and others have pointed out, but the political cost also has to be looked at in this context. Do we need to be part of an organisation that is not only an economic failure but a political failure as well? Do we want to be a member of an organisation that usurps elected leaders in member states? Do we want to be in an EU that is so terrified of having a referendum that it took the elected Prime Minister of Greece behind the bike shed wherever the meeting was and forced him to resign? Do we want to be part of an organisation that hand-picks the leaders of democratic countries—the ones who can be relied on to toe the line—never mind that Monti and Papademos were willing parties to both Italy’s and Greece’s accession to the euro? Their hands are not clean on this, yet they are the people who have been put in place by the European Union. Above all, the Government need to carry out this analysis to nail, once and for all, the threats that, by disengaging from the EU, Britain will somehow be left in the slow lane and will lose its place at the top table. That is what they like to tell us. If the food at the top table is rancid—
Lord Willoughby de Broke
I shall finish very shortly. I am going to finish my speech. This is an important debate, as the noble Baroness, Lady Noakes, said. I intend to finish my speech in a minute.
Baroness Stowell of Beeston
My Lords, I would like to make the point that I understand that different views were expressed at the start of the debate. The noble Lord, Lord Campbell-Savours, asked the government Whip to intervene when noble Lords had exceeded six minutes, and the noble Lord has exceeded eight minutes.
Lord Willoughby de Broke
Yes, I shall be as brief as I possibly can be, but this is an important subject. I am sorry, but I do not feel that there is a time constraint in a Second Reading debate.
I was saying that we should not be told that we are going to be in the slow lane or removed from the top table if we are out of the EU. The noble Lord, Lord Howell, is not in his place—
Lord Lea of Crondall
Is it acceptable for the noble Lord to carry on speaking after that very clear advice from the government Whip, and after the position was made clear right at the start of the debate in response to the question from my noble friend, Lord Campbell-Savours?
Lord Pearson of Rannoch
Unless the government Whip’s advice is inadvisable.
Lord Willoughby de Broke
I shall finish now. The only club we need to be in is the world club and we are already members of that. The European dream has turned into a dangerous nightmare. We need to wake up.
The Earl of Liverpool
My Lords, in a typically powerful and persuasive opening speech, the noble Lord, Lord Pearson, referred to the fact that this is the fourth time that this Bill has come before your Lordships. The noble Lord has been steadfast in his advocacy of the need for what one might call a cost-benefit analysis of our membership of the EU, and a number of faithful foot soldiers in this House have followed him every step of the way. My family motto is “Be Steadfast” and I am proud to be one of those foot soldiers.
Today, with a full blown euro crisis on our hands, a real prospect exists of a fragmentation of the eurozone. My noble friends Lady Noakes and Lord Ryder and others referred to that. Indeed, it was reported recently in one of the broadsheet papers that the Chancellor and the Treasury are so concerned that they have set up a committee to look at how we might best manage an orderly exit from the EU. I wonder whether the Minister can throw any light on that. It is an important question because, if that is indeed the case and the findings can be made public, much of the work that the noble Lord, Lord Pearson, envisages being carried out by the committee set up under his Bill will already have been done.
We have heard about the latest Pink Book figures and the £28 million leaving our shores every day. Our countrymen are growing restive and the situation is becoming indefensible in the teeth of this recession. There is now a real possibility that we may be called upon to part with many more billions to try to shore up the doomed euro. We have a duty to explain how we are getting value for money and, if a satisfactory and convincing explanation cannot be found, we should leave the project. That is what around 70 per cent of our population believe.
No one is able to say exactly what level of corruption exists within the EU. My noble friend Lord Risby mentioned, I think, £4.6 billion, but I have heard figures as high as £5 billion or even £6 billion. In any event, as we know, the EU has been unable to close off the accounts for the past 17 years. It seems unbelievable to me that we can keep pumping ever increasing amounts of taxpayers’ money into this sadly corrupt organisation. One day, I believe that the newspapers will get on to the ever increasing gravy train of MEP and Commissioner salaries, pensions, housing and travel expenses. What effect that will have on an already sceptical British public remains to be seen. There will come a time when even the Europhiles will have to stop defending the indefensible.
On which note, I was very heartened to read Sir Max Hastings’ recent Damascene conversion. As a self confessed pro-European all his adult life, he now admits that the EU is a disaster affecting every aspect of British life. In a full page article in the Daily Mail on 13 September this year, he said:
“The cost of Brussels has become insupportable. If we continue to burden employers and wealth generators, large and small, with its Utopian vision, only relentless decline can lie ahead”.
He ends the article with these words:
“if Britain’s government cannot find the means to retrieve some part of our lost control of vital national interests, we shall find ourselves mere fellow passengers”,
with our EU partners,
“aboard a waterlogged hulk, while the Chinese, Indians, South Koreans and Singaporeans power past in their glittering speedboats, leaving us bobbing in the wake”.
He could also have included the Russians and Brazilians in their speedboats. Anyway, that is not a future I wish to see.
I believe that the real elephant in the room is the democratic deficit. Self-governance and retaining our sovereignty are now far-off dreams. If proof were needed of that, one need look no further than a recent report of a discussion said to have taken place between President Barroso and our Prime Minister when he was reported as saying that we must be prepared to agree to further federalist and fiscal integration within the EU or accept the imposition of a financial transaction tax which would have such a devastating effect on the City of London. Perhaps the Minister can either verify or refute that this ultimatum was given.
In any event, one has to ask how anyone can pretend that democracy is alive and well when some 72 per cent of our laws are imposed on us by directives and regulations emanating from non-elected Commissioners in Brussels. The argument that it is only by staying full members that we can have a seat at the top table and influence events just does not wash any more. We have tried and failed in that endeavour in the past, and qualified majority voting, among other things, ensures that we shall never achieve that dream however devoutly it may be wished.
There is an alternative. We could become like Norway and Switzerland, restoring our own democratic powers, regaining control of our borders and applying quotas. This could be achieved in a spirit of friendship and good neighbourliness; our trade would not suffer because their trade with us, as we have already heard, is greater than ours is with them, and neither party would wish to lose those markets. Our attractiveness to major international companies would, I believe, increase rather than diminish, and we could benefit by becoming, in effect, the Hong Kong of Europe. Of course there will be an initial upheaval but I believe that we would see in the years that follow a significant increase in jobs in this country. I do not think that that is as fanciful as it at first sounds.
In any event we need a reality check, and we need it now. I give my full support to this Bill. I hope that it will soon progress to its further stages in your Lordships’ House.
Lord Stoddart of Swindon
My Lords, I join other noble Lords in thanking the noble Lord, Lord Pearson, for his persistence in bringing this Bill forward for discussion on Second Reading in this House. I have no doubt that many people have been coming up to him lately, as they have been to me, saying, “You know, you were right all along”. The speeches that we have heard so far today—a balance of speeches anyway—have also tended to confirm that.
The noble Lord, Lord Desai, who is not in his place, suggested that the noble Lord, Lord Pearson, was in the minority, but I remind the House that recent opinion polls have shown quite clearly that the majority of the people wish and would be prepared to leave the European Union, and that 70 per cent of them would like a referendum on whether we are in or out, which has been denied to them. Of course the noble Lord, Lord Desai, was right that we should have a wide-ranging discussion on the whole issue. Reference was made to replies given to noble Lords, including me, that the benefits of the European Union are self-evident. Perhaps that should be turned around to show that the disbenefits of the European Union are self-evident.
I would have liked to talk a great deal about trade, but unfortunately the time restriction precludes that. However, I point out that since 1973 we have traded in permanent deficit with Europe, and that the deficit at the moment is running at £38 billion a year. That represents a lot of lost jobs to people in this country; we should not forget that. If we need more jobs, we need to lift our trading eyes to the world of 7 billion people, not focus on the narrow confines of the centrist, declining and undemocratic European Union.
We continue to hear the old mantra that the UK should be in the European Union but not ruled by it. It is now becoming quite clear that the objective of the European Union and its leaders is to create a country called Europe in which nation states are marginalised, relegated to third-division status and ruled from Brussels by bureaucrats—I understand that they are now called technocrats. We cannot continue to belong to the EU and not be ruled by it.
Britain has been plagued by a succession of leaders who are faint-hearted and believe that Britain cannot exist as an independent, self-governing nation. They insist that outside the European Union we will be sidelined and miss the Euro train or ship. Even when they can see that we are heading for the buffers or the rocks, they persist in saying that it is in our interests to be there. The Prime Minister was at it again in his speech at the Lord Mayor's banquet, claiming to be a Eurosceptic. The sort of Europe he says he wants is not on the agenda and he should think about what he is saying. Nevertheless, he trotted out the old, tired mantra that outside the EU we would end up like Norway.
Let us have a look at Norway. I am most obliged to the Times for an article on Tuesday, 15 November on how the UK and Norway compare. Norway's unemployment rate is 3.2 per cent; the United Kingdom’s is 7.8 per cent. Norway’s household income is $32,400; the United Kingdom's is $28,600. Norway emits 0.19 kilograms of carbon per dollar of GDP; the United Kingdom emits 0.26 kilograms. Norway’s national savings rate is 34.7 per cent; the United Kingdom’s is 11.2 per cent. Norway’s annual working hours are 1,407; the United Kingdom’s are 1,646. What conclusion does the Times come to? If you want a good life, forget Britain and go to Norway.
Perhaps we should stop talking about how Britain would be sidelined outside the European Union. After all, inside it we have only 8.5 per cent of the vote—and Norway would have less than one per cent. What sort of influence is that? We would be far better off outside the European Union. We would be able to trade with the world, keep our own money that we are handing over every year to the extent of £10.3 billion and use it for the betterment of our own people.
Lord Kakkar
My Lords, I join other noble Lords in congratulating the noble Lord, Lord Pearson of Rannoch, on securing this important debate on the Second Reading of his Bill. I will confine my comments to the area of healthcare and the impact that the European Union is having on the delivery of healthcare and biomedical research in our country. I remind noble Lords of my interests as a practising surgeon, professor of surgery and active biomedical researcher.
I will concentrate on two areas: the European working time regulation and its impact on the training of young doctors and other healthcare professionals in our country; and the impact of the clinical trials and data protection directives on our ability to conduct high-quality clinical research. On the European working time regulation, there has been extensive review and discussion about its potential implications. Its purpose is well recognised, but the unintended consequences with regard to the practice of medicine are not always so well recognised.
If the working time regulation had provided demonstrable evidence of an improvement in clinical quality, the safety of patients and the training of our young doctors and other healthcare professionals, it would be a very reasonable regulation to adopt and apply to the practice of medicine in our country. However, there is little evidence that the regulation restricting hours of work to 48 per week and applying to medical practitioners in training has achieved those objectives.
Clearly there are differences between different disciplines in medicine. The craft disciplines of surgical practice such as my own require a high level of exposure to large numbers of cases in order to develop technical skills, and also a broad ongoing continuity of management of patients to develop the judgment necessary for ultimate independent consultant practice.
The Royal College of Surgeons has taken a keen interest in the potential impacts of the working time regulation on surgical training in our country. In 2010 it produced a report that looked at the potential cost implications of the application of the working time regulation with regard to surgical training. In the two years prior to the introduction of the working time regulation, it collected data using freedom of information requests that were responded to by 96 acute NHS trusts, and extrapolated the findings to the 160 acute trusts where surgical training takes place. It concluded that in the year of introduction of the working time regulation, expenditure on locum costs to cover rotas as a result of the regulation increased from some £540 million a year to £750 million—an increase of more than £200 million.
That was across the board. When the royal college looked at surgical locums, it concluded that costs increased from £170 million a year to £230 million—an extra £60 million spent on locums as a result of the application of the working time regulation restricting surgical trainees to working 48 hours a week. It also tried to determine the number of surgical hours lost per month as a result of the restriction to a 48-hour working week and concluded that some 400,000 surgical hours a month were lost as a result of the restriction. If we were paying this price for achieving an improvement in clinical care or in training, it might be completely justifiable. However, the Royal College of Surgeons and the Association of Surgeons in Training concluded that that was not the case.
The second area is the impact of European directives and regulations on the conduct of clinical research in our country. Twelve per cent of the global citations in clinical and healthcare research are of publications from United Kingdom institutions and nearly one-quarter of the 100 leading medicines in the world have been developed in our country. Biomedical research is therefore hugely important to our economy and in terms of what we can do for our own people as well as for others around the world. In January a working group at the Academy of Medical Sciences chaired by Sir Michael Rawlins published a report, entitled A new Pathway for the Regulation and Governance of Health Research, which looked at ways of ensuring that we remain competitive. It concluded that the European clinical research directive has had a detrimental impact on the conduct of clinical research in our country. The directive was introduced for good reasons—to improve ethical standards and to ensure consistency of data and, ultimately, to ensure that patients are strongly protected in all clinical research—but there have been unintended consequences which have made the approval of clinical trials much slower and the conduct of clinical trials less effective. It has also increased the cost of doing clinical trials, so much so that, in 2000, 6 per cent of all patients going into clinical trials globally came from our country while, by 2006, the number had fallen to only 2 per cent of patients going into clinical trials. That has a very serious impact on our ability to function in that area.
These conclusions were also confirmed by your Lordships’ Science and Technology Committee in its second report for Session 2008-09, on genomic medicine, chaired by my noble friend Lord Patel. It also concluded that it would be important for Her Majesty's Government to review the working of the clinical trial directive and the data protection directive, which were having a detrimental impact on the conduct of clinical research in our country. I know that the Government are keenly aware of these important issues and that they are trying to address them. If a committee were established to look at the benefits and costs of our membership of European Union, consideration of the impact of European regulation on the conduct of research and the training of our doctors are important topics that should be considered.
Lord Ahmad of Wimbledon
My Lords, yet again the question of Europe is one which we find dominating headlines. Indeed, it is impacting daily lives and for this reason and others, I join in the chorus of approval and tributes being paid to the noble Lord, Lord Pearson of Rannoch, today. His timing of this debate is quite impeccable.
“What we should grasp, however, from the lessons of European history is that, first, there is nothing necessarily benevolent about programmes of European integration; second, the desire to achieve grand utopian plans often poses a grave threat to freedom; and third, European unity has been tried before, and the outcome was far from happy”.
Those are the words of my noble friend Lady Thatcher.
We see the currency born of the European ideal today fighting for its mere survival and economies of Europe that led the world as proud nation states looking across the world, perhaps, to emerging and developing nations with envy at their growth rates and investment levels. Yet as turbulence grips Europe, Britain, as ever a proud nation in Europe, continues to play a pivotal role in seeking to provide assistance, guidance and, most importantly, leadership and financial contribution where and when it can. This is notwithstanding the backdrop of our own economic challenges on the domestic front. We are supporting neighbouring European economies to ensure our treaty commitments.
Therefore I find recent reports of warnings being issued by the President of the European Commission to my right honourable friend the Prime Minister to put the European ideal first and not to think of the UK, particularly with reference to the benefits of the vibrant City of London, quite frankly a ludicrous proposition. Indeed, I should perhaps declare an interest as someone who currently serves in the City of London. Does the President of the European Commission really believe that the argument that we shall be left behind will resonate with our Government and, more importantly, with the British people? It will not.
Economic and monetary union and the birth of the euro brought with them similar cries of: “a two-track Europe”; “Britain will no longer have influence”, which many noble Lords have said; and “Frankfurt will become the economic capital of Europe”. Has any of these propositions come true? No. We were right not to join the euro then, and we are right today to defend the City of London against prohibitive taxes for the benefit not only of the City and what it brings to Britain but of Europe as a whole.
Let me recount the time of the launch of the single currency. I remember talking about this. One concept that was often raised was how we remember who is going in and who is going out. If you throw Greece into the equation, a baffling acronym came about: PIGS. I say no more. Price stability was one qualifying criterion. Others were successful membership of the ERM, interest rate convergence and fiscal prudence—and let us look towards prudence. One of the criteria was a 60 per cent ratio of government debt to GDP. Was this strictly met? You need only look at Belgium at 122 per cent and Italy at 121 per cent. Those criteria were not strictly adhered to.
Then there was the cost of the introduction. One of the elements was fiscal policy spillovers. A European-wide interest rate would mean that EU countries would have to increase their intra-EU transfer payments to help others. How Greece would have loved no competitive devaluations in the current climate. These are no longer downside risks or doomsday scenarios; they are a living reality facing the single currency today. Monetary union without fiscal union was never going to be a sustainable proposition. That has proved correct. There are many in business and in public life now who rather than lecture the country should eat a bit of humble pie.
I turn briefly to the EU’s proposed tax on the City of London. According to some reports it might mean that 80 per cent of the revenue would come from London. The director-general of the CBI said that it is,
“a Brussels revenue-raising exercise, and one that will hit London disproportionately hard”.
The City of London is our jewel in the crown. It has been a big asset for the UK and, indeed, for Europe. If we are asked to be good Europeans, should good European not defend what is good about Europe? The City of London is good about Europe. However, rather than be proud Europeans and proud of this European centre, officials in Brussels are seeking to price the City of London out of the market. It is therefore right that voices are raised and resistance is shown at these blatant attempts to target the heart of our economy.
We are a proud nation with a rich history and a country which has demonstrated on the world stage that it fights for freedom, democracy and the promotion of strong trade. Standing up for Britain does not mean that we are against Europe. The countries of Europe remain among our largest trading partners. However, it is right that we should stand against giving further powers away. I was therefore pleased to support the European Union Bill which passed through your Lordships' House earlier this year, because it called time on the juggernaut of European integration. We need to look at the virtues of a proposal before we forgo any national interests for some perceived general good as conceived by a Brussels bureaucrat. Indeed we need to repatriate powers as the Government are seeking to do. We have also found, perhaps, an unlikely ally in Chancellor Merkel, who only yesterday said that the new Commission proposals on eurozone countries submitting their budgets for approval to Brussels to solve the euro crisis are “extraordinarily inappropriate”.
In conclusion, there should be a simple message to those who seek to move towards greater European political and economic union: you integrate further if you want to; our country is not for further integration. However, that should not mean that we are against Europe. It should be the Government’s role to establish perhaps a third way in Europe where membership of the EU is not a journey to a federalist Europe, but one which seeks to establish the role of nation states in Europe where we stand and play our part as an independent country in Europe, not as a region of an integrated union.
Lord Lea of Crondall
My Lords, we are debating an interesting proposition, which is quite a good idea in some respects. But I suspect that the methodology would not be very straightforward and would itself become highly divisive. For example, many problems of quantification were illustrated in a point made a few minutes ago by the noble Lord, Lord Willoughby de Broke, who mentioned energy policy and the carbon tax regime. You can call it other names but essentially the EU has agreed that by 2020 it will collect €50 billion a year to hand over to the rest of the world in terms of adjustment finance. If our share is about 15 per cent that would come to €7.5 billion a year. In no way can that be charged against us in terms of “them costing us”, because since 1992 at Rio de Janeiro we have been the “leader in Europe” in pressing for tighter and tighter targets. This reveals some of the ambiguities of what might come up in the methodology.
Another question is how to add up apples and oranges in different sectors of the economy. The noble Lord, Lord Ahmad, has just said that the City of London is the jewel in the crown, to which I shall make two remarks. If we are the Hong Kong of Europe and that Hong Kong is the City of London—I doubt the logic of thinking that we will be in a stronger position to be the Hong Kong of Europe if we are not in Europe—what about the rest of our economy? How will we bring in the consequences for the rest of our economy if we measure the interests of the British economy only by the City of London, the jewel in the crown? I think that its role recently has been to lay hand grenades and not golden eggs. Therefore, there would be issues about methodology.
Many noble Lords have found it difficult to stick to the Bill before us. We have heard many speeches about the whole of the European exercise being a dead duck and that Britain should leave. I suppose that, if it is a dead duck and the whole thing has collapsed, there is no need to be in or out of it.
A totally separate question has been raised by noble Lords, including my noble friend Lord Stoddart, about public opinion. To think logically about this, if we believe in the impartiality of this review and it produces a positive answer in favour of staying in Europe, the job will be somehow—I know that I will be shot for saying this—to educate the British people and to find ways to ensure that they understand that the conclusions are positive. There cannot be the logic of the study suggested by the noble Lord, Lord Stoddart, without running the risk that it might produce an answer that some people do not like. But that is true of both sides. I suspect that we would find that, in the dynamics, this is a positive thing and that we have a problem with public understanding. But that is a separate question. One cannot then say, “But we ought to say no because of public opinion”. We are a democracy and of course that is an important question. However, the methodology is not to do with public opinion per se. It purports to be to do with quantitative methodology.
In the two minutes remaining, I shall echo three points which have already been made. The noble Lord, Lord Empey, made the point that we have voted for things that have happened in Europe. The Commission is not a set of gauleiters: it is the Council of Ministers which seeks agreement. As we all know, there are different procedures, including codecision, the Parliament and so on. But we can see the fallacy in the idea that Monsieur Barroso can say something and Chancellor Merkel goes down on one bended knee by just looking at yesterday’s newspapers.
We hear easy examples of countries which do splendidly without being in the EU. Switzerland and Norway are always cited. I want to spend at least 30 seconds on Norway. I have a great number of friends in Norway and I hope that they will not mind me saying that it is a sheikdom with democracy. In terms of the proportion of oil revenues to its national finances, it is not comparable at all with any other country in Europe. It has a huge sovereign fund, which is wonderfully administered and becomes a great contributor to aid to Africa, et cetera. The point that we really have to look at is that Germany is a successful economy: how they and not we?
Lord Watson of Invergowrie
My Lords, my noble friend Lord Desai mentioned the 1975 referendum on what was then the EEC. I voted no, against continued membership. Like many in the Labour Party, I was concerned at the restrictions that it might place on a future Labour Government introducing socialist policies, not least in the industrial sector. Of course, there was wide division in the party. But things have moved on. Were there to be a referendum tomorrow, I would vote yes to stay in and I would campaign strongly for that position.
I welcome the Bill introduced by the noble Lord, Lord Pearson. Indeed, I say “Bring it on” as regards the committee because, like my noble friend Lord Davies of Stamford, I am confident that the position of those in favour would prevail. However, I am slightly puzzled as to the wording of the Bill—not just the Title but also the Long Title, which refers to,
“a Committee of Inquiry into the economic implications”.
Clause 1 is entitled “Committee of Inquiry into withdrawal from the European Union”. That will not come as a surprise to anyone who knows anything about the noble Lord, Lord Pearson, or UKIP. None the less, it is inconsistent.
I should like to say something about the way in which the European Union has developed over the years in terms of achieving its social agenda, particularly in terms of the high level of employment, social protection, improved living, working conditions and economic and social cohesion. The adoption of legislation setting minimum requirements has improved labour standards. It certainly strengthened workers’ rights, which I say from my background in the trade union movement. It thus improved economic efficiency and, as such, is surely one of the European Union’s main achievements in the field of social policy.
EU protection issues such as transfer of undertakings, part-time workers, fixed-term contracts and the working time directive, to which the noble Lord, Lord Kakkar, referred, have been resisted by UK Governments at one time or another. But those are rights that we would not enjoy in the UK were we not under the umbrella of the European Union. I regard that as a positive aspect of our membership.
Those who oppose EU legislation in these spheres—legislation that essentially aims to protect people’s health and well-being—should consider that, apart from the suffering caused to individuals and their families, poor working conditions represent a huge cost for the EU economy. Originally, EC—as it was then—employment law was designed with the aim of ensuring that the creation of the single market did not lead to a lowering of labour standards or distortions in competition. Today, employment law also has a key role in ensuring that a high level of employment and sustained economic growth is accompanied by continuous improvement in the living and working conditions throughout the European Union. The coalition Government should bear that in mind, not least in respect of the proposals outlined by Mr Cable two days ago. Reducing protection for people at work will not save or create a single job. It is not employment law that is holding firms back: it is the tough economic climate and the problems many SMEs are still having in getting the banks to lend to them. Research from the OECD shows that there is no link between regulation and economic output. German employees have much more protection at work than ours, yet its economy is the strongest in Europe. I believe that the UK’s best interests are served by playing as active a role as possible in the decisions which influence the future direction of the Union and its member states.
In respect of this Bill, many economic benefits of EU membership can be highlighted—this view is based not on my individual opinion but on figures produced by the coalition Government. The EU is a bigger trading area that the US and Japan combined and accounts for more than half of all UK trade in goods and services. According to an Answer given in July this year by the BIS Minister Ed Davey, 3.5 million jobs are reliant on the EU single market, which is one in 10 of all UK jobs. The latest available estimates show that the greater level of trade liberalisation achieved through the single market leaves EU countries to trade twice as much with each other as they would do otherwise. As a result, the single market has contributed to income gains in the UK between 2 per cent and 6 per cent; that is about 1,100 to 3,300 per year per British household. Again, those are figures quoted in an Answer by Mr Davey.
Another BIS Minister, Mark Prisk, also stated in an Answer this year that more than 50 per cent of foreign direct investment to the UK comes from other EU member states and is worth £350 billion a year to this country. This investment flows from our full access to the single market, because the level of trade liberalisation in the EU is unparalleled anywhere in the world.
EU competition and consumer rights laws have driven down prices, opened up markets for smaller businesses and boosted consumer protections. For example, thanks to the European Union, British families and businesses now enjoy vastly reduced mobile phone roaming charges, cheaper flights and proper compensation when flights are delayed or cancelled. In terms of global trade, the UK gets the best deal through the EU. The Union is a force multiplier for the UK, because this country contributes to common positions which then carry the weight of the world’s largest trading bloc. For example, in 2003, the USA was forced to back off and lift tariffs on UK steel producers by the World Trade Organisation, which authorised the EU to impose countertariffs on US products if the USA ignored the WTO’s ruling. The EU-South Korea Free Trade Agreement, the EU's first trade deal with an Asian country, came into operation in July this year and will be of great benefit to the EU as a whole and the UK in particular.
It should also be stated that British business supports our EU Membership: 74 per cent of business leaders polled by Business for New Europe and Ipsos MORI last year believed that the UK’s withdrawal from the EU would be damaging compared to 22 per cent who did not. Every mainstream political party supports UK membership, with only UKIP and the BNP opposed.
Being either outside or on the periphery of the EU while other member states discuss the crucial issues and take the major decisions has never been a positive or even tenable position for the UK. Those who advocate either withdrawal or our retrenchment within a reformed EU need to work harder on overcoming this country’s geographical relationship with Europe. No man or woman, it is said, is an island. It has never been more accurate to say that, in these critical economic times, no country is an island.
Lord Stevens of Ludgate
My Lords, I, too, congratulate the noble Lord, Lord Pearson, on instigating today’s debate. He is very persistent and continues to fight earnestly for what he truly believes in despite much opposition. I also agree with most of what the noble Lord, Lord Desai, and other speakers, said in that I think that we need to have a serious discussion about the broader aspects of the membership of the EU, apart from just cost-benefit analysis. The noble Lord, Lord Howell, said in a debate on the European Union (Implications of Withdrawal) Bill:
“The whole process of incorporating EU regulations and other burdens into our lives is sloppy, full of holes and should long since have been tightened up”.—[Official Report, 8/6/07; col. 1359.]
I agree with these sentiments, but sadly we have not been able to make much progress.
Calls in the past for a cost-benefit analysis have always been brushed aside on the grounds that the net gains from our membership were so obvious that there was no need to quantify them. Recent developments must make even those so committed to the project feel uneasy. The reality is that Britain’s membership of the EU is very costly and the benefits are becoming harder to see. The most transparent cost is our net budget contribution. Following the December 2005 Brussels summit at which the UK’s rebate was significantly reduced, this has risen sharply. In addition, there are off-budget contributions; for example, projects such as the Galileo, which is now expected to cost the EU taxpayer up to €22 billion in the next 20 years. The net costs to Britain of the common agricultural policy and the common fisheries policy are estimated at £16 billion and £3 billion per annum respectively. More difficult to quantify are the costs of excessive regulation. But here perhaps the estimate produced in October 2005 by our previous Prime Minister when Chancellor, in a Treasury paper under his own signature, and as mentioned by the noble Lord, Lord Pearson, is well worth thinking about. I shall not repeat the figures.
The flood of new regulations from Brussels continues despite everything which the new coalition Government say they would like to stop. Now Brussels wants to tackle the big four auditing firms and suggests that large companies should have two firms of auditors. Would it not be better for its members to get their own accounts signed off with a clean audit first?
As we all know, the UK has serious budgetary problems and is seeking to cut expenditure. Indeed, all the countries in the EU have similar problems. It might be expected, therefore, that Brussels would share the pain experienced by its member states by cutting its expenditure and not increasing it. Its recent proposal to increase its budget by approximately 5.9 per cent is out of touch with all reality. Even though the increase had been reduced by Ministers, it just goes to show that they have no budgetary control.
I do not propose to spend much time on discussing where all the EU money goes; suffice it to say that a prime example of what appears to me as a lay man to be gross duplication and waste is the new foreign service. Its budget is 20 times the cost of the UK’s Foreign Office and includes among other items £33 million for 150 bomb-proof limousines for all EU ambassadors. The number of staff employed by its quangos and committees alone has tripled during the past five years, amounting to a total cost of more than £2 billion in 2011. It has just opened a new £25 million office in London, and our Foreign Secretary has claimed that the UK Government have brought the EU budget under control. Perhaps the noble Lord, Lord Sassoon, could confirm in his reply that the UK has no liability for any losses incurred by the ECB, another potential burden on this country.
It is a shame that our Deputy Prime Minister has chosen to describe those who want treaty change as “populists, chauvinists and demagogues”. I am afraid that I fit into that category. Surely those who do not want treaty change can raise the level of debate higher than this. However, we must be grateful to our Deputy Prime Minister for supplying us with the information that an extra £1 billion of government expenditure in the UK would create 200,000 to 300,000 jobs. By extrapolation—and perhaps this is unfair—expenditure of £15 billion, which is our gross contribution to the EU would create 3 million to 4 million jobs, matches both our annual contribution to Brussels and the mystical, unsubstantiated and inaccurate figure from the Government that 3 million jobs would be lost if the UK left the EU.
The UK exports less than 10 per cent of GDP in goods and services to the EU each year, yet, as has been said, the EU influences 100 per cent of the UK economy. British exports worldwide, outside the EU, are substantially more than those within it and are growing much faster.
If one turns to the longer term, one sees that the EU has a declining population whereas most of the countries in the rest of the world have rising populations, particularly the US, out largest country export market. The EU is forecast to lose 16 per cent of its current working population by 2050, more than the current working-age population of Germany. The US is to gain 17 per cent. Let us not forget that the Lisbon treaty obliges the EU to negotiate free trade agreements with a member state that wishes to withdraw. It already has free trade agreements with more 80 per cent of all member countries. Our Chancellor says that he is worried that if we do not fully participate in the bail-out negotiations, we could become a “second-tier … state”. Good. Then we can join the USA and the other 165 countries that are not members—China, India, Brazil to mention but three—and be free of the thousands of regulations that come from Brussels.
I am confident that a cost-benefit analysis will show —after all, we have it for other legislation—that the costs far outweigh the benefits. In addition, there is only one way to restore our nation status and sovereignty, and that is to renegotiate our relationship with the EU to achieve what many of us were led to believe; namely, that we entered into a free trade area and not a federal Union. I therefore support the excellent Bill of the noble Lord, Lord Pearson, as a major step in this direction.
Lord Gilbert
My Lords, I was very taken by the mention made by the noble Lord, Lord Stevens, of bombproof limousines, although in this country they would be more suitably donated to elected politicians than to faceless bureaucrats, but the idea is one that might find a considerable welcome in the Government. Before I get down to my main remarks, I would like to say to noble Lords that I have based much of what I want to say on an article in the December issue of a magazine called Standpoint; it is by Mr Daniel Hannan, who happens to be the Conservative MEP for South East England. I also want to express my unreservedly warm welcome to this Bill from the noble Lord, Lord Pearson—I hope that I may call him my noble friend because I feel that he is. I congratulate him on his persistence. I am afraid that there is virtually nothing I want to say on the Bill because he said it all quite brilliantly earlier in his speech. His remarks were well researched, as they always are, and I also congratulate him on that. It is a treat to listen to him.
However, as several noble Lords have pointed out, our relations with the EU go far wider than economic questions. We have the common agricultural policy which, in my view, is wicked—I have chosen that word with care—because of what it has done to the developing countries of the world. We have the common fisheries policy which is disgusting because of what it has done to the oceans around these islands. Then we have the idiotic nonsense of the eurozone. There are some people, even in this House, who would like us to join up with the crew that brought us the common agricultural policy and the common fisheries policy and the eurozone in a common security and defence policy. Can you imagine having a common security and defence policy with people like that? It is absolutely ridiculous, for very good reasons.
Incidentally, I recall a phone call I received while I was working in New York in the early 1960s, although I cannot remember the exact date. Charles de Gaulle had vetoed our entry into what was then the Common Market. A friend at the British Consulate rang me to say, “John, have you heard the news? It is marvellous news”. I said in reply, “I think it’s marvellous news, but why do you think it’s marvellous news, Richard? I thought that you were in favour of our joining the common market.” He replied, “Yes, but don’t you see, they will bringing us within six months the crown of Europe on a platter”. That is what the Foreign Office thought about the EU, or the EC as it was in those days. How wrong they were.
Obviously I accept and endorse the motives behind the construction of all the European organisations and institutions because they are driven by very high-minded and fundamentally humane ideals, ones that are thoroughly decent. But we have to look beyond that. I was interested in the remarks of the noble Lord, Lord Risby, who I have not had the pleasure of hearing before. He pointed out that we have to take account of our geography because it is an important factor. The noble Lord is absolutely right, but for my money, our closest friends are not our nearest neighbours, with the possible exception of the Irish, as I have said before. The closest friends of this country are to be found in Australia, New Zealand, Canada and the United States, but not in other countries which I shall not name in this debate. It is perfectly obvious from the history of the last many centuries where our friends are.
I recall a debate in the Parliamentary Labour Party when I was quite a freshman. The late Roy Jenkins got up and with that ineffable trademark of his dismissing something as not worthy of consideration, he said, “I have never had much time for kith and kin in politics”. When Roy Jenkins said that, I thought of a friend of mine called Doug Neill in Canada who lost three brothers on the same day at Dieppe. I have a lot of time for kith and kin in politics. I think we should be with our friends.
I do not take seriously the idiot gentleman—maybe he is not an idiot—who said the other day that very soon all of Europe will be speaking German. Obviously that was a metaphorical remark, but it is just as dangerous metaphorically as it is literally. That is what the EC is leading us towards today. I have one quotation from the article which came from Angela Merkel in October:
“Nobody should take for granted another 50 years of peace and prosperity in Europe”.
They are not my words, but those of Angela Merkel. If she says that we cannot be assured of another 50 years of peace in Europe, I ask myself in which direction will the Bundeswehr be marching.
Lord Gilbert
Well, she said it, not me. When you get the leaders of Europe using the sort of apocalyptic language which so offends my noble friend, I suggest that he should address himself to the people who use it, not me.
I have a solution for Europe. I think that the EU should have joined EFTA as a single unit. I would have been perfectly happy with that arrangement, so do not let anyone say that those of us who are against the construct of the EU are anti-European. Later on I would hope to see a widened EFTA expanded into a NAFTA. That is the way forward. But that is for the distant future. In the short run, what we need now is the sort of information that the noble Lord, Lord Pearson, is seeking in his Bill. I congratulate him and he will have my full support.
Lord Cormack
My Lords, having listened to every word of the debate, I would just like to refer your Lordships’ House to one point. I want to remind noble Lords of a very remarkable man, a friend of mine who was a distinguished Member of your Lordships’ House until a couple of years ago—the late Lord Dahrendorf. It seemed to me that Lord Dahrendorf had it right. He was a visionary, a man who distributed literature against Hitler on the streets of Berlin, and who served Germany in Parliament and represented Germany in the Commission in Brussels. He then came here and, having taken British nationality—although he was still given the German Order of Merit—he served our country with vision and distinction. He warned this House and Europe in general of the folly of entering too prematurely into a single currency. He thought the whole idea was questionable because without political union, of which he was not in favour, you could not have a proper working single currency.
I do not go with the noble Lord, Lord Pearson, in wanting to pull out of Europe, but the lesson of today’s debate is that we have to rethink our place within it. Those who are still peddling the single currency as a panacea have to realise that it has achieved far less than they thought it would. It has achieved about as much as Lord Dahrendorf thought it would when he warned that that way could lie disaster.
Lord Davies of Oldham
My Lords, I, too, offer my congratulations to the noble Lord, Lord Pearson, on introducing his Bill and on opening the debate with his usual stirring speech. This has been a striking debate because, while on the whole cost-benefit analyses have played a relatively small part in our deliberations either in or out of Europe, they have been the burden of the majority of speeches. That is why, when the noble Lord is congratulated in some quarters on the timeliness of this debate, I am afraid I beg to differ. I cannot think of anything less timely than Britain beginning a potential process of long debate on whether we should continue as members of the European Community when the whole of the world is in such an intensive economic crisis.
We in Britain know the costs that are being borne by our people at the present time. We know about the increase in unemployment. We know about the reduction in services on which our people rely. Of course, our crisis looks relatively marginal compared with the crisis in the eurozone. I do not hold it against those who have long careers of criticism of the European Community to use the crisis in the eurozone to some advantage, particularly if they are in the position of being able to say, “We told you so”. At the time, the Labour Government also said, “We told you so”, because we made sure that we did not join the eurozone.
However, it is not just Europe: the United States economy is largely stalled. The one part of the world that is expressing itself in more positive terms in its economy is of course China, the other south-east Asian growing economies and India. When China is suggested as a possible solution to the problems of sovereign debt crisis in Europe, do we not learn the lessons of interdependence? Do we not appreciate that we are not going to solve these problems through unilateral action but by considerable international economic action to promote growth, develop jobs and stimulate demand?
We know that we cannot do this on our own. We know that we cannot do it readily if the European market stays as depressed as it is. Yet we have today a suggestion that we do a cost-benefit analysis on Europe. The noble Lord, Lord Bilimoria, suggested that the Treasury does this every day. The Minister will find the response to that particular point fairly straightforward. I am not so sure that the analysis is carried out in the Treasury every day in quite the comprehensive terms that the noble Lord, Lord Pearson, suggests. The Treasury should be engaged in rather more significant matters of reviving the British economy at the present time than that which is proposed in the Bill.
I had some sympathy with my noble friend Lord Lea when he asked about the methodology of the small group of carefully balanced individuals setting about their cost-benefit analysis. I appreciated rather more the contribution of the noble Lord, Lord Risby, who said that we cannot get away from our geography or avoid the consequences of the European crisis at the present time. That is why we should be directing ourselves towards new solutions to the situation.
As always, I have considerable sympathy for the Minister responding to a debate of this extent and complexity, to say nothing of passion. He will have noticed that the noble Lord, Lord Risby, is alone in being a Member from his own Benches who is not severely and totally critical of the market. The noble Lord demanded that the Minister get some pretty clear indication today that this cost-benefit analysis would bear some kind of fruit in Britain's future in Europe.
A cost-benefit analysis would certainly need to address itself to some rather tricky points. My noble friend Lord Davies of Stamford asked the obvious question of whether the Japanese motor companies would be in Britain if Britain were not part of the European Community. How does one set about counting the benefits derived from that analysis against the background where we all know where the British motor car industry was in the mid-1980s until the Japanese companies arrived here?
Surely what we need at this point of real crisis is not to cast uncertainty in Europe and uncertainty in the markets about where Britain would stand in relation to Europe. In this crisis, we do not need added uncertainty, certainly not one of such significance as this. Surely what we need are degrees of confidence. To cut ourselves off from a market of 500 million customers is scarcely conducive to international confidence. It would suggest that we had lost faith in Europe and it might even suggest that we had lost faith in our ability to compete with our European rivals.
It is clear that high-value services and highly skilled manufacturing need to be underwritten. I heard what the noble Lord, Lord Kakkar, said about the particular issues of the directives that he is concerned about. As ever, European directives certainly exercise our minds greatly in a whole range of areas, but the noble Lord would be the first to acknowledge that medical science is international in its research and international in its advances and that a great deal of that work depends on international co-operation of a high degree.
In addition to medicine, we can quote the issue that cropped up in this debate if only in passing: the whole issue of the environment. Britain has been in the lead in Europe in developing policies on the problems of our environment. We all know what the challenge is and we all know that significant costs are involved for industry and for householders as well as for the economy in coping with climate change. We also know the catastrophic consequences of us not acting. Yet Britain has been the lead in Europe on this project.
In Committee we will enjoy more fruitful debates on this Bill and analyse some of these issues with much closer scrutiny than we have been able to do in general terms today. However, although I will be only too happy to see the Bill get its Second Reading and I look forward to future exchanges, the real issues that face this country are not those of membership of the European community but more fundamental economic issues.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, I start by congratulating the noble Lord, Lord Pearson of Rannoch, on getting this debate today. I disagree with the noble Lord, Lord Davies of Oldham. It is quite right that we should be debating Europe at this very difficult and challenging time. I also thank all noble Lords for what has turned out to be a valuable and thought-provoking debate. Having said that, I make it clear at the beginning that the Government have significant reservations about the Bill that we are debating today.
I am between the rock of noble Lords wanting to move on to complete two other significant Private Member’s Bills’ Second Readings today and the hard place of doing justice to what has been a very stimulating debate. The noble Lord, Lord Davies of Oldham, has already pointed out my problem, and I am grateful to him for not adding to it. I thought that the string of questions was about to come, but it did not and I am grateful for that.
As we are all aware, these are extremely dangerous times for the global economy. The crisis in the euro area continues to undermine markets across the world, the UK included. As my right honourable friend the Chancellor has said, resolving the euro area crisis would be the biggest single boost to the UK economy this autumn.
As well as resolving the immediate crisis, Europe faces significant challenges that go to the very core of its raison d’être. What is the EU’s purpose in an open and competitive global economy? What do we need to change for it to meet that vision? We are right to ask these questions, but we will be heard and make a difference only so long as we are a core member of the EU, and we will make sure under this Government that our voice is heard in Europe, exactly as it has been heard most recently on the negotiations for the EU 2012 budget. I remind my noble friends Lord Liverpool and Lord Stevens of Ludgate of what we have done to peg back the proposed increase successfully, resisting proposals for inflation-busting increases. But of course I agree with my noble friend Lord Stevens that much more needs to be done and that there needs to be real budgetary restraint by the Commission for the next few years. We have saved €12 billion against the ceiling that was there in the 2005 financial perspective, but there is much more.
While we are on this topic, I would say to the noble Lords, Lord Pearson of Rannoch and Lord Willoughby de Broke, that I do not recognise the numbers that they were quoting. The net contribution of the UK to the EU in 2010-11 is estimated at £7.6 billion, up from £4.7 billion in 2009-10, but of course the reason for that increase is because of the give-away that the last Government gave on the UK’s abatement. Having stepped up very significantly to the new level, the OBR’s figures are that the numbers now remain broadly level over the next few years.
As well as financial discipline, it is equally important that Europe pursues an ambitious agenda for growth.
Lord Pearson of Rannoch
For clarity’s sake I should say, following on from what the Minister has just said about our gross and net contributions, that he is talking about the Treasury figures. The figures that we gave are from the pink book and include all our contributions to the European venture, whether they go through the Treasury or not, such as the DfID budget. So I am afraid that our figures are the correct figures.
Lord Sassoon
My Lords, I was quoting the figures of the independent Office for Budget Responsibility, not the Treasury’s own figures, but let us turn to the more important issue: that Europe must pursue an ambitious agenda for growth. In the single market, I believe that we have one of the most powerful tools to ensure strong, sustainable and balanced growth not only across the EU but for the UK. The noble Lord, Lord Watson of Invergowrie, quoted all the figures that Ministers would customarily quote, so I am very grateful to him for helping me out. I will simply emphasise that this is a market worth €12 trillion and home to 500 million consumers.
Despite what the single market has achieved to date, however, so much more can still be done, so in answer to noble Lords, including my noble friend Lady Noakes, who rightly argue that we need assessment for well informed debate, I should say that I agree up to a point. When it comes to the forward-looking challenges as to how we are going to get the most out of the single market, yes, we need the analysis. That is why, for example, in February this year BIS published a significant study into the effects of completing the single market and the 7 per cent increase in UK GDP that could be achieved if we press forward with that project. A truly free and open single market in services and the creation of a digital single market could add as much as €800 billion to EU GDP.
In answer to the second and third so-called misconceptions mentioned by the noble Lord, Lord Pearson of Rannoch—I do not shy away from those but am very happy to address all four of them head on—I believe that it is only by being in the EU that we will drive forward the benefits of the single market and capture the very significant gains that remain out there. There is a lot to be done and it is very frustrating that things do not move forward, but it is easy to say that we can be outside it and somehow get all those benefits. If the market is to be driven forward we need to be there, at the table. We can unlock a further €60 billion of benefits to the EU from world trade through completion of EU free-trade agreements with key markets such as India, Canada and Singapore. Again, I do not agree with the noble Lord about what we could achieve in these areas if we simply had our own seat at the WTO. Just as we are doing here in the UK, we have to drive down the regulatory burdens and costs of doing business across the EU—something that was identified by a number of noble Lords in this debate.
Finally, in response to these questions of whether we could be outside it and have the benefit of the free market, the comparison that the noble Lord, Lord Stoddart of Swindon, made with Norway, for example, is simply wrong. I am grateful to the noble Lord, Lord Lea of Crondall, who has already addressed that point. Norway is a small country blessed with huge oil and gas reserves, which is what makes it principally different from countries such as the UK. We cannot simply therefore step somehow magically into their shoes. I also say to the noble Lord, Lord Stoddart of Swindon, that while overall we have to fight to increase our share of world trade and our exports, a trade deficit, taken narrowly, is not in itself a bad thing. We have to recognise the benefits of trade to both sides, and therefore cannot simply dismiss the benefits that we have from EU trade by saying that we have a deficit.
The question about the benefits of going forward but nevertheless improving the EU market is precisely why my right honourable friend the Prime Minister secured a commitment for an EU growth test: to filter out EU legislation that is harmful to growth and jobs. The Commission’s proposed financial transaction tax is one such example. The European Commission itself expects that such a tax could reduce EU GDP by as much as 3.4 per cent or €422 billion—madness. More than that, as my right honourable friend the Chancellor has said it is “a bullet aimed”, squarely,
“at the heart of London”.
I say to my noble friends Lord Ahmad of Wimbledon and Lord Liverpool that the financial transaction tax requires unanimity to go forward, and that it will not get UK support. However, just as we have done and will do on directives in financial services and on the EU budget, we will continue through the current crisis to defend the full range of Britain’s interests in Europe.
Having picked up some of the important general themes that noble Lords have raised in this debate, I shall turn briefly to one or two questions about the analysis here. I certainly agree with my noble friends Lord Risby and Lady Falkner of Margravine and the self-styled noble and maverick Lord, Lord Desai, that this all goes much wider than some narrow cost-benefit analysis. Once we start this discussion, such an analysis is important but not nearly sufficient. I also agree with my noble friend Lady Falkner that there is plenty of material out there; it is not that the debate cannot be informed by a whole range of credible and indeed less credible commentators. In 2010 the Treasury reviewed that literature, which is available on the Treasury website, so we do not shy away from looking at the issue from time to time. There was also the 2005 study, which again is available on the Treasury website. I hope that it is of some reassurance to the noble Lords, Lord Bilimoria and Lord Empey, that we at the Treasury do not spend our time doing these studies on a daily basis—I hope they would expect us to be getting with doing some more valuable work with our time—but from time to time we look at what the outside experts are coming up with.
We should remind ourselves that, in addition to the costs and benefits of the EU, we as a nation risk downplaying our prospects at every turn. It is important to recognise, for example, that in the World Bank’s ease of business rankings the UK has got back into the top 10 and is now ranked seventh. That is critical. So I believe that Britain is well placed. We have lot to do internally in the UK, of course, and I have no doubt that there will be more discussion about that next week. As I said, the EU has much more to do with our active and positive participation.
I take the points made by the two noble Lord Davieses who have spoken in this debate about the location of manufacturing and the benefits that we get from it. I agree. On other issues of trade and investment, my noble friend Lord Ryder of Wensum referred to recent remarks by the chairman of the Chinese sovereign wealth fund, the CIC, on the eurozone. That gives me an opportunity to remind the House that the same chairman of the CIC was here two weeks ago with a very large delegation of Chinese officials and businesses, looking at the opportunities in UK infrastructure. While others have to go to Beijing begging for bailouts, we are very pleased to receive delegations here to look at opportunities in the UK. That is the context in which we should see this debate.
The noble Lord, Lord Kakkar, referred to another area of great strength for the UK: our world-beating excellence in clinical research. He made some telling points but, on the broad point about working time regulations, I stress that the Government are committed to the view that working people should decide the hours that they work, and we will continue to make that abundantly clear to the European Commission.
I did not get many questions directly, but a point was specifically addressed to me by my noble friend Lord Stevens of Ludgate about the UK’s exposure to losses of the ECB. I can confirm that net losses or profits are allocated to euro-area national banks and that non-euro-area national banks, such as the Bank of England, do not receive profits or losses from the ECB. The UK makes a contribution to the capital of the ECB but that is simply in relation to the bank’s running costs.
Finally, we had two interesting and remarkable contributions at the end from a more historical perspective from the noble Lord, Lord Gilbert, and my noble friend Lord Cormack. I merely say that, of those two contributions, I was rather attracted by and appreciate that of my noble friend and his important reminder of the insights that the late Lord Dahrendorf brought to these discussions and to the country more broadly.
In brief conclusion, let me be absolutely clear that the Government believe that leaving the EU is not remotely in our national interest. Standing on the outside, we would still be subject to the rules made in Brussels on the single market but powerless to influence them. Rest assured that rules written without us will not generally be in the UK’s national interest. We have always been the driving force for open markets and free trade in the EU, and that is a role that we will continue to fulfil to ensure that the UK’s voice is still heard and the UK’s interests are protected.
Lord Pearson of Rannoch
My Lords, I am grateful to all noble Lords who have spoken, I suppose especially to those who were nice about my persistence in this matter. I find that very agreeable, and I assure them that I will do my best to continue in that endeavour.
Briefly, I will pick up on the two speeches that were, perhaps, most critical of the Bill, by the noble Lord, Lord Davies of Stamford, and the noble Baroness, Lady Falkner. To the noble Lord I say that when he talks about fish not respecting national boundaries, it is a fact that before we joined the common fisheries policy, some 70 per cent of all the fish that swim in what are now EU waters did so in waters which were ours, and would be ours were we to leave the common fisheries policy. On the common agricultural policy, of course we are not suggesting that we will not continue to give aid to farmers. At the moment, the £3.4 billion that we give them annually comes out of the gross contribution to the budget of £18.5 billion, and not, as I think he may have suggested, out of the net £10 billion which we send in cash to Brussels.
The noble Baroness, Lady Falkner—the only contributor from the Liberal Democrat Benches, and very welcome for that—criticised the composition of the committee. I am quite open to agreeing with her on that. I do not think that it is impossible to find respectable people with no firm opinion as to whether we should stay in or leave the European Union. One would find quite a few of those on your Lordships’ Cross Benches. As to the views of Scotland, Wales and Ireland, this would be a national study, which would be free to consider the separate positions of those countries. Then, I am afraid, the noble Baroness, made the mistake of confusing our membership of the European Union with our access to the single market. I suggest that we discuss this when she has had time to read what I have said in Hansard.
The noble Lord, Lord Desai, made the very good point that this Bill is perhaps too narrowly drawn, and what we want is not just an economic cost-benefit analysis but something much wider. I agree with him on that. Two of the earlier Bills that we discussed in recent years in fact went wider, and wanted to consider not only our economic costs and benefits but the effect of our EU membership on our constitution, defence and so on. So, I completely agree with that. I do not know whether the Bill is amendable, but, if it is not, no doubt we can try another one fairly soon.
I was grateful to the noble Lord, Lord Watson of Invergowrie, who put many interesting statistics before us. I think they came largely from the trade union movement and showed how positive our EU membership is in economic terms. That would have to be considered by the committee and looked at very closely. I agree with the noble Lord, Lord Lea of Crondall, that if the inquiry produced a report that showed how positive our membership was overall, that would be that and we would have to live with it.
Coming to the Front Bench speeches, there was a unanimity there from the political class against the Bill, which was not to be found in almost any of the other speeches. The noble Lord, Lord Davies of Oldham, said that this is completely the wrong time for this sort of Bill. Europe is in crisis and we must be good, lie down, get on with it and hope for the best, or words to that effect. The noble Lord, Lord Desai, said to me in an aside that may not find its way into Hansard, although I think it should, “Never fix a roof when it’s raining”. The noble Lord, Lord Davies, said that we need international action and cited the environment. He took the line that climate change or, as it used to be called, global warming is man-made. Quite a lot of us disagree with that.
The Minister also agreed that any Bill of this kind should go wider than a pure cost-benefit analysis. He said that it was an important Bill but not sufficient, and I am grateful for that. I think I have already put him straight on the gross and net contributions. We are working from the Pink Book, not the Treasury figures. I refer him in particular to table 9.2 on gross and net contributions in the Pink Book, which came out last Wednesday, some three months late—I do not quite know why.
A number of noble Lords said that we want to be like Norway. The noble Lord, Lord Sassoon, mentioned this. Well, we do not want to be like Norway. We would rather have the position of Switzerland.
I think the Minister agreed with the noble Lord, Lord Kakkar, about the working time directive and other European legislation that is damaging our National Health Service. He said that he would continue to press the Commission on this point. My final question to the Minister is: what is the point of the United Kingdom continuing to press the Commission on these and other burdens that come from Brussels? With 8 per cent of the votes in the Council, there is nothing that we can do to reverse them and we will not do so.
I conclude by thanking all noble Lords who have spoken. I beg to move that the Bill be read a second time.
Public Services (Social Value) Bill
Arrangement of Business
(13 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Shutt of Greetland
My Lords, noble Lords who were here three hours ago will recall that I suggested that today we should have an advisory speaking time of six minutes. I am afraid that is still the case; indeed, it could do with being somewhat less. We are endeavouring to consider the two Bills today. I hope that if people can be succinct, they really will be. If we could get through so that we tackle the third of today’s Bills by around 2.20 pm, we might still be able to get through. However, we will have to take a view sometime during the next Second Reading.
Human Trafficking (Further Provisions and Support for Victims) Bill [HL]
(13 years ago)
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Lord McColl of Dulwich
That the Bill be read a second time.
Relevant documents: 21st Report from the Delegated Powers Committee
Lord McColl of Dulwich
My Lords, I thank noble Lords who support the Bill, and the charitable sector, which does so much to combat human trafficking, especially organisations such as ECPAT, Care and the International Organisation for Migration.
First, I wish to consider some key trafficking stories and then key trafficking statistics. I will then set out the rationale for my Bill and provide an overview of some of the key clauses. I was asked to keep to six minutes just a few minutes ago but there is no way that I can. I begin by sharing with noble Lords what has for me been the most salutary part of preparing for this Bill—not the reading of statistics but meeting the victims of trafficking.
I recently had the privilege of meeting Sophie, a young woman who experienced first hand the horrors of modern-day slavery. Sophie’s story is one that may surprise noble Lords, as her testimony demonstrates that trafficking is no respecter of persons. Sophie is a British woman who, at 24, was asked to accompany her boyfriend on a trip to Italy. Wooed by the enticing prospect of a holiday abroad, Sophie had no idea that what awaited her was a hellish situation. Her so-called boyfriend in fact lured her to Italy to pimp her out and make money to pay off his drug debts. Forced to service men in the back of a rundown petrol station, Sophie was physically, emotionally and psychologically abused by her trafficker. His threats terrorised her and meant that she feared leaving as she knew that his gang network was fully capable of tracking down not only her but her family members in the United Kingdom.
Then I think of Grace, a young woman who, since being rescued from her trafficking situation, is unable to sleep in her bed as a result of the memories she associates with her past sexual exploitation. Instead, she sleeps on her couch night after night, terrified of the thought of a bed. I also remember Anna, an adult woman who is receiving aftercare support in the United Kingdom but still suffers from night terrors because of the flashbacks she experiences, which are a constant reminder of the horror she endured. Then there is Maria, a young woman who was forced to undergo four abortions as a result of her exploitation in a brothel. Noble Lords can imagine the emotional scars with which she is living. I could go on but time is limited. Meeting the victims of trafficking is a deeply sobering experience which highlights the inadequacies of the current legislative and policy framework in place in the United Kingdom. My Bill seeks to address some of these shortfalls.
I turn from specific stories to the statistics. The number of trafficking victims here in the UK is horrifying. Between April 2009 and March 2011, the UK Human Trafficking Centre, which is the government body responsible for formal identification of trafficking victims, recorded 1,481 referrals via the national referral mechanism. These referrals included 88 nationalities. Of the 1,481 referrals, 72 per cent were female and 26 per cent were children. The actual number of victims is presumed to be much higher by front-line organisations such as the Poppy Project and ECPAT, which have evidence that many victims avoid the national referral mechanism because of their underlying fear of deportation if their immigration status becomes known to the Government. This fear is precisely what the traffickers use to control their victims.
This Bill seeks to address the challenge of trafficking primarily through the provision of better care for the victims of trafficking. I shall address some of the key clauses, including those pertaining to legal advocates for child victims of trafficking, compensation, and the need for an independent rapporteur. The truth is that although Britain is a signatory to the Council of Europe convention against human trafficking, no changes in domestic legislation have yet been made to give effect to these new commitments. My Bill rises to this challenge.
There has been another development in the past month—in October, to be precise. The European Commission accepted Britain’s application to opt in to the anti-trafficking directive. As an opted-in country, we will now have no choice but to make legislative changes to give effect to the directive. To this end, the Government are fortunate that my team has already done much of the work. However, my Bill goes a little beyond the directive in some key aspects, which I shall highlight later.
I start by addressing the need for better protection of children who have been trafficked. The government agency, the Child Exploitation and Online Protection Centre, publishes strategic threat assessments every year that make it plain that, between 2007 and February 2010, 942 child victims of trafficking were identified, of which a staggering 301, or 32 per cent, are reported to have gone missing while in local authority care. This is a completely unacceptable state of affairs.
Clause 7 requires the Government to provide safe and appropriate accommodation for rescued victims of trafficking. Although one might argue that existing measures provide accommodation through local authorities, the large number of children who go missing clearly implies that the current safety measures for children are completely inadequate. Yes, we are providing children with accommodation, but a 32 per cent disappearance rate indicates that the accommodation is neither safe nor appropriate.
Clause 9 of the Bill, meanwhile, sets out parameters for a legal advocate who would protect the child’s welfare and work in the best interests of the child from the moment that they are identified as a victim of trafficking. There is currently a major problem with rescued victims being passed from one social worker to another, with very little continuity of care. Just last week, I met a young girl who was in tears about this. There are even accounts of children going to court to find that their social worker has not turned up. The legal advocate—some people prefer the term “guardian”—would provide a dedicated person to accompany the child victim of trafficking in all their interactions with the state.
The Government already consider that the existing system of care is sufficient to meet the requirements of the anti-trafficking directive, but my Bill raises the bar because it requires the provision of a system of guardianship through legal advocates, and would offer significant additional protection to child victims of trafficking from the moment that a child is identified as a victim by the authorities. With 301 children going missing between 2007 and February 2010, we clearly need more robust child protection than at present. Clause 9 provides for this.
I turn to Clause 8 on the compensation for the victims of trafficking. There are two rationales for compensation. The first is restorative justice. Trafficking takes place because there are large profits to be made, but the victims of trafficking rarely benefit from their labour. Traffickers will often provide the bare minimum—sufficient food, clothing and shelter—to ensure that they can continue to work. Even after a victim is liberated from their exploitive position, they seldom receive compensation for the work they have already done. Restorative justice teaches that part of rehabilitation is requiring the damage meted out against victims to be redeemed by the subsequent action of convicted perpetrators to the greatest extent possible. Compensation is one way in which this can be achieved. The second is the rebuilding of damaged lives. Trafficking is a completely devastating experience from which it can be very difficult to recover. Victims of trafficking need help to put their lives back together again beyond the influence of traffickers. This requires resources, to which end the provision of compensation is hugely important.
Retrafficking is a genuine concern. We know from research on this subject that trafficked persons who return to their countries of origin are met by economic circumstances similar to those which put them at risk of trafficking in the first place. Compensation, along with strong reintegration programmes, is one way to help victims to rebuild their lives upon returning home. Both the Council of Europe convention on trafficking and the EU directive make provision for compensation but they fail to properly address the UK problem, which is as follows.
At the moment, provision is made for the victims of trafficking to access compensation but it is rendered null and void by the fact that there is no parallel provision granting those with a credible claim permission to remain in the UK while the claim is being processed. Without this, the right to access compensation to rebuild their lives and make sure that they are not retrafficked is purely theoretical. To this end, Clause 8 of my Bill sets out provisions for compensation, including the necessary leave to remain to make a compensation claim.
There is arguably one thing that is worse than being trafficked and that is being trafficked and then caught committing a criminal offence under duress, for which one is then prosecuted. In such situations, the victims of trafficking must feel that the whole world is against them, as first they feel the wrath of the traffickers—the law-breakers—and then they feel the wrath of the state, the law-enforcer. In this context, far from compounding the trauma of victims of trafficking, the state should seek to help. Tragically, however, what is actually happening is that victims of trafficking are being pushed into the second trauma of prosecution. An example of this problem is provided by the Anti-Trafficking Monitoring Group, which reports that a 14 year-old boy from Vietnam, initially found by police working on a cannabis farm, was placed in local authority care but subsequently went missing. Four months later, he was rediscovered at a second cannabis farm and was arrested and convicted of drug crimes. This seems to me morally indefensible.
I am not saying for one moment that we should move to a situation where all that any criminal has to do is to say that they have been a victim of trafficking and they will not be prosecuted. I am simply saying that such claims should be taken seriously and, when they are found to be genuine, we should not put victims of trafficking through the trauma of prosecution. Clause 5 of my Bill addresses this challenge.
Significant concern has been expressed about the Government’s commitment to fight trafficking, in part because no independent body exists to monitor trafficking in the light of which it is then possible to assess the efficacy of trafficking policy in the UK. Attempts by front-line organisations seeking information on trafficked persons are met with a frustrating lack of information. This includes data on victim care, assistance and support, and victims’ post-recovery period. The deficiency in record-keeping does not allow the Government to properly measure the impact of the current legislative and policy framework.
An independent watchdog or national rapporteur would fulfil the measures set out in the Council of Europe Convention on Action against Trafficking in Human Beings and the EU directive on human trafficking with regard to the provision of a national rapporteur. As such it would be completely independent of government, but have access to all relevant government data and produce regular public reports in the light of which one could assess whether things are improving or getting worse and whether the current policy and legislation are working.
However, the Government have argued that Britain is already compliant with the national rapporteur provisions because of the existence of an interdepartmental ministerial committee on trafficking. That is problematic for several reasons. First, far from being independent of government, an interdepartmental ministerial committee is clearly right at the heart of government. Secondly, as answers to Parliamentary Questions have revealed, that committee produces no reports. We know that information-sharing among immigration officials, social services and charities across the UK is critical in the fight against trafficking. We must facilitate an annual assessment of the Government’s progress in the area in order to recommend robust policies in the future. Clause 12 of my Bill makes provision for that.
I could go on discussing other clauses in the Bill, but I conclude by saying simply that I am delighted that we are a signatory of the Council of Europe trafficking convention, that we have opted in to the anti-trafficking directive and that human trafficking is an explicit commitment of the coalition agreement. I am delighted by all this good intent but no amount of good intentions is any substitute for results. At present, our results—like losing 301 trafficked children in three years—are not very inspiring. We need to connect our good intentions to a clear political will that will follow through by introducing appropriate legislative changes to give effect to our good intentions. That is the reason for my Bill. I commend it to the House. I beg to move.
Lord Sheikh
My Lords, I am pleased to have this opportunity to congratulate my noble friend Lord McColl of Dulwich on bringing forward this Bill for your Lordships' consideration. I have taken a long interest in the subject of human trafficking, as it is the cause of much suffering to large numbers of vulnerable people. I have spoken on the subject several times in your Lordships' House.
Despite concerted efforts in this country and across the world, the appalling reality is that human trafficking is one of the fastest-growing international criminal activities. I welcome very strongly the lead that the Government have shown in making this country one of the world's leaders in combating trafficking. The decision to opt in to the European Union human trafficking directive will extend our powers to prosecute United Kingdom nationals who commit offences anywhere in the world, even when there is no connection to the United Kingdom. I welcome the inclusion of Clause 4, which amends the current arrangements for trafficking involving a country other than the United Kingdom for sexual exploitation. The traffickers need to know that there is nowhere they can hide from justice. That is why I welcome Clause 1 of the Bill, which makes it very clear that consent to human trafficking shall be irrelevant. Part 3 of the Bill provides for special measures for witnesses. I hope that this will make it easier to bring successful proceedings. The European Union directive will also provide for a more co-ordinated and shared approach among the members of the European Union, which I welcome.
Just over a month ago, on Tuesday 18 October, we had the opportunity to mark Anti-Slavery Day. As a sign of the Prime Minister's personal commitment, a reception was hosted at No. 10 Downing Street. Human trafficking is a form of slavery and none of us should be prepared to tolerate that in the 21st century. That is why my noble friend's Bill is so timely and so important. If we are to bring an end to this practice, we need to understand how the traffickers behave. We have to recognise that these people will change their ways to try to evade the rules and regulations that we put in place. We need to make sure that we are one step ahead of them at all times.
I recognise that it has been a priority of the Government for a considerable time to act on human trafficking. We cannot afford to let down our guard. Some progress has been made but there is a lot more to do. The creation of the National Crime Agency will improve our capabilities, not least because it will bring together general law enforcement and border policing to share intelligence and conduct joint operations. Tighter immigration controls will also have a part to play, as will improved intelligence. We must raise the stakes for the traffickers.
The British people will not tolerate this activity, which often takes place behind closed doors and in secret. Very often, victims find themselves coerced into illegal working. They are compelled by the traffickers to break the law, and I am pleased by Clause 5, which will provide immunity under certain circumstances. It is also important that compensation will be provided, as proposed by Clause 8. Supporting victims is central to increasing the number of people who are successfully prosecuted, but it is easy to sympathise with a victim who does not wish to take the stand in court, and I support the provisions of Clause 5 in this regard. The Crown Prosecution Service is aware of this, and I welcome its public policy statement on developing further measures to help victims. We need to ensure that there is a greater range of specialist care providers able to support victims of this crime.
Part 2 provides a duty on the Secretary of State to set out the procedure for identifying a person who might have been the victim of a human trafficking offence. It also sets out the assistance and support that must be provided. That is also to be welcomed. Vigilance at local level is also important. Every locality must be aware of the dangers and prepared to act.
Intelligence must lie at the heart of our operations. We must make sure that traffickers are not able to enter this country, and we must proceed firmly against those responsible. They are often international organised groups that make profits from these crimes. I know that the Government are alive to the issue and are working on an ever more effective strategy to combat human trafficking. The Bill will provide an additional focus on the needs of those victims who have suffered much.
We need also to ensure that sentences serve as a realistic deterrent to those who perpetrate this evil. That is why Clause 2 offers scope to increase sentences by defining aggravating factors. The national referral mechanism enables the speedy identification of victims in this country, and the provision of specialist care and support. However, there are still those who manage to slip through the net. We need comprehensive cover to identify and support victims. It is time to do more to help support the thousands of vulnerable women and children who are smuggled across borders and forced to work or beg, or pushed into the sex trade. A number of victims also end up working in cannabis farms, which of course increases the criminal activity of producing illegal substances. The inclusion of Clause 3 in the Bill is very much appreciated.
The launch, on Anti-Slavery Day, of the initiative with Virgin Atlantic to provide cabin crew with training to spot potential traffickers and victims was commendable. It is important that we put in place prevention and monitoring measures, and I welcome the commitment in Part 4 to the publication of an annual strategy.
My noble friend Lord McColl is a very distinguished Member of your Lordships' House and is well respected in this place and beyond for his compassion, generosity and honour. I am very happy to support him and the Bill.
Lord Anderson of Swansea
My Lords, as the noble Lord, Lord Sheikh, has properly said, this is a vital Bill affecting a large number of vulnerable people exploited by evil gangs. I therefore think it quite wrong that the government business managers attempted to muzzle the noble Lord, Lord McColl, and to restrict him to six minutes, and to encourage the rest of us to finish all we have to say within what is now about 50 minutes.
I shall make two preliminary points. First, like the sad individual stories which the noble Lord, Lord McColl—I am tempted to call him “my noble friend” for all sorts of good reasons—has given, I was most moved by an episode of “From Our Own Correspondent” relating to a woman from Moldova looking forward to going to work in a cafe in Italy. The correspondent describes her wearing her best dress and, carrying her small number of belongings, waving goodbye to him. He felt quite sure that she was probably on her way, unwittingly, to a brothel.
This is not an evil restricted to London. I shall give one or two thoughts on the Welsh connection. I am delighted that the National Assembly has an all-party committee and that we in Wales have established a national co-ordinator, a former senior police officer, who, a few months ago, pointed out that the looser controls at our ports may well lead to an increase in trafficking by these evil individuals and organisations.
My chief interest is that I am a member of the Parliamentary Assembly of the Council of Europe and, as noble Lords are aware, the Council of Europe introduced a treaty on action against trafficking in human beings which came into force in February 2008. The UK ratified the convention in December of that year, and it has been in force in our country since April 2009. Our compliance with the convention is now monitored by the Council of Europe group of experts on the convention—known as GRETA—which visited this country at the end of October to evaluate the implementation of the convention, so this issue is not far from the Government’s mind.
I congratulate the Government on the coalition agreement on tackling human trafficking as a priority, but I have concerns about the lack of effort to make us compliant with the demands of the Council of Europe convention, and I suspect that those concerns are shared by GRETA. They are twofold; first, the Government seem to have taken action only at the level of policy, not at the level of legislation, which raises real concerns about long-term enforceability within our legal system; and secondly, the Government seem to relate to the subject of trafficking as if it were an immigration problem when the Council of Europe’s convention against trafficking is in fact a human rights convention. Anyone reading the recently published government anti-trafficking strategy could be forgiven for thinking that we are not a signatory to the Council of Europe convention because of the overwhelming focus on immigration and lack of recognition of and focus on the human rights dimension, which is covered strongly in this welcome Bill.
In this context, of course I welcome the Bill because it provides the most concrete device to appear since we became a convention signatory for giving our new commitments effect within UK law. The Bill is, I am sure, precisely the kind of innovation which GRETA would approve and without which I suspect we are unlikely to get high marks when GRETA’s report is published in June.
For time reasons, I shall not go through the individual clauses of the Bill and their relation to the convention, save to mention that Article 12 of the convention requires the Government to provide assistance to victims of trafficking. However, as the noble Lord described, the situation on the ground suggests that service provision is far from ideal and Clause 7 addresses those issues.
Article 10 of the convention states that as soon as an unaccompanied child is identified, that child must be provided with representation,
“by a legal guardian, organisation or authority which shall act in the best interests of that child”;
However, in the UK we still have no system of guardianship as have other developed countries in the European Union. The noble Lord mentioned the sad figures of children who have escaped or been taken from local authority control, which is covered in Clause 9.
Finally, Article 29 of the convention requires states to consider appointing a national rapporteur. The UK Government have not taken serious action on this point thus far, which is covered in Clause 12. There are aspects of the convention not in the Bill, including Article 15, which deals with using assets seized from traffickers to fund assistance for the victims of trafficking. I hope that the Government will look at that.
The Government have done some good things. I particularly welcome the fact that expenditure has continued at the same level. However, we cannot take the convention seriously just through policy commitments. There is a need for some change within domestic legislation to give proper, enforceable, accountable expression to key convention commitments. This is the end purpose of the Bill, which I find timely and I wholly welcome. I congratulate the noble Lord on the Bill.
Baroness Doocey
My Lords, I, too, thank the noble Lord, Lord McColl of Dulwich, for introducing this Bill, which proposes some significant changes and much needed improvements on the current system. Clause 9, which provides for the appointment of a legal advocate for child victims of human trafficking, is sensible and in line with the ECPAT proposals. It would also fulfil the UK’s obligations as a signatory of the United Nations Convention on the Rights of the Child. I should like to focus my remarks on the problem of the international trafficking of children through our airports, ports and railway stations. I declare an interest as a member of the Metropolitan Police Authority.
An unfortunate side-effect of the globalisation of the economy is the globalisation of crime. The trafficking of people into slavery, although reprehensible, is nothing new and has been going on in one form or another for many centuries. But the increasing ease of international travel has brought fresh challenges and the law must keep up with these changes because the current system is not adequately equipped to deal with the problem. The greatest challenge is the large number of children brought into Britain as domestic slaves. The number of unaccompanied children entering Heathrow Airport gives some indication of the scale of the problem.
Some years ago, the Metropolitan Police and the UK Border Agency jointly set up a pilot project at Heathrow called Operation Paladin Child. In just three months, it found that 1,800 unaccompanied children came through the airport. Of these, it judged that 600 were vulnerable and almost half were under the age of 11.
Children are trafficked for a variety of reasons. Many are put to work as domestic slaves or childminders. Some, like Oliver Twist, are forced into street crime. Others are used for benefit fraud and, when they come of age, many are sexually exploited. Criminal gangs make very big money out of children. The Metropolitan Police estimates that each child forced into street crime makes £100,000 a year for their gangmasters. Benefit fraud is also hugely profitable, particularly the widespread practice of passing one baby from one gang to another so that gang members posing as the child’s relatives can make multiple benefit claims in many different parts of the country. Often, the children’s parents are tricked into sending them to the UK with a promise of a good education but, instead, their children are condemned to a life of slavery. Perhaps the most notorious case is that of Victoria Climbié, who was brought into Britain by her aunt to be used for benefit fraud.
Let me give two examples of the pain and suffering that these children often endure. A 14 year-old boy from South Africa was smuggled here on a containership with a number of other boys. By day, they were locked into the containers; by night, they were taken out and gang-raped by the crew. When the ship docked in the UK, one of the boys was put to work in a London factory by his uncle. After a while, he could not cope with it much longer. When he complained, his uncle showed him a photograph of his mother, dead from gunshot wounds, and gave him a choice: he could either continue to work in the factory or he would receive another photograph of the rest of his family who would suffer the same fate.
My second example is an eastern European woman accompanied by three children who was stopped at a regional airport in the UK. After much questioning, she finally admitted that the children were not hers—she did not know them; she had just met them; and she had been paid to deliver them to a central London address. More shocking still was her admission that this was her third such trip. Each time, she had been accompanied by three children. Who knows what fate awaited these children?
The team at Heathrow is very successful and has made it much more difficult for child traffickers, so the gangs have simply moved to easier points of entry such as the Eurostar terminal at St Pancras International railway station. Entry to the UK by train does not have such rigorous standards of security as air travel. Children of 12 and above may travel unaccompanied provided they have a form signed by their parent or guardian. However, there are no checks on the authenticity of the parent or guardian who signed the form, so the whole procedure is less than useless. Unaccompanied minors are on their own from the time they get on the train until the time they get off at St Pancras. To make matters worse, there are no dedicated child protection measures in place at St Pancras, so children can just get off the train and simply disappear into the ether.
The way we treat our children defines us as a society. It is totally unacceptable that, in the 21st century, children are still being trafficked into this country. This Bill will go a long way towards helping stamp out this evil trade.
Baroness Butler-Sloss
My Lords, I declare an interest as the co-chair of the All-Party Parliamentary Group on Human Trafficking. I support the Bill and I make no apology for also talking about Clause 9, which relates to the legal advocate.
This Bill is necessary, despite the good intentions of government. I congratulate the Government on signing the European Convention and the European Union directive and, even more, on their policy, including the important support of the Prime Minister.
Much of what is required in the directive is in our legislation and, in theory at least, in our practice, but there remains much more to be done. There are real issues over implementation of policy, and the Government may be oversanguine in their belief that they have done enough. I would suggest that the devil is in the detail.
There are 2.4 million people who are trafficked around the world. Human trafficking is the second most valuable illegal trade in the world and is worth billions of pounds. My greatest concern, from my own background, is in trafficked children. The noble Lord, Lord McColl, gave some details, but I shall add a few more.
From January to September of this year, 202 children were identified as trafficked: 67 from all parts of Africa; 50 from eastern Europe, mainly Romania, Slovakia and Bulgaria; 22 from other regions; and 63 from Asia, mainly from Vietnam. Your Lordships have already heard about Vietnamese children coming to this country. Why do they come? They are mainly boys who go into rented accommodation where the house has been stripped and turned into a cannabis factory. There are over 3,000 cannabis factories in London and something like 7,000 factories identified across the United Kingdom, most of them staffed by Vietnamese boys. It is a real problem because those boys in the factories are taken out by the police and Romanian Roma children are thieving on the streets. I do not know whether noble Lords have heard of “mobile surfers”. The police told me when I went along the Edgware Road with them some time ago that a boy of 12 or so we could see on the street was a mobile surfer. The child would run into a café where young people leave their mobiles on the table, pick one up, run out and go into the next café. They, along with Bulgarian children who steal on London Transport, are the victims rather than the criminals because their traffickers take the money from them. It is very important that we do not see these children as criminals when what in fact they are doing is providing money for their traffickers.
The system of adult victims in this country, although not perfect, is undoubtedly better than that for children. If a child is recognised as a victim, he or she is placed under social services’ care. There is a great danger, as the noble Lord, Lord McColl, pointed out, of a child being retrafficked, and he gave some worrying figures for missing children. The problem is that the social services who take these children in do not necessarily identify them as having been trafficked. My co-chairman of the group, Peter Bone MP, inquired of local authorities how many of them knew that their missing children had been trafficked. I think that only 11 authorities out of those which replied across the whole country knew that the children had actually been trafficked. That is of great concern.
Clause 9 would offer help that is not being provided by social workers. The proposed legal advocate would be able to support and advise children at each stage up to the age of 18. An extremely powerful letter from the ECPAT UK, signed by 25 different organisations including the children’s commissioners, the NSPCC and Barnardo’s, was sent to Tim Loughton, the Parliamentary Under-Secretary of State for Children at the Department for Education, on 14 October this year. It stated that the Government are failing to meet international obligations and that the general child protection services for these children are not sufficient. Child victims of trafficking require independent and dedicated guardians with parental responsibility to look after their educational, medical, practical and legal requirements. Who speaks for these children at the moment? There is a real problem here in that social workers cannot be expected to speak for them across the multiplicity of procedures that they have to go through. What the legal advocate would do is befriend the child, become a person the child could trust, and on the end of a telephone could advise and guide them through all these procedures. As I have said, local authorities mostly do not even know that the children who are missing are trafficked children.
Some of the NGOs, particularly Barnardo’s, offer legal advocates, but the major problem for an NGO in doing so is that the agencies do not recognise that they have any serious influence and do not take any notice of them. What is therefore required in the Bill is a legal advocate either with parental responsibility or with some other authority of which the various agencies would have to take account. Has the Minister looked at the interesting pilot scheme in Scotland where, I think, eight guardians are working in the Glasgow area with what has been so far a real degree of success? Will the Minister look not only at that scheme, but also at those NGOs which are offering advocate services to see whether, as long as they are given sufficient authority that the agencies must listen to them, that could be built on? If the Government do not do this, these children will continue to fall through the system and continue to be denied their absolute basic requirements. Let us face it: these children are victims and they are not receiving the help in this country that they should.
The Lord Bishop of St Edmundsbury and Ipswich
My Lords, from these Benches, I offer our congratulations to the noble Lord, Lord McColl, and thank him very much for bringing this timely and urgent Bill to our attention. It is ironic, coming from a diocese where Clarkson, one of Wilberforce's companions, is buried in the churchyard just outside Ipswich, that 180 years later we are having to debate again in this House slavery, which is what we are really talking about.
I endorse from these Benches everything that the noble Lord said about the care of children, their need for advocacy and the danger of their being retrafficked. I will concentrate particularly on Clause 8 and the whole matter of compensation. As I understand it, at present victims of trafficking can seek compensation through a compensation order granted in criminal proceedings, through an application to the criminal injuries compensation scheme, through civil litigation and, where applicable, through an employment tribunal. However, Anti-Slavery International’s report makes it clear that victims of trafficking are seldom aware of their rights, particularly to compensation, and rarely have an opportunity to use them.
Again, putting this into perspective with a real person, there is the case of Lucy, a domestic worker from Indonesia who was employed by a diplomat in the UK for two years and paid something like £250 a month for full-time work. She was abused by her employer and prevented from returning home. Even though Lucy received a positive decision on her trafficking case by the UK Government, she was granted only temporary leave to remain for 30 to 90 days. That was not nearly enough time to make a compensation claim under the criminal injuries compensation scheme.
The option of leave to remain in Clause 8 of the Bill would allow people such as Lucy to stay in the UK while securing the compensation that they rightly deserve. While it is not open to the UK Government to affect some of the economic and social circumstances in which trafficking originates in other countries, it is open to us to offer this sense of restorative justice.
The Christian churches are particularly supportive of anything that offers that sense of restoration. It is not just a matter of monetary compensation; it is about offering the chance of gaining life skills that will prevent the retrafficking that is such a curse in these situations.
I am very aware of the pressures of time. There is much more that I would like to say, but I would like to close on this. Recently we were confronted again in our Sunday readings by the rather disturbing gospel that reminds us that what we do and what we fail to do to the least of others we do to Christ himself: “Inasmuch as you did it to the least of these my brothers and sisters, you did it to me”. That is a salutary thing for Christians to think about, but I would also say that for all of us, of any faith or none, protecting and helping victims of trafficking is about our common humanity and our sense that no one should be treated in this way. We on these Benches support this Bill wholeheartedly.
Baroness Berridge
My Lords, globalisation has brought many benefits. Cheap flights mean that this is the most well travelled generation. Internet communication gives to many more choice over where to live and work, and our food reflects a global supermarket. But all these benefits are also used by those who wish to trade in human lives, who have taken advantage of the portrayal of western countries as having streets paved with gold, so that human trafficking is now surpassed only by drugs as the most profitable illegal trade.
I believe that William Wilberforce would tell us to get our eye back on the ball and I am grateful to my noble friend Lord McColl for this Bill, which enables your Lordships to do just that. I know my noble friend's depth of concern is shared by many people, as I have received more e-mails requesting me to speak in this Bill than on any other legislation in my 10 months in this House. Although much of the Bill mirrors the European directive, which I am so pleased Her Majesty's Government will be implementing, I wish to speak specifically to two aspects of the Bill: the legal advocate and the national rapporteur.
The legal advocate seeks to address the terrible situation outlined by my noble friend Lord McColl that, in a three-year period, about one-third of those trafficked children in the care of a local authority just went missing. This problem urgently needs addressing, and the system of a social worker and advocacy support is not working properly. As I understand it, some social workers have not even heard of human trafficking, and apparently it is not part of the university curriculum for training social workers. Would it not make sense to have some specialist social workers for trafficked children, rather like the specialist foster carers that are currently being piloted by Barnardo’s?
Although I appreciate the particular vulnerability for trafficked children as they are in a foreign country and have to deal with a number of agencies, I understand the reluctance of the Government to provide a different system of support for these children. Many of the other children in local authority care who have not been trafficked are arguably equally as vulnerable. There will never be limitless resources and allocation must be just to all vulnerable children. However, if an increased focus in future on missing trafficked children and better training and awareness among professionals does not lead to a sharp decline in these statistics for missing trafficked children over the forthcoming year, would my noble friend the Minister agree to review the introduction of a legal advocate or guardian in those circumstances?
Secondly, I turn to the national rapporteur, which I think is such a lovely phrase, unlike the Inter-Departmental Ministerial Group on Human Trafficking, which is the Government's fulfilment of Article 19 of the directive. But seriously, in most other jurisdictions the national rapporteur is independent of government, which means that they can scrutinise the Government on the prevention and monitoring of trafficking. However, the national rapporteur should also be a figurehead, an individual who could give much needed public awareness of human trafficking and ensure that a clear message is communicated. The pink ribbon is the symbol for breast cancer and the daffodil is the symbol for Marie Curie Cancer Care, but human trafficking has a blue heart, a purple ribbon, a blue blindfold and a purple teardrop. Consistent public messaging is clearly needed.
Necessary and admirable though this Bill is, it deals only with the supply side of human trafficking. I believe that a national rapporteur who is a respected individual—and please note that I do not use the word “celebrity”—could help with the demand side of human trafficking. Will young men consider a message from the Inter-Departmental Ministerial Group on Human Trafficking about the possible plight of the woman who he pays for sex on a stag weekend? I think not. On such a vital issue, I cannot believe there is no suitable individual for this role.
With hundreds of thousands of people trafficked into the EU every year, it is so disappointing that only 100 to 300 prosecutions are brought each year. I think that the eurozone has more than one crisis on its hands. Many professionals are working hard to bring perpetrators to justice, and the evidence of the victim is vital. Many victims are prepared to testify, and we should be grateful that they are willing to remain here to do so. But is there not a mutual aspect missing here: that victims often need compensation for the crime committed in the UK to rebuild their lives and so should be allowed leave to remain here long enough to claim such compensation. Please would my noble friend the Minister ask that the discretion to grant leave to remain be used not just for the benefit of our judicial process but for the benefit of the victim? It is shameful that no human trafficking victim has successfully claimed compensation in the UK.
The sooner globalism communicates the message that our streets are not paved with gold, the better, and I sincerely hope that Anti-Slavery International is wrong that the figures reveal about a tenth of the problem. Sadly, I recognise the urgent need for this Bill and I commend it to your Lordships’ House.
Baroness Young of Hornsey
My Lords, I, too, express my thanks to the noble Lord, Lord McColl of Dulwich, for seeking to make legislative provision for measures both to combat human trafficking and to provide appropriate support for its victims. I declare an interest as a patron of Anti-Slavery International; the long history of that organisation reiterates the point made by the noble Baroness, Lady Doocey, that trafficking in one form or another is, sadly, not a recent but a centuries-old phenomenon. What is relatively new, however, is the multifaceted, cross-border nature of it. Organisations such as ECPAT UK, CARE and Stop the Traffik, which several noble Lords have already mentioned, would like to see more vigorous action on the part of the Government to identify, combat, and prevent human trafficking, particularly in relation to child victims, which is where I will focus my brief remarks today. I thank those organisations for their informative briefings.
I want to draw particular attention to the plight of children who are trapped and caught up in the various forms of this odious, illegal practice. It is hard to accept the fact that there are those who seek to use children for sexual exploitation, domestic servitude, forced labour, benefit fraud and involvement in criminal activity such as pick-pocketing, theft, begging and working in cannabis farms. Tragically, however, that is what is happening, as a recent report from the Child Exploitation and Online Protection Centre demonstrates. Of course, the very nature of this activity means that it is hard to give the precise numbers of children involved, but the level of the problem is indicated by the data collated by CEOP.
Of the 202 children trafficked so far this year, more than a quarter were destined for sexual exploitation—with the majority being girls, of course. The data also show the international nature of this trafficking into the UK; my noble and learned friend Lady Butler-Sloss has already given a sense of that. She mentioned that 67 children were trafficked from Africa, 29 of whom were from one country, Nigeria. Again, they were mostly female and sexually exploited. We have trafficking from Asia, from eastern Europe, from western Europe, from South America and from the Caribbean. It is indeed a global trade. John Cameron, head of the NSPCC's helpline, is quoted as saying:
“The gangs who bring these vulnerable children into the UK are highly organised and ruthless. The trafficking is often carried out like a military operation with victims being taken through several countries and passed along a line of criminal ‘agents'. Even if the children are intercepted by the authorities and put into care they are frequently tracked down again by the people exploiting them and spirited away to a slave-like existence”.
The noble Lord, Lord McColl, has already pointed to statistics from CEOP which reveal that in the UK approximately one-third of the 942 children identified as victims of trafficking went missing from local authority care. A number of noble Lords also referred to that fact. It is clear that the Government want to combat child trafficking—I have no doubt about that—as do local authorities and child protecting agencies. But the fact that even when a child is supposed to be in a safe place, they are not secure means that we are failing and that something is not working. If, over the course of three years, 301 children can go missing from local authority care provision—an average of around two every week—we can only imagine how many others without even that level of protection might be disappearing every week of the year.
I am aware that there have been a number of exchanges between concerned NGOs, such as those I mentioned earlier, and the Government about the issue of guardians for these most vulnerable victims of trafficking. Members of your Lordships’ House may be aware that the Prime Minister does not currently feel there is a need for such a system as, in a letter to ECPAT UK, he wrote,
“we believe that existing arrangements for children are comprehensive—and that introducing a further professional … would be unhelpful”.
This approach is disputed by the majority of organisations working in this field and, indeed, by the majority of noble Lords this afternoon.
ECPAT UK believes that a system of guardianship is essential to ensure the safety and well-being of child victims of trafficking. It would minimise the risk of child victims of trafficking becoming “the disappeared”, help to break the connection to their traffickers and provide a base for a long and difficult journey to something approaching recovery. ECPAT has also reported that young people who themselves have been in these situations say that such a system would have helped them to improve their life chances.
While I support the overarching principles of this human trafficking Bill, particularly on the matter of guardianship, I am also concerned about other strategies being deployed to prevent these wretched, illegal forms of child exploitation. A system of guardianship and an independent rapporteur, as suggested in the Bill, would be helpful in preventing children falling into a cycle of repeated exploitation, but what other measures are being taken to prevent trafficking in the first place?
Poverty and the lack of education and opportunity that many families experience in developing countries mean that parents and children alike can be tricked into thinking that the trafficker is leading these children towards a prosperous, happy life overseas. A basic desire to improve their situation makes these families vulnerable to the blandishments of such criminals.
Poverty is obviously a big issue and, as has already been suggested, will not be solved overnight. However, what steps are the Government taking to work with Governments and NGOs from the countries that are the source of many of the trafficked children who end up in the UK to raise awareness of the real dangers that they may face? Raising awareness of the realities of what will most likely happen to their children is one way of protecting vulnerable families. So is supporting NGOs in the UK in their efforts to educate communities here about children’s and women’s rights.
I mentioned earlier some of the countries from which children are consistently trafficked into Britain. A substantial number come from east Africa and Nigeria. AFRUCA, which stands for Africans Unite against Child Abuse, was formed in 2001 specifically to address the issue of all kinds of abuse of African children. This culturally specific organization has insider knowledge of some of the cultural traditions and beliefs that have led to children coming here from the continent and being subjected to harm. It organises activities, information-spreading, education and advisory services. I agree with World Vision, which recommends that the UK Government should work with African and other affected communities in the UK and with organisations such as AFRUCA.
It is important to conduct rigorous research on best practice, methods and strategies to identify and raise awareness of demand as the root cause of trafficking, something that the noble Baroness, Lady Berridge, alluded to. That should also be a priority.
Lord Wei
My Lords, I, too, congratulate the noble Lord, Lord McColl, on his Bill, which raises some very important issues. I am delighted to speak in support of it today and declare an interest as an adviser to the Community Foundation Network, whose members do a huge amount all over the UK to both fund and mobilise community-led solutions to local social problems. One such problem is fuel poverty, which it is tackling through its current Surviving Winter appeal where members of the public are invited to donate their winter fuel allowance to others in greater need of it in their community.
In the time available to me, I would like to home in on one specific challenge, protecting the victims of child trafficking, and one specific part of the Bill, Clause 9. The ECPAT UK child trafficking data and statistics briefing for May 2011 does not make for pleasant reading. As my noble friend Lord McColl and others have mentioned, it reveals that between 2007 and February 2010, 301 of the 942 children identified as victims of trafficking went missing from local authority care, mainly under the watch of stretched social workers, and with many children passed from one agency to another, sometimes with limited or no dedicated representation to help support them.
Clause 9 of the Bill addresses these challenges by providing a much more robust system of protection in the form of a legal advocate, who would have dedicated responsibility for supporting a child victim of trafficking in all their interactions with the state—the police, the courts, social services and so on. Such provision is based on international best practice in child guardianship, and we must afford child victims of trafficking in the UK nothing less if we are to demonstrate genuine compassion for these incredibly vulnerable and needy children.
There is a problem, however. Guardianship is generally costly and, as everyone knows, at present the Government do not have much in the way of spare cash. Some might respond to the financial constraints of the moment by resigning themselves to the sorry conclusion, “It will never happen”. While this may be logical if you subscribe to a narrowly statist approach to service delivery, it is not if you take a broader view. The truth is that there is an important alternative approach to service provision that trades on a commitment to localism and the principles of citizen-led social action which I and others have advocated and sought to help foster over the past decade. If 946 victims of child trafficking are identified over three years, that works out at just over 300 children a year. That is a significant number but rising to the challenge would not be beyond the capacity of the voluntary sector working in partnership with government.
In the run-up to this debate, I was approached by a number of different charities that said that they would be very interested in working with the Government to develop a guardian programme staffed by volunteers. Of course, there would be some cost implications. They made it very plain to me that it would be absolutely imperative that volunteer guardians were properly trained to deal with what can be very challenging situations. They would also need to have ongoing supervision. This would all cost money which would need to be raised somehow. Crucially, however, these costs would be very small when compared with a classical, salaried statist approach to guardianship. The analogy with such a solution would be that of local magistrates, who give huge amounts of time to serve their communities. Similarly I do not think it beyond the wit of man, even in these strained times, to find 300 people nationwide willing to give a few hours a week to help a trafficked child access justice and fair treatment after the trauma of having been kidnapped and enslaved, and of having been abandoned or of having escaped. This is where the drafting of the noble Lord’s Bill is so very helpful. It makes provision for a legal advocate but does not define the arrangements in great detail. Instead, it gives the Secretary of State an order-making power in Clause 9(1). This order-making power could be used to define a very expensive statist approach to guardianship or it could make provision for the Government to work with the voluntary sector to develop a very much more cost-effective guardian, prepared and provided by civil society.
In making this suggestion today, I anticipate two objections to which I would like to respond. First, some will argue that, if charities are expressing an interest but have not yet set anything up, things cannot progress through this Bill. The absence of an up-and-running voluntary sector proposal, however, does not prevent the Government from future-proofing legislation through the provision of regulations that provide for the possibility of working with the voluntary sector on child guardians as and when voluntary initiatives get off the ground. The second objection I anticipate to my proposal for an alternative approach to guardianship pioneered through a government/voluntary sector partnership is that it would be quite a challenge to create a nationwide network and organisation to rise to the guardianship challenge overnight. I agree, and in the spirit of the Localism Bill would like to suggest that either the regulations make provision for—or, if this is not possible, the Bill is amended to make provision for—charities and community groups to bid to take on the development of a system of voluntary local guardians for trafficked children within a local authority area. As with the community right to challenge in the Localism Bill, if the local authority does not deem the proposal to be sufficiently robust it should have the right to reject it, after which the charity should, in turn, have the right to appeal to the Secretary of State or seek a judicial review. Such a legal framework would facilitate a grass-roots approach to guardianship that, in time, would come to cover the UK, I hope. It would not be dependent on government moneys but I am confident that, if it worked, local authorities would recognise that it was in their interests to support the initiative.
In closing, this Bill’s time has come and I hope that the Government are able to support it. Do we want to continue as we are, losing children at a completely unacceptable rate and have no system of guardianship, or would we rather have some form of guardianship? We must not let the best become the enemy of the good. We cannot allow the current situation to continue. In particular, I ask the Minister whether he has recognised the scope for an alternative approach to guardianship, via the “legal advocate” order-making power, and specifically what his view is of the proposal that community groups be given the opportunity to bid to provide that function at no, or low, cost to the state to help these 300 or so children in need every year. Would he be prepared to meet with concerned Peers to discuss this possibility?
Lord Bew
My Lords, I support the main principles of the Bill of the noble Lord, Lord McColl. I will concentrate my remarks on Clause 11 and the Irish and Northern Irish dimension of this problem, which Clause 11 deals with in a skilful and important way, as an attempt to strengthen the criminal law in Northern Ireland with respect to human trafficking as an offence. In 2007, at the time of the anti-trafficking Operation Pentameter, it was considered that there was in fact no significant problem of human trafficking in Northern Ireland. Since then, however, it has sadly become clear that this is not the case, and that there is a significant problem.
A very important step along the way in increasing public understanding was the publication by the Institute of Conflict Research in 2009 of the document The Nature and Extent of Human Trafficking in Northern Ireland. In June 2010, Mr David Ford, the Justice Minister in the Northern Ireland Assembly reported that anti-racketeering officials had rescued dozens of victims of trafficking in Northern Ireland that year. He rightly said that,
“trafficking is nothing less than modern-day slavery”.
Mr Ford has also suggested that Northern Ireland is a staging post for traffickers operating between Scotland and the Republic of Ireland. In September of this year the Press Association drew attention to a joint NSPCC and Barnardo’s report which suggested that Belfast International Airport was indeed being used as a point of entry to the United Kingdom by human traffickers. Belfast was described, in a horrifying phrase, as “a child-trafficking hub”.
There is an additional problem here—the open border that exists with the Irish Republic. In your Lordships’ House there may be a sense of the border between Northern Ireland and the Irish Republic as something that is closely guarded and monitored. However, in the years since the end of the Troubles that has ceased to be the case. It can be crossed with the greatest of ease by anybody, including human traffickers.
We have to be aware that there is a significant problem in the Irish Republic. Only this week, Marion Walsh, the chief executive of the anti-trafficking unit in the Department of Justice in Dublin, said that since the Criminal Law (Human Trafficking) Act 2008 was passed, around 215 serious allegations and cases have come before the Garda, the local Irish police. Why does it matter? It matters precisely because that border is so porous. That is why Clause 11 is so important. It is skilfully drawn and draws attention to the ways in which we can deal with the Irish and Northern Irish dimensions of this problem.
I support the broad principles of the Bill. However, because of our increasing awareness of the particular difficulties that relate to the island of Ireland, I personally want to lay particular emphasis on Clause 11.
Baroness Massey of Darwen
My Lords, I am most grateful to the noble Lord, Lord McColl, for introducing this Bill on human trafficking. He does a great service to this House and to Parliament. This is an all-party and cross-departmental issue. It is, as the right reverend Prelate said, an issue for our common humanity.
I am delighted that my guest appearance on the Front Bench is concerned with trafficking. It is an issue with which I have been associated, particularly in relation to children. It is an honour to be in this Chamber today following so many distinguished speeches full of compassion and concern about this horrifying issue. I know that the noble and learned Baroness, Lady Butler-Sloss, works tirelessly and organises meetings about trafficking. I appreciate her attempts to raise awareness of these issues, as I appreciate the efforts of the noble Lord, Lord McColl. Other noble Lords are also committed to improving the situation both nationally and internationally, as expressed by the noble Baronesses, Lady Doocey and Lady Young, and the noble Lord, Lord Bew.
This is a very serious issue. We have been presented with a wide-ranging Bill. I hope that the House will allow me, like other noble Lords, to dwell somewhat on the issue as it affects children. Children would have been the subject of my speech from the Back Benches, and now that I am on the Front Bench, I still want to dwell somewhat on children. Child trafficking is perhaps the most appalling aspect of trafficking. I want to touch briefly on the issues of safe accommodation, advocacy and employment.
I agree with the noble Baroness, Lady Berridge, about a national rapporteur and compensation, but she has covered that. I am of course pleased that the Government have made progress on trafficking. They have signed the EU directive on preventing and combating human trafficking, and they have produced a strategy. Indeed, the strategy has useful sections on identification and care, acting at the border, co-ordination of law enforcement efforts and child victims. However, as the noble Lord, Lord Sheikh, said, it needs an extra focus.
The Bill asks questions and plugs gaps. The noble Lord, Lord McColl of Dulwich, has already eloquently described the Bill, so I will simply touch on a few questions and areas of concern. I want to speak briefly about my experience of meeting young women and some young men, which illustrates the problems expressed by the Bill. One young woman I met was sold into a gang of traffickers in Nigeria. She was locked up in a room in London with others and was hidden away with no contact with the outside world except with men who came for sex—sometimes up to a dozen or more a day. She finally escaped and attracted the attention of a neighbour who went to the police. The girl was allocated to the support programme at the University of Bedfordshire. Others have also been saved by the police and other charities, including Barnardo’s and Stop the Traffik. Young men and boys involved with cannabis farms have been mentioned. It is simply outrageous that they may be given custodial sentences whereas the bosses get off. Last year a CEOP report found that children were being arrested and imprisoned for cannabis cultivation.
Prevention of trafficking is absolutely key. I hope that the Government will look into prevention measures very vigorously. Identification of children who are trafficked may be very difficult. They may be terrified and simply not know what to do or where to get help. This, of course, applies also to adults who are trafficked. The first 24 to 48 hours after identification of being trafficked are important as the child may still be under threat or coercion. This is particularly important as they are often groomed to mistrust police and social workers. They must have immediate access to legal aid and counselling. Children are often not told that they are entitled to legal aid. The Bill would address this. Trafficking cases are very complex and require expert legal advice and representation. This relates back to the Legal Aid, Sentencing and Punishment of Offenders Bill, which had its Second Reading in your Lordships' House on Monday. Legal aid is crucial. Child victims of trafficking may have immigration claims that are not asylum claims and will therefore no longer qualify for legal aid.
The government report and this Bill recognise that identification of trafficked people is important and that there should be a plan to safeguard and promote the long-term welfare of the child. Barnardo’s, which runs 22 services for children and young people at risk of sexual exploitation, found that identification of child victims of trafficking is low. The Bill seeks to address this.
Safe accommodation is dealt with in Clause 7(3). ECPAT has set out principles for the safe accommodation of child victims of trafficking. The principles include: that children should be asked about what makes them feel safe; safety measures should be implemented to reduce a child’s risk of going missing; and that such children should be given access to a range of psychological, educational, health, social, legal, economic and language support that brings safety to the child and helps them recover. Efforts to make children safe should involve the wider community in ways that help create an environment in which it is difficult for traffickers to operate. One of ECPAT’s youth groups has stated:
“Safety has to be taken seriously. I think it should be the main priority as there’s no future when you’re not safe”.
Like many others, I am concerned about advocacy not just for children. There should be a legal guardian for each child victim of trafficking. This would minimise the risk of trafficked children going missing, help to sever links with traffickers and build a foundation for recovery. Young people themselves support such a system. As we have heard, many children disappear without trace and are never seen again. Safe accommodation and guardianship could improve this situation. I hope that future strategies will address these issues, even though much has been made of the costs of such a system. The issue of costs was set out well by the noble Lord, Lord Wei, but we do not seem to know what the cost comparisons are of a legal advocate for a child in relation to a child going through criminal proceedings. That is just the financial costs. The cost in human terms would favour advocacy support. In Scotland there is now a requirement to ensure that children going through the children’s hearing system will for the first time be able to get advocacy support. Under existing legislation in Scotland, a child can take any person with them into a hearing and this person could be an advocate. Many children go into hearings unprepared, and advocacy support should be available to children and young people so that they can understand the process that they are going through before, during and after a hearing.
The Bill recognises that victims of trafficking need support, legal aid and guidance through systems of which they can have no knowledge or experience. I speak again of adults and children. It may seem initially costly, but we should think of the savings that might be made regarding the need for services at a later level and date—and of the costs of human suffering.
I should like to ask the Minister a few questions. First, will the Government accept that trafficking for sexual exploitation should be an offence anywhere in the world? Secondly, how will the government strategy be monitored in relation to the important issues it raises, particularly of prevention? Will the private sector be encouraged to record how it is trying to eradicate slavery and human trafficking from supply chains? Will the Government support charities and community groups that do so much to combat the terrible effects of trafficking? What the noble Lord, Lord Wei, said in this regard was very interesting indeed.
I welcome the Bill. I thank the noble Lord, Lord McColl, for his insight in bringing it to the House again, and for encouraging such a wealth of informed speeches. As many noble Lords have said, we need resolve and determination. We do not need just structures and strategies but wide-ranging, forceful, practical means to tackle this insidious and evil practice. I hope that the Government will take note of the Bill and this debate. I look forward to the Minister’s response and the progress of the Bill.
The Minister of State, Home Office (Lord Henley)
My Lords, bearing in mind the strictures of my noble friend the Deputy Chief Whip, I will endeavour to be brief. I therefore from the start offer to write to noble Lords if I fail to answer some of their points.
I begin by welcoming the noble Baroness, Lady Massey, to what she described as her guest appearance. I hope that there will be many more such guest appearances, and we look forward to them. I also thank my noble friend Lord McColl for introducing the Bill and providing the opportunity for a debate that has raised a wide number of issues, reflecting the complex nature of the problems of tackling human trafficking. It is clear from the strength of feeling throughout this debate that human trafficking is an issue that profoundly affects us all—of course, no one more so than the victims of this appalling crime.
Human trafficking is a complex and covert crime that demands an international response. In the UK, we have a very good story to tell, but that does not mean that we can rest, and we obviously have a responsibility to lead the way in the fight against trafficking and to develop increasingly sophisticated responses to the changing nature of the organised crime landscape.
The Government’s decision in May this year to opt in to the EU directive confirmed our commitment to this goal. It might be useful if I set out in a few words a little about the directive and our response. Noble Lords will be aware that we chose not to opt into the directive when the draft proposal was initially published last year. We knew that the draft text would go through an extensive period of negotiation between the European Council and the European Parliament, and we wanted to be absolutely sure that the text would in no way be detrimental to the integrity of the United Kingdom’s criminal justice system. The feared widening of the text of the directive did not happen and we examined in great detail the final text and its impacts on the UK, and concluded that applying to opt in would benefit the United Kingdom.
We must now ensure that we achieve compliance with the requirements of the directive by April 2013. Failure to do so would be very damaging to the United Kingdom’s reputation in this area, as well as open up the possibility of infraction proceedings. While we are, I must stress, already compliant with the majority of the articles within the directive, we have identified two existing areas of primary legislation that must be amended within this short timescale. The remainder of the directive can be implemented in full through secondary legislation and through various operational measures and operational routes.
My noble friend’s Bill is obviously to be commended—it is a very good, detailed and thoughtful piece of work. It sets out to transpose the directive fully into United Kingdom domestic primary legislation and brings together a range of human trafficking provisions into a single piece of legislation. Again, I congratulate my noble friend on his commitment to this important issue. As I said, we are obviously fully committed to implementing the directive, but it must be emphasised that the United Kingdom already complies with the majority of the measures in the directive and will bring forward the necessary primary legislation required for its implementation as necessary.
To comply with the directive, we will establish extra-territorial jurisdiction where the offender is a United Kingdom national, and I hope that that deals partly with one of the noble Baroness’s questions. We will also widen one existing offence of trafficking for forced labour so that it is an offence where trafficking takes place wholly within the United Kingdom.
However, we believe that, in seeking to implement the directive, the Bill introduces unnecessary legislation and implements measures beyond what is required in the directive. For that reason and others relating to timing and other matters, I obviously cannot give it my wholehearted support today. However, I recognise that it provides a very welcome opportunity to debate these matters.
I want to be clear that implementing the directive is only one part of the wide range of work that we are carrying out to tackle trafficking. In July this year, the Government published a new strategy on human trafficking. The strategy has a clear and single aim: to stop trafficking being a viable and profitable crime and to end the harm that it causes. We want to tackle the problem at source, improve intelligence-sharing and the co-ordination of law enforcement in the United Kingdom, and address the demand that fuels this appalling crime, as well as improve victim identification and care.
My noble friends Lord McColl and Lady Berridge and others raised the question of the national rapporteur. My noble friend Lady Berridge did not believe that the expression “inter-departmental ministerial group for oversight” exactly rolled off the tongue and caused much joy. I assure her that we have a number of inter-departmental ministerial groups. However, the idea of a national rapporteur has generated a great deal of interest. We believe that with our group, even with its fairly inelegant name, we have an equivalent mechanism in place, and that its remit, which includes the assessment of trends in human trafficking, will be sufficient to comply with the EU directive. We have recently revised our arrangements to better support the Government’s work on human trafficking and to ensure effective oversight of the human trafficking strategy and implementation of the directive.
The question of child guardians was raised by a number of noble Lords, and I understand the concerns. The directive contains a number of important provisions about assistance and support for child victims. Again, we are confident that the United Kingdom is compliant with these measures. As noble Lords will be aware, local authorities have a statutory duty to ensure that they safeguard and promote the welfare of all children, regardless of their immigration status or nationality. We believe that this responsibility should remain with the local authorities, which co-ordinate the arrangements for each child to ensure that they are safe and to promote their welfare. Local authorities obviously have comprehensive systems in place to do this. Adding a “guardian” to this framework risks creating yet another level of complexity to these arrangements, which are already strong and ensure the best interests of the child. Even worse, it risks creating confusion for children if plans for their care are not effectively co-ordinated.
There was also considerable concern, quite rightly, about the number of children who are going missing from local authority care. As I stressed, local authorities have an overall statutory duty to safeguard children and that includes responsibility for preventing and mitigating the risk of them going missing from care. The noble and learned Baroness, Lady Butler-Sloss, raised concerns about the numbers of such children going missing. There are good examples of measures that have been put in place by various local authorities to reduce the number of children going missing, such as the installation of CCTV, the greater use of interpreters and ensuring that children are aware of the situation and the risks. A number of local authorities have ensured that there are placements for potentially trafficked children and that they are protected by maintaining confidentiality about the location of the placement and by limiting the direct contact of the young people with adults who have not been formally assessed or vetted. Recently published guidance on the safeguarding of trafficked children highlights these models and seeks to encourage agencies to adopt similar approaches.
In addition, we will continue to work with CEOP and I was very grateful for all the references that noble Lords have made to the work of that agency, which I visited only last week. It takes the national lead for missing children and combating that issue and it has issued the guidance to promote the spread of good practice. Our forthcoming strategy on missing children and adults will also help to provide a framework for local areas to put in place a more effective arrangement to tackle this issue.
Bearing in mind the time, and the fact that I shall write to noble Lords on some more detailed comments that have been made, I hope that they will understand if I cannot answer, at this stage, all the questions that have been put. We believe that it is intolerable that in 2011 human trafficking still plagues this country and the whole world and that we should not rest until we have it under control. I am very grateful to my noble friend for providing us with the opportunity to debate these matters. I look forward to the support of the House as we continue to strengthen United Kingdom’s response to human trafficking.
Lord McColl of Dulwich
My Lords, as we are so short of time, I shall simply thank everyone who has taken part in the debate. It has been very informative and has provided many very helpful suggestions. I beg to move that the Bill be now given a Second Reading.
Arrangement of Business
(13 years ago)
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Lord Shutt of Greetland
My Lords, I am anxious that we start and conclude the Second Reading of the Mental Health (Discrimination) Bill. I thank the usual, and unusual, channels for agreeing to speak with a degree of succinctness and, in at least one case, withdrawing.
Mental Health (Discrimination) Bill [HL]
(13 years ago)
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Lord Stevenson of Coddenham
My Lords, in the interests of time, I shall keep my introductory remarks very short. That is quite simple because this is a simple Bill, as simple as the discrimination that it is trying to end is completely disgraceful. I am glad to report that there has been something of a conspiracy among other speakers to speak for a short amount of time and one or two people have withdrawn.
The noble Baroness, Lady Hollins, who is sitting behind me, has withdrawn because she has to leave before the end of the debate. She asked me to say that, as a past president of the Royal College of Psychiatrists, she is wholly supportive of the Bill.
The Bill has a simple purpose: to remove the last significant form of discrimination in law in our society. We can be proud of the fact that, over the past 40 or so years, the UK has taken a series of steps to end discrimination in law on gender, disability, sexuality and ethnic origin. It is astonishing to most people—although perhaps not to those who have suffered from mental health stigma—that there remain disgustingly blatant discriminations against those suffering from mental ill health. If you are an MP, school governor or company director, depending on the precise circumstances, you can be removed from your job automatically or at the will of colleagues as a result of mental health problems. I will make it clear. You can have an episode of mental ill health, fully recover—just as, happily, one recovers from most illnesses—and years later you can be forced from your job. This discrimination applies only to mental ill health. It applies to no other form of ill health. You may be so physically ill that you cannot take part in discussions on boards or in school governors’ meetings, yet such rules will not apply to you. That discrimination reflects a deep stigma of medieval proportions.
Perhaps even more shocking is the matter of jury service. If you are called for jury service, you are obliged to tick a box asking whether you have ever had mental health problems. If you have, you are automatically disqualified. Only about 2 per cent of us tick that box. The real figure should be about 10 times that—so the law is a considerable ass in the process. I will not develop my argument further. There are very easy, very low-cost ways to amend the situation, which are practised in countries as far away as Scotland.
It is as simple as that. The Bill seeks to remove the last major discriminations in law in our society. I will say two further things. Noble Lords may have received yesterday an astonishingly strong missive from the Law Society setting out,
“the substantive reasons for the Society’s unconditional support of the above Bill”.
I am also encouraged by the Government’s attitude. In February they set out their six objectives for a new mental health strategy. One of them was that,
“fewer people will experience stigma and discrimination”.
I look forward to the Minister's response. Perhaps I dare suggest that the Bill might accurately be described as implementing government strategy. I beg to move.
Baroness Bottomley of Nettlestone
My Lords, I strongly commend the noble Lord for his initiative in bringing forward this practical, concise and important Bill. It was 50 years ago that Enoch Powell talked about putting a torch to the funeral pyre of the great Victorian lunatic asylums. It was also 50 years ago that Erving Goffman, the great American sociologist, talked about stigma theory: the process whereby an individual is isolated, denigrated and humiliated to make others feel more normal and safe.
In the field of mental health, discrimination and stigma have been extraordinarily persistent. It is quite wrong for reality to reinforce prejudice. As the noble Lord said, there can be no justification for singling out mental ill health, whether of a school governor, Member of Parliament, company secretary or juror, when many other forms of difficulty would make them far more objectionable in any of those roles.
My original reference to become a Member of Parliament was written by a professor of child psychiatry at the Maudsley, Lionel Hersov, with whom I worked for a long time. Like others, I made it my role in Parliament for all these years always to do what I could to promote understanding and recognition of, and better services to tackle, the problems of mental ill health. I know that the noble Lord is doing a huge amount to develop a major global initiative to promote research into the understanding of mental illness and its cures.
I recognise the Government’s work in their excellent recent paper, No Health Without Mental Health. A key feature is the intention to combat stigma and discrimination. In that context, I strongly add my voice of support to an enlightened, simple and practical Bill that can make a significant difference.
Lord Patel of Blackburn
My Lords, I have many reasons for wishing to speak in support of this vital Bill, and I am very grateful to the noble Lord, Lord Stevenson, for introducing it. I know very well the noble Lord's commitment to this area, and I must acknowledge my esteem for his honesty, openness and integrity in trying to ensure that this issue is not lost or ignored any further.
I am no stranger to the impact of discrimination for people suffering mental illness. As a former chairman of the Mental Health Act Commission, I was made aware on a daily basis of the pain and injustice that people experienced by virtue of having a problem that affects more than one in four of us at some time. It is also my firm belief that this issue can be truly understood only from the perspective of the person affected. The voices of service users and those experiencing mental health problems are essential to our understanding of the issues. It was for this reason that I sought to have a mental health service user join the board of the Mental Health Act Commission. I am thankful that that was not illegal or prohibited.
We were fortunate to gain the expertise and insight of a remarkable woman, Kay Sheldon. Kay was in many respects an unusual choice. She was not the usual type of person to apply to be on a board, and she clearly made her views known at the interview. As someone who had experienced detention several times under the Mental Health Act, she said she would consistently stand up for the rights of service users and be a voice for those who have direct experience of mental health problems. We could not have had a more excellent advocate of service-user rights, and that, in essence, was our core function: to ensure the protection of those very rights. Kay is now a member of the Care Quality Commission, and I know that she remains firmly and completely committed to the rights of people using health services and continues to ensure that the voices of service users are at the forefront of decisions about healthcare.
It is from my personal knowledge of Kay and the many others with mental health problems who have made an immense contribution over the years, particularly to public services, that I wish to speak in very firm support of this Bill. I hope that the Minister will agree with me that it is crucial to have people like Kay who bring their personal experience to the strategy and decision-making of public boards.
I also strongly support this Bill because of the message it sends about ending discrimination. I was very fortunate this week to meet a remarkable young man, Danniel Bennett. Danniel was in a very serious accident earlier this year which almost cost him his life. He was bleeding badly from his head after suffering an injury while playing football, and his father, who was there, had to give him CPR before the ambulance arrived. It was a very serious injury and the young boy's life was in the balance. He was only 13 years old. Danniel is from the Romany Gypsy community and a health worker who happened to be at the scene—a professional whose job is to save lives—refused to help the father give CPR. Her attitude was, “He’s a Gypsy, let him die”. He did not die, thanks to his father's knowledge of CPR, but he needed to go to hospital and needed treatment for his serious head injury. That should have been simple and unquestioned, but he was not admitted to hospital and did not receive a CAT scan. While anxiously waiting in the A&E department, his father was told that his son would not be admitted because, and I quote, “Your kind always turn up in droves”, and that he “should be grateful you are getting any treatment at all anyway”. It was the family GP who, when he saw Danniel the following day, immediately called 999 and had Danniel admitted for a CAT scan which revealed that he had two haematomas on his brain. Danniel survived, but he is still experiencing problems and he can remember hearing that his life was not worth saving because of who he is, a Romany Gypsy. It is a shocking story and hard to believe, yet I know that this kind of discrimination goes on even in the heart of our most trusted public services. We cannot separate our values from the framework of our laws. Our laws set the standards of behaviour we expect, and must themselves never be the cause of unjustified and unreasonable discrimination.
I want to end by reading a short extract from one of the many poems that this 13 year-old boy has written. It sums up what this Bill is all about.
“I challenge you Mr Government
To walk a mile in my shoes
I will start
By taking away your freedom
And then your choices too
And when your soul is destroyed
And you can feel no more pain
I will set you free and give you back your name
So that you can sit back
And feel what it's like to be me
And hopefully your heart and head
Will be filled with shame”.
I hope that today there is no need for shame and that the House will put an end to at least one injustice of discrimination: that against people who experience mental health problems. People like Kay and Danniel deserve our full support. I wish we had a thousand more like them on our school boards, in Parliament, running companies and serving on our juries. I urge noble Lords to support this Bill and put an end to this discrimination.
Baroness Barker
My Lords, I thank the noble Lord, Lord Stevenson of Coddenham, for returning this House to an issue that it has previously debated—for example during the passage of the Mental Health Bill in 2006. The legislation which this Bill seeks to repeal was passed because Members of Parliament took the view that to do so was to protect the best interests of people experiencing mental distress and to protect the four institutions named in the Bill.
Since then, there have been two significant developments which make the Bill introduced by the noble Lord, Lord Stevenson of Coddenham, appropriate. First, the Mental Health Act 2007 states that,
“‘mental disorder’ means any disorder or disability of the mind”.
The effect which was intended by the Government of the day is that mental health legislation extends to a very wide range of people, including those with mild depression and those who may never think that they should be covered by mental health legislation, as well as the rest of us. They are being excluded from these specific duties and they should not be.
Secondly, the Mental Capacity Act 2005 enshrines in law the common understanding which we all have that the capacity of people with mental health problems or learning disabilities can vary from day to day. Since the 2006 legislation was passed it has become much more common for a person to take out a lasting power of attorney. In addition, people with mental health problems, such as those who are bipolar, are now, as a result of that legislation, more likely to make an advance statement. At a time when the person is well they can state that should they become ill again, they wish a nominated person to be involved in making decisions on their behalf. They can say, “It is likely that, should I become ill again, I might try to make unwise decisions. I wish at that point for those decisions to be ignored”. Those two proposals mean that a period of mental ill health is not now the inevitable catastrophe that it might have been. People with mental health problems and those who care about them can use those tools to mitigate the effects.
On juries, several jurisdictions—the noble Lord mentioned Scotland—already operate the system that would come into operation under this Bill. It is very important to note that a person who is experiencing mental distress can apply for recusal and therefore not have to serve on a jury. The chances of a major case being disrupted because a juror has ill health would be minimised.
For all those reasons, it is now less likely that the organisations in question would suffer adversely. In fact, those organisations would benefit from having people with experience of mental ill health involved. Therefore, Parliament should move with the times, move forward and pass this Bill into legislation at the earliest opportunity.
Baroness Masham of Ilton
My Lords, it is because my noble friend Lord Stevenson of Coddenham is bringing this Bill before your Lordships that I am pleased to say a few words in support. I knew my noble friend when he was chairman of the Newton Aycliffe and Peterlee new town corporation in the 1970s, on which I also served. He was an enthusiastic and energetic chairman and I had no inkling that he sometimes suffered from endogenous depression. Looking at his impressive CV, one can see that it has not affected his work performance in any way.
My feeling about this Mental Health (Discrimination) Bill is that people should not be discriminated against, but that they should be fit for purpose for whatever they do if it is a public service. Should a person have had a mental health problem, they may be better equipped to understand the population as a whole. I think that about one in three people will at some time have a mental health problem.
Because of time, I cannot say much that could be said. However, I am delighted that my noble friend will have a research trust. There is not enough research into the many difficult problems of mental health, including cannabis use. We must come to some conclusion over that. I hope that the Government are ready to help this Bill become law by giving it parliamentary time.
The Lord Bishop of St Edmundsbury and Ipswich
My Lords, from these Benches I warmly thank the noble Lord, Lord Stevenson, for bringing this Bill. Many times within the course of Christian ministry in this country you come across the very distressing scenes of people in extremes of mental ill health. A number of times in parishes that I had in the north-east I saw people within the parish who were sectioned. And I saw them recover. It is very important that people understand that recovery is possible. Although this Bill allows people to take part in the political, legal, commercial and educational processes of our country, it is the signal of hope that it gives that is so important.
I should at this time hold up our own hands to say how much the churches have to learn. A very able priest who has come back into parish ministry spent many years with a mental health advocacy charity. He pointed out to me how poor the churches can be at supporting people in need. We all have to learn, and a Bill such as this is a wake-up call to everybody. I hope that it finds warm support from the Government.
Lord Collins of Highbury
My Lords, this has been an excellent, albeit brief, debate. I, too, thank the noble Lord, Lord Stevenson, for bringing the Bill to your Lordships' House.
The changes in it are long overdue. Mind and other mental health organisations have long campaigned for these laws to be repealed. They are clearly discriminatory and there is widespread agreement among MPs and political parties alike that they have no place in a modern and fair society. But what is worse about their existence is that they are symptomatic of the prejudicial view that having had a mental illness makes you incapable of being a citizen with all the rights and responsibilities that that implies. They stigmatise this illness unlike any other. It puts out the message that anyone with a mental health problem is not fit to be an MP. It is a message that is picked up by all employers and is something we know is experienced by the overwhelming majority of people who have suffered mental illness.
By adopting these measures, we can send a clear message to all employers that we need to address mental health problems in the workplace and put an end to the discriminatory attitudes that prevent capable people working.
We know that the proportion of people who have mental health episodes in their life is high, as my noble friend Lord Patel highlighted. That is why it is both important and useful to have people in the other place and this House who are willing to talk about their experiences and how they came through their problems. I know that we will fully succeed in changing attitudes only when people feel able to speak openly of their own personal experiences. But we cannot expect people to be out and proud when laws that stigmatise mental illness still exist. Every time a citizen is summonsed for jury service, as I was recently, they are reminded in the most explicit terms that someone who has suffered a mental illness is a second-class citizen. How can we change attitudes when this goes on? I hope that, after today, the Minister will ensure that the Government find time to make these changes, which are long overdue.
Lord Wallace of Saltaire
My Lords, I was just discussing with my noble friend Lord Shutt the West Riding asylum, with its own dedicated railway siding and room for 1,200 people, which was still there, although thankfully empty, when I first stood in the Shipley constituency. We have thankfully moved a long way from the Victorian age, but there are still some issues which we have to remove from the statute book.
I can tell the House that the Government support the Bill, although we will ask for some amendments to be made in Committee. A number of the provisions put forward demonstrate a shared purpose with the objectives of this Government. They are in line with the Government’s strategy, No Health Without Mental Health. Tackling stigma and discrimination is at the heart of the Government’s mental health strategy.
This is an issue which goes way beyond the Government and the Opposition. Shifting public behaviour and attitudes requires a major and substantial social movement, including more sympathetic treatment in our mainstream media. So let me remind noble Lords that the Government have already publicly committed to the repeal of Section 141 of the Mental Health Act 1983 and that, as has already been mentioned, we stated last February that the section would be repealed when a suitable legislative vehicle became available. This Bill seems to be that suitable legislative vehicle, and we are glad to see that it is linked with similar amendments on the role of company directors, school governors and jurors. On the question of jury service, the Government have been considering the detail of what is proposed and wish to ensure that any amended provisions are fair and effective. They support the principles underlying the Bill, including Clause 2 on jury service, and propose that the clause should remain in the Bill. However, it is possible that my noble friend the Deputy Leader of the House and his colleagues at the Ministry of Justice might bring forward a government amendment at a later stage.
Given the lateness of this Second Reading in the Session, it may not be possible, even with the best of good will, for the Bill to complete all of its stages before the Session ends, let alone to take it through the Commons as well. If, however, it fails to be carried during this Session, the Government hope that it will be reintroduced at the beginning of the next Session, and can assure the House that it will have the Government’s support. We look forward to seeing it on the statute book.
Lord Stevenson of Coddenham
My Lords, I thank everyone who has spoken. I do not know if this debate will set a record for brevity because I do not come here often enough to know, but I would lay a sizeable bet that it is. By the way, it is a very nice feeling to hear one’s own bishop speak in support of a Bill. I believe that it is a total coincidence, but it is nevertheless very nice. That provides a context in which to say that, although I cannot remember the exact title, I believe that the person responsible for educational policy in the Roman Catholic church has written a letter to the noble Lord, Lord Wallace, and myself expressing their support. I think that the House would like to know that. I thank everyone for being here.