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Oral Answers to Questions
(12 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Jessica Morden (Newport East) (Lab)
1. What assessment he has made of the effect on families of the changes in eligibility rules for working tax credit to be introduced in April 2012.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
4. What assessment he has made of the effect on the economy of changes to the working tax credit to be introduced in April 2012.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
6. What assessment he has made of the effect on the economy of changes to the working tax credit to be introduced in April 2012.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
7. What assessment he has made of the effect on families of the changes in eligibility rules for working tax credit to be introduced in April 2012.
Mr David Crausby (Bolton North East) (Lab)
13. What assessment he has made of the effect on families of the changes in eligibility rules for working tax credit to be introduced in April 2012.
The Economic Secretary to the Treasury (Miss Chloe Smith)
The Government are reforming tax credits to ensure that support is targeted on those most in need and costs are controlled. The change to the working hours requirement for couples with children makes the system fairer by reducing the disparity between lone parents and couples. Lone parents have to work 16 hours a week to be eligible for tax credits, so it is right that couples should have to work more hours between them.
Jessica Morden
Some 730 families in Newport will be hit by the changes to tax credits, which means that they will either have to work more hours or face losing up to £3,800 a year. The Government have so far demonstrated no understanding of the difficulties faced by families in this position trying to find extra work. Will the Minister tell my constituents exactly where these mythical hours will come from?
Miss Smith
I shall be precise. I can tell the hon. Lady that the number of vacancies was up by 11,000 in the last three months to January 2012, and 1.07 million people moved into employment in the last quarter.
Luciana Berger
I was interested to hear that response from the Minister because a representative of the Union of Shop, Distributive and Allied Workers in my constituency told me that in one supermarket alone close to 30 employees had requested extra hours. Those extra hours just do not exist. Will she confirm that from April a couple with children on the minimum wage who cannot increase their hours to 24 per week will be £728 better off out of work?
Miss Smith
I cannot comment on that particular set of circumstances, as the hon. Lady will appreciate, but the fact is that about 80% of households with children will see their tax credit awards rise. It was the previous Government who allowed nine out of 10 households with children to be eligible for tax credits. That was unsustainable and uncontrolled spending.
Jonathan Reynolds
The Minister will remember that in an Adjournment debate last November I warned her about the devastating impact that the cuts would have, particularly because the hours were simply not available for people to increase the number they worked to meet the eligibility criteria. This week, a coalition of charities has written to the Government begging them to postpone these devastating changes. May I ask her and the Chancellor to meet some of the families affected so that they can understand what the impact will be on them from April?
Miss Smith
Any elected MP will regularly meet constituents in their constituency and discuss a range of matters. I certainly do that, and when I have met those affected in my constituency—whether as a constituency MP or, most recently, as a Minister—I have explained the fairness of this measure, which is that it puts couples on a par with lone parents. Where is the Opposition’s concern for single mums and dads, who have always had to face that challenge?
Catherine McKinnell
The Minister knows fine well that in today’s economy part-time workers will find it extremely difficult, if not impossible, to get the extra eight hours a week to keep their working tax credits. The lowest-income families will lose £3,870 a year, which would be crippling for any family, let alone the poorest. To accord with reality—something that the Minister should get back in touch with—what are this Government going to do about that?
Miss Smith
This Government’s main priority, as the hon. Lady knows very well, is to reduce the deficit left to us by her party, for which her party shows no responsibility whatever. She will also know that the cumulative average loss for households from our measures next year will in fact be £310.
Mr Crausby
Last week a young woman constituent employed locally by the Stroke Association complained to me that as a result of the association’s funding being cut, her hours were being reduced from 28 to 20, so she loses eight hours’ pay and tax credits as well. What advice can the Minister give my constituent other than to stop work and go on benefits?
Miss Smith
I would be sure that the hon. Gentlemen’s constituent in that case took a clear look around at the opportunities available throughout the economy. I refer him to my previous response, which is that vacancies were up in the three months to January 2012. There are jobs out there: hon. Members need only to hear, for example, this morning’s announcement from Nissan—somewhere near the hon. Gentleman’s constituency—to know that there is work available.
Margot James (Stourbridge) (Con)
Is my hon. Friend aware that, according to the Office for National Statistics, there are currently 476,000 job vacancies? It should be possible for a couple, between them, to find an extra eight hours’ work. Does she agree?
Miss Smith
I do agree with my hon. Friend. As I have said already, it is a question of fairness. This measure asks a couple to do what a lone parent has always had to do, and I think that is fair.
Harriett Baldwin (West Worcestershire) (Con)
Can the Minister confirm that, under the current system, a single parent who is offered more than 16 hours’ work a week by his or her employer would face a marginal withdrawal rate of up to 97%, and that such anomalies will disappear with the change to the universal credit?
Miss Smith
My hon. Friend makes a very fine point, and she is absolutely right that the reform paves the way for the universal credit, through which this Government are proud to be tackling the incentives that make work pay.
Charlie Elphicke (Dover) (Con)
Should we not look at providing tax help for hard-pressed families in totality and in the round, in particular, through measures such as increasing the personal allowance to £10,000 for income tax?
Miss Smith
I certainly agree, and my hon. Friend will know, just as other Members of this House do, that that measure would take more than 1 million low-income earners out of tax altogether, which is a healthy start and a step on the path to our economic recovery.
Rachel Reeves (Leeds West) (Lab)
We have heard incredible complacency so far from the Minister about couples in receipt of working tax credit, who are desperately worried. Liz, a low-paid worker in Suffolk, told her union, the Union of Shop, Distributive and Allied Workers, that
“two weeks ago my boss informed me that the likelihood of finding the eight extra hours I need was next to none, at least for another three months. I have been looking for another job to boost my hours, but so far have had no joy”.
What advice would the Minister give to Liz and thousands of families in her position, who stand to lose up to £4,000 in just a month’s time?
Miss Smith
Liz from Suffolk might like to listen to Rachel from Leeds, who says that
“we must ensure we pass the test of fiscal credibility. If we don’t get this right, it doesn’t matter what we say about anything else.”
Rachel Reeves
The Minister offers Liz cold comfort, especially as the Government’s own figures show that families are likely to be £728 better off out of work, rather than in work, as a result of these crazy changes. The Minister could not answer my last question, so let me ask her about another family. Let us imagine that a single mum with three kids who is earning £42,000 a year is offered a promotion that would take her pay to £43,000. If she takes the pay rise, she will lose almost £2,500 in child benefit—every single penny of it. What is the Minister’s advice to her? Should she turn down the promotion to keep her child benefit, or should she reduce the number of hours she works?
Miss Smith
It is absolutely extraordinary that the hon. Lady is unable to deal with any aspect of her own challenge on fiscal credibility. May I ask her whether she voted for the welfare cap that highlights the average family’s earnings within the example that she just gave?
Mr Speaker
I remind the House that Members ask the questions and Ministers answer them.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
2. What fiscal steps he is taking to assist women facing high child care costs.
The Chief Secretary to the Treasury (Danny Alexander)
The Government do not assume that high child care costs are an issue for women only, but we have increased the provision of free child care for three to four-year-olds to 15 hours a week, and extended that commitment to about 40% of two-year-olds by 2014-15. The Government support low to middle income working families directly through the child care element of working tax credits. We also provide support through employer-supported child care vouchers.
Mr Sheerman
But what does the Minister say to young women who are professionals and managers and who, according to the Daycare Trust, face the double whammy of a 30% increase in the cost of nursery provision over the past four years and the loss of their child benefit? What does he say to those young women?
Danny Alexander
I say that the Government are increasing the entitlement to free child care for three and four-year-olds from 12.5 to 15 hours a week, and introducing a new entitlement for disadvantaged two-year-olds, so that 40% of two-year-olds will have 15 hours of free child care per week. That represents substantial support for those families, in addition to which there will be tax credit support—depending on income—and access to employer-supported child care vouchers, which were taken up by 500,000 people in 2011-12.
Mrs Anne Main (St Albans) (Con)
I welcome the free nursery places, but nursery care in constituencies such as mine is often so expensive that nurseries decline to offer the free places unless they are allowed to request a top-up. Will the Government please consider listening to those nurseries that would welcome parents being able to give a small amount so that they could offer the free places?
Danny Alexander
My hon. Friend makes an interesting point. She will also recognise that local authorities have a duty to maintain sufficient child care to meet the needs of working parents in their area. The Department for Education is to undertake a review to ensure that that is happening.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Many women facing high child care costs are low-paid workers in the public sector. We wrote to the Chancellor in January, calling on him to write to the pay bodies to ensure that by being tougher at the top, we can help to protect lower-paid workers in 2013 and 2014. Can the Chief Secretary to the Treasury tell us whether the Chancellor has taken that action, and whether he will deliver on his promise that, as he delivers pay restraint, he will do more for the lowest-paid public sector workers?
Danny Alexander
The hon. Lady will recognise that, during the pay freeze of last year and the coming year, we have provided a £250 pay increase for those earning less than £21,000 a year. The pay review bodies have been asked to provide advice in relation to the future pay remit, but she should also recognise that the increase in the income tax personal allowance, which will come through this April, will be worth £126 this coming year to precisely the people she is talking about. I hope she welcomes that.
Claire Perry (Devizes) (Con)
Does the Minister share my absolute incredulity at hearing the Opposition talk about the cost of child care, given that it went up 50% during their term in office? Will he tell us how much this Government are spending to help hard-pressed parents with the burgeoning costs of child care?
Danny Alexander
I entirely share my hon. Friend’s sentiments; she expresses them very well. We will be investing £760 million a year by 2014-15 to extend free child care to disadvantaged two-year-olds.
Julian Sturdy (York Outer) (Con)
3. What steps he is taking to strengthen consumer protection in financial services.
The Chancellor of the Exchequer (Mr George Osborne)
In the Financial Services Bill, the Government are establishing a new financial conduct authority with additional powers to protect consumers and promote effective competition. On the day on which banks are writing to customers who were possibly mis-sold payment protection insurance, we are ensuring that banks will be open about any unarranged overdraft charges and interest payments on savings accounts.
Julian Sturdy
I thank the Chancellor for his response. As families and individuals try to get on top of their debts, will the Chancellor outline whether the Government believe that new legislation is required to ensure that credit markets act in a responsible rather than predatory manner towards customers?
Mr Osborne
We are introducing legislation through the Financial Services Bill. It creates the financial conduct authority, which will have additional powers and will, I think, be a powerful champion of consumers. Rather than wait for legislation, we are taking action with the industry’s agreement to introduce a seven-day ban on store card retail incentives so that people cannot take out a store card and immediately get a special offer with it in the shop; and we are stopping excessive card charges being hidden on statements.
Mr Andrew Love (Edmonton) (Lab/Co-op)
What is the Chancellor going to do about the exorbitant interest rates being charged to vulnerable consumers by pay day lenders, which are now so ubiquitous on our high streets up and down the country?
Mr Osborne
I agree with the hon. Gentleman that there are practices in that industry that we want to see stopped—and I would highlight two in particular. The first is the rolling over of loans, which we are working with the industry to stop; the second is the ongoing use of continuous authorities to take money out of bank accounts, which people might not be aware that they have granted to a pay day loan company or anyone else. We are dealing with those specific abuses and, as I say, we are creating a new powerful consumer champion in the financial conduct authority.
Mr Andrew Tyrie (Chichester) (Con)
The Financial Services Authority agreed to publish a review of its own conduct in the run-up to the failure of RBS only after considerable pressure from the Treasury Committee. It really should not be that difficult to get some answers out of a regulator.
Does the Chancellor agree that accountability to Parliament would be better served if the Financial Services Bill were amended to require the new regulator, the financial conduct authority, to respond to similar such reasonable requests from the Treasury Committee?
Mr Osborne
Of course we will listen to any proposals put to us. Clauses 69 to 76 include a new requirement on both the new bodies we are creating—the prudential regulator and the financial conduct regulator—to make a report when a regulatory failure has occurred. That trigger will be set out in the legislation, so we are providing additional powers to require reports when things go so badly wrong, as they did a few years ago.
Mrs Jenny Chapman (Darlington) (Lab)
The financial service from which my constituents most need protection is high-cost lending. The Chancellor’s remarks so far go nowhere near far enough in protecting consumers. We need a range of caps and we need some properly enforced regulation of advertising. When is the Chancellor going to do something about this?
Mr Osborne
I completely understand the concern about excessive and very high interest charges, which have been a problem for many years. I think it is better to tackle the specific abuses. The Government are conducting a review of the cost of credit to consumers, but by tackling very specific abuses such as the roll-over of loans and the use of continuous authority, we think we are getting to the really hard cases and abuses that we want to see ended. I have to say—this was certainly the view of the previous Government, too—that although it could be worth looking at, simply introducing a cap might have the effect of pushing a lot of people into a completely unregulated black economy. I am not sure that any of us would want to see that.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
I remind the Chancellor of the excellent suggestions in the Treasury Committee’s report on the objectives of the successor body to the FSA, as they would certainly help consumers. Will he take the opportunity provided by the current legislation to give effect to those recommendations?
Mr Osborne
As I have set out before, we have listened carefully to the Treasury Committee and made all sorts of amendments to the Bill to take account of its recommendations, including changing the FCA’s remit to include competition. The Joint Committee chaired by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) also proposed similar recommendations. We have listened to Parliament; thanks to those suggestions, we have made changes that we think will improve the Bill; and the Bill is now before the House and soon to be debated.
Naomi Long (Belfast East) (Alliance)
5. What recent assessment he has made of the effect on tourism of differential rates of VAT in the hospitality industries in the Republic of Ireland and Northern Ireland.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The number of overseas visitors to Northern Ireland grew by an estimated 11% in the first half of 2011, compared with just 7% over the first 10 months in the Republic of Ireland. Building on that performance, marketing campaigns by the Northern Ireland Tourist Board and Tourism Ireland are expected to draw 150,000 more visitors to Northern Ireland, create over 600 new jobs, and provide an additional £24 million in revenue for the economy in 2012.
Naomi Long
The Minister is right to draw attention to the success that Northern Ireland has enjoyed as a result of the efforts of the Northern Ireland Assembly. However, given that tourism is so price-sensitive, will the Government think again about the potential offered by a VAT reduction? We are currently the only part of the European Union that does not support our tourism industry in that way. Will the Minister reconsider, so that we can try to maximise the potential and grow even more jobs in the sector?
Mr Gauke
As I have said, Northern Ireland tourism is doing well at present. Were we to pursue a relief along the lines adopted in the Republic of Ireland, it would involve a cost of some £8 billion, £9 billion or perhaps even £10 billion, which would have to be made up for by higher taxes or spending cuts elsewhere.
Mr David Amess (Southend West) (Con)
8. What steps he is taking to reduce tax avoidance and evasion.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are determined to tackle tax avoidance and evasion and ensure that the tax system operates fairly for all. By closing down two aggressive avoidance schemes on 27 February, we have demonstrated that we are prepared to take bold action to counter avoidance. The Government’s commitment has been underlined by their reinvestment of £917 million in Her Majesty’s Revenue and Customs, which will bring in additional revenues of £7 billion a year by 2014-15.
Mr Amess
The United Kingdom has the longest tax code in the world. It has 11,500 pages, and is 10 times longer than “War and Peace”. Does my hon. Friend agree that any simplifying measures would be welcome, as they would reduce tax avoidance and evasion and would prevent further ridiculous trials such as that of Harry Redknapp? I always thought that he was innocent, because he is such a good football manager,
Mr Gauke
So he is an ex-Harry Redknapp fan.
Complexity in the tax code can provide opportunities for avoidance, but, equally, much of the complexity that exists is a consequence of attempts to crack down on avoidance. The Government have set up the Office of Tax Simplification, and we are determined to do what we can to simplify the code and address avoidance and evasion.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Stamp duty land tax avoidance schemes cost the Exchequer hundreds of millions of pounds a year, but my questions on the subject have been met with complete complacency by Ministers. I was told:
“HM Revenue and Customs… is aware of a number of marketed… schemes. HMRC considers that none of the schemes… is effective in reducing… liability”.—[Official Report, 17 January 2012; Vol. 538, c. 708W.]
Now we hear that the Chancellor is going to crack down on such schemes. Which is it?
Mr Gauke
There are many marketed schemes that HMRC is convinced do not work, and that will be established in the courts. I suggest that those who are sometimes persuaded by claims that a particular scheme will work should treat them with caution. However, the Government are determined to crack down on stamp duty land tax avoidance. We took steps in the last Budget, we took steps in the autumn statement strengthening the disclosure regime, and there may well be more to come.
Mr Peter Bone (Wellingborough) (Con)
When the banks begin to make profits again, they will offset the losses that they made when they got us into a total mess, and will avoid paying tax. Whenever companies are paying tax on their profits, the banks will be avoiding tax on theirs. Will the Government look at that?
Mr Gauke
There are times when taxpayers engage in aggressive avoidance and we put a stop to it, as we did last week. However, the offsetting of losses is not novel—it is a long-standing element of the tax system—and, although of course we keep all such matters under review, the legitimate use of losses does not necessarily count as aggressive avoidance.
Anas Sarwar (Glasgow Central) (Lab)
Given the Government’s attempts to cut the deficit, it would make sense to clamp down on tax evasion, so why are they cutting 10,000 staff at HMRC?
Ian Austin (Dudley North) (Lab)
9. What assessment he has made of the effect of fiscal policy on the level of economic growth in 2011.
The Chief Secretary to the Treasury (Danny Alexander)
Tackling the deficit is necessary for supporting sustainable economic growth. The Government’s credible consolidation plan has restored confidence in the UK’s fiscal position, helped avoid a rise in market interest rates, and allowed a more activist monetary policy to support the economy.
Ian Austin
We know that this Government’s Ministers think they are always right and everyone else is always wrong, but how do they explain why growth in America, which took a more balanced approach to dealing with the deficit, was twice the rate here in the UK, and if it is, as they insist, all the eurozone’s fault, why was it only exports that prevented the British economy from lurching back into recession last year?
Danny Alexander
If the hon. Gentleman wants an explanation for the country’s current economic position, he need look no further than the Office for Budget Responsibility report published at the time of the autumn statement. It highlighted three factors: the problems in the eurozone; high inflation and commodity prices over the past year; and the depth of the crisis that was caused in part by the hon. Gentleman’s Government and the damage that did to the British economy. If he is looking for people who should be asked to apologise, he should look to himself, and perhaps he should apologise not least to the people of the west midlands, as that region fell behind the rest of the economy during Labour Government’s period in office.
Michael Fallon (Sevenoaks) (Con)
Given the amount of Budget lobbying now going on, will the Chief Secretary remind those who want to add even more to our borrowing by proposing wholly irresponsible and unfunded tax cuts of the Institute for Fiscal Studies advice that
“there is a strong case for the Budget not to contain a significant permanent net giveaway”?
Danny Alexander
I would certainly remind them of that, and of the fact that the need to maintain the credibility of this country’s fiscal position should override any such considerations.
Mr David Anderson (Blaydon) (Lab)
In the assessment the Chief Secretary is undertaking, will he let us know about the extent of the income tax and national insurance losses that will result from the sacking of between 7,000 and 10,000 public servants? Does he expect the benefit bill to go up, and if so, by how much?
Danny Alexander
As the hon. Gentleman knows, we have had to make some very difficult decisions in order to deal with the enormous Budget deficit left to this country by Labour. If his party had not left a mess, we would not have to clean it up.
Stephen Williams (Bristol West) (LD)
One direct economic stimulus would be to allow people to keep more of their own money from the proceeds of work. The Government have already taken a great step forward in implementing the Liberal Democrat policy of raising the income tax threshold to £10,000. Will the Chief Secretary and the Chancellor seriously consider going further and faster in the Budget and achieving in this Parliament the goal of all our constituents having £10,000-worth of tax-free pay?
Danny Alexander
Such decisions are, of course, for the Chancellor to announce on Budget day, but, as my hon. Friend will know, the coalition agreement commits this Government to real-terms increases in the personal allowance every year in order to reach the goal of a £10,000 tax allowance, which the Liberal Democrats set out in our election manifesto. As a result of the substantial steps we have already taken, there will be a further tax reduction of £126 for all basic rate taxpayers in this country from April this year.
Mark Pawsey (Rugby) (Con)
10. What fiscal steps he is taking to encourage job creation in the private sector.
Gavin Williamson (South Staffordshire) (Con)
11. What fiscal steps he is taking to encourage job creation in the private sector.
The Chancellor of the Exchequer (Mr George Osborne)
We are making businesses more competitive by cutting business taxes, helping work pay by increasing the personal allowance and introducing universal credit, and helping unemployed people into work through our Work programme and work experience.
Mark Pawsey
As someone who owned and ran a business, I welcome the reductions in corporation tax and the small profits rate already announced by my right hon. Friend, but a further area of taxation is business rates, where although the reliefs for small companies are very helpful, many businesses currently face a significant increase. Can anything further be done to help businesses in this respect?
Mr Osborne
I will not pre-empt any Budget announcements, but I will say that we have extended small business rate relief to 2013. We announced that in November, and it will help more than half a million small businesses, and we have also introduced a deferral scheme to help larger businesses with their cash flow, so we are doing other things as well as reducing corporation tax—a further reduction in corporation tax is planned for April, of course—and cutting the small companies tax rate, which was due to go up under the previous Labour Government.
Gavin Williamson
The recent changes in research and development tax credits will provide a major boost for hi-tech manufacturing businesses based in my constituency and near it, such as Moog and Goodrich. What more can my right hon. Friend do to help generate more high-skilled, well-paid jobs in the manufacturing sector?
Mr Osborne
I have been very encouraged to hear about the success of companies in my hon. Friend’s constituency, including the two that he mentioned. We will provide further details later this year on the R and D “above the line” tax credit, on which we have listened to representations from industry and Members of Parliament. In the vicinity of my hon. Friend’s constituency, we also have the enterprise zone i54, which will start up in April. More generally, this is a week when 20,000 new jobs have been announced by Tesco and we have heard the great news that Nissan will produce a new car in the UK. There are some encouraging developments in the British economy.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Is the Chancellor not aware that his measures are not working? In the last quarter for which we have figures, set against a 67,000 drop in public sector employment there was a welcome but very modest increase of only 5,000 jobs in the private sector. Why not do something bold and positive in the Budget, such as taking one of our proposals, rather than rejecting it out of pride, to expand the national insurance holiday to cover all small companies that take on new employees, rather than just the relatively small number of new small companies?
Mr Osborne
I have noticed in the Budget representations from Labour Members that they are always very good at suggesting things we can spend money on but never have any ideas about how to save money, despite leaving us with the largest budget deficit in our peacetime history. They are all over the place: one week it is a tax cut, the next it is a spending increase. The truth is that we need economic credibility. The budget deficit is coming down but it is still far too high. Of course, we will not have the unfunded giveaways that got this country into a mess under the previous Labour Government.
Chris Leslie (Nottingham East) (Lab/Co-op)
At the budget a year ago, the Chancellor published his “Plan for Growth” with the rhetorical flourish that it would create
“a Britain carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
A year later, we can see that he has achieved less than half of the downgraded growth forecast made at the time. We had a shrinking economy in the last quarter with—and this is true—only one private sector job created for every 13 public sector jobs lost. Looking back at the past year, where did his plan go wrong?
Mr Osborne
We have secured for this country economic credibility and stability in the most intense global storm, with the eurozone crisis and rising oil prices. Of course it is difficult, but where is the credible economic policy from the Labour party? It is completely absent. Is it not striking that we have not had a single Labour MP get up and talk about the good news from Nissan today? The car is called the Invitation, but the only invitation the hon. Gentleman is interested in is one to the lasagne parties held by the shadow Chancellor.
Andrew Griffiths (Burton) (Con)
14. Does the Chancellor agree that the national loan guarantee scheme has massive potential to help small and medium-sized enterprises grow? Does he also share my view, however, that we need a more enlightened approach from the banks in lending for growth, particularly to support start-ups, exporters and manufacturing?
Mr Osborne
We have introduced various tax changes, including our seed capital scheme, creating the most tax-advantaged start-up environment almost anywhere in the western world. Indeed, it is more attractive than that in the United States. On credit easing, I can confirm that subject to final EU state aid approval, which we expect to get in the next week, we will have the scheme up and running before the Budget.
Sammy Wilson (East Antrim) (DUP)
Is the Chancellor aware that while fiscal policies are being used to create jobs, HMRC, through its hard-line attitude towards many small businesses with cash-flow problems, is driving people out of jobs and firms to the wall? What can he do to avoid the continuation of the situation in Northern Ireland, where 55% of bankruptcies in the past four years have been initiated by HMRC?
Mr Osborne
I think the figure that the hon. Gentleman cites, across the whole UK—I shall come back to him with the specific figures for Northern Ireland—has been roughly the same for many years. Many bankruptcies are ultimately caused by the taxpayer because the tax bills are the last thing that a company cannot pay, and that has been true in good times and bad. We have continued with the time to pay scheme, which was introduced by the previous Government during the recession, and we are making every effort to help viable businesses with their cash flow and to help them pay their taxes, which benefits everyone, in a way that keeps them afloat.
Nadine Dorries (Mid Bedfordshire) (Con)
I am sure the Chancellor is aware that it is not just Nissan that we have heard good news about. Last week, Center Parcs announced that it had been able to secure £250 million-worth of investment to build a new Center Parcs in my constituency, creating 1,700 ongoing jobs and 1,500 jobs in construction. Does the Chancellor agree that tourism is an ideal way to attract inward investment into the UK and that it is an area we should be looking at to create jobs in the private sector?
Mr Osborne
The announcement was very welcome. I commend my hon. Friend for taking an enlightened attitude to development in her constituency, which is not always the case. When it comes to tourism, we have authorised a big increase in the advertising campaign that is currently going around the world to sell the UK in this very special year when we have the Olympics and the jubilee. We want a permanent increase in tourism as a result of those events.
Dan Jarvis (Barnsley Central) (Lab)
12. What assessment he has made of the performance of the Money Advice Service.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Money Advice Service is an independent body and the Financial Services Authority approves its business plan and budget. The service’s online health check was launched in June last year and received nearly half a million visits. More than half of those visits resulted in a personal action plan, providing thousands of visitors with a direct route to taking control of their finances.
Dan Jarvis
The Minister will know that low-paid workers in my constituency are currently missing out on the discounts that utility providers offer to customers when they pay their bills by direct debit. What work is he doing with the Money Advice Service to increase the number of low-paid workers who pay their bills by direct debit?
Mr Hoban
It is important that people take as much advantage as they can of the discounts on offer. The Money Advice Service is there to provide advice to people at all levels of income. Encouraging more people to open bank accounts and to take advice on direct debit services is a key part of its role.
David Rutley (Macclesfield) (Con)
15. What assessment he has made of the effect of Government spending commitments on the budget deficit.
The Chief Secretary to the Treasury (Danny Alexander)
In the autumn statement, the Government announced their decision to continue the consolidation beyond the current spending review period in response to a deterioration in the Office for Budget Responsibility’s forecast. The Government’s plan has restored confidence in the UK’s fiscal position, protected the UK from the European sovereign debt crisis and kept low long-term interest rates.
David Rutley
Has the Chief Secretary seen the latest report by the International Monetary Fund, which shows that although the US had a fiscal contraction of 0.8% last year and Germany saw a 2.3% tightening of its fiscal policy, both those economies are still growing? Does he agree that this shows that those who have called for an increase in the deficit as a way to drive growth are completely wrong?
Danny Alexander
Yes, I wholeheartedly agree with my hon. Friend. When the coalition Government came into office the UK was forecast to have the largest deficit in the whole of the G20. It is necessary to stick to the Government’s consolidation plan to restore public finances to sustainability. At the same time, the Government are delivering a radical programme of supply-side reforms to lay the foundations for a stronger and more balanced economy in the future.
Kevin Brennan (Cardiff West) (Lab)
I think the Minister has studied some economics. Does he understand the mechanism by which going too far, too fast with cuts can make the budget deficit worse? Where did he and his colleagues go so wrong with their sums on the budget deficit?
Danny Alexander
There is a very simple mechanism going on in the economy: the hon. Gentleman’s party caused the mess and we are cleaning it up.
George Freeman (Mid Norfolk) (Con)
Has my right hon. Friend seen the report in today’s Times saying that on his appointment the shadow Chancellor apparently turned to the Leader of the Opposition and asked:
“What if George Osborne is right?”
Does not the news of the jobs in Nissan, along with the 500,000 jobs created in the economy and our low interest rates, prove that he is?
Danny Alexander
I have not seen that report, but I can tell my hon. Friend that it is not a question I have asked myself.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
16. What steps he is taking to create greater equality in gross value added between the countries and regions of the UK.
The Chief Secretary to the Treasury (Danny Alexander)
Economic development policy is devolved, although the UK Government continue to work with the devolved Administrations in Scotland, Wales and Northern Ireland, as well as with the English regions, including on policies to maintain low long-term interest rates and provide 100% capital allowances in designated enterprise zones.
Jonathan Edwards
Latest European Union statistics indicate that GVA per head in inner London is £109,278 while the figure for the south Wales valleys is £10,654. Will the Chief Secretary include provisions in the forthcoming Budget to equalise wealth levels across the British state?
Danny Alexander
Budget announcements are a matter for the Chancellor, but I recognise very much the point that the hon. Gentleman raises. That is why we have asked the Silk commission to consider changes to the financial provisions within Wales—we look forward to its report—but he will also know that the autumn statement saw an additional £216 million of capital funding going as a consequence to the Welsh Assembly Government. I am sure that he, along with me, wants to press them to announce how they will use that money.
Ian Swales (Redcar) (LD)
Ninety-three organisations in the north-east have been awarded almost £100 million from the regional growth fund. May I welcome the additional £1 billion being allocated to the fund, and will the Chief Secretary ensure that bids are supported that would route more of that money to small and medium-sized manufacturers?
Danny Alexander
My hon. Friend is absolutely right. The regional growth fund is making an enormous difference across the country, particularly in those regions that are most affected by public spending reductions. Many of those projects are creating jobs and boosting the economy in constituencies such as his. He is right to say that we need to find more ways to get those moneys to smaller businesses, and of course the next round will invite programme bids that can do precisely that.
Damian Collins (Folkestone and Hythe) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and manage the public finances so that Britain, from now on, lives within her means.
Damian Collins
Will the Chancellor join me in welcoming today’s report from the east Kent enterprise zone that nearly 1,000 jobs have already been created on the former Pfizer site? What assessment has the Treasury made of the positive impact of tax credits for video game production and high-end TV production in the UK to mirror the success of the film tax credit, which has helped to secure Britain’s place as one of the world’s leading creative economies?
Mr Osborne
With two weeks to go to the Budget, I shall not comment specifically on tax policy, but the industry to which my hon. Friend refers has made its representations to the Treasury. It already benefits from the reduction in the small companies tax rate—or, indeed, the corporation tax rate in respect of larger firms—as well as the reforms to research and development tax credits and the introduction of the seed enterprise investment scheme, which will help start-up companies in the creative sector, as elsewhere.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The Chancellor’s policy on child benefit seems to be that a two-earner family on £84,000 can keep all their child benefit, but a one-earner family on £43,000—whether that is a single parent, or where mum or dad stays at home to look after the kids—will lose all their child benefit, which is £2,500 if the family has three kids. What is fair about that? For the benefit of Labour Members, the Deputy Prime Minister, the Justice Secretary, the Prime Minister and Government Back Benchers, will the Chancellor tell the House what is today’s policy on child benefit?
Mr Osborne
What I would say to the right hon. Gentleman is that I think it is fair to ask those in the top 15% of the income distribution to make a contribution to the fiscal consolidation. I happen to think that that is fair. If we now have a Labour shadow Chancellor who thinks it is not fair to ask people in the top 15% of income distribution to make a contribution to cutting a 9% budget deficit, he has completely lost sight of his party’s values.
Ed Balls
So on the comparison of £43,000 and £84,000, we are none the wiser. Let me ask the Chancellor another question about family finances. A year ago, he promised to get the economy growing and introduce a fair fuel stabiliser, which would cut fuel duty when petrol prices were higher. One year on, he is now indicating that he is going to press ahead with fuel duty increases, even though rising oil prices mean that pump prices have today reached a record high. How can he press ahead when petrol prices are 4p higher than they were in last year’s Budget? What has happened to the stabiliser, or is it not the truth that he cannot do the right thing on child benefit, tax credits or fuel because his plans have failed? A year ago, he said in the Budget that he would put fuel into the tank of the British economy. The fact is that the economy has tanked—on the hard shoulder—and this Chancellor has run out of fuel.
Mr Osborne
There is an inconvenient truth, which is that the fuel duty rises that the right hon. Gentleman refers to are the ones put in place by the Labour Government, which he and any Labour Member who was in the previous Parliament voted for. That is the unbelievable opportunism of the Labour party today. One month it is VAT, another month it is child tax credits and now it is fuel. He is like a pinball machine, bouncing all over the place. He does not have a credible economic policy.
Today, the right hon. Gentleman may have been listening to his Labour leader on Radio 5 Live. This is what a caller from Wakefield—very close to the shadow Chancellor’s constituency—said:
“I voted Labour all my life…but we need to have a credible Opposition…You’re not going to be the Prime Minister of this country by any stretch of the imagination. I’d put my life on that.”
Another Labour voter said:
“It’s really bad what you’re doing.”
The truth is this: they need a credible economic policy to be a credible Opposition and a credible shadow Chancellor and they do not have it.
Mr Speaker
Order. When the House has calmed down a bit, I will gently and kindly remind the Chancellor that answers are to be about the responsibility for Government policy. It is pretty straightforward.
Anna Soubry (Broxtowe) (Con)
T2. Many Conservative Members have long believed that lower-paid workers should be moved out of paying income tax. Will the Chancellor confirm that next month’s increase in personal allowances will have a real benefit for hard-working families in Broxtowe, and can they be increased even more come the Budget, please?
Mr Osborne
The personal allowance is increasing from April. We inherited a personal allowance that was £6,475. It is going to be £8,105 in April. That will take 1.1 million people out of tax and deliver a tax cut to 23 million or so basic rate taxpayers. I say to my hon. Friend, to my colleagues in the Conservative party and to my colleagues in the Liberal Democrat party that this is a coalition policy. It was part of the coalition agreement. It was in the Liberal Democrat manifesto, but I am also proud that it is a Conservative Chancellor who is implementing it.
Toby Perkins (Chesterfield) (Lab)
T4. If the Chancellor had cut less than the Darling plan and at the same time was borrowing less, we would be calling him a genius. What word would he use to describe somebody who has achieved the opposite?
Mr Osborne
I did not really understand what the hon. Gentleman was saying. He seemed to suggest that we should be cutting less than the Darling plan, so the Opposition are now abandoning even the deficit reduction plan that they claimed to have when they were last in government. It just shows how all over the place they are.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
T3. The oil and gas industry has opened its books to an unprecedented degree to show the costs of operating in the North sea, to help the Chancellor understand the need for investment and incentives. Will he recognise the need to respond positively in the Budget on decommissioning relief and on other incentives to maximise the job potential of the oil and gas that we have left in the North sea?
Mr Osborne
I am very aware of what an important industry that is for the UK and how important it is to extract what remains of the oil and gas in the North sea—of course there is still an enormous amount of oil and gas in the North sea—and to have an industry in Aberdeen and other places that continues long after the oil runs out. We are specifically engaging with the industry on decommissioning relief in order to give certainty to the industry about the years ahead, and on specific field allowances, which might aid new exploration.
Dan Jarvis (Barnsley Central) (Lab)
T8. Given that schoolchildren and students are the future bill payers of this country, can the Chancellor explain why, two years after the Conservatives blocked plans to include financial education in the national curriculum, no progress has been made in ensuring that our young people have the tools to make informed decisions about their finances?
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Department for Education is looking at this area. I am clear that the support that this Government have given to the Money Advice Service will ensure that people of all ages and all income levels receive the advice that they need to manage their money properly and prepare for their futures.
Mr Sam Gyimah (East Surrey) (Con)
T5. The Opposition’s policy of more spending, more borrowing and more debt is not credible and will result in higher interest rates. Will the Chancellor tell the House what impact just a 1% rise in interest rates would have on businesses, mortgages and the cost of servicing the colossal national debt racked up by the previous Government?
Mr George Osborne
I gave these figures to the House before and will give them again because they remind us how irresponsible the Labour party’s policy is: a 1% rise in mortgage rates would add £10 billion to family mortgage bills; a 1% rise in interest rate loans would cost businesses £7 billion; and a 1% rise in interest rates would add £21 billion to debt interest payments. The policy that the Labour party claims to pursue, at least this week, would definitely put market rates up, which is what has happened to other countries without a credible fiscal policy, and taxpayers, families and businesses would pay for the mess they got us into.
Hugh Bayley (York Central) (Lab)
By how much will the national debt have grown by the next general election, compared with the situation the Government inherited following the last general election?
Mr Osborne
In two weeks’ time I will produce the latest Office for Budget Responsibility forecasts for the fiscal situation, so the hon. Gentleman will have to be patient and wait until then.
Jason McCartney (Colne Valley) (Con)
T6. With new businesses setting up and others expanding in my constituency, I very much welcome plans to promote equity investment in new business ventures through the seed enterprise investment scheme. What else is being done to support new business ventures across my constituency and the rest of our nation?
The Exchequer Secretary to the Treasury (Mr David Gauke)
My hon. Friend is absolutely right to highlight the seed enterprise investment scheme, which will provide 50% income tax relief on investments in new start-up businesses. There is also the £50 million business angel co-investment fund, supported through the regional growth fund, the business coaching for growth arrangements and a number of measures that HMRC is taking to help start-up businesses.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
The Minister’s answer on the national insurance holiday for small businesses was simply not good enough, so may I press him again on why he will not expand eligibility for the national insurance holiday to all small businesses with fewer than 10 employees that take on extra workers, as set out in Labour’s five-point plan for jobs?
John Pugh (Southport) (LD)
T7. What success are we having in stamping out VAT fraud, specifically missing trader fraud, which affects us more than it does other EU countries and costs us almost £10 billion?
Paul Goggins (Wythenshawe and Sale East) (Lab)
Airports create jobs, yet next month’s increase in air passenger duty will apply equally to unused airports in regions with high unemployment and busy airports in the south-east. Will the Chancellor consider introducing a differential level of air passenger duty so that airports in regions with high unemployment can gain some benefit from it?
Mr George Osborne
We will of course listen to any representations. My constituency is also served by Manchester airport. Indeed, the second runway is in my constituency, so I am well aware of the representations from the airport, but I gently say to the right hon. Gentleman, with whom I get on well as a constituency neighbour, that the increase in air passenger duty was the policy of the previous Labour Government and was set out in their last Budget. The one thing we were able to do was to delay the increase last year to give passengers some relief. It is a little opportunistic for Labour Members to complain about a tax that they all voted for when in government.
Andrea Leadsom (South Northamptonshire) (Con)
Does my hon. Friend agree that it is unacceptable that four banks in the UK have 80% of the SME business and 80% of the personal current account business in this country and that it is essential we get more competition in the banking sector? During the passage of the Financial Services Bill, will he consider again the Treasury Committee’s recommendation for a specific primary competition objective for the Financial Conduct Authority?
Mr Hoban
We have listened to representations from not only the Treasury Committee, but the Independent Commission on Banking, and one of the three objectives of the FCA will be to promote competition, which will get better outcomes for consumers so that there is more choice and better value for money.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
Unemployment in Halifax has doubled since 2010, because of the Government’s failed economic policies. Will the Minister outline the urgent action that he is going to take to ensure that people get back to work in the town?
Mr George Osborne
Unemployment rose sharply at the end of the previous Labour Government, and youth unemployment has been rising since the middle of the previous decade, which is a tragedy for everyone affected by it and for the country. That is why we have the Work programme, why we are introducing the youth contract and why we have our work experience scheme, but a Labour MP is chairing the campaign to sabotage it and deny young people who are currently claiming unemployment benefit the chance of real work experience, so perhaps, first, the hon. Member for Halifax (Mrs Riordan) will have a word with the Labour MP who chairs the so-called right to work scheme.
Mr Christopher Chope (Christchurch) (Con)
The Chancellor referred to the top 15% of earners having to contribute to deficit reduction. Why is he proposing that, in that 15%, those who have children should make a bigger contribution than those without?
Mr Osborne
The reason we have put forward the policy is that those higher-rate taxpayers who do not have children are not in receipt of state benefits, so it is quite difficult to remove state benefits from them.
Geraint Davies (Swansea West) (Lab/Co-op)
The Chancellor and his Government are considering the complete removal of all subsidy to disabled manufacturing workers in Remploy. Does he accept that, as a minimum, the subsidy should be at the level of unemployment benefit and reflect the knock-on cost on health in order to avoid making a net loss by putting those people on the dole?
Mr Osborne
We are seeking to use the same amount of money in a better way, and it is a very sensitive issue, which hon. Members from all parts of the House are concerned to ensure we get right. We are working very closely with disability charities to come up with a future that is right for the people who have disabilities and want to work.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
In 1997 the gross value added difference in the national economy between the north and London was some 70 points. By 2010 it had gone up to 86 points. What more can my right hon. Friend do, or what will he consider doing in the next Budget, to add to the Government’s drive to narrow the north-south divide, which increased under the previous Government?
Mr Osborne
My hon. Friend is absolutely right. The gap between the economic performance of the south of England and the north of England and, indeed, all parts of the UK increased under the Labour Government, so all those policies for regional development agencies, The Northern Way and all that led to an increase in disparity in our country, and manufacturing as a share of our national economy halved. We have introduced the regional growth fund, and we have enterprise zones and major transport schemes such as High Speed 2, to shrink the gap between the north and the south and to make sure that all parts of our economy benefit—[Interruption]—so that we have a better record than the one when the right hon. Member for Morley and Outwood (Ed Balls) was sitting in the Treasury.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
The Royal Bank of Scotland has today announced that it is cutting 300 jobs, mainly in Edinburgh, and transferring the work to India, where 250 jobs are to be created. Will the Chancellor intervene and tell RBS that the public did not put billions into it just to let it export jobs in that way?
Mr Osborne
As the hon. Gentleman well knows, the Government’s shareholding in the Royal Bank of Scotland is managed through United Kingdom Financial Investments Ltd, an institution created by my predecessor, another Member for Edinburgh, the right hon. Member for Edinburgh South West (Mr Darling), and we have no plans to change those arrangements.
Duncan Hames (Chippenham) (LD)
Last week was indeed a triumph for those in the Treasury tackling tax avoidance, but can the Chancellor tell us whether those tax receipts, which will have not been budgeted for, are going to be used to set against the deficit or to put money back in the pockets of ordinary working people?
Mr Osborne
I am afraid that my hon. Friend will have to wait for the Budget to see what we propose to do across the board, but last week we demonstrated that we are prepared to take decisive and swift action where we find unacceptable tax avoidance—by a bank in that case, which we felt was incompatible with the code of practice that we asked the banks to sign and which they have signed. I hope that he and his constituents take it as a signal of our seriousness about tackling tax avoidance and, indeed, tax evasion.
Nick Smith (Blaenau Gwent) (Lab)
Much work has been done to secure a private sector-led infrastructure project in Blaenau Gwent. The developers say that it could create sustainable jobs for over 10,000 people. Given that the Chancellor has already announced 100% capital allowances in six English enterprise zones, when will he be able to offer similar assistance to the Welsh enterprise zones?
The Chief Secretary to the Treasury (Danny Alexander)
We are in discussions with the Welsh Assembly Government about their proposals for enterprise zones in Wales, including the possibility of applying within them the capital allowances regime that the hon. Gentleman describes, and we will make an announcement shortly.
Matthew Hancock (West Suffolk) (Con)
Thank you, Mr Speaker.
Does my right hon. Friend agree with the statement made this morning:
“The last Labour government didn’t regulate the banks properly. That’s what caused the financial crisis”—
not my words but those of the right hon. Member for Doncaster North (Edward Miliband)—or does he, like me, think that it was caused not just by a failure to regulate the banks but by the Labour Government spending more money than they had?
Mr George Osborne
Of course, it was a double failure: the catastrophic failure of Labour Ministers, including the then City Minister, the right hon. Member for Morley and Outwood (Ed Balls); and the failure to get a grip on public spending. We are having to clean up both messes at the moment.
Bill Presented
Planning Applications (Appeals by Town and Parish Councils)
Presentation and First Reading (Standing Order No. 57)
Martin Caton, supported by Philip Davies, Mr Elfyn Llwyd, Andrew George, Caroline Lucas, Bob Blackman, Paul Flynn, Kate Hoey, Robert Halfon, Steve McCabe, Kelvin Hopkins and Sir Bob Russell, presented a Bill to allow town and parish councils to appeal against the granting of planning permission in their area in certain circumstances; to make provisions for Wales; and for connected purposes.
Bill read the first time; to be read a Second time on Friday 27 April, and to be printed (Bill 314).
Energy Generation (Planning and Right to Invest)
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I beg to move,
That leave be given to bring in a Bill to require new energy generation companies to offer a proportion of shares for purchase by residents in local communities; to provide that residents in local communities have the right to invest in ownership of local electricity distribution grids; to establish an agency called Community Power Direct to advise local communities on matters relating to energy generation; to require local planning authorities to consult Community Power Direct when considering planning applications involving energy generation; and for connected purposes.
My Bill seeks to keep within local communities more of the wealth and power that our need for energy creates. The motivation behind the Bill is to make communities more resilient by helping to keep a little more of the wealth from energy generation in local hands. Being a child of the 1980s, I remember the “Tell Sid” campaign advertising new energy company shares for sale to ordinary people for the first time. I believe in share ownership, and I want more people to have a share in the electricity market, with one crucial innovation: we need a new “Tell Sid” campaign. My Bill would encourage those new electricity share owners to co-operate and pool their influence. Widening the pool of people who have a direct stake in the ownership of how new energy is generated would be good for the country, for communities, and for the energy market. My Bill would give a shot in the arm to the ambition for more co-operatives and mutual methods for delivering services.
Some community-scale energy schemes are already wholly community-owned, funded by community share schemes such as Westmill in Oxfordshire, Fenland Green Power, and the famous Baywind Energy in the Lake District. Of course, I support those who want their energy to come from a wholly self-generated or community-generated source. My Bill seeks to lock into law the ability of the local community to buy into the ownership or part ownership of energy that is being generated in and from their area. The Bill would create a right for local people to invest in the new energy companies that are created whenever new energy generation projects are developed.
To secure a licence and to raise the finance for generation schemes, the energy companies would establish new, separate wholly-owned companies. The Bill would require shares in those new companies to be made available to local people wanting to invest in new energy generation projects in their area. For example, why should not local people who are seeing a new wind farm go up have the chance to get a direct personal benefit from a new business which, important as it is for bringing down carbon dioxide emissions, will nevertheless inevitably have some impact on their community? Why should local people not have a say, through their ownership of a stake in the new business, in how it is run? Why should local people, whose ever-rising energy bills have helped to pay for the new energy business, not see a direct financial return too? That could help the finances of people in the local community and make them feel more secure.
I believe in the power of markets and the benefits of strong competition, but markets have to be regulated properly if the benefits of competition are not to be captured by the few. My Bill therefore seeks to spread the benefits from new investment in energy markets to the many. The squeeze on finances up and down the country, which has been caused by the Government’s economic policies, is exemplified in part by Ministers’ failure to tackle rising energy prices. I support the need for action on rising prices, which my right hon. Friends the Leader of the Opposition and the shadow Secretary of State for Energy and Climate Change have rightly championed. My Bill would help to increase the number of winners from the energy market. It would also accelerate the slow process of decentralising the generation and supply of energy, which bolder Governments than ours are embracing with enthusiasm.
Communities should have the opportunity to own the electricity grid in their area. That means not the electricity transmission wires, but the electricity distribution network beneath the grid supply point. My Bill would give a right of first refusal to local communities to allow them to buy the local grid if it is put up for sale. It would create a period in which the community could consider whether to buy or partly buy the grid network in their area. In the meantime, new infill grid infrastructure —the local wires that connect new homes on new estates to the grid—would in future be community owned and operated under licence, perhaps by the National Grid or another body. Ofgem would be required to license the process.
One lesson from the financial crisis and the various privatisations of the ’80s and ’90s is that individual shareholders are not powerful enough on their own. My Bill would therefore establish Community Power Direct to enable those in a community who buy shares in a new energy generation project to pool their shares through a co-operative so that they have a more effective voice in how the business operates and who benefits from its success.
Similar ownership and control structures are emerging in services other than energy, such as health care, leisure services and financial services. Foundation hospitals allow local people to become direct members of their hospital, giving them a voice and even more of a stake in the delivery of a service that is vital to their community. Building societies and credit unions give users of financial services a stake in their ownership, giving them a voice in and, crucially, a financial benefit from how the business is run. Why can a similar process not operate for energy generation?
Community Power Direct would have to be consulted when new energy generation projects are planned or developed. That important new planning requirement would be a further stimulus to widening the opportunity for local people to invest in the energy services of the future.
My Bill would help communities to become a little more resilient in these tough times. It would stimulate new social investment and share more fairly the benefits of energy wealth. I commend it to the House.
Question put and agreed to.
Ordered,
That Mr Gareth Thomas, Gavin Shuker, Barry Gardiner, Ms Karen Buck, Clive Efford, Kate Green, Chris Evans, Stella Creasy, Alun Michael, Mr Andrew Love, Rushanara Ali and John Cryer present the Bill.
Mr Gareth Thomas accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 27 April , and to be printed (Bill 315).
Point of Order
Paul Flynn (Newport West) (Lab)
On a point of order, Mr Speaker. Sir Christopher Kelly said at the Public Administration Committee this morning that the Prime Minister had “almost certainly” broken the ministerial code in not having an investigation into the conduct of the previous Secretary of State for Defence and Mr Adam Werritty. Instead, the probe was conducted by a senior civil servant. That view has also been expressed by the only enforcer of the ministerial code, Sir Philip Mawer, who has now resigned.
Do you think, Mr Speaker, that two investigations are now necessary—a legitimate investigation into the conduct of the previous Secretary of State and Mr Adam Werritty and an investigation into the conduct of the Prime Minister? As the Prime Minister is the only person who can authorise an investigation under the ministerial code, is it, perhaps, a matter for you in the Chair to consider whether action is needed on the allegations made by Sir Christopher Kelly?
Mr Speaker
The hon. Gentleman is a very experienced Member, and he never uses a word accidentally. I noticed in his attempted point of order his use of the word “perhaps”, which I suspect was surrounded on either side by an appropriate comma. My answer is no, it is not a matter for the Chair, and this is not a point of order for the Chair. We are considering a matter of Committee business on the one hand and, as I understand it, the ministerial code on the other. The latter, as he acknowledges, is supervised and overseen by, and the responsibility of, the Prime Minister. Whether that is satisfactory to the hon. Gentleman I cannot say, but it remains a fact. He has very effectively made his point for today, but it is not a point for me to respond to beyond what I have said.
Water Industry (Financial Assistance) Bill
(12 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Thank you, Mr Speaker, for calling me back to the crease to continue my batting, in the same way as a nightwatchman who has been put in half an hour before stumps being drawn is asked to come back and play again. Unlike the nightwatchman, I do not expect to occupy the crease until lunchtime, but I hope to score a few runs and make a few points.
A BBC producer reminded me over the weekend that at the outbreak of the second world war, the BBC was showing a cartoon. It stopped it bang in the middle, and then five years later, picked it up from exactly the same point so that people could carry on watching it. I do not suggest for one moment that you, Mr Speaker, or anybody else will necessarily remember what I was saying in the final two minutes of last Wednesday’s debate, although I have no doubt that some Members will have ensured that they have a copy of Hansard in front of them. I will, if I may, take this opportunity to remind everybody of where I got to.
I thanked Ministers for ensuring that the south-west would receive the £50 cut in water bills, and I recognised that the previous Government had done a significant amount of background research to ensure that that could be delivered. I also mentioned, however, that it was the current Government who had had the political strength to deliver it. I suspect that one reason for that was the lack of political commitment or pressure needed to deliver the cut, given that there were only three Labour Members of Parliament in the whole of Devon and Cornwall up to 2005. Members of Parliament from other regions of the UK were putting greater pressure on the Government to deliver projects that they wanted.
I added on Wednesday that until 1997 St Peter’s ward in my constituency was one of the most deprived in the whole country. I therefore argued that the challenge facing that community, where there has been significant regeneration and demographic change, remains as great as ever.
I also remember my hon. Friend the Minister telling the House that the bad water debt added an extra £15 to all our bills throughout the country. The £50 is very welcome, but I was disappointed to hear that there is likely to be a 4% increase in this year’s water rates bill, which is an estimated £24, or nearly half that £50.
I understand that South West Water is expected to meet EU regulations by investing in water infrastructure, and by improving the quality of our drinking water and beaches. However, we have 30% of the coastline and 3% of the population. Communities such as those in the Devon, Cornwall and Somerset peninsula are expected to make a significantly greater contribution to the local environment compared with other parts of the country.
South West Water, like other companies, has a monopoly on the supply of water. Ofwat—its regulator—oversees the economics and the quality of the environment, but we need to widen its remit so there is more competition in the delivery of water. In addition, we need to ensure that there is greater connectivity between neighbouring regions, so that water assets can be transferred to parts of the country where there is a greater demand. It beggars belief that we were told in February that parts of the country will be subject to hosepipe bans because we have failed as a country in the past 20 years to invest in reservoirs and other infrastructure.
To deliver that greater connectivity so that we can deliver water from one part of the country to another, we should make much more of our network of canals and waterways, another achievement of that great Victorian era, which was the basis of our industrial revolution.
Ian Paisley (North Antrim) (DUP)
I wholeheartedly agree with the hon. Gentleman on the use of the network of canals. This is niche legislation pertaining mainly to England, but I hope those views are extended to include our network of canals in Northern Ireland.
Oliver Colvile
It is fair to say that the Bill affects a specific part of England, and it would not be appropriate for me to start advising the Northern Ireland Assembly what it should and should not do, so I shall continue—I do not have far to go, and no doubt the hon. Gentleman can make his contribution on that later.
I am arguing that to deliver that connectivity, there should be greater use of canals and waterways. I very much welcome the £50 off the water rates, and I am grateful to my hon. Friend the Minister for providing it, but I hope it will be a temporary solution and that the Government make the cut more sustainable by creating greater competition within the market; reforming Ofwat, so that it has a greater role in delivering that competition; making greater use of our canal system and waterways to move water between regions; and explaining how we can reduce the bad debt element of water rates.
I hope that in providing those answers, we can ensure that we stop pushing water uphill and that we have affordable water bills.
Julie Hilling (Bolton West) (Lab)
I am pleased to be able to speak in this debate. I am not against support for water customers in the south-west, and I absolutely agree that it is unacceptable in 2012 for the Thames—the major river in our capital city—regularly to be flooded with sewage. However, it is also not acceptable in 2012 that hard-working people in my constituency are having to beg for food, or that they are spending more than 5% of their income on water bills. My constituents cannot wait for a further water Bill to address the affordability of water: they need action to help them with their bills and action on social tariffs.
In the north-west of England, the affordability of water is based on deprivation rather than on historical or geographical issues. The bills of United Utilities Water—my local water company—are close to the national average, but income deprivation is worse than in any other region. More than half the country’s most deprived communities are in the north-west, even though we have only 13% of England’s population. Based on Ofwat’s analysis, once households in South West Water’s region receive their proposed £50 bill reduction, affordability problems will be more severe in the north-west than in the south-west. Company social tariffs will not solve the problem. Too many customers in the north-west are in financial need to make in-house cross-subsidy work. It therefore needs a national social tariff scheme that all water companies will pay into. The Government’s hands-off approach, leaving it to water companies to devise their own affordability scheme and even giving them the choice whether to provide one, definitely will not help those people most in need in Bolton West.
There is no definition of water poverty. Households needing to spend more than 10% of their net income on heating and lighting are deemed to be in fuel poverty, but there is no equivalent definition for water. It seems to me, however, that if someone has to pay 5%, or even 3%, of their income on their water bill, they are pretty poor. Some 840,000 households in the north-west are spending 3% of their income on water, and 370,000 households are spending more than 5% of their net income. It is no surprise then—absolutely shocking, but no surprise—that 4,890 tenants of Bolton at Home are in debt, and that 1,462 of them owe between £1,000 and £2,000. This debt is of concern to all of us and adds £15 a year to everyone’s bill.
We need to recognise that some people simply cannot afford to pay their bills. I was told last Wednesday about a 70-year-old lady in Bolton who has just been rehoused in a Bolton at Home house. She had to move out of her last rented home because she could not afford to pay the heating costs. She has had to ask Bolton at Home for a furnished property because she cannot afford to buy her own bed, cooker, carpets or armchair—a furnished property at the age of 70 when she should be able to enjoy her life surrounded by her own belongings. Before she retired she was a care worker, but was never offered a pension scheme and was never able to save for her old age. She is now trying to live off £134 per week for her gas, electricity, water, food, clothing and all her other needs, and her water bill is about to go up by nearly 5%. Such people need help not greater debts.
United Utilities is a good water company and offers financial assistance schemes. It has a trust fund that will make grants to customers in genuine financial difficulty. That can clear outstanding water arrears, which is great, but does not help people to find the money on an ongoing basis to pay their bills. I am also told by Bolton citizens advice bureau that the fund often runs out of money before the end of the financial year, that it rarely assists people who cannot afford to pay the current year’s instalments, and it will refuse a grant if it does not think that the customer has a good enough reason for falling into arrears in the first place.
United Utilities also has an arrears allowance scheme that reduces the balance by £1 for every £1 paid by the customer. Again, however, the customer has to be able to pay the ongoing charges, and if they miss just one payment, they are thrown out of the scheme and will not be readmitted. There are also 5,200 United Utilities customers on the WaterSure scheme, which is for those who have medical or other needs that mean they have high water usage, but that simply caps their bill at the average household bill. United Utilities is also running a feasibility study on a support tariff. However, none of this solves the fundamental problem that some people do not have a big enough income to pay their water bills.
Unlike for other services, my constituents cannot shop around for a better deal. They can buy their water only from United Utilities. These private firms are monopolies, and frankly it is not enough just to expect them to be philanthropists. United Utilities is telling me that company social tariffs will not work for the north-west. We therefore need national action on social tariffs. Water companies can apply to have money deducted directly from benefits, but Bolton citizens advice bureau tells me that its money advice staff are deeply frustrated by that. Of course, we all believe that people should pay off all their debts, but when a person reaches a crisis of debt, priorities have to be made. There is no point paying off a water bill if the person is evicted from their home; the water bill is not a priority if they have no electricity in the house; and the water bill is not a priority is there is no food to feed the children. If a person is on limited income, the advice from all professionals is to manage priority debts. Only when homes are saved or prosecutions avoided are other debts dealt with. As there can be only a limited number of attachments to benefits, it can be harmful if one of them is for water bills.
Finally, water debt is just part of the problem facing so many low-paid people. It is 2012, and we have poor people dependent on food handouts. We have poor people losing their homes, poor people unable to heat their homes, poor people unable to pay their water bills—in fact, poor people paying the price for global economic failure. The Secretary of State should take action now on water poverty. I urge her to do so.
George Eustice (Camborne and Redruth) (Con)
Let me begin by welcoming this Bill. We all know the historical causes of high water bills in the south-west. They go right back to the time of privatisation, when insufficient account was taken of the lack of sewerage infrastructure and the pressure that this would put on companies such as South West Water to provide such infrastructure in the future. In Cornwall and the south-west, we also have just 3% of the country’s population looking after some 33% of the coast.
I have always argued that we have spent way too long in recent years talking about the problems and not enough time talking about the solution. I am delighted that we now have a solution to the unfairness of high water bills in the south-west, through the measure in this Bill to deliver a £50 discount on all household bills. I pay credit to the Minister for all the work that he has done to make that a reality. He has managed to deliver a policy where the previous Government were unable to do so. I remember talking to Labour candidates even at the last general election who said that although there was a problem, nothing could really be done about it. We have proved that something can be done, and where there is the political will, there is a way. I hope that the Minister does not feel that Devon and Cornwall MPs have lobbied him too ferociously on this issue. I feel there were times when he saw a Devon or Cornwall MP approaching him that his face dropped somewhat, as he knew the subject that was up for discussion. I hope that has not put him off the counties of Devon and Cornwall, because this move is very much welcomed by everybody there.
There has been some discussion about whether the £50 rebate is enough. However, it is important to remember where we were just a year ago. There was not going to be a Government-funded discount; in fact, the discussion at that time was very much about what might be achievable through a national social tariff. That would effectively mean having a pot of money funded by all the water companies, at the expense of water bill payers across the country, with resources allocated on the basis of affordability. That would have disproportionately helped those in the south-west—it would have helped some in other parts of the country as well—but it would have been paid for by water bill payers across the country. The decision that the Government have finally come up with—to find public money to fund the discount, so that it does not cost water bill payers elsewhere in the country money—is a sensible solution. Importantly, it separates the historical unfairness of high water bills in the south-west from affordability, which it seeks to address through the company social tariff. That is the right approach, and we should welcome it. We in the south-west should not look a gift horse in the mouth and say, “This isn’t enough,” because I think that £50 is a significant discount, which we should all welcome.
I would like to pick up on what my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) said about the projected rise in water bills from South West Water. This is an issue, because with the Government having done their bit and finding some money to create a genuine discount for people in the south-west, it would be a dreadful state of affairs if it was all swallowed up by water bills in the south-west being increased anyway. As my hon. Friend said, that could take up around half the discount. However, the Government have done their bit and found the money; we now need South West Water to do its bit by showing restraint in the bills it issues and by developing the social tariff. Most importantly, we need Ofwat to do its bit. I very much hope that the Minister—if he can do one last thing—will hold its feet to the fire, and keep the pressure on Ofwat to ensure that it keeps those bills under control.
Finally, I want to touch on how we might create downward pressure on water bills in the longer term. I am encouraged by what I have seen on that issue in the remainder of the White Paper, which deals with the development of proper competition on the retail side, particularly in the business sector. Businesses will not benefit from the £50 discount, but if we can increase competition at the retail end, we should be able to achieve downward pressure on their bills. I welcome these proposals.
Mr Andy Slaughter (Hammersmith) (Lab)
In London, there is a real need for improvement to the sewerage system. The present network of major sewers was designed for a 19th century city. London’s population is now 7.6 million, but it is projected to rise to 8.3 million by 2021 and to 8.8 million by 2031. It will then have doubled since the major sewers were built. It is remarkable that the system has managed so well for so long, and is a tribute to Bazalgette and the others who designed and built it. It is, however, clearly inadequate, and has been so for some time.
The present system consists of combined sewers, which convey foul sewage and rainwater run-off to the sewage treatment works before they are discharged. When the combined sewers reach capacity, the combined sewer overflows—CSOs—are designed to discharge excess untreated waste water into the River Thames. This avoids overflows and back-ups through manholes and into individual properties, but it means that as soon as the hydraulic capacity of the sewage treatment works is exceeded, sewage is pumped directly into the Thames. In fact, some parts of London, including my constituency, also have a problem with sewage back-up, and the Counters Creek relief scheme that Thames Water is seeking to implement will bring an end to that appalling problem, which has affected thousands of my constituents over the past few years. It happened three times in four years during the latter part of the last decade. I welcome the implementation of the Counters Creek relief scheme—a major scheme across west London—but the result will be even more sewage going into the Thames. The river will continue to bear the brunt.
Discharges can occur following as little as 2 mm of rain; they happen approximately 60 times a year. The Thames is tidal between Hammersmith and Beckton, and when CSOs discharge, the resulting sewage and litter flows up and down the river with the tide. In winter, it takes about a month for non-biodegradable waste to get from the head of the estuary at Teddington to the sea. In summer, when water levels are lower, it can take up to three months. It is in summer that we get the worst response and the worst smells.
In future, sewage might flow into the Thames even on dry days unless the situation is managed. In any typical year, 39 million cubic metres of untreated waste water—a mixture of sewage and rainwater—are discharged. The frequency and volume of untreated waste water entering the tidal reaches of the Thames have increased, and will only increase further. This level of waste entering the environment is not tolerated anywhere else in the UK, and it should not be flowing into the main river of our capital city. Something clearly needs to be done.
The discharges affect the river in several ways. First, polluted water increases health risks to recreational users of the Thames, whose numbers I am pleased to say are increasing year on year. Secondly, the aesthetic impact of CSO discharges is offensive. Materials such as faeces, toilet paper, wipes, sanitary products and other “flushable” items, including hypodermic needles, regularly end up in the Thames at Hammersmith. All of this causes slicks of pollution to float on the river before being washed up on the foreshore. Thirdly, sewage discharges harm the ecology of the river by reducing dissolved oxygen levels in the water. In extreme events, this can result in the death of fish and other wildlife, often in large numbers. There are therefore strong environmental, health and economic cases for the Thames tunnel.
The Thames tunnel will work with the existing system of sewers, with improved sewage treatment works and with the Lee tunnel to reduce the frequency of CSO discharges. This Government and the previous one have conducted serious studies of the issues behind the tunnel. Investigations have been carried out by the Department for Environment, Food and Rural Affairs and by independent bodies, resulting in the 2007 regulatory impact assessment, the Thames tunnel needs report, and DEFRA’s 2011 strategic and economic case for the Thames tunnel. They all conclude that the tunnel is the most comprehensive solution available at the most proportionate cost.
A number of alternatives have been suggested. The first is that we have a system to mitigate and reduce the dissolved oxygen levels in the Thames. This involves using the so-called Thames Bubbler oxygenation craft, as well as hydrogen peroxide dosing. This has helped with fish mortality in some places, but it is not sustainable; neither is it a complete solution and neither will it work in a tidal river.
Mr Matthew Offord (Hendon) (Con)
The hon. Gentleman is making an eloquent speech. Does he agree that the Bubbler and the sustainable drainage system will not remove things like heavy metals, pesticides and all the other contaminants that go into the river through the CSO system he describes?
Mr Slaughter
That is absolutely right; it is a sticking plaster approach. I have reservations about the tunnel, which I shall come on to, but I am making the case that the tunnel is the only sensible solution thought of so far because many alternatives have been put forward but they are simply not sustainable.
SUDS—sustainable drainage systems—are one alternative. There is nothing wrong with them. They reduce the amount of surface run-off blowing into the sewerage system and complement other measures. However, the Government policy statement makes it clear that to prevent rain water and run-off entering sewerage systems completely will require either a new system designed to meet the principles of SUDS and source control or a completely new conventional separate water system, which would be disproportionately expensive. Although it can be installed effectively in new developments, trying to retrofit all London’s properties to the required level is simply impractical. It is impractical, too, to create extra capacity in the existing sewerage system. Existing sewers cannot be enlarged or duplicated because the system is so large and complex and has so many cross-connections that most of the network would need to be enlarged to prevent CSOs from discharging.
The Government’s report says that substantial duplication and enlargement to most of the sewers would entail massive construction work throughout inner London, enormous disruption and extremely high costs. Converting a combined drainage system into a separate drainage system would involve the provision of a completely new network of sewers approximately 12,000 km in length. Every existing property would require connecting to the new system and the cost and disruption would be high and might lead to a large number of misconnections, which could create a legacy of problems.
Any of those alternatives, if they were sustainable, would cost many times the cost of the tunnel—whether it be a SUD system or a separate rain water and sewerage system. What the opponents of the tunnel have been left with—I am sorry to see that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) appears to have joined them—is the idea of a shorter tunnel. This is a tunnel that would cover just west London—the so-called Selborne tunnel, named after the author of the report sponsored by Hammersmith and Fulham council.
The shorter tunnel has none of the advantages of the longer tunnel and brings many more problems. It would effectively mean sewage stuck in the shorter tunnel for up to two weeks at a time while it became septic and could go nowhere—clearly it can flow only through the existing network of sewers in east London as capacity becomes available there. It would also require far more storage on land in west London. Thames Water’s response to the Selborne report—I have no brief for Thames Water—was quite devastating, pointing out its follies and fallacies. Indeed, if we read the Selborne report, we find that it does not talk about the shorter tunnel because it was realised that it was not a workable proposition. It would cover only half of the CSOs in London—that is, it would do only half the job. East of Battersea, sewage would continue to go into the Thames; west of Battersea, including in my constituency, the tunnel would regularly be full of sewage, with all the attendant problems of smell and disease that that can cause.
Mr Offord
Does the hon. Gentleman agree that our aim is to address some of the environmental problems of the river apart from the death of the fish on which so many people seem to focus, and that because the shorter tunnel would not comply with the urban waste water directive, the whole exercise would be pointless?
Mr Slaughter
The whole exercise has been a PR exercise, a sham and a spoiler. Those who have supported, or are supporting, the shorter tunnel have no credibility when it comes to resolving environmental and other problems. By all means let people criticise the Thames tunnel on its merits, but let them not propose this chimera as an alternative.
As a Hammersmith Member of Parliament, I have had to deal with all the propaganda and misleading statements that have appeared over the past five years under the auspices of Hammersmith and Fulham council. In fact, there is a huge amount of consensus about what needs to be done, and, to a large extent, about the solution, at least in principle. It is agreed that we must resolve the problems of sewers flooding the Thames, and that a tunnel is the best way to do that. We can argue about the route and about the cost, but both this and the last Government, mayoral candidates, most local authorities and most London Members of Parliament of all parties are of one mind, and it is not helpful to suggest otherwise.
Let me summarise the recent history of the campaign against the tunnel in Hammersmith. It began because this was an EU scheme: it began as an anti-EU campaign. Then it was claimed that it would despoil all the local parks—such as Ravenscourt park, which is about half a mile from the Thames—or that Furnival gardens would be dug up, which was never the intention. There were also false claims that housing estates would be demolished to make way for the tunnel portals. None of that has helped to identify the reasons for what is being done.
I sympathise with individual residents’ groups who are concerned about what is happening in their immediate areas. My constituency contains at least two of the sites involved. The Acton sewage tanks are on the very border of my constituency, and I hope that the fact that the tunnel will begin at that point will mean an improvement, because tanks that often cause problems of smell and are unsightly will no longer be needed. The other site is the Hammersmith pumping station. I have had the pleasure of going down into it—as have the hon. Member for Hendon (Mr Offord) and many others—to see the appalling conditions that exist when raw sewage is pumped into the Thames. At that site, the necessary building work will be contained within the parameters of Thames Water’s own development area. Of course we should be concerned about the disruption caused by building work, and should encourage Thames Water to use the river wherever possible to take spoil away, but, as far as I can see, Thames Water is working quite closely with local authorities and others, when that is allowed, to ensure that that disruption is minimised. It will clearly be necessary to keep an eye on the situation.
The one issue that is of concern in Hammersmith and Fulham is what is going to be the main drive shaft of the tunnel, which was to have been at Barn Elms in the constituency of the hon. Member for Richmond Park (Zac Goldsmith) but will now be in south Fulham, in the constituency of the hon. Member for Chelsea and Fulham (Greg Hands). I feel for the residents of Fulham if disruptive work is to take place there, but much of the blame for that must lie with the local authority, which, by running an extraordinarily outrageous campaign against the tunnel on principle and on entirely false premises, has failed to engage with Thames Water other than to try to take it to court to prevent it from proceeding with the project at all. By contrast, the hon. Member for Richmond Park and other London local authorities have played a blinder in negotiating with Thames Water, pointing out the problems involved in development in one area or another. It seems that the people in Hammersmith and Fulham will have to put up with the main drive shaft because of the incompetence of their own local authority.
I find it strange that the main defence put up by Hammersmith is that 95% of what is going into the river at present is water, and only 5% is sewage. Raw sewage is, by definition, a mixture of water and other products. I am not sure that that quite answers the question of how we are to have a sustainable River Thames in the future. I was fascinated by the following statement by the hon. Member for Chelsea and Fulham in his explanation of why he is opposed to the tunnel:
“Anglers, rowers and sailors will experience personal benefits from the tunnel”.
Never before have I heard not having to swallow human excrement proposed as a personal benefit. There is a complete lack of reality about what is actually happening. At present, people who walk along the Thames towpath see raw sewage floating in the river on a regular, weekly basis. That is a disgrace to London, our capital city, and something must be done about it.
We must keep a careful eye on both where Thames Water is intending to build and the cost of this project. It is true that costs have escalated over time. Both Front-Bench teams have made the point that Thames Water’s bills are the lowest in the country, and even after the anticipated additional cost of the tunnel, its bills will be near or below the national average water bill. Although that is true, it is no great comfort to those of my constituents on low incomes who will have to pay the additional cost. Because there is a clear and overwhelming need for the alleviation of sewer flooding, the attitude to this issue of both Thames Water and the Government has been somewhat blasé.
Ironically, the Bill contains provisions for both the construction of the tunnel and subsidies in respect of excessive water bills. I am not suggesting that that may be required in the London area at present, but we must be aware that there are many very poor people in my constituency and across London who find it difficult to pay their water bills in addition to everything else. I would like either the Government or Ofwat to conduct a more critical analysis of Thames Water’s plans and the costs. We did that in respect of Crossrail, which is another major civil engineering project in London, to try to keep down, or drive down, costs, and I believe we should do the same for the Thames tunnel. It is not good enough simply to say that there are social tariffs and that the bills will be no higher than the national average. People are being asked to pay substantially extra on top of bills they may already be struggling to pay.
I am grateful for the House finding additional time to debate this issue, which is vital for London. There are only a handful of opponents, including those representing Hammersmith and Fulham. It is extraordinary that they do not have a response to what is a national embarrassment and a health hazard, and something that we can no longer sustain in London—a river that is getting back to the state it was in in the 19th century, when the Bazalgette scheme was necessary. Whenever we discuss projects such as HS2, Crossrail and the Thames tunnel, I am always ashamed that there seems to be a reluctance to undertake great civil engineering projects, in which this country led the world in the 19th century.
I hope that there is a solution, and I suspect that it is the Thames tunnel project. In going forward with it, the Government must consider the sensitivities of the various local areas and the cost.
Dan Rogerson (North Cornwall) (LD)
Clearly, I am delighted that the Bill has been introduced. I would have liked to have seen it some time ago and I am very pleased that the coalition Government have responded to the call from people in the south-west for a measure of support towards the incredibly high costs that they pay for their water—or, more accurately, for the disposal of their sewage, as that is what we are talking about. We talk about water bills, and as a generic term I suppose that is fair enough, but in reality we are talking about the cost of dealing with sewage. As we heard from the hon. Member for Hammersmith (Mr Slaughter), that is clearly an issue in other parts of the country, too. This is very much a Bill of two parts and I shall not seek to comment on the question of what is required in London, other than to say that I sympathise with London MPs who see the costs that their constituents will pay in the future. Whatever scheme we use, and, clearly, the hon. Gentleman thinks that this is the right scheme, there will be greater costs for their water—or sewage—bill payers. From a south-west perceptive—that is, from a Cornish and Devonian perspective—people have been paying these bills for a long time, as we have heard. They are not worried about the future; they have been dealing with this problem since privatisation and, as we have heard, it goes back to the way in which the water industry was privatised.
My speech is somewhat timely. I shall not seek to comment in detail on the inquest that has just reopened in Taunton, but we need to remember just how controversial the process of privatisation and how it was undertaken were. The water poisoning incident at Lowermoor in my constituency still concerns people today and I shall follow with interest the outcome of the inquest into the death of Mrs Cross and the question of whether information was withheld from people as privatisation was introduced.
Simon Hughes (Bermondsey and Old Southwark) (LD)
On the broader, rather than the narrow, point, may I say that those of us with London seats do not try to make the case that our bills are as high as those for people in the south-west and have always argued for a better deal for them? Any argument about the Bill, for us, concerns part 2 and the terms and conditions under which the Government might support Thames Water with any funding for big projects.
Dan Rogerson
My right hon. Friend is absolutely right. The Bill offers opportunities for other parts of the country in that if the Secretary of State felt subsequently that measures should be put in place to look after the interests of water bill payers—or sewage bill payers—in other regions, the Bill would allow them to do that. That is very welcome to all parties.
Let me return to my point about privatisation in the south-west. I do not have the figures to hand about whether much of a receipt was realised at the time, but, clearly, the liabilities companies were being asked to take on were quite high. I suspect that some income was coming into the Treasury at the time of privatisation and a small “green dowry”, as it was called, was provided to the south-west to deal with the recognised cost of clearing up the woeful underinvestment in sewage treatment around a very long peninsula. If a fairer assessment of the real picture had been undertaken at that time, bill payers in the south-west could have been spared a great deal of hardship. It is worth putting on the record that more account could have been taken of the situation at the time. Rather than everything being rushed through, there could have been a better deal at that point that more fairly reflected the burden being placed on my constituents and those of other hon. Members in Devon and Cornwall.
Members from other parts of the country have said to me, “Well, you live in that wonderful part of the world and have that coastline. You enjoy it, so you’ve got to pay for it.” They should try saying that to a young person living with their family in the ward in which I live and in which I spent the early part of my life, St Mary’s ward in Bodmin, which is one of the most deprived wards in the south-west. I would venture to suggest that a young person growing up in that ward might well spend far less time on the beaches of Cornwall than people from other constituencies who come down and visit, or than those who are fortunate enough to own a second home in my constituency that is very close to the beach. My hon. Friend the Member for St Ives (Andrew George) has already discussed the costs sometimes involved in connecting water and sewerage systems to isolated and remote properties, which may be unoccupied and have low water bills because they are on meters. Those costs are borne by people living inland, on the peninsula, who probably do not get the benefit of going to the coast very often.
Dan Rogerson
I suspect we will hear more about people in Plymouth who are in that situation.
Alison Seabeck
Actually, I rose to talk not about people in Plymouth but about the additional costs that the water company has had to bear of placing pumping stations in places that will not spoil tourists’ views of a harbour or a beach. That is certainly the case in some places in Cornwall. People do not see those costs but South West Water bill payers have been burdened with them.
Dan Rogerson
The hon. Lady makes an excellent point, and we can set that against the background of what others have said in this debate and in our previous debate on this. People in our part of the world have low incomes and comparatively high housing costs—not as high as those of constituents here in London, but much higher than in the north-west or the north-east. When combined with a low income, those costs are a significant pressure on people’s spending power.
I am delighted that the coalition Government have recognised that this problem needs to be dealt with, but it is not easy. The previous Government looked at the issue for some time and I pay tribute to those who have previously campaigned on this, including many Members who are still in the House. Members from my party and some Conservative Members, as well as Linda Gilroy, who was very useful to have involved, along with the hon. Member for Plymouth, Moor View (Alison Seabeck) and the right hon. Member for Exeter (Mr Bradshaw), all helped to put pressure on the then Labour Government to take action. We got as far as getting the Walker review, so I suppose we should be grateful for that.
Alison Seabeck
Before the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) leaves the Chamber—oh no, he has gone—I wanted to draw attention to something he said earlier about the problem being partly due to the fact that there were only three Labour MPs in the south-west. Clearly, it is about quality, not quantity, but on that premise, given that we have a very large number of MPs from the Government parties in the area now, I assume that everything we want in the south-west will happen. That was a little churlish because the hon. Member for North Cornwall (Dan Rogerson) is right that there was complete cross-party effort on this.
Dan Rogerson
I think we can point to the time before the Labour Government, during the early days of the privatised industry, when, although there was a preponderance of MPs in the area from the Government party, we did not get anything. We have to recognise that there has been a problem and that it is being dealt with to some extent.
The company still has work to do, so we are not looking at a static position. We are looking at the fact that, as the hon. Member for Hendon (Mr Offord) said in his excellent contribution in our previous debate on this issue, raw sewage is still being washed out. That happens in London, as the hon. Member for Hammersmith has described, and in coastal locations such as Trevone, which I mentioned in an intervention. Water companies argue that that is a very rare event, happening two or three times a year, but the statistics show that it happens far more than that. Rainfall patterns are changing and development patterns have changed. We have, fortunately, got some affordable housing and market housing built in some of those communities, but that has added to the burden on the sewerage systems, which are just not up to the job. South West Water still has work to do and it also has to take responsibility for taking over the private sewerage systems. I welcome that change, but it will add to the costs going forward. The measures are long overdue and will, I hope, help to offset some of the burden on bill payers.
I have some concerns about the debt model that has been agreed between Ofwat and the water companies. The debt that has been taken on over previous decades to provide infrastructure is not being paid off to any significant degree. Under the debt model, those loans are repackaged periodically.
The water companies and Ofwat argue that that is a great deal because it keeps the cost of borrowing down—if we were to start to pay off these things now, we would put bills up even higher. I see that, but I am concerned that, essentially, we are saying that the Government’s sensible proposal will have to continue for ever, because we will never, ever pay off some of the significant debt that has been arrived at to put in the infrastructure. I hope that Ofwat will continue to look at the issue, because my constituents come to me and say, “At least we must have paid off a lot of this money by now and we must be getting to the point where the bills will start to go down.” No we are not, because the debt is constantly repackaged. That issue perhaps needs to be examined.
Hon. Members have talked about national WaterSure, or social tariffs. I know that the advice from the Treasury is that that effectively amounts to a tax—we need to examine that—but any scheme that seeks to help those who are struggling the most ought to do so regardless of where those people live. Even after the welcome investment in tackling inequality in bills across the country, people in my constituency and in other constituencies across Devon and Cornwall—because of low income, high housing costs, and high water and sewage costs—will still be worse off than people in other parts of the country.
I accept that other hon. Members will say, “Come on, you are getting this and surely you must be satisfied with it,” but I will be satisfied when I think there is a fair deal for people in my constituency and in neighbouring constituencies. As I said in a Westminster Hall debate earlier this year—or perhaps at the end of last year; memory fails me—I hope that we reconsider having some sort of national tariff. If measures are kept within region, the pressure on the other bill payers will be so high that those measures will not be allowed to be significant enough to meet the need.
We also need to keep a close eye on the profits of the water companies. In an excellent contribution to the first part of the Second Reading debate, my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) mentioned the sometimes arcane business models and the layers of companies that manage to pass on significant dividends. Ofwat could do more to look at the profits there. As my hon. Friend the Member for St Ives said, the leadership at South West Water is far better than it was and those people have engaged hugely with the campaign to deliver on this issue. They are being open and realistic about what is achievable, but all water companies need to consider the contribution that they, too, could make to perhaps providing a more generous WaterSure or social tariff scheme. We need to be vigilant about that.
George Eustice
Does the hon. Gentleman agree that another shortcoming of the WaterSure tariff is the fact that it is available only to those who are on meters? That is good if it encourages people to go on to a meter, but there is a problem with blocks of flats where it is not practical for people to go on to a meter. Some of those people are in temporary rented accommodation, and it is not their call whether they go on to a meter.
Dan Rogerson
The hon. Gentleman is absolutely right, and we might be talking about some of the people who are worst off, because they live in smaller flats or houses in multiple occupation. I hope that as the Government move forward with their review of water policy they will consider whether any resource could be put into finding technological solutions to overcome those problems. At a time when we are considering smart metering and all sorts of things to do with energy, there must surely be a solution that allows metering for all water consumers, no matter where they are. A small investment, perhaps in that, or some encouragement to companies that might be coming up with such ideas, would help to deal with the issue. The sooner we can get everybody on to a meter, the sooner we will take the burden from those who, thus far, have been unable to take advantage of metering. The hon. Gentleman makes a strong point.
I should perhaps conclude by returning to the issue of fairness and who these measures are designed to help. South West Water feels strongly that it would like to see help for small businesses—it is concerned about that. I sympathise with that point of view, although we have to be realistic about how much money there is, and therefore about the support that will be available to residential customers if businesses are covered as well. It is difficult to distinguish between the smaller and the larger businesses, some of which are national and quite profitable. They would see a benefit that was nothing to them, but which would suck up money that could go to a residential customer down the road.
Second homes are an issue, as one might expect me to say. The Government’s proposals contain a careful appraisal to make sure that nobody gets £50 off their bill if they are currently paying less than £50, or we would be giving them money. I suspect that many in that category are people on water meters who are not using much water because the property is empty much of the time, as a second home. If, as the Bill moves beyond Second Reading, anything more could be done to examine the issue and make sure that it targets people who live in the area and pay higher water bills, I would welcome that.
I am delighted that the Government are moving on the matter at last. I hope they continue to examine ways in which we could help the very poorest consumers through social tariffs. I congratulate the Minister on tiptoeing through the various minefields surrounding the subject and coming up with the Bill that we are debating. I look forward to it making progress and becoming an Act.
Kate Green (Stretford and Urmston) (Lab)
It is a pleasure to speak in the debate. Many hon. Members have noted that the Bill seeks to deal with two specific local issues, the south-west in respect of the first clause and London in respect of the second, but the Bill is widely and non-specifically drawn.
I take the opportunity to ask about Ministers’ broader strategic intentions. In what the clauses encompass there is some real potential for development of the Government’s broader water strategy, and I am keen to explore two questions in relation to that. The first is affordability. A number of hon. Members, including the hon. Member for North Cornwall (Dan Rogerson), who has just completed his excellent speech, have raised some important issues about that. In common with other non-south-west Members, I want to put it on record that I have no concerns at all about ensuring a fair water deal for customers in the south-west, but customers across the country are struggling with water bills, as a number of hon. Members have pointed out, as the cost of living rises, and the cost of water and other utilities creates additional pressure on household budgets.
The Bill offers Ministers the opportunity to think creatively about how Government can help to relieve those financial pressures, and perhaps to give some indication today of their thinking in that area. Social tariffs have been rightly identified as the route to achieving that, but there is a clear need for the industry and Government supporting the industry to ensure that we raise the game. Water is clearly not a luxury and some families, such as those with young children and families where there is ill-health or a disabled member of the household, are hit particularly hard. WaterSure is helpful in addressing some of the additional need that arises for those families, but it applies only to families with more than three children in the household and the take-up is not particularly good. Only about a third of households that could benefit from WaterSure are taking advantage of the scheme.
The hon. Member for North Cornwall and others mentioned the need to spread water metering more widely and some of the properties where that is quite challenging. It is also important to recognise that without the benefit of well designed social tariffs, families with higher levels of water usage because families are larger or because of health and other needs may find that water metering worsens their position. It is therefore important that we design very carefully the way in which we apply tariffs to meet the needs of particular families and to support those on lower incomes.
I urge the Minister to recognise the lessons that have been learned in relation to social tariffs from the energy industry, and work that has been done with energy utility companies. The first and extremely important lesson is that a hands-off approach is not sufficient. If it is left to the industry alone to apply the sorts of tariffs that support low-income households, the result is poor protection for the poorest consumers. There would be a lack of information about tariffs and the benefits of more favourable tariffs would more often accrue to better-off customers who can pay by direct debit, for example, which reduces industry costs but passes the benefits to those who can operate their personal finances in that way. Customers often end up on a tariff that might initially have been quite good for them but becomes inappropriate, and there is a lack of proactivity on the part of the supplier to seek to inform individual consumers and improve their position. That is understandable in a market where competition pertains, as is the case for energy utility companies, but it will happen all the more in a market that is effectively a series of regional monopoly markets, as is the case for the water industry.
There have been some interesting experiments on improving the coverage of social tariffs and affordable bills in the energy industry, and I hope that Ministers will take those into account in relation to water supply. There have been some interesting experiments on entitlement to the benefits that support low-income families or those that meet a particular additional need, such as disability benefits. There has almost been a two-way trade in working around that linkage with the receipt of benefits. It is of course possible to think more creatively about how information held by the Department for Work and Pensions and other agencies on who is in receipt of financial benefits could be used more widely to identify households that might also be eligible for social tariffs, a point the Secretary of State alluded to in her opening remarks last week. Although I appreciate the concerns about data sharing, I think that the benefits would surely outweigh the risks and urge Ministers to think imaginatively about how the data could be shared effectively.
Alison Seabeck
My hon. Friend talks with a great deal of experience in this field. Could she offer a view on whether the introduction of universal credit will make it more straightforward to operate a social tariff through the benefits system or slightly more complicated because it will be less easy to pull out certain elements and see where people’s needs are?
Kate Green
I will not venture to speculate on that—it is disappointing that I, a universal credit junkie, do not have an answer. This is one of the rare moments when I say that it might be useful that universal credit is a household benefit, because water is of course a household bill and so the calculation might be easy. However, a number of the elements of local financial support, such as council tax benefits, will not be within universal credit, so it might not be a straightforward indicator of which households and properties are particularly likely to be linked to high water usage. I hope that the Minister will take the opportunity to discuss the localising of benefits with colleagues in the Departments for Work and Pensions and for Communities and Local Government and to explore what the options might be following the introduction of universal credit. The Secretary of State for Work and Pensions certainly makes great claims about the access to data that universal credit will both rely on and introduce, and I think that it is undoubtedly the mood of the House that we would want to see the data used effectively and constructively, with careful attention to privacy and data sharing concerns, in order to help bring water bills down.
As I have said, the linkage to those in receipt of benefits works two ways. It is not just a case of looking at benefits data and identifying people who might be eligible for a social tariff; it is also about looking at people who are on social tariffs and ensuring that they are in receipt of all the financial support to which they might be entitled through the benefits system.
The Minister may be aware of—and if he is not, I urge him to go and look at—the excellent schemes that have been developed with energy utility companies in order to link benefits checks, proactive benefits advice and entitlements assessments, working closely with a number of charities, to customers on social tariffs. That interesting model has worked well in several parts of the country, with several utility companies and advice agencies working in partnership, so I hope that he will consider whether it might work for the water industry, too.
I endorse strongly what my hon. Friend the Member for Bolton West (Julie Hilling) said about help for people struggling to pay water bills, and I ask the Minister also to comment on consumer education in terms of water usage, because if households can use water more efficiently, they will also help to manage their bills.
My second issue relates to clause 2, and I shall look again at its wider potential beyond the immediate need that it seeks to address—that of resolving the serious problems in London. It relates to the substantial infrastructure investment that the Bill envisages but which I again encourage Ministers to think about using proactively in terms of infrastructure development throughout the country.
At Davyhulme in my constituency, United Utilities operates a large sewage and water treatment plant, which was built in the 19th century but has been at the forefront of technical innovation and development since it was established—and no more so than now. Its groundbreaking sludge treatment project, which when fully up and running will be the largest such programme in the world, takes raw sewage and effectively transforms it into renewable energy sources, with the treatment by-product being used as soil conditioner.
That interesting and remarkable project has already benefited from modest financial support from the Government for its pilot stage, but, if drawing such green energy supplies from sewage and water treatment is to be a real runner, we might want to encourage substantial national investment in it. It is estimated that the Davyhulme plant, when fully operational, could supply green energy to 5,000 homes in the north-west, so there is substantial potential for such energy sources to become a major part of the Government’s renewable energy strategy. I should therefore be interested to hear from the Minister what discussions are taking place with his colleagues in the Department of Energy and Climate Change to link investment in our water treatment sector to the development of new energy supplies.
Under clause 2, I see how Government thinking about their role in supporting the industry’s development through investment or pump-priming might be taken forward. There is a real win-win possibility, which I am sure the Minister will want to explore.
I am grateful to have had the opportunity to raise these wider issues in the context of this Bill. I appreciate that it has not been introduced to deal with the long-term strategic issues of infrastructure and affordability, but in the absence of any other water legislation, or of any sign of new legislation, this may be the only legislation that we have to work with for some time to come, and it would be a great shame if we were not able to maximise its potential.
Neil Parish (Tiverton and Honiton) (Con)
I thank the Minister for all his work in getting this Bill into Parliament so that we can deliver the £50 saving to water rate payers in the south-west, because they are a hugely deserving cause, as one would expect me to say.
As other Members have said, although we have only 3% of the country’s population, we have 30% of its beaches. We welcome many holidaymakers to Devon and Cornwall—they are most wonderful places to go to, and I encourage every Member to do that—but of course people from throughout the country use those beaches, so a small share in the cost of cleaning them up and looking after them will be gratefully received, and is necessary and fair. I thank the Chancellor for getting the money through, because we inherited a very difficult financial situation from the previous Government. They had 13 years to sort this out in much better economic times; we have managed to find the money in very difficult economic times, and that is a worthy achievement.
We must look at the profile of the people who are having to pay those bills in Devon and Cornwall. A large percentage of the population are elderly, including a lot of people who have been retired for a long time, and may have retired on good incomes but have found that inflation and other things have taken away their buying power.
Sheryll Murray (South East Cornwall) (Con)
Does my hon. Friend agree that the average income per household in my constituency and the wider south-west is about £23,000, which is way below the national average?
Neil Parish
I do indeed. We have to look at the income profile of people’s salaries and wages. We rely a great deal on tourism, which, while it is essential for the whole area, is not necessarily the most highly paid industry in the country. It is right to give support to the people paying those bills.
The money that South West Water has made available to clean up the beaches is essential. Whatever the rights and wrongs of water privatisation, we must realise that before the industry was privatised, the infrastructure had not been dealt with. That meant that a huge backlog of work needed to be done on the sewerage works throughout Devon and Cornwall, and the cost of that was bound to impact heavily on water bills. In my constituency of Tiverton and Honiton there is a £2.8 million scheme to improve Cullompton sewerage works, which started last November and is due for completion in June. South West Water has also spent £340,000 on a scheme to enhance Allers water treatment works, and there is another scheme to enhance the Cullompton works. It is key that the company carries on putting the infrastructure in place so that we can get much cleaner beaches. We have beautiful countryside in Devon and Cornwall, but we should not forget that people mainly come for our beaches, so it is absolutely right to keep them clean.
We must consider those who are unable to pay their bills. There is a national cost of over £15 per bill to make up for those who cannot pay. The combination of those who cannot pay and those who will not pay is always the most difficult thing for Governments and companies to deal with.
My hon. Friend the Member for Camborne and Redruth (George Eustice) talked about businesses. The Bill covers not businesses but private households. Businesses need much more competition. I urge the Minister not to let the horses frighten him. At the moment, the companies are saying, “You can’t possibly give us more competition, because that will frighten away investment from the City.” We do not want to frighten away investment, but neither must we be frightened away from looking at where we could create greater competition. In Scotland there is one nationalised company for wholesale water, and retail companies that can compete with one another. With our privatised water companies in England, Wales and Northern Ireland, we can look into ways to create more competition and then get the bills down for businesses too. It is essential that businesses, as well as householders, in Devon and Cornwall should benefit. The trouble is that if we spread the money for the £50 reduction across businesses as well, householders would lose a significant amount of it.
We need South West Water to be clear about why it is putting its bills up by another £20 or so. Although that might be justified, we do not want it to eat significantly into the £50 that we have provided to help people with their bills. We must remember that the south-west has been singled out because it has the highest water bills in the country, mainly because of the cleaning up of the sewage works.
The final point that I want to raise is about the London tunnel and the sewerage works in London. Last week I made an intervention that caused one or two long faces among Opposition Members, but I shall repeat the point. One night, when I was travelling back from here on my bicycle towards Chelsea bridge, going into Battersea, there was a low tide and I could smell the sewage being pumped into the River Thames. I question whether that should be happening in 2012. A company, a farmer or anybody else who polluted in that way would be prosecuted. Is there one law for some and another law for others?
It is high time this issue was dealt with. I know that that involves a huge expensive infrastructure project, but in the 21st century it is essential to clean up the sewage that goes into the Thames. Every time there is a tremendous amount of rainfall, the sewage works cannot cope and out goes the sewage into the Thames. The water companies have the right to do that—whereas a business that did it would be prosecuted immediately. I am delighted that this project is to be undertaken. I know that parts of London do not welcome it because of how it will affect them, but for the greater good of the capital and of the Thames, it has to be done.
Mr Andrew Love (Edmonton) (Lab/Co-op)
Rather unusually, I will start my contribution by seeking to resolve a confusion that has been in my mind over the past couple of weeks. I received a letter from the Minister, as did all London Members, pointing out that discussion of the Thames tunnel would be prioritised in this Second Reading debate. It also mentioned the national policy statement for waste water. Although the letter states clearly that that is before Parliament, I have been unable to gain reassurance that it will be debated on the Floor of the House. I seek the help of the House on that. I will comment on the Thames tunnel, but I will also touch briefly on the national policy statement for waste water, because it affects my constituency.
Like other London Members, I am shocked by the regular reports about the consequences of the discharges into the River Thames, even though my constituency does not lie on the river. I am shocked by the number of discharges—about 50 a year, or one a week. The discharges can have cataclysmic consequences for people who live along the Thames. That is an extremely important issue. There is European legislation under which countries that do not clear up such discharges will be fined. That should weigh on us heavily, not only because of the level of the fines that will be imposed, but because it highlights our responsibility.
I have been impressed by the 10 years of hard labour, if I may call it that, that has gone into the preparation of the Thames tunnel scheme. I have listened closely to the debate, and I have heard many people’s views and received many letters and e-mails about some of the proposed alternatives. Like most Members who have spoken, I remain to be convinced that any of those will address the existing needs. Broadly speaking, I am therefore in favour of the Thames tunnel project. My concern is about its affordability for individual water consumers and its cost and likely value for money.
We have talked a lot about water poverty. I am sure the Minister will say that Thames Water bills are low compared with those in other parts of the country, but we must consider water poverty. If we define water poverty as having to spend 3% of income on water, more than 1.1 million Thames Water customers are affected. If we define it as 4% of income, more than 600,000 are affected. That is twice the level in any other water authority area, which should concern us.
The previous Government introduced the WaterSure scheme to place a cap on water bills for low-income families whose water usage is metered. The problem is its narrowness, and the fact that take-up has not been widespread. Only a third of eligible consumers make use of it. That represents roughly 3,600 families in the Thames Water area, where more than 1.1 million consumers live in water poverty, so it does not really address the problem. I will not go into detail about social tariffs, because other Members have done so, but I am sceptical about the scheme as it is currently constructed, and we need it to be changed enormously to address the problems.
My final point about water poverty is that the Thames tunnel will cost consumers roughly an additional £50 a year, or £1 a week on their bills. The Minister will say that that will take Thames Water bills only up to the national average, but the consequences for the 1.1 million consumers already in water poverty will be extreme, and must be taken into account.
I shall now turn to the value for money, the costs and the delays of the project. It has been going for 10 years now. The study was started up in 2001 and was carried through to the development of the scheme in 2005. As the debate has shown, the scheme is still being consulted on and there is still significant opposition to it. It might not be very well-informed opposition, and it might not address the issues that need to be addressed, but it is there. Perhaps the Minister could say something to reassure us about whether the £4.2 billion cost can be kept to. Will the ambitious time scales upon which that cost is based be realised? Can such a complex and, if I may say so, risky project be delivered at that cost?
To echo what my hon. Friend the Member for Hammersmith (Mr Slaughter) said, the public sector will be supporting some of the riskier aspects of the project. Are the Government getting to the bottom of how to get value for money? We could go into the issues of public-private partnerships and the private finance initiative, but I remain to be convinced that the project will be delivered on time and to cost. I should like some reassurance from the Minister about how we can ensure that Parliament and the Government play a role in protecting the Thames Water customer and the UK taxpayer and ensuring that the project delivers for them.
The national policy statement on waste water is related to my local project at the Deephams sludge works. Like the Thames tunnel, Deephams currently discharges into a river—the River Lea, a tributary of the Thames—which contributes in a smaller way to the discomfort along the Thames. The technology at Deephams dates back to the first half of the last century. To put it crudely, it is exhausted. There was little investment until the last year or two, when significant new investment was made in preparation for the national policy statement.
Deephams was not a problem some years ago. It was in the Lea valley, quite a long way from my constituents, many of whom did not know it existed and were not concerned about it. That is not the case now, which is a primary reason why I am raising the matter. During the past 10 years housing has come to the edge of Deephams, and there are consequences, including the statutory nuisances from sludge works, such as the pungent smells. Thames Water will say that it does not get many complaints about the smells, but there are sound reasons why the number of complaints is not as great as it should be—not least the confusion caused by the fact that a number of different facilities in the Lea valley can contribute to those problems. Constituents living close to Deephams regularly take up the consequences of the lack of investment with me.
I should say something positive about the national policy statement, because much in it is to be welcomed. There is no longer a preferred option for the redevelopment of the Deephams site, which shows flexibility, leaving open a wide range of options. I strongly welcome the increased priority given to design. The policy statement talks of sustainability, durability and adaptability, which are important considerations for the redevelopment of the Deephams site.
The national policy statement recognises the need for flexibility and talks of the likely population increase for which Deephams must provide a facility: the population will go up from 850,000 to nearly 1 million over the lifetime of the project, so recognition of that is welcome. Finally, the national policy statement recognises that most of the infrastructure is woefully out of date and must be replaced.
I want to build on those welcome changes to the national policy statement, and I ask the Minister, if he has time, to comment on some of my suggestions, the first of which relates to the central role of Ofwat, which will be responsible for funding capital infrastructure. I understand that Ofwat has responsibility for ensuring that capital infrastructure comes in on cost and on time, but based on previous experience, I make a plea not to limit the preferred options to be considered for Deephams, and not to restrict what can be done to existing legislative requirements.
The national policy statement recognises the critical need for flexibility, and to find innovative and sustainable solutions. We should not base proposals on existing need—as I have said, the national policy statement recognises that the population will increase and that there should be flexibility—but there should also be flexibility in welcoming higher standards, which will undoubtedly be introduced. There will also be legislative change during Deephams’ period of operation.
Climate change will come to the fore—we are now in the midst of a discussion of drought, but there will be other climate change issues in future. Everyone keeps talking about the green agenda, but we need to introduce the new technologies into our water system. I shall come back to that in a few moments. Thames Water will claim that the recently improved project in Reading is state of the art, but the problem for Deephams is that development will come 10 to 15 years down the road. So we need to consider not what is state of the art now, but what will be state of the art in 15 years. I hope that the Minister can reassure the House that the Government recognise the need for these flexibilities, because there is a danger that Deephams will be out of date by the time it comes on stream. It is incumbent on Thames Water and the local community to consider what alternatives there are, and what other technologies could be used.
I want to mention two such technologies that are being piloted in this country but have not been fully rolled out, although they are being used in the United States and China. My knowledge here is suspect, so I hope that nobody will press me too closely, but there are things called integrated fixed-film activated sludge—I can give Members a definition if they want—and moving bed biofilm reactors. Council officers at the London borough of Enfield speak about little else at the moment; they can wax very lyrical about it.
Council officers sympathise with the idea of introducing a combination of the two technologies to future-proof Deephams in respect of the factors that I have mentioned, including climate change, improved water quality and population increases. Is the Minister aware of, and sympathetic to, those technologies? They are not mentioned in the national policy statement, but it would be welcome if he could say something helpful about them. We recognise that the introduction of new technologies has a cost implication, but there is growing evidence not only that they can respond more flexibly to future pressure, but that over time they work out much cheaper.
To sum up, it would be helpful if the Minister commented on some of these issues. I strongly welcome much of what is in the national policy statement, but if Deephams is to address the issues of concern to people in my constituency and round about, we need to build in the flexibility to allow them to develop the technologies that will address the issues of the future.
Gavin Shuker (Luton South) (Lab/Co-op)
Allow me, Madam Deputy Speaker, to convey the apologies of the shadow Secretary of State, who has been unable to attend owing to the split sitting of this Second Reading. I am sure that that is true of many other Members across the House.
We have had a robust discussion of a variety of issues, and I am heartened by the contributions of different Members. I shall start with last Wednesday’s contributions. The hon. Member for Thirsk and Malton (Miss McIntosh) pressed the Minister for an amendable motion on the debate on the waste water national policy statement, asked about the lack of an impact statement, raised concerns about the Government’s actions in the negotiations on flood insurance, and asked where the comprehensive water Bill was. We share all those concerns.
My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) raised understandable concerns about the King Edward memorial park in his constituency and educated us on the importance of fire sprinklers. I hope that the Government will work with him and us to ensure that the comprehensive water Bill responds to this aspect of fire safety. The hon. Member for St Ives (Andrew George) made a typically insightful speech that recognised the actions of Members on both sides of the House to reduce bills in the south-west. He also made a compelling point about the national treasure status of Devon and Cornwall’s beaches, which is a point that we accept.
My right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock) spoke powerfully about the Deptford high street Thames tunnel site, demonstrating once again that she is a powerful advocate on behalf of her constituency, and the hon. Member for Hendon (Mr Offord) confirmed his view, which we share, that the Thames tunnel is both essential and desirable for the ongoing health of the river and Londoners.
My right hon. Friend the Member for Exeter (Mr Bradshaw) asked where the comprehensive water Bill was—a theme that many Members picked up on—and established that the welcome £50 reduction would be quickly wiped out by a lack of action more broadly on affordability.
The hon. Member for Newton Abbot (Anne Marie Morris) asked a number of technical questions—in particular, about park homes—to which, given the six-day hiatus in this Second Reading debate, I would expect the Minister to have a comprehensive and erudite response.
My hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) was generous and forward-looking in thinking not just of her constituency—for which she has helped to secure water affordability payments—but about affordability more broadly. She reiterated our question: where is the Government action to quell rises in water bills beyond the direct subsidy to the south-west?
The right hon. Member for Bermondsey and Old Southwark (Simon Hughes) asked his own questions about the Thames tunnel. To be clear, we do not necessarily agree with the alternative proposals to deal with the problem, many of which have more to do with short-term political interests than the long-term benefits of being good custodians of the natural environment.
The hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile), in what was originally a very short contribution, paid tribute to his predecessor, Linda Gilroy. When it comes to water, I am sure he will represent his constituents’ interests in the same way. He was less generous, however, when he talked about three Labour MPs as perhaps being one reason why more action was not taken. I would say that those three Labour MPs more than punched above their weight in bringing the issue to the fore.
My hon. Friend the Member for Bolton West (Julie Hilling) talked about debt in her constituency and gave us real stories of customers struggling to pay their bills. The hon. Member for Camborne and Redruth (George Eustice)—another Devon and Cornwall Member—talked about the nature of the scheme to award £50.
My hon. Friend the Member for Hammersmith (Mr Slaughter) talked about the need for the Thames tunnel, in his typically forthright style. He did not hold back from saying what he really thought, including about his local council. He also slew the myths of the Selborne commission—a sensible thing to do in a debate such as this.
Mr Slaughter
If my hon. Friend has any lingering doubts about the need to alleviate the sewage going into the Thames, he is welcome to join me and my constituents at 10 o’clock this Saturday when Thames21 will be doing a deep clean just by the sewage outlet at Hammersmith bridge. I am sure he will find ample evidence there of why we need such alleviation.
Gavin Shuker
I believe that is what is known as a helpful intervention from my hon. Friend.
The hon. Member for North Cornwall (Dan Rogerson) talked about the nature of the privatised settlement, and raised the possibility of the Bill being used to extend payments to other areas. I hope he will look carefully at our amendments to ensure that the issue has proper parliamentary scrutiny as the legislation goes through.
My hon. Friend the Member for Stretford and Urmston (Kate Green) talked about affordability, social tariffs and data sharing, all of which are essential if we want to reach a broader affordability settlement.
The hon. Member for Tiverton and Honiton (Neil Parish) talked about bill payers in Devon and Cornwall, and returned to the theme of competition, which we obviously look forward to hearing more about in our comprehensive debates on the Bill.
Last but not least, my hon. Friend the Member for Edmonton (Mr Love) talked about the consequences of the 50 discharges each year on average, and about Deephams, the site in his constituency.
This Bill deserves proper scrutiny, because the issue of water affordability is not going to go away. Across the country, families are under real pressure. We therefore welcome the help extended to the south-west, and we praise the many Members, in all parts of the House, who have raised that point, both in this Second Reading debate and in the run-up to it. However, the problem of water affordability does not stop at the River Exe. In a moment, the Minister will stand up and talk about financial assistance—indeed it is in the very title of the Bill—but today, across this country, a fifth of all households are spending more than 3% of their income on water. What assistance does this Bill extend to the 400,000 households in Wales, the 460,000 households in Yorkshire, the 780,000 households in the Severn Trent region or the 1.1 million households here in the Thames region that fall into that category? Sadly, the legacy of this legislation will be what it does not do, as it offers no help for millions of hard-pressed households.
We know that the pressure on budgets will only increase—the White Paper makes that much clear. Populations will increase, as will scarcity of water in large parts of the country. We in this House must therefore take action to keep water affordable. The Government promised us a proper water Bill—significant legislation, far-reaching market reform and action for customers. However, their own water White Paper—their blueprint for water—was delayed by six months. Our Cave, Pitt and Walker reviews gave the Department a clear direction of travel. Everyone across the House accepts that what is needed is a comprehensive package, tackling water issues, introducing changes and then letting the industry settle down and deliver. What we need is a proper water Bill, but Ministers have lost their slot in the Queen’s Speech. Indeed, just last week I asked the Minister across the Dispatch Box:
“If tackling drought, conserving water and reforming abstraction are so important, why has the Secretary of State delayed her own Bill?”—[Official Report, 1 March 2012; Vol. 541, c. 410.]
His response was that he was not privy to the contents of the Government’s legislative programme for the next Session of Parliament. That is a shame. I would have hoped that someone had pointed out to the Minister that he had lost his slot. Everyone in the House seemed to know that, apart from him.
This mini-Bill proves that the pilot light is on at DEFRA, but that there is little legislation coming through any time soon. Customers, investors and water companies will rightly ask: where is the beef? This delay is serious: we are to see no action to curb the unsustainable abstraction of our rivers and streams, no time scales to increase competition in this highly regulated monopoly market, no changes to ease water scarcity—exacerbating the extreme drought conditions that we are already experiencing—and no action to keep water affordable across the UK.
This legislation is for the future, but the cost increases are for now. This April, water bills are set to rise by an average of 5.7%, which will add £20 to the average bill. We will seek to amend the Bill to ensure that those who are struggling to pay will have access to a social tariff. It is unfair to extend the situation in which a postcode lottery determines whether people can afford to pay their water bill. We know that the Government have ruled out extending national social tariffs beyond the WaterSure scheme, even though that scheme reaches only a third of eligible households. They have walked away from making further social tariffs mandatory. Under their plans, the design of social tariffs is to be left to private companies. In fact, in the DEFRA draft guidance, companies are even given the choice of whether to provide one at all.
In the short term, we know that tackling the bad debt that raises all our bills, pooling cross-subsidy to make it more effective, requiring landlords to share the names of their tenants, as they do in the energy sector, and setting minimum standards for social tariffs can all make a serious dent in the cost of water. We know what works, and we are willing to work with the Government to introduce comprehensive reforms to achieve that. So which of those measures will DEFRA commit to? None of them. That is not good enough.
Andrew George (St Ives) (LD)
How would the hon. Gentleman answer the questions that he has just put to the Government?
Gavin Shuker
We have been very clear about the measures that we believe the Government could take right now to make a real dent in water prices. We are not going to talk about the long term but do nothing in the short term, which, with the exception of the measures relating to the south-west, this Bill is the very definition of.
The Government must do what only they can do. Their White Paper talks about water for all, but merely offers affordability for some. We will not oppose the Bill this afternoon, but we will table amendments next Wednesday to improve it. Ministers should not deny the existence of the quiet cost of living crisis that is very real for many families across the country. Instinctively, we all feel that water should be affordable. As the Bill progresses, I hope that the Government will accept our amendments to improve it. In doing so, they could help to ensure that there is water for all.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)
I thank hon. Members on both sides of the House for their participation in this debate. It is good to hear that the issues tackled by the Bill are at the forefront not only of my mind but of those of other hon. Members. Also, it is a pleasure to be lobbied by my hon. Friend the Member for Camborne and Redruth (George Eustice). He should not worry about collaring me in the Lobby, and neither should any other hon. Member. If I give the impression of putting my head down and trying to get through it as quickly as possible, I regret that. I congratulate him and Members from the south-west from all parties on the pressure that they have brought to bear to achieve a measure to alleviate what we accept is an unfairness that dates right back to privatisation 20 years ago. I congratulate them on the success that they have achieved thus far in getting this legislation introduced.
Water seems to have been in the news on a daily basis recently, which reflects how precious the resource is to each and every one of us. Despite the confidence of the right hon. Member for Exeter (Mr Bradshaw) that we live in a rainy country, parts of the United Kingdom have been affected by drought for many months now, and that is likely to continue into the summer.
We must act now: it is imperative that we have a system in place that provides a secure water supply now and for the future, while continuing to protect the environment. That is why we are dealing with the situation we face at the moment. We brought together experts and key players in the water industry at a drought summit. We do not need legislation to get on and tackle some of the drought-related problems; we are doing that right now.
I often find myself making speeches about the particular river of concern in my constituency—the River Kennett—and I am also lobbied by Members across the country about the water that flows, or does not flow, through rivers in their constituencies. Of most concern to this Bill is the river into which the Kennett flows—the Thames. Today, the proposed Thames tunnel offers the most timely, comprehensive and cost-effective solution to the combined sewer overflow problems and the dumping of raw sewage into our river.
My right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) asked for the case on the tunnel to be compared once again with other proposals put forward. I have to say, however, that none of the alternatives identified during the extensive studies carried out over the past decade has been found swiftly or adequately to address the environmental and health objectives for the Thames tideway while simultaneously complying with our statutory obligations.
Mr Slaughter
I compliment the Minister on his clarity and consistency on this issue. Does he share my frustration, however, that when I go back to my constituency I find the hon. Member for Chelsea and Fulham (Greg Hands)—as a Government Whip, he should be helping this Bill through the Commons—running a vitriolic campaign against the tunnel and a local authority that not only spends tens of thousands of pounds on a misleading campaign, but as of last night is threatening to sue the Secretary of State for Communities and Local Government to prevent him from safeguarding sites in the borough? Can the Conservative party get its act together on this issue?
Richard Benyon
I thought that the hon. Gentleman was going to make a helpful intervention, but he made his point eloquently once again.
The alternative proposal for a shorter western tunnel would allow large volumes of raw sewage to continue to flow into sections of the Thames—exactly what the Thames tunnel is designed to avoid. It is clear that the public do not want raw sewage going into this iconic river through one of the most important cities in the world.
In what I must say was a great speech, we heard from my hon. Friend the Member for Hendon (Mr Offord) about how serious is the issue of combined sewer overflows—not just in London, but around the country. He added his own perspective on other elements of the Bill. I can assure him that combined sewer overflows are monitored robustly and that action is taken where permits are breached or problems with the environment are identified. Beyond the Thames tunnel, some £1 billion is being invested further to reduce the impact of combined sewer overflows across the country.
We are ever mindful of the costs involved in the Thames tunnel project. We remain convinced that there is an economic case for it. Part of it is Thames Water’s estimate that the project would directly employ about 4,250 people in the construction and related sectors, as well as providing further secondary employment. The Thames tunnel team actively support the Crossrail Tunnelling and Underground Construction Academy, which is currently training and gaining employment for 70 apprentices a year. Following the Crossrail model, the Thames tunnel project will specify in its contracts the level of apprentices that will be employed by the contractors.
Let me say that I remain sceptical on cost, which is where I believe Ministers should be on a project of this size. We are receiving the best possible advice, and the work will be ongoing. I cannot possibly stand here and say now that costs will definitely be pegged at the current estimated level, but we will try to deliver this project within budget and effectively for the people of London and the country as a whole.
Richard Benyon
I am sorry, but I am a bit short of time, and I may be about to answer the point. Despite the concerns raised by my right hon. Friend the Member for Bermondsey and Old Southwark, Ofwat regulates the ring-fenced regulated businesses and ensures that customers receive value for money from them. Who ultimately owns that ring-fenced business makes no difference to customers; the licence conditions attached to the ring fence provide the necessary protections. Thames Water’s structure is similar to that of several other water companies.
We heard eloquent and passionate speeches from the right hon. Member for Lewisham, Deptford (Dame Joan Ruddock) and from the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), reminding us of the potential impacts of the tunnel’s construction on their constituents. I remain ready to work with them to try to minimise the impacts in any way I can. I am very conscious of the effect that it can have on communities.
My hon. Friend the Member for Thirsk and Malton (Miss McIntosh), my right hon. Friend the Member for Bermondsey and Old Southwark and the hon. Member for Edmonton (Mr Love) asked for an opportunity to amend the waste water national policy statement. We are, of course, happy to have a debate on the policy statement, and, like other debates in the House on national policy statements, it would be a yes or no debate. Best endeavours are being made to ensure that it is held before the Easter recess, and I hope that that provides the necessary reassurance. As for the other project to which the policy statement refers, the Deephams sewage treatment works, Thames Water intends to begin the phase 1 consultation in about June this year. It is still working on a preferred option, and aims to submit a planning application in late 2013 or early 2014.
The hon. Member for Wakefield (Mary Creagh), the shadow Secretary of State, sometimes reminds me of someone having a fight in a pub when the lights have been turned out. She flails around in all directions, and causes as much damage to her mates as to anyone else. She had to intervene later in the debate to tell us that she was, in fact, supporting the Bill, which is a great relief. That was underlined by the hon. Member for Luton South (Gavin Shuker), and we are grateful for his support as well.
Despite the concerns raised by the shadow Secretary of State, the powers in the Bill are appropriately drafted. Although we currently have no plans to use those powers other than to assist South West Water customers and in relation to the Thames tunnel, we heard many calls today—including, again, calls from Opposition Members—for us to legislate to help reduce the problems of water affordability around the country, and to invest in new infrastructure to help make the country more resilient to droughts in future. As the water White Paper made clear, given our growing population and changing climate, our need for infrastructure investment will not diminish. We should leave ourselves the flexibility to offer similar Government support to future projects if the case is strong. However, it is inconceivable that any nationally significant infrastructure project would proceed with Government backing unless the case had been fully debated, as the Thames tunnel project is at present.
Let me repeat the Secretary of State’s commitment: we will publish a draft Water Bill for pre-legislative scrutiny in the coming months, and it will cover the remaining legislative commitments set out in the water White Paper. The market reform proposals in the White Paper will be a key part of the Bill, and are a direct response to Martin Cave’s invaluable report.
In the few seconds that I have left, I want to talk about affordability. One of the necessary provisions is the ability for us to issue guidance on water company social tariffs, so we can address the issue of water affordability nationally. The reduction in South West Water bills to which we are committed addresses an exceptional historic unfairness, but we recognise that many people in the south-west and elsewhere are struggling to pay their water bills. We are encouraging all water companies to introduce social tariffs to reduce those bills in order to help people who would otherwise struggle to pay them, and we will publish final guidance on the design of the tariffs in the spring.
My hon. Friends the Members for St Ives (Andrew George) and for Newton Abbot (Anne Marie Morris) were keen for us to expand the existing reach of the WaterSure scheme. I assure the House that we have considered that carefully, but, as Members will appreciate, we have to make tough decisions about the use of limited public funds.
Richard Benyon
I am sorry, but I cannot.
My hon. Friend the Member for Newton Abbot expressed the fear that not all household customers would receive assistance. We know that in some cases the bill payer is the landlord or manager, for example in a park home, a block of flats or sheltered accommodation. I assure my hon. Friend that we are working with South West Water to ensure that the money reaches the people, in whatever residence they live.
As the water White Paper explained, keeping water affordable is vital, but it is also vital for us to use water more efficiently. While there are many uncertainties in connection with the weather, the one thing of which we can be certain is that it will become more unpredictable. That is why we are taking action now, and why we are responsible for ensuring that we use water wisely so that we can retain a secure water supply in the months and years ahead.
I am grateful for the support of Members in all parts of the Chamber, and I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Water Industry (financial assistance) Bill (programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Water Industry (Financial Assistance) Bill:
Committal
1. The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on consideration and on Third Reading
2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be completed at one day’s sitting.
3. On that day, proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption.
4. On that day, proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption.
5. Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee of the whole House, any proceedings on consideration or proceedings on Third Reading.
Other proceedings
6. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Mr Vara.)
Question agreed to.
Water Industry (financial assistance) Bill (Money)
Queen’s Recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a),
That, for the purposes of any Act resulting from the Water Industry (Financial Assistance) Bill, it is expedient to authorise-
(1) the payment out of money provided by Parliament of any expenditure incurred by the Secretary of State by virtue of the Act, and
(2) the payment of sums into the Consolidated Fund.—(Mr Vara.)
Question agreed to.
Public Procurement
(12 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
I beg to move,
That this House considers that European Union Documents No. 18966/11 and Addenda 1 and 2, relating to the Draft Directive of the European Parliament and of the Council on public procurement, and No. 18964/11 and Addenda 1 and 2, relating to a Draft Directive of the European Parliament and the Council on procurement by entities operating in the water, energy, transport and postal services sectors, do not comply with the principle of subsidiarity for the reasons set out in Chapters 2 and 3 of the Fifty-seventh Report of the European Scrutiny Committee (HC 428-lii); and, in accordance with Article 6 of Protocol (No. 2) of the Treaty on the Functioning of the European Union on the application of principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.
This debate gives the House a welcome opportunity to consider the subsidiarity questions—pronouncing that word will be one of today’s challenges—identified in the draft directive on public and utilities procurement. It may assist the House if I give some general context on subsidiarity, after which I shall turn to the draft directives under consideration, focusing in particular on the subsidiarity concerns.
This is the fifth time the House has considered a motion for a reasoned opinion on subsidiarity. The first three related to financial services, and one related to justice. The Under-Secretary of State for Justice, my hon. Friend the Member for Reigate (Mr Blunt), read into the record on 7 December—at column 313—a very good definition of subsidiarity. That is not only my opinion; the hon. Member for Stoke-on-Trent South (Robert Flello), speaking for the Opposition, said precisely the same thing, so there is clearly general approbation on both sides of the House for that definition. I do not propose to trouble the House by reading out the definition again—[Interruption.] There is approbation for that from those on the Government Benches behind me. However, colleagues can, of course, read it for themselves, if they so wish.
The Government support the Lisbon treaty provisions to uphold the principle of subsidiarity and want to work with Parliament to highlight any subsidiarity concerns that the Government may share. Our explanatory memorandums on the proposals in question drew attention to those concerns, and I am very pleased that the European Scrutiny Committee—chaired by my hon. Friend the Member for Stone (Mr Cash), who is present—decided to pursue the matter with suitable dispatch. I also note that the National Assembly for Wales has written to the European Scrutiny Committee expressing concerns about subsidiarity in respect of the procurement proposals.
We have looked into whether other member states share these concerns, and I know of at least one case: the Swedish Parliament has raised similar concerns and tabled reasoned amendments on both proposals in very similar terms to those of our motion.
Kelvin Hopkins (Luton North) (Lab)
Does the Minister agree that the principle of subsidiarity is too little used and too little understood? We take it seriously, but many other European Union member states do not. Should we not take a lead on this issue more often?
Mr Harper
I agree. It is an important principle, and where it is sensible to raise it, we should do so.
Let me turn to the substance of the proposed directives. Although the motion before the House rightly refers to the draft directives as a whole, the specific issue on which the ESC has drafted the reasoned opinion is the requirement that member states must establish “national oversight bodies”. I will therefore briefly outline the proposals as a whole and the Government’s position, and then I shall turn to our specific concerns, which are shared by the Committee, about the oversight body provisions.
To recap the background, since the early 1990s there have been EU rules governing procurement by public authorities and utilities. In this context, utilities are certain bodies operating in the water, energy, postal and transport sectors, where those bodies have certain special rights or a monopoly position. The directives currently in force were adopted in 2004, and were transposed into law in the three United Kingdom jurisdictions in 2006 by means of procurement regulations. In line with the devolution settlement, the Scottish Government did that separately in Scottish law by making their own regulations; that is relevant, as I shall explain shortly. In addition, there are directives that govern the rights and remedies available to aggrieved suppliers or other interested parties if a public body or utility breaches the rules when awarding contracts. In the UK, those remedy rules have been implemented by amendments to the procurement regulations.
The directives require EU-wide advertising of many requirements and establish specific procedures to promote fair, open and transparent procurement decisions to promote open market public procurement across the EU, encouraging competition, innovation and value for money. The Government are keen to see that those rules are properly respected across the Community to ensure opportunities for UK businesses and a level playing field for all.
Perhaps at this point I should say a few words about the Government’s wider position on public procurement. My right hon. Friend the Minister for the Cabinet Office and Paymaster General announced a series of major reforms to public procurement with the aim of using the public sector’s considerable purchasing power to promote efficiency and growth. The reforms will fundamentally change the way in which the Government buy by providing an open door for current and future suppliers to discuss upcoming procurement opportunities; making it faster to do business with Government by speeding up the procurement processes to world-class standards and removing unnecessary wasteful practices; working with industry to identify and address any key capabilities needed to meet future demand; ensuring that SMEs can access the value of procurement; and reforming the EU directives that govern public procurement.
Following consultation by means of green papers, the Commission published proposals for new directives. Its declared aim is to modernise, simplify and increase flexibility in the procurement rules. The public procurement proposal covers five main areas of improvement: simplification of procedures; the strategic use of public procurement to meet new challenges, such as increased innovation and environmental protection; better access for SMEs; sound procedures to discourage corruption and favouritism; and improved governance procedures. As the European Scrutiny Committee’s reports mention, the Government support many of those elements of simplification and modernisation and I am pleased to note that the Committee also welcomes those improvements.
There are some areas where the Government will continue to press for further improvements through the negotiations, working with other member states when they have similar aims. Those improvements include a review of and increase in the financial thresholds as early as possible consistent with wider international procurement agreements and a specific time-limited exemption for mutuals, so that they can become established before being subject to competition.
Mr Dave Watts (St Helens North) (Lab)
The Minister is setting out the rules to which the Government will work to ensure that there is free and fair competition across borders, but is not the rest of Europe ignoring all those rules and, in some instances, has no intention of opening up its markets to British companies? By not taking the same position, are we not disadvantaging our businesses?
Mr Harper
There are two separate issues. The first is what other European countries do, and the European Commission should be our ally in taking action to open up those markets. The second is what we do to open up competition, and I do not think that our adopting a protectionist strategy benefits us at all. Our companies trade globally, not just in the European Union, and we need them to be competitive and to be able to win business not just in the EU but in countries with fast-growing markets.
Mr Harper
Off the top of my head, no, as I do not pretend to have an encyclopaedic knowledge of all public procurement for cars across Europe. We will not help our car industry by having people make procurement decisions to buy such cars regardless of other criteria. We need to ensure that we take into account a wider range of criteria and the hon. Gentleman will know that the Government set out our steps towards making procurement decisions, taking wider features into account. The European Commission suggests using public procurement strategically to meet challenges such as increased innovation and environmental protection to ensure that some of those extra, wider issues are built into procurement decisions.
Kelvin Hopkins
On this matter of trade, we do not so much have a problem with the rest of the world, but we have a serious trade problem with the rest of the European Union where we have a very big trade deficit. That is evidence that the other parts of the EU do not play fair on trade, particularly when it comes to currency. The Germans have persistently maintained a low parity for their currency over many decades, which has meant that their manufacturing sector has been built up at the expense of ours.
Mr William Cash (Stone) (Con)
A big issue that has cropped up in the past year is that of Bombardier. The question that the hon. Member for St Helens North (Mr Watts) just asked is apposite because this is not simply a question of whether there are fair rules on procurement in terms of competition. Because a legal framework has been created, there is a special and fundamental requirement to comply with those rules because they are part of the legal process. The problem is not merely whether proper competition is being avoided but whether the law is being breached as well.
Mr Harper
I thank my hon. Friend for making that point. On the specific issue of procuring rolling stock, he will know that when this came up in the House last year the then Transport Secretary made it clear that the bids were being evaluated by criteria laid down by the previous Government. The problem was that we had to follow the criteria that were already laid down. The then Secretary of State also said that we would look at procurement in the growth review that was under way, and that we would look at what happens in other EU countries that are constrained by the same rules and at best procurement practices to make sure that, where appropriate, we include appropriate socio-economic criteria in the procurement decisions. That has to be done right at the beginning; we cannot set out the criteria and then change the rules part way through the process to favour domestic bidders. I have looked in detail at the particular case my hon. Friend mentions and it was made clear that the decisions that people are not happy with were taken under the previous Government and that we had to implement them. The alternative would have been to suspend the procurement process completely and go right back to the drawing board.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
I, too, wanted to raise the issue of Bombardier. Does my hon. Friend agree that there is growing interest in this among British citizens and that they want the Government to be more resolved to buy British goods, particularly British agricultural products, when it comes to supplying our armed forces? How will the Bill enable us to do that?
Mr Harper
My hon. Friend makes a very good point. The Government have been doing a great deal of work on this, and my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs has been setting out some of the Government’s policies to improve that position. However, I shall not go into those in depth, because that would take us away from the focus of this reasoned opinion.
Kelvin Hopkins
The Minister is being very patient and generous in giving way. On Bombardier, is it not the case that with such complex and big contracts, it is very hard to make judgments between bids? Over time, the Siemens bid might turn out to be a lot more expensive and a lot less good than we first imagined.
Mr Harper
If the hon. Gentleman will forgive me, I have answered the point made by my hon. Friend the Member for Stone about the procurement process and I am not going to go into specifics about a particular procurement decision because I have not seen the detail and I was not involved in making that decision. The hon. Gentleman makes a good point about such procurement contracts being significant and complex and there is a need to get the specification right in the first place. There has been a considerable amount of controversy about that particular case.
Mr Spellar
First, as a previous Transport Minister may I tell the hon. Gentleman that the Germans always buy German trains and the French always buy French trains? They make it very clear how they do that. Secondly, going back to police cars, I do not know what he does on a Saturday night but if he watches any of the police series from various European countries, he will notice that if they are from any country that produces cars they always drive their own vehicles. I do not want to get into specifics, but this is about the mindset of our civil service. The French, German, Spanish and Italian civil services back their industry. What is wrong with the culture of our civil service that it is always trying to do British industry down?
Mr Cash
After 28 years in this place one gets a sense for when a Minister wants to get to the end of his speech as quickly as possible, particularly when he is being assailed on all sides. May I just ask whether a full analysis has been made by the Government through the appropriate Department—not his Department, but the Department for Business, Innovation and Skills—of whether there has been a real investigation into the way public procurement operates in this country as compared with the rest of Europe?
Mr Harper
The short and honest answer is that I do not know. I will find out and make sure that I or my right hon. Friend the Minister for the Cabinet Office writes to my hon. Friend to let him know.
I was not close to sitting down because I was about to set out the three areas in which the Government have subsidiarity concerns about the proposed oversight body—concerns that are shared by the European Scrutiny Committee. First, the oversight body was not proposed in the Commission’s consultation green paper or otherwise consulted on, so neither member states nor anyone else had an opportunity to comment on the proposal. The Commission’s impact assessment does not provide a clear or detailed justification. The European Scrutiny Committee expressed similar concerns about the inadequacy of the Commission’s impact assessment when we debated the common European sales law.
Secondly, the proposal for a single, national oversight body in each member state does not recognise or respect the different legal systems within the UK. As Members are well aware, Scotland has a separate and distinct legal system. Under the devolution arrangements, the development and application of public procurement policy and the implementation of public procurement legislation are devolved matters in both Scotland and Northern Ireland. As I have mentioned, Scotland has chosen to implement the procurement directives separately. The requirement for a single national oversight body for a member state is inconsistent with those settlements, and the Commission has not demonstrated any objective necessity for a single body in each member state.
The third substantial concern is the proposal that the oversight body should be empowered to seize the jurisdiction currently resting with the courts to determine some disputes about compliance with the procurement rules. That would be a judicial function, whereas the other functions of the body would be administrative or regulatory. If they were all combined in one body, that would intrude unjustifiably in national legal and judicial structures. That would be inconsistent with the UK’s legal traditions in which a clear distinction is made between judicial and administrative functions. The remedies rules that I mentioned earlier leave it to member states to determine the legal structures that enforce the rules. There seems to be no clear justification for departing from those now. This might affect other member states as well.
As I have said, a number of other member state Governments will have issues with the national oversight body, whether on grounds of bureaucracy, cost, incompatibility with existing arrangements or subsidiarity. The Parliament of one country has already set out similar concerns to ours in a reasoned opinion. The debate has been very helpful and the European Scrutiny Committee’s motion is very welcome. I look forward to listening to other Members and having the opportunity to support the motion and have this House take a sensible decision today.
Michael Dugher (Barnsley East) (Lab)
I begin my brief remarks by joining the Minister in thanking members of the European Scrutiny Committee for their thorough work in producing the draft reasoned opinion. As the Minister said, the report concentrates on two key areas: the Commission’s apparent failure to adhere to proper processes and the question of infringement of the principles of subsidiarity. On both those issues, Labour Members are in general agreement with the European Scrutiny Committee’s conclusions.
First, we share the concern that the draft directives in question fail to comply with the Commission’s procedural obligations. In an apparent breach of article 2 of protocol No. 2, the Commission neither consulted member states properly on the possibility of setting up a single national oversight body to monitor procurement nor carried out the required “detailed statement” assessing the implications.
Secondly, on the substance of the directives, we are particularly concerned by the proposal that would require the UK to allow the introduction of a single oversight body with the power to “seize” jurisdiction from British courts. As the Committee makes clear, that proposal would force the UK to combine non-judicial and judicial responsibilities within the same organisation. Crucially, the proposal could be seen as breaching the principle of subsidiarity due to it requiring an administrative body to carry out functions that would normally be dealt with by UK courts. As the Committee states,
“this aspect of the proposal amounts to an unwarranted interference in the domestic legal order of the UK, in which administrative and judicial powers have traditionally been exercised separately.”
In addition, the National Assembly for Wales has said that the proposal to introduce a single oversight body in the UK fails also to have proper regard to the principle of devolution.
The Commission’s draft proposals are simply not the right approach. Indeed, it is our view that they amount to little less than another power grab by the European Commission. As the European Scrutiny Committee has outlined, they will add another layer of bureaucracy.
There is a growing public perception in the UK—one that has been echoed by Members on both sides of the House during the debate—that when it comes to EU procurement rules, the current system does not function fairly. The Commission has to face up to that perception. How the rules are interpreted has been allowed to vary too much from country to country over the years. Too often, it seems like one rule for us and another for other member states. Too often, weaker Ministers, in all Governments, have been rolled over by officials, often at the Treasury, who, at best, have an ambivalent attitude to British industry. They have used EU procurement rules as a basis to make recommendations to Ministers that simply do not do the right thing by the United Kingdom.
Mr Spellar
I have always thought that there was precious little to commend Chairman Mao’s misrule in China, but his policy of sending recalcitrant officials back to the countryside for re-education seems to have something to commend it. Would not undertaking a shift in respect of Britain’s manufacturing be salutary for many of our civil servants, who are letting Britain down?
Michael Dugher
I thank my right hon. Friend for his intervention: he is not noted for being on the left of any party, so it is refreshing—surprising—that he refers to Chairman Mao, but he is of course right.
I referred to weaker Ministers, but I pay tribute to my right hon. Friend: whether he was a Defence Minister or a Transport Minister, he was assiduous in standing up for British industry and challenging his officials—indeed, challenging other Ministers, whether in this Government or the previous Government—on behalf of the UK taxpayer and British industry.
The strictest and most inflexible approach to EU procurement rules seems to be almost an article of faith for some parts of the system here at home. Officials and Ministers might believe that they are acting like good Europeans, but the truth is that they do not act like other Europeans. Little wonder that the British public remain so sceptical of many of the European institutions.
Mr Watts
Is it not worse than that? Even when British civil servants and Ministers have a right not to apply European rules—for example, in defence—on more than one occasion we have seen those same civil servants advising Ministers to buy something that is not created in the UK.
Michael Dugher
My hon. Friend makes an excellent point. Defence is a good example—
Michael Dugher
I shall happily give way to the shadow defence procurement Minister in a moment. We should consider the development of defence industrial policy, which formed the basis of the defence industrial strategy: it was written into the rules that Ministers would have to consider the impact on UK industry and UK exports as part of the criteria by which they made decisions. I thought that was an enormously important improvement, and it is a great pity that the Government are rolling back in that determination.
Alison Seabeck
My hon. Friend is absolutely right. We talk of an Anglo-French defence treaty and further co-operation, but I am already picking up from British industry concerns that the French Government are one step ahead of us and are already lining up contracts for small and medium-sized enterprises in France to pre-empt anything that emerges from that. We do lose out. People in industry are deeply concerned that this Government are not fighting for them.
Michael Dugher
I thank my hon. Friend for that intervention, which echoes my conversations with industrialists in defence and in other sectors. The attitude—the mindset—that my right hon. Friend the Member for Warley (Mr Spellar) referred to was plain to see when the Government cited EU procurement as justification for not choosing Bombardier for the £1.4 billion Thameslink contract.
Such a decision would have been unthinkable in any other member state, supposedly subject to the same EU procurement rules. Ensuring effective and equal access to public contracts across the single market is important, but, as my right hon. Friend the Leader of the Opposition said today, instead of Ministers standing rather idly by in the Department for Business, Innovation and Skills and other Departments:
“We should be using the power of procurement to support innovation and jobs here”
in the United Kingdom.
Opposition to protectionism is right, but opposition to industrial activism is wrong. Contrary to the apparent direction of travel inside the European Commission, there is an increasingly strong argument that there should be greater application of subsidiarity and flexibility in the EU’s attitude to procurement. It is important to remember, not least from the point of view of public confidence, that in spending UK taxpayers’ money, Governments of all political persuasions should be mindful of the implications for the domestic UK economy and for the people who pay those taxes. That is especially the case in tougher economic times, when the pressure on resources is even greater.
We will no doubt return to the issue in the coming months. Labour Members agree with the European Scrutiny Committee’s overall view that the Commission has failed to show that the proposal to set up a single oversight body produces clear benefits that cannot be achieved at national level. We support the motion, and in so doing we agree that the reasoned opinion should be forwarded to the Presidents of the European institutions.
Jacob Rees-Mogg (North East Somerset) (Con)
My hon. Friend the Member for Stone (Mr Cash), the Chairman of the European Scrutiny Committee, asked me to make a speech on behalf of the Committee and on his behalf because he thought that he would not be here, but such is the attraction of a European debate that he is in his place anyway. None the less, the Committee is grateful to Her Majesty’s Government for facilitating the debate so quickly. The time scale under the Lisbon treaty for national Parliaments to submit a reasoned opinion on a subsidiarity issue is extremely tight. In this instance, the European Scrutiny Committee received the views of the National Assembly for Wales only a couple of days before the Committee’s meeting last Wednesday, when it recommended that the House adopt the draft reasoned opinion.
The Government have welcomed the proposals, and many of the detailed measures in them, and have provided an impact assessment that suggests that the benefits would significantly outweigh the costs. However, as we have heard from the Minister, they have one major concern—namely, that the proposals would require member states to establish a national oversight body, which would not only have a range of administrative and regulatory powers, but would be able to “seize” jurisdiction of the courts and pre-empt their functions in a way that the Government consider might infringe the principle of subsidiarity.
As I mentioned, this concern was echoed in the letter from the Chairman of the Constitutional and Legislative Affairs Committee of the National Assembly for Wales. I understand that the Scottish Parliament takes a similar view. Let me say from the outset that this concern is shared by the European Scrutiny Committee for reasons that I will come on to in a moment. So the debate today is not about the generality of the draft directive, in spite of some of the comments that we heard earlier. Rather, it is about a subsidiarity issue that the Government, two of the devolved Assemblies and the European Scrutiny Committee have identified.
Before I turn to the subsidiarity issue, I should explain that a reasoned opinion is a new procedure under the treaty of Lisbon, available to national Parliaments if they wish to challenge Commission proposals for legislation on subsidiarity grounds. National Parliaments have eight weeks from publication of a proposal to submit a reasoned opinion. The deadline in this case is midnight Brussels time, which would be 11 pm Greenwich mean time, on 8 March 2012.
If such opinions represent one third of all votes of national Parliaments—the bicameral UK Parliament has two votes—the Commission has to reconsider its proposal. We understand that, as the Minister mentioned, one other national Parliament, Sweden’s Riksdag, is also submitting a reasoned opinion on similar grounds. Even if the threshold is not met—in reality, the numbers required mean that it is highly unlikely that it will ever be met—the Commission responds to each reasoned opinion it receives. In addition, national Parliaments can, acting through the Government, now challenge EU legislation on the grounds that it infringes the principle of subsidiarity.
The principle of subsidiarity is born of the wish to ensure—if you believe this, you would believe anything—that decisions are taken as closely as possible to the nationals of individual EU member states. It is touted as a buffer against unnecessary supranational—not supernatural—legislation but it has been largely unsuccessful. If only the legislation were supernatural, we might find that our experience of the European Union was a happier one. None the less, its definition is important. It is set out in article 5(2) of the treaty on the functioning of the European Union, which states:
“Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.”
In addition, the treaty requires the EU institutions to ensure “constant respect” for the principle of subsidiarity as laid down in protocol No. 2 on the application of the principles of subsidiarity and proportionality. Accordingly, article 2 of the same protocol obliges the Commission to consult widely before proposing legislative Acts. This is one of the parts that has not taken place. Such consultations are to take into account regional and local dimensions, where necessary. If the Commission fails to do so, a reason must be given in its proposal.
George Eustice (Camborne and Redruth) (Con)
Does my hon. Friend agree that the principle of subsidiarity would work far better if rather than just being able to prompt a response from the Commission, groups and national Parliaments were able to strike down policies of the Commission?
Jacob Rees-Mogg
If I may divert from the set text from the European Scrutiny Committee, it is always worth remembering that subsidiarity started as a theological term in the Roman Catholic Church, of which I am a member. That is one of the most centralised bodies of any organisation anywhere in the world, with power vested in the Holy Father, so I have always been rather suspicious as to what the purpose of subsidiarity is.
Mr William Cash (Stone) (Con)
As a fellow Catholic, may I ask my hon. Friend whether he agrees that it is one thing to have the Jesuitical concept of subsidiarity, which has been brought into the rule-making of the European Union, as a theological question, and that it would be far better if the matter were regarded purely as one of theology and not exclusively one for political purposes?
Jacob Rees-Mogg
I am grateful to my hon. Friend for his helpful intervention. I do not think one should use the term “Jesuitical” too pejoratively, as the Jesuits are a fine body who, I believe, educated my hon. Friend—
Jacob Rees-Mogg
With enormous success, which is acknowledged around the country and for which we are all grateful. However, I agree with the fundamental point that it is a political rather than a theological reality in this case.
By virtue of article 5 of protocol No. 2, any draft legislative Act should contain a “detailed statement” making it possible to appraise its compliance with the principles of subsidiarity and proportionality.
I turn now to the Committee’s view, as expressed in the draft reasoned opinion. The first conclusion we came to was that the Commission had failed to consult member states in the Green Paper, or otherwise, on the possibility of setting up a single national oversight body. This is in clear breach of article 2 of protocol No. 2, and I ask the Minister to say whether he agrees with this, and whether he intends to pursue it with the Commission.
Similarly, there is no evidence in the Commission’s explanatory memorandum or impact assessment of it carrying out the requirement under article 5 of protocol No. 2 to prepare a “detailed statement” containing
“some assessment . . . in the case of a directive of its implications for the rules to be put in place by Member States, including where necessary the regional legislation”.
As a consequence, the draft directive on public procurement and, by implication, the draft directive on procurement by public entities is said by the National Assembly for Wales to breach the devolution principle in both Wales and Scotland. I quote from the letter of 23 February from the National Assembly for Wales:
“The proposal also fails to have regard to the principle of devolution in imposing the duties on a single body.”
Mr Watts
I agree wholeheartedly with the thrust of the hon. Gentleman’s speech. The only weakness that I perceive is that it is clear to me that the Commission believes that there is not fair trade within Europe. Some countries abide by the rules and others do not. We have heard examples of that today. How would the hon. Gentleman address that problem?
Jacob Rees-Mogg
I am in complete agreement with the hon. Gentleman that one of the problems of the European Union has long been that we as a nation are particularly good at obeying the rules and our continental colleagues are not necessarily so good at obeying the rules. This is for all sorts of historical reasons and understanding of our constitution as against their constitutions. The problem, and the reason why I am fairly relaxed about them not obeying the rules, is that one would have to argue for more Europe and more intrusive regulation to get them to obey the rules. That would be a bad thing. I happen to believe, though I am not sure that Opposition Members share this view, that one-way free trade encourages efficiency in the home economy, that one can compete very effectively even with one-way free trade, and that we should be relatively relaxed about how they cheat, if I am allowed to use such a term in relation to our continental friends.
The National Assembly for Wales went on to say about the proposal:
“It fails to reflect the way in which separate implementing regulations have hitherto been made in Scotland, and the way in which extensive administrative and advisory functions in relation to procurement in Wales are exercised by or on behalf of Welsh Ministers.”
The Government’s explanatory memorandum does not consider the impact of the proposals on the devolution settlement, so I would be grateful if the Minister said whether the Government agree with the concerns raised.
Before turning to the Committee’s final conclusion, I should emphasise how important it is that the Commission, which has considerable executive power to initiate legislation, is obliged to consult properly, and prepare a “detailed statement” which assesses its proposals for compliance with subsidiarity. If it does not do so, we risk ending up with a provision such as this, which conflicts with a fundamental principle of the UK’s constitution. I trust that the Government agree with this and will take the Commission to task over it.
Finally, I turn to the proposal to establish a national oversight body, which not only would have a range of administrative and regulatory powers, but could “seize” the jurisdiction of the courts. The Committee thought this an alarming proposal, and it really is. It hits against the heart of our understanding of the separation of powers between governmental agencies and the judiciary. Again, no consultation on that proposal took place and it was not in the Green Paper—it came out later—so we have this great leap in our understanding of the law without any proper consultation. The Committee concluded that the proposal amounted to an unwarranted interference in the domestic legal order of the United Kingdom, where administrative and judicial powers have traditionally been exercised separately, and so infringed the principle of subsidiarity.
The Committee also considered that the combination of functions would be likely to prevent the oversight body from acting judicially without suspicion of a conflict of interest—we looked at that fairly recently when the European Court of Justice ruled in its own favour over the pay of EU officials, so we know how corrupt these EU courts can be—contrary to article 6(1) of the European convention on human rights. That is the core of the matter. It undermines one of the principal objectives of these two directives: to increase legal certainty in the award of procurement contracts. It is for these reasons that the Committee asks the House to approve the Government’s motion on subsidiarity.
Kelvin Hopkins (Luton North) (Lab)
It is always a great pleasure to listen to the hon. Member for North East Somerset (Jacob Rees-Mogg), whose speech was properly prepared and helpful to the debate. I am very pleased with the Government’s motion, and it is not often that I am unqualified in my support for the Government. Indeed, from time to time I am critical of my own side, although the robust speech by my hon. Friend the Member for Barnsley East (Michael Dugher) was also very welcome. We also heard some particularly helpful interventions from both sides of the House, and I concur with them all.
I am happy to speak in favour of the motion and support the principle of subsidiarity in this instance. The proposal states:
“The subsidiarity principle applies in so far as the proposal does not fall under the exclusive competence of the EU.”
I am rather pleased that the national health service and various other public bodies do not fall under the exclusive competence of the EU. In fact, I rather like them being under the exclusive competence of the British Parliament, but that is my personal view. I think that we ought to decide democratically what we do with our public services and not be dictated to by anyone else.
We are putting forward a reasoned opinion, but I would go even further and call it a reasoned opposition. Indeed, I think that opt-outs or derogations would be preferable to subsidiarity, as I have argued from time to time. The Government have talked about the possibility of regaining some powers from Brussels, and I could suggest one or two to be returned—but that might go beyond the boundaries of the debate.
The draft directive is about contracting authorities or public bodies, but some of those are now more or less in the private sector, so I am not sure whether they really fall within the scope of the EU’s proposal. The idea of a national oversight body, presumably set up by the British Government, that would police British contractors or contracting organisations on behalf of the EU is bizarre. If the EU wants to set up a body to police things, it should do that itself. It should not expect us to do it. Even then, I would, of course, object.
We are talking about the EU trying to lever public services into the marketplace, and the EU marketplace rather than the British one. I am in favour of strong public sector organisations with public sector employees, paid for publicly and accountable to this Parliament, local authorities or other public bodies. I am against the privatisation of our public services in principle, but if there is to be any private involvement it should be British private involvement, and we should not see our public services sold off to foreign organisations over which we have little control, if any. The whole proposal is unacceptable.
The European Scrutiny Committee’s document refers to social services. It states:
“The evaluation on the impact and effectiveness of EU public procurement legislation has shown that social, health and education services have specific characteristics which make them inappropriate for the application of the regular procedures for the award of public service contracts.”
That is a long way of saying that it is inappropriate for the EU to intervene in our public services, and I strongly agree. I am a member of the European Scrutiny Committee. Sadly, on this rare occasion I was unable to attend the meeting at which the matter was discussed, as I was out of the country on parliamentary business—I obviously missed an interesting and serious debate—but I absolutely support the Committee’s decision.
There have been some general comments on public procurement, what other countries do and what we do, and it has been observed that some countries seem expert at somehow managing to secure contracts for their companies rather than foreign ones. Indeed, I remember some years ago Signor Agnelli, the proprietor of Fiat, being asked why there seemed to be Fiat cars everywhere in Italy, whereas other countries seemed to import cars. He denied the existence of any sort of protectionism or arm-twisting in Italy and said that it was simply because Italians preferred to drive Fiat cars. We all know that Italy is completely above suspicion in these matters, so I will go no further.
Members also talked about railways. I really think that we have made a terrible mistake in offering the Thameslink contract to Siemens. I have been travelling on Thameslink and its predecessors for 43 years, and if the contract proceeds as we expect, I shall be very unhappy about the fact that in future I will be travelling on Siemens trains rather than Bombardier trains made in Derby.
I am known to be sceptical about the EU arrangements. I want voluntary arrangements with our fellow European countries. I am an enthusiastic European in the genuine sense. I love Europe as a place, the countries, the people, the politics and the philosophies that have come out of this great subcontinent, but I am not in favour of an ever-growing EU that is increasing its control over our lives and economies and trying to dictate how we run our countries. That should be done by democratically elected Parliaments. I hope that in time other countries will feel as we do about that. With the current crisis in the eurozone, I suspect that other countries are already starting to think in those terms. The Greeks are very unhappy about what is happening, and who can blame them? Around 25% of their population are unemployed. Wisely, the UK has been somewhat more sceptical of the EU, and perhaps has been leading the way towards a more sensible future for the whole of Europe in the coming years.
Mr William Cash (Stone) (Con)
I see that the Minister is anxious to get to his feet and am sorry to have to disappoint him, but it will not be for long.
As my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) dealt so well with the European Scrutiny Committee’s representations, I want to look at some of the context within which this all takes place and, in particular, draw attention to the explanatory memorandum provided by the Government. It states:
“Public procurement plays an important role in the overall economic performance of the European Union. In Europe, public purchasers spend around 18% of GDP on supplies, works and services. Given the volume of purchases, public procurement can be used as a powerful lever for achieving a Single Market fostering smart, sustainable and inclusive growth.”
There is one point to which I am bound to draw attention, and that is the figure of 18%, which is a monumental percentage of the European Union’s GDP. We therefore want to be absolutely certain that it is not subject to abuse.
There is a good degree of cross-party support on this question, and when intervening during the debate I mentioned that there are important reasons for ensuring that we are not cheated through any fancy practices by other member states. I voted for the Single European Act 1986 and wrote a letter to The Times about it, drawing attention to the difficulties that might arise if any mistakes were made in the Act’s operation. At the same time I tabled an amendment stating that nothing in the Act would derogate from the sovereignty of the United Kingdom Parliament.
As it happens, the then Speaker, Bernard—Jack—Weatherill, and I had a discussion, because I disagreed with the House officials on the selectability of my amendment. I was told in those days—I repeat, in those days—that the question of derogation from the sovereignty of the United Kingdom Parliament was regarded as reopening the whole issue of the European Communities Act 1972. In fact, it did no such thing, and I am glad to say that since then such amendments, including those on the sovereignty of the United Kingdom Parliament, have been accepted on several occasions.
That raises the question of the extent to which a single market, and the legal framework carried with it, is compliant with the general principles of competition, because we live in a global environment. We live in a world where there is a great deal of international competition, so constraining economic performance and public procurement within the single market raises one or two issues.
On the question of the manner in which the report has been put together, the explanatory memorandum states that
“the European Commission conducted in 2010/2011”—
only a short time ago—
“a comprehensive evaluation of the impact and effectiveness of EU procurement legislation drawing on an extensive body of evidence and new independent research.”
I raised that question from the UK point of view with the Minister, because it is one thing for 18% of the EU’s entire GDP to be looked at by the European Commission, in which some of us have not very much confidence, but it is another thing to ask whether the UK Government have looked at the implications for the UK, particularly in the light of recent examples, such as Bombardier.
The Minister replied, “Well, that was done under the previous Government,” but, although that is no doubt true, the question of whether it is a matter for political point-scoring does not necessarily lead us to the right conclusion. I am interested to know now what impact public procurement has on the UK vis-à-vis other member states of the European Union. That is why I asked the Minister if he would be good enough to take it up with the Business Department, and he has graciously agreed to do so.
It is clear that Germany has a monumental advantage, some of it created by its own success, when it comes to foreign direct investment in other member states—particularly in those with economic and political ties to Germany, as geographically, politically and economically such links give Berlin substantial leverage over those countries. That process is in part leading to a distortion of the EU’s overall objectives, hence the increasing concern that Germany is becoming not merely the predominant member of the European Union but the dominating element. I say that in no hostile sense—just that I think it is bad for Germany, for Europe and for the UK.
Kelvin Hopkins
It has been said that the European Union is one way of avoiding conflict between the nations of Europe, but, with the pressures inside the eurozone at the moment, tensions are being exacerbated by the European Union, not lessened.
Mr Cash
I do not need to go any further down that route, other than to say that public procurement amounting to 18% of the EU’s GDP represents a significant advantage to countries with the maximum degree of foreign direct investment, if they are able to induce the Governments and official bodies of those countries to procure for them the return that they no doubt feel is justified, given the contribution that countries such as Germany make to the European Union as a whole. All that requires a great deal of careful analysis.
I do not want to be unduly suspicious, but I fear that there is a considerable amount of hand-wringing over the extent to which Germany is expected to contribute to the European Union in relation, for example, to Greece and to Spain, when in fact, as Wolfgang Münchau said in the Financial Times a couple of days ago, the root problem is the imbalance that Germany is creating by its refusal to import. I cannot be sure about this, but BIS should ask itself the serious question whether there is not a similar problem in relation to public procurement.
If Germany, for example, makes massive contributions to other countries in Europe, no doubt it believes that if it in turn obtains contracts for the roads, railways and all the other things that make up the public procurement system, it will therefore, through the contracts that it has secured there, receive a repayment—with fantastic profits attached, no doubt—that returns the money to Berlin. That is no doubt what it wishes to achieve—and is achieving.
Mr Watts
The hon. Gentleman hits on a real problem. As far as I can see, the German authorities, whether they be the Government, civil servants or politicians, all tend to see manufacturing as the core of what they do. They make every effort to maximise the potential work that they can generate for their own manufacturing industries. That is not the case in the UK, and we are in an unfair position because of it, so do we, as well as the Germans, need to change?
Mr Cash
I am glad that the hon. Gentleman raises that issue, because it is very much the direction in which we should go. We need an analysis and we need to know whether the UK is stepping up to the plate. We know that we have incredibly good industries, but are we making the most of them? Are we being cheated? Are we—if it falls short of cheating—being taken for a ride? Are the rules being properly complied with, and should BIS not conduct a strategic analysis of the issue, irrespective of the fact that the Business Secretary, being a Liberal Democrat, has an apparent abhorrence of investigating what I should like him to look at in terms of the inadequacies and manipulations of the European Union?
I am not being hostile or over-suspicious, but when 18% of GDP is tied up in such public procurement, it is very important for us to be completely sure that we are having a calm and collected look at the extent to which it operates for or against us. The evidence on Bombardier suggested that things had gone badly wrong. I do not really care which side of the House is at fault; as far as I am concerned, this is an opportunity to get it right. I am glad to see that those on both Front Benches are nodding in agreement, because I know that their main concern is to serve the national interest, and that would be well achieved by making such an analysis.
The document contains, as part of the study that the European Union conducted, issues relating to small and medium-sized enterprises. Bigger manufacturing industries tend to be able to look after themselves, but some SMEs need to be carefully monitored and given every possible advantage to enable them to get into the procurement market. The document also refers to the “strategic use” of procurement in Europe—strategic, I imagine, in the context of global trade.
There are deep concerns about the extent to which our water, electricity and many other main utilities are exposed to degrees of competition that are apparently not complied with in some other countries. I hope that that, too, will form part of the overall strategic analysis.
Kelvin Hopkins
Some of our utilities, such as electricity and water, are owned by foreign companies—even foreign state-owned companies—and there is a suggestion that they are exploiting the British market to subsidise their own markets.
Mr Cash
Yes. This is all part of what I would like someone to look into very carefully. We are far too used to hearing generalisations and soft words when we are in fact talking about very substantial sums of money—on a monumental scale—and the question of whether this is a fair and free market that benefits us. I take into account the remarks of my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) about the manner in which free trade operates, but for practical purposes, in terms of public procurement, I would want to be satisfied that it always works on a fair and reasonable basis and does not in any way upset the UK economy.
This is a very important debate, albeit not one that has attracted a vast amount of interest. I am afraid that these European debates, the contents of which are extremely important, do not necessarily attract the degree of attention that they deserve, because although they deal with people’s daily lives, with whether the UK economy will function effectively, and with many other areas within the rubrics of the European Union’s legislative framework, they do not have the word “domestic” stamped on them, and people think that when we talk about “Europe” we do not mean the UK. The truth is that the UK is affected very directly by everything that happens in the EU, and I want to be entirely satisfied that we get the full benefit of the trading system that the single market is supposed to provide.
Kelvin Hopkins
The work that the Chair of the European Scrutiny Committee does, in which some of us try to support him, does make a difference, and this House does hear about the realities of the European Union. I think that our Front Benchers, possibly our civil servants, and certainly the public outside appreciate that we are taking these things seriously. I pay particular tribute to the hon. Gentleman in that regard.
Mr Cash
That is extremely generous of the hon. Gentleman. I feel very strongly that we have a duty to look at these matters and to do what we can to help in debating them for the benefit of our constituents in the United Kingdom as a whole.
The explanatory memorandum contains a reference to the impact assessment and its executive summary, which gives us reason to believe that the impact on the European Union has been considered. However, the European Union is not an end in itself; it is an artificial framework that has been created for the purpose of an objective, which is, ultimately, political union. We know that. We also know, from what Chancellor Merkel has been saying recently, that that is very much tied up with her own agenda; I do not need to go down that route. We must consider the impact on the United Kingdom of the huge amount of money involved in public procurement, and the effect in relation to utilities, which may determine whether we get any energy and whether we have a proper water system, electricity system, and so forth. Enabling other countries’ companies to have control over those matters is a question not only of trading but of national security.
It is very important to have these things properly looked at. I am sure that the Minister and the duty Whips will pass on my messages to BIS, and that we will end up with a virtuous circle whereby we have a proper analysis to ensure that the United Kingdom gets what it deserves out of the European Union, and does not participate in it in ways that are, as our debate on subsidiarity amply demonstrated, unnecessary.
Mr Harper
With the leave of the House, let me respond briefly to some of the concerns raised during the debate. I will try to keep my remarks as focused as I can on the motion before us, tempting though it is to range more widely over the whole gamut of European policy.
I, too, pay tribute to my hon. Friend the Member for Stone (Mr Cash) for the excellent work that he does in chairing the European Scrutiny Committee. His wider concerns about growth, trade, jobs and our success as a country were exactly the focus of the recent European Council, the details of which my right hon. Friend the Prime Minister set out so ably yesterday, when my hon. Friend was in the Chamber. From our perspective, the purpose of being in the European Union is to ensure trade, jobs and success for the United Kingdom.
I welcome the comments of the hon. Member for Barnsley East (Michael Dugher) and his general support for the motion. He referred to concerns that he had picked up about officials and “weaker Ministers” at the Treasury. I can only assume that he has reached those conclusions from his close working with the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who has great experience of the Treasury and must have encountered such things in the 10 years that he was Chancellor.
My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) entertained us, as ever, on behalf of the European Scrutiny Committee, leaving an opportunity for my hon. Friend the Member for Stone to range more widely. My hon. Friend the Member for North East Somerset made an excellent speech that took us down one or two little byways. The House will be pleased that I am going to resist the temptation to engage in any kind of theological debate about subsidiarity, or even supernatural law-making. The National Assembly for Wales, to which he referred, had two main concerns: first, about the oversight body and subsidiarity in general; and, secondly, about specific issues to do with devolution. The Government agree with those concerns, as I explained in my earlier remarks.
My only other point is about the wider procurement issues. It is worth noting that recent analysis showed that UK companies won 17% of all the public procurement contracts awarded to companies from other member states across Europe. I will leave it to hon. Members to draw their conclusions about whether that is good or could be better, but it is a fairly substantial chunk of GDP.
Finally, on the subject of how other European countries do their procurement, there are remedies for aggrieved suppliers, which countries have to implement. I urge any British company that feels that it has been hard done by to use those remedies to ensure that it gets a fair bite of the cherry.
Question put and agreed to.
Resolved,
That this House considers that European Union Documents No. 18966/11 and Addenda 1 and 2, relating to the Draft Directive of the European Parliament and of the Council on public procurement, and No. 18964/11 and Addenda 1 and 2, relating to a Draft Directive of the European Parliament and the Council on procurement by entities operating in the water, energy, transport and postal services sectors, do not comply with the principle of subsidiarity for the reasons set out in Chapters 2 and 3 of the Fifty-seventh Report of the European Scrutiny Committee (HC 428-lii); and, in accordance with Article 6 of Protocol (No. 2) of the Treaty on the Functioning of the European Union on the application of principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.
Consumer Insurance (Disclosure and Representations) Bill [Lords]
(12 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
It is fortunate that we have the opportunity to debate the Bill on the Floor of the House on Report and Third Reading for a number of reasons. First, the Committee stage of the Financial Services Bill is currently under way upstairs in Committee Room 12, where the Financial Secretary, who usually deals with these issues, is answering the debate and addressing the many amendments that I and my hon. Friends have tabled. It is a shame that the Government saw fit to put only one Minister on that Committee, because it means that he is unable to join us in this debate. I have popped down briefly. It is a pleasure to see the Economic Secretary fielding the questions on his behalf. I have a number of them for her on the detail of the Bill.
Secondly, it is fortunate that we are having this debate on the Floor of the House because, rather bizarrely, the Government chose to take Second Reading upstairs in Committee. I did not know that such Bills could have a Second Reading debate on the Committee corridor, but apparently, under one of the more arcane Standing Orders of the House, Law Commission Bills can be debated upstairs in Committee on Second Reading and never usually see discussion on the Floor of the House. I do not believe that it is right for primary legislation not to have a hearing on the Floor of the House. That is an important principle. However, despite my objections, the Second Reading debate happened upstairs. I challenged the Financial Secretary to hold the Report stage on the Floor of the House and he eventually relented, under extreme pressure. I regard that as one of my greatest triumphs in opposition. It turns out that the Report stage could also have been taken in Committee, so this piece of primary legislation need never have seen the Floor of the House of Commons.
I realise that I have digressed, Mr Deputy Speaker, but I just wanted to show how fortunate we are to have the opportunity to debate the Consumer Insurance (Disclosure and Representations) Bill here today.
This is a broadly positive Bill. I place on the record my thanks to the Law Commission and the Scottish Law Commission, which in 2009, when the previous Administration were in office, published a joint report entitled, “Consumer Insurance Law: Pre-Contract Disclosure and Misrepresentation”. That report resulted in this Bill.
The new clause is simple and, I hope, relatively uncontroversial. I hope that the Government will accept it as a positive step forward. The many hon. Members who have joined us for this debate will know that consumer insurance is incredibly important to all our constituents. We are talking not just about life insurance, which members of the public might want to take out, but more day-to-day insurance such as household and contents insurance, building insurance, motor insurance, flood risk insurance, personal effects insurance, health insurance and even pet insurance. There are a number of insurance schemes that the Economic Secretary or my hon. Friend the Member for Clwyd South (Susan Elan Jones) may have taken out. Consumer insurance is, therefore, incredibly important.
Although superficially it looks as though the Bill changes only small aspects of contractual matters, it nevertheless gives us the opportunity to take stock of the state of the consumer insurance market and to ask where it is heading, particularly in the light of its provisions. The Bill has a number of important purposes, which I will touch on at Third Reading. Essentially, the story goes back to the 18th and 19th centuries, when a degree of common law had accrued and there were questions about a new contract for insurance. At the start of the 20th century, it was felt that the Marine Insurance Act 1906 needed to be placed on the statute book.
Chris Leslie
I note that the hon. and learned Gentleman recalls that from his history studies. Although, strictly speaking, the 1906 Act applies only to marine insurance, it has since been generally understood that it applies to all forms of insurance. Essentially, its provisions are the building blocks of the contractual process that is involved in the consumer insurance trade.
Stephen Phillips
The hon. Gentleman will know that the 1906 Act, which was drafted by Sir Mackenzie Dalzell Chalmers, is commended to the House by many insurance lawyers as a wonderful piece of drafting. I suppose, as this is my first intervention in this debate, that I should refer the House to my entry in the Register of Members’ Financial Interests; I am an insurance practitioner. Does the hon. Gentleman think that it is a good idea for Parliament to intervene in this way, given that there are certain respects in which the 1906 Act altered the common law? For example, the test of loss in relation to marine insurance now differs from the test of loss in relation to non-marine insurance.
Chris Leslie
I am grateful to the hon. and learned Gentleman for bringing his experience to bear on this debate; it is incredibly useful. I suppose that, to a certain extent, we all ought to declare an interest in these matters as consumers, because some of our arrangements may be affected.
The hon. and learned Gentleman is right that the 1906 Act has stood the test of time for a considerable period, indeed for more than a century. I confess that I do not have a copy of it in front of me, but I will paraphrase its arrangements. It enshrined in law certain principles of disclosure. In particular, it placed a considerable emphasis on the requirement for the party seeking insurance to disclose any issues that might be broadly relevant in the insurance process. It did not require the insurer to ask a series of specific questions about the particulars of the individual being insured. That was left to the discretion of the insurer. That is part of contract law. Of course, common law has accrued since that time. Some serious problems have developed in recent decades in relation to where the balance is struck between the insurer and the person being insured. The onus falls perhaps too heavily on the person who is being insured.
For example, if you have taken out household contents insurance recently, Mr Deputy Speaker—I am not sure whether you have, but I suggest that you do, because it is a wise thing to do even though it can be quite expensive—you may have been asked a number of questions about the type of mortice lock you have and other things about your place of residence. If you did not volunteer particular data about the building in which you reside, how frequently you are away on business and so on, an insurer with a beady eye on avoiding an obligation to pay up could invalidate your insurance should you be unfortunate enough to be burgled and need to make a claim. That would be through no fault of your own, other than your failure to disclose a number of matters to the insurer.
Chris Leslie
A llama? I did not know that. I am not sure I needed to know it, either, but the hon. Gentleman may choose to take out insurance on his pet llama. You might well ask yourself where this is going, Mr Deputy Speaker, but the key question is whether that is a luxury insurance product, or whether the hon. Gentleman has such affection for that pet llama—
Chris Leslie
In that case, he will feel that it is an absolute necessity to ensure that his llama always has pet insurance. He may well find that under the Bill, rather than simply taking out a generic insurance contract, he is asked a series of specific questions about his pet llama. They could include how long he has kept the llama, its age and the environment in which it is kept. He may well think to himself, “Well, this insurance could become quite expensive,” and feel that of all his insurance products, he can leave that one and take a risk. Poor old llama—it may well just have to take its chances.
Jonathan Evans (Cardiff North) (Con)
Before the hon. Gentleman frightens my hon. Friend the Member for Lichfield (Michael Fabricant) away from insuring his llama, I will follow my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), who declared his interest, and point out that I am a former director of NFU Mutual. That farming insurance company would find no difficulty whatever in providing insurance for a llama.
Chris Leslie
I think a deal has been transacted on the Floor of the House. However, under the provisions of the Bill, a series of disclosures may be requested from hon. Members seeking such insurance.
My point is simply that we need to know the impact that the Bill will have on pet insurance and other discretionary insurance, but also, perhaps more importantly, on essential types of personal insurance that we all want our constituents to have, such as household insurance, flood risk insurance and motor insurance. In those cases, there is less wiggle room for individuals to decide not to take out insurance.
There are separate discussions to be had in another place about the problem of certain drivers thinking, “Well, the fine that I get for driving uninsured is less than the cost of motor insurance, so I will take my chances and drive uninsured.” In my view, the penalty for driving uninsured needs to be higher than the cost of getting insurance. That is a pretty straightforward point, but you would be surprised, Mr Deputy Speaker, by the small fines that are sometimes issued to people who drive uninsured. I am sure that hon. Members will know of cases in which constituents have unfortunately been involved in accidents caused by uninsured drivers. When those uninsured drivers are prosecuted the fines are a pittance, which sends the message, “Why bother with insurance?” We must return to that issue, but it is a moot point whether it would fall under the scope of a review under the new clause.
Mandatory types of insurance are particularly important in the Bill. I can foresee circumstances, particularly with car insurance, in which the insurance sector feels that it is not getting much return. Many of our constituents howl with derision at the sheer expense of motor insurance—the AA recently said that it rose by about 16.4% in 2010. The Bill will make provision for the disclosure of certain extra pieces of information, even though people have no choice but to take out motor insurance if they want to drive; it is a legal requirement.
People will be surprised to find that even though motor insurance costs are escalating—that problem needs to be tackled in a number of ways—the insurance sector says that motor insurance is not massively profitable. The Association of British Insurers has described it as one of the most challenging products for insurers. I believe it has stated that premiums amounted to £10.7 billion and claims to £10.3 billion in 2010, so often the margins are not particularly great.
It is difficult for hon. Members, as non-experts in that trade, to know whether insurance companies are making significant profits, but let us take them at their word that they are not doing so. I can envisage a situation in which insurance companies say, “We want to back out”—pardon the pun, Mr Deputy Speaker—“of the motor insurance trade.” They might feel that in order to do so, they will deter new contracts for motor insurance. One way of doing that would be by placing a series of extra hurdles in front of customers wanting to obtain such insurance.
Many young drivers will know to their cost how difficult it can be to get insurance cover for their vehicles. I do not know whether the Minister has a driving licence—
The Economic Secretary to the Treasury (Miss Chloe Smith)
indicated assent.
Chris Leslie
I am glad the hon. Lady has insurance—I would expect nothing less. The Government car service will certainly have insurance. Not so many years ago, when she was under the age of 25, she might have found it extremely difficult even to find companies that would insure her. She is doubtless a very careful driver with an unblemished record, and she might find it easier to get insurance as a woman driver, but many young male drivers find getting insurance incredibly difficult. My point is simply this: we need the ability to review the impact of the Bill to test what is happening in motor insurance, particularly for those drivers who struggle to get insurance.
Additional hurdles could be placed in the way of those drivers. I do not object to the shift in the balance of disclosure in the Bill—I want to put that on the record—but it is important that we take time to recognise that there could be circumstances in which those seeking motor insurance find it more difficult to get as a result of these measures. We just do not know, which is why we need a review one year after the commencement of the legislation.
Another aspect of a review would be households subject to flood risk. Apparently—I did not realise this until I researched it—one in six homes in the UK are subject to the “at risk” category in respect of flooding. Amounts paid out by insurers since 2000 exceed £4.5 billion. A recent article in This is Money said that annual flood damage claims are running at more than £1 billion each year, and that 200,000 homes could become uninsurable by 2013 if an agreement cannot be reached between the Government and the industry on high-risk areas. That is incredibly important to the affected individuals, whether in Hull, where people recently had difficulty in gaining insurance, or elsewhere.
The changes on disclosure could well affect the ability of individuals to take out an insurance contract. Many who have taken out flood insurance might have found, unwittingly, that they were unable to receive a payment even though a catastrophe had occurred—a flood, a river bursting its banks or whatever—because they did not realise they were supposed to disclose certain aspects.
I want a review of the Act after one year. The provisions will, I hope, improve the situation and we will find that more people can take out flood insurance in a way that means they and insurers are assured that the contract will be fulfilled and that payouts can be made following floods and other such eventualities, but we do not know what the impact of the measure will be.
The Bill is relevant to flood victims, for whom the cost of insurance—if they can get flood insurance at all—could increase 500%. It is therefore very important that we have a review to see what happens in such circumstances. It is important that we see what is happening in the market for discretionary types of insurance as a result of the Bill, but we also need a review of the essential, mandatory, roof-over-the-head types of insurance. For those reasons, it would be helpful if the Minister accepted that such a review will take place.
Stephen Phillips
I rise to make only a short contribution. The new clause is misconceived. The Law Commission did not think it necessary, and with the greatest respect, the hon. Member for Nottingham East (Chris Leslie) has undermined his own case, because only in circumstances in which claims that ought to be paid have not been paid might there be any adverse impact on the costs of the types of insurance contract that the Bill covers.
I say to the hon. Gentleman and the whole House—to be fair, there is no one but him and the Opposition Whip on the Opposition Benches—that in this day and age, I am pleased to see the Bill before us. It is not only long overdue, and perhaps I shall speak to that on Third Reading, but it is inconceivable either that it will remove products from the market or add greatly to the costs of the type of insurance contract that it is designed to cover. I cannot help feeling that the hon. Gentleman will not wish to press the new clause to a Division.
Chris Leslie
I hear the hon. and learned Gentleman’s points, and I do not wish in any way to denigrate the importance of the Bill—it is an extremely positive and important measure—but the fact that it originated with the Law Commission does not necessarily make it perfect or negate the need for a review. He should not be under that illusion. Just because those fine minds at the Law Commission introduced the Bill does not necessarily mean that we should not scrutinise it.
Stephen Phillips
I am not for a moment suggesting that the Bill should not be scrutinised.
Insurance companies ought to pay claims that they have not paid previously as a result of an inadvertent misrepresentation or non-disclosure—everyone wants that change, which is the reason for the Bill. The only way in which the costs of the types of insurance contract that the Bill covers will increase is if claims that ought previously to have been paid—legitimate claims—are paid. Disreputable insurance companies—I venture to suggest that there is none left in this country—currently might decline to pay a claim on a specious basis. For that reason, the review proposed in the new clause is unnecessary. I anticipate that the Government will not wish to carry it out, and the hon. Gentleman is rather hoist on his own petard because of the argument he has made in support of the Bill.
Jonathan Evans
My hon. and learned Friend will know that arrangements are in place for the Financial Ombudsman Service to look at the circumstances to which he refers—when an apparently proper claim is declined by an insurance company on specious grounds. Notwithstanding the 1906 Act, the financial ombudsman has, under the “treating customers fairly” provisions, which were put into operation by the Financial Services Authority, many times ordered a payment to be made. Is that not one of the reasons for the Bill? The situation will be that legislation rather than the financial ombudsman will be involved in righting wrongs.
Stephen Phillips
My hon. Friend makes a valid point. The insurance industry has long been regulated and the ombudsman has long been able to make declarations, but there are circumstances in which one cannot go to the ombudsman—for example, if the financial value of the contract is too high. There are circumstances in which the ombudsman will not intervene—for example, if legal proceedings between the consumer and the insurance company or, if Lloyd’s, some other insurer, are already afoot. In addition, experience dictates that the financial ombudsman is not, for example, particularly au fait with some of the more obscure parts of insurance law with which the Bill grapples, such as those parts of common law that deal with basis clauses and the turning of representations into warranties when made the basis of the contract.
I hear, then, what my hon. Friend the Member for Cardiff North (Jonathan Evans) says, but it is fair to say that the Bill is not only welcome but contains proposals that the Law Commission has properly considered and requires no review of the type that the new clause contemplates. For those reasons, the new clause is, in my respectful view, misconceived; and for those reasons, I am sure that the hon. Gentleman will not push it to a vote.
Mr Christopher Chope (Christchurch) (Con)
I was rather attracted to the new clause tabled by the hon. Member for Nottingham East (Chris Leslie). The idea that the House should engage in post-legislative scrutiny is a good one and accords with good legislative practice. That, effectively, is what he is saying. He is not saying that the House would necessarily be involved; he is saying that the Treasury, the Department sponsoring the Bill, would have an obligation to assure everybody about the impact of legislation. This could be an important precedent. Perhaps, in due course, it will be part of official Opposition policy to provide for post-legislative scrutiny.
This area of insurance is extremely complicated and, as the hon. Gentleman said, very expensive for many people. The reason it is so expensive is that there is an enormous amount of fraud, particularly in relation to motor accidents. We heard recently about the high incidence of claims for whiplash. Almost everybody involved in even the most minor bump is encouraged to claim on their insurance for whiplash injuries, and invariably the insurance companies end up paying a lot of money to prevent what they would describe as nuisance claims from going to full litigation. Effectively, they are held to ransom, and not surprisingly it is the customers of those insurance companies who end up paying the bill through higher premiums.
That situation is particularly pernicious with compulsory insurance, which motor insurance is—third party, fire and theft, and so on—for people seeking to drive a motor vehicle on the road. It is particularly tough on young people, and has been made tougher by this ludicrous European legislation declaring that insurance companies cannot take account of whether a young girl belongs to a class group with a lower claims rate than a young man who belongs to a group with a higher claims rate and who therefore will face additional costs.
As a consequence, the premiums for young women have increased significantly faster than premiums for young men. I suppose I have a family interest, because my daughter has recently acquired her first car and taken out her first insurance policy. I can reconfirm what the hon. Member for Nottingham East said. Obviously, she did not have a no-claims record, because she did not have any driving experience, and in the end, the best deal was from a company offering her 10 months’ insurance, which gave her the prospect of getting a no-claims discount after 10 months rather than after a year.
Jonathan Evans
There might have been another reason for the 10 months: the European decision to which my hon. Friend referred comes into operation in 10 months' time.
Mr Chope
My hon. Friend is ahead of the game. I was interested in his earlier intervention declaring his knowledge and experience of one particular insurance company—a company from which we sought a quote but which was extremely reluctant even to consider providing insurance cover at a reasonable price. The reason was that it did not want to engage in this market and had recently changed its policy. It is a pity that this mutual insurance company has decided that the pressures are such that, even for long-standing customers, it is not prepared to take on, at a reasonable price, the sort of risk to which I have referred.
It is easy to go unnecessarily wide on such an issue—perhaps I was led astray by the hon. Member for Nottingham East because of the width with which he introduced his new clause. However, I look forward to hearing the Minister respond to the idea of post-legislative scrutiny. Perhaps, Mr Deputy Speaker, if she could fit that point into the scope of her response to this short debate, she will say whether it might become Government policy to make post-legislative scrutiny the norm rather than the exception. I hope, at least, that she will come forward with some strong and persuasive arguments so that I do not have to join the hon. Gentleman in the Lobby in support of new clause 1.
Mr Deputy Speaker (Mr Nigel Evans)
That probably goes too wide for this particular debate. I call Chloe Smith.
Miss Chloe Smith
I welcome the three contributions and the interventions we have just heard. I wholeheartedly welcome the cross-party support that the Bill enjoys overall. In responding to the points made, I am sure that I will make my hon. Friend the Member for Christchurch (Mr Chope) happy today. I also take this opportunity to thank my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) for his learned and helpful contributions.
On a brief note of discord, I am afraid, I must recommend a purchase to the hon. Member for Nottingham East (Chris Leslie), who kindly recommended motor insurance to me and llama insurance to my hon. Friend the Member for Lichfield (Michael Fabricant). I must recommend to him the Standing Orders of the House of Commons—he can purchase a copy for a mere £10, if he cannot find a copy in the Library—page 53 of which contains the answer to his questions about Second Reading Committees in relation to Law Commission Bills. I recommend that reading to him.
I will address the new clause in some detail and answer the question about review. I think that my hon. Friend the Member for Christchurch will be pleased to know that the Treasury is already committed to a post-implementation review of the Bill in three to five years which will examine whether the Act, as we hope it will then be, has achieved its objectives, identify whether there are any unintended consequences, and assess the costs and benefits of the legislation. I say to the hon. Member for Nottingham East, then, who might press his new clause, that given that it seeks a review, it is an unnecessary addition to the Bill.
It is also unnecessary, particularly in the context of the Bill, to draw our attention to the cost and availability of consumer insurance, because the Government already take those issues very seriously. We do not need a review of the Bill to draw attention to the issues because we are already taking action on them. I will go into two of the areas that the hon. Gentleman mentioned: motor insurance and flood insurance. Hon. Members will know that three weeks ago the Prime Minister met the insurance industry and consumer groups to discuss rising premiums and the steps that we will take to bring them down.
On motor insurance, the Government have already taken a wide-ranging series of actions to tackle the rising costs of car insurance, and we are committed to doing even more. We are proceeding with a series of legal reforms that will reduce the costs associated with personal injury claims. The cost of claims following motor accidents is a crucial driver of insurance premiums, and we think that under the current system too many people can profit from minor or spurious accidents at the expense of motorists. We expect our ban on referral fees and our reform of no win, no fee agreements to reduce both the level of fees and the number of frivolous claims. We have also committed to reducing the £1,200 fee that lawyers can currently earn from small-value personal injury claims. In return, insurers have committed to ensuring that those savings will be passed directly on to policyholders, which I am sure all hon. Members here today would welcome.
Chris Leslie
I am grateful to the Minister and other hon. Members for taking the time to reflect on my new clause, which I do not think would be particularly onerous. It is important that we should have the opportunity to test the impact of the Bill, which is quite significant, given some of the changes—albeit welcome ones—that it is making to the contractual process.
In the new spirit of accord with the hon. Member for Christchurch (Mr Chope)—in which I so frequently find myself, particularly given his recent comments about the Government’s ridiculous plans for child benefit—I am quite taken by his suggestion of post-legislative scrutiny. Ensuring that we properly reviewed certain provisions in statute would be a useful initiative to take; indeed, in many ways that is why we tabled this new clause. The Minister has helpfully set out the Government’s view in those areas on which I want a review to focus. She believes that the Government are taking steps to deal with some of the difficulties in motor insurance, but I have to say that I disagree. I do not think that enough measures are being taken to help consumers who find that market particularly difficult. Also, the cuts in the flood defence budget are raising the prospect of householders being flooded more frequently, about which many constituents will be concerned.
However, I understand the Government’s general commitment to keep an eye on the issue. The Minister implied that the new clause was not necessary. It is a shame that she was not able to accept it, but given that we have at least had the chance to air the issues, and on the Floor of the House too—despite the ridiculous provisions of the Standing Orders of the House—I am more than happy not to press the new clause. Obviously we do not want to dwell on it for too long, and I think the point has been made. I therefore beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Clause 2
Disclosure and representations before contract or variation
Chris Leslie
I beg to move amendment 1, page 1, line 22, at end insert—
‘(3A) It is the duty of the insurer to show regard to the principle that a burden or restriction which is imposed on a consumer through requests for particulars before a contract is entered into should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction.’.
If hon. Members look at line 22 of page 1, right at the foot of the Bill, they will see a simple provision that states:
“It is the duty of the consumer to take reasonable care not to make a misrepresentation to the insurer.”
It follows a provision in clause 2—one of the most important in the Bill—that refers to the “disclosure and representations” that consumers need to make to an insurer
“before a…contract is entered into or varied.”
I tabled an amendment in Committee that was specifically designed to challenge the Government in respect of the burden that might fall on consumers under the new provisions in this Bill.
I support the Bill; I think it is important. I want more clarity and disclosure, as the contractual arrangement needs to be clearer and more transparent. However, there is a small alarm going off in the back of my mind—I have a minor anxiety—that we might unwittingly create circumstances in which an individual faced with having to answer a barrage of extra questions, or fill in page after page of forms that they perhaps did not have to fill in before, may well think, “I can’t be bothered with this particular insurance cover,” especially if they feel it to be a discretionary area of cover, rather than a mandatory area, such as car insurance. Faced with that weight of administration and bureaucracy, those individuals might say, “I just don’t have the time or the inclination for these dozens and dozens of questions,” and might therefore go without insurance cover when that would be neither a prudent nor wise thing to do.
Faced with a constituent in one of our surgeries who asked, “Should I take out household insurance cover?”, “Should I take out contents and building insurance”, and so forth, most of us would say, “Absolutely you should. You don’t know what’s around the corner. There could be any number of things that fate could bring upon your shoulders. Therefore, you really ought to regard this as essential.” In the dreadful economic circumstances that the Government are presiding over, many hard-pressed families might decide that certain things will have to give, and I am sure that the cost of insurance is on many people’s minds. Adding to the consideration of cost the idea that people have to go through onerous processes and jump through hoops to get the insurance could take a certain category of person to a tipping point. Such a consideration could be the straw that breaks the camel’s back, leading them to conclude that they just cannot be bothered to fill in the forms for that insurance cover at that point. Many of us will have been there. We will have seen a particular product and made a note in the diary to investigate it, but, when faced with the hurdle of filling in the forms and getting involved in the bureaucracy, we have found that it falls down our list of priorities. That is the point that I want to test with the amendment.
In Committee, I framed the amendment incorrectly. The amendment that I tabled at that point related to circumstances in which a consumer varies a contract that they have already taken out. As the Minister will know, when she reapplies for her car insurance, the insurer will already have details of her address and driving habits on record. Renewing an insurance contract is therefore not particularly onerous, because not all the questions need to be asked afresh. She will be able to tick a box to “re-answer” them. In Committee, the Minister explained that my amendment was unnecessary as there were ways of varying contracts quite efficiently.
I have therefore tried to reframe the amendment so that it relates particularly to new insurance contracts. It is aimed at the individual who has perhaps not had car insurance or owned a house before, and who decides to start from scratch with a new insurance contract. In the amendment—I hope that hon. Members will forgive the slightly flowery legislative language that is sometimes used in such provisions—I have proposed the addition of a new subsection:
“It is the duty of the insurer to show regard to the principle that a burden or restriction which is imposed on a consumer through requests for particulars before a contract is entered into should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction.”
I know that many hon. Members have concerns about regulatory burdens, but we must be careful, because regulations are sometimes necessary for the protection of individuals and of society at large. We should always keep a watchful eye on the burdens that such regulations impose, however.
The regulatory impact assessment that accompanies the Bill shows that the costs that will fall on the consumer will not be particularly onerous, which is why I support it in general terms. In pounds, shillings and pence terms, the costs will be negligible. The assessment estimates that an additional £700,000 a year will be saved by the insurance sector as a result of the provisions in the Bill, and that if there is an extra charge to consumers, it will probably be 2p or 3p for every £100 of insurance. I am therefore not concerned about the cost as a burden. The burden that I am flagging up is the administrative burden, the non-financial burden, that might fall on the shoulders of the consumer.
Mr David Nuttall (Bury North) (Con)
Will the hon. Gentleman tell us who will be responsible for determining whether the new duty that the amendment seeks to impose is being fulfilled?
Chris Leslie
Ultimately, the courts would have to be the arbiter in relation to those arrangements. This is the kind of thing that tends to get drawn into a judicial review, although I would hope that it will not need to be tested in that way. I am simply introducing a principle that I would like insurers to have regard to when they frame the questions, the tests and the requirements that they place on the shoulders of the consumer.
Mr Nuttall
So, in reality, the only way for a consumer to enforce this duty would be to take the company to court; otherwise, he would be relying on the good nature of the insurance company, would he not?
Chris Leslie
Indeed, that is the very nature of the measure, but that does not mean that, in the course of changing the disclosure requirements, we should not try to frame the duties that insurers have to abide by. I do not know whether hon. Members have visited moneysupermarket.com or confused.com recently. They are aggregator websites on which a number of insurance companies share the questions that people have to answer in order to take out an insurance contract. The websites show the range of insurance contracts that are available. Quite honestly, I think that the way the aggregator companies will deal with the Bill is another matter, but I challenge any hon. Member to say that their boredom threshold has not been reached after they have filled in 15 or 20 pages of a form. Having said that, I think that many hon. Members—especially those who are in the Chamber at the moment—must have particularly high boredom thresholds. I know that from many hours of experience in these debates. Notwithstanding that propensity to sit through long, technical discussions, however, I believe that form-filling is quite a different matter.
My point is about the administrative burden in relation to new contracts. I want us to ensure that we protect the section of society that I have been describing. I can envisage us all being visited at our surgeries in the years ahead by constituents telling us that they did not take out insurance not because of the cost but because the form-filling was just too much for them. They will tell us that they regret that, but that there were just too many questions to answer. I hope that the Minister understands why I have framed the amendment in this way. It is an important provision, and I hope that she will address it.
Mr Chope
The hon. Member for Nottingham East (Chris Leslie) has again done the House a service in raising this issue. He has spoken of the need for proportionality. I disagree with the way he has worded his amendment, however, as it is rather hard in law to place a duty on an insurer to “show regard” to a principle. Given all the other qualifications in the amendment, it would, in practice, by unenforceable.
Mr Greg Knight (East Yorkshire) (Con)
Is the hon. Member for Nottingham East (Chris Leslie) not making rather heavy weather of this matter? Will not the market take care of it? If one insurer on its own presented reams and reams of questions, and the others did not, surely the potential customer would simply go elsewhere.
Mr Chope
My right hon. Friend anticipates my next point, which was to say that this should be, and will be, sorted out in the marketplace. Perhaps a new company called Simple Insurance could be formed—if no such company already exists—with my hon. Friend the Member for Cardiff North (Jonathan Evans) as a director. It could promote itself on the basis that it would ask just a few easily answerable questions that would not prove too burdensome. I agree with my right hon. Friend that that would be a better way of dealing with this matter. However, the amendment underlines the fact that many of the forms are far too complicated and intimidating, to the extent that people often tick all the boxes without looking at the small print. That is how many of them get into difficulties. These forms are often not filled in by the persons themselves but by somebody on the end of a telephone. Again, that can lead to difficulties of language or understanding. It is not just my hearing that sometimes makes it difficult for me to understand what people are saying on the other end of a phone when they are seeking information. There are some important issues here, but I do not think that the amendment has proposed the right solution to the problem.
Miss Chloe Smith
I shall answer a few questions. On this amendment, I am indeed with my hon. Friend the Member for Christchurch (Mr Chope) and my right hon. Friend the Member for East Yorkshire (Mr Knight), as I believe that the market will assist us in this area. I shall deal with the amendment principally on that basis.
The amendment, as hon. Members will have seen, would create a duty for insurers to make disclosure requests that are proportionate to the benefits generated. Following discussion in Committee, we return to the issues today; I hope I shall be able to add to what my colleague, the Financial Secretary said there.
There is no disagreement with the principle that the burdens on consumers should be as light as possible. That applies to the group of consumers mentioned by the hon. Member for Nottingham East (Chris Leslie) and, indeed, to all others who wish to purchase insurance. As the amendment rightly recognises, there is a balance to be struck between burden and benefit. The Government believe this balance is best struck by the Bill as it stands, with commercial pressures operating as a factor in that case.
I shall recap those points shortly, but I want to set out some background information on the types of questions currently asked, as I know Members were interested in that topic in Committee. They were particularly interested in the average number of questions asked when consumers enter into different types of insurance policy. I was able to take only a rough look at such things, but for some current policies it can take about 13 to 18 questions to underwrite home insurance and 12 to 18 to underwrite motor insurance. Requirements linked to these straightforward, mass-market products do not on this rough measure appear to be at all excessive. Simply counting questions, however, rather misses the point.
If insurers asked only a single question, this would be far more burdensome for consumers. I think it is much easier to answer a series of short, targeted questions—and this Bill sets out that they must be specific and clear—than it is to answer a single general question like “Has anything changed?” or “Is there anything I need to know?”
The Law Commission undertook a more sophisticated analysis of burdens on consumers, which was contained in its first discussion paper and has informed the development of this Bill. It discovered real problems in 2007 with the questions being asked in life and critical illness insurance. For example, one insurer asked, “Have you had any physical defect or infirmity, or is there any ailment or disease from which you suffer or have suffered or to which you have a tendency?” This seems impossibly difficult to answer and appears to require the consumer to begin at birth and work through every single visit to the doctor. Yet that might qualify as proportionate under this amendment because it is only one question. Reassuringly, there have been significant moves in this sector to improve the questions since 2007. The design of this Bill will further promote this improvement.
It is worth explaining briefly—I think the hon. Member for Nottingham East referred to this earlier—that different consumers face a different set of questions in order to purchase a similar policy by virtue of the channel they choose, whether it be through an aggregator, by telephone or face to face in a broker’s office. There is a need for insurers to tailor the requests they make in these different ways.
The burdens placed on consumers form the nub of the issue, and there is evidence that insurers already pay careful attention to those burdens. It has already been argued tonight that this is partly driven by market pressure, so let me add to those arguments. Clearly, a consumer has the choice to purchase from an alternative provider if disclosure burdens are too high. Indeed, some insurers have advertised products on the basis that they are easy to purchase. Comparison sites consistently study these drop-off rates and try to make the process as easy as possible.
It strikes me that no business wishes to run the risk of losing a customer entirely—the scary scenario that the hon. Member for Nottingham East has set out. No business would wish to do that because it would represent the loss of a customer. We hope that no consumer would wish to be in that position, as they would not then get the security of the product that they are looking for.
There are, of course, some savings to be made for insurers who get the right balance between getting the information they need and making it easy for consumers to purchase their product. The cost of asking another question is not insignificant, and insurers are well aware of that when they design their questionnaires. I refer the House to a PricewaterhouseCoopers report in November 2007, which considered the financial impact of the Law Commission’s insurance project as a whole. It estimated that increasing underwriting by two to three minutes per policy would equate to up to an extra £3,600 per 1 million of gross written premiums—equivalent to around an extra £150 million spent in the UK general insurance market alone. That does not include other costs associated with asking more questions, such as for the gathering and processing of the data. It is clear that there is a strong existing incentive for insurers to ensure proportionality.
I shall deal briefly with the Bill’s other provisions, in case Members do not already find the arguments about market pressures compelling enough to rely upon tonight.
Two further features of the Bill mean that if insurers impose burdens on consumers, they might undermine any right they have to refuse or reduce a claim. Under clause 4(1)(b) an insurer is not entitled to a remedy unless they can show that a consumer’s misrepresentation induced them to enter into the contract—at all or on its current terms. As a result, the Bill creates no benefit for insurers if they ask questions to seek answers on which they would not need to rely. Furthermore, under clause 3, a long and complicated questionnaire might have a bearing on whether a consumer has taken reasonable care not to make a misrepresentation. Insurers are at greater risk of having to pay claims, despite not having been given the correct information, if they make things difficult for the consumer. So in my view, there is no danger that the Bill will place extra burdens on consumers—as a result of those two measures in addition to the market forces mentioned earlier. Our impact assessment does not expect the Bill to result in significant changes to the questions asked by insurers. Rather, the Bill brings the statute into line with existing best practice and regulation. It is fair to say that we are updating the law, not altering the approach of insurers.
I do not believe that it would be beneficial for this Bill to go further than it does by seeking to change practice by prescribing the content and number of insurers’ questions. If we were to prescribe or limit the information insurers were able to seek, it might even increase premiums. Let us take, for example, the recent European Court of Justice ruling—one hon. Member has already referred to it—on the use of gender in insurance pricing, which shows that limiting the risk factors that insurers can use will increase the average cost of insurance.
Creating a duty for insurers in primary legislation would not be the appropriate solution. We continue to work closely with the insurance industry on this issue and with consumer groups on a range of issues. Where there are specific concerns about practice in certain parts of the market, the Government have worked with the industry on guidance. Accepting this amendment and creating a provision is unnecessary. It will throw out the careful balance in the Bill, and it is not the most effective way to make sure that consumers do not face excessive burdens. I therefore ask the hon. Gentleman to withdraw his amendment.
Chris Leslie
I hear what the Minister says, but I do not agree that she needed to dig through the barrel of reasons to resist the amendment. I know that officials tend to list a number of reasons—typically to address drafting or other deficiencies—but when she talks about upsetting the balance of the Bill as a whole simply to place a duty on insurers to show regard to a principle about the imposition of a burden or restriction being proportionate to the benefits, I think she is going a little too far. However, the aim of the amendment was to test the position.
Mr Chope
On a point of order, Mr Deputy Speaker. It has now gone eight o’clock. In an act of indulgence, a number of us allowed the Government to remove the normal constraints on private business so that the three hours allotted to it could begin later than 7 pm. However, it seems to me that, given the prospect of a reasonably lengthy debate on Third Reading of the Bill that we have been discussing, it is open to the Government to adjourn the Third Reading debate until another day, so that the three hours allotted to the private business can proceed immediately.
Mr Deputy Speaker (Mr Nigel Evans)
That is not a matter on which the Chair can intervene. It is a matter for the Government’s business managers to consider.
Third Reading
Miss Chloe Smith
I beg to move, That the Bill be now read the Third time.
I shall do my best to be brief but comprehensive. I think that Members on both sides of the House can agree that the current law relating to pre-contractual disclosure and representation in connection with consumer insurance contracts is unreasonable. I think we can also agree that the alternative practices favoured by regulators and insurers, although not always consistent, give the consumer far better protection from the unreasonable refusal of claims. The Bill updates the law to reflect what has rightly become market practice, and in doing so it clarifies the duties of consumers and how they can expect to be treated by insurers.
On behalf of my hon. Friend the Financial Secretary to the Treasury, who began the process, I thank all Members who have spoken during the Bill’s passage and who have, without exception, recognised that it constitutes a valuable and much-needed updating of statute. We also owe thanks to the Law Commissions, whose joint report on the issue and extensive work has produced a Bill that implements this change with the backing of a wide range of consumer groups, as well as that of the industry and regulators.
The drafters of the Marine Insurance Act 1906, if they are still with us, will not have envisaged the ways in which consumers currently purchase insurance cover for such purposes as their homes, their cars or their health—or their llamas. They will also not have envisaged the existence of the comparison website, and the way in which it requests information from consumers.
In October 2010, a letter with a range of signatures was sent to The Times in support of the Bill. It described the current law as designed to
“govern face-to-face commercial insurance deals in the coffee houses of Georgian London.”
The 1906 Act is not suitable for the modern insurance market, especially as it contains harsh penalties for reasonable failures to disclose or accurately represent information by those purchasing insurance. The Bill replaces the current burdensome duty requiring the consumer to provide all information that might influence the judgment of a prudent insurer with a requirement for consumers to take reasonable care to answer the insurer’s clear and specific questions. It also makes penalties for non-disclosure or misrepresentation proportionate, rather than allowing the insurer to legally void the contract in all cases. Consumers have been protected by the Financial Ombudsman Service—which has been applying those proportionate remedies for some time—as well as by market practice and Financial Services Authority rules, but there are real benefits in aligning the law with that practice.
In some circumstances, the different legal and regulatory positions cause problems for both industry and consumers. At present, the FOS receives about 1,000 complaints a year about non-disclosure and misrepresentation. About half the insurers’ decisions are upheld, a figure we would expect to be much higher if there were sufficient clarity about the rules. That indicates that insurers find it difficult to locate and interpret the relevant rules.
We believe that those two key provisions—the change in the duty of the consumer and the provision of a proportionate rather than a harsh set of remedies for the insurer—shift the balance of the law in favour of the consumer. Some parts of the Marine Insurance Act are heavily biased in favour of insurers, and the Bill attempts to rectify that bias.
Miss Smith
Some estimates have been made, and I believe that my hon. Friend will find some of them in the impact assessment, but I am sure that my hon. Friend the Financial Secretary will be happy to deal with the point in more detail.
The Bill takes a high-level approach, updating the principles set out in law to bring them into line with good practice rather than attempting to set out prescriptive detail. That should help to prevent the law from becoming outdated again as market practice develops.
I hope that Members will accept the advice of consumer representatives who wrote to the Committee—including Age UK, the British Heart Foundation, Consumer Focus, Macmillan Cancer Support, the Trading Standards Institute, Which? and UNLOCK—and will give the Bill its Third Reading.
Chris Leslie
I join the Minister in welcoming the Bill. It was prompted by a Law Commission report in the days when we had a Labour Administration. The recommendations were made back in 2009, and I am glad that the present Government have seen fit to accept them,
As I said earlier, these are incredibly important changes. They put some of the more opaque and obscure elements of common law and voluntary codes into a more statutory form, thus placing them beyond doubt. They update the law in relation to pre-contractual disclosure and clarify the rules about misrepresentation, making a distinction between consumers who, perhaps unknowingly, misrepresent their circumstances, and those who knowingly mislead insurers.
There have been circumstances in which insurers have used the opacity of the common law to take advantage of consumers who were unable to make a claim because they did not disclose a particular aspect of their lives to the insurer at the time of the contract. In some particularly insidious examples, people who had developed cancer or multiple sclerosis were unable to receive insurance payments because, although they had not known that early symptoms might develop into a more serious long-term condition, their insurers told them that they should have mentioned a tingle in their feet, or some other symptom that no one would expect to be the beginning of a more serious disease. I am glad that the Bill will close some of those loopholes.
We do not want consumers to have to have recourse only to the Financial Ombudsman Service to gain redress. The current rules are inadequate, we need the courts to be able to rely on clearer legal statute to clarify the arrangements, and the Bill achieves that. It abolishes the consumer duty to volunteer information in a more general, non-specific way. It also clarifies arrangements for group insurance, life insurance and rules on intermediaries. We therefore think this is an important Bill. I am glad we have touched on some of these important questions, including the state of the motor insurance industry and why more action needs to be taken to help consumers in that regard.
Jim Shannon (Strangford) (DUP)
In this Bill, has consideration been given to the differentials in prices across the United Kingdom? Northern Ireland has the highest insurance premiums in the entire United Kingdom. Is it not time to have the same competition in Northern Ireland—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are now on Third Reading, and questions must be relevant to that stage.
Chris Leslie
That was an important point, however. There are regional disparities in consumer insurance. We tried, through an amendment, to—
Mr Deputy Speaker
Order. The hon. Gentleman is an experienced Member and he should know that on Third Reading we cannot discuss what was not in the Bill. We must make progress.
Chris Leslie
Your strictures are very firm, Mr Deputy Speaker, and I would not in any way want to stray out of order. Suffice it to say that this Bill will, I hope, help all parts of the country, especially the regions where we need to ensure that insurance standards rise.
It is a shame that the hon. Member for Lichfield (Michael Fabricant) is no longer in the Chamber. We were talking about pet insurance, and I did not realise that he owned a llama. Perhaps he has gone to groom his llama.
This has been an important debate, and I am grateful to all Members who have contributed. Although we must keep an eye on the impact of its measures, we support the Bill.
Mr Deputy Speaker
I hope we will have no further mention of the llama of the hon. Member for Lichfield (Michael Fabricant).
Jonathan Evans
You will not hear any from me, Mr Deputy Speaker.
I wish to detain the House briefly in order to place on record the contribution to this Bill of the all-party group on insurance and financial services, which I chair. The group met on 1 December 2010 at the request of the consumer bodies to which my hon. Friend the Minister referred. I am glad the shadow Minister referred to multiple sclerosis, because the Multiple Sclerosis Society was one of the groups that asked us to examine this area of the law.
We were told that this area of the law has, in fact, been under review since 1980. In the 1980s and 1990s the shortcomings of the operation of consumer law were apparent. A scoping paper was produced in 2006. The Law Commission then produced its proposed legislation, but it was not enacted, despite the fact that in 2009 a request to do so was made to the last Labour Government. The reason for that was—[Interruption.] No, this is not a party political point. The reason was that the Association of British Insurers had responded in a letter, expressing its broad support for the recommendations but adding that there were still issues that needed to be addressed
“before we could support the Bill entering the process for uncontroversial Bills.”
That sets the context for the all-party group’s contribution. We had our meeting on 1 December, and we heard from Mr David Hertzell, the law commissioner who is the author of this legislation. He also attended the special Public Bill Committee that was set up as part of this process. We also heard from Mr Peter Tyldesley, a senior lecturer in insurance law at Bedfordshire university, a consultant to the Financial Ombudsman Service and a lawyer at the Law Commission. Both of them told us it was necessary to have the buy-in of the ABI before we would be able to make use of the uncontroversial Bills process.
This is the first Bill that has gone through that new process. As a result, there was no Second Reading on the Floor of the House and there was a mere 29-minute Committee sitting, and in the Lords there was a special Public Bill Committee. That was possible because the legislation is uncontroversial.
Following our meeting with David Hertzell and Mr Tyldesley, we contacted the ABI and it came back within three days clarifying that its letter had been misinterpreted, and that as far as it was concerned the Bill could proceed on the current basis. Within a few weeks, that happened.
As there is a review taking place of all-party groups, I wish to stress the constructive contribution that this all-party group made in this instance. I pay tribute to my colleagues on that group for their contribution to this excellent measure.
Miss Chloe Smith
I thank all Members for their comments on Third Reading and at other stages. This Bill will produce a long overdue update of the law. I am pleased that we all recognise the value it brings for customers as well as the industry. The only final additional point to make is that it is clearly right that our regulators have adopted an approach more reasonable than that set out by the current law, but we need clarity and consistency between regulators and the courts, which this Bill provides.
I commend the Bill to the House, and I hope it will be welcomed elsewhere, as it has been here tonight.
Question put and agreed to.
Bill accordingly read the Third time and passed, without amendment.
Business without Debate
european union documents
London Local Authorities and Transport for London (No. 2) Bill [Lords]
(12 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Bob Blackman (Harrow East) (Con)
I beg to move, That the Bill be now read a Second time.
I am pleased to introduce the Bill to the House. It is promoted formally by Transport for London and Westminster city council, who do so at the request of all the other London boroughs, including the City of London, and through the good offices of London Councils, the representative body. It is therefore fair to say this Bill has the support of all political parties across London.
This is a different Bill from the one we valiantly promoted over the past few weeks, and which my hon. Friend the Member for Finchley and Golders Green (Mike Freer) led on. Sadly, he is unable to be in the Chamber tonight—because he is still suffering the after-effects of the previous debates on that Bill.
Mr Christopher Chope (Christchurch) (Con)
I am sure we are all very sorry that my hon. Friend the Member for Mid Norfolk (George Freeman) is unable to be present. However, I congratulate my hon. Friend the Member for Harrow East (Bob Blackman) on taking on the responsibility, and he will know that that previous Bill has not completed its passage through this House. Discussion of it will be resumed next Tuesday—it is to be hoped at precisely 7 o’clock.
Bob Blackman
Indeed, we will have a series of Bills; as with London buses, once we have enjoyed one, another will follow. I hope we will conclude discussion of the Bill in question next week, and I trust we will be able to start the debate on it at 7 o’clock.
That Bill has proceeded further than the Bill currently being debated, which has been in its gestation period for a considerably extended period.
Mr David Nuttall (Bury North) (Con)
My hon. Friend refers to the other London local authorities Bill. Will he give the House a brief explanation of why there are two separate Bills going through Parliament at the same time?
Bob Blackman
I thank my hon. Friend for that question and although I will not digress at this point, I shall explain further during my speech why there are not only two but three Bills going through almost at the same time.
It is fair to say that private Bills of this type have been promoted regularly by London boroughs for many years. That goes back to the days of the old London county council, of which many might mourn the loss, and to those of the Greater London council, and runs through to the advent of the Greater London authority and the Mayor of London. This is the third Bill to be promoted by the boroughs and Transport for London since TFL came into existence. Separately, the London boroughs have promoted no fewer than 10 London local authorities Bills of their own and TFL has promoted three of its own over the years.
It is therefore fair to say that Bills of this nature are not uncommon—far from it, in fact. I mention that because during our recent debates it has been suggested that London local authorities Bills are somehow different from or new in comparison with what happens elsewhere in the country. They are not new. This form of localism has been practised over many years and it has been so successful that Governments of all parties have taken sections from the provisions pioneered in London local authorities Bills and advanced them in national legislation. For example, the Localism Act 2011, which I strongly support, includes provisions on fly-posting that were first introduced in a London local authorities Act. That demonstrates that what happens in London can subsequently be taken forward nationally.
There has been a long wait for this Second Reading. When I was asked to take on this Bill, I was reminded that we reviewed its provisions at a council meeting in 2006 when I was deputy leader of Brent council, and we initiated this draft Bill when I served on the Greater London authority, although at that stage it contained many more proposals and clauses.
Finally, the Bill was introduced in the House of Lords as long ago as January 2008 and First Reading in this House took place on 28 March 2011. Before I move on to the contents and details of the Bill, it is right to explain why we have had to wait so long for it to come before the House. A threat to the Bill emerged after the House of Lords Opposed Bill Committee reported in March 2009. A group of bodies that represented sporting interests voiced concerns about two clauses that would have enabled London authorities to recover the costs of cleaning streets and imposing traffic regulation measures at sporting and other events. It soon became clear that the sports bodies had very strong support among peers in the other place and the promoters recognised that there was therefore a potentially serious threat not just to the clauses in question but to the whole Bill.
Unsurprisingly, the promoters embarked on a process of negotiation with the sports bodies. It has proved to be a very long process indeed. Without going into all the details, it is enough to say that agreement in principle was eventually reached before the general election of 2010. Although the promoters believed that agreement had been reached with the sports bodies in 2010, a further point of dispute arose, the conclusion of which was not achieved until the beginning of 2011. As part of the agreement, the clauses were removed.
Mr Chope
To go back to the sports bodies who were concerned about the Bill, am I right in recalling that the compromise agreement that caused provisions to be withdrawn from the Bill involved the large football clubs in London entering into an agreement with the local authorities on sorting out the problems of litter emanating from the playing of those first division and premier league football matches? Will my hon. Friend tell the House whether that voluntary agreement has now been implemented?
Bob Blackman
Not only premier league and first division football teams, but other sporting events throughout London were involved. Coming as I do from the Wembley area, I remember the negotiations that had to take place between Wembley stadium and the local authority on the clearance of litter, which was the subject of a section 106 agreement when the stadium was rebuilt. However, not all the stadiums in London are being rebuilt so separate agreements had to be reached with those bodies. It is quite right and should be accepted that huge amounts of litter are generated by sporting events, so why should local council tax payers have to bear the cost of the litter dumped by visitors to stadiums? Voluntary agreements have been reached and my understanding—I am happy to be corrected if I am wrong—is that they have been adhered to thus far and fully implemented across London.
After the general election, the Department for Transport raised a number of new issues with the Bill that required the promoters to give detailed consideration to the drafting in some other respects. The Department asked the promoters not to hold Second Reading in this House until they had responded in detail to those points, hence there was a further delay while the points were ironed out and notice was given of Second Reading last July. Second Reading was objected to by my hon. Friend the Member for Christchurch (Mr Chope) and others.
It became clear at that point that clause 17, which relates to pedicabs, was the subject of strong opposition from all sides, in particular the pedicab industry on the one hand and parts of the taxi trade on the other. Petitions were deposited against the pedicab clauses by pedicab operators, taxi driver representatives and the National Union of Rail, Maritime and Transport Workers. Essentially, one side wanted stronger clauses whereas the other side wanted no clauses at all. Following further discussion between the promoters and the pedicab industry, the promoters have decided that they will not proceed further with clause 17 and they will ask that the Bill is amended in Committee to remove it. In those discussions, it has been agreed that the pedicab industry will take steps towards self-regulation. After that, it will be monitored to see whether self-regulation achieves the requirements. The promoters have been working with the pedicab industry to achieve that and, consequently, propose to withdraw the provisions from the Bill.
Bob Blackman
I understand that the Bill’s promoters will submit that in Committee for the inspection of those who wish to see it. I know that the promoters have written to my hon. Friend the Member for Christchurch and the hon. Member for Hayes and Harlington (John McDonnell), who have specific concerns about clause 17, to inform them of the position.
Let me address the clauses that will be implemented, which cover seven distinct subjects. Clauses 4 and 5 will enable London authorities to attach street lamps and signs to buildings without requiring the consent of their owner or occupier. This will bring the rest of London into line with the City, where the City of London corporation already has those powers. The intention is to avoid cluttering streets with more and more street furniture; that is a particular concern right across London. In response to the points made by the then Minister, the right hon. Member for Doncaster Central (Ms Winterton), in her report to Parliament on human rights, the promoters have amended the Bill. Subsections (3) to (7) of clause 4 now require authorities to serve notice on the owner of the building in question and to take any representations into account. Also, subsection (12) requires authorities to come forward with a statutory code of practice on the exercise of the powers. The provisions on compensation have also been amended in favour of the property owner. Leading counsel’s opinion on the compatibility of part 2 with the European convention on human rights has been obtained by the promoters, and she is satisfied that it is compliant.
Mr Chope
My hon. Friend has not mentioned the petition against the Bill that has been put forward by the Society of London Theatre and the Theatrical Management Association. Are the promoters going to give any further concessions as a result of the concerns that those two organisations continue to express?
Bob Blackman
The promoters agreed to introduce proposals in Committee to exempt theatres from the legislation so that no street furniture will be adhered to such buildings, because of the nature and type of buildings concerned. I trust that my hon. Friend will be satisfied that that particular objection will be fully answered and that no further action will be taken.
Clauses 6 and 7, which deal with damage to highways, are uncontroversial. They will enable London authorities to recover the cost of repairs to the carriageway—not just the footway as the current law provides—where damage is caused by construction traffic. The measures will also enable them to require by way of a planning condition a deposit before construction work commences. That will be warmly welcomed across London, where construction traffic frequently causes damage not only to footways but to the public highway. It is often very difficult for local authorities to recover funding for dealing with that.
Mr Nuttall
My hon. Friend refers to works traffic but will he confirm that clause 6 does not mention traffic? It merely refers to damage caused by work or any activity associated with work.
Bob Blackman
One of the key concerns about damage to highways and footways across London from construction work is about recovering the costs of repair, which otherwise have to be borne by local council tax payers. Those costs should properly be charged to the firms carrying out the work—hence the rationale. However, I will refer my hon. Friend’s comments to the promoters to make sure that this issue is clarified in Committee.
Part 3 concerns builders’ skips and its main purpose is to decriminalise offences relating to such skips, such as putting them out without a licence or not properly lighting or protecting them. Such actions are a menace to road users of all types and the Bill enables the highway authority to require information about who the owner of the skip is in order to determine on whom penalty charge notices should be served. Clause 10 provides that the owner of the builder’s skip will be liable to pay any penalty charge arising from a contravention. Representations may be made against the imposition of penalty charges, and appeals made to an adjudicator, much like the existing parking regime in London.
Part 3 will also alter the powers of the highway authority to place conditions on giving permission for placing a skip on the highway and enable the authority to insist that the skip have lights or a guard, or a system of guarding, as an integral part of the skip. Once again, that is a key part of ensuring the safety of all road users.
Bob Blackman
The key point, which is clear, is that that is a criminal offence and subject to enforcement by the police nationally. The purpose behind the measure is to get to a position whereby the local authorities can impose those penalties and ensure that they are properly and effectively enforced so as to prevent people from committing quite serious offences. This sensible measure, taken in London, might eventually be rolled out across the country. We are talking about what should happen in London.
Stephen Pound (Ealing North) (Lab)
The hon. Gentleman, who has a distinguished record in local government, will have seen the suggestion in the Bill that skips be immobilised. Leaving aside putting a Denver boot on a skip, or somehow restricting the haulage points, does he not agree that immobilising a skip will create a mound of foul, reeking refuse and rubbish that towers above that skip? Surely it would be far more sensible simply to take the damn thing away and hold it to ransom until the owner coughed up.
Bob Blackman
I was about to come to the aspect of disabling a skip on the highway. It springs to mind that local authorities might have a pound of skips filled with stinking refuse that would be unclaimed by any individual.
This is a particularly serious problem. Under the Bill, there is a power for conditions to be imposed on the provision of a skip on the public highway. That is the key point—if it is on the public highway. That will enable the local authority to insist that there are lights in place, or a guard or some other system, when that skip is placed on the highway so as to protect all road users. The local authority will be able to fix an immobilisation device—
Bob Blackman
May I answer the intervention from the hon. Member for Ealing North (Stephen Pound)? The key issue is the fact that a penalty notice will have to have been served on the owner of the skip prior to the immobilisation device being placed on that skip. Quite how the immobilisation device will work I leave to the hon. Gentleman’s imagination and to the ingenuity of London local authorities.
Mr Nuttall
Leaving aside the fact that I am disappointed not to hear how a skip might be immobilised —I was genuinely looking forward to finding out the mechanism whereby that particular procedure will be carried out in London—is it not already an offence to have a skip on the public highway without its being lit by a marking light at night?
Bob Blackman
To clarify, the position is that these are already offences in law. However, as things stand, there is no capability for local authorities to do anything about them or take enforcement action in London. The purpose behind these measures is to enable local authorities to enforce the rules and ensure that penalties are served on those who indiscriminately place skips on the public highway outwith the proper conditions, without proper protection and without proper lighting. The difficulty that a number of London authorities have is pursuing skip owners. Unfortunately, not all skip companies write their name and phone number on the side of their skips. Identifying who is responsible for a skip is often a challenge. These clauses will help to clarify that and give local authorities the ability to deal with those skips. As to how they will be immobilised, I look forward to seeing diagrams of the ingenious devices that will be produced.
Mr Chope
It is inherent in what my hon. Friend says that the police are able to deal perfectly adequately with the problem of skips right across the country. Why do London authorities think they need a completely different regime for dealing with skips, when up to now the police have been quite competent at doing so?
Bob Blackman
I am not one to criticise the police—far from it. The police do a wonderful job in this country. However, I do not want the Metropolitan police to spend their time pursuing skip owners and people who indiscriminately leave skips on the public highway. I would much rather the police were pursuing burglars, muggers and violent criminals, than people who had committed such an offence on the public highway. The measure is much in keeping with the decriminalisation of car parking that was carried out a number of years ago, which led to local authorities imposing car parking controls and ensuring that penalty notices are properly served and car parking restrictions are properly implemented.
Mr Chope
If there is a case for decriminalisation, surely the best way of proceeding would be for the Government to introduce national public legislation enabling local authorities to enter into decriminalisation of these offences if they wish, instead of the piecemeal bottom-up job that my hon. Friend is trying to promote.
Bob Blackman
I thank my hon. Friend for the intervention. I have no objection to the Government coming forward with legislation. I am sponsoring the measure on behalf of London authorities, which all agree that this is a severe problem in London. It may well be that in my hon. Friend’s constituency there is a problem, in which case he can promote suitable legislation there. This is all about proper localism. As I suggested earlier, in the fulness of time other local authorities may also lobby the Government for such measures. This is all about implementing a measure in London, trying it out and possibly rolling it out across the country, as I suggested earlier.
Clause 16 deals with interference with barriers and makes it an offence to open, close or interfere, without lawful excuse, with a barrier that is erected by a traffic authority that is intended to prevent the passage of vehicles or any class of vehicles into, out of or along a highway. There has been no objection to this sensible measure. A number of roads in London are closed off for normal purposes, but there is a requirement that barriers should be movable for emergency vehicles to gain access. Unfortunately, because barriers can be moved, unscrupulous individuals tend to move them. The clause would make it an offence to do so unless one is a proper person duly qualified by the highway authority to do so.
There have been substantial objections to clause 17, which deals with pedicabs. The promoters will seek to drop the clause in Committee. Despite that, there have been a large number of objections. Hon. Members who have been to the west end recently will almost certainly be familiar with pedicabs. They are sometimes known as bicycle rickshaws. They usually consist of a large tricycle with an open carrying cabin to the rear for passengers. They operate to all intents and purposes like taxis, charging fares for what are usually short journeys. They are found mostly in the west end of London and they are currently not regulated in London at all. They give rise to a number of problems, which have been the concern of the promoters and others.
The promoters have decided to ask the Bill Committee to remove clause 17. None the less, I should briefly explain what it would have done. The clause relates solely to traffic management; it does not deal with the safety of pedicabs or the fitness of their drivers—believe me, pedicab drivers have to be fit. The clause would have assisted the councils and TfL in identifying the owner of a pedicab and enabled them to serve a penalty charge notice when a parking or moving traffic offence had been committed.
The clause would have operated only if the councils or TfL already had arrangements in place for a voluntary registration scheme for pedicab owners or if a separate statutory licensing scheme had been enacted. That is because such a scheme would undoubtedly require pedicabs to display some sort of plate that could be used to identify the owner. The clause, in itself, would not have set up a statutory licensing or registration scheme, although there is of course a demand for that in some parts of London. An attempt to introduce a statutory registration system was made in a previous London Local Authorities and Transport for London Bill, but it was rejected by the Committee on that occasion.
Two pedicab companies, Bugbugs and Reliable Rickshaws, have petitioned against the clause, as have the London Cab Drivers Club and the National Union of Rail, Maritime and Transport Workers, which represents taxi drivers. As hon. Members can guess, the petitioners have very different views about the merits of the pedicab trade but are united in their opposition to the clause. Hopefully, the proposed withdrawal of the clause will appease all those who objected, but it will probably satisfy none of them.
Stephen Pound
Some of us consider these motorised rickshaws to be the greatest menace to public safety since Mr Toad first climbed behind the wheel of his Hispano-Suiza touring car. I am amazed that an organisation called Bugbugs appears to have sufficient weight to influence Her Majesty’s Government and speak for this bunch of anarchists in an organised way. Could the hon. Gentleman possibly tell us what the pedicab industry organisation is, because I have not heard of it before?
Bob Blackman
I thank the hon. Gentleman for his intervention. The reality, of course, is that this Bill is being promoted not by the Government, but by London local authorities and TfL. They have been subject to considerable pressure from the pedicab trade, and most of the people concerned are individuals who ply their trade.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
The hon. Gentleman is responding to a key question from my hon. Friend the Member for Ealing North (Stephen Pound). Notwithstanding the obvious disappointment that clause 17 is likely to be dropped when the Bill goes into Committee, does the hon. Gentleman share my disappointment that that means there will be no regulation of that industry, which many people say is an accident waiting to happen?
Bob Blackman
I thank the hon. Gentleman for his intervention. I think that a voluntary system of regulation is needed and should be attempted. If such a system does not work, I am sure that we will return to the matter in a further such Bill in future.
Mr Chope
My hon. Friend will know from looking at these petitions that as long ago as 2003, on the application of Robert David Oddy v. Bugbugs Ltd, the courts suggested that primary legislation would be required. Is he of that opinion? If so, would he suggest that it should apply right across the country, and why does he not start putting pressure on the Government to bring forward that legislation?
Bob Blackman
I thank my hon. Friend for that intervention. Pedicabs are almost unique to the west end of London; I have not heard of or seen any pedicabs anywhere else in this country. In the due fulness of time there may be a requirement to regulate pedicabs throughout the country, but at this point it is specifically a London issue and specific to a distinct part of London.
It is therefore for London local authorities and for TFL to determine what they are going to do. They have responded to London cab drivers and to various aspects of the taxi driver lobby, who share the view of the hon. Member for Ealing North (Stephen Pound) about the pedicab trade, but equally they have understood that the pedicab trade itself has responded in a very—[Interruption.] Ah! The hon. Member for Ealing North is present. The pedicab trade itself has responded by saying that it is being unfairly treated, but we will have to see whether the voluntary system works, and if it does not we will have to return to primary legislation.
Part 5 refers to charging points for electric vehicles and enables London authorities to provide and operate charging apparatus for electrically powered motor vehicles on highways and to permit third parties to do so. The clauses in part 5 set out the procedures for that provision and create an offence of the unlawful use of charging points.
The number of electric vehicles has increased rapidly since the Bill was first thought of some six years ago, and the Government are very much in favour of encouraging their use. I strongly support the use of electric cars and look forward to their being the principal cars on the roads in London in the not too distant future. The Mayor of London has made it a priority to encourage electric vehicles on our roads, and there has been no opposition whatever to part 5, except from the Society of London Theatre, which was concerned about points being placed directly outside theatres.
Mr Lee Scott (Ilford North) (Con)
Does my hon. Friend agree that outside theatres, particularly when they are closing of an evening, we have the menace of pedicabs, as the hon. Member for Ealing North (Stephen Pound) said, that other such vehicles are parked there, that no one can get by or even walk on the pavements and that this proposal could make things worse?
Bob Blackman
I thank my hon. Friend for that intervention. The location of the electric charging points, which is the nub of his intervention, will be the subject of appropriate consideration. It would be foolish in the extreme to site electric charging points where there were going to be huge crowds. I cannot imagine, for example, electric vehicles being charged up outside football stadiums, where crowds would be charging over them. That would not be a sensible siting, and that is why we want sufficient electric charging points to coincide with parking meters, where people are allowed to park, so that, instead, they are legitimately able and permitted to park, they can charge their vehicles at the same time and they can be charged by the local authority for the electricity that they use.
Mr Chope
Following the point that my hon. Friend the Member for Ilford North (Mr Scott) made, does my hon. Friend the Member for Harrow East (Bob Blackman) accept that planning would be a much better regime with which to control the location of such charging points? Why should one not have to obtain planning permission if one wants to install a charging point in a particular place on the highway?
Bob Blackman
My hon. Friend is a great supporter of deregulation and of reducing the burden on business, but I cannot think of anything more cumbersome than having to obtain planning permission for an electric charging point on the highway. I can just imagine the extended time that that would take. The proposal will allow London local authorities to introduce such charging points in sensible and appropriate places, where the public can access them easily and we can encourage the use of clean, green electric vehicles.
I hope that my very brief outline of the provisions of this worthy Bill has persuaded hon. Members of the merits of giving it a Second Reading and minimised the necessity for an extended debate.
John McDonnell (Hayes and Harlington) (Lab)
I congratulate the hon. Member for Harrow East (Bob Blackman) on his succinct account of the Bill. He and I go back a long way with these Bills. When I was a Greater London council member, I was responsible for the promotion of GLC Bills and London local authorities Bills. He may recall that one year we introduced a policy of what we described as positive victimisation, whereby not a penny would be spent in the constituency of any London Member who did not vote for the money Bill. Unfortunately, that somewhat contravened parliamentary privilege, and I was called to the Bar of the House to account for my behaviour. Then, in a civil servant role as chief executive of the Association of London Government, I was responsible for promoting successive Bills on behalf of London local authorities.
John McDonnell
It is. I have delayed the House on these Bills on even more occasions than the hon. Member for Harrow East. I congratulate him on valiantly supporting this attempt by the London boroughs to promote legislation.
I want to deal with clause 17 and pedicabs—or rickshaws, as they are more commonly known. The hon. Member for Harrow East informed us that the promoters of the Bill are seeking amendments in Committee to remove the clause. I have received correspondence from Mr Alastair Lewis of Sharpe Pritchard on behalf of the promoters of the Bill, saying:
“I am the parliamentary agent for the promoters of the above Bill, which is down for a second reading debate next Tuesday 6 March 2012.
I am writing to let you know that the promoters propose to seek amendments at committee stage which would have the effect of removing clause 17 (Pedicabs) from the Bill. This decision follows further discussions between the promoters and representatives of the pedicab industry in which it has been agreed that the pedicab industry will take steps towards self-regulation. The promoters have been working with the pedicab industry to achieve self-regulation and consequently propose to withdraw the provisions contained in the Bill.”
Having read that into the record, I hope that there will now be no attempt not to move the amendments.
I convene the RMT parliamentary group. The RMT, which represents taxi drivers in London, has expressed genuine concerns about the role of pedicabs, as have taxi drivers themselves and people more widely within the community. London taxi drivers consider that there is unfair competition from pedicabs. London taxi drivers go through extensive training, they do the London knowledge, and they are vetted.
Mr Scott
Does the hon. Gentleman agree that it is a deeper issue than whether pedicabs represent competition, because they are also a danger to members of the public? They are dangerous vehicles whose drivers are unlicensed and seem able to do what they want, when they want, and to charge what they want. It is not about competition, but safety.
John McDonnell
There is unfair competition because pedicabs do not have to comply with the legislation that applies to taxis. Fitness for taxi drivers is not about physical fitness, although I am sure they are a strong body of men and women who could compare with any pedicab driver. It is about not having criminal convictions, for example, so that people who step in a London taxi can feel safe and secure. There is no vetting of pedicab, or rickshaw, drivers in that sense. There is a strict safety regime for black cabs in London, but no such regime for pedicabs. The hon. Member for Ilford North (Mr Scott) is right. The more pedicabs are allowed to continue to ply their trade on the streets of London, the more Londoners are at risk. That is why the RMT objected to the proposals in the Bill, which do not provide details of any licensing scheme that would address those issues.
The last time this matter was raised in legislation, the Opposed Bill Committee cited the Department for Transport’s concerns about pedicabs, such as the lack of any safety regime, the impossibility of identifying the owners of the pedicabs, issues over insurance and the fitness of the characters who are operating the pedicabs. The provision was thrown out by the Opposed Bill Committee on the basis that it failed to comply with any of the Department for Transport’s recommendations about the form of the licensing regime that should be introduced.
We are now left with a situation in which clause 17 has been withdrawn and there is to be a discussion with the pedicab industry. I have no idea who that will involve. We have heard about Bugbugs, but we have no idea how representative that company is of the trade. Quite honestly, it could be a group of gangmasters who hire people on cheap work rates, requiring no form of qualifications and no vetting. After the discussion with the industry, a voluntary scheme will be introduced that will be regulated on a voluntary basis.
Stephen Pound
My hon. Friend has mentioned the view of the RMT, which I respect profoundly. The Licensed Taxi Drivers Association also has a firm view about this matter. One of its objections is that these death-trap rickshaws tout for business. I wonder whether my hon. Friend has considered that. They slow down outside theatres and other places of entertainment, touting for business and negotiating prices. That is not illegal according to the Metropolitan police. We cannot simply leave the situation in limbo, because in an hour, throughout the west end, this will happen tonight. Does he agree that action needs to be taken urgently?
John McDonnell
That is exactly the point. Clause 17 is being removed from the Bill because it is not satisfactory. It does not address the issues that were pointed out to the promoters by the Department for Transport and the Opposed Bill Committee of this House. We are now faced with a free-for-all out there on the streets of London, where there are vehicles that comply with none of the legislation that licenses and authorises every other vehicle on our roads. I find that unsatisfactory. It leaves Londoners at risk.
No commitments have been given on how the voluntary arrangements will be devised or who will be consulted. Will all the petitioners against the licensing clause in the Bill be consulted? Will they be engaged in drafting the voluntary registration and regulation scheme? Will there be a wider consultation with the general public? How will the consultation take place and over what period? How long will self-regulation be allowed to operate before the Government decide whether to move to a full licensing regime? None of that has been made clear by the promoters of the Bill.
Like other hon. Members, I find this situation unacceptable. We have been discussing this matter since 2003. Nine years on, we still have no licensing regime and no concept of how the self-regulation regime will be developed and consulted on, how it will be tested, what criteria it will be tested against and when the House will address the issue again.
John McDonnell
Apart from there being too many, as I heard one hon. Member say from a sedentary position, nobody knows how many pedicabs there are, how many people are involved in the industry, how many companies or operations there are, or how many passengers there are. Also, nobody knows how many complaints have been made against the operation of these rickshaws. All we know is that when proposals have been made to discuss pedicabs and their regulation, a considerable amount of concern has been expressed about their operation and about how they should be regulated, if they are to be allowed to continue at all.
There is now strong concern and we are in the worst of all worlds. There is a free for all with no regulation, no licensing and no understanding of how voluntary regulation will work. These pedicabs are out there operating and it is making people vulnerable. There is growing concern and anger not just among taxi drivers but among other road users in the centre of London about the unrestrained way in which pedicab operators work—not only how they pedal through the streets but how they park and clutter up the streets. In some ways, they also affect west end businesses. As much as they say they benefit businesses in the west end and passengers travelling around the area, the more they clutter the streets the more they impede business.
I am pleased that the clause on pedicabs is being withdrawn, but the Government need to take action either to close down pedicab operations, because of the real concern about their safety, or to bring forward a proper licensing and regulation regime. If such a regime is introduced, it should be no less stringent than the one on the black cab trade in London; otherwise, it will undermine fair competition.
I have read into the record the intended withdrawal of clause 17, and if the promoters of the Bill are now going to enter into discussions about self-regulation, I urge them to contact all Members who have expressed concerns about the operation of pedicabs and engage us in a full consultation. In that way, we might find a way forward. After all these years, I would have hoped that the promoters had learned some lessons about how to legislate properly rather than continuing in the same way.
Mr David Nuttall (Bury North) (Con)
As always, it is a great pleasure to follow the hon. Member for Hayes and Harlington (John McDonnell), who speaks with knowledge and experience and represents his union with great skill. As the hon. Gentleman was making his case on behalf of taxi cab drivers, I wondered whether the union had considered recruiting pedicab drivers and offering them union membership.
John McDonnell
The RMT is an expanding union, and Bob Crow is not averse to recruiting new members. However, there is fundamental concern that pedicabs are increasingly proving an unsafe mode of transport in our city centre. It is a matter of principle for the RMT.
Mr Nuttall
I am sure it is, and I can understand that if I were a taxi driver I would be concerned about the matter. However, I am looking at it from the public’s point of view. Do hon. Members who represent London constituencies find themselves inundated by complaints at their surgeries from people who have suffered overcharging or unsatisfactory service by pedicab drivers? If there had been anything more serious than that, it would no doubt have been dealt with by the police.
It occurs to me that if this problem—if it is a problem—were to be dealt with just in the area covered by the 33 London authorities, there is a danger that pedicab drivers would relocate to Birmingham, Sheffield or Manchester, and we would have the same problem there. If there is a need for regulation, it should surely be proceeded with on a national basis.
Stephen Pound
May I open a window into the world of the London MP’s surgery? We do get complaints about pedicabs. They operate in other cities, principally Oxford, but my constituents have two objections to them. The first is the potential for a lethal incident, and the second is the absolute lawlessness and scofflaw attitude of the operators. Recruiting them into a trade union when they are not a member of a trade would be extremely difficult. People object to pedicabs and worry about them, and they want action.
Mr Nuttall
That may well be so, but given that pedicabs have been operating for so many years—certainly for nine years, although one assumes they were operating before that—I would have expected a long list of cases in which people had sued pedicab firms after incurring injuries. I heard an hon. Member say earlier from a sedentary position—or it might have been in an intervention—that pedicabs are a danger.
Mr Scott
My hon. Friend might find that there has been litigation against drivers when pedicabs have tipped over. The people who travel in those vehicles—I use the word “vehicles” very loosely—wonder what pedicabs are insured for. If people get seriously injured, as some have been, they find that the vehicles are not insured at all. These vehicles are a menace on our roads.
Mr Nuttall
I simply repeat the point I have made: if they are a menace in London, or indeed in Oxford, the matter should be dealt with on a national basis and not in a piecemeal way through a London local authorities Bill. As we have heard, pedicabs will not be dealt with in any way at all. We now hear that, having spent all these years on the one clause that might go some way towards dealing with something that someone is concerned about, it will not be dealt with by the Bill. I shall come to that shortly.
I am grateful to my hon. Friend the Member for Harrow East (Bob Blackman) for his introduction and for acting on behalf of the promoters in the House. He has been passed the baton by our hon. Friend the Member for Finchley and Golders Green (Mike Freer), who, I notice, is not in his place. I am sure that my hon. Friend the Member for Harrow East will look to make the same scintillating speed of progress as our hon. Friend the Member for Finchley and Golders Green made with the London Local Authorities Bill.
My hon. Friend the Member for Harrow East referred to the fact that 10 Bills have been promoted by the London local authorities. I do not know over what period, but I assume it is since the Greater London council was abolished—[Interruption.] I now hear that some were introduced before the GLC was abolished. My hon. Friend said that it was not uncommon for a Bill to be promoted in that way, but if I were a London council tax payer, I would ask why some of those Bills were not consolidated and dealt with in a rather more organised way than the current piecemeal and haphazard approach.
We debated a Bill that deals with three or four things last week and we will debate another one next week, and the London Local Authorities and Transport (No. 2) Bill, which we are debating now, deals with six or seven different matters. I cannot see why they could not be brought together in one Bill, but I can see that it provides a good deal of work for the parliamentary agents who draft Bills and prepare the various petitions that are lodged in opposition to them.
What is common to all those London Bills is that each brings with it more regulation, more red tape, more bureaucracy and more rules for Londoners and visitors to London. This Bill has had a very long gestation period indeed. The petition for it was lodged as long ago as 27 November 2007. We have already heard this evening that the discussions and planning go back some years even before that.
The petition was lodged as long ago as four and a quarter years, and First Reading took place in the other place on 22 January 2008—incidentally, the day after the then Transport Minister, the right hon. Member for Doncaster Central (Ms Winterton), wrote a four-page letter to point out that the Bill was defective in many ways. So, even before it reached the First Reading starting gate, the right hon. Lady had written to the Chairman of Committees, Lord Brabazon of Tara, a four-page letter stating, in a nutshell, that the Bill did not comply with the European convention on human rights, not just in one particular but in several particulars. One would have thought that with all their experience of promoting Bills, the London local authorities would at least have got these matters right before drafting the Bill. Nevertheless, the Bill received its First Reading on 22 January 2008.
Not much happened after that, as we have heard, and on 17 November 2008 the other place resolved that the Bill’s promoters should have leave to suspend further proceedings on the Bill until the next Session. This House concurred with their lordships in their resolution on 19 November. Not much happened until Monday 9 March 2009, when a Select Committee of five noble Lords began a three-day hearing into the Bill’s contents and to listen to the petitioners’ objections. There were three petitions in the Lords, which for reasons of brevity I will not go into, although later I will touch on the Commons petitions.
The petitions were dealt with at length over three days, and the result was 119 pages of evidence. One would consider that pretty detailed analysis but unfortunately most of the evidence related to matters not before the House today. The Bill considered by the other place contained many more clauses than this Bill. I think it contained 38 clauses, whereas this Bill has 23. That is quite an attrition rate in the number of clauses in the four years since the Bill was originally introduced. The Committee reported to their lordships on 2 April 2009. Again, however, unfortunately for today’s proceedings, much of what was considered in the report from the then Under-Secretary of State for Transport, the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) has been removed from the Bill in the other place. The hon. Gentleman is now the shadow Minister and is in his place this evening, and I am sure he will recall signing the said document and will no doubt be able to recall its contents exactly. There is very little left worth commenting on from that report and from those three days of detailed examination of the Bill in the other place.
On 29 October 2009—more than six months after that report was presented to their lordships—the House of Lords resolved for a second time to give leave to the promoters to suspend proceedings on the Bill and, if they saw fit, to proceed with it in the following Session. This House concurred with the resolution of their lordships on 3 November 2009. I have to give the promoters of these Bills one thing: they are nothing if not determined. It will therefore be no surprise to the House to hear that the Bill was duly reintroduced, on 19 November 2009.
Yet again, it would appear that nothing happened for several months—according to the official Parliament website, that is—until the Bill was for some reason reintroduced on 28 June 2010. However, as we heard from my hon. Friend the Member for Harrow East, there was in fact a great deal of activity behind the scenes. Great chunks of the Bill were being removed and it was slimmed down to its current state. [Interruption.] I think I said earlier that it had 38 clauses; in fact, it had 39 in those days. Following what we might refer to for present purposes as the Select Committee stage—obviously the procedure is different with a normal public Bill—clauses 4 to 14 were removed, and amendments were made to clauses 16 and 21. Also, clauses 26 and 27 were removed on Third Reading, to which I shall turn shortly. Either way, the Bill was losing clauses at quite a swift rate.
Third Reading took place in the other place on 28 March 2011. It is perhaps worth noting how few people took part in that debate. After four years, one might assume that this Bill had been considered by dozens and dozens of their noble lordships and baronesses; in fact, nothing could be further from the truth. The Bill was considered by just five noble lords in Committee. On Third Reading, it was discussed by just six more. So, as far as I can see, a total of just 11 noble lords took part in the debates on the Bill in the other place.
Mr Peter Bone (Wellingborough) (Con)
My hon. Friend has made an interesting point about the number of Members in the Committee in the Lords. If there were only five present, was there a quorum?
Mr Nuttall
I am grateful to my hon. Friend for that intervention. If it is in order, I will name the five noble lords in question. They were Lord Dahrendorf, Lord Faulkner of Worcester, who was the Chairman of the Committee, Baroness Fookes, Baroness McIntosh of Hudnall and Lord Methuen. I venture to submit that five was the full membership of the Committee, and all five attended the first, second and third sittings. I apologise for not referring to Lord Dahrendorf as the late Lord Dahrendorf, as he has passed away since those proceedings took place. Indeed, so has one of the contributors to the Third Reading debate, Lord St John of Fawsley. He passed away a few days ago. As I have said, very few lords took part in the discussions on the Bill in the other place, and the Third Reading debate lasted for only 48 minutes. For the avoidance of doubt, I should say that the Bill’s previous readings were purely formal and were simply recorded in Hansard. There was no debate on First Reading or when the Committee reported on 2 April.
It is perhaps worth noting the comments of Earl Attlee, who spoke for the Government in the Third Reading debate in the other place. The amendments that had been moved earlier by Lord Jenkin of Roding sought to remove clauses from the Bill. It is slightly confusing, because the Bill has been reprinted since it was originally introduced, and clauses 16 and 17 to which I am referring were those that were in the Bill at the time, and not those that appear in the Bill before us today. The provisions that were causing concern at the time related to the problems, as Lord Jenkin saw them, that had been put forward by the London Cycling Campaign. He went through a number of other petitions. As I say, I shall not go into them here today.
Mr Nuttall
My hon. Friend says, “Why not?” from a sedentary position. I commend the Third Reading report to all interested Members, as it sets out the problems that their lordships saw with the Bill, to some of which they drew this House’s attention. Indeed, they invited this House to look at it again to deal with the problems they had identified in our further consideration.
Earl Attlee said on Third Reading:
“The Government are committed not to create new offences unless it is truly necessary to do so.”
One problem is that the Bill seeks to create new offences. I would accept that in one respect—responsibility and liability in respect of skips transferred from the police to local authorities—but the general thrust of the Bill is to create more rules and more regulation. Earl Attlee went on to say that the Government had not reached a final conclusion about the matter. He said:
“The Government’s position on increasing the burden on business is very clear and we will be considering”—
we should note the future tense—
“whether, in our view, the Bill would create an unacceptable burden on business in order to make our views known before the Bill reaches Committee stage in the other place.”
We may hear more about the Government’s view when we hear from the Minister later.
According to what Lord Attlee said, I understand that the Government had notified the Bill’s promoters that some clauses could be improved or altered by minor amendments, particularly regarding the affixing of street furniture to buildings. One specific suggestion was made—that the owner of the building should be served with a notice, giving the exact date on which the work would begin, and setting out the terms of the use of electric vehicle charging points installed and operated under the Bill’s powers. The noble Lord went on to say:
“We will be seeking to reach agreement on amendments with the promoters before Committee stage in the other place as it is then that the Bill can next be substantially amended.” —[Official Report, House of Lords, 28 March 2011; Vol. 726, c. 1034.]
I emphasise the words “substantially amended”. Clearly, on Third Reading in the other place, the Government had serious reservations.
Mr Bone
My hon. Friend is gracious in giving way. I draw his attention to clause 16 on gated roads, where we seem to be creating an offence that does not need to be made. I see these barriers all over the country. Surely we do not need another law; if they were interfered with, that would presumably be criminal damage in the first place.
Mr Nuttall
I have not yet reached the subject of gated roads, but it is probably possible to pick at random a part of the Bill that creates a new offence, rule or law, to which is attached a fine not exceeding level 3 on the standard scale.
As my hon. Friend says, there are gated roads all over the country, and if that is a problem in the capital city of our great country, it is no doubt just as likely to be a problem on a country road somewhere out in the shires. If the correct way of dealing with the problem is to introduce legislation that creates a criminal offence—which is what we are doing here—it is surely correct to deal with it by means of legislation that covers the whole country, not just the capital.
Many things have happened since the Bill’s introduction in the other place as long ago as 27 November 2007, four and a quarter years ago. For instance, we have had a general election, and the Localism Bill—now the Localism Act 2011—received Royal Assent on 15 November last year. I am sure that several London local authorities have undergone a change of political control since 2007, and I wonder to what extent the promoters of the Bill considered those changes.
The Localism Act gives local authorities a general power of competence. It has completely changed the regime in which authorities operate: they no longer have to seek specific authority from this place to go off and do something, because the Act allows them to do it unless another Act tells them that they cannot. To what extent has that been taken into account by the promoters? Moreover, residents have been given the power to institute local referendums. If this is the problem that some Members think it is—as we heard earlier—I am sure that some residents will be hot on the heels of local councillors with petitions asking for something to be done about it.
After many years of delay, things speeded up after the Bill’s Third Reading in the House of Lords on 28 March 2011, and it appears to have been given its First Reading in this House on the same day. I believe that that is the only occasion on which anything to do with this Bill has ever happened speedily. It has, however, attracted four new petitions, from Bugbugs Media Ltd, Reliable Rickshaws Ltd, the National Union of Rail, Maritime and Transport Workers, the Society of London Theatre, the Theatrical Management Association, and the London Cab Drivers Club. As my hon. Friend the Member for Harrow East said, the promoters of the Bill managed to achieve the rare feat of upsetting the petitioners on both sides. They could not really win. Whatever they did, they were bound to upset somebody. I suspect they have probably reached the right conclusion by deciding to upset both sides and withdraw clause 17.
Let us return to the question of the cost to the London council tax payer. The organisations concerned—private limited companies, trade bodies and, indeed, trade unions—have been put to expense in having to raise these petitions. I dare say the solicitors and parliamentary agents were not acting for nothing; they could have been acting on a pro bono basis, and if they were I am sure someone will rise to tell me so—but the hon. Member for Hayes and Harlington is not doing so. I therefore assume these people were being paid rather handsomely for their good services. These Bills are by no means a no-cost option, therefore.
Over the past four years there has been an attrition rate of four clauses per year. However, only 10 minutes after the start of the opening speech of my hon. Friend the Member for Harrow East, we heard that another clause is to go. We have made good progress, therefore: the first clause went in 10 minutes. If we carry on at this rate, the Bill will be gone in a couple of days—but if we carry on at the same rate as things have been moving since the Bill started its life, we may, sadly, have to wait another six years before it withers away to its natural end.
Mr Chope
My hon. Friend makes an important point. If this Bill had not been objected to and had instead received its Second Reading on the nod, it would not have been possible for its promoters to reflect upon clause 17 on pedicabs, for example. They have now had the opportunity to reflect on that, and have reached a different conclusion from their original one.
Mr Nuttall
My hon. Friend is right. What has happened with this Bill gives the lie to the notion that these proceedings are meaningless and we are just going through the motions. Although only 11 Lords were involved in the proceedings in the other place, very substantial changes have been made to the Bill, and we do not know what might happen after the Bill has been examined in more detail. The three hours that have so far been allocated to Second Reading may well turn out to be rather brief when one considers the history of this matter and how long it has already been going on and what little progress has been made in four years. Any thoughts the promoters might have that a Third Reading could be concluded within three hours may prove to be somewhat optimistic.
We heard in the opening speech of my hon. Friend the Member for Harrow East that despite the fact that the Bill has been on the go for so many years, there are still a number of areas where we have no idea what is being put before us. There is no draft of the agreement relating to the affixing of lamps to theatres. There is no draft of the code. There is no idea of how skips are going to be immobilised. I would have thought after all these years, such basic points would have been covered and the details would be before us tonight.
It seems to me that the Bill is half-cooked and the simplest thing at this stage would be for the promoters to withdraw it and for it to be reconsidered in the light of the Localism Act 2011, the comments made in the other place, the reservations expressed by the Government and the comments that I shall now make.
The Bill is down to just six parts. Part 1 deals with preliminary matters, part 2 effectively deals with the attachment of street lamps and signs to buildings and damage to highways as a consequence of adjacent works, part 3 deals with the law relating to builders’ skips, part 4 deals with two matters to do with road traffic—that is, gated roads, which were referred to in an intervention by my hon. Friend the Member for Wellingborough (Mr Bone), and pedicabs—part 5 deals with charging points for electric vehicles and part 6 deals with the London Local Authorities and Transport for London Act 2008.
Part 1 contains the standard preamble, giving details of when the Bill will take effect, and states that the Bill
“may be cited as the London Local Authorities and Transport for London Act 2009”—
but perhaps 2012 might be optimistic. I shall therefore deal with the provisions on the attachment of street lamps and signs to buildings in part 2, which is the first substantive aspect of the Bill. The explanatory memorandum, which the promoters have helpfully provided, states that clauses 4 and 5 would alter the London authorities’ existing powers to attach street lamps and traffic signs to buildings by bringing them more in line with those of the City of London corporation. It is a “decluttering” measure, making it easier for the authorities to require that signs and lamps are attached to buildings. I would submit that it is not so much a decluttering measure as a moving of clutter from one part of the highway to another in such a way that there might well be some practical difficulties with how it operates.
The requirement in clause 4(4) is:
“Not less than 56 days before the London authority propose to begin the work to affix an attachment or a traffic sign to a building they shall serve notice in writing on the relevant owner of the building of their proposal to affix it.”
Of course, the owner might not necessarily be the occupier of the building. The Bill is silent, as far as I can see, about the definition of an owner. I would submit that the owner would be the owner of the freehold, but I can understand that someone might argue that the owner could be taken to mean a leaseholder or tenant of the building. There might therefore be some legal argument about that clause, which I suspect will need to be considered in more detail in Committee.
Mr Chope
My hon. Friend will have heard what our hon. Friend the Member for Harrow East (Bob Blackman) said about the promoters’ intention to offer an exemption from clauses 4 and 5 for the Society of London Theatre and the Theatrical Management Association. Does he think that that exemption needs to go much wider than just the organisations that have petitioned against the Bill because the points that they make about natural justice and listed buildings could apply to a much larger group of building owners than that particular group of theatre owners?
Mr Nuttall
My hon. Friend makes a welcome and interesting observation. It seems to me that the theatres are being given special treatment because they have particularly deep pockets. They have been able to employ parliamentary agents to prepare and submit a petition, which is before the House, and they have been using a firm in Westminster to prepare representations regarding their concerns. There is a danger that other owners of buildings in London may be somewhat jealous of the fact that London theatres have managed to wangle an exemption from the measures for themselves which many others would no doubt welcome if they could benefit from it. That raises the pertinent point that if it is appropriate for the London theatres to be exempt, why is it not appropriate for other buildings to be exempt?
We know from the petition, dated 26 April 2011, that the Society of London Theatre and the Theatrical Management Association are concerned about the effect that the measures could have on their members. They quoted the Wyndham report, which studied the economic impact of London’s west end theatres. Tony Travers of the London School of Economics was commissioned to do the report, which revealed, in 1998, that the total economic impact of west end theatre on the UK economy had been £1.1 billion in the previous year. More recent data imply that the figure is now approaching £1.5 billion. Some 41,000 jobs depend on west end theatre—27,000 directly and 14,000 indirectly. Those organisations went on to say that, crucially, they operate on very tight profit margins and that anything that could add to those costs is a matter of concern. I am sure that many other organisations and bodies throughout the capital city would say, “Those concerns apply to us as well. We operate on tight margins and anything that might add to our costs would be extremely detrimental.” It is therefore difficult to see at first sight why west end theatres should be treated differently from other organisations that have not petitioned the House in the way that those societies did. Equally, however, one could say that they took the time and trouble to do so and therefore it is only right that they should be granted some form of special treatment.
Mr Nuttall
Yes. I hope that, when the time comes to consider the clause in Committee, some explanation for that is given. Perhaps the code of practice will be available at that stage. It is perhaps a matter of some regret that that document is not available for consideration by the House today to enable us to see how effective that particular code is likely to be.
That deals with clause 4, very briefly. Clauses 6 and 7 deal with damage to the highway caused in consequence of works done on land adjacent to the highway. At first sight, I agree with my hon. Friend the Member for Harrow East that it seems perfectly reasonable that the taxpayer should not be required to pay for damage caused to the public road by those carrying out works on land adjacent to the road, but I wonder whether there is not a better way to do that. I am particularly concerned about small builders, and perhaps people who are not builders at all, but who own land and are carrying out the works themselves. It might come as a surprise to them when they apply for planning permission to build a small extension on their property that they are asked to stump up before commencement of the works in case any damage might be caused to the highway, when the chances are that, although that is a possibility, it will not happen.
I am pleased that clause 7 now appears in the Bill.
Philip Davies
My hon. Friend talks about the merits or otherwise of this part of the Bill, but is not that slightly superfluous? The point is that we all have places in our constituencies where we might be concerned about damage being caused by adjacent works. If that issue needs to be tackled, surely the point is that it should be tackled nationwide and not in a Bill that applies only to London.
Mr Nuttall
My hon. Friend makes a pertinent point. My constituency of Bury North—no doubt in common with his constituency of Shipley, and, indeed, I would be so bold as to venture to suggest, every constituency represented in the House—has at one time or another, and perhaps even at this moment, contained at least one property, although I suspect it could be many properties, with a skip outside it. Therefore, if skips are causing a particular problem in London, I would venture to suggest that similar problems are being caused in every constituency in the land. Indeed, not many days ago I had a skip outside my own property as we were having some small works done. So not only was there a skip in my constituency, but there was one outside my drive.
We have here part of a Bill with clauses 8, 9, 10, 11, 12, 13, 14 and 15 all on the issue of skips. I see my right hon. Friend the Member for Carshalton and Wallington (Tom Brake) in his place. On Third Reading in the other place, his Liberal Democrat colleague, Baroness Kramer, highlighted the faintly ridiculous nature of all this discussion about skips. She said:
“I find it astonishing that the time of this House has to be spent on issues such as the lighting and guarding of builders’ skips. If ever there was an illustration of the need for the Localism Bill, and a more general grant of powers to assemblies and local authorities, this Bill is it.”—[Official Report, House of Lords, 28 March 2011; Vol. 726, c. 1031.]
Since the noble Baroness made that speech, her wish has been granted and the Localism Bill is now law. For that reason, perhaps there is no need for the clause.
Philip Davies
My hon. Friend is very knowledgeable on these matters and he will know that on page 11 the Bill deals with the problem of skips that are not properly lit during the hours of darkness. So that the Bill does not become a solution looking for a problem, does my hon. Friend know on how many occasions there has been a big problem around the country of skips not being properly lit, and how many accidents have been caused by skips not being properly lit during the hours of darkness? Is this a big issue, as far as my hon. Friend is aware?
Mr Nuttall
My hon. Friend makes an interesting intervention. Although it is not a widespread problem, I suspect that there are occasionally cases where a builder might forget to put the appropriate light on a skip. Therefore there is a danger that if a skip is not lit during the hours of darkness, it could result in an accident taking place and a motor vehicle driving into the skip. Indeed, I cannot remember the details and I dread to think how many years ago it was, but when I was in practice as a solicitor, I was once involved in a case where a car hit a skip, and we had to take civil proceedings because there was no light on the skip.
Philip Davies
I knew my hon. Friend was knowledgeable about these matters. I predicted that he would know more about the subject than I do. I have seen nothing on “Panorama” about a big blight around the country of skips not having sufficient lighting or builders forgetting to put lights on them. Does he know how widespread the problem is? It has never been raised with me before.
Mr Nuttall
I have to say that the issue has never been raised at one of my surgeries, and it has obviously not been raised at one of my hon. Friend’s surgeries, but by the sound of it, it is a problem all over London, and even as we speak, cars are colliding with skips. Of more interest is the fact that clause 13 relates to the immobilisation of builders’ skips. I am disappointed that we have not yet been able to hear how those skips are to be immobilised, but I look forward to a future debate when we will find out how that will take place.
I referred in an intervention to clause 16 in part 4. The clause relates to gated roads, and I shall not comment further on that. As we know, clause 17 relates to pedicabs, and it has been placed on the record that the clause is to be withdrawn. Part 5 relates to charging points for electric vehicles. If legislation is needed because of a surge in the number of electrical vehicles, surely it should be considered on a national basis. This is the one part of the Bill where a case could be made for that. The idea that owners of electric vehicles in London will stop when they get to the boundaries of London is faintly ridiculous. As my hon. Friend the Member for Christchurch (Mr Chope) has suggested, the correct way to deal with that would be through the use of planning legislation.
The Bill’s final clause is another new clause that was not in the original Bill. It would repeal provision in, and make minor amendment to, the London Local Authorities and Transport for London Act 2008. My hon. Friend the Member for Harrow East might be able to confirm whether that Act had been a private Bill.
Mr Nuttall
It was a private Bill. Well, there we go. That Bill had not been passed when this one began life, which is amazing, as this Bill is being used to correct that Act. I think I have demonstrated that there is merit in examining these Bills. My very final point shows that even as this Bill was beginning life, the House allowed a defective Bill to be passed. This Bill has been overtaken by events, as I have attempted to demonstrate, and the best thing for it, the promoters and the taxpayers and residents of London would be for my hon. Friend to withdraw it. If he does not, I strongly urge the House to vote against the Bill on Second Reading.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
It is a pleasure to follow the hon. Member for Bury North (Mr Nuttall), who has just completed a very tidy 60 minutes. I congratulate the hon. Member for Harrow East (Bob Blackman) on introducing the Bill. Unsurprisingly, I will be extremely brief. We support the Bill and will do so later this evening. The provisions on de-cluttering, damage to the highway, dealing with skips and electric vehicle charging points are all very positive, as detailed by the hon. Member for Harrow East. We had an exchange on the disappointment about the pedicabs issue, but that will go to Committee and we look forward to discussing it then.
I noted the comments by the hon. Member for Harrow East on football stadiums and litter, which was one of the issues discussed previously. When I read the report of the debate in another place, I noted the comments of my noble Friend Lord Rosser, who referred to Hammersmith and Fulham borough council’s concern about the litter around Chelsea football club. As a West Ham supporter, I have no problem whatsoever with criticising Chelsea. I am not entirely comfortable with agreeing with Hammersmith and Fulham, but for the sake of Chelsea I will make an exception. We are very supportive of the Bill and look forward to its going into Committee for further scrutiny.
The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I congratulate the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) on his succinct contribution, which demonstrates that it is possible to get a large number of points across eloquently within a short period of time. I congratulate the hon. Member for Harrow East (Bob Blackman) on moving the Second Reading of this private Bill and welcome the opportunity of this debate.
I want to make it clear from the start that the Government do not oppose the principle behind the Bill. However, we have some reservations about some of the powers set out in the Bill as currently drafted. Officials from the Department for Transport are currently in discussions with TfL on these provisions, and I look forward to a more detailed examination of them in Committee.
As the hon. Member for Harrow East set out, the Bill would confer a variety of powers on TfL and London local authorities, the promoters. For example, they could provide electric vehicle charging points and recover costs from developers for damage to highways following remedial works. The Government have already notified the promoters of some clauses that could be improved or altered by minor amendments, particularly those relating to the attaching of street furniture, such as lamps and traffic signs, to buildings and the terms of usage of electric vehicle charging points.
Pedicabs were discussed, and it might be useful for the House to know that I asked the Law Commission to carry out a review of the rather convoluted and confused legislation relating to taxis and private hire vehicles, which it has agreed to do. As part of that review, it will also consider the law in respect of pedicabs, so there will be national consideration of the matter.
Norman Baker
The Law Commission is currently holding an open consultation, to which the hon. Gentleman and others can doubtless contribute if they wish, and it will come forward with recommendations later in this Parliament on what in the way of legislation the Government should take forward.
We should also like to ensure that the financial and resource burdens that the new provisions might create for the justice system are properly assessed. The Government will in preparation for Committee seek to reach agreement on amendments with the Bill’s promoters.
Philip Davies
Will the Minister set out why the Government are so much in support of the Bill, given that they are keeping all their Members here late into the night unnecessarily in order to vote for it? If its provisions are so popular with the Government, why are they not bringing forward legislation to introduce those measures throughout the country?
Norman Baker
With respect, it is not the Government who are keeping Members here late this evening.
May I thank the hon. Member for Harrow East again for his introduction? As I have said, the Government have their reservations, which we will explain in more detail in Committee, but with that I welcome his bringing the Bill forward.
Mr Christopher Chope (Christchurch) (Con)
It is a pleasure to follow the Minister, who I am surprised was so brief, because this is an important measure. As he said, his Department and the Government generally are still looking at the detail of it, because they have not had sufficient time to do so hitherto—as the Bill was first brought forward only in 2008. They are therefore pleading with the House tonight, “Please give us a bit more time for further detailed consideration,” and then, when the Bill goes into the Opposed Bill Committee, they will be able to decide exactly what they want.
Given that the Bill’s sponsor, our hon. Friend the Member for Harrow East (Bob Blackman), whom I congratulate on having been given the accolade and responsibility for taking it through the House, has already said that he will seek in Committee to withdraw clause 17, which relates to pedicabs, and given that the Minister himself referred to the prospect of the Law Commission carrying out a review, it seems that if the Bill takes the normal course of such legislation, it will, when it leaves Committee and returns to the House, no longer contain any provisions relating to pedicabs. That is why I begin my main remarks by referring to the pedicabs issue, which raises an enormous amount of interest in London. I have to admit that I have never travelled in one, but I am conscious of the fact that they are among the most environmentally friendly forms of transport—even more so than electrically propelled motor vehicles, which are also dealt with in the Bill.
I note from the evidence that the pedicab industry has produced that most pedicab drivers are self-employed entrepreneurs serving the interests of the people of London and now, as we have heard, of other parts of the country. They have developed a business that meets the needs of the public, and done so totally outside the sphere of regulation, except that pedicabs are propelled by bicycles, which are subject to regulation under the Road Traffic Act 1991 and the Road Traffic Regulation Act 1984.
Pedicabs themselves are not subject to any specific regulation, but this Bill, when it was brought forward, contained definitions of pedicabs which were offensive to everybody: offensive to the taxi trade, to the pedicab industry and, probably, to the people of London—if they applied their minds to the matter. I note that it is now proposed that the pedicab industry should engage in self-regulation and that the promoters of the Bill are making specific arrangements with the pedicab industry to encourage that approach. However, is that consistent with what has taken place before? The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) was particularly brief in his remarks.
Mr Chope
Perhaps. That might be because the hon. Member for Poplar and Limehouse did not want to draw the House’s attention to the fact that the issue of pedicabs was raised when his party was in government and the House was considering the London Local Authorities and Transport for London Bill 2004-05 to 2007-08. I think that I am right in saying that he was a member of the Government at the time. On that occasion, the Government said:
“The clauses relating to pedicabs did not address the concerns the Government had about passenger safety. The clauses made no provision for any minimum standards to be applied to or for any checks to be carried out on pedicabs, their riders, or their operators, nor for any training to be required or for a registration to be refused, suspended or revoked. The Government pointed out that the registration of pedicabs under these clauses could be mistakenly viewed by the public as an endorsement of the vehicle's basic roadworthiness and the character of the rider.”
The then Government took the view that there was a serious problem that needed to be addressed and that the private legislation was not going far enough. Tonight, the Opposition seem to be taking the line that it is probably a good idea to withdraw even the proposals in this Bill relating to pedicabs.
Jim Fitzpatrick
In my very brief comments, I said, as I did in my intervention on the hon. Member for Harrow East (Bob Blackman), that I was disappointed that the issue of pedicabs was not being addressed. There is a challenge here. Were pedicabs to be endorsed by the legislation, people might feel them to be safe, but were they to be scrutinised through the legislation, people would have every expectation that that would make them safe.
Mr Chope
I am trying to interpret what the hon. Gentleman has said. I know that he is probably walking a proverbial tightrope, but he seems to be saying that he would like the provisions on pedicabs to remain in the Bill and objects to their being taken out in Committee. Is that the right interpretation, or would he like the different interest groups, whether they be pedicab supporters or taxi drivers, to interpret his remarks as neutral?
Jim Fitzpatrick
I think that what I said was that we look forward to the Bill going into Committee so that we can look at these matters in some detail.
Mr Chope
Okay. I hope that the hon. Gentleman has the privilege of serving on the Committee so that he can get down to that necessary detail.
On a serious note, if pedicabs are a problem in London—I am not conceding that they are—then the problem will also be apparent elsewhere in the country in many other cities, if not now, then perhaps in future. Apparently pedicabs are already operating in Oxford. Surely that makes the case for saying that if we are going to do anything about pedicabs, it should be in the form of national legislation. That is why I welcome the Minister’s announcement that the matter will be the subject of consideration by the Government, perhaps with a view to legislation if necessary, or if recommended by the Law Commission, later in this Parliament. That is obviously an addendum to the coalition agreement of which we should all take note for the purposes of tonight’s proceedings.
Having dealt with the issue of pedicabs, I think that we must congratulate the pedicab industry on having thrived without regulation for so long. I am sure that it will play an important part in ensuring that those who come to London for the Olympic games later this year will be able to access transport to suit their needs at the time of night when they want it. I suspect that the pedicab industry would never have developed in London in the way that it has if there had been more licensed black cabs operating in the early hours of the morning, when people cannot find a black cab for love nor money in the centre of London. The pedicab industry has filled that vacuum.
I will now return to clauses 4 and 5. My hon. Friend the Member for Bury North (Mr Nuttall) made some important points about those provisions. I referred in interventions to the petition from the Society of London Theatre and the Theatrical Management Association. Those two organisations think that clauses 4 and 5 are framed far too widely and that they do not provide people with a sufficient opportunity to have their representations considered.
Paragraph 16 of the petition states that the Bill
“ought to include provision to ensure that where a building owner does make representations in response to a proposal by a London Authority to affix a street lamp or traffic sign to a building, those representations ought fairly to be considered by an independent third party before the London Authority should be allowed to proceed. Furthermore, the London Authority should be required to explain its response to the representations and the grounds upon which it has come to its decision to proceed with its proposal under clause 4(6)(a) or (b).”
That is an important concern. It applies not only to theatre owners, but to building owners throughout London who will potentially be affected by clauses 4 and 5. I hope that when the matter is considered in Committee, the promoters will ensure that those safeguards are written in and that it is not just the Society of London Theatre that is given an exemption.
Similarly, paragraph 17 of the petition, states:
“your Petitioners respectfully submit that the Bill should further specify how these provisions will affect West End theatres, particularly those which are also listed buildings.”
I do not think that it is only listed theatre buildings that should be the subject of concern, but all listed buildings. I hope, likewise, that that point is taken on board by the hon. Members who have the privilege of serving on the Opposed Bill Committee.
Second Reading is an opportunity to flag up issues that, were the Bill to make further progress, might be the subject of more detailed consideration through amendments on Report, if not in Committee. Without wishing to detain the House for a great length of time, perhaps I can help by drawing attention to one or two issues that I think are worthy of more detailed consideration, if not this evening, then on a subsequent occasion.
The first issue is that of builders’ skips, which is the subject of part 3. A whole part of the Bill is given over to the issue of builders’ skips. People who are following the proceedings of this esteemed House of Commons may wonder why we should spend valuable time discussing decriminalising offences under section 139 of the Highways Act 1980 on a piecemeal basis. Surely it would be much better for the Government to bring forward primary legislation to enable local authorities that so wished to decriminalise those offences. That is exactly the same regime that is operated in relation to parking offences. In effect, local authorities can opt into the decriminalised regime if they so wish.
The precedent that the Bill would set, on which the Minister did not comment, would be that any local authority wishing to decriminalise offences—or in due course any police and crime commissioner who thought that decriminalisation would be a good idea—would have to promote a private Bill. Surely that does not make much sense.
Philip Davies
While my hon. Friend is on the subject of skips, I am sure it has not escaped his notice that as the Bill stands, if a skip is hired out to a person who breaches the provisions of the Bill, it will be not the person who has hired the skip but its owner who is pursued by the local authority. Even though the owner may not have been the person committing the offence, they will still be pursued. They will have to go through the bureaucratic nightmare of trying to recover their costs from the person who perpetrated the offence. Does he not think that that is nonsense?
Mr Chope
I do, and when my hon. Friend the Member for Bury North (Mr Nuttall) referred to the debate on Third Reading in the other place on 28 March 2011, he did not mention what Lord Jenkin of Roding said about the concerns about clause 9(5). He said that it
“provides for a defence of knowingly giving false information about the identity of the owner of a skip. There has to be some way of enforcing Clause 9, which enables the authorities to obtain from the skip company the name and address of the person on whom they can serve a penalty charge notice. If not, the authorities will end up in a position where the whole of Part 3 will be unenforceable.”—[Official Report, House of Lords, 28 March 2011; Vol. 726, c. 1027.]
At the moment, as I indicated in an intervention, we are not aware that the police have any problem whatever in enforcing the provisions of section 139 of the 1980 Act. One wonders why the London authorities are so keen to take on enforcement provisions for themselves and are not content with the existing law, with all the safeguards that were incorporated in it when it was considered as primary legislation by both Houses.
I have referred to the Third Reading debate in the other place, and I note the sad news of the recent death of my late noble Friend Lord St John of Fawsley. It is worth reminding the House that he was a man of great wit, with plenty of good stories. One of them was set out in that debate. I will not read it out, but I do not think it would be out of order for me to recall that he told their lordships of the time he was appointed chairman of the Royal Fine Art Commission by Lord Jenkin of Roding. He said that he held that position for 15 years,
“until the whole of the commission was abolished by fax. Not even the Vatican in its worst days would behave in such a way. When the Orthodox Church got rid of the Orthodox Archbishop of London, it did so by fax. However, it provided a charge: namely, that he coveted thrones.”—[Official Report, House of Lords, 28 March 2011; Vol. 726, c. 1030.]
It is therefore not only in this House that we allow ourselves diversions and indulgences in proceedings on private Bills—they certainly allow them in the other place. The Chairman of Committees took the noble Lord to task only a few minutes later, but, bearing in mind the sad news of his death, I thought it was worth sharing that with the House in case hon. Members have not been looking as carefully at the Official Report as some of us have been.
That brings me to the issue of gated roads and clause 16. The same point arises in clause 16 as arises in relation to other clauses. If we want to introduce criminal sanctions against a
“person who opens, closes or otherwise operates or interferes with a relevant barrier”,
they should apply across the country rather than just in London. That is an issue for the Government. We considered pedlars legislation at length in the previous Parliament, but this is the second Bill this Session in which the question of national or piecemeal, local legislation is a big issue.
Philip Davies
I do not wish to pre-empt my hon. Friend’s speech on Report, but the gated roads provision says that relevant barriers should not be operated or interfered with “without lawful excuse”. Does my hon. Friend have any idea—I do not see such an idea in the Bill—what constitutes a “lawful excuse” for interfering with a barrier?
Mr Chope
I would normally refer my hon. Friend to the terms of the Bill, but he is right to say that there is no reference in it to what is defined as a “lawful excuse”. The only virtue of clause 16 is that it is a short one, so it is easy for gifted amateurs to get to grips with it. There is no definition of a “lawful excuse”, so he is on to a good point and potential grounds for amendments when we have the opportunity to propose them.
As for clause 18, “Charging points for electric vehicles”, had I been asked to predict on which issues the Government and the promoters would have a difference of view, I would not have thought that was one of them. I was interested to hear from the Minister that the Government have concerns. I hope that they extend to why there should be a separate regime for charging points for electric vehicles in London from other parts of the country.
All sorts of things are set out in the clause about the permissions that can be granted, conditions that can be imposed, and charges that can be made. There are also references to the avoidance of liability. Despite all the powers that the London authorities would be willing to give to themselves, they would be keen to exculpate themselves from responsibility and liability, and to give themselves indemnity, as set out in the detail of clause 18, for injury, damage or loss resulting from the charging apparatus.
The mind boggles to think what uses people could make of the charging points if not to charge their electric vehicles. There is obviously sufficient concern, because there is a provision in clause 22 to create yet another new criminal offence—that of unlawful use of a charging point. The details are set out in the Bill, and I encourage my hon. Friends to acquaint themselves with them in case they should ever find themselves unwittingly on the wrong side of this new law, which the Bill’s promoters are so keen to impose on the body politic.
Mr Speaker, you can probably tell that I am full of enthusiasm for the Bill. In fact, I am full of enthusiasm about the prospect of submitting its contents to closer and greater scrutiny. I hope that, in due course, we will have a Bill that is a heck of a lot better than this one and which contains only powers for the local authorities and Transport for London that are needed, justified, reasonable and in accordance with the rule of law. I put those points on the record and thank colleagues who supported me in ensuring that we could debate the Bill on Second Reading, which would not have been possible had we not objected to it consistently over recent weeks and months.
Question put and agreed to.
Bill accordingly read a Second time.
Business without Debate
Rail Ticketing and Overcrowding
(12 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Alok Sharma (Reading West) (Con)
I was recently told a story about Lenin and rail travel. In April 1917, ahead of the October revolution, Lenin arrived by train back in Russia at the Finland station in Petrograd. As he stepped off the train, he was asked by some of his waiting supporters, “Comrade Lenin, why did you travel sitting in the First Class carriage?” Lenin replied: “Comrades, after the revolution we will all be travelling sitting in first-class carriages.” The story sounds apocryphal, and my revolutionary zeal is more muted than Comrade Lenin’s. All I want is for my commuting constituents who travel in standard class to be able to sit, and not stand, in standard class.
Rail overcrowding at peak times and high rail ticket prices affect many of my constituents. I get the message from my constituents in my postbag, and I get the message in person as I commute daily from Reading to London. There are broadly three ways to tackle overcrowding and the high rail fares: first, more investment in new rolling stock; secondly, encouraging train operating companies, through the terms of their franchises, to make more effective use of existing capacity and to think more imaginatively about their product offering; and thirdly a reduction in the rail industry’s overall costs, which will limit future increases in rail fares.
Let us take each of those in turn. I know that the Government recognise very clearly the difficulties faced by rail commuters, which is why they are investing in new rolling stock. I welcome the huge investment in the sector across the country—the largest level of investment in rail, I understand, since the Victorian era. As an example, last November, the Minister announced funding for an additional 48 carriages on First Great Western services running through Reading and the Thames valley, and into London Paddington. By August, Reading will have seen 1,500 extra standard-class seats available during the morning peak and around 1,700 extra standard-class seats during the evening peak hours, which will be good news for many of my commuting constituents—and, I have to say, for me too.
The Chancellor’s decision in the autumn statement to cap rail fares at RPI plus 1% was also welcome recognition that rail commuters need help at a time when household budgets are stretched. The median average gross annual salary in Reading is around £28,000. A season ticket from Reading to London, including the London underground, costs just under £5,000 a year. For many, rail fares take up a very large proportion of after-tax income. That is why getting value for money is absolutely key for rail commuters. Season tickets can cost thousands of pounds, so value for money should very much include being able to get a seat on the train.
Let me turn to the more effective use of existing capacity. Ahead of this debate, I wrote to the train operating companies that operate both first and standard-class services to ask about their policies to deal with overcrowding. That included a request for any statistics they may have on overcrowding, and in particular any information on the number of occasions in the past 12 months when services were deemed to be overcrowded. I also asked about the train operators’ policies on declassifying first-class carriages for use by all passengers when no seating is available in standard class, and for any statistics they may have on the number of times over the past year when a declassification took place.
Some of the conclusions from the responses were surprising. In at least one operator’s franchise agreement, no definition of “overcrowding” is specified, suggesting a lack of consistency across franchises. Most operators were unable to supply any detailed statistics on overcrowded services over the past year. For most operators, individual train managers make the decision to declassify a carriage or a whole train. Again, however, save for one operator, it appears that no data are collected on how many times declassifications have occurred over a 12-month period. From my experience of rail travel over the years, and not just the commute on the Reading-to-London line, I have never once been on a train that has been declassified. Perhaps I have just been spectacularly unlucky.
With many franchise agreements coming up for tender this year and next, and with a rail Command Paper and a fares review imminent, I have some suggestions that the Minister may wish to consider. First, let us aim for longer franchises, which will help operators to fulfil the requirement for more investment in new rolling stock. There also needs to be less prescription on the minutiae of franchises and more focus on measures that matter to passengers. Industry sources have told me that in some cases the format of draft agendas for meetings between train operating companies and the rail regulator have been dictated in franchise agreements. I am not sure how that benefits passengers. There should be more of an obligation to measure overcrowding regularly, against set objective parameters, and to publish these measurements, perhaps on a monthly or quarterly basis. I understand that an annual assessment is made of overcrowding at peak times on the Reading-to-Paddington line. However, that is not necessarily sufficient, given that only passengers on the morning commute, from 7 am to 10 am, are counted. In Reading, some of the most overcrowded trains leave between 6 am and 7 am.
Each operator should clearly set out its declassification policy, and there should be an obligation to record and publish—again, on a monthly or quarterly basis—how often trains or individual first-class carriages are declassified. That level of transparency will undoubtedly help commuters and passenger groups to determine how well train operators are responding to the challenge of overcrowding. Perhaps we should also consider setting out in franchises a minimum ratio for the number of standard-class seats on peak-time trains compared with first-class seats. It is absolutely right that anyone who pays the premium for a first-class ticket should enjoy a premium service. However, there is nothing more disheartening than walking through several relatively empty first-class carriages to reach some very crowded standard-class carriages, with passengers standing in aisles and vestibules. This is not about penalising high-paying first-class passengers, but about getting train configurations right at peak times.
In its response to my queries, South West Trains noted that it offers expectant mothers who travel with a weekly, monthly or longer season ticket the opportunity to apply for a free first-class upgrade if no standard-class seats are available during their journey. I would like to see that extended across the entire rail network; indeed, it could be included in rail franchise agreements at little cost to the train operating companies. That would represent a common-sense approach. Also, where this does not currently happen, I am sure that the scheme could also be extended to include disabled passengers without operators incurring prohibitive costs.
With changing work patterns, and an increase in working from home or more than one location, it also needs to be recognised that not all business commuting requires people to travel every day of the week. Some of my constituents might travel to London only three days a week, and not always on the same three days. However, the only choice they currently have is between buying a weekly season ticket and buying more expensive daily tickets. That does not represent value for money. We need train operators to offer more value-for-money ticketing options, and smart ticketing is very much part of the answer.
Iain Stewart (Milton Keynes South) (Con)
I congratulate my hon. Friend on securing this debate. He has made some excellent points that I heartily endorse. Does he agree that, as well as assisting commuters from Reading or Milton Keynes travelling into London, smart ticketing would assist inward investment to our respective constituencies for passengers who want to travel there on business, albeit not necessarily on a weekly basis?
Alok Sharma
My hon. Friend is absolutely right. Smart ticketing will make a huge difference to his constituents and mine. He is known as a great champion of the commuters in his constituency.
In the autumn statement, the Chancellor announced a £45 million investment to extend smart ticketing across the south-east. As my hon. Friend has just pointed out, smart ticketing could make a massive difference to passengers, and enable train operators to offer multi-ticketing options. For example, the three-days-a-week commuter could benefit from a pay-as-you-go system, but paying the reduced season ticket price, or buy 12 journeys for the cost of 10. There are many permutations that would bring more value for money for passengers.
If franchise agreements are to last for 15 years, they need to be flexible enough to cope with changes to technology, and I hope that that will be factored in. Train operators should also be encouraged to innovate in the way that train classes are categorised. Perhaps some lessons could be learned from the airline industry in that regard. In that industry, many operators now offer a range of options, including premium economy, and I do not see why that could not be replicated across the railways. As an example, Chiltern Railways is experimenting with the option of a new premium economy business zone, which allows passengers to upgrade by paying a supplement of £20. The upgrade includes a guaranteed seat and access to wi-fi, without the extra unnecessary and costly frills of first class. The new service can be purchased without having to buy a separate ticket or pay a full first-class fare. That represents the sort of imaginative approach that I would like to see considered in new franchise agreements.
I am happy to stand corrected, but I understand that it is not currently possible for the same operator to offer differential fares on the same line. Let us take the Reading to Paddington line as an example. A fast service takes 30 to 35 minutes, and a local stopping train takes about an hour, yet there is no difference in ticket pricing between the two services. One could imagine, however, that a significant fare discount for those using only the locally stopping service would be an attractive option for some commuters. In any such scenario, it would be important to ensure that those using the fast services did not suddenly see a huge uplift in their fares. Additionally, for the services to be viable, sufficient rolling stock would need to be available to cover both route options adequately. Longer franchises and the consequent greater requirement for operators to invest in new rolling stock could eventually present an opportunity for them to consider differential pricing.
Finally, I want to cover the reduction of overall industry costs that would in turn lead to reduced pressure on ticket price rises. The McNulty review concluded that UK rail was the most expensive in Europe, compared with some benchmark countries. The review also found scope for industry costs to be reduced by 30% by 2018-19, reflecting the fact that passengers and taxpayers in the UK currently pay an average of about 30% more in fares and subsidy than those in comparable European countries. McNulty noted that the key barriers to efficiency in the sector included the fragmentation of the industry and the current franchising and fare structures. I have already commented on franchising and fare structures, and I agree that industry fragmentation can be a barrier. The planned operational alliance between South West Trains and Network Rail on trains operating out of Waterloo is one way of getting industry players to work more closely together for the ultimate benefit of passengers, and, if it works, it could be a model for others to follow.
I acknowledge the good work that the Government have already done to tackle overcrowding and rising rail fares, but there are imaginative solutions that train operators could adopt to provide much more value for money for rail commuters. I am looking forward greatly to the publication of the Government’s rail Command Paper and fares review and, of course, to the Minister’s response this evening.
The Minister of State, Department for Transport (Mrs Theresa Villiers)
I congratulate my hon. Friend the Member for Reading West (Alok Sharma) on securing the debate, and on his interesting and well-thought-through contribution on the issues that face not only his constituents who commute but rail passengers across the country. There is no doubt that there are significant concerns about overcrowding on a number of routes at particular times of the day, including those used by his constituents. The Government take those concerns very seriously. We also take seriously the problems on routes into a number of cities around the country. That is one of the reasons why, even in these difficult times for the public finances, the Government have prioritised investment in our rail network.
As my hon. Friend has generously highlighted, the programme of capacity expansion to which we are committed is bigger than anything seen since the Victorian era, and a number of the most ambitious and important changes will be taking place in the Great Western franchise area, which serves my hon. Friend’s constituents in Reading.
Our programme includes a new fleet of IEP—intercity express programme— electric and bi-mode trains built in Newton Aycliffe in County Durham; electrification of the lines linking Paddington and Bristol, Cardiff, Oxford and Newbury; upgrades to signalling and train operating systems; provision of an electric suburban fleet; a massive redevelopment of Reading station; Crossrail infrastructure works and rolling stock introduction, including improvements to Paddington; and, last but not least, redoubling the Swindon to Kemble line. All that is on top of the current programme that is delivering the 48 carriages that will benefit the Great Western franchise. I am pleased to say that, as part of that roll-out, two additional three-car trains—class 150s—started in full service on the Reading to Basingstoke line just last week. This releases turbo trains from that route to strengthen the Paddington services and provides a capacity uplift in its own right on the Basingstoke line.
My hon. Friend focused his remarks, among other things, on the reporting system and its relation to crowding levels. We are in the process of re-letting the west coast franchise—and that new franchise will require the franchisee to use automatic passenger count equipment. We will, of course, consider similar provisions for future franchises. I note my hon. Friend’s particular concerns about the regularity of reporting. Franchisees have generally been asked to supply data for at least each quarter, but I acknowledge that modern technology means that more frequent reporting is becoming a more viable option, to which we will give careful consideration. By collecting better data about demand and usage than is available now, we have an opportunity to transform and improve planning in the rail industry.
We are at the start of an intense retendering programme for rail franchising. Through this, we plan to deliver the longer franchises, for which my hon. Friend rightly called, including on the Great Western network. We also propose to deliver greater flexibility to respond to customer demand in a commercial way, within a framework set by the franchise that protects key outcomes for passengers, taxpayers and the economy. That means giving operators more freedom to design service patterns and stepping back from the system that arose under the previous Government whereby timetables were effectively set in Whitehall. We want to see more decision-making power transferred to people who are closer to the front line. I believe that this is in tune with some of my hon. Friend’s remarks, and that these changes will lead to a better match of capacity and demand and better outcomes for passengers.
On 22 December 2011, the Department for Transport launched a consultation on the new Great Western franchise. We will ask bidders to consider how they would strengthen the reliability of services and improve stations and trains. Current franchises already include train planning requirements. For example, we have issued the invitation to tender for the west coast franchise, including obligations on planning timetables and stock in order to minimise crowding on short commuter flows —generally under 20 minutes—and to give passengers a seat on longer journeys. In cases where crowding cannot be eliminated, the new west coast franchise would require the operator to ensure the impact is not unduly concentrated on a single route or service. Every franchise has its own set of circumstances, and the consultation on Great Western explicitly asks for views on how we can best address overcrowding issues on its routes.
Of course, we have to acknowledge that there are many places on the UK network where using existing resources more effectively and efficiently will not be enough to meet the demand for rail. In some cases, crowding problems can be realistically addressed only with infrastructure improvements. It is not impossible for these to be delivered as part of a franchise agreement, particularly smaller-scale projects, and we have included provisions in the west coast ITT to make it easier and to encourage it. Medium and large upgrades will generally require Network Rail or Government funding, which brings me back to the major programme of investment to which I have already referred. Responding to concerns about crowding effectively requires both Government and train operators to play their part.
My hon. Friend made some good points about ticketing. As the number of passengers using our railways each year continues to grow, it is more important than ever for us to get fares and ticketing right. As my hon. Friend said, that was considered in the McNulty review. Our vision of a modern customer-focused railway includes smarter and more transparent fares and ticketing. We want buying a ticket to be a straightforward transaction, not an obstacle course, and we want passengers to be able to choose from a range of fares that are designed to meet their needs without having to understand every nuance of the underlying fares structure.
Like my hon. Friend, I recognise the benefits of smart ticketing. I acknowledge that the technology presents the possibility of more flexible season tickets, and we intend to explore it as part of our forthcoming fares review. The season ticket model has remained largely unchanged for many years, and I agree that we need to update it to reflect modern patterns of work and travel and the fact that increasing numbers of people no longer work the traditional nine-to-five, Monday-to-Friday week.
Rail ticketing can contribute to our efforts to support a more flexible working culture, as well as removing barriers to entry to the workplace by, for example, women who are weighing up the costs and benefits of returning to work after having children and are considering part-time work. The smart ticketing technology that is now becoming available could deliver a range of new types of ticket, with the potential to transform the way in which we think about and pay for rail travel. I assure my hon. Friend that the Government take the wider roll-out of smart ticketing very seriously. Indeed, that is partly why £45 million was recently committed to the development of flexible smarter ticketing on routes in the south-east.
My hon. Friend mentioned the Chiltern business zone product that runs on some services between London and Birmingham. That is the sort of passenger-focused innovation that we want train operators to consider when operating within the framework of the longer, more flexible franchise agreements that we will be rolling out as part of our reform of the franchising programme, because we want them to encourage more passengers on to trains when they have the capacity to get the best use out of rolling stock.
As I have said countless times at this Dispatch Box, I consider it vital for the cost of running the railways to come down. I agree with my hon. Friend that that is essential if we are to respond effectively to the concern expressed by passengers about the level of fares, in his constituency and in many other parts of the country. It is also the only viable means of delivering an end to above-inflation fare rises. It is fair for passengers to contribute to the cost of running the railways and to the coalition’s massive rail improvement programme, and the fares that they pay are making an important contribution to that; but neither fare payers nor taxpayers should have to pay for industry inefficiency.
In line with the recommendations in the McNulty report, we believe it is crucial for those responsible for track and for trains to work more closely together. A crucial part of delivering cost reductions is ensuring that both sides of the rail industry are subjected to strong shared incentives to reduce costs and improve services, and we will therefore expect train operators to deliver closer working relationships and alliances with Network Rail as part of wider efforts to deliver the savings that the McNulty study concluded were possible.
As my hon. Friend anticipated, we will shortly publish a policy statement—in the form of a Command Paper—on rail reform, reducing the cost of the railways, and improving services for passengers. It will set out a strategy for an affordable. sustainable, safe and high-quality railway that will deliver a better deal for both taxpayers and fare payers. I encourage Members to read the Command Paper when it is published, and to respond to the fares and ticketing consultation that we will be launching shortly. It is important that the concerns of their constituents are heard loud and clear as we take forward the crucial process of not only improving and expanding capacity on our railways, but reforming them in order to deliver lower running costs and better services for passengers.
Question put and agreed to.
Ministerial Correction
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Treasury
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Miss Smith
In the quarter to January, there were 11,000 vacancies across the economy, meaning that 1 million people moved into work.
[Official Report, 5 March 2012, Vol. 541, c. 679-80.]
Letter of correction from Chloe Smith:
An error has been identified in the response given to the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson).
The correct response should have been:
Miss Smith
In the quarter to January, there were 11,000 vacancies across the economy, and in total 1 million people moved into work.
Westminster Hall
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Manufacturing and Engineering
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Neil Carmichael (Stroud) (Con)
It is a great pleasure to see you in the Chair, Ms Clark, not least because we are both on the much-loved Environmental Audit Committee, where we have some fun, as well as doing some serious work. [Interruption.] It is always good to set the scene and to highlight co-operation.
It is also great to see the new Minister. I congratulate him on his appointment to an important place—the Department for Business, Innovation and Skills. It clearly has some important tasks ahead, so I wish him good luck and good fortune.
This is a timely debate, not least because the north-east has just had the good news that Nissan is making a massive investment in the community of Sunderland. Incidentally, that investment was supported by the regional growth fund to the tune of £10 million, which is great news. I come from the north-east, and I know that people in the area are particularly pleased with the way Nissan has supported employment and contributed massively to our export position over a number of decades.
The debate is also timely because the Engineering Employers Federation conference is under way today. That is emblematic of the importance of manufacturing and engineering. The Leader of the Opposition will say a few words there, but so, too, will the Chancellor of the Exchequer. That is obviously worthy of mention.
Before I go into the meat of what I want to say, it is critical to underline the importance of the Government’s deficit reduction programme, which will lead to stability in the economy and to low interest rates. We cannot talk about rebalancing the economy if interest rates are not low enough to encourage investment and to support long-term, sustainable economic development. Fundamentally, our macro-economic policy is absolutely right, and we should rest every other argument on that central point.
In April, I am holding a festival of manufacturing and engineering in my constituency, and I am pleased to say that the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), is coming along to open it. The festival will run for five days, and I have three reasons for holding it. The first is to celebrate manufacturing and engineering in my constituency, because we have a large number of very effective firms making high-added-value, innovative products that are often destined for export.
The second reason I am holding the festival is that I want to create an environment in which people feel they want to invest even more in my constituency. It is necessary to point out where we are strong and to say that we can be stronger, with appropriate support.
The third reason I am holding the festival is that I am obsessed with the idea that young people need to be channelled towards manufacturing and engineering when they think about a future career. We have to make it clear that young people should think about manufacturing and engineering. They should do that for themselves because manufacturing and engineering would be a good prospect for them, and they should do it for the economy because it is absolutely necessary that we have the people with the right skills.
Jack Lopresti (Filton and Bradley Stoke) (Con)
I congratulate my hon. Friend on securing this important debate. On apprenticeships, is he aware that 30% of the senior management at Rolls-Royce, which has a large facility in my constituency, started their professional lives as apprentices? That demonstrates what a fantastic career people can carve out in manufacturing. It also clearly demonstrates social mobility in action.
Neil Carmichael
My hon. Friend is absolutely right, and I will talk about apprenticeships later. I notice that he has Airbus literally around his neck—its name is on his lanyard—and that is a signal that he understands the importance of large firms such as Airbus and Rolls-Royce in developing our manufacturing and engineering.
The programme for my festival will include investment. I will, for example, highlight the good work of Handelsbanken, which is an effective bank; I have mentioned it on the Floor of the House in connection with investment. We need the right banks—ones that know and understand the sectors they are trying to invest in and the people they are investing with. It is a question not simply of checking out the assets and borrowing against collateral, but of understanding business planning and recognising opportunities for business growth.
Next, the festival will talk about supply chains, which are critical to the economy. It is all very well saying that things are made in Britain when a large number of those things contribute to a bigger thing that is perhaps made in Europe. The importance of supply chains—certainly to my area—cannot be underestimated. The same applies to Wales, Scotland and all parts of England, and it has to be understood. I therefore welcome the measures that the Government are taking to promote good supply chains.
We will also have to talk about women in manufacturing and engineering. We cannot go on with just 2% of girls thinking that physics is a good subject to take; we have to encourage more girls to take it. If we check the economies that are doing as well as, or better than ours, we see they are better at recruiting women into manufacturing and engineering, and we have to do the same.
I am also going to talk about energy and recycling, because such new technologies are important in generating ideas for the future.
Last but not least, we have to get into schools to make sure that they are properly linked to business and that there is a proper interchange of ideas and understanding. We cannot have schools simply saying, “We’re not interested in business, because that’s beyond our ken.” Instead, we have to make sure that schools fashion their courses in ways that encourage pupils to get involved, and interface with, the world of manufacturing.
David Simpson (Upper Bann) (DUP)
I agree entirely with what the hon. Gentleman has said, and I congratulate him on obtaining the debate, but does he agree that we urgently need to look at the cost of doing business? I was in the manufacturing business for more than 30 years, and the cost of manufacturing in this country has gone through the roof. Something needs to be done to help businesses to export and manufacture more.
Neil Carmichael
The hon. Gentleman is absolutely right. That is at the nub of the issues I am coming to. I thank him for his intervention, and I am grateful for his support.
Lots of firms are supporting my festival of manufacturing, and I should name them because they are doing a huge amount. Renishaw is a fantastic engineering firm with factories in my territory. It is really innovative and good at coming up with new products, and it is determined to promote exports. Incidentally, it is also interested in the protection of patents.
There is also Nampak Plastics. One would not think that designing milk bottles was an engineering activity, but it is. Nampak has come up with a milk bottle that is incredibly handy in terms of getting it out of the fridge, but which also uses recycled plastic. Another firm is BPI, which is very effective at turning farm waste products, such as silage wrap, into raw materials for firms such as Nampak to use. WSP—formerly part of Milliken—is the world’s best manufacturer of tennis ball covering and snooker table cloth. It operates in one of the oldest mills in my constituency, and it is a fantastic firm.
There is also Omega, which is a great recruitment firm in the technology sector. I have already mentioned Airbus. Although it is in Filton, near Bristol, it is also supplied by firms in my constituency. That underlines the point that I made about supply chains. Finally, there is Delphi, which makes virtually all the injectors for large, heavy lorries, and it is in Stonehouse.
The policy areas that I want to talk about are straightforward. To begin with banking, I have already mentioned the need for responsive local knowledge, with more emphasis on the plan than on assets, and I want to ensure that the reform of banking, through the Vickers report, brings that about. We must be certain that high street banks and new banks, with new approaches to investment, will be more flexible, and more willing to take early investment decisions. I would suggest that anyone who does not think that is important should go to Germany and ask businesses there what kind of banking they have. They will say that it is exactly what I recommend, and that that is one reason why German firms get started and keep going.
Jeremy Lefroy (Stafford) (Con)
On that point, does my hon. Friend recognise that in Germany the top four banks account for some 13% of lending to businesses, whereas in Britain the figure is 84%? That gives an idea of the diversity of banking in Germany, which obviously has a more successful manufacturing sector than we do.
Neil Carmichael
That is right, and a good point, which underlines the one I was making. I like statistics that do that, so I thank my hon. Friend. We simply must make sure that we have that kind of range and opportunity.
I wanted to discuss planning. We need a cultural change in local authorities. They must start to think in terms of economic growth, as well as slapping up houses, so to speak. We cannot have them being awkward about business planning applications. I came across a good example yesterday, relating to investment in our super-broadband highway. Too often planning authorities stand in the way of the very investment that is needed, by being awkward about granting planning permission; that is something we must deal with.
Procurement is the next area I want to mention. There is another great firm in my constituency: DuroWipers makes the best wipers imaginable for battleships, or any ships, in really rough weather. They will not break. What does the firm want? It just wants better access to the big buyers such as the Ministry of Defence. We say that we want small businesses to have that access, and we must make sure they get it. DuroWipers is a good example of the kind of firm that would benefit enormously.
My hon. Friend the Member for Filton and—
Neil Carmichael
Yes. My hon. Friend will have to speak up, because I am a bit deaf. He talked about apprenticeships. Training and skills are critical. In virtually every firm in my constituency where I have talked to people, they talk about that. ABB, a global leader in power transmission and distribution technologies, is a good example. In Stroud—in Stonehouse—one of its biggest factories employs 250 people and makes gear for the water and power industries. Sixty per cent. of its products are exported, so that is an example of success not just for local employment but in the sense of reaching out to markets. That firm keeps telling me that we must narrow the STEM skills gap—science, technology, engineering and maths—and it is right to say that.
That is a critical fact, and it means we must focus on maths and science in schools. We must ensure that pupils have access to good teaching, and that they get results that they are comfortable with, so that they can look for the jobs that are available, which will be good for them. That underlines the point I made before—but it keeps coming up in business—about the need for more contact with schools, and the need to get in early, to encourage young people to think of manufacturing and engineering.
One thing that I would like—I am not sure that we will get it, but the Budget is coming up, so I shall mention it—is national insurance relief for companies that support apprenticeships. That is an interesting idea and I am putting that marker down now. We need an update of careers advice, so that careers advisers are fully aware of the opportunities in manufacturing and engineering. Of course, ABB has had some successes in apprenticeships, because one of its apprenticeships is currently in the final of the Gloucestershire Apprenticeships Awards. That is great news; such local recognition is important to businesses and shows what good value apprenticeships are.
The Government have taken some great steps on research and development, but we must be sure that we do the best we can for those who are interested in it. It is true that the manufacturing sector, contains a large research and development sector, and that many firms produce groundbreaking products, but we must carefully manage the transition from academic research into the production of useful commercial products. I referred earlier to patents, and to firms such as Renishaw, which has a good relationship with academic organisations. However, we must think carefully about the question of patents. We need to ensure that the relationship between the academic and business worlds is mutually beneficial, and that it encourages the right degree of investment.
Jack Lopresti
Just for the record, my constituency is Filton and Bradley Stoke. My hon. Friend and I are virtually neighbours, so he should remember.
I wanted to ask whether my hon. Friend recognises the importance of university technical colleges in increasing the range of training and opportunity for young people, and providing the link between business, manufacturing and the education sector.
Neil Carmichael
I thank my hon. Friend for his correction about the name of his seat. I was slightly confused about it, because I know it is getting a new name in the boundary review, and I was discussing that with him yesterday. I apologise for my misunderstanding.
My hon. Friend is right. The UTCs are important. I fully support that initiative and I know that Lord Baker has been pivotal—as, indeed, has Lord Adonis—in supporting those projects. We want more of them. In my constituency, I have been vigorously promoting the engineering centre in Stroud college. Funnily enough, there is another link there with the constituency of my hon. Friend because the college has merged with the one in Filton—and quite right too, because is a good strategic alliance. The point I want to make is that it is necessary for engineering to be promoted in organisations, including colleges.
Mr Iain Wright (Hartlepool) (Lab)
I am enjoying the hon. Gentleman’s speech immensely and agree with much of it. What does he think about the decision of the Secretary of State for Education to downgrade the status of the engineering diploma? How will that help to promote engineering among young people?
Neil Carmichael
I thank the hon. Gentleman for that interesting intervention. Alison Wolf’s report is clear on the need for proper training in STEM subjects before beginning to worry too much about qualifications. It is right that there should be qualifications in engineering—and those are available in Stroud—but, as I have said, the STEM subjects need to be rigorously promoted in schools and colleges. Alison Wolf made a strong case for taking that line, and I hope the Government will pursue it with rigour.
I want to return to the subject of ABB, which is a member of the Enhancing Value taskforce launched by the Council for Industry and Higher Education. A report is coming out in July on how to make the most of UK research. I hope that the Government will read it and draw lessons from it, if it contains significant lessons; judging by the quality of ABB, I am sure that it will.
No discussion of engineering and manufacturing can fail to include a mention of the European Union. It is critical that we should recognise—as the Prime Minister did yesterday, powerfully—that 40% of our exports go to Europe. We are attached to Europe through all the supply chains that I have mentioned, and we must recognise that, in relation to trade development, Europe is a powerful magnet for interests and a strong promoter of our interests globally. A key point that came up in The Economist this weekend is the need to ensure that small firms can become big firms. We must look carefully at how the European Union is regulated and remove any barriers that prevent a small firm from growing.
Glyn Davies (Montgomeryshire) (Con)
I thank my hon. Friend for allowing me to intervene and to associate myself with his speech, almost all of which I agree with. The point he makes about small firms becoming large firms is crucial in a rural area. Manufacturing can be a key part in promoting a rural economy. I have spent quite a long time involved in this industry. In mid-Wales, the proportion of manufacturing has grown over 20 years from about 7% to 25%. In an imbalanced economy in which financial services are dominant, a concentration on manufacturing can be particularly beneficial in a rural area. Does my hon. Friend agree with that assessment?
Neil Carmichael
Definitely. My own constituency is rural. I have been celebrating, and will continue to celebrate, manufacturing on my patch. I have made it clear that there are still great opportunities for developing manufacturing and engineering in my rural constituency. The issue is to ensure that the right infrastructure is available, which I will come on to shortly.
Let me just finish the question on the European Union. The EU matters to us; we need to be there to promote our economic interests and the interests of our manufacturers and engineers, but the terms of the debate about Europe sometimes become confused. It is essential that we recognise, understand and promote the fact that Britain is part of the European Union and that Europe is a place in which we can and should do business in the most unregulated and appropriate way. We need to send out a signal to our businesses that we are behind them in that project.
There are one or two measures that I wanted to cover, but many of the interventions have already touched on them. One area of Government policy that has not been mentioned is the role of local enterprise partnerships. My own in Gloucestershire is doing some useful work in analysing the needs of businesses, the supply of skills, and the supply chain issues in connection with business. LEPs should work well with local authorities. As it happens, ours is coterminous with Gloucestershire county council, which is doing a huge amount of work in promoting economic development in our area.
A £100 million investment programme is under way and is geared towards focusing on better skills, which is consistent with the work of the LEP. It is also geared towards infrastructure. It has already contributed to the campaign to redouble the Swindon-Kemble line, which will improve the speed and quantity of our rail links, thus ensuring that we have infrastructure that is fit for purpose. It has also invested £7.5 million in broadband, to which I have referred. It is absolutely brilliant that our county council and LEP have a local focus. Critically, I applaud the Government for creating LEPs and for ensuring that local authorities work together and have a duty to co-operate in developing economic growth.
James Morris (Halesowen and Rowley Regis) (Con)
I congratulate my hon. Friend on securing this debate. He is making some important points about local enterprise partnerships. The black country LEP, which covers my constituency, has been instrumental in developing a skills agenda for the area, which is absolutely vital, and in getting investment into the i54 enterprise zone. Some £500 million of investment has come from Jaguar Land Rover, which is already having a big impact on the automotive supply chain in the west midlands. I went to visit the high-tech engineering firm Sandvik in my constituency. It said that demand for its machine tools is at a very high level, so I commend the black country local enterprise partnership for the work that it is doing in my area.
Neil Carmichael
I thank my hon. Friend for his appropriate and useful intervention. The fact of the matter is that we need a degree of co-operation; we need to work together. Business has recognised that partnership is a good thing. However, there is also a need for competition, so we need to strike the right balance between the role that Government agencies perform, which is largely through partnership, and the role that businesses perform, which is largely through competition. We need the right framework for partnership and for competition. That is how we should look on our relationship with the European Union, the Government and the local authorities.
As I come to the end of my speech, I must say that I am overwhelmed with this general sense of agreement. That is a message that I will promote not just here to the Minister but to my constituency. I am quite determined to ensure that Stroud is on track for economic growth and, broadly speaking, that the whole of Britain is too. The key issue is ensuring that our businesses can have access to the appropriate investment. We need to work hard to get the banking sector right so that that happens. I urge the Minister to think carefully about that. It is necessary to redouble our efforts to ensure that the STEM subjects have predominance in the school curriculum. It is no good just talking about manufacturing and not actually ensuring that young people are enthused to become involved in that critical sector.
Whenever I visit factories in my constituency, I am always struck by the cleanliness, the modern sense of technology, the new approach, the research and development and the fact that young people would, if they ever got there, be really impressed and encouraged, which is why it is so important that schools have a strong and sustained relationship with the world of business.
Finally, we ignore our relationship with the European Union at our peril. We must recognise that manufacturing and engineering are a core part of our country; they need to be grown, nurtured and developed. We can do that by having good relationships with the European Union—Germany, France, Italy and elsewhere. That is the key point on which I want to rest. I thank all hon. Members for listening.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
I congratulate the hon. Member for Stroud (Neil Carmichael) on securing this debate, which is crucial, given the stage we are at in the manufacturing cycle.
Let me start with an apology. I will be extremely brief because I have to attend a Select Committee at 10.15 am. I am extremely disappointed by the Opposition’s lack of interest in manufacturing, which is, I think, a result of the political selection processes in our party. We do not have enough people with a manufacturing background sitting on these Benches—not just the Opposition Benches, but the Government Benches. That has manifested itself in the attendance here today. I welcome the Minister to his new position and wish him every success for the future.
I have spent almost all my working life in manufacturing, whether it be in the shipyards of Glasgow, or working for the defence company, Barr and Stroud, which is now Thales, so I understand the importance of engineering and manufacturing. I take the simple view that we in this country will not survive by cutting hair alone. We need a strong manufacturing and engineering base.
The hon. Member for Stroud touched on the importance of apprenticeships. The previous Labour Government rightly focused on the need for education, and the need to get people into university. We have now reached a level where we need the same resources put into non-vocational skills, and we need to get people back into manufacturing.
Manufacturing is not seen as a sexy industry. In my time working with Thales, I saw many examples of young people coming into engineering as, say, lathe turners only to be seduced into the collar-and-tie side of the section—the buying section, the materials section, or whatever. They would not stay on the engineering side of the business, getting their hands dirty. However, I must say that I am greatly encouraged by the number of young women coming forward to become involved in high-tech engineering. Apprenticeships are extremely important if we are to survive as a country.
The other issue that I want to raise is procurement. Successive Governments have been dismal in using their procurement muscle to secure contracts and jobs. There is no worse example than the contract for the recently announced MARS project, for which, apparently, no British tenders were received. For the sake of Hansard, I should say that MARS is the military afloat reach and sustainability programme. I genuinely believe that there must be an inquiry into why British companies are not tendering for such contracts. I believe that, these days, some of our defence companies are becoming rather snobbish, in that they only want certain defence contracts on the high-tech side—contracts to build ships or whatever. The MARS ships will be massive supply carriers. As I have said before, when I was a shipyard worker, when I woke up in the morning I did not really care what I was building as long as I was building something, keeping myself employed and looking after my family.
I am extremely disappointed that we are losing the MARS contract to South Korea, a country that almost destroyed British shipbuilding in the 1960s and 1970s. Here we are again, going back down the road of giving contracts to foreign competition, such as South Korea. That could seriously damage our shipyards, because there are gaps coming up between the contracts for aircraft carriers that could have been filled by the MARS project contract. For us to surrender that contract and for none of our major defence contractors to have tendered for it is disgraceful; questions should be asked.
Jeremy Lefroy
Does the hon. Gentleman agree that it is absolutely vital that this country maintains a major shipbuilding capacity, and that we cannot simply let it go?
Jim Sheridan
The reality is that we live on an island; we therefore depend on ships, not just to supply us, but to defend us. It is important that we invest in skills in shipyards, and that we get people back into working in shipyards. I was there when the shipyards were almost closed in Glasgow and Govan; if it was not for Government intervention, they would have closed. I am pleased that they are now thriving, but there is still some work to be done. The hon. Gentleman is absolutely right that we need to invest in shipbuilding.
I want to touch on the issue of Europe. My other experience is of a situation that I found myself in with regard to the Ferguson shipyard, a very small shipyard at the tail of the bank on the River Clyde. That shipyard almost went out of business because of European legislation. Ferguson plays by the rules, as most British companies do; it listens to the civil servants who tell them what to do, while the French, Germans, Polish and others find ways—including by being economical with the truth—of getting shipbuilding contracts at prices that British companies such as Ferguson just cannot compete with. That is something that, from a European perspective, we need to find out about.
I spoke to the management of Ferguson at the time, who said quite clearly that bids for contracts were being tendered by Polish companies that were clearly using European objective 1 funding, and that under no circumstances could Ferguson compete for them; even if Ferguson would not make a profit from the contract, it could never have had any impact on the contract process at all. Again, we need to look at the legislation surrounding Europe, and see how we—and everybody else—compete within Europe, to make sure that we are operating on a level base and are not being sidetracked by people who are being economical with the truth.
The other issue that concerns me greatly—it has already been referred to—is the supply chain. Big multinational companies can survive, but the supply chain to those companies is crucial. I have found that small and medium-sized enterprises experience problems not just with banks—although the banks are important, in terms of lending money to make sure that companies survive—but with the paying of invoices by big companies. Those companies would hold money back from SMEs; the SMEs could not get paid. They therefore could not pay their bills and struggled to survive, or even went out of business. There is a responsibility on major defence contractors to treat the supply chain properly and pay their bills on time, so that we keep these small companies in business.
Rolls-Royce is an absolutely first-class company, and it is well organised, but unfortunately it has just announced, in my patch, that it is not taking on apprentices. That is somewhat disappointing, and we need to look at that, as do the Government. All of us have to consider why companies such as Rolls-Royce, which has an operation in Inchinnan, are not taking on apprentices. After all, Rolls-Royce is one of the leading companies in this country, and if it is struggling to take on apprentices, we need to find out why.
It would be remiss of me, as a Labour Member, not to mention employment legislation. I know that Government Members might disagree with me, but it is somewhat disappointing that a number of major companies left our island simply because it was cheaper to manufacture in the Czech Republic, China or wherever. A classic example from my patch is Hewlett Packard, which basically surrendered all its manufacturing base in Scotland and gave it to the Czech Republic. The workers in Scotland did nothing wrong. They were told, as we were all told, that if they worked hard, delivered on time, delivered quality, and so on, their jobs would be safe. That was what they did. That was the deal: “We, the workers, will work hard and deliver on time, to make sure that the product gets there on time, and on cost.” As for Hewlett Packard, some director sitting somewhere in Texas decided, “No, we can get this work done in the Czech Republic,” and that is what the company has done.
That story takes me back to my point about employment legislation. I know that people have different views on employment legislation, but it is far too easy for companies, particularly multinational companies, to say, “I’m sorry, we can get it done in another country”—wherever that country is—“far cheaper,” and exploit the labour in that country. That is why we have lost, and are still losing, a lot of our manufacturing base. Putting politics aside, we need to understand why manufacturing companies can easily up sticks and move.
It is annoying that after Hewlett Packard transferred that manufacturing base to the Czech Republic from Scotland, the company applied to the Scottish Government for a £7 million grant—and got it, which was rather foolish of the Scottish Government, in my view—to set up a call centre in exactly the place where the manufacturing operation had been. I disagreed with that at the time. The company was transferring manufacturing and we were losing all those skills, and then we as taxpayers gave a multimillion-pound company £7 million of taxpayers’ money to set up a call centre in exactly the place where its manufacturing operation had been.
Those are just some of the issues that I feel strongly about. I am passionate about manufacturing. I genuinely believe that if we do not have a strong manufacturing base, this country will be in a serious state. Again, I must say that I am somewhat disappointed in the turnout for this debate. I had hoped that there would be a lot more people interested in manufacturing. Perhaps we politicians need to look at how best we can get people with a manufacturing background, or a sense of manufacturing, involved in politics. I do not want to be discourteous, but I do not just mean business people in manufacturing; I mean people who have actually worked in manufacturing, and who have a feel for it. That will help to ensure that we go forward as a manufacturing nation.
Katy Clark (in the Chair)
I remind Members that if they wish to speak in a debate, they should stand up when a Member has finished his speech. I call Chris White.
Chris White (Warwick and Leamington) (Con)
Thank you for calling me to speak, Ms Clark.
I am pleased to follow the hon. Member for Paisley and Renfrewshire North (Jim Sheridan). I applaud his comments about shipbuilding, and his speech made very clear his passion for the manufacturing sector. I congratulate my hon. Friend the Member for Stroud (Neil Carmichael) on securing this debate, and on giving us the opportunity to discuss this important area of economic policy. I would perhaps disagree slightly with the previous speakers, in that sometimes in this House, it is when there is general agreement on the importance of a subject, as there is in this debate, that there is a smaller number of speakers. May I also congratulate the Minister on his new post?
As someone who has worked in the automotive sector, for MG Rover, I could not be more delighted to hear the news from Nissan this morning. Although I might be expected to say this as co-chair of the all-party group on manufacturing, it needs to be stressed that no long-term economic recovery is possible for our country without a long-term recovery in our manufacturing and engineering sector. Throughout the world, countries that have managed to protect and support their manufacturing capacity in the good years have bounced back stronger from the financial crisis that has weakened the sector. At present, 88% of our economy is in the service sector; industry comprises only around 11%, and agriculture 0.9%. In Germany, industry makes up nearly 30% of the economy, services 68%, and agriculture 2.5%.
None of us believes that we can turn the clock back completely to the days when Britain was the workshop of the world. However, if we are serious about rebalancing our economy towards a stronger manufacturing sector, we need a credible industrial policy. Only if we are able to focus the full attention of Whitehall on rebuilding our manufacturing sector will we be able to lay the foundation for future success in our economy. This is not a call for central planning or the nationalisation of industry, but a call for every Department and every official to pull in the same direction. We need the same level of consideration to be given to manufacturing as has been given to the financial and services sectors over the past 30 years. That will come about only if there is a co-ordinated strategy across Government, headed by a dedicated Minister for manufacturing, who pulls together the different strands of industrial policy, and who can be held accountable by Parliament, by industry, and by the public.
The all-party group on manufacturing will focus on the issue of the development of such a strategy in the weeks and months ahead. However, in general, the strategy will need to encompass three key areas: skills, export and finance. We need to have the skills in place to give our businesses access to the pool of labour that they need to grow and compete. We need to ensure that we give manufacturers, and particularly small and medium-sized companies, enough incentives to invest in skills for their employees, so that they feel confident in hiring new people and supporting their employees’ skills development over the whole life cycle of their careers in business.
Making our industry fit to export is vital. That does not mean that we should ignore manufacturing for domestic supply. Indeed, import substitution would be one of the best ways to enable us to reduce our balance of payments deficit, strengthen our economy and create a base for future export growth. In the long term, we need to be able to access the growing, emerging markets in China, India and south America. This means putting in place a strong system of export guarantees that match or beat those of our competitors; putting more resources into UK Trade & Investment so that it can champion the work of our manufacturers; and ensuring that we continue to push internationally for the reduction of trade barriers.
On finance, we need to ensure that our manufacturers are adequately supplied with credit. Britain historically has a low investment rate in its manufacturing sector. For example, on machine tool consumption, despite being the world’s eighth largest manufacturer, we are the world’s sixteenth largest consumer of machine tools. Without considerable investment in our manufacturing business, we will not be able to compete in the long term with emerging economies or advanced competitors such as Japan, Germany or the United States. Bold and radical policy prescriptions are necessary if we are to redress the balance; there could be a bank for industry, for example.
However, in the short term, the Government can take measures in the upcoming Budget to help support the sector, the most important of which would be to put in place 100% capital allowances for a two-year period, a proposal that has been put forward strongly by the EEF. This short-term measure would encourage companies, many of which are sitting on large cash reserves, to invest in new capital equipment to ensure not only that we make our manufacturers more competitive over the long term, but that we give a short-term boost to many businesses and improve order books. I urge the Minister to encourage the Chancellor to look favourably on that proposal. It would have a minimal cost to the Treasury, but a big impact on our manufacturers.
When it comes to manufacturers, we cannot afford to tinker round the edges indefinitely. I hope that the Government will continue to be bold in their thinking, so that we can, to quote the Chancellor, bang the drum for the “march of the makers”.
Jeremy Lefroy (Stafford) (Con)
It is a pleasure to serve under your chairmanship, Ms Clark. I congratulate my hon. Friend the Member for Stroud (Neil Carmichael) on securing this extremely important debate.
My first job after university was as a production foreman with Ford in Bridgend. I am delighted that that factory, 30 years on, is still there. In fact, Ford recently announced a £240 million investment in that engine plant. At the time, it was supposed to be the most efficient engine plant in the world. I believe it is still one of the top ones. The UK has a major role in manufacturing engines not only for the motor industry, but for all types of vehicles, including, for instance, construction equipment, which I will come on to later.
I have been passionate about manufacturing from the start of my career. I welcome the comments made by all Members who have spoken so far. In the past couple of years, there have been major announcements of investments, particularly in the motor industry. As has been referred to this morning, there has been a very welcome announcement by Nissan in Sunderland. There have also been announcements from: BMW in both Oxford and Hams Hall in Warwickshire, near the constituency of my hon. Friend the Member for Warwick and Leamington (Chris White); Toyota; Honda; and Vauxhall. Of course, there is also the welcome announcement that Jaguar Land Rover is building an engine plant at the i54 site, close to my constituency. The UK is a world leader in the design, development and manufacture of engines for motor vehicles.
In my constituency, the largest employer in the private sector is Alstom, which employs nearly 2,000 people. It is the only remaining transformer manufacturer in the UK. It is extremely important for the UK electricity supply industry and beyond, as it is involved in manufacturing in the transport and other sectors. I also have in my constituency Perkins, a part of Caterpillar, which makes very large engines to power generators around the world. Some 90% of production in my constituency is exported. As hon. Members have mentioned, manufacturing is by far the greatest earner of export revenue in this country; our manufacturing sector accounts for 54% of our exports.
I absolutely endorse what my hon. Friend the Member for Warwick and Leamington said: we need a long-term manufacturing strategy in this country. I refer hon. Members to my entry in the Register of Members’ Financial Interests. I want to highlight a report from the chairman of JCB, Sir Anthony Bamford, called “UK Manufacturing: Time to Make it Count”. I received it yesterday, which was timely. I recommend that every Member and every Minister reads it, because he makes very powerful points. He has the right to do so, because his is a private company employing several thousand people in the UK and 10,000 in total around the world. It is constantly investing in the UK, instead of choosing to outsource manufacturing to perhaps more convenient places. It continues to invest in people, plants, and research and development here in the United Kingdom.
Hon. Members have already covered much of the scene. I know that others wish to speak, so I will concentrate on two or three areas. On skills, it has already been mentioned that not enough women are going into engineering. In this country, the figure is something like 8.7%; in Germany, it is nearly double that. We can see the results in German manufacturing industry. We need to encourage more people, particularly women, to go into engineering and take it up, not only at degree level, but at apprentice level.
I want to concentrate particularly on finance. I have already referred to the fact that in Germany companies have a far wider range of banks from which to choose. Reference has been made to Handelsbanken; I welcome its growth in this country, because it is committed to this sector, but I want to see more local and regional banks and more mutuals—something to which Sir Anthony Bamford refers. As my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) mentioned, in our area, the Black Country Reinvestment Society is steadily growing and committing funds to local manufacturers.
We have already heard about this country’s export credit guarantee scheme. It is a good scheme, but not nearly good enough. Over the past nine years, Germany’s equivalent scheme has advanced or guaranteed eight times more finance than the UK has done, and the results show. We must do more on export credit guarantee. It is not just a drain on the Treasury. People pay for insurance, and it allows them to get from the Government the backing that they cannot get from commercial markets.
That is particularly relevant if we consider where the world’s growth areas are. Six of the top 10 fastest growing economies in the world are in sub-Saharan Africa. Anyone who goes there now, as I do frequently—I lived there for 11 years—will see huge opportunities. Just last month, when I was in Kenya as part of the armed forces parliamentary scheme, I was delighted to see products by JCB and other British companies; I had not seen that there before. There are huge opportunities, and we neglect them at our peril.
I would like to comment on the provision of equity finance. We in this country are poor at equity finance. I welcome the fact that the banks have set up the business growth fund, which should not be confused with the regional growth fund. The business growth fund is like a renewed 3i—Investors in Industry. However, I urge the banks to consider a slightly lower threshold. At the moment, they are considering investments of £5 million or more, and businesses with a turnover of £10 million or more. Many smaller manufacturing businesses would welcome investment; in fact, they are the ones with potential for growth. I urge the banks not to say that it is too expensive to consider smaller businesses, but to see them as an opportunity.
To return to the question of ownership, we in Britain seem to be good at giving away ownership of our manufacturing businesses. As the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) said, the problem is that however competitive the UK is, if a company is not headquartered in the UK, it will not have the emotional pull to invest here—an emotional pull shown by JCB, for instance, which is headquartered here. I am not saying that we should not encourage foreign investment—we welcome it—but at the same time, let us build up home-grown major manufacturing businesses like JCB, Rolls-Royce and others that have been mentioned.
My final point concerns energy costs. There has been a lot of debate in the House recently about energy-intensive companies, working in areas such as steel, ceramics and glass, which are vital to this country’s manufacturing base. I welcome the Government’s recognition of that importance, but we must ensure that we do not unintentionally cause those industries to migrate overseas as a result of things such as the carbon price, which will come in next year. We can be sure that they will not reduce the amount of carbon that they produce. In fact, in the places to which they go, they might be allowed to produce more carbon. Those industries in Britain have a proud record of cutting their carbon emissions over many years, and I give the last Government credit for that.
Ian Swales (Redcar) (LD)
As vice-chair of the all-party energy intensive industries group, I would like to comment on that point. I am late for this debate because I have just met Tata Steel, which has a £50 million cost disadvantage in the UK compared with its French competitors as a result of energy prices—and that is now, before various other measures have come into effect. I totally support my hon. Friend’s comments about energy costs.
Jeremy Lefroy
I thank the hon. Gentleman for saying that. Considering energy costs should be part of a long-term Government approach to manufacturing, and I welcome the chance to raise the issue in this debate.
Glyn Davies (Montgomeryshire) (Con)
Thank you for allowing me to speak, Ms Clark. I anticipate making a short contribution to the debate. In fact, I did not intend to speak; I came here to listen to the debate, which I congratulate my hon. Friend the Member for Stroud (Neil Carmichael) on securing, as I thought it was hugely important. However, as the debate unfolded I decided that I wanted to contribute a couple of important points. The first follows up on an intervention that I made about the impact on manufacturing in rural areas. I represent and have lived my whole life in a rural part of Britain—mid-Wales. Although I am a farmer by background, I spent a lot of my life involved in regional development, or what we term rural development. I was chairman of a local authority planning department for several years, and then I was chairman of a development agency responsible for mid-Wales.
When I was holding strategy discussions with senior officials about how I would begin to do that job, the British economy was becoming increasingly focused on financial services and the service sector. We did not think it was possible to develop the economy in mid-Wales, or indeed to transform it. It was in serious decline after the loss of jobs in agriculture and steel in neighbouring areas. The view that we took was that manufacturing was the route on which we should concentrate.
Over about 20 years—I gave the figures earlier—the proportion of manufacturing jobs in mid-Wales increased from about 7% or 8% to about a quarter of the work force, dramatically changing it. While the Government had a policy of intervention, which they do not have now, and while there was a Development Board for Rural Wales and a Welsh Development Agency to support it, the whole environment of mid-Wales was transformed. It became a dramatically important place, and we managed to do that on the back of manufacturing. There was no other way that we could have done it.
Another great benefit was that because mid-Wales is a sparsely populated area, the strategy involved growing very small manufacturing companies. That can be done in rural areas. It involved one and two-man businesses. They were success stories for us. We grew them. That is another fundamental platform on which a manufacturing industry can be based.
James Morris
I come from a constituency that contrasts with that of my hon. Friend—the black country in the west midlands. It was a great area for steel-making and industrial capacity, and is now having to be revived. Does he agree that one way that we can re-energise the manufacturing base is through enterprise zones? That is a good policy implemented by the Government. We should be looking to extend those enterprise zones and provide further enhanced capital allowances to encourage manufacturing investment.
Glyn Davies
Indeed. I thank my hon. Friend for that intervention. It is not only about enterprise zones but about learning from them and perhaps extending the principles underpinning them across the country. As Ministers often mention, we have ended up with an imbalanced economy in Britain, because for decades we have not concentrated enough on manufacturing. We have looked to financial services and the service industry as the answer, but manufacturing has not been given its proper place in our economic strategy.
I will comment briefly on the biggest threat to manufacturing in my constituency. Policy on manufacturing is devolved to the National Assembly for Wales—I will not cover that in this debate—but that is not the biggest threat by a long way. Every business that I talk to now is worried about the impact of onshore wind development in mid-Wales. A huge project is proposed, and the whole manufacturing sector faces the prospect of the roads of mid-Wales being completely clogged up for the six, seven or eight years after the mid-Wales connection project is approved.
I cannot overstate the impact that the project will have. Businesses are already discussing moving out, because they will not be able to develop. At least three companies—manufacturing businesses that depend on transport—have written to me already to say that if the project goes ahead, they will not be able to function in the area. The impact of the project must be part of the Government’s understanding here at Westminster of what they are doing when they consign mid-Wales to becoming little more than an onshore wind farm landscape.
My final point is one that my hon. Friend the Member for Stroud referred to in his introduction. Again, I draw on my experience as chairman of a planning authority, which was my first venture into public life. I did that job for seven years, and I realised that it was crucial for the body responsible for the planning process in a local authority to have a close connection to economic development. Apart from dealing purely with planning regulations, looking at a chart and saying yes or no, we have to inject into the process the impact that plans will have on the local economy.
Yesterday I went to a business that wanted to change the use of its site. It would be hugely important for the town where I live, Welshpool. The planning authority is concerned about access. The business has satisfied the authority on access but the authority is insisting on a complete revamp of the whole site. The authority will therefore make it impossible for the business to continue on that site, and the company has said that if it cannot get what seems to be a sensible change-of-use agreement, it will have to move out. That is happening purely because those responsible for dealing with the planning application are not charged with any responsibility to promote economic development. There has to be a close link between those two objectives of a local authority if we are to have a sensible approach that will enable us to maximise the benefits that our nation can get from manufacturing.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship, Ms Clark. I congratulate the hon. Member for Stroud (Neil Carmichael) on securing a timely and excellent debate, and I agree with a lot, if not all, of the points that have been raised.
There was a similar debate on manufacturing on the Floor of the House in November. I mentioned at the time that we do not debate manufacturing as much as we should in the House. However, we have had two debates on manufacturing in the space of about 100 days, on top of an important speech that my right hon. Friend the Leader of the Opposition is making, even as we speak, on the case for patriotism not protectionism in business policy, to the first ever manufacturing conference of the EEF, which the hon. Member for Stroud mentioned. They are testimony to the belief that manufacturing and engineering have to play a central role in our economic future, and policy makers are waking up to that.
A thriving and diverse manufacturing sector, in which British firms design, innovate, engineer and simply make things, is vital if this country is to pay its way in the world. I hope this debate has shown that manufacturing still plays an important role in the British economy. Hon. Members have quite rightly highlighted manufacturing excellence in their constituencies. We remain the seventh biggest manufacturing nation on earth. We have the largest aerospace industry in Europe and the second largest in the world after the United States. That is something to be proud of, and something that we need to nurture and support as much as possible.
The automotive industry has been mentioned a number of times in the debate. Nissan’s announcement today is very welcome news. Once, the British car industry and the phrase “British Leyland” were the epitome of all that was wrong with British industry—it was uncompetitive and obsolete. Now, however, our automotive industry is one of the most productive in the world, and we should be proud of that.
However, let us be honest: we have relied far too much on far too few sectors and too few regions in this country for economic growth. In the past three decades, Britain lost more industrial and manufacturing capacity as a proportion of its economy than any other leading developed nation. As has been mentioned in the debate, the hollowing out of the UK’s industrial supply chain over the past 30 years has made us ever more reliant on our competitors for raw materials, basic products and increasingly, as the likes of China and India move up the value-added chain, innovation, and research and development.
We therefore need a much bigger push towards manufacturing. I was struck by the comments made by the hon. Member for Stafford (Jeremy Lefroy), who mentioned Sir Anthony Bamford, the chairman of JCB, and his report. Sir Anthony knows a thing or two about industry. His warning last week to the Prime Minister is stark:
“Germany’s focus on value-added products sets it apart. It has a manufacturing strategy which the UK doesn’t. If our politicians fail to deliver a coherent long-term manufacturing strategy, and quickly, we will fall into an economic abyss from which we may never emerge.”
That is absolutely right. The whole House needs to pull together in unity to ensure that we have a long-term economic vision with manufacturing at its heart in order to see the jobs and wealth that this country needs.
My first question to the Minister is: what is the Government’s response to Sir Anthony’s report? He made a nine-point plan to boost manufacturing and engineering, including increasing capital investment by tax incentives, expanding the Export Credits Guarantee Department to ensure that we export more, encouraging more banks to set up in the UK to boost competition, and improving in general the public image of manufacturing through media campaigns. Will the Government implement in full Sir Anthony’s recommendations?
Other senior industrialists have echoed that view. Sir John Rose, the former chief executive of Rolls-Royce, has said:
“We need a framework, or a business route map, to create context, drive focus and help prioritise public and private sector investment.”
I absolutely agree.
John Cridland, the director general of the CBI, stated in a speech in November:
“What’s needed is a new form of industrial policy, one that signals ambition, helps develop future capabilities and secures sustainable growth…A new understanding needs to run through all of Government. Industrial policy might be based at the Department for Business, but all Departments need to share the same ambition. They all need to work to join up policies and create a system that’s more than the sum of its parts.”
Again, I absolutely agree with that. We need a more joined-up and co-ordinated approach, not just in the Department for Business, but across Whitehall. The nub of much that I want to say today is that we do not have a joined-up approach to manufacturing and engineering in the Government.
It is not just senior industrialists who are calling for clarity; the Business Secretary is lobbying hard on the matter, as was seen in a letter that he wrote recently. He said:
“There is something important missing: a compelling vision of where this country is heading beyond sorting out the fiscal mess; a clear and confident message about how we will earn our living in the future.”
I could not agree with the Business Secretary more, but I fear that the joined-up approach that is being called for by the CBI and other industrialists is simply not happening.
The Government’s sole economic priority is deficit reduction. I fear that if we cut too far and too fast, far from allowing private sector enterprise to bloom, we will choke off competitiveness and undermine our manufacturing base still further. On the one hand, the Government stress the importance of science, research and development and innovation as a means of supporting our manufacturing and engineering base, but on the otherhand unlike any other developed nation in the world, they are cutting the science budget by 15%. The Government stress the importance of an industrial strategy in defence to help British industrial capability, but at the same time they have published a White Paper that prioritises the purchase of off-the-shelf, sometimes foreign, military equipment. That is why the director general of the CBI, in responding to the White Paper, urged the Government not only to get the best value for taxpayers but to
“take into account employment and industrial implications of decisions.”
My hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) mentioned the awarding of contracts for Royal Navy fuel tankers to South Korea. What was the Department doing when the process was going through Whitehall? Why was it not working with the British supply chain to ensure that UK companies could bid for such contracts? Why on earth did the Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff), allegedly say:
“We don’t build tankers in the UK”?
Who on earth is batting for Britain in Whitehall on major procurement decisions if that is the attitude of Ministers?
Several hon. Members mentioned the importance of procurement, and they are absolutely correct. Governments can help shape markets—the Government are often the biggest customer and can often drive innovation and competitiveness. It is frustrating that the Government are not using procurement and the power that they have to back British business and support jobs, skills and innovation, and therefore enhance British competitiveness. I agree with the TUC, which stated that the UK should have a
“procurement policy guided by the principle that every pound of taxpayers’ money should contribute to jobs, skills or the strength of the British economy.”
Yes, procurement should be based on securing best value through competition, and sometimes some British firms will lose out, but let us have a procurement regime that looks at value in the widest and most effective sense. I quote again the TUC, which said that
“a procurement regime that is simply based on lower cost, offering nothing to the long-term development of the British economy, has no place if our industries are to reach new levels of competitiveness.”
We saw the debacle of the Bombardier decision on buying trains; let us not have the same mistake again. Let us ensure that our business policy emphasises manufacturing, but also ensures that we can back British business—patriotism is not protectionism.
Jeremy Lefroy
I am following very carefully what the hon. Gentleman is saying. Does he agree that if we allow our capacity to build ships or trains to disappear, we will be held over a barrel by other manufacturers around the world because we will not have an alternative at home?
Mr Wright
I agree absolutely with the hon. Gentleman. Many people accept, quite rightly, the importance of not being too reliant on foreign sources of energy; that is why we need to ensure that we have a diverse energy policy. Frankly, we need the same approach for manufacturing—we should not be too reliant on our foreign competitors. We need a vibrant steel industry and a vibrant shipbuilding industry to ensure that we have that capacity, and that we produce the next generation of ships and use steel for offshore wind—that is exactly what we need to do.
Let me turn to another important issue, which I mentioned in an intervention on the hon. Member for Stroud: the tie-in between manufacturing, engineering, the wider point about business and schools, and our education system. If we are to see engineering and other STEM subjects rise in cultural importance, it is vital that engineering qualifications have at least parity of esteem with more liberal arts-based subjects. That is why, as I mentioned in my intervention, the decision of the Secretary of State for Education to downgrade the value of the engineering diploma from the equivalent of five GCSEs to just one is simply wrong.
In the previous Government, I was the Minister with responsibility for 14 to 19 reform and apprenticeships. I had responsibility for the engineering diploma, so I feel protective towards it. It was, and is, a high-quality and rigorous qualification that has the support of business and backs the interests of many of our brightest young children. The downgrade is the wrong move if we are to promote engineering. Do not take my word for it. Dr Mike Short, president of the Institution of Engineering and Technology, along with 16 senior industrialists, put his name to a letter to The Daily Telegraph that said:
“The Engineering Diploma is widely recognised as a significant route to providing the crucial technical and practical skills that young people will need to build a Britain that can compete effectively and internationally where technology can make such a difference to our digital world. Industry and the professional engineering institutions have worked extensively to make this 14-19 qualification a highly robust and attractive qualification, which now appears to be being undermined by the Government's premature decision to downgrade its worth.”
Ian Swales
Does the hon. Gentleman agree that when I asked the Secretary of State for Education a question on this subject a couple of weeks ago, his answer that the engineering diploma had to be seen as level with physics, chemistry or biology showed a basic misunderstanding of what the engineering diploma actually is?
Mr Wright
The hon. Gentleman is absolutely right. For far too long, we have had a culture that considered academic subjects to be successful, and vocational and engineering-based qualifications to be somehow second rate. Germany does not have that culture, which is why it has a flourishing manufacturing sector. We need a similar parity of esteem in this country; otherwise, we will never be able to achieve our potential in manufacturing and engineering.
The world will not wait for us. We need a sense of determination and urgency in light of the fiercest competition the global economy has ever known. Instead, and to my utter frustration, we have a sense of drift and a lack of co-ordination from the Department for Business, Innovation and Skills, and across Whitehall. The time is now, as senior industrialists, the CBI, the TUC, and hon. Members here today have said, to play to our strengths, seize the opportunity and put manufacturing and engineering at the heart of the economy. The Government need to act now.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)
It is a pleasure to serve under your chairmanship, Ms Clark.
I congratulate the hon. Member for Stroud (Neil Carmichael) on securing the debate on an important subject. May I also say that all the key points in his contribution were excellent? He is a keen advocate of manufacturing and engineering companies, both in his constituency and nationally. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), who has responsibility for business and enterprise, is looking forward to opening the Stroud manufacturing festival on 23 April, which is an excellent initiative that will promote the case for manufacturing. The hon. Member for Stroud demonstrated the most remarkable array of different types of manufacturing in his constituency.
The hon. Gentleman also highlighted the importance of inspiring young people. I heard recently of a survey of youngsters, aged 11 or 12, on what they wanted to do when they grew up. None of them talked about manufacturing, making or designing things. We have to change to that culture and it will take a while. The National Careers Service, which is being launched in April, will work with STEMNET, a body that promotes STEM subjects in schools. It is running a scheme of STEM ambassadors—industrialists, academics and so on—who go into schools to talk to children to try to inspire them, and to think about manufacturing as an option.
Various people have raised the importance of getting women into manufacturing. The hon. Member for Stafford (Jeremy Lefroy) made a comparison with Germany. If we are to make the maximum use of the skills available in this country, we must open up engineering and manufacturing to both sexes, rather than it being the almost exclusive preserve of men.
Mr Iain Wright
Does the Minister think that the downgrading of the engineering diploma qualification is a good and positive thing that will promote engineering to our young people?
Norman Lamb
I absolutely agreed with the hon. Gentleman when he talked about parity of esteem between the vocational subjects, including engineering, and the more academic subjects. In recent years, including during his own party’s tenure in government, that has not existed—there has been no parity of esteem. The vocational, practical subjects have been downgraded in the public mind, and the Government are doing a lot to re-establish them. The university technology colleges initiative is valuable in that regard. On his particular point about the engineering diploma, it is a complex issue with the interaction of school tables. However, the principal learning in engineering—the engineering core of the diploma—will be recognised. That in itself is a vote of confidence. I therefore reject absolutely any idea that the Government do not see the importance of parity of esteem.
I want to mention the fantastic news from Nissan in Sunderland—mentioned by a number of hon. Members—which offers the potential for 2,000 jobs. The shadow Minister was generous in applauding that great news. There are a number of challenges and we hear stories that go in the other direction. However, when we have news that demonstrates a very clear vote of confidence in the UK economy, we should applaud it. The extent to which the automotive industry in this country now leads the way—hon. Members have talked about the fact that we are a world leader in motor vehicle engines—means that we have an enormous amount to build on.
The future of manufacturing is an issue being debated not only in the House, but, as we have heard, at high levels elsewhere today. My right hon. Friend the Secretary of State for Business, Innovation and Skills will address the inaugural EEF manufacturing conference today, as will the Leader of the Opposition. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford, has been speaking at the automated Britain conference this morning and will address the Institute of Mechanical Engineers manufacturing conference tomorrow. He and my right hon. Friend will make it clear that manufacturing growth is one of the highest economic policy priorities for the Government. It is important to stress that.
The UK is recovering from the biggest financial crisis for generations and the deepest recession of almost all the major economies. We are still feeling the shocks from the eurozone’s sovereign debt crisis. The recent agreement with Greece, although welcome, is not a panacea. One of our first decisions in government was to place manufacturing at the heart of our economic strategy. I reject the shadow Minister’s charge that there is any sense of drift. The Department is focused on manufacturing. The Minister of State leads on manufacturing: he devotes attention to it, and he is closely interested in doing everything he can to support growth in manufacturing.
In placing manufacturing at the heart of our economic strategy, we were under no illusion about the challenge that we faced in turning UK manufacturing around. In the UK, manufacturing as a percentage of the economy fell from just over 22% in 1990 to around 10% in 2010. The decline of manufacturing has been significant, in marked contrast with Germany, which has sustained that share of the economy much more successfully. We have learnt from the mistakes of previous Administrations
Ian Swales
I welcome the Minister’s comments about the importance of manufacturing. Does he agree that even figures such as 10% or 12% far understate the importance of manufacturing to our economy, because so many service sectors, such as logistics, energy and so on, depend on having a manufacturing sector? Will he join me in welcoming the fact that manufacturing employment in the north-east has risen every month for the past 22 months, which shows that the Government’s policies are helping?
Norman Lamb
I applaud my hon. Friend’s work promoting manufacturing, not only in his region but nationally.
Norman Lamb
May I deal with the previous intervention?
My hon. Friend the Member for Redcar (Ian Swales) is right to stress the importance of manufacturing in its own right and in respect of services. If we are to get out of economic difficulties, building exports partly based on smart manufacturing is essential. I am conscious that time is tight and I have already given way to the shadow Minister—
Norman Lamb
I would prefer to continue to make my points, despite the hon. Gentleman’s tempting.
There is an absolute necessity to shift activity away from consumption and public expenditure, towards investment and exports. The hon. Member for Montgomeryshire (Glyn Davies) made a good point about rural areas and small companies that can grow. In my very rural constituency, more people are employed in manufacturing than in agriculture. Manufacturing is important in all communities throughout our country.
One of the first things that we had to do as a Government was deal with the deficit. There is a divide on this matter between this Government—the coalition parties—and the Opposition. We believe that to re-establish confidence in the UK economy it is essential that we deal with the deficit effectively. We are clearly starting to succeed in that effort. On those foundation stones it is possible to rebuild. The actions we have taken have helped to restore stability and consolidate the UK’s triple A credit rating, which in turn will make this country more attractive to investors. Our job is to help manufacturers maximise their competitive advantages, thereby stimulating economic recovery and reanimating the spirit of industrial enterprise in this country.
Hon. Members have mentioned the importance of finance. In that regard, there are comparisons to be made with Germany, again, which has a large number of local banks, as does America. The concentration of banking in just a few hands in this country is a problem that is well identified. We have to ensure that our successful growing businesses have access to the finance that they need, including equity finance—another matter mentioned by the hon. Member for Stafford.
Hon. Members, including the hon. Member for Montgomeryshire, mentioned the importance of planning. The Government are taking steps to reform radically our planning system, introduce a presumption in favour of sustainable development and ensure that local authorities recognise the importance of facilitating growth in that way.
Last year the Government issued a plan for growth alongside the Budget, which set out a range of actions to stimulate growth in the manufacturing sector, and over the past year we have made progress in a number of areas. I want to deal quickly with some examples.
We are supporting the technological innovation that underpins competitiveness, which is critical. First, we are setting up a network of technology and innovation centres, known as catapults, to smooth the path from original research to commercial success. The first catapult, launched by the Secretary of State at the Technology Strategy Board’s innovate conference last year, is focusing on high-value manufacturing, funded with £140 million over six years. Catapults for offshore renewable energy, an important sector for the UK economy, were launched last month and will be created in 2012, along with catapults for cell therapy, satellite applications and the connected digital economy. The full network of seven catapults will be completed and fully operational in 2013. Many of these initiatives are in accord with Sir Anthony Bamford’s report, which we welcome and are considering. There is a lot of common ground in that report and what the Government are doing.
Secondly, we have modernised the manufacturing advisory service and increased its funding, including an extra £7 million to support supply chains, as mentioned in the debate. The revamped service will work with businesses, especially small firms, to improve their productivity, which is still a challenge for this country.
Thirdly, we have introduced a £125 million supply chain initiative, working with major UK-based manufacturers to rebuild capacity and ensure that more of the components and associated services they require can be sourced in this country. Fourthly, we have introduced a £250 million support package for energy-intensive industries, which the hon. Member for Stafford and my hon. Friend the Member for Redcar mentioned, to help offset the costs of the carbon price floor. The Government want to ensure that those industries can remain in this country and remain competitive.
Finally, we are establishing the Green investment bank, an innovative and exciting new concept, and expect to make an announcement about its location shortly. The bank will invest up to £3 billion, initially in five priority areas: offshore wind power generation, which is essential for this country’s energy security; commercial and industrial waste processing and recycling; energy from waste generation; non-domestic energy efficiency; and the green deal.
Norman Lamb
I have not got time.
On exports, the hon. Member for Stroud mentioned engaging with the EU and ensuring that our largest market—the single market—is exploited effectively by this country. Whatever our views about the EU, we must recognise the importance of taking every opportunity we can to export through the EU. We must also focus on emerging markets, where there is enormous potential to grow our exports.
Let me mention the regional growth fund. An important element in rebalancing the economy is the use of limited public funds to leverage in private investment in areas of the country that have relied too heavily, under previous Administrations, on the public sector. Nissan is a perfect example of how a bit of public money can leverage in substantial amounts of private funding for this successful initiative.
We are working hard to encourage and support British manufacturers and create an environment where they are free to thrive and compete in a global marketplace. Two weeks ago, we held a second manufacturing summit, which gave ministerial colleagues and me the opportunity to discuss and agree what more should be done to help us meet these challenging ambitions. We want UK industry to be our partner in achieving economic transformation and recovery. This strategy places world-class manufacturing at the heart of a healthy and balanced UK economy.
Council and Social Housing
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Austin Mitchell (Great Grimsby) (Lab)
May I express my great pleasure at speaking under your chairmanship for the first time ever, Ms Clark, and my gratitude for being able to talk on the supply of public or council housing, and housing association or social housing?
We have a crisis building up at the bottom end of the housing market—public housing for rent—which hits those who cannot afford to buy. That can be up to two fifths of the population, depending on the area. The cause is, effectively, 30 years of disinvestment in housing, starting under the 18-year Conservative Government with the right to buy, which substantially reduced the public housing stock. The right to buy is welcome, of course, but should be paralleled by a policy of building one home for every home sold off, to maintain the stock of public housing. There followed 13 years of under-investment by the succeeding Labour Government, who did not invest enough in housing, and who bribed and bullied councils into privatisation. The problem now is that that long period of disinvestment and under-investment is being followed by the neo-liberal policy of the coalition.
When in opposition, the Prime Minister said:
“We support social housing, we protect it and we respect social tenants’ rights.”
That, however, was the prelude to a neo-liberal policy of running down the public sector, building up the private rented sector, and cutting public spending on housing. The result is that we are now building up to a housing crisis that will severely hit those who cannot afford to buy.
Karen Lumley (Redditch) (Con)
Will the hon. Gentleman join me in congratulating Redditch borough council, which only last night announced a new programme of building council houses?
Austin Mitchell
I am delighted by any building of council houses, but the figures today from Inside Housing show that public housing construction orders are down to their lowest level for many years. Any initiative that produces council housing and new building is welcome, but it is in the context of low public housing build, which is the essence of the problem.
What used to be socially mixed council estates, with people at all levels of the social scale—from top to bottom, almost—are becoming, because of the disinvestment and under-investment, dumping grounds for the poor and the needy, which was not their purpose. The housing stock has shrunk and, given the Government’s announced policy of selling at even more substantial discounts, will shrink further; the houses cannot be replaced at the discount level being given. The waiting lists are already at nearly 5 million individuals— 1.8 million households—and many will never get the housing that they are waiting for. Also, homelessness applications are up by about a quarter. The English housing condition survey says that 391,000 children are living in overcrowded conditions—a figure that is up by about 18%. Housing costs are now at their highest level ever as a proportion of income, and they will be pushed up further, for the people whom we are talking about, by the coming rent increases. Housing build starts are at their lowest level since 1923; there is a pathetic number of council housing starts.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Gentleman on obtaining this important debate. As he will be aware, a call went out in December last year to farmers and rural councils to help with the social housing problem, but that in itself is not enough to deal with the more than 10,000 people on the waiting list.
Austin Mitchell
The hon. Gentleman is exactly right, of course. A number of calls, initiatives and gimmicks are being pursued, but there is no firm conclusion, in terms of house building.
Rehman Chishti (Gillingham and Rainham) (Con)
I congratulate the hon. Gentleman on securing this important debate and on the passion he has shown on the subject for many years. He referred to some of what is being done as a gimmick, but in terms of substance, does he welcome this Government investing £4.5 billion in affordable housing over the next four years? That will help to increase supply and provide a major boost to people on housing waiting lists.
Austin Mitchell
Of course I welcome the statistic that the hon. Gentleman read so brilliantly from the brief, but those are hypothetical houses not yet built, and the problem is now. The situation now is that starts are at their lowest level since 1923, and that is what we need to deal with.
Simon Hughes (Bermondsey and Old Southwark) (LD)
May I join in the tributes? The hon. Gentleman has a great record on the issue. However, we all understand the difficult position that the country and the Government are in. The previous Government were hopeless when it came to new council housing build; as he knows, they had the worst figures of any Administration since the war. Can he accept that, given the depth of the recession, the Government’s initiatives are moving in the right direction? We should unite at least in encouraging them to ensure that we have more council and social housing, certainly including at rents that his constituents and mine can always afford.
Austin Mitchell
I will come to that point, which is wrong. Hopes are not houses. The Government might have the intention to build an increased number of houses, but the problem is now, and it is getting worse. A crisis is building, to which the only answer is to build more public housing for rent now. That is not being done; it has not even been started. House building is so low that the tragedy will become worse in the next months and years. The right hon. Gentleman is correct in that the Labour Government’s record was pathetic. At the end, we managed to persuade the then Prime Minister—often a difficult job—that we had to build council houses and had to have a building programme. That was initiated by my right hon. Friend the Member for Wentworth and Dearne (John Healey). That was responsible for growth, and for jobs in the recovery from recession, but it was immediately cut by the incoming coalition Government, who had initially promised to maintain that building programme. They stopped it, and began a deliberate policy of diminishing, demeaning, draining and dumping social housing and those who live in it.
I say “diminishing” because of the 60% cut in funding for building social housing. Even that spending is predicated on higher rents providing revenue. That meant that areas such as Grimsby and north-east Lincolnshire got nothing, which is unprecedented. We wanted to build, but we could not, because no money was available as our rents were too low. I say “diminishing” because of the cuts in housing benefit, the cost of which is high only because the building rates have been so low. If we had built social houses over the long term and on a sufficient scale, we would not need to pay housing benefit to the homeless and to move them into expensive accommodation, and would not have the kind of abuses that are serialised every day by the Daily Mail. It is failure to build that has made the housing benefit bill so high.
Other cuts are already affecting new claimants and, from April, they will start to affect those who renew their housing benefit. First, there was a cut for adult dependants at home, which was designed to force kids—adult children—out of the household and into a single person housing market that is not there. The bedroom tax, which comes in in April next year, is a cut in housing benefit of 15% for those with a spare room, and of 25% for those with two spare rooms, to force tenants to move to smaller accommodation, which is not there, or into the private rented sector.
There is the renewal rate for under-35s from April next year, who will be getting the shared-room rate for single people. Then universal credit and caps will come in, which will produce even more difficulties, not so much in Grimsby but certainly in London and the big cities. That is the “diminishing” part of the argument.
The demonisation part is that council tenants are being treated and regarded as subsidised scroungers living on state subsidy. In fact, the Localism Act 2011 ends secure and assured tenancies, which are the basis of establishing a settled community and a good life on a council or housing association estate. It replaces them with short-term tenures. That means that if the family get better off—if the head of the household or members of the family get jobs—and income increases, the tenancy will not be renewed.
Andrew Percy (Brigg and Goole) (Con)
I thank my next-door neighbour but one for giving way. On the issue of longer-term tenancies, as the hon. Gentleman will know, my hon. Friend the Member for Cleethorpes (Martin Vickers) and I have joined him in the Lobby on the issue of short-term tenancies. However, what he has not said is that it will be up to local councils to decide whether to offer them, so there is an element of local democracy. It may be that our councils in north Lincolnshire decide not to do that. Secure tenancies have not gone completely; it will be up to local councils to decide whether to continue to offer them.
Austin Mitchell
I am a grateful for that point. I am also grateful that, for a period, in Humberside, we have agreed on the issue of short-term tenancies. I hope that the measure will not be enforced by councils, but several are already making arrangements to enforce it, and others are being campaigned against by tenants who wish to persuade them not to enforce it. We will have a patchwork quilt over the country, but the net effect will be that in many cases, people are forced out, and are forced into accommodation in the private rented sector that is not there.
Austin Mitchell
I give way to the right hon. Gentleman, who is a member of the council housing group, and has worked on the issue for a long time.
Simon Hughes
I want to ensure, following the last intervention, that anybody who reads this debate is clear about the position. It will be up to every council to decide whether all or some of its properties do not have secure tenancies. Southwark council—one of the largest social housing landlords in the country—should, in my view and that of my colleagues, keep the policy that everybody in Southwark council housing should have a secure tenancy in future. If it wants to do that, there will be no risk to any of those people. The scandal is people who have salaries or incomes of £100,000 and are in council properties; some of them are not very far away from the hon. Gentleman and from me.
Austin Mitchell
There are problems and abuses in any system; in the tax system, for instance, there are myriad abuses that are not being dealt with effectively. The general principle should be that tenancies should be either secure for council house tenants, or assured for residents in housing associations. It is up to councils, as the right hon. Gentleman says, to decide. I hope that they will decide to maintain secure tenancies; that is the only basis on which one can have a safe, secure, settled community of people who are assured that they will be able to stay in their houses and that their kids will not have change schools.
Sir Bob Russell (Colchester) (LD)
I am grateful to the hon. Gentleman for giving way, because I think we agree more than we disagree on this subject. Will he explain why, for 35 years—from 1945 to 1980—successive Governments were of the view that council housing was an important part of social society, and why, from about 1980 onwards—this includes the previous Labour Government—successive Governments have turned their backs on council housing? I do not understand why that social phenomenon or change has happened. Can he explain?
Austin Mitchell
The hon. Gentleman has asked a difficult question. I do not know the answer. I take it that there was an element of financial stringency—a desire on the part of the Conservative Government to cut taxes, which meant cutting Government spending and therefore spending less on public housing for rent. Certainly, the Labour Government did not spend enough on housing because their priority was to put money into the health service and education, which, after a long period of disinvestment, did get a lot more cash from the Labour Government. The financial situation was pressing in that direction. Also, there was clearly a feeling that we had built enough. That feeling was wrong, because building public housing for rent is a means of providing employment, maintaining full employment, stimulating the economy and providing for social need.
Andrew Percy
There was another element; it was not quite as the hon. Gentleman suggests. As he will know from the time he spent in council housing in Hull for “Tower Block of Commons”, there was also a social change, which meant that a lot of people did not want to live in council housing. Consequently, in Hull, where I was a councillor for 10 years, we had hundreds of houses that we could not let because people simply did not want to move into them. It is not quite the case that we simply abandoned social housing the 1980s.
Austin Mitchell
But it is the case that a failure to invest made the estates less attractive to live in. Had those estates been updated, modernised and refurbished in the way that was needed—that was certainly needed on the Orchard Park estate—they would have been more attractive places to live in. In the ’70s, they were very much mixed communities, as all the statistics show. It was because spending was cut that they became unattractive. Housing there was also less available, due to sales, which picked the eyes out of many of the estates. That was the reason why people did not want to move in. That movement was coupled with the fact that the Government were spending less, so the housing was less attractive. They were disinvesting in the policy. I do not have the answer to why Governments were doing that—they should not have done it; it was socially divisive and damaging to other social services—but that was the reality. We were spending less, we were not building, and we were not refurbishing or modernising. There was a big modernisation under Labour, to be fair, which brought in private capital by privatising the estates. Again, that was inadequate to deal with the scale of the problem and the disinvestment that had taken place.
I want to resume my thread and talk about draining public sector housing. The new proposals for giving councils control of their housing revenue accounts involve them paying substantial sums to buy back, in order to pay off historical debts. However, that historical debt has in fact been paid off many times over the years. For instance, in the years when daylight robbery applied—that was begun by a Conservative Government, and was carried on for too long by a Labour one—£13 billion was drained out of housing revenue accounts by that system of financing, and the draining has gone on since. The Government were abstracting £1.6 billion every year from housing revenue accounts to pay off historical debts, they said, and to redistribute. The proposal that historical debt has to be repaid by councils that want to run their own revenue accounts is fallacious. It is an attempt to squeeze council financing of development of new housing once again.
The whole programme is imposing sacrifices on those least able to bear them: the poor, the low-waged, the disadvantaged and the handicapped. Given that the approach is to spend so little on social and council housing, the question is: why should those who are not responsible for the financial crisis and the recession be forced to bear the burden of paying for it? That question is never answered. The Department for Work and Pensions’ own risk assessment shows that the benefit cuts are hitting the vulnerable, the sick, the young, and the low-paid. That whole package, plus the other changes, results in fear, homelessness and insecurity. It will also result, particularly in London, in a kind of ethnic cleansing, because the cuts will hit racial minorities who have bigger families harder than other sections of society. People will be forced out to the private rented sector.
The private sector is not rent controlled. We need to restore rent control and regulate conditions more tightly to control the incipient development of Rachmanism and exploitation. Rents are too high in the private rented sector, yet in the public rented sector they are being raised to 80% of private sector level.
Sir Bob Russell
I endorse the points raised by the hon. Gentleman. Does he share my disbelief at the fact that many council houses that have been sold are being rented out by the current owners, yet the rent—which is paid for by housing benefit out of the public purse—is set at a grotesquely higher level than would be paid were the property still a council house?
Austin Mitchell
Absolutely. The system causes instability and damage to the estates. People cannot keep up with their payments, so houses are repossessed and sold at auction. Somebody buys those houses as a speculative venture because they are cheap; they put in any kind of tenants because there are no controls, and those tenants claim housing benefit. The rent goes up, and the public sector is drained to pay for that folly. That is the result of many years of sales. I agree with the hon. Gentleman. We need to maintain controls and regulation in the private sector, because otherwise we will have the return of Rachmanism and a situation where Cathy has to come home time and again. “Cathy Come Home” came out in 1966, and followed a long period of difficulty in the private rented sector. Such difficulties are now returning, and we need to dramatise the situation to get the same kind of public reaction that “Cathy Come Home” received.
The situation is hitting the low-paid, the poor, the unemployed and the vulnerable—exactly those people who any civilised society should be helping. It is also hitting other sectors. How can we have good health without good housing? If people live in overcrowded, unsanitary and damp conditions, a health problem will arise. Good housing is the basis of a good health policy. How can we have a good education policy if kids are being shunted from school to school as their parents are forced to move, or if they do not have room at home to study or work in? It is impossible. How can we maintain stable, crime-free communities in which people want to live together, if they are being moved in and out as if they were in a transit camp? People need housing, but they are being shunted around because they cannot afford to pay for their housing, perhaps because of the bedroom tax or cuts in housing benefit, or because a decision by the council means that if they improve their position, they will have to move out of their home. Those policies will produce instability, insecurity and disturbance of the worse possible kind, and will turn places into transit camps.
The only answer—this point is central to the whole debate—is to build big, to build now and to build more than we ever did. We must build affordable, high-quality, public rented housing. It is the cheapest housing to build and run; it returns money to the councils because the rents produce more income that it costs to maintain and manage the estates, meaning that councils will make a profit. Rents are not set to maximise the income of private individuals, but are fixed at an acceptable social level that people can afford and will provide a return to the council. That is the kind of housing that we should be building for people who cannot afford to buy, and that should be the priority.
Rehman Chishti
The excellent portfolio holder for housing in Medway said that the way forward should involve
“More financial encouragement for social renting tenants to become owners of newly built or renovated homes, thereby freeing up socially rented properties.”
Does the hon. Gentleman agree?
Austin Mitchell
I do agree; I always have. Interestingly, before Grimsby council became North East Lincolnshire council, it was one of the first authorities to sell council housing to tenants. When I was in the New Zealand Labour party, we argued for years over whether state housing should be sold to tenants. We finally decided that it should be, and pioneered that policy in New Zealand, which was welcome. Such policies work provided that each sale of a council house is replaced by a build, so that the stock remains constant or builds up. That is the criterion; it is not about selling off houses ad lib to pick out the eyes of the estates. It must be a policy of sell and build.
The Government say that we cannot afford to build. We can afford foreign wars, high-speed trains and Crossrail, but we cannot afford decent housing for our people. Decent housing is an investment; that is why we should build. We could finance it through municipal bonds—that is how council housing used to be financed, and that is what happens in other European countries. Houses are secured by the asset created by the bonds. We could let pension funds invest in social and public housing; we could even use the revenue created by printing money, or quantitative easing. At the moment, money created by quantitative easing goes into the banks and is stashed away in the reserves. Why should it not be used to pay for contracts for social and council housing, which will house people and create an investment, from which we can derive income that can be secured? There are all sorts of ways to invest in housing, but if we do not invest, we slide into crisis.
I shall conclude on an important point: if we invest in housing, we stimulate the whole economy. Look at what happened in the 1930s when recovery from the depression, which was as bad as this one, was precipitated and stimulated by building the houses in which many of us—including me—were brought up. That changed the face of England in the 1930s; it stimulated the economy, created jobs and took us back to higher employment. Housing policy launched the recovery that was sustained by rearmament from 1938. Housing could do the same now, because it creates jobs and demand. People have to furnish their houses and provide everything in them, and that stimulates the entire economy. Everything—social need and economic sense—points to a big housing programme, particularly for social and council housing. Since everything points to such a programme, why are the Government not building? Why not begin that building programme now to stimulate the economy and serve the people?
Martin Vickers (Cleethorpes) (Con)
It is a pleasure to serve under your chairmanship, Ms Clark, and I congratulate my neighbour—indeed, my own MP—the hon. Member for Great Grimsby (Austin Mitchell) on securing this debate. As my hon. Friend the Member for Brigg and Goole (Andrew Percy) said earlier, the hon. Member for Great Grimsby has a long history of campaigning on these issues.
I was first elected to Great Grimsby borough council in 1980. That seems a long time ago, but the hon. Gentleman was already entering his fourth year as a borough member. I was put on the housing committee and I recall that we had some rather heated exchanges. Many of the hon. Gentleman’s colleagues were strongly opposed to the right to buy, and frustrated many of his constituents in their aspirations to buy their council property. He will correct me if I am wrong, but I recall that he always favoured the right to buy. In the 1970s, Great Grimsby borough council had an enlightened Conservative administration. I must declare an interest because my parents bought their council house at that time. I speak, therefore, as a council house Tory, of which there are a number in this House, and I can bring some personal experience to the debate.
We lived in a privately rented property in Cleethorpes. My parents were then allocated a council house in Grimsby, when I was about five or six years old. I can remember my mother telling me many years later that one of the most important things about the move from the private to the public sector at that time was the security that it gave them.
As my hon. Friend the Member for Brigg and Goole pointed out, he and I joined the hon. Member for Great Grimsby in the Lobby opposing reductions in tenancies. The situation that the Government have arrived at now is much more acceptable than was originally the case. As the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) pointed out, we now have a satisfactory situation. However, security is important, not only from the individual tenant’s point of view but, as the hon. Member for Great Grimsby pointed out, for creating settled communities.
We must recognise that, as with most things in life, there needs to be a balance—a mix between the private and public sectors. I agree with the hon. Gentleman that more public sector housing is needed. I think that it is perfectly acceptable to have a mix involving housing associations, direct council building and various other partnership arrangements that can enter the equation. I very much favour the Government’s plans to extend the right to buy. We need to recognise the aspiration of many tenants to get a foot on the property ladder, and the benefits that that can provide. However, security, as I said, is important. We must recognise that homes are not just bricks and mortar. They are genuine homes and they contain all the memories of the tenants.
A week ago, the hon. Gentleman and I were in north-east Lincolnshire with the Minister of State, Department for Communities and Local Government, my right hon. Friend the Member for Tunbridge Wells (Greg Clark). Indeed, we drove from Grimsby to Cleethorpes and were pointing out to him the urgent need to bring more commercial properties that are no longer used as retail outlets into the housing market. I know that the Government intend to ease the planning classifications that restrict that, but more needs to be done. We need to recognise that many commercial properties, as I pointed out on the route from Grimsby to Cleethorpes, are no longer in retail use. They are sound properties and could be brought into use, at a reasonably modest cost, as residential properties. Some sort of partnership between the private and public sectors could determine that.
The other point that I want to make was touched on by the hon. Gentleman. This issue affects Shoreline Housing, the main social landlord in our north-east Lincolnshire area, which receives no Homes and Communities Agency funding at all during the current four-year period. As the hon. Gentleman pointed out, that is because of the low rents in our part of the country. That makes it virtually impossible to balance the books, as it were, in strictly economic terms. I have written a letter to the Minister of State, following his visit last week, on that issue. We need to keep a close eye on it.
To sum up, the points that I want to make are these. We need a mix. We need to provide security for tenants. We need to bring commercial properties into use as residential properties. I hope that the Minister will take away the points that I have made specifically about funding in north-east Lincolnshire.
Heidi Alexander (Lewisham East) (Lab)
I am grateful to be able to take part in the debate. Since I was elected to Parliament, I have probably spoken more about the need to increase the supply of genuinely affordable housing than about any other subject. I have done so not because I have any great expertise in that field, but because I know how desperate my constituents are to find homes that they can afford. Successive Governments have failed to appreciate the scale of the housing crisis. My fear is that the policies of the current Government will just make it worse.
Every fortnight, I sit in my advice surgery in south-east London and have the same conversation over and over again with families living in massively overcrowded accommodation who want me to help them find a home. Some will already have a council home or housing association property, but many more will be renting in the private sector. Most of the people who come to see me are in low-paid, often part-time work and juggling the pressures of bringing up their family while holding down a job.
I see mums who are on the edge of nervous breakdowns because their families are living in damp, depressing flats. I see dads who feel powerless to find their children a decent place to live. I often see children who are sharing a bed with their siblings, and sometimes I see children who have no bed at all. I also see families who live in a single room in a shared house. I say to myself that in 21st-century Britain, that cannot be right.
I often ask the constituents who come to see me what they do for a living. I ask them outright how much they earn. Obviously, their answers vary, but in the eight years for which I have been holding advice surgeries, first as a councillor and now as a Member of Parliament, not one of the families who have ever come to me for help with housing could afford to buy a property in London. For the vast majority of people who come to see me, even shared-ownership homes and part-rent, part-buy schemes are way out of their league. To access those homes, people need to be earning thousands of pounds more than many of my constituents.
Increasingly, people have been turning to the private sector to meet their housing needs and have been resorting to housing benefit to help them cover their rent. In Lewisham, private rents are basically double what social rents are, so for many of my constituents the private sector becomes an option only if the state pays money to their landlord. Yes, we have heard a lot about the housing benefit bill going up, but let us think about this. If private rents in my constituency are double the social rents, there is no surprise in that. Our failure to build adequate amounts of social housing has resulted in our lining the pockets of private landlords on an industrial scale—and make no mistake: the policies of the current Government will make that situation worse.
Social rented homes in my constituency are a hugely sought-after commodity. Demand massively outstrips supply. If I had a pound for every time I have explained that in my surgeries, I would be a rich woman. In London, 350,000 people are on waiting lists, yet only a tiny fraction of those people will actually be able to move each year. If we are to meet the housing needs of my constituents, we must dramatically increase the supply of social housing. I am relaxed about whether that is housing rented out by councils or housing associations, but I am clear that it needs to be genuinely affordable.
What are the current Government doing to build more social housing?
Heidi Alexander
My hon. Friend gives the short answer. The current Government’s record over the last two years on social rented housing has been utterly shameful.
Sir Bob Russell
I regret the line that the hon. Lady is taking, because I thought the purpose of the debate was to try to secure consensus—unanimity—on the way forward. However, as she wants to make a critical point, will she confirm that the previous Labour Government built fewer council houses than the Thatcher Government?
Heidi Alexander
I can confirm that in the last five years of the Labour Government, 256,000 affordable homes were built. [Interruption.] I obviously heard the hon. Gentleman when he asked me about council housing and I have said previously that if properties are genuinely affordable, I do not have a problem with whether they are council houses or housing association properties. He talks about the purpose of this debate. My reason for coming to the debate was to scrutinise the policies of the current Government, who I believe are failing. I am sorry if the hon. Gentleman does not welcome my tone, but it is important to put these things on the record.
Let us look at the facts of what the Government have done over the past two years. The national affordable house building programme has been cut by 63%, and there is £4 billion less to spend on new affordable homes between now and 2015 than there was between 2008 and 2011, when we spent £8.5 billion. Some 259 new social rented homes were started across the whole country between April and September last year—a 99% fall on the same period the previous year. In London, a city of 7 million people, just 56 new social rented homes were begun in the same period, which represents 8,469 fewer social rented home starts between April and September last year than in the preceding six months. That is not the record of a Government who are committed to building the homes this country needs; it is the record of a Government who are failing.
In the past few weeks, I asked a major housing association in London to provide me with figures on the number of social rented homes it has built over the past three years and what it plans to build over the next three. Its response was illuminating. Although it has averaged an annual output of more than 1,000 social rented homes—homes that have been built new—in recent years, that figure will halve in the next three years. Those projections are borne out by the amount of social housing that has been granted planning permission since the Government came to power. Last week, Inside Housing reported that the amount of social housing that was granted planning permission in 2011 was virtually half that which had been granted permission the year before. If planning permissions are not granted, the homes will not be built—it is simple.
I also question the affordability of any homes that housing associations or councils do build in the next few years, and my hon. Friend the Member for Great Grimsby (Austin Mitchell) also picked up on this issue. The Government have their strangely named affordable rent model, which allows social landlords to charge up to 80% of market rents, thereby bringing in more money to cover the costs they laid out in construction. The problem is that, in some parts of the country, the rents, which are just 20% lower than market rents, will be anything but affordable. If people in receipt of housing benefit move into those properties, will we not just be adding to the housing benefit bill again? I could be wrong, but I thought that was precisely what the Government were trying to avoid.
The supply of social housing is a function of not only what is built, but what happens to existing homes in the sector. Debates about allocation policies are all well and good, but if there is simply not enough social housing out there to meet the population’s needs, we will just be working out how to cut up the cake, knowing there will never be enough to go round.
On the overall amount of housing available at rents that people can afford, the Government’s enhanced right-to-buy proposals are particularly worrying. Like my hon. Friend, I agree with the principle of a right to buy, but when there is such a shortage of council housing, it seems crazy to deplete the overall stock of socially rented homes. The Government will argue that, for every home sold, another will be built, but I do not see how the finances stack up. Research by Hometrack in December 2011 showed that, where a £50,000 discount is applied, the average receipt from a sale would be £65,000, which would be lower than the cost of delivering a new property. That leaves aside the issue of whether the replacement works on a like-for-like basis. Will a two-bedroom flat sold under the right to buy in London be replaced by the same sort of property in a similar location?
Mr John Leech (Manchester, Withington) (LD)
On that point, two-bedroom flats sold off in London should be replaced by larger properties to deal with the shortage of such properties in London. In the same way, there is a shortage of smaller properties in other parts of the country.
Heidi Alexander
I do not necessarily disagree with the hon. Gentleman, but building a larger property will probably cost more. There are real questions about how we get to a situation where we have the right sorts of properties in the right places. I just cannot see how an enhanced right-to-buy scheme will help to get people into homes at a price they can afford.
I have painted quite a bleak picture, but there are things the Government could and should be doing. They should level the playing field between councils and housing associations in respect of how they borrow money to invest in social housing. If we remove the cap on the borrowing that local authorities can invest, more money might go into new social rented housing. The Government should also be clear in the national planning policy framework that social rented housing is a priority, instead of leaving it to the whim of local authorities, as the current draft does. They should be clear and robust in their planning policy document.
Since the Government came to power, we have heard plenty from the Housing Minister, including lots of different initiatives and gimmicks. I have listened carefully to those announcements, waiting to hear something that will give hope to my constituents—the people I spoke about at the start of my contribution. To be honest, however, I have heard nothing in what the Government have said that will give them hope. We need a dramatic increase in the number of social rented homes being built, but nothing the Government are doing will bring that about.
Mr John Leech (Manchester, Withington) (LD)
I am pleased to speak under your chairmanship for the first time, Ms Clark. I, too, congratulate the hon. Member for Great Grimsby (Austin Mitchell) on securing the debate.
The contribution of the hon. Member for Lewisham East (Heidi Alexander) was somewhat unfair on the Government. I would just point her in the direction of the comments made by my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes), who noted the massive under-investment in social housing during the years of the previous Labour Government, when the economy was doing well. Throughout the previous Parliament, I, along with colleagues not only in the Liberal Democrats but across the House, argued for substantially more investment in social housing. Indeed, my hon. Friend the Member for Colchester (Sir Bob Russell) was arguing for that from 1997.
Heidi Alexander
One thing the previous Labour Government had to deal with when they came into office was the £19 billion backlog in repairs and maintenance investment in public housing, but they brought 1.5 million homes up to the decent homes standard. Does the hon. Gentleman not accept that that represented an incredible amount of investment in social housing, albeit it did not contribute to the number of new homes?
Mr Leech
I thank the hon. Lady for that intervention. I will not stand here and defend the ills of the Conservative Government pre-1997. However, the previous Labour Government could have done more at a time when the economy was doing well. As my right hon. Friend the Member for Bermondsey and Old Southwark said, the coalition Government have come to office at a time when there is not a lot of cash available.
Although I welcome the additional social housing that will be built over the next three to four years, I emphasise to my hon. Friend the Minister that we need to do more. I point him in the direction of the Department for Transport, where there has been significant capital investment in railway schemes at a time of significant budget cuts. Some capital investment in social housing schemes would be yet another way of helping to boost the construction industry and to deal with the massive shortage of social housing.
Governments cannot, however, be expected to do everything. Local authorities must play their part, and I want to make a few brief comments about that. My hon. Friend the Minister is aware of my concern about the changes to housing benefit regulations, and the prospect of tenants who under-occupy homes in my constituency losing housing benefit unless they choose to move to smaller properties. That policy has been widely criticised by housing associations and local authorities, including my own in Manchester, because of a lack of available smaller properties for tenants to move into. The hon. Member for Lewisham East mentioned a massive shortage of larger homes in London, but the problem in other parts of the country—certainly in Manchester, but also in other areas of the north of England—is a shortage of smaller properties for people to move into.
Manchester city council criticised that change in housing benefit regulations, but when it was given the opportunity to help to provide some additional, smaller social housing accommodation, it chose not to do so. Many local authorities—although London is an exception—have available land, which has been earmarked for housing development, and my constituency is no exception to that. In Chorlton, the former Oakwood high school site on Darley avenue has been earmarked for housing. However, Manchester city council says that there is already plenty of social housing in the area, so there is no need for more. It says so despite having argued that there are not enough available properties to allow under-occupying tenants to move to smaller accommodation. That seems to be a bit of a contradiction.
The council also argues that some homes will, by definition, be affordable, because some property will be available to buy on a shared ownership scheme. That is certainly true—and welcome—for people who are able to get on the housing ladder, but the harsh reality is that many people cannot get a mortgage in any circumstances; therefore, by definition, those homes are unaffordable for those people.
I return, therefore, to the point I made at the beginning, about local authorities taking on some of the responsibility. It cannot just be left to the Government to throw billions of pounds at housing development. Local authorities need to make land available—where they have it, because I recognise that some do not—for social housing.
John Cryer (Leyton and Wanstead) (Lab)
It is a pleasure to speak under your chairmanship, Ms Clark. I congratulate my hon. Friend the Member for Great Grimsby (Austin Mitchell) on securing the debate. Both he and my hon. Friend the Member for Lewisham East (Heidi Alexander) have said a lot of what I intended to say, so I shall be brief. I intend to speak purely on local issues, and how my constituency and borough are affected.
Six wards of my constituency are in the London borough of Waltham Forest and two are in Redbridge. The borough of Waltham Forest has a housing waiting list of about 13,000. The Redbridge waiting list is probably not much short of that. My hon. Friend the Member for Great Grimsby mentioned that about two fifths of people in the country cannot afford to buy a home. I do not have the figures to hand, but my suspicion is that, certainly in the four wards of Leyton, and almost certainly in Leytonstone ward as well, that figure will be much higher.
We are getting back to the sort of levels of overcrowding that probably were last seen during the Victorian era. Like my hon. Friends the Members for Great Grimsby and for Lewisham East—and other hon. Members in the debate—I sit in advice surgeries week in, week out, taking up housing cases, and I know there is little I can do about the vast majority of them because, as my hon. Friends pointed out, it is simply a matter of the relationship between supply and demand. That relationship is out of balance because of the failure, over a very long period—since 1979—to build council houses, and the partial failure to build social housing.
Yesterday I met a group of GPs from my constituency, mainly based in the Leyton area. We were talking about methods of preventing the sorts of illnesses that are common in my constituency—engaging in programmes of prevention rather than cure. Those GPs are perfectly honourable people, with perfectly good intentions, but the fact is that an awful lot of the problems that they deal with have to do not just with health but living conditions. When entire families live in single rooms—and I have met many who live in those circumstances, which as I said takes us back to almost Victorian levels of overcrowding—it will not be possible to deal with the illnesses, including psychological illnesses, that stem from those conditions.
When siblings must share not just rooms but beds; when there are many people in one room; or when people are in overcrowded social housing, or are tenants of cowboy landlords, in badly maintained and overcrowded properties, those people will not enjoy the best of health, or perform to the best of their ability at school. They will also encounter problems with work—and there are problems at work in any case. All those circumstances together bring things to a critical pitch, and I suspect that if we continue down the path we are on, with overcrowding, and bad living and working conditions, there will be an explosion in many of the illnesses that we associate with those conditions, and serious public health problems.
[Martin Caton in the Chair]
The number of home starts is now the lowest since 1923, whatever hon. Members on the Government side say. That is a pretty appalling record. I am the first to admit that the Labour Government should have built more council and housing association homes, but in reality an awful lot of money was ploughed into the decent homes standard. Many homes in the social sector—whether belonging to councils or housing associations and trusts—had fallen to such a low level of maintenance that there had to be investment. That is leaving aside the fact that investment was necessary in education and the fabric of schools, and in hospitals and GP surgeries. There was investment in housing, to bring the existing housing stock up to the decent homes standard.
However, in the last two years of the Labour Government some progress was made. When my right hon. Friend the Member for Wentworth and Dearne (John Healey) was Housing Minister, there were council housing starts in many boroughs, including London boroughs, for the first time, in some cases, in 25 or more years. If my right hon. Friend had had more time he would have emerged not just as a good Minister but a great one, and he would certainly have had an enormous impact on the lives of my constituents and many others.
A figure from the history of housing that I always remember is that in 1951, Winston Churchill, who was leader of the Conservative party, stood on a platform of building more council houses than the then Labour Government—the Attlee Government. We were building 200,000—it might have been more, but I think it was about that. It seems extraordinary now that a Conservative leader would say their Government would build more than 200,000 council homes a year.
The house building programme in the council sector peaked under Harold Wilson’s Government, at about 1 million homes a year, in the mid to late ’60s. If we could have even a fraction of that situation today it would make an enormous difference to my constituents, who struggle, day in and day out, with appalling housing conditions. At the moment we are in a vicious circle of cuts, resulting in more people being unemployed in the construction sector, less investment, and more people unemployed and claiming benefits. Since the election alone—in just under two years—65,000 people from the construction sector have joined the dole queue. If we were to invest in housing we could get into a virtuous circle. At the time of the election—this is not a party political broadcast—the deficit was falling, and so was unemployment. We were in a virtuous circle of investing in the public sector. We were building homes, among other things—council homes. We were starting to see a rise in the number of people employed in construction. Getting back to that position would have a great effect on the indigenous industries, the numbers of people employed in the construction sector and those whom I represent who live in appalling housing conditions.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I am grateful to the hon. Member for Great Grimsby (Austin Mitchell) for introducing this important debate. I want to make a few points. Having a constituency not very far from that of the hon. Member for Lewisham East (Heidi Alexander), we share many of the same analyses. Another London MP, the hon. Member for Leyton and Wanstead (John Cryer), has exactly the same sort of housing need pressure on him as I have had for every year since I have been a Member of this House. The pressure on me has not altered; it has been the same under Labour and Tory Governments and even under this Government. It is still 40% or more of the people who come to see me who ask for help with their housing. They may want new housing because they are living in overcrowded conditions, a first home at a cost they can afford, repairs to be done or whatever. The issue, therefore, remains hugely important.
A few months ago, the Halifax and Lloyds bank sent me—and probably many other Members—some key facts about my constituency. I think I knew them, but I will relay them to you, Mr Caton, for the purpose of the debate. The average house price in my constituency at the time this pamphlet was issued in December 2010 was £310,621. The average national house price was £164,310, which was nearly half the cost of a house in a seat such as mine, where most people come from a working-class background and where many have lived all of their lives, and generations before. The average earnings in a constituency such as mine were £52,755, while the average earnings across the UK were £32,178. Of course London earnings are higher, but they are not so high that they make up for the additional housing costs.
My first point is that for people in high-cost areas—it applies not just to London but to inner-city Leeds, Manchester and so on—the additional money that they earn does not make up for the additional cost of their housing. That is a challenge that can only be met by supported housing. By definition, if people do not have the wages to be able to buy into the private sector as owner-occupiers, social housing must be provided.
Secondly, we are required, therefore, to build as much as possible. All the evidence suggests that if we are to get people into work and keep them in work, we need construction projects, whether it is big infrastructure projects or housing. It is how we can get most people into work, doing skilled and productive jobs, and thus benefiting the local economy. It is a win-win situation: we house people and provide work for them.
Thirdly, I have a pre-Budget plea. The Chancellor could help this situation with some tax changes. If we taxed unused, undeveloped brownfield land as if it had been developed, we would incentivise the owners to use the land. They would realise that there was no point in sitting on undeveloped land because they would be paying the same tax as they would on developed land. Let me repeat publicly the plea that I have made to my colleagues in private. Site value rating—it can be called by another name—which the Liberal Democrats have espoused for many years, is really important. We must incentivise people to put their land on the market so that there is the space on which to construct our buildings. There are many unused sites in my constituency that still could and should be used for housing. We must have a tax system that incentivises proper development of property.
If there is new council housing, and there should be, we must change the rules over right to buy. The discount regime has been varied. It was much higher and was rightly brought down by the Labour Government, and it has been changed again under this Government. The incentive on councils to build new council housing is never going to be great if, immediately it is built, it is bought out of the council housing sector. There is an argument that different rules should apply to new-build council property and existing council property. I have never supported the discounts when they were high. There should always have been a regime in which the whole of the money went back to the council so that the stock could be replaced. For many years, though, the money went to the Government, leaving the council with only some of it.
I am in favour of mixed communities, but mixed use of blocks of properties, either flats or tower blocks, often does not work at all. There is the tenant who, in many cases, is there for life; the right-to-buy person, who will be there for life or a long time; and then the people who rent, either from people who have bought the flat or from people who have bought and sold on. They tend to be there for two minutes—I exaggerate slightly—and have no stake in the community. They are not naturally very good neighbours. They may not be inherently antisocial, but they may be students, visitors or here on holiday. Such a mix does not make for community cohesion, and we may need to have different rules in the future. I appeal to Ministers to think about how we manage multi-occupancy places—places that are not detached, semi-detached or terraced. The system does not work well at the moment. As any local authority will say, managing an estate with that mix of people is really difficult.
Heidi Alexander
The right hon. Gentleman is talking about the right to buy. Obviously, his Government have consulted on the enhanced right to buy. For the sake of clarity, I want to know whether he supports the proposed £50,000 limit on the discount that can be applied.
Simon Hughes
My instinct is to keep the limit where it is. There is such a need for social rented housing that we do not need to encourage people at the moment.
I have two final ideas. The hon. Member for Great Grimsby and I had an exchange earlier. It is important that we get out the message that it will be up to local authorities to decide whether all or some of their properties will be secure tenancies in the future. I worked very hard to ensure that that was the outcome. My colleagues will remember that in the summer of 2010, the Prime Minister floated the idea that it might be the policy of the Government to end secure tenancies in every local authority.
I was very clear about that from the beginning. I went to see the Minister for Housing and Local Government immediately and he helpfully allowed me to look at the housing policy paper. I was clear that we needed to have a policy that only allowed that if the local authority decided that that should be the policy. We must not frighten people, particularly older people, into thinking that they will lose their security of tenure where they are—that does not apply—or that it will follow that in future council tenancies in Southwark, Lewisham, Grimsby or anywhere else there will not be security of tenure. Councils can decide to keep every property, or 90% of properties or every estate bar one as secure tenancies if they wish. I support that as a principle of localism. I will fight to ensure that my local authority, whoever runs it—it has been run by us and by Labour over the years—retains the security of tenure for those who move into council properties unless there is an all-party consensus in a particular block that it should not be retained, for other management reasons.
Finally, I support the Housing Minister and my hon. Friend the Minister who will respond to this debate in saying that if there are people who end up with high incomes, it is wrong that as council tenants they do not pay for that property the market rent it would fetch on the open market. This is a difficult area. The Housing Minister has said that there should be a threshold of £100,000, which I support; that is an easy starting place. I cannot justify saying to my constituents who are knocking on my surgery door that there is not a place for them because someone with a family income of £50,000, £60,000, £70,000, £80,000, £90,000 or £100,000 is sitting in a council property paying a council house rent. We have to deal with that issue, because that is an inequity that was never intended to exist. These homes were intended to be for people on low incomes who could not afford to go elsewhere. At the moment, we have people in them who are on much higher incomes. I do not suggest that those people should be evicted—that would be inappropriate, because we want mixed communities—but they should pay the full whack.
In conclusion, I say to my hon. Friend the Minister that I am grateful for many of the initiatives that have been introduced, particularly the new homes bonus, which allows all authorities—including mine—to spend money on housing. I understand the difficulties that the Department for Communities and Local Government has had in trying to win the battle to get the money that it needs. I am pleased that the new affordable renting system does not mean that the properties concerned will all be at 80% of market rents; in London, I think the average is 64% of market rents, which is better than 80% of market rents. We must try to ensure that we have the maximum number of properties at lower rather than higher rents.
I will continue to urge my hon. Friend the Minister—as I know he would wish me to do—to argue within his Department and within Government as a whole that we should have more local authority housing wherever possible, or that we should give councils the freedom to build it, because we have a huge unmet need for such housing in many parts of our country. We need more local housing that is not all immediately swallowed up by being bought up and disappearing from the social housing sector. I hope that message is heard loud and clear within Government, and I hope that my colleagues within Government are arguing very strongly for it, so that at the end of five years the coalition can have a better record on housing than that of the Governments that have gone before; I know that that is my hon. Friend’s aspiration.
Chris Williamson (Derby North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Caton, for what I think is the second time.
I shall begin by congratulating my hon. Friend the Member for Great Grimsby (Austin Mitchell) on securing what is an absolutely vital debate. It has been a very good debate, and I am particularly encouraged by the contributions from all parties. We have heard contributions from the hon. Member for Cleethorpes (Martin Vickers), my hon. Friend the Member for Lewisham East (Heidi Alexander), the hon. Member for Manchester, Withington (Mr Leech), my hon. Friend the Member for Leyton and Wanstead (John Cryer) and the right hon. Member for Bermondsey and Old Southwark (Simon Hughes).
It is important that we set this debate in some sort of historical context; my hon. Friend the Member for Great Grimsby touched on that context in his contribution. There was a break in the post-war consensus, which existed from 1945 through to the election of Margaret Thatcher in 1979. After that election, we saw an ideologically driven Government that really set its face against public housing and many other elements of the welfare state. Council housing was run down and stigmatised, and ultimately we saw council houses being sold off in their millions, and now the Government are at it again.
The new right to buy is not fit for purpose because, first, there is a real problem in the adequate supply of affordable housing for people. Secondly, the commitment that for every house sold another one will be built is not really worth the paper that it is written on for many areas, and the reason is that the houses will not necessarily be built in the area where the houses are sold off.
To return to the historical context, after 1979, rents were driven up and houses were sold off. Then there was a large-scale voluntary transfer, with significant reliance on the private sector to make up for the houses that were sold off. The right hon. Member for North West Hampshire (Sir George Young), who was then Housing Minister, said when challenged in the House of Commons on 30 January 1991:
“Housing benefit will underpin market rents—we have made that absolutely clear.”
He went on to say:
“If people cannot afford to pay…housing benefit will take the strain.”—[Official Report, 30 January 1991; Vol. 184, c. 935.]
The Housing Minister of 1991 ought to talk to his contemporaries today to say that the direction of travel in which they are taking Government policy is absolutely at odds with that commitment, which was given by a Conservative Minister 20 years ago.
When the Conservatives chose to go down that course on housing, it was a spectacular failure; indeed, it was predicted that it would be a spectacular failure. Since 1991, the housing benefit bill has nearly quadrupled, from £6 billion to well over £22 billion. Then today’s Government—the coalition Government—have the temerity to blame the very victims of a policy failure for which a previous Conservative Administration were responsible back in the early 1980s and 1990s, when council houses were sold off and the private rented sector was supposed to pick up the slack. As the Housing Minister of the day said in 1991, housing benefit would “take the strain.”
Now we are seeing the consequences of that, and we do not really have anything to show for it other than a number of enriched private landlords. We have not got any houses particularly to show for this huge investment in housing.
What happened was that rather than investing in bricks and mortar, as used to be the case, the situation was turned on its head, and personal subsidy became the flavour of the day. That has resulted in the huge problems that we see now. As my hon. Friends have pointed out, we now have the lowest number of housing starts since the 1920s; there has been a catastrophic collapse in new housing starts.
Before the general election, on 30 April 2010, the Prime Minister gave a commitment that the Conservatives supported social housing and would “protect it”. However, one of the first things that they did when they came to office was cut investment in council housing and social housing by 60%. They then launched a wholesale attack on the rights of tenants in social housing. That was a grotesque breach of faith with the British public, as they said one thing before the election, then did the exact opposite on coming to office.
In my view, the cuts in housing benefit are a national scandal. They will do nothing to tackle high rents; all they will do is impoverish people who have no alternative but to live in rented accommodation. The bedroom tax is utterly shameful, and increasing the age rule for the shared accommodation rate to 35 is utterly despicable and an attack on young people, and on people who are not so young.
My hon. Friend the Member for Great Grimsby discussed a potential return to Rachmanism, but that has already happened. I addressed a public meeting in Brent at the end of last year, and a number of private tenants who attended told me that they had been in their homes for a long time but were being evicted to allow the landlord to rent out their properties at an inflated price to people attending the Olympics.
The Government’s approach in relation to so-called affordable rents, which are set at 80% of market rents, is nonsense. By definition, that approach makes “affordable” housing unaffordable and it will add to the housing benefit bill. People living in social housing will be caught by the housing benefit cap, which is absolute madness. Investment in council housing is absolutely key, and I hope that the Government will think again about their approach, because such investment would give a huge boost, not only to people who are in desperate need of affordable public housing but to the economy. It would create jobs in the construction sector, as my hon. Friends have already pointed out. Indeed, it would create jobs not only in construction itself but in all the ancillary trades and industries that go with construction when there is a buoyant housing market. It should also be said that 80% of the materials used on a construction site are procured within the UK.
The construction sector is on its knees. We need a new approach. The new homes bonus is not fit for purpose, it will not work and it will provide very few houses. We need investment and we have heard some excellent ideas today about linking quantitative easing to that investment, as well as ideas about the use of bonds, pension funds and so on. All those ideas should be considered by the Government. In conclusion, housing subsidy is a good thing; it is just a question of how we deploy it. We absolutely need housing subsidy in our country.
The problem is that the Government—this applies to both parties, because it was not changed when Labour came to power in 1997, so this is not a party political point—did not shift the subsidy back towards bricks and mortar. The Government really need to think again. If they are genuinely committed, and there appears to be cross-party support today for council housing, they need to think about their approach to council housing and their enhanced right to buy, which will decimate council housing in the north of the country, but not make too big an impact in the south. They need to look at the supply side, at new ways of investing and, in my view, change course. That is absolutely essential if they are to provide the housing that the people of our country desperately need.
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)
I am pleased to have the opportunity to respond to a very important topic in a timely debate. It is a privilege to serve under your chairmanship, Mr Caton. I am delighted to have the opportunity to respond to the hon. Member for Great Grimsby (Austin Mitchell), who is a long-standing and passionate campaigner for council housing. In fact, I think he has got more passionate every year that I have heard him, which is from 1997 onwards. I think his passion increased as his despair with his Government’s performance grew. Of course, he is not simply an advocate of social housing. I hope that he will not take this amiss, but he is a fundamentalist who is in favour of council housing.
Several temptations have been offered to me in this debate—for instance, to trespass on the work of my right hon. Friends in the Department for Work and Pensions in relating to housing benefit. I will not go there. I have been tempted to trespass on the toes of the Chancellor of the Exchequer in relation to the Government’s approach to stabilising the finances of this country and writing a new Budget. I will not go there. In the limited time that I have, I will focus on the key points relating to council and social housing. I want to make it clear that we accept the analysis that it would be a good thing to have more investment in housing. That is why we are investing more in housing. We think that it is a good idea to have more social and affordable homes. That is why we are investing in social and affordable homes.
I want to put very clearly on the record the statistics for social rented homes—local authority and housing associations combined. They show that in the 18 years between 1979 and 1997—dates chosen not entirely arbitrarily—the number of social rented homes fell by 1,122,000. Between 1997 and 2010—13 years—the number of social rented homes fell by 420,000. The average loss per year under the Conservatives’ 18 years was 62,000 a year, and the average loss per year during Labour’s 13 years was 32,385—a net loss of local authority and housing association homes.
As a result of our investment programme, in the five years from 2010 to 2015, for the first time since 1979 there will be a net increase in social and local authority homes. Although I am ready to concede that it would be good if we could do more, it is important to recognise that this Government are outperforming their predecessors by a margin. The problem is large. We currently have 1,840,000 families on local authority waiting lists in England. As several hon. Members have noted, the Localism Act 2011 gives back to local authorities the flexibility to manage their housing stock without reference to national diktats.
One thing to emerge from this debate is that there are many different housing markets and many different social housing markets. As an example, my hon. Friend the Member for Manchester, Withington (Mr Leech) contrasted the situation in his constituency with the problems facing the hon. Member for Lewisham East (Heidi Alexander). It is surely right that local housing authorities should have the right and the duty to determine for themselves what their social housing strategy should be, and the Localism Act gives them that additional flexibility.
The hon. Member for Lewisham East made a point about the national planning policy framework perhaps dictating to councils what land they should allocate for social housing. That is surely a matter for them to carry out a proper study of the circumstances in their area and to make appropriate provision.
Andrew Stunell
No, I have only two or three minutes left. I want to make a point regarding the reduced investment in housing alleged by the hon. Member for Lewisham East and by the hon. Member for Derby North (Chris Williamson). It is true that the amount of money that we are investing is lower, but of course the amount of subsidy needed is lower as well. Under the formula that we inherited, every social home built required a subsidy of £85,000 to be built. Under the affordable rents model, it requires a subsidy, on average, of £37,000. We produced a scheme that would invest £4.5 billion in social and affordable homes, and we told the House that we were confident it would deliver 150,000 new homes over the period to 2015.
We were mocked and scorned by the Opposition, who said that the model would not work; it could not possibly deliver. I have not yet received an apology now that we know that not 150,000, but 170,000 homes will be provided with the £4.5 billion injection. Contracts are being signed up all over the country by the Homes and Communities Agency. Indicative rent levels are in a range to fit local circumstances. The average affordable rents range from 65% in London to 79.5% in the north-west. In London, only 5% of the affordable rent homes are being offered at the 80% level. Those are in areas of comparatively low rental values in London.
I want to make a point about decent homes. If I can put it this way, Labour hoped that it had got a “get out of jail free” card for reducing the social housing stock. Of course, the Labour Government improved much of it. We are also improving 170,000 existing social homes to bring the remainder up to the decent homes standard. We are continuing that investment as rapidly as we can in all circumstances.
I will address points made by the hon. Gentlemen from the northern part of Lincolnshire: my hon. Friends the Members for Brigg and Goole (Andrew Percy) and for Cleethorpes (Martin Vickers) and, of course, the hon. Member for Great Grimsby. The new homes bonus does not simply apply to new homes, but to the reoccupation of empty homes. Indeed, the conversion of shops to homes would generate the new homes bonus via the empty homes route. I hope that those hon. Gentlemen will talk to their local authorities to see how best they can make sure that that is dealt with appropriately.
In my final moments, I will talk about right to buy. It seems to be generally agreed—certainly by the hon. Member for Great Grimsby and a number of others—that the problem with right to buy in the past was that there was no replacement policy. When the Prime Minister announced last September that the Government were reintroducing the right to buy policy, he made it explicitly clear that that was on a one-for-one replacement basis. [Interruption.] The hon. Member for Derby North disbelieves it. He disbelieved the 150,000, and we produced 170,000. No aspect of this Government’s policy has been taken at face value on Labour’s side of the road, and yet, every time, we have not simply delivered, we have exceeded. I ask the hon. Gentleman, just for once, to accept that the intentions of this Government are clear: to increase the social housing stock and to make sure that we maintain and deliver on the promises that we have made to the House.
Rossendale Rail Link
(12 years, 9 months ago)
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Jake Berry (Rossendale and Darwen) (Con)
It is a pleasure to serve for the first time under your chairmanship, Mr Caton. I am pleased to have secured this debate on the need for a commuter rail link between Rossendale and Manchester. The Government have made key announcements recently that High Speed 2 will reach not only Birmingham but Manchester, which is of great significance to the north-west of England. I also welcome announcements on the electrification of the Manchester-Preston and Manchester-Liverpool corridors. In addition, I am delighted that the Todmorden curve linking Burnley, Accrington and Manchester will be up and running next year. It is a superb achievement for the Conservative Lancashire county council, which, despite the doom-mongers and naysayers, has delivered a new rail service for east Lancashire.
The new rail development will be a huge driver of wealth and growth in our area and shows this coalition Government’s commitment to the north-west of England, an area in which I am privileged to have lived my entire life. Manchester, already a leading centre for commerce, is clearly set to grow rapidly and will remain the dominant commercial force in the north-west.
The biggest threat to the progress of the north-west’s economy, despite Government investment, remains transport capacity issues. I have praised the Government’s programme, but there is a significant gap in transport services to Rossendale. Our only north-south transport link remains the M66, named by TomTom in October last year as the most congested road in the UK. If the Government fail to deal with congestion to and from Rossendale, it is highly likely that the Rossendale economy will not track the region’s median growth rate.
Transport issues already have a significant negative impact on wages in the Rossendale valley, which are between 10% and 25% lower than in Manchester and the north-west as a whole. Wages are lower particularly for employees who both live and work in Rossendale, reflecting a lack of skilled opportunities that I believe is connected to our failure to provide a transport link. As a result, nearly 50% of the Rossendale working community commute out of the valley every day.
In this debate, I hope to press the Minister for guidance on how I can ensure that Rossendale’s economy grows and prospers in line with our region. The key is securing a north-south rail link connecting Rawtenstall, Ramsbottom, Heywood and Bury. A rail link is vital to local business. We in Rossendale do not want to send our brightest and best south down the motorway every day. A rail link will bring investment into Rossendale as well as supporting a mobile and skilled work force.
The rail link is not a new enterprise; I will detail some of the work already done to study it. In brief, the track exists, and a heritage rail line currently runs along it. Local partners support the link, including all local authorities and, I believe, all local MPs on a cross-party basis. If we succeed in providing the commuter rail link, we will have a virtually unique opportunity to run a commuter link along a heritage rail line. That not only makes sense commercially but is an opportunity for this Government to break new ground in supporting our heritage railways.
Graham Jones (Hyndburn) (Lab)
I echo the comments made by the hon. Gentleman and endorse that point. The rail link runs right alongside my constituency, so I fully support upgrading the line to a commuter line. I congratulate him on securing this debate.
Jake Berry
The hon. Gentleman, like me, has a history of supporting the rail link. I pay tribute to him for supporting a hugely important project.
To set the scene briefly, today’s east Lancashire railway is a heritage railway operating on two contrasting sections of line. Both were originally built in the 19th century, and both routes passed through the then-important mill town of Bury. That was all fine until on 27 March 1963, the chairman of the British Transport Commission, the infamous Dr Beeching, published the Beeching report, or, to give it its correct and more interesting title, “The Reshaping of British Railways”. It contained details of all passenger services to be withdrawn or modified.
To the complete amazement of the local population, the report proposed that Bury lose all three of its direct passenger services to Manchester, entirely cutting off stations such as Rawtenstall and Bacup. Although the Manchester-Bury electric service was eventually reprieved in 1966, services from Manchester Victoria to Bacup, Bury and Accrington ended. On 20 November 1984, the East Lancashire Railway Trust was formed as a partnership between two local authorities and the East Lancashire Light Railway Company to take forward the opening and ongoing development of the railway.
The first success came in July 1987, when the first four miles of track were reopened for regular passenger services—as a heritage rail line, I hasten to add—between Bury and Ramsbottom. On 27 April 1991, the ELR was extended a further four miles from Ramsbottom to Rawtenstall after the completion of major works, including the re-decking of three river bridges and one road bridge, re-signalling in Ramsbottom and the re-grading of Rawtenstall station in my constituency, where the train now terminates.
As I am sure the Minister will agree, it was a superb achievement to bring that line back from the brink and turn it into a fully functioning heritage line open nearly every weekend of the year. It shows the passion and dedication of local volunteers and the determination of the people of Rossendale, despite limited or no Government support for the east Lancashire rail link. We have succeeded with our heritage railway line, but now is the time to turn it into a viable commuter link.
Graham Jones
The hon. Gentleman is making a great case for the importance of the rail link. Does he agree that people in the area fully support that link? A survey in the Rossendale Free Press showed that the vast majority of people support it. The local district council, under both parties, has supported it as well. Does he agree that there is huge support for the upgrade?
Jake Berry
I thank the hon. Gentleman for raising that point. It gives me the opportunity to say that I do recognise the survey in the Rossendale Free Press, one of the finest newspapers in this country, along with the Lancashire Telegraph, both of which I hope will cover this debate.
We have succeeded in running a heritage line; now we want a commuter rail link. That holds its own challenges, which we acknowledge. The idea is not new. I will briefly take the Minister through some key developments since 2008. In 2008, a Halcrow report on demand modelling showed a low rate of return, and local authorities questioned the assumptions used. Rossendale local authority questioned them because the report did not take account of our regeneration plans, considered Rossendale as having a small catchment area for stations and assumed a highly attractive alternative bus service. Since the date of that report, the M66 motorway has been named as the most congested in Britain. The bus service is not attractive and, in fact, the bus services using the motorway have recently been reduced.
Jake Berry
I am sorry. I will not.
In June 2009, a report on the potential reopenings of rail lines nationally by the Association of Train Operating Companies investigated the Rawtenstall-Manchester rail link. The report said that it had a good business case, with a rate of return of 1 to 1.8. That was the fourth best in the 20 or so schemes that were looked at nationally. It assumed a high capital cost, I think as an acknowledgment of the challenges of running a heritage rail operation and commuter light rail side by side, but it had a much more positive approach on potential demand than the Halcrow report. It is my view, as well as the local authorities’, that the ATOC report best reflects relative demand and is a piece of work that we would seek to rely on in the future.
When the multi-area agreement was put in place for Pennine Lancashire, it was recognised that the east Lancashire rail link was a regional, east Lancashire priority, and that remains the case. Investment has gone into the Todmorden curve linking Burnley to Manchester. In addition, the Manchester-Blackburn railway corridor has recently seen investment. That may have followed a similar Adjournment debate that I had with the right hon. Member for Blackburn (Mr Straw), and I hope that we will have such success following today’s debate. Looking at the investment in those two lines, it is clear that there is a gap in the middle, and an ELR proposal would complement the Government’s other programmes in the region.
As the Minister will be aware, in late 2009, Manchester’s bid to the transport innovation fund failed following a referendum. However, as part of the TIF bid, a provisional sum of £30 million was allocated to the Rochdale-Rossendale corridor for the ELR. The east Lancashire and west Rochdale area study commissioned by Atkins in early 2010 is involved with a range of partners and has become focused on the ELR as it has progressed. The key issues investigated by Atkins focused heavily on the technical considerations of running a heritage rail operation in parallel with a modern commuter service.
Jim Shannon (Strangford) (DUP)
Does the hon. Gentleman feel that a tourism potential could be realised if the rail link is opened? If so, how does he think the Government could encourage that to happen?
Jake Berry
I thank the hon. Gentleman. The heritage rail line is already open and has a huge tourism potential. I am sure that it will continue to contribute to our local economy.
Returning to the ELWRAS report, the local authority’s view is that that developing piece of work has never properly addressed the demand potential, the socio-economic issues and the wider transport benefits. The report has not been finalised, and we hope that when it comes out, it will give regard to our desire for a rail link. As long as the report is not publicly available, the proposals are hitting the buffers, and we are hoping that the Minister will be able to leave the sidings and get the project back on track.
Reports aside, the most compelling case for a rail link in Rossendale is the business case. Knowing that we would have this debate today, I contacted the Rossendale business leaders forum to take some of its views. Lisa Thompson, who is a director of ISSL, an IT company based in Rossendale, and who also runs St Mary’s chambers, a conference centre, said:
“On behalf of St Mary’s Chambers in Rawtenstall we struggle getting people from out of the area to use our facilities as the public transport is so restricted. It means that you have to drive and with the price of fuel this can put people off. With a rail link that connects the wider area such as Ramsbottom and Bury and of course into Manchester would get more people visiting the area and attending events that are held here.”
Peter Boys of B and E Boys Ltd, a major construction contractor in the area, thinks that a rail link is “essential”—it would improve transport links into Rossendale and provide greater employment, making Rossendale more attractive as a place to operate his business. In his view, it would catalyse the development at New Hall Hey and have fantastic effects on jobs and the local economy, extending all the way up the Rossendale valley, through Stacksteads and Bacup. He also believes that it would bring people from Manchester to use Ski Rossendale, Golf Rossendale and the Adrenaline Gateway, which are well known local tourist attractions.
Julie Green Jones of Rossendale, the largest bailiff company in the UK, said that she worked as a nationwide company, and a rail link would give much easier access to clients, many of whom arrive in Manchester on national rail and have to be picked up. She also said that the provision of such a link would encourage people to live in the Rossendale area and provide her work force with opportunities.
Contributions were also received from Bob Killelea of Killelea Structural Steelwork and Amanda Grundy of Golf Rossendale. They all largely supported the idea. Such businesses are not small businesses but major service companies, manufacturers and builders. They are exactly the sort of businesses that we are looking at to pull us out of recession. I cannot speak for the entire Rossendale business community, but Mike Damms of the east Lancashire chamber of commerce probably can. In his view, the principle of connecting Lancashire is already established through the Todmorden curve, which has a far smaller proportion of its population—4%—currently commuting into Greater Manchester, compared with Rossendale’s 50%.
The young people in Rossendale, with small terraced houses, can feel that they are in a social trap. The culture of Manchester—the bright lights of the city—is actually very nearby, but for them it is socially and culturally inaccessible. That is an important point: we need to support our young people into highly paid jobs in Manchester.
The Minister can see that the demand for such a rail link does not just come from one MP; it comes from two, and I know that more would have been here today if they could have made it. The demand does not come from one political party, one business or one local authority. In fact, I have never been involved with a campaign that has had such overwhelming support from all parties.
I hope the Minister will enlighten me on how we can get past this battle of the studies, where we seem to have several studies contradicting one another on the relative achievability of the rail link. I also hope that he will give some clear guidance to me and the local authority about how we can take forward the funding proposal and, where relevant, make available officials in his Department to meet me, the local authority and other local MPs.
I think we as a Government have a commitment to make the whole country the best place in the world to grow and start a business. Rossendale has a skilled work force. We actually have affordable land and huge business expertise, but we are excluded and marooned in terms of transport. This country’s recovery will be driven by small business, not from London, but out of towns such as Rawtenstall, Haslingden and Bacup. If the Government are serious about backing business, I hope they will be serious about backing the Rossendale rail link.
The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I congratulate my hon. Friend the Member for Rossendale and Darwen (Jake Berry) on securing the debate, which is of considerable importance to his constituents who live in Rossendale. I know that he has been a strong advocate for his area on the issue for some time.
The coalition Government appreciate the economic benefits that investment in transport can bring to an area. Our priorities in the Department for Transport are economic growth and cutting carbon, so we welcome any proposals that address those issues. The need to encourage economic growth is particularly important in the north-west and, as my hon. Friend recognises, we have already taken steps to address that by announcing a series of rail investments.
My hon. Friend referred to High Speed 2 and the Todmorden curve. He might also have mentioned the electrification of the north-west triangle of lines between Manchester and Liverpool, Liverpool and Wigan, and Manchester and Blackpool; the go-ahead for the Ordsall curve, the first stage of the northern hub, which will help significantly to reduce journey times between Liverpool, Yorkshire and the north-east; the approval, subject to confirmation of the business case, of the electrification of the north trans-Pennine route between Manchester and York via Leeds; the approval of the Metrolink extensions in Manchester, which are being implemented by Transport for Greater Manchester; and our recent agreement with Northern Rail and First TransPennine Express for additional carriages to be provided in the north-west. I hope that my hon. Friend recognises that in the short time we have been in government, we have already done a great deal to promote rail investment in the north-west, not least for the reasons he has cited.
We recognise that wage rates in Rossendale are estimated to be 10% lower than in Manchester, the north-west and the UK as a whole—an estimate to which my hon. Friend drew attention. Transport has a key role to play in improving the economic well-being of an area. We are therefore happy to support the efforts being made by local transport authorities to improve transport in their areas so as to improve access to jobs and attract new employment. In particular, I agree with my hon. Friend on his point about young people having access to major conurbations for jobs and employment, and for social reasons, too.
Rossendale was particularly unfortunate to have its railway line closed as a result of the Beeching cuts of the 1960s and 1970s. Dr Beeching was so keen on cuts that he even cut his own line in Sussex. Lines on either side of Rossendale—between Bolton and Blackburn, and between Rochdale and Todmorden—are thriving. They are being used by greater numbers of people travelling to work in Manchester, and that has led to longer trains being provided and requests for better off-peak frequencies.
The closure of the railway line was bad news for the area. However, had that not happened, we would not have witnessed the tremendous success of the heritage east Lancashire railway, to which my hon. Friend rightly paid tribute. It has brought hundreds of thousands of visitors to the area, as well as creating new jobs. It has given a tremendous boost to the local economy and put the area on the tourism map. I pay tribute to the many people involved in this and other heritage lines, not least the Bluebell railway in my constituency. Such lines have succeeded in making heritage railways one of Britain’s great success stories in tourism towns.
Despite that success, I appreciate that the lack of a regular rail service can put an area at a disadvantage, particularly as regards providing access to a major employment centre such as Manchester. As a Transport Minister in the coalition Government, and also as a Liberal Democrat, I support fully the reopening of railway lines as a means of improving accessibility to places—subject, of course, to there being a satisfactory business case.
Graham Jones
Does the Minister agree that there is an urgent need for public transport investment? I caught the bus to Manchester and it took me two hours to get into the city centre. As the hon. Member for Rossendale and Darwen (Jake Berry) pointed out, the M66 is choked up.
Norman Baker
The hon. Gentleman anticipates my next point. I was about to refer to access to the A56, the M66, the M60 and the M62. They are used by express bus services, but they suffer from peak-period congestion—there is no getting away from that, and that has to form part of considerations—which makes commuting into Manchester by bus relatively unattractive. I understand why the local authority believes that the area is not benefitting from the growth in jobs and average wage rates experienced by other areas, including local areas.
The Department understands that local authorities and Transport for Greater Manchester are working together to see how their transport problems can be addressed. My hon. Friend the Member for Rossendale and Darwen referred to the 2008 Greater Manchester passenger transport executive study, which investigated the scope for using the east Lancashire railway to provide a commuter service from towns in the Rossendale valley to Manchester. The study looked at a number of options, including an extension of Metrolink and a new heavy rail service.
The estimated capital cost of adapting the heritage line to accommodate regular heavy rail services was estimated at between £22 million and £30 million. The study was very sensitive to the requirements of the heritage railway and came up with a series of proposals that enabled both types of service to operate at different times of the day, and days of the week. Personally, I think that the proposal for joint working could be a strength rather than a weakness. It also calculated the operating and maintenance costs of the various service options, suggesting that they would be approximately £1.5 million to £2 million per year.
At the time, the Department suggested that the PTE and local authorities follow up the study with some demand forecasting work, so that an estimate of passenger income could be made and a business case calculated for the scheme. The Department understands that this work was carried out, but we have not seen the results. However, we understand from the local authorities that they were unhappy with the assumptions used to forecast future demand, which has led to the conclusion that the business case for this scheme is not strong. Since that work was done, the Department has produced a guidance note on demand forecasting. It is available on our website; my hon. Friend might like to draw that to the attention of the local authorities.
We are aware that the line was one of many that the Association of Train Operating Companies looked at in its “Connecting Communities” report. Its very high level piece of work suggested it might have a business case of 1.8 at best. That in itself might encourage the local authorities to look again at the scheme in greater depth, with the help and support of train operators.
As for the next steps, it seems crucial for the local authorities to get together and look again at forecasts of demand, and to confirm whether there is a business case. If there is a good business case for a rail scheme and that still appears to be the best way of meeting local transport needs, further development work will be necessary, especially given the necessity of linking the scheme with the heritage railway. The promoters will need to weigh up the costs and benefits, and estimate the need for long-term subsidy. Transport for Greater Manchester and the local authorities will have to make the difficult decision of how high a priority to give the scheme, given the number of competing priorities that we are aware of, both in Lancashire and in Greater Manchester.
The Government can help. In addition to the advice that we are prepared to offer any promoter of a rail scheme, we provide capital funds toward transport schemes. We are currently consulting on the funding process for the major local transport schemes, which will come into effect from April 2015. We have made it clear that local authorities and local enterprise partnerships can use that to fund rail schemes, as well as other public transport schemes and highway schemes. That gives local bodies genuine choice over the best way to meet their local transport needs. We are moving away from the idea that local authorities simply deal with roads, and we are giving them the opportunity to consider road and rail—what is best for their areas. As the scheme will address primarily local needs, this would not be a project that the rail industry would be looking to fund in a future control period such as, say, 2019 to 2026.
We will shortly consult on rail decentralisation, with a view to giving greater responsibility for specification of rail services to local authorities and PTEs. Transport for Greater Manchester appears to be very enthusiastic about taking on such responsibilities as part of a larger consortium. The local enthusiasm for transport is probably more advanced in the Manchester area than elsewhere in England—a good development from my hon. Friend’s point of view. A new service to Rossendale is just the sort of service that could be included in a network of services that could be devolved.
In conclusion, I encourage the local authorities and Transport for Greater Manchester to complete the demand forecasting work to establish whether there is a business case, and to continue to consider alternative ways of addressing the issues raised in the debate. Both Lancashire county council and Transport for Greater Manchester are experienced in considering such projects, but the Department is happy to provide advice and guidance if that is needed. I am happy to arrange a meeting with officials, local representatives and my hon. Friend, if that would be helpful in taking the matter forward.
Not-for-profit Advice Sector
(12 years, 9 months ago)
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Yvonne Fovargue (Makerfield) (Lab)
It is a pleasure to serve under your chairmanship, Mr Caton.
I begin with the comments made by the Lord Chancellor and Secretary of State for Justice, who said that the proposed changes to legal aid are not an attack on women and children; they are an attack on fat cat lawyers. Perhaps he could say that to the 1,000 people who used the specialist welfare benefit advice service at the Bolton citizens advice bureau in the month of January alone. Perhaps he could say that to someone like Jeannie, who e-mailed last night, extremely pleased with the result in the House of Lords, saying that perhaps now people like her can leave an extremely dangerous situation and receive the financial help and support to do so before they are murdered.
The changes to legal aid will have a destabilising effect on the funding of advice agencies, law centres and citizens advice bureaux. Hundreds, if not thousands, if not millions, will lose out. The funding cuts will have a disproportionate effect on the not-for-profit sector, which the Government’s own impact assessment agrees will receive 77% of the cuts to civil legal aid. As I have often said, advice agency funding is a bit like a game of Jenga—it is complicated, it is interdependent, and small amounts removed can lead to the whole structure crashing down, leaving vulnerable clients underneath with nowhere else to go.
It is not worth looking at the new position under the Legal Aid, Sentencing and Punishment of Offenders Bill without looking at the current position. Citizens advice bureaux say that they will receive £51.3 million less in 2012-13 than in 2010-11. Law centres have had a 52% cut in their local authority funding. Coupled with the devastating effect that the legal aid cuts will have, citizens advice bureaux will lose £28.4 million, and law centres will lose £6 million and more than 85% of their current legal aid funding. Up to 18 law centres could be lost and up to 50% of citizens advice bureaux—more than 200 bureaux with 1,500 outlets—could close completely. If the changes go through, 100% of law centres and CABs say that they will operate on a vastly reduced service.
In total, the not-for-profit agencies will lose £51 million. In my borough of Wigan there will be a cut of £428,000 for specialist work: the citizens advice bureau loses £133,000, which is 3.5 caseworkers plus their admin support, and the legal aid lawyers, who provide the rest of the social welfare law help, will lose the remainder. These are not fat cat lawyers; they are lawyers working with the most disadvantaged people in their community.
Rehman Chishti (Gillingham and Rainham) (Con)
With regard to not-for-profit advice services and centres, has the hon. Lady seen the statement dated 22 November 2011 by the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), who is the Minister for Civil Society? He says that the Government have committed £16.8 million towards not-for-profit advice centres and services.
Yvonne Fovargue
I have seen that statement. I will mention statements made by Ministers, including both the Secretary of State for Justice and the Chief Secretary to the Treasury, who yesterday made an announcement about advice funding.
Citizens advice bureaux alone will lose 500 specialists. Make no mistake: this is specialist work. It is not simple form-filling, which people can do by themselves. The bureau in my constituency told me that in the past three months appeals to the commissioners have increased by 50%. Surely, people are not expected to do this by themselves.
I will tell hon. Members the story of one CAB client called Sharon, who went there when she was told that her income support claim would be stopped as she was living with her ex-husband Darren, who should support her financially. After a lengthy interview with an adviser, Sharon told the specialist caseworker that she was not living with Darren, but that he used her address for financial purposes as he often did not have a permanent address for long periods and that he also stayed, on occasion, to help care for her, as she had severe and chronic mental health problems.
The adviser challenged the Department for Work and Pensions decision, using the lengthy, complex case law about the living-together test, and provided a written submission to the tribunal contesting the DWP’s interpretation of the case law, and expert evidence to show that Sharon’s relationship with Darren was a close friendship. At the appeal, the tribunal judge commented on the substantial body of evidence provided by the specialist and used it to conclude that Darren’s relationship with Sharon was
“more akin to an adult child who goes to care for a frail elderly relative who is living in their own home.”
All Sharon’s benefits were reinstated.
Where does the Minister expect people like Sharon to go for help in future?
Mr Andrew Smith (Oxford East) (Lab)
I congratulate my hon. Friend on securing this important debate and support the argument that she is making so eloquently. Is it not a particularly cruel irony that these cuts happen at precisely the time when, because of benefit cuts and working tax credit loss, families are under especially acute pressure? Therefore there is double harm from these damaging cuts.
Yvonne Fovargue
I agree. The need for advice will increase when universal credit and the personal independence payment come through. All evidence from the past proves that the need for advice increases when there are changes to the benefit system, particularly in the six months before and after.
There will be no places to go to pick up the slack. Age Concern, the pro bono unit and the free representation unit—all the agencies mentioned by the Minister and the Secretary of State as being able to pick up the slack—have categorically said that this is not possible. Specialist services will be lost.
Susan Elan Jones (Clwyd South) (Lab)
I congratulate my hon. Friend on securing the debate. To be honest, most hon. Members would be delighted if these measures concerned fat cat lawyers.
Six paid posts will go at Citizens Advice in Wrexham, leading to an additional problem. What happens to the service that is provided for a couple of hours a week or a fortnight in the surrounding villages? Does my hon. Friend agree that, if services were cut, the impact on villages such as Rhosllannerchrugog and Chirk would be devastating for people living there, particularly those who are currently out of work or on low incomes, who would have to pay additionally for travel to the urban centre—if they could get appointments?
Yvonne Fovargue
I agree. The effect on people using the services, who are disproportionately on a low income, will be devastating. Individuals will not appeal, which will end up costing the state more—hon. Members should remember that they have been unlawfully denied benefit—or may take the case themselves and be unable to present the evidence effectively or provide the right sort of evidence, or will end up at their Member of Parliament’s surgeries. I think all hon. Members will admit that we are not legal experts. However, there will be nowhere else for us to refer such people. I recommend to the Minister a report produced by the Young Legal Aid Lawyers, which demonstrates how much MPs rely on their local advice centres.
Yvonne Fovargue
I need to make a tiny bit of progress, but I will later.
So far we have talked only about welfare benefits. Debt clients will lose access to early advice, giving the perverse result that they may be sent away and told, “If you get into more debt and are at risk of losing your home, we might be able to see you.” Clients who are unlawfully dismissed from employment will have nowhere to go and will end up claiming benefits.
This loss of specialist provision has great implications for the future. The experience of specialists will be lost, not just for this generation, but to future generations, because they are training other advisers—often volunteers—but will be unable to pass on their experience because they will not be there within the agency.
I remind the Minister of the cost of cases. A case such as Sharon’s, which has benefited her, cost £148. That is how much a welfare benefits case costs. A debt case costs £180 and a housing case costs £160. What are the knock-on costs to the other agencies of removing this small amount of funding?
The Minister has said many times that he disagrees with the King’s College and CAB figures on the savings made to the state by keeping such matters in scope. What is his estimate? Has any estimate been made by the Government of the knock-on costs of removing specialist work from legal aid?
The real tragedy, as my hon. Friend the Member for Clwyd South (Susan Elan Jones) mentioned, could be the loss of whole agencies. Often, large agencies have done the right thing and diversified their funding and contracted with the Legal Services Commission. The services provided by the Manchester community legal advice service were jointly commissioned by the local authority and the LSC in October 2010. A three-year contract was awarded until October 2013, with the possibility of two more years if the targets were hit—and they have been. Some £1.2 million of legal aid funding will be directly lost by that service and that is likely to have knock-on costs of another £800,000 leading to more than £2 million being lost from that service. In addition, 34 specialist advisers will be lost and 97% of the specialist services throughout Manchester will go. Contracts have been signed for premises and other essentials, predicated on the three-year contract that was given to the service. Cuts pose a risk to the continuation of the whole CAB and community legal advice service in the city of Manchester.
In effect, Manchester could become a desert in terms of face-to-face advice. Who in the city will be affected by that? The majority of the clients, as my hon. Friend the Member for Clwyd South said, are on low incomes, or have a disability, or are black and minority ethnic. They experience higher than average rates of unemployment, debt and homelessness. These are the people that the cuts will affect—not fat cat lawyers. Will the Minister please comment on the future of the community legal advice services, whose staff signed contracts in good faith and now find that those contracts are being reneged on? That is just one example.
When this matter is spoken about in the main Chamber there are many fine words from all parties, but as a feisty volunteer said to the mayor when he spoke about the CAB in respect of a funding cut, “Fine words butter no parsnips. Let’s see the colour of your money.” That is what we need.
We may talk about the transition fund—£20 million given for advice agencies—but transition, to me, means moving on. I cannot see where advice agencies are going to move to, to get specialist funding. I feel that a lot of them will be transitioning into oblivion.
Toby Perkins (Chesterfield) (Lab)
I congratulate my hon. Friend on securing the debate. She is hitting on a key issue; the continued existence of the advice agencies is obviously important but ultimately, if their clients cannot afford to access the services, the existence of the organisation itself is of little value. The legal aid funding that supported welfare claims and appeals was fundamental to many of those people continuing to access benefits to which, it turned out, they were entitled. She is generous to assume that the Government are genuine about wanting to find an alternative, but is it possible that they like the idea that a lot of people will not be able to claim the benefits in the future? That would save money not only on legal aid but in welfare. Is it possible that everything has been planned?
Yvonne Fovargue
Were I a cynic, I might agree with my hon. Friend. Only a few weeks ago, in this very Chamber, the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), mentioned that the backlog was of almost nine or 10 months, which will certainly not be the case if people do not have access to appeals any more.
I welcome the announcement by the Chief Secretary to the Treasury that there will be more money for advice, but I am a pragmatist and have worked for an advice agency, so the bottom line is when, how much and what for—without answers to those questions, my welcome cannot be too great. As my hon. Friend the Member for Chesterfield (Toby Perkins) said, is it a coincidence that the funding will be removed at the same time as the need for advice will increase? What assessment has been made of the need for specialist advice in the period of change? Finally, has the Minister—I know it is not his area—discussed with his colleagues when the advice review is due to be published? I thought it would be essential to publish the results of the advice review before the decisions are made on the removal of legal aid from advice agencies.
I welcome the vote in the other place that people should have access to legal services that meet their needs effectively. Citizens Advice and other advice agencies have been offering such services for more than 70 years, which are as vital now as they were then.
Dr William McCrea (South Antrim) (DUP)
Advice services such as Citizens Advice have expressed concerns about the effect of the Bill. Citizens Advice stated that
“what’s left…of legal aid will be…unworkable for too many advice providers.”
Is that the opinion of the hon. Lady as well?
Yvonne Fovargue
It is, because of what is known as a critical mass in the area. We should not forget that advice agencies have already suffered an unplanned 10% cut in the rates of such cases this year. To remove legal aid completely would be to destabilise; for the small amount of work left in scope, it might not be worth employing an adviser—in fact, an adviser could not be afforded.
I have always believed that a thriving advice sector contributes to a healthy society with fairness and access to justice for all at its heart. The changes to legal aid rip the heart out of the advice sector and will leave the vulnerable lost and alone, knocking at the doors of cash-starved local authorities and of MPs’ surgeries. The changes are not only heartless but economically unsound.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on securing the debate, and on her contributions to a vigorous and informative discussion of an important issue. I understand and share the strong concerns expressed, and the high level of interest, in debates on the value of the not-for-profit advice sector throughout consideration of the Legal Aid, Sentencing and Punishment of Offenders Bill in both Houses. Today, I would like to deal with the concerns expressed on behalf of Jeannie, Sharon and other vulnerable people, and assure the hon. Lady that we have listened and are taking action.
The Government value highly the important role of not-for-profit organisations such as Citizens Advice and law centres in delivering advice services locally. The Government want to support such organisations, particularly at the current time. Reforms to the legal aid system will, as the hon. Lady is aware, reduce the organisations’ income, and my colleagues throughout Government and I appreciate that times are difficult for free advice services, which are understandably concerned about their future. Given the financial climate, however, any Government today would have to take difficult decisions and make major changes to the services that they fund. Legal aid expenditure is approximately £2.2 billion per annum, which is 25% of the Ministry of Justice’s budget. Legal aid must play its part in fulfilling the Government’s commitment to reduce the fiscal deficit and return this country’s economy to stability and growth. The proposed legal aid reforms therefore have the additional aim of achieving substantial savings.
We are not making the changes lightly, although the importance of seeing them in context cannot be overstated. Our structural deficit, which we inherited from the Opposition, and their mismanagement of the economy present a range of challenges to our economy and to our ethos on public service provision. I am, however, confident about, and stand by, the criteria that we have employed in determining what areas should attract funding under the Bill.
In the Bill, we have sought to define clearly those areas that the Government believe should attract public funding in future under a reformed legal aid scheme. That will allow at least some certainty as to the areas in the legal aid market that we will continue to support and that, I hope, will thrive. We are aware and fully acknowledge that there will be implications for future provision: fewer legal aid providers are likely to be needed; the methods through which many services are delivered will change; organisations might change; and advice provision will also change. That is alongside other changes to the legal market, such as alternative business structures. The full impact assessment has been published, but the hon. Lady also asked about the knock-on costs, and it is true that those are sometimes difficult to define because they often depend on behavioural change, such as people switching from family courts to mediation.
The result of the changes is not necessarily the decline of a thriving legal aid market; the market can still thrive if it adapts. We must acknowledge the need for acceptance and recognition of the fact that the market will be different. We must consider constructively how best people can be assisted, and how sustainable voluntary organisations can be run under the new framework. The important issue is whether services will be available for clients, rather than whether that service is provided by any particular type of provider in a particular way. The expansion of telephone-based advice, to which the hon. Lady referred, will create contracting opportunities, and we already have examples of providers, including those from the not-for-profit advice sector, that run face-to-face contracts alongside centralised telephone advice contracts as part of their business model.
Yvonne Fovargue
How would the Minister answer Steve Hynes from the Legal Action Group, who said that if we wanted to create a system that removes access to advice, we should make it a telephone-based system?
Mr Djanogly
I have spoken to the gentleman about that, as I have to the hon. Lady, who made the same point in Committee. The Government are determined in their view that telephone advice, if used appropriately and provided for the right clients, can be a helpful service, not least for those who are disabled or live in remote rural areas, for instance.
Andrew Percy
I appreciate what the Minister is saying. As he must know from his surgeries, many constituents come to us and say that the last thing that they want to do is have a telephone conversation with us—they want to see us face to face. Can he assure us that residents who need assistance and do not want to access it down the telephone line—a lot of older people in particular have problems with that—will continue to be able to get face-to-face advice?
Mr Djanogly
The telephone service will be used only in a limited number of areas, so that we can see how it works, and yes, if someone is unsuitable for receiving telephone advice, perhaps because of their age, the alternative of face-to-face advice will be available.
I am pleased to see good examples of not-for-profit organisations acting innovatively, forging partnerships with other organisations and adapting to the changing face of advice provision. I accept that the proposed reforms are likely to be particularly challenging to the not-for-profit sector. Legal aid, however, is only one of many funding streams that citizens advice bureaux and law centres receive. For example, legal aid represents only 15% of the income of citizens advice bureaux. I also point out that our scope changes have not yet happened and will not do so for another year, giving us time to look at the changing needs of the market. Indeed, one of the major issues for the sector is changes to other sources of funding, such as local authority cuts, which are determined by local priorities, not central Government.
Toby Perkins
I am encouraged by the Minister’s suggestion that he has an open mind when it comes to listening to the concerns of the not-for-profit sector. I recognise what he says about the need to reduce the overall legal aid bill, but he will be aware of amendment 11, which was proposed in the House of Lords and which deals with social welfare law. My concern is that if the Minister comes through with this policy without identifying an alternative, the most vulnerable people, who are used to being on benefits and suddenly find that they are not eligible, will be desperately marooned. Will the Minister give us a sense of who might pick up the slack in those cases? If not, will he consider giving Government support to that amendment, rather than scrapping the entire savings proposals?
Mr Djanogly
No. What I will do is give the hon. Gentleman a clear idea of what the Government propose to do to ensure that that slack, as he called it, will not be forgotten or missed. We are committed to ensuring that people will continue to have access to good-quality, free advice in their communities. That is why the Government acted, and set up the £107 million transition fund to support the voluntary sector in managing the transition to a tighter funding environment. That is why we also launched the £20 million advice services fund, and a Government-wide review of free advice services. The advice services fund was always intended to provide support to the sector in the short term only, with the Cabinet Office review of the advice sector providing longer-term solutions. I can advise the hon. Member for Makerfield that the review is expected to conclude later this spring, and it will provide recommendations on proposals to secure the long-term sustainability of the sector.
As the hon. Lady said, the Chief Secretary to the Treasury announced only yesterday that the Budget statement will set out that further additional funding will be made available to the not-for-profit advice services in the current spending review period to support the Cabinet Office review, so that advice services are sustainable over the long term.
Sarah Newton (Truro and Falmouth) (Con)
I very much welcome the Cabinet Office’s work on changing the advice landscape. Will the Minister assure me that when discussions are held with the National Association of Citizens Advice Bureaux, it is encouraged to ensure that it passes the new money down to the local citizens advice bureaux, which is where most people experience the organisation’s high-quality work?
Mr Djanogly
Yes. The work that is being done through the Cabinet Office is looking at local CABs. I thank my hon. Friend for making that point, and also for highlighting that NACAB is funded quite separately from local CABs. It is mainly funded by the Department for Business, Innovation and Skills; that is bringing a new player into the debate. That point also highlights the complexity of the debate. One of the problems we have had in the run-up to and passage of the Bill was confusion when people misunderstood the nature of legal advice, and the general advice that is the core of CAB provision, which we are so keen to maintain.
With regard to the issue of existing contracts for law centres—community legal advice centres and networks—which was raised by the hon. Member for Makerfield, we will honour those contracts and review how best to implement the Bill when contracts need to be re-let. The needs of Manchester and the local area will be carefully considered as part of that review.
Yvonne Fovargue
I do not think there is a lot of confusion between generalist and specialist help in the minds of the people who use and provide it; it appears to be just in the mind of the Government. The specialist help is needed for areas such as welfare benefits. The Government have tried on many occasions to say that that is about simple form-filling. It is not. There are 8,690 pages of Department for Work and Pensions guidance given to its decision makers.
Mr Djanogly
As the hon. Lady knows, where there is a risk to someone’s security or liberty, or where someone is at immediate risk of losing their home, we are not ending legal aid for civil advice. There seems to be a misconception that we are taking away all legal aid for civil advice. That is simply not the case. We are prioritising our help for those who are most vulnerable, given the overall funding that we have to work with.
I can confirm that my Department is working closely with colleagues across Government, and particularly with the Cabinet Office, which is leading on this area, to support this important cross-Government work. The Prime Minister and Deputy Prime Minister are aware of the ongoing work; I hope that will assure hon. Members that the Government are listening to the concerns being voiced about the not-for-profit sector, and are urgently taking work forward to address those concerns.
Sustainable Communities Act
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Stephen Williams (Bristol West) (LD)
I am delighted to have secured this debate. Although I have been a Member of Parliament for seven years, this is the first Adjournment debate that I have secured, and I am pleased that it is on such an important topic. Depending on the Minister’s response, it is potentially a groundbreaking debate about an aspect of the planning process that will affect all constituency MPs and the local government areas with which we work.
I remember the Sustainable Communities Act 2007 from the previous Parliament. The Bill had cross-party support but began in the 2001 Parliament with my former colleague, Sue Doughty, then the Liberal Democrat MP for Guildford. Sadly, she lost her seat in 2005, but the baton was taken up by the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd), who is now a Member of the coalition Government. The Bill became law in 2007 and is a bottom-up process in legislation—I know that the Minister, whom I greatly admire for his philosophy of localism, has endorsed it on many occasions.
Under the Act, the Government have a duty to help local councils and communities by responding to their suggestions. It is not only about consultation, but about trying to reach agreement with central Government on how those suggestions could be taken forward. If that practice is adopted, it would represent a whole new strand of governance at local level in our country.
There was considerable enthusiasm across the country for the Bill even before it became an Act. In my first year as a Member of Parliament, I addressed a packed public meeting at the Elmgrove centre in Redland in my constituency. That was the first time that I worked with Local Works, which campaigned for the Bill outside Parliament. Steve Shaw, who heads that organisation, has helped me to prepare for today’s debate. The Act had cross-party support and showed the House of Commons at its best. Its purpose was to enable local councillors and communities to put suggestions to central Government on how to improve governance at local level. Today’s debate concerns an example of a council that has taken advantage of that legislation.
In June last year, a small council in Suffolk, Leiston-cum-Sizewell town council, faced a difficult situation when it was sent a planning application for a large out-of-town retail development. Although Suffolk Coastal district council is the planning authority, parish and town councils such as Leiston-cum-Sizewell have a statutory duty to comment and a right to be consulted on such applications. The application in question presented the council with something of a problem: it was 12 inches thick and consisted of 10 specialist consultant reports that had been prepared by the applicant or their advisers. The council could have made comments based on community feeling, or it could have worked diligently and properly—as I am sure its electors would have expected it to do—and ploughed through that documentation and come to a considered opinion. Essentially, we are all in the same position. I am often asked as an MP to comment on planning applications in my constituency. As it is a city-centre constituency, a huge number of such applications are received every week, let alone throughout the year, so I do feel the pain that that small town council in Suffolk experienced last year.
District councils, or unitary authorities such as the one that I am more used to in Bristol, have large planning departments and professional planning consultants to advise councillors when determining planning applications. Parish and town councils, however, usually have only a town clerk who may even work part-time, so the whole system is stacked against them.
The proposal from Leiston-cum-Sizewell is designed to address such situations. At its meeting, the town council asked for two things, and I hope that the Minister will respond to these requests. First:
“That any applicant or representatives of any applicant who submits such an application that will have a significant effect on an area must, if requested by the Town or Parish Council attend a meeting of (i) that Council to answer questions from elected councillors; and (ii) a Town or Parish Meeting,”
of all citizens in the area who are interested in the application. Such a move would have an effect across the country. Large urban areas, such as Bristol West which I represent, are not in parishes but they have active residents associations. Liberal Democrat controlled Bristol city council has set up a network of neighbourhood forums in which local councillors can comment and exercise decision-making powers over expenditure in their communities. Such a proposal could be applied across the country.
The second request is that any applicant who submits a planning application that will have a significant effect on an area should,
“if requested by the Town or Parish Council, or a Town Meeting, pay for the Council or Meeting to get an independent assessment carried out as to how the proposed development will affect the sustainability of the local communities.”
That would have been a live issue this time last year when a well-known supermarket—Tesco—was acquiring planning permission for a new store in the Stokes Croft area of my constituency. There cannot be many Members of Parliament who have witnessed widespread civil disturbance and rioting because of a planning application for a shop, but I am afraid that is what my constituents experienced in April last year. When everyone else was enjoying the royal wedding, I was with the police witnessing mayhem on the streets. It was all because of a planning application that the community felt had not been handled properly, either by the council or—more significantly—by the developer, which people felt had not engaged properly with the community. The proposal to require a developer to pay for independent advice and an assessment on how any significant planning application will affect the local community, will strike a chord with my constituents and many communities across the country.
The proposal was considered by Leiston-cum-Sizewell town council on a cross-party basis. It was proposed by Councillor Ron Bailey, an independent green councillor who I am pleased to see is attending the debate today, together with Conservative Councillor Richard Geater and Socialist Councillor Bill Howard. There must be something in the sea air in Suffolk Coastal because no Liberal Democrats were elected to the council. Nevertheless, I will do my best to move the proposal along in this arena.
If small local councils such as Leiston-cum-Sizewell, or parish councils, or indeed local communities that do not have that level of local governance, wish to have independent consultants and advice, it is often financially impossible for them to do so. Therefore, I am particularly attracted by the second proposal that funding for that should be provided by the applicant.
We are discussing large-scale applications, such as those for a superstore, in which applicants—particularly the big supermarkets—will spend millions of pounds on acquiring the land and bringing their proposals to fruition. Therefore, the cost of an independent assessment would be only a miniscule proportion of their capital outlay on a scheme.
Since Leiston-cum-Sizewell town council in Suffolk proposed the motion, it has attracted widespread support—support right across the country from the family of 1,500 town, parish and, indeed, Welsh community councils. As you will know, Mr Caton, since the disestablishment of the Church in Wales, there are no parish councils in Wales; there are community councils instead. The proposal struck a chord throughout the country, and Local Works has given me several examples of parish councils that have faced similar situations.
Waldringfield parish council, which also happens to be in Suffolk, faced an interesting proposal to build 3,000 extra houses in the neighbouring parish. Obviously, that would have a major impact on its own community. Closer to home for me, Tibberton parish council in Gloucestershire was sent an application so large that it was contained in three huge boxes of plans and documents. It had to have them delivered from the district council’s office, because all it had been sent was a CD. Presumably, it was not possible for it to print out all the documentation itself.
Durnford parish council in Wiltshire has lent its support, as have Southwold town council in Suffolk, Woodhouse parish council in Leicestershire and High Legh parish council in Cheshire. In fact, I could list quite a few more councils to show how widespread the support is for the imaginative proposal that originated from Suffolk.
What Leiston-cum-Sizewell council, all the parish councils and the parts of England where we do not have parish councils are looking for from the Minister today is another positive indication that the coalition Government take localism incredibly seriously. They have embarked on an imaginative series of proposals to reinvigorate local government. I know that the Minister is in the process of negotiating a city deal for my home city of Bristol. We may be having elected mayors across the country as well.
This is about the grass-roots level of local government, which matters more than anything else to local people. All of us, but particularly those of us who have worked our way up the system—I was a county councillor, district councillor and unitary councillor before becoming a Member of Parliament—know that planning applications can excite people in a way that we might not anticipate when the documentation first appears through our letter box or in our inbox. Communities care very deeply about local planning applications, whether they are for superstores, football stadiums, extensions to cricket grounds or a whole host of other large applications that I could name in my constituency.
This proposal, under the Sustainable Communities Act 2007, puts power back into the hands of local people, into the hands of their local community representatives if they have them and, in the case of the cities where they do not, perhaps directly into the hands of residents associations, too. The Minister is a committed localist. I hope that he can make some favourable comments about the proposals that I have outlined today.
The Minister of State, Department for Communities and Local Government (Greg Clark)
It is a pleasure to speak under your chairmanship, Mr Caton, and to have been present to hear what we now realise was the maiden speech of my hon. Friend the Member for Bristol West (Stephen Williams) in an Adjournment debate that he had called. It was a very accomplished one, reflecting his own passionate commitment to localism, which the House has come to know about over the years. I congratulate him on securing the debate. I also congratulate Councillor Bailey, who has shown that it is possible for the resolution of a parish council or, as in this case, a town council to be debated in Parliament, too, so that the views of local people can go straight to a national debate and be considered in that way.
I join my hon. Friend in paying tribute to the authors and midwives of the Sustainable Communities Act 2007. It is indeed landmark legislation. Like him, I first encountered it when I was a candidate for this place. In fact, the morning after my selection as the Conservative candidate for Tunbridge Wells, which is now my constituency, I was canvassing on the doorstep and one of my constituents-to-be, Philip Clarkson Webb, said, “I have only one question for you. If you are elected, will you be supporting the Sustainable Communities Bill?” I did not know about the Bill at the time. I took the time to research it and was able to assure him that I would support it.
That was a great pleasure that I shared with my hon. Friend: we were both able to support the passage of the Bill that became the Sustainable Communities Act. I also join my hon. Friend in paying tribute to Local Works, which was responsible for driving through successive Parliaments that Act of Parliament. It has had an influence beyond even what I think the original promoters and authors had in mind. I think it is fair to say that it was one of the principal sources of inspiration for what is now the Localism Act 2011, in that the central approach of the Sustainable Communities Bill was to give the right of initiative to local communities—first to local councils, but then to neighbourhoods below the level of local councils, in order to give them the right to challenge how things were done on their behalf, either by the layer of local government above them or, indeed, by central Government. That applies across the board. Hon. Members will be familiar with the rights that the Localism Act entrenches: the right to challenge and the right to list assets of community value, with an opportunity to bid for them.
However, nowhere is the influence more marked than in the planning system and the reforms that we have made, through the Localism Act, to the planning system in order to put local communities at the heart of the planning process. I am indebted to my hon. Friend the Member for Henley (John Howell), my Parliamentary Private Secretary, who has given, over many years, a great deal of thought and commitment to the issue, which has resulted in the provisions that we have enacted.
I want to say a little about the provisions on planning in the Localism Act as they affect parish and town councils, because they constitute one of the principal ways in which the intention behind the Leiston-cum-Sizewell proposal already has the opportunity to be reflected in law. The first application is through neighbourhood planning. Many town and parish councils throughout the country have participated in the development of neighbourhood plans and parish plans, and put a great deal of effort and enthusiasm into drafting them. However, as my hon. Friend the Member for Bristol West knows, they have had only advisory status. They have been there, usefully, to inform the decisions of district and borough councils on planning applications, but they have had no statutory force. We considered that that was wrong—that those who live in an area and who know their neighbourhood well and have a passion for it ought to be able to have their say and to shape their neighbourhood in the way that they feel will best reflect the interests of their community in future.
The Localism Act therefore introduces the statutory right to have a neighbourhood plan, which then becomes part of the development plan, against which planning applications are tested. The first test is whether a planning application conforms to the local plan. The neighbourhood plan, once adopted, becomes part of that. This is a revolution in the powers that neighbourhood forums or, in this case, town and parish councils have. I would encourage all town and parish councils throughout the country that have not embarked on the production of a neighbourhood plan to do so.
There has been a huge wave of enthusiasm for this. The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) and I were able to announce yesterday a fifth wave of what we call front-runners in neighbourhood planning. I am referring to town and parish councils and neighbourhood forums that are getting on with producing neighbourhood plans, even in advance of certain measures coming into force. We now have 223 neighbourhoods across the country that are actively engaged in producing neighbourhood plans, which will say in some detail what kind of development should be permitted, where it should be and what kind of character it should have. When combined with the right to a neighbourhood development order, that gives parishes, town councils and neighbourhoods the opportunity directly to confer planning permission on applications that clearly conform to local people’s wishes.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Member for Bristol West (Stephen Williams) on securing the debate. I hope the Minister will excuse my naivety, but does the measure mean that local communities could stop an application that would create 500 or 600 jobs if they felt it did not fit in with the area?
Greg Clark
We have a plan-based system in this country, and all applications are judged against the development plan. It is right that the plan continues to be the basis for determining planning applications. In putting together the plan, however, every community across the country—whether at district, borough or neighbourhood level—will want, and is indeed obliged, to consider the future prosperity of its area. The beauty of a plan-based system is that local knowledge can inform decisions about how an area can prosper in future and how it can house the people who want to live there. The examination of neighbourhood plans and local plans would test whether something was a reasonable response to the area’s future needs. It is absolutely right that local people are the first to make the decision, and that the content of the plans is not, as was previously the case, substantially directed by regional spatial strategies, which the Localism Act will abolish.
Neighbourhood planning therefore gives parish and town councils an important role. I am delighted to say that the National Association of Local Councils, which represents town and parish councils across the country, is one of a number of organisations that have been funded by my Department to assist parish and town councils that are interested in producing neighbourhood plans. That help is there, and it is already available to local councils.
In response to the hon. Member for Upper Bann (David Simpson), I mentioned the prospective abolition of regional spatial strategies, which, again, took power away from local people, and the consequence of that imposition was to alienate people from the planning system. One thing we know from this country and from the continent is that the more genuinely, the more substantially and the earlier we can involve the local community in plan making and in planning decisions, the better the outcome is in terms of design and serving the area’s needs, and the less contentious things are. If people feel that something is being done to them, rather than involving them in a participative way, they are likely to bridle at that imposition. Part of the point of taking powers to abolish regional spatial strategies was to involve people at a much earlier stage.
I want to make particular reference to a new power in the Localism Act that is germane to this issue: the requirement to have compulsory pre-application scrutiny for significant developments. The earlier a community is involved in a process, the better that is for everyone. Having a requirement to demonstrate to the community that it has had the chance to be involved and consulted before an application is made for a significant development maximises the chances that the application will go with the grain of what people want and need locally and will not simply be in defiance of it.
We have taken those powers. In terms of discharging the requirement to have pre-application scrutiny, parish and town councils are obviously bodies which it would be sensible for applicants to consult. If there is a requirement for pre-application scrutiny, it would be a strange way for applicants to proceed not to take the views of parish and town councils into account. We are therefore introducing—we will publish the regulations shortly—a big change in local people’s entitlement to be involved and to have their say in planning applications.
Parish and town councils are statutory consultees for all sorts of planning applications, and it would obviously be good practice—this goes completely with the grain of the reforms that we have made and continue to make—for applicants to engage constructively with them. It is always difficult to compel someone to appear in a particular place, but I would strongly encourage applicants to engage with, and respond to, reasonable requests from parish and town councils to meet. I say that not least because we often find in our lives as Members of Parliament that when we meet to talk about something, it is possible to find common ground on issues that seemed contentious. I certainly endorse and encourage the spirit of what my hon. Friend the Member for Bristol West proposes on behalf of Leiston-cum-Sizewell in terms of the engagement between parish and town councils and applicants.
Stephen Williams
I welcome what the Minister has said, and particularly his strong expectation that applicants will engage with parish and town councils, or with local communities where such councils do not exist. If the experience is that applicants do not engage, however, will the Minister consider whether they should be required to do so in future?
Greg Clark
We have set out a requirement that there will be compulsory pre-application scrutiny for major applications—my hon. Friend will agree that it is sensible to have a cut-off point so that not every application needs to involve that degree of required consultation, which is not desirable always and everywhere. We will shortly publish details of how we propose to interpret that provision through the regulations, and my hon. Friend will find that our proposals would make it clear to any applicant that the requirement to engage with communities properly, rather than superficially, is absolutely there.
Let me briefly make a point about the funding side of things. It is not the Government’s policy to compel developers or applicants to make contributions outside the usual means of paying for the scrutiny of planning applications, but it is clearly open to the developer—the applicant—and the town and parish council to have a voluntary arrangement that would assist with the kind of community engagement we all agree is desirable, not least on the part of applicants. The Localism Act—again reflecting the spirit of the Sustainable Communities Act—also provides that a meaningful proportion of the revenues from the community infrastructure levy will have to go directly to neighbourhoods, including town and parish councils, where there is one. The financial resources available to town and parish councils are therefore about to change substantially.
I hope I have been able to respond to my hon. Friend in a way that reassures him of our absolute commitment to continue with this important agenda. We are grateful to him for bringing Leiston-cum-Sizewell’s proposal to us, and the council will find that many of its aspirations are given practical effect through the proposals I have mentioned.
Question put and agreed to.
Written Ministerial Statements
(12 years, 9 months ago)
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Pensioner Taxation and Employee Share Schemes
(12 years, 9 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government launched the Office of Tax Simplification (OTS) in July 2010 to provide independent advice on simplifying the tax system.
The OTS has today published an interim report on its review into pensioner taxation and the final report on the review of approved (tax-advantaged) employee share schemes, both commissioned by the Government on 5 July 2011.
The Government asked the OTS to carry out a two-stage review of pensioner taxation. In this first stage of the review the OTS has identified and examined at a high level those parts of the tax system which cause the most complexity for pensioners. The OTS will analyse these areas in more depth before formulating recommendations in the second stage of their review.
The Government also asked the OTS to carry out a two-stage review of employee share schemes. The first stage of the review looked at the four tax-advantaged schemes. The OTS was asked to evaluate the four schemes, identifying where they create complexities and disproportionate administrative burdens for scheme users, and examining areas where the schemes could be simplified. The OTS will look at the simplification of unapproved schemes in the second stage of its review.
Electronic copies of both reports have been placed in the Libraries of the House.
The Government will respond to the OTS reports in the Budget, on 21 March 2012.
HMS Victory
(12 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)
I am pleased to inform the House that I am today laying a departmental minute, the contents of which are replicated below, which proposes the transfer of HMS Victory and its contents and fittings to the HMS Victory Preservation Trust. This is a new charitable trust which has been established for the purpose as part of the National Museum of the Royal Navy.
The proposed transfer would enable private donations to supplement current Defence provision for support of the ship; and I am pleased to inform the House that the Gosling Foundation has generously agreed to donate £25 million to support the establishment of this new trust. The Ministry of Defence (MOD) has agreed to match this donation with a further capital grant of £25 million. Together, this amounts to a very sizeable endowment and would enable HMS Victory to be sustained for the benefit of future generations.
This transfer is part of a wider agreement which would enable HMS Victory to remain as a commissioned warship under her commanding officer and ship’s company. Currently the flagship of the Second Sea Lord, she will become the flagship of the First Sea Lord.
The detailed arrangements proposed, which are subject to legal and contractual discussions and trade union consultation, envisage that the trust would assume responsibility for the ongoing maintenance contract. The MOD would provide project management assistance in support of the contract for up to two years to enable the trust to grow this expertise. I expect the new arrangements to be in place by 1 April 2012.
Departmental Minute Dated 6 March 2012 Concerning the Gift of HMS Victory to the HMS Victory Preservation Trust:
“1. It is the normal practice when a Government Department proposes to make a gift of a value exceeding £250,000, for the Department concerned to present to the House of Commons a minute giving particulars of the gift and explaining the circumstances; and to refrain from making the gift until 14 parliamentary sitting days after the issue of the minute, except in cases of special urgency.
2. The gift to be made in this case, subject to finalisation of legal and contractual arrangements, is to a charitable trust controlled by the National Museum of the Royal Navy (NMRN) and comprises the historic warship HMS Victory together with its collection, fixtures, fittings and contents, material in store, technical information and the cradle on which the ship rests in Portsmouth Historic Dockyard. The Department also intends to grant rights to occupy and use the dry dock and land around the ship together with associated services access rights and leases to use those buildings in the dockyard which support the ship—put simply, a complete package, which would allow the trust to take over responsibility for the ship’s maintenance, repair and operation as a heritage attraction. The current maintenance contract for the ship operated by the Department would be novated to the trust; and the Department would provide project management expertise to the trust for a period of up to two years while the trust develops its own in-house expertise.
3. As a unique and irreplaceable national heritage asset, it is difficult to measure the value of HMS Victory in financial terms but the ship (together with its associated historical artefacts, fixtures and fittings) has an insurance valuation of £10,000,000. Apart from the ship itself, the value of the material in store and the cradle is assessed as £5,000,000. The total value of the gift is therefore £15,000,000.
4. Although the property of the charitable trust, the ship would be licensed to the MOD so that she can remain a commissioned warship and flagship of the Royal Navy. This allows for the development of a partnership between the Department and the voluntary sector for the support of this important element of British and naval history; and enables the sustainment of this iconic symbol of our history for the benefit of future generations.
5. The Treasury has approved the proposal in principle. If, before 23 March, a Member signifies an objection by giving notice of a parliamentary question or a motion relating to the minute, or by otherwise raising the matter in the House, final approval of the gift will be withheld pending an examination of the objection.”
Environmental Council
(12 years, 9 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
The Secretary of State for Energy and Climate Change and I will represent the UK at the Environment Council in Brussels on 9 March.
At this Council, the presidency will seek legislative political agreement on a proposal for a regulation of the European Parliament and of the Council, amending Directive 2001/18/EC as regards the possibility for the member states to restrict or prohibit the cultivation of genetically modified organisms in their territory.
The presidency will also conduct a legislative orientation debate on a proposal for a regulation of the European Parliament and of the Council on the establishment of a programme for the environment and climate action (LIFE).
Ministers are expected to adopt non-legislative Council conclusions on: a road map for moving to a competitive low-carbon economy in 2050; the follow-up to the 17th session of the conference of the parties to the United Nations framework convention on climate change and the 7th session of the meeting of the parties to the Kyoto protocol (Durban, 28 November to 9 December 2011); and Rio+20: Pathways to a sustainable future.
The following topics will be covered under ‘any other business’:
Information from the presidency and the Commission on the outcome of the 12th Special Session of the Governing Council/Global Ministerial Environment Forum (GCSS 12/GMEF), Nairobi, 20-22 February 2012;
Information from the commission on ETS/aviation: state of play;
Information from the presidency and the commission on the convention on long-range transboundary air pollution (CLRTAP)—revision of the Gothenburg protocol: state of play;
Information from the Netherlands delegation on a proposal for a regulation of the European Parliament and of the Council on the sound level of motor vehicles;
Information from the presidency and the commission on the European semester/annual growth survey—the way forward after the March European Council.
House of Lords
Railways: Great Western Franchise
(12 years, 9 months ago)
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Lord Berkeley
To ask Her Majesty’s Government whether the new Great Western rail franchise specification for trains between Bath, Bristol, Newport and Cardiff, and intermediate stations, will take into account recent increases in population and demand.
Earl Attlee
My Lords, recent increases in population and demand will indeed be taken into account. In drawing up the objectives for the new Great Western franchise, emphasis has been placed on the need to provide appropriate capacity for passengers, within the constraints of affordability and available infrastructure. We are looking closely at recent growth trends and forecast demand as part of the specification process.
Lord Berkeley
I am grateful to the Minister for that Answer. Presumably he will have read—because I sent it to him—a report of the West of England Partnership’s Joint Transport Executive Committee, which the committee will in fact discuss tomorrow, proposing a greater Bristol-area metro network with much more frequent regional trains and some extra new stations. Will he ensure that that kind of specification is included in the tender specification for the new franchise?
Earl Attlee
My Lords, the noble Lord raises an extremely important point. The Government’s objective is to strike an equitable balance of stakeholder interests: the fare payer, the taxpayer, the long-distance business traveller and the commuter. These stakeholders are obviously in conflict. Because of this, we urge our friends in the west and south-west of England to reach a consensus on their priorities so that we can use our resources to progress them to best effect.
Lord Bradshaw
My Lords, the last Great Western franchise was almost a disaster from the day it was let. It has had to be rescued both with more rolling stock and more money. Will the Minister give an undertaking that, whichever bids are received for the new franchise, they are robust bids and, as it will be a 15-year franchise, that they will include quite a contribution of new ideas, new rolling stock and new infrastructure?
Earl Attlee
My Lords, my noble friend makes important points. Although value for money is high up on the agenda, given the challenges set by the McNulty review, the exact evaluation criteria are yet to be determined, but they will reflect the franchise objectives that, for clarity, are managing change, providing appropriate capacity, ensuring that the passenger experience continues to improve, operational and environmental performance, and delivering efficiencies.
The Lord Bishop of Exeter
My Lords, the Great Western franchise is one of the most complex in the country, with a clear demarcation between the London-Swansea access and the London-Penzance access. It is vital that fair balance is maintained in the specification to reflect the needs of the whole community. However, in the West Country, there are very real concerns about whether that will be the case. In particular, there is a high degree of uncertainty about the integrity of the franchise specification. Can the Minister offer a clear statement for the Department for Transport about whether the specification will be a guidance document only for bidders or whether it will be regarded as the default position? Does he recognise that the danger is that bidders will front-load the premium payment for the franchise at the expense of essential elements within the specification and that the south-west peninsula could be the loser?
Earl Attlee
My Lords, the right reverend Prelate asked several extremely complicated questions, and I think it would be better if I wrote to him. However, I have confidence in the whole franchising process. We are determined to strike the right balance between the needs of all stakeholders. As I said in my response to the Question asked by the noble Lord, Lord Berkeley, there is a conflict between stakeholders that needs to be resolved.
Lord Brooke of Alverthorpe
My Lords, I will keep my question brief and simple. Will the Minister confirm that the present rolling stock on the line is quite inadequate, and that it would be totally unreasonable to expect it to continue to be used until electrification in 2018? In the circumstances, and with reference to his first Answer, will he confirm to the people in that part of the country who use the line that the franchise will invite new rolling stock?
Earl Attlee
My Lords, first, we need to be careful about being too specific about which rolling stock should be used. To do so would compromise the negotiations between the train operating company and the rolling stock company. However, a new fleet of IEP trains is expected to be provided for the franchise for InterCity services. This project was initiated by the previous Administration. The new operator is expected to take responsibility for the provision of other rolling stock on the franchise.
Lord Cormack
If the Government attach such importance to value for money, why are they persisting with HS2?
Earl Attlee
My Lords, HS2 is somewhat wide of the Question on the Order Paper.
Baroness Corston
My Lords, in his Answer to my noble friend Lord Berkeley, the Minister referred to conflicts in the greater Bristol and south-west England area. Will he confirm whether the department is looking kindly on the proposal for the greater Bristol metro?
Earl Attlee
My Lords, the document that the noble Lord, Lord Berkeley, referred to covers the Bristol metro. It would be very helpful to have a response from local stakeholders on how they want the balance to be struck between the needs of the metro system and those of longer-distance travellers.
Baroness Randerson
Will the Minister give us an assurance that the franchise will be let in a manner that is compatible with the establishment of a south Wales valleys metro—a project on which there is a considerable degree of consensus and unanimity in the area?
Earl Attlee
My Lords, I am sure that officials take all relevant considerations into account, but I cannot comment on my noble friend’s particular point.
Lord Davies of Oldham
My Lords, no doubt rail passengers will look with some hope—which we expect to be fulfilled—for the improvement of a service that has been the subject of considerable criticism and dismay among passengers right along the line. Will the Minister confirm that the terms of the franchise will allow fares to be increased by 8 per cent in 2013-14, and possibly thereafter?
Earl Attlee
My Lords, I am not aware of the noble Lord’s particular point, but we cannot operate a railway system for free; it has to be paid for, and paid for by fares.
Lord West of Spithead
My Lords, on this Cornish patron saint’s day, will the Minister support the continuance of the overnight sleeper service to Cornwall?
Earl Attlee
My Lords, unfortunately I omitted to ask about the overnight sleeper service to Cornwall. However, some of my ministerial colleagues have great affection for that service.
Universities: Anti-Semitism
(12 years, 9 months ago)
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Baroness Deech
To ask Her Majesty’s Government whether they will clarify the laws applying to universities and student unions when an anti-Semitic incident has taken place on campus.
Baroness Verma
My Lords, the law is clear: there is absolutely no place in our universities for racism, including anti-Semitism. As independent bodies, universities and student unions are responsible for undertaking their own legal obligations. They have the tools to tackle anti-Semitism. They have access to a very strong legislative framework and practical guidance to provide protection and deal with any anti-Semitic incident. We expect universities to act swiftly to investigate and address any anti-Semitic incidents reported to them. We have seen a fall in the number of incidents in higher education, from 44 in 2010 to 27 in 2011, according the Community Security Trust, but I accept that that is still too many and we must not be complacent in our resolve.
Baroness Deech
I thank the Minister for her Answer. However, I wonder if she is aware of just how often these anti-Semitic incidents occur, reported or not. Sometimes it is other students’ Nazi-themed activities, coupled with assaults, and sometimes it is hate speakers who are invited on to campuses which indeed they target. Recent events include speakers who blame 9/11 on Israel or who equate all Jews with Nazis, and worse. Universities tend to take refuge behind the doctrine of freedom of speech and do very little. They do not seem to realise the limits of freedom of speech as constrained by recent legislation largely from the previous Labour Government. The Public Order Act—
Baroness Deech
Will the Minister ensure that universities bring up to date their codes of practice on visiting speakers to take account of legislation and make sure that they apply to student unions as well?
Baroness Verma
My Lords, the Education (No. 2) Act 1986 requires university governing bodies to ensure as far as possible and practicable that freedom of speech within the law is secured for members, students, employees and visiting speakers. Institutions have to issue and keep updated a code of practice on the organisation of meetings and other activities taking place on their premises. These codes often include the right to refuse permission for an event. However, universities have to balance freedom of speech with their legal obligations, for instance in the Equality Act 2010. Only institutions themselves can make decisions about speakers. No other body could make judgments about each and every case. They are subject to the courts in this, as with other laws. The 1986 Act does not apply directly to student unions but indirectly through the universities’ codes of practice.
The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, we really cannot all stand up at the same time. I think that it is the turn of the Labour Party, and I rather wish that one of the two noble Lords would give way to the other.
Lord Janner of Braunstone
My Lords, the Minister will be aware that last year on United Kingdom campuses there were 27 reports of anti-Semitic incidents and attacks on students and academics. Does she agree that the time must now have come for the Government to create and require a national approach for all universities to deal with anti-Semitic and all other racist attacks?
Baroness Verma
My Lords, I can only repeat that the Government cannot tell universities and higher education institutions who they can or cannot invite. However, universities have to follow very strict codes of practice. We are always working with universities, and wherever there are incidents and we hear of them we try to ensure that universities have the tools in place to counter those sorts of vicious speakers and their contributions.
Lord Boswell of Aynho
My Lords, given that the Minister has already confirmed that because universities and colleges are in receipt of very substantial amounts of public funds, they are bound by the public sector equality duty—which is an important factor that they should bear in mind and take seriously—will she also, on the positive side, celebrate the work of the Equality Challenge Unit and of others who are working positively towards ensuring that universities are, as they always should be, places of enlightenment, and not an opportunity for the expression of prejudice?
Baroness Verma
I absolutely agree with my noble friend. We see universities as places not only of learning but of great understanding. All the organisations that my noble friend mentioned are at the heart of those tasks of moving forward. However, we take the concerns very seriously and we understand why the noble Baroness has posed this Question and the noble Lord, Lord Janner, has raised it. We are working to ensure that all universities stand up for any students who feel under threat, regardless of their race, religion or background.
Lord Campbell-Savours
My Lords, is it not important that we draw a very clear distinction between the actions of anti-Semites and the actions of those who feel passionately about the actions of the state of Israel in the West Bank of the Jordan and in the Gaza Strip?
Baroness Verma
My Lords, I do not want to enter into another debate, and that is a separate debate although it is one that we must not shy away from. At the same time, we do not want to lose the greatness of our universities, which allow students to hear contributions that are often very vile but then also allow them to make a judgment as to their response.
Lord Palmer of Childs Hill
My Lords, my noble friend the Minister drew attention to the statistics up to 2010. Based on the October 2011 report from the National Jewish Student Survey, 21 per cent of Jewish students felt very worried about anti-Semitism at university; 38 per cent of Jewish students felt worried about anti-Israel sentiment at university; and, more worryingly, 42 per cent of Jewish students had witnessed or been subjected to anti-Semitism in the seven months up to the survey. Will my noble friend the Minister confirm that Her Majesty’s Government consider these figures to be a real cause for concern, and indicate what steps they will take to address this issue? Can the Minister outline the approach that the Government are taking to work with universities, the academic community and the Jewish community to solve what is a real problem, despite what other Members of this noble House have said?
Baroness Verma
My Lords, I am sure that my colleagues in the Box have taken note of my noble friend’s concerns and the figures that he has raised today. The Government take all these issues very seriously and I reassure the House that wherever we find that we can intervene, we surely do.
Universities: European Languages
(12 years, 9 months ago)
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Baroness Coussins
To ask Her Majesty’s Government what is their response to the 2012 university applications figures from the Universities and Colleges Admissions Service (UCAS) showing that applications for courses in European languages are down by 11.2 per cent and non-European languages by 21.5 per cent compared to the previous year.
Baroness Verma
My Lords, 2011 was a record year in the overall number of people applying for higher education places. However, we cannot make a direct comparison as a reduction this year could be considered inevitable, with applications for language courses coming from a reducing population of 18 year-olds. We estimate that there will still be many more applications for higher education language courses than places available. The previous Government marginalised languages in schools. This Government are stimulating language study, and an increasing number of young people are now studying languages.
Baroness Coussins
My Lords, does the Minister accept that one very likely reason for the decline in numbers is the additional cost of a four-year degree that includes a year abroad, especially if that year is outside Europe and therefore does not qualify for any help under the ERASMUS scheme? What are the Government going to do to reduce financial disincentives for people considering a four-year degree course, particularly when employers are saying how much they value the language and other skills that are acquired during the year abroad?
Baroness Verma
My Lords, the noble Baroness has greater expertise in this area than I do, but I reassure her that the ERASMUS fee waiver programme will continue until 2014 and Ministers are considering the report by Professor Riordan on how we are going to fund after 2014. However, students will continue to enjoy the ERASMUS fee waiver for studying outside Great Britain in European countries. For study abroad in non-European countries, students get a percentage of fee waivers from their higher education institutions, and that is often up to the higher education institutions themselves. They recognise the value of it and therefore are more inclined to work with students to see what they can do to ensure that those students are able to take the benefit of that one year abroad.
Lord Anderson of Swansea
My Lords, the Minister will be aware that last year, of the 306 graduate entrants into European Union institutions, only seven were from the UK. Does she agree that this must be due in part to the decline in language teaching? Does she further agree that it cannot be in our national interest that there is such a decline and that the future influence of this country in European Union institutions is likely to decline as a result of this?
Baroness Verma
That is why the Government have prioritised language courses at university and in schools. The noble Lord will be aware that we have placed this, with HEFCE funding, under the vulnerable subjects in order that it will get the full grant. My right honourable friend Michael Gove has taken the issue very seriously. He has made sure that language teaching is part of the English baccalaureate and that young children are exposed to the joy of learning a language. As those of us with business backgrounds know, the importance of trading globally will be on the basis that we have the experience and knowledge of languages.
The Lord Bishop of Chichester
My Lords, can the Minister confirm that Her Majesty's Government are concerned about the cultural as well as the economic disadvantage our country is likely to suffer as a result of the decline in language skills? As the UCAS statistics indicate a disproportionate fall in the number of applicants from people from deprived areas, what are Her Majesty's Government doing or going to do in order to minimise the impact of tuition fees and a fear of considerable debt, specifically on children from those areas?
Baroness Verma
My Lords, the right reverend Prelate is absolutely right in introducing the value of a cultural understanding through language learning. The Government agree with that. As he will know, we have also made sure that, through our own reforms of the fee system, more people from disadvantaged backgrounds will be able to come into higher education simply because they will not be expected to put any moneys in fees up front. We are very much focused on widening participation. I for one am very keen to see children from poorer backgrounds and BME communities take that step forward into higher education.
Baroness Brinton
My Lords, do the Government still support the principle of prioritising strategic, important and vulnerable subjects such as STEM and modern languages? What highly specific advice will be given to schools and universities to prioritise modern languages, given their importance in our economy today?
Baroness Verma
My noble friend is absolutely right. She will be reassured to know that we have put £14 million on one side to ensure that the vulnerable subjects, such as science, technology, engineering and languages, get fully funded support. We recognise that if we are to be a good globally viable trading nation we will have to have all these skills plus more to be able to do that. Today, Brazil is a prime example of an economy that has gone forward. We must learn from the lessons around us so that we do not lag behind.
Lord Quirk
My Lords, can the Minister explain why it is that in the bulk of schools the popularity and take-up of foreign languages is very bad but that in private schools and grammar schools it remains relatively buoyant? Is there a lesson here in some way for the Government?
Baroness Verma
My Lords, the only lesson I should like to reassure the noble Lord on is that my right honourable friend recognises that language learning in primary schools across our country has declined over the years and that we need to make sure that every child has the access and opportunity to learn a language that gives them the benefit and the advantage of being able to function economically, culturally and happily in the world around them.
Gypsies and Travellers
(12 years, 9 months ago)
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Lord Avebury
To ask Her Majesty’s Government what is their response to the communication from the Commissioner for Human Rights of the Council of Europe on the adequacy of the provision of accommodation for Gypsies and Travellers in the United Kingdom.
Earl Attlee
My Lords, my right honourable friend the Secretary of State for Communities and Local Government replied to the letter from the Commissioner for Human Rights of the Council of Europe on 27 February. A copy was placed on the Council of Europe’s website on 1 March. The Secretary of State’s letter gave details of the measures the Government are taking to improve the situation of Travellers, particularly in relation to the provision of sites.
Lord Avebury
My Lords, my noble friend may be aware that local authorities are intending to provide planning permission for less than half of the accommodation that was shown to be necessary in the comprehensive assessment of need conducted during the previous Parliament. First, what immediate action are the Government going to take to increase the number of sites in order to match their legal obligation as identified by the high commissioner to provide adequate housing for Gypsies and Travellers? Secondly, have any of the local authorities and social housing agencies to which the Government recently granted a total of £47 million to build new sites identified the land they intend to use for this purpose, let alone applied for planning permission on it?
Earl Attlee
My Lords, my noble friend’s question on whether local authorities have identified the land suitable for pitches is a matter for them. If I have any further information that I can give him, of course I will do so. In response to the most important question put by my noble friend, the new homes bonus will match fund the additional council tax raised for new homes, including Traveller pitches, for the next six years. Traveller pitches are usually rated as band A so at present local authorities will get a bonus of £959 per year for six years for each new pitch. Traveller pitches owned by local authorities and housing associations will attract an additional £350 per year enhanced bonus, like other affordable homes.
Baroness Whitaker
My Lords, one of the key points made by Dr Hammarberg in his letter to Mr Pickles was about the “significant hurdle” concerning the requirement that for planning permission, the applicant has to establish “Gypsy status” and demonstrate particular “working patterns”. Will the Government now dissociate the granting of planning permission from these inappropriate and restrictive criteria?
Earl Attlee
My Lords, the Government will publish the national planning policy framework by the end of this month, and shortly we will announce our conclusions resulting from all the consultations we have held related to Travellers.
Lord Laming
My Lords, does the Minister agree that the Gypsy way of life is extremely hard and that the best hope for them and, indeed, for society as a whole is the provision of sufficient official pitches so that the children—the next generation—can receive a proper education and thereby have an alternative lifestyle available to them?
Lord Hamilton of Epsom
Does my noble friend not agree that there is a serious problem here in that as local authorities provide pitches for Gypsies and Travellers, the number of Gypsies and Travellers increases, so we are always behind the curve? Is there not a problem here if we go on providing pitches and the demand continues to increase?
Earl Attlee
My Lords, there are some who think that; it may be the case or it may not. Our duty is to meet the need and we are doing that by means of the new homes bonus and other incentives to deal with the problem identified by my noble friend.
The Lord Bishop of Exeter
My Lords, would it not be helpful for the Secretary of State to meet directly with representatives of the Gypsy and Traveller community to discuss with them the issues raised by the Commissioner, and together with them develop measures to deal with those problems? Further, can he say whether the Secretary of State does have such plans?
Earl Attlee
My Lords, I would be very surprised if the appropriate Minister does not have discussions with the relevant organisations.
Lord Elystan-Morgan
My Lords, is the Minister aware that about a quarter of a century ago a very distinguished High Court judge, the late Mr Justice Peter Pain, when hearing an application from a local authority in south Wales for an injunction to clear Gypsies from a lay-by said, “I will not grant this injunction because an injunction is an equitable remedy. To claim an equitable remedy you must be equitable. I will only grant the injunction to those local authorities which can show that they have taken seriously their statutory obligations in relation to Gypsies”.?
Earl Attlee
My Lords, the noble Lord makes an important and interesting point. It is much easier to have an unauthorised encampment removed if the local authority has already made appropriate provision.
Lord McKenzie of Luton
My Lords, as the Minister has acknowledged, there is a shortage of adequate permanent and transit sites for Gypsies and Travellers, but, at the same time, the Government are dismantling regional spatial strategies, one of the objectives of which was to set targets concerning the number of pitches that each local authority should provide. What evidence do the Government have which suggests that the replacement duty to co-operate will better encourage local authorities to meet their own and their neighbours’ responsibilities?
Earl Attlee
My Lords, as I have said, we have not seen the full government policy because that will be announced shortly. The previous Government’s model of top-down pitch targets under regional strategies has not delivered. Between 2000 and 2010, the number of caravans on unauthorised developments increased from 728 to 3,895.
Baroness Sharples
If they are Travellers, why do they not travel rather than getting settled in one spot?
Earl Attlee
My Lords, some Travellers are static, partly because there are not the opportunities around the country and their patterns of work are changing. It would be better in those circumstances if they remained static so that their children could be properly educated, as suggested by the noble Lord, Lord Laming.
Business of the House
(12 years, 9 months ago)
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Lord Strathclyde
That Standing Order 40(1) (Arrangement of the order paper) be dispensed with on Tuesday 13 March to enable proceedings on the Health and Social Care Bill to take place before Oral Questions.
Schools (Specification and Disposal of Articles) Regulations 2012
(12 years, 9 months ago)
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Lord Strathclyde
That the draft orders and regulations be referred to a Grand Committee.
Health and Social Care Bill
(12 years, 9 months ago)
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15:45 - Division on Amendment 163AA. - Ayes: 203 / Noes: 261 - Amendment 163AA disagreed.
16:41 - Division on Amendment 163BZZB, as an amendment to Amendment 163BZZA - Ayes: 188 / Noes: 278 - Amendment 163BZZB disagreed.
18:18 - Division on Amendment 163BA - Ayes: 183 / Noes: 255 - Amendment 163BA disagreed.
18:38 - Division on Amendment 165 - Ayes: 171 / Noes: 221 - Amendment 165 disagreed.
19:09 - Division on Amendment 178A - Ayes: 157 / Noes: 203 - Amendment 178A disagreed.
Lord Warner
“PART 2AStandards of adult social careSecretary of State duty as to the standards of adult social care
(1) The Secretary of State shall have a duty to secure the improvement in the quality of adult social care services through local social services authorities and qualified service providers registered with the Care Quality Commission.
(2) In discharging this duty, the Secretary of State must ensure—
(a) the establishment of a fair and resilient partnership between individuals and the state for funding adult social care that—(i) secures adequate funding to deliver safe and sustainable services,(ii) provides access to these services for those of limited means,(iii) caps the financial liability to pay for services for those with unusually high lifetime care costs,(iv) minimises the impact on the demand for health services,(b) that the assessment of the needs of individuals and their carers for services is undertaken on the basis of published criteria for eligibility to and charging for services that applies consistently throughout England,(c) that continuing efforts are made to reduce barriers to the delivery of integrated health and adult social care to individuals and through the conduct of commissioners and providers of both health and social care services.(3) The Secretary of State may, after appropriate consultations, make regulations governing the discharge of his duties under subsections (1) and (2), subject to affirmative resolutions in both Houses of Parliament.”
Lord Warner
My Lords, we return to the issue of adult social care, which is a good occasion for seeing a massive emptying of the Chamber. In very simple terms, the amendment is an attempt to get the Bill to live up to its title and become a genuine health and social care Bill.
Subsection (1) of the proposed new clause would place a clear duty on the Secretary of State to secure improvement in the quality of adult social care through the offices of local government and qualified service providers. It would make the Health Secretary pay proper attention to adult social care in a similar way to the way in which he is under a duty to ensure a comprehensive health service under other provisions in the legislation.
Subsection (2) of the proposed new clause identifies the key elements that the Secretary of State must pay attention to in discharging the duty in subsection (1). These are: adequate funding for safe and sustainable services; access to services for those of limited means; a cap on the financial liability of those with high lifetime care costs; and minimising the impact on the demand for health services. It also introduces national eligibility criteria for services across England and standard charging policies. That was argued for overwhelmingly in the evidence to the Dilnot commission, of which I was a member. In subsection (2)(c), a further push is given to the integration of health and social care in line with the recent report on social care by the Health Select Committee in the Commons.
What is to argue against in these provisions? Today, we see a lobby of Parliament by the Care and Support Alliance to secure action on delivering a more sustainable adult social care system instead of the underfunded and unsustainable system that we have now. This alliance is overwhelmingly in favour of implementing the framework in the Dilnot commission report in order to deliver a resilient and sustainable financial framework for adult social care. There is legitimate room for debate on the precise details of that framework, especially the level of the cap proposed by Dilnot. I for one would accept that we should start with a higher cap than the commission’s preferred option of £35,000, but there is nothing in this amendment that limits the Government’s freedom of manoeuvre on these details or on the speed of implementation. Nor does it frustrate the achievement of cross-party agreement in the cross-party talks now taking place. However, I see little evidence of those talks progressing very fast, with an isolated and politically wounded Health Secretary lacking any Whitehall-wide support, especially from the Chancellor, for doing a deal with the Opposition.
The amendment would get the Government out of a jam. They can implement Dilnot and anything else that they want to propose in their forthcoming White Paper without a new Bill next Session. Subsection (3) of the amendment would give broad powers to use affirmative regulations after appropriate consultation. I can see that after the failure of the Government to provide a convincing political narrative on this current Bill, the Prime Minister might not want to launch another Bill from Richmond House in the next Session. Therefore, ever sensitive to these political considerations, I offer him an exit strategy without neglecting the serious needs of adult social care and the people who need those services.
We all agree that the funding of adult social care is in a parlous state; there is broad stakeholder support for the Dilnot-proposed framework. We all recognise the dependence of the NHS on a robust adult social care system, without which the NHS will surely fail to deliver the efficiency gains required of it. We all want to see improved integration of health and social care, although the Government’s opposition to my amendment on integration last week was disappointing, especially the conduct of 17 Liberal Democrats who voted against it. However, I say to Lib Dem colleagues that today is your chance to make amends. If you want to go to your spring conference trumpeting your success in saving the NHS, you will support the amendment. You had the courage to insert in the coalition agreement the establishment of an independent commission. I pay great tribute to you for doing that. Now have the courage to put into this Health and Social Care Bill the means to implement the adult social care changes that are so badly needed.
I have low expectations of the Minister being willing to accept the amendment because I suspect that his hands are tied by those in a higher pay grade. However, if he is willing to take this amendment away and come back at Third Reading with something equivalent, I will not press matters today. If he is not, we owe it to the outside world, especially the stakeholders lobbying Parliament today, to show where people stand on tackling the crisis in adult social care and protecting the many vulnerable people affected by that crisis. I beg to move.
Baroness Pitkeathley
My Lords, I was delighted to add my name to this important amendment which builds on several amendments we have discussed in your Lordships’ House with regard to the integration of health and social care. The central point of the amendment is to place a duty on the Secretary of State to secure improvement in the quality of social care services provided by local authorities. It goes on to set out the means of doing so.
These proposals are based on those of the Dilnot commission, of which my noble friend Lord Warner was such a distinguished member and about which there is such consensus among all those who work in or are in receipt of social care. If only the coalition Government had managed to achieve such a consensus about all the proposals in this Bill, we would have saved a lot of time and be a lot more content. There is consensus around the proposals and everybody understands what the social care system is in need of. As we have heard from my noble friend, the system is starved of cash, failing to meet the volume of need, unfair—a lottery—and confusing and difficult to find your way around, especially if you are frail, elderly and confused.
The existing consensus is that the future funding of social care has to be based on a combination of individual and state responsibility and contribution, and that we must achieve a lasting settlement. We have mentioned many times before in your Lordships’ House that the Health and Social Care Bill fails to address the most pressing of all health problems: how to deliver affordable and effective social care for our growing elderly population—a view endorsed, I remind your Lordships, by the Health Select Committee in a recent report.
It is extremely worrying that rumours are circulating that the White Paper on social care, responding to both the Dilnot proposals and the Law Commission proposals about legislative reform in this area, is to be delayed. This would be a huge disappointment as well as a missed opportunity. Moreover, it would renege on the commitment given by the Minister for social care in another place when he said only four months ago that,
“social care has languished and rested in the ‘too-difficult-to-do’ box for far too long. We are the Government who are committed; we see the urgency and the need”.—[Official Report, Commons, 10/11/11; col. 181WH.]
I hope that the Minister will today repeat that commitment in response to this amendment.
We should remember, too, the advantages which would be delivered by accepting this approach. We would spend existing resources—which everybody agrees are short—better. It would improve integration of health and social care systems. When people’s need for social care is not met, they turn to the NHS—resulting in increased numbers of emergency admissions or delayed discharges. The inconsistency between fully funded NHS care and means-tested social care hampers delivery of an integrated care system. Recent statistics from the Department of Health show an 11 per cent rise already in the number of hospital bed days lost to so-called bed blocking, so that costs have risen extremely fast.
In addition, the rights and responsibilities of individuals and agencies would be clear to the public if the Government accepted this approach. If people were clear about their future personal liability, they could plan how they would meet care costs up to the level of the cap, wherever that were placed. We would also stimulate the care market to provide more choice for families and incentives for business. The Dilnot report and its proposals have been called a once-in-a-lifetime opportunity. We cannot and should not miss that opportunity. I support the amendment.
Lord Skelmersdale
My Lords, the House seems to have gone remarkably silent after those two introductory supporters of this particular amendment. As some of your Lordships will remember, when I returned from Northern Ireland as the ex-Minister responsible for health and social services, I came as a great fan of combined health and social services. Yet I discovered in my experience there that it would never, ever work unless you had one organisation in total and utter control. This may seem like a Second Reading speech, but it is not intended to be. The Secretary of State mentioned in the amendment means any Secretary of State, and currently we have two Secretaries of State. That is why the notable ambitions of this amendment—and they are notable—will always fail. Therefore, I encourage my noble friend, until a higher authority than himself, senior as he is, gives the imprimatur to take social services away from local government, to resist this amendment.
Baroness Murphy
My Lords, I think that the noble Lord, Lord Warner, is having us on. There is an urgent need to press the Government on bringing forward their White Paper on social care reform, which is the pressing economic and social care issue of our day—more important than this Bill. But we have to get it right. We are expecting a White Paper, and there are many arguments to be had about the recommendations from the Dilnot commission, although there is quite a consensus of opinion, and about the right and wrong and who will pay and when. I hope that we can have those debates in this House. But this issue requires a full Bill. This amendment gives a new Bill inside the Health and Social Care Bill on Report, and I do not really think that it will fly. I can imagine what the noble Lord, Lord Warner, would have done if it had been proposed when he was Health Minister. He would have given it very short shrift—and I urge the Government to do so again. We need a proper recommendation and discussion in the White Paper.
I also remind the House that last year the Law Commission came out with a report on adult care social services that said that we had had endless piecemeal bits of legislation over and over—and this amendment does it all over again. Let us not make the mistake of supporting this amendment. I am very sympathetic to what the noble Lord wants to do, and we all feel very impatient about it, but let us have a proper Bill and proper debates and get it right for the next generation. Frankly, it is our generation and the next one that will benefit from a proper social care reform Bill. Let us get it right and not do it this way.
Baroness Barker
The noble Lord, Lord Warner, asked what was to disagree with—what was not to like—and the answer is nothing at all. However, that is not to say that this amendment is not deficient and there are not an awful lot of questions that it begs.
The noble Lord is right that my party, along with others, has agreed with the Law Commission review and supported the efforts to see the Dilnot commission brought into law. However, he will know as well as I do that the history of social care law reform is littered with failed attempts to deal with one of the biggest issues that our society faces—the Royal Commission on long-term care. The Wanless report was largely about the NHS, but a significant chunk of it was about the need to reform social care to drive down future demands on the health service. Noble Lords have been critical of this Bill, and many of their criticisms are justified, but they overstate the extent to which the latter parts of the Bill, with the placing of public health into local government and the creation of health and well-being boards, attempt to deal with that agenda, decrease health inequalities and raise levels of preventive health promotion. I, too, think that this is an inadequate response, particularly to the Law Commission report, which was a good and detailed piece of work. It deserves extensive scrutiny and to be brought forward in law in a way that is far more comprehensive than this.
I will not have a go at the noble Lord, Lord Warner, for keeping the issue on the agenda, but I say to him that the Care Services Minister, Paul Burstow, has made it clear throughout his tenure that he is doing all in his power to keep social care to the fore. I come back to the £2 billion that was invested in social care at the beginning of the Government’s term. The Government are mindful of the need to deal with this, not least because the noble Baroness, Lady Murphy, is right to say that, as she often reminds this House, no one has a social care need unless they have a healthcare need—the two things are indivisible—and if the Bill is about anything, it is about tackling the health needs of the population as a whole over time.
I do not disagree with the noble Lord, Lord Warner, but I do not think that this is quite the way to go forward. I hope that all Members of this House will continue to uphold the consensus that there has been over the past two years behind the work of the Law Commission and the Dilnot report to bring this issue forward in a way that means that it can be determined successfully once and for all.
Lord Campbell of Alloway
My Lords, I would like to raise the matter of the process of putting in statute what in the ordinary course of events should be put in subordinate legislation by regulations or whatever. If you read the amendment carefully, it is a very wide command involving four assessments of individuals’ needs. I am not at all criticising what is sought, but I ask for it to be considered that the amendment would open a large gateway of legal challenge to the Secretary of State that would not exist if this were not put into statute. This question is concerned with finance at a time when finance need not be referred to again.
Lord Beecham
My Lords, I congratulate my noble friend on bringing forward the amendment, to which there seem to be two limbs. The first involves finance and looks forward—indeed, arguably it paves the way—to the Dilnot report or some version of it being the basis for the complex issue of catering for the needs, present and future, of a significant proportion of the population.
The second limb is directed more towards the services that will be required, which we would all agree need to be better co-ordinated than they have been. In that respect, I have a certain sense of déjà vu. At the time of the 1973 reorganisation, I was chairman of my city council’s social services committee when various services that were directed to run adult social care were transferred to the health service—chiropody, bath attendant services and the like. At that time, the area health authority, as it then was, found itself in difficulties and unable to fund the continuation of the service, so my authority contributed significantly financially to preserve the very services that we had handed over. That illustrated clearly the need for a much better relationship between the two sides that, a generation later, has still to be achieved. My noble friend’s amendment would certainly direct us further along the road to integration.
The noble Lord, Lord Skelmersdale, refers to the impossibility of progress being achieved without a single body organising it. I do not think that that is right. In fairness to the Bill and the Government, the creation of the health and well-being boards, with the obligation to produce a joint strategic needs assessment and to collaborate in implementing the measures required to deal with those needs, provides a more coherent framework for that necessary degree of collaboration.
Lord Patel
My Lords, I do not know whether the Bill is adequate for its intention. I did not think for one minute that the noble Lord, Lord Warner, was trying to insert a Bill into a Bill; he is trying merely to highlight the need for some commitment to social care in a Bill that has “health and social care” in its Title but not much about social care in it. Successive Governments have talked about integrated health and social care but have failed to achieve it. For the first time, we have a Bill with the Title “Health and Social Care”, but with no mention at all of social care. To indicate some commitment to its delivery, if not now then at a later stage, would have been adequate. Delivering integrated health and social care should have the same commitment to it as delivering improved waiting times for acute care.
We tried to get commissioning as a way of integrating health and social care. It would have been a better way forward, but unfortunately that amendment was narrowly defeated. This amendment asks only that the Government commit to making continuous efforts to reduce barriers to integrated health and social care. I do not think that it is inadequate or that it inserts a new Bill into the Bill.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, this has been a thoughtful debate. At the outset, it is appropriate for me to pay tribute to the noble Lord, Lord Warner, for his strong advocacy of the need to improve the quality and funding of social care services. The noble Lord played a critical role as part of the Dilnot commission and has made strong speeches both today and in Committee on this subject.
I am in complete agreement that high-quality social care services are crucial for the health and well-being of the population. As the Government and many others have said, major reform in adult social care is long overdue. We recognise the need for lasting reform to respond to the challenges facing social care. The recent engagement exercise, Caring for our Future: Shared Ambitions for Care and Support, conducted from September to December last year, highlighted again the scale of the challenges. We know that the quality of care is variable and can sometimes be poor, as recent high-profile failures have demonstrated. The current social care system does not support people to plan for their future care needs or maintain their well-being and independence. People often have a poor understanding of what social care is and of how to navigate the system and access the services they need.
All this is compounded by the well documented twin issues of an ageing society and financial constraint. This critical context explains why the Government have set the reform of adult social care as one their key priorities, but it also explains why social care reform merits it own focus and cannot be dealt with around the edges of discussions on another important topic. The Government are convinced that the time has come for social care reform. Given that, the question before us is not whether action should be taken to improve the quality of social care services but rather how we go about doing so.
I have given Amendment 163AA a good deal of consideration, and I am afraid that I have to say to the noble Lord, Lord Warner, that I do not feel it is the appropriate mechanism to achieve what he seeks. This is because, as well as reform being needed for social care quality and funding, there is broad consensus that social care law too needs extensive reform. The noble Baroness, Lady Murphy, helpfully mentioned the Law Commission report on law reform, which put forward this argument last year. I wish to quote a short passage of the report, which states that,
“adult social care law has been the subject of countless piecemeal reforms … It is of little surprise that not only does the law perplex service users and social workers, but also the judiciary”.
This is the problem with the noble Lord’s amendment; to accept it would be to perpetuate exactly the same confusing and piecemeal approach against which the Law Commission argues. The legal framework for care and support needs fundamental reform, not further additions to an already opaque statute.
I wish to set out briefly what I see as the appropriate course of action on social care reform. We will publish a White Paper on care and support in spring this year. I repeat that undertaking, particularly to the noble Baroness, Lady Pitkeathley. We will follow this by bringing forward legislation at the earliest opportunity. The White Paper will draw on multiple sources, including the excellent work of the Law Commission and the Commission on Funding of Care and Support, for which I again express my gratitude to the noble Lord, Lord Warner. The White Paper will respond formally to the reports of both those commissions and, of course, to the Health Select Committee report on social care.
The noble Lord has proposed that a duty be placed on the Secretary of State to secure continuous improvement in the quality of social care. The Government’s proposals for embedding and safeguarding quality throughout social care will be a central theme for the White Paper. We sought views on this as part of the engagement; it highlighted that progress on quality has already been made with the publication of Transparency in Outcomes last year, which set out the Government’s approach on quality, transparency and outcomes in social care. Our approach to quality improvement is aimed at responding to poor quality, enabling improvement and rewarding best-quality services to support choice.
The ideal for social care is a sector filled with great people doing great jobs who deliver high-quality care to people using social care services. As I said, we are committed to publishing the White Paper this spring and preparations are on course. The Government are taking the broadest possible approach to achieving consensus on the most crucial long-term issues. Therefore, in that context, I do not believe that the time is right for an amendment of this sort. It would pre-empt the White Paper and could leave stakeholders unclear on the broader picture of social care reform.
Moreover—I see this as the central point—we do not want to make further changes to the existing statute when more lasting legal reform is already planned in the near future. Social care is a vital public service and deserves its own focus in its own statute. Too often, debates on social care have taken place on the margins of those on another issue.
Baroness Meacher
I apologise for intervening but I wonder whether it might be relevant to change the Title of the Bill to the Health Bill, bearing in mind the noble Earl’s very valid comments that there will be a White Paper and a totally separate Bill. The Bill’s Title is a misnomer.
Earl Howe
The noble Baroness may not have been following all our debates as closely as some, given that we have extensively debated integrating health and social care and how the Bill will improve the prospects of that. I therefore do not agree that social care is such a poor relation in the Bill. She is quite right; of course its prime focus is health, but we have not completely neglected the subject that is so close to her heart.
Specific legislation on social care will be the most appropriate vehicle for debating these critical matters and achieving lasting reform. Of course I understand the desire of the noble Lord, Lord Warner, to keep social care at the top of the political agenda. That is greatly to his credit. I can assure him that the Government have not lost sight of this. We share the same aims for a high-quality service, but it would be wrong to legislate now in such a selective way. The noble Lord may suppose that this is just another instance of a Minister following the standard line that says “resist”, but I hope he will accept that that is not so. There are genuine reasons why the amendment is a bad idea, and I hope that he will feel able to withdraw it.
Having said that, I look forward to debating these issues with him further in due course, and to benefiting from the insight that he and others bring to this topic.
Lord Warner
My Lords, this is an interesting debate. Let me say to the noble Baroness, Lady Murphy, that I am not having the House on. I am deadly serious about this because when the Dilnot commission was set up we were asked to do a job extremely rapidly, and we did so well within the 12 months we were set. We were asked to do that so that the Government could crack on with change, which is absolutely vital. This service—adult social care—is in a parlous state that will also do enormous damage to the NHS. Unless you do something quickly about adult social care, you will cause the most terrible financial crisis in the NHS. That is what the demography tells us. That is the reality for urgent admissions to acute hospitals and people staying there much longer than they need to.
If you are interested in improving and safeguarding the NHS, you should be interested in rapidly moving on with the reform of adult social care. The Government are already behind time on this reform. I do not blame the noble Earl, but we were expecting faster action, as was the Dilnot commission. Spring could come quite late this year in terms of the White Paper appearing, and we have no guarantee that there will be legislation in the next Session. The noble Earl has stuck to the normal line, for which I do not criticise him, that one can give no assurances about the next Session’s legislation, but one has to be an extreme optimist to believe that a collective Government will want to have another go at this territory in the next parliamentary Session. I do not doubt his good will—I am grateful for the kind words he said about me—nor his real confidence that the Government will press on with that, but there are a lot of people out there, not just in front of Parliament today, who think that the Government need to go faster on this issue.
I have listened very carefully. The amendment does not prevent the Government from bringing forward new legislation in the next Session. If they want to do that, I shall be deeply delighted and they will have my support. I see nothing in the amendment that prevents the Government from making a start on making changes and protects them to go further if they want to include such provision in the next legislative programme.
I think we should make sure that adult social care is properly represented and recognised in the Bill. Therefore, I wish to test the opinion of the House.
Baroness Thornton
“CHAPTER A1Principles of regulations of health and adult social care servicesPrinciples of regulation of health and adult social care services
Any person undertaking any regulatory functions under this Part or any functions in relation to services provided under this Part shall exercise all such functions based on the principles of universality and social solidarity.”
Baroness Thornton
My Lords, at last we come to the heart of the Health and Social Care Bill—Part 3. On 3 March, David Cameron was again telling his party about the need for greater competition and for the private sector to be encouraged. He has since justified his remarks by saying that it would have been easier not to have addressed the “invisible crisis” in the National Health Service in England. So, the “invisible crisis” which no one but the coalition Government seem able to see is the justification for fragmenting our NHS and opening it up to the private sector.
Our fundamental disagreement with the two parties opposite is that we think that competition should be used only within a managed framework and when it adds value. There has to be freedom to use non-competitive means and to deliver co-operation, collaboration and integration. For a moment we thought that we had a new recruit to the argument, when the Secretary of State announced that he had lost faith in competition. He was all for it in his landmark 2005 speech to the NHS Confederation, and he was all for it when he and his coalition allies launched this Bill with price competition and an economic regulator to promote competition. Now, however, it is reported that he is not so sure.
We on these Benches have not changed our minds. We share the view expressed by the noble Baroness, Lady Williams, that Part 3 should be dropped—a view which is shared by almost all the professional bodies, as well as the staff in the NHS. Even the evangelical GP commissioners are very aware of competition, and we note that the drive to force through any qualified provider for the operating framework for 2011-12 has just been thwarted—a highly embarrassing defeat for government policy.
Making competition central to the reform of the NHS, as opposed to making it one component of a more rational and comprehensive reform with collaboration and co-operation at its heart, remains dangerous. Even with the amendments already agreed, Part 3 is a mess; and even at this late stage the Government should think again and try to build on the very wide consensus that accepts a role for competition only when it adds value for patients.
The three amendments in this group—and the late arrival of a manuscript amendment in the name of the noble Lord, Lord Clement-Jones, which I will return to in a moment—seek to address fears that have been widely expressed about the way that competition will intrude into the NHS in ways that we do not want, and that do not benefit patients. The fear is supported by the legal advice of many experts, who foresee how the Bill will open up opportunities for legal challenge in ways that are not currently acknowledged.
We also see that some clinical commissioning groups are asking awkward questions about how autonomous they will be, and how free to do the job that they are given. We know that they will have to obey the rules set out for them both by the NHS board and by Monitor, but is it worse than that? Will they have to employ legal and consultancy support on a grand scale to avoid being challenged by the courts or by whatever the co-operation and competition panel turns into? Will fear of challenge deter the innovation that the Bill claims will be unlocked?
Amendment 178A is the best effort of many legal minds collectively to solve the problem of ensuring, so far as is possible, that commissioners can do their job. When one looks at the old NHS, or even at Wales, one sees that there is a very high degree of confidence that arrangements made between different parts of the NHS will not be subject to legal challenge on competition grounds. There are no contracts on the arrangements of which the law may get traction. However, even in Wales, if there is a decision that some aspect of provision may require non-NHS providers to be engaged, the full force of competition law applies. We all know that. We are part of the EU so these rules apply.
We know that health services can, as Part B services, get some protection from the full force of EU competition law. We believe that that protection will be chipped away over the years. Although procurement is simpler under Part B, it is still open to challenge if the basics around transparency are not met. If there is an intention to enter into a contract that is enforceable in law, you quite rightly have to go through the correct procedure. This is no different from what is set out in the current principles and rules, which, if you read them, make a lot of sense—as they should, because my Government wrote them.
The doubt and the opportunities for challenge will remain unless you construct in the legislation a framework to protect commissioners of the kind that we set out. Such an approach might not be perfect but it is the best that major brains can come up with. Since the coalition Government’s stated intention is that commissioners should be free, we should be able to see either their version or their legal advice—but we have not. The purpose is not to give unfair preference to NHS providers, or, indeed, to prevent third sector providers; the purpose is to free commissioners to make decisions that would have to pass the test of reasonableness in any event. Neither the third sector nor private sector providers would be any worse off, because they would still have to go through procurement procedures under any circumstances if a service went out to tender.
We think that Amendment 163BZZA, at the head of this group, and the following amendment are the right place to recognise this important principle from the outset. Amendment 163D follows a line that our Liberal Democrat colleagues have also explored, which is to define our NHS in a way that makes it clear that it is not a market despite what the Bill states.
The principle of social solidarity is used in the courts to help differentiate national social policy from the EU internal market and competition law. Social solidarity is therefore not an invention of the Labour Party, it is a term used in EU law. Social solidarity means “provided for that purpose as a matter of social policy” and as such may be considered by the courts to restrict the application of EU internal market law. All this has the same objective—to limit the scope for EU law to be applied in ways that do not help.
The noble Lord, Lord Clement-Jones, has, as it were, come to the party somewhat late by tabling his manuscript amendment. My colleagues and I have been in discussion with him and his colleagues, including the noble Baroness, Lady Williams, for many months, and we have shared with them our thinking on this matter. Indeed only last week I wrote to the noble Baroness, the noble Lord and their colleagues about exactly what we thought we should do together on Part 3. In that letter, as point one, I said:
“Your amendment 177”—
the manuscript amendment—
“and our 163 cover the same kind of point and should be combined”.
I am very pleased that this burst of late enthusiasm from the noble Lord, Lord Clement-Jones, has led to his agreeing that we should combine our amendments, and I am absolutely delighted to say that I would want to accept his amendment as an amendment to our amendment. I hope that noble Lords will have time to work out what exactly is going on here as the discussion progresses. Essentially, however, the noble Lord, Lord Clement-Jones, wants to amend our manuscript amendment with his manuscript amendment—which I am sure he will explain. I apologise to the House that this has been done as a manuscript amendment, but I am happy to report that we seek the same end. When the time comes, I will be very happy to accept the noble Lord’s amendment.
Our amendment does not oppose the use of competition, in its place, and will enhance the Bill. I also like its use of the term social solidarity, as that appropriately describes what our NHS is, and why and how it exists. I beg to move.
Amendment 163BZZB (to Amendment 163BZZA)
Lord Clement-Jones
Lord Clement-Jones
My Lords, I beg to move Amendment 163BZZB. I am delighted at the response of the noble Baroness, Lady Thornton. Clearly she recognises good drafting when she sees it. I hope she accepts the arguments, in substance, as I put them forward in my speech.
In common with many other Members of this House on all Benches, I expressed a number of concerns about the risk of market competition becoming greatly more prevalent within the health service as a result of the current provisions of the Bill, despite some concessions offered and partly because the Bill failed to fully reflect the intentions of the Future Forum. Our fear was that the Bill contained a number of measures that could increase competition within the NHS at the expense of collaboration and integration.
We were explicit that we are not against competition in the NHS but it must be applied where it is appropriate to do so in the interests of patients. It is not appropriate in all circumstances. Patient and public benefit can often be secured in other ways; for example, integration of services and co-operation between providers, or a mixture of these with competition, are often preferable alternatives.
EU and UK competition law has had some application within the health service for some years now, largely as a result of Labour’s reforms in the 2006 Act, and we should remember that. However, we do not want to see competition law applied universally across the health service so that our health service commissioners and providers are required to operate an entirely market-based NHS without being able to choose where the market and competition should apply and where they should not.
The objective of the Bill and Ministers during its passage must be to put beyond doubt the protection of the NHS from competition as an end in itself where this does not serve the interests of patients. The tests summarised from OFT guidance for whether EU competition law applies to the provision of healthcare for the purposes of the NHS falls into three stages. First, is the provider an “undertaking”? This depends on whether it carries out an “economic activity”. This status may fluctuate over time and apply to some activities and not others of the same provider. Offering or supplying goods or services in a given market is the characteristic feature of an economic activity.
Even if economic, is the activity wholly social in nature rather than commercial? Compulsory healthcare and insurance schemes have been held to be wholly social. The OFT emphasises that this depends on the facts of each case. Even if the provider is an undertaking and the economic activity is not wholly social, is this in relation to services of general economic interest? This is where both Amendment 177, which I am currently speaking to as well as Amendment 178, come in, in addition to Amendment 163BZZA.
SGEIs are protected from some aspects of competition law. Member states are free to designate services as SGEIs and the Commission will challenge such decisions only if it thinks that the member state is in error. In the view of these Benches, the risk of a number of elements of the Bill being taken together increases the likelihood of NHS services being found by English and EU courts to fall within the scope of UK and EU competition law. These include the fact that the Competition Commission is deployed in reviewing the development of competition in the NHS in the provision of healthcare, and the exercise by Monitor of its functions in relation to the provision of healthcare services.
Secondly, the potential deregulation of foundation trusts from 1 April 2016 under Clauses 111 to 114 means that Monitor will no longer from that date have the power to appoint and dismiss foundation trust directors unless the Secretary of State decides otherwise. On oversight of foundation trust mergers by the OFT, we were concerned that ordinary competition rules as a result of the application of Part 3 of the Enterprise Act by virtue of Clause 77 would be applied. Originally, the PPI cap for foundation hospitals was lifted under Clauses 163 and 164, opening the way for the majority of income for some foundation trusts to derive from private patients, which could have led to a loss of status as an organisation promoting social solidarity. This has now been restricted to a maximum of half the revenue of an FT, which helps to mitigate that risk. There are still issues surrounding transparency and authorisation by a foundation trust’s council of governors or Monitor which remain to be resolved with later amendments.
Earl Howe
My Lords, competition in the health service is a complex topic and very often, in my experience, misunderstood. It is important that we start with a misconception which several noble Lords have raised with me outside the Chamber and, indeed, in Committee. We need to be clear that competition already exists in the NHS and that the Bill does not herald its introduction. The last Government fully recognised that and encouraged it. The last operating framework which they put in place for the NHS stated:
“We shall enable this by … re-affirming our commitment to the ‘any willing provider’ approach for free choice of elective care, reducing the barriers to the entry of new providers”.
The previous Prime Minister, Gordon Brown, giving evidence to the Liaison Committee in December 2007, said that,
“the private sector … is expanding, will continue to expand and will be a lot bigger in the next few years than it is now”.
The Labour Party manifesto of 2010 said:
“Patients requiring elective care will have the right, in law, to choose from any provider who meets NHS standards of quality at NHS costs”.
The previous Government’s policy of increasing the use of competition is already benefiting patients. The recent report from the Office of Health Economics Commission on Competition in the NHS concluded that,
“evidence both from the UK and internationally suggests that quality based competition with prices fixed by a regulator can be beneficial, producing higher quality care at the same cost on average and, importantly, not leading to increased inequity in access to health care”.
Baroness Thornton
I thank the noble Earl for allowing me briefly to intervene. He has given some useful and selective quotes. Do not those quotes go on to warn very seriously about cherry picking?
Earl Howe
I think that the noble Baroness and I agree that cherry picking is highly undesirable, which is why this Bill outlaws it.
I do not see, as some do, competition and integration as polar opposites, nor are they mutually exclusive. I agreed entirely with the Future Forum when it said in its report last year:
“We have also heard many people saying that competition and integration are opposing forces. We believe this is a false dichotomy. Integrated care is vital, and competition can and should be used by commissioners as a powerful tool to drive this for patients”.
That is worth keeping in our minds.
In response to my noble friend Lord Clement-Jones, let me turn to competition law. I understand that some noble Lords want to prevent competition law ever applying to NHS services. That is to wish for the impossible. The question is not whether competition law should apply to the health service but how. That is why I agree with my noble friend that we must make sure that the NHS is insulated from the inappropriate application of competition law. In particular, we must ensure that clinicians are free to commission NHS services in the way that best serves patients’ interests and that there are no impediments to beneficial co-operation to increase integration, improve quality or reduce inequalities. Under our proposals, a series of protections will provide the sort of insulation against inappropriate application of competition law that my noble friend and others require. I hope that the House will allow me to set this out in a little detail.
Co-operation for the benefit of patients should not breach competition law. Article 101(3) of the Treaty on the Functioning of the European Union and Section 9 of the Competition Act lay down exemptions which apply if the wider benefits of an agreement outweigh its anti-competitive effects. On an individual basis, we would expect collaborative arrangements whose overall effect was beneficial to patients to meet the criteria in Article 101(3) and Section 9.
Competition law would be unlikely to apply to a wide range of NHS services. Some obvious examples are accident and emergency, trauma, critical care, maternity, specialist surgery and many others, particularly in remote or rural areas.
Monitor would support the NHS to understand where competition law does and does not apply. A key benefit of establishing Monitor as a sector regulator, with concurrent responsibilities under the Competition Act, is that it will be able to provide authoritative guidance to the NHS on where that law would and would not apply. The Government’s firm expectation is that Monitor would produce sector-specific guidance and address this question in terms of relevant examples, including models of integrated care and clinical networks, which would be updated in line with developments in healthcare practice. This guidance would help reduce unnecessary fear of legal challenge and uncertainty for both commissioners and providers.
Monitor could also provide informal advice in individual cases, building on what the Co-operation and Competition Panel does now. For example, that might include commenting on what types of collaborative arrangements and specific provisions within such arrangements are and are not likely to comply with the competition rules. Any such advice would be without prejudice to any future decision that Monitor might have to take to enforce the provisions of the Competition Act. However, like the guidance, such advice would provide reassurance to providers and could help them to avoid unnecessary legal costs.
If and when it became appropriate, Monitor could make the case for block exemptions. That would mean that the Competition Act would not apply to specified arrangements for the provision of NHS services. At this stage, it is not clear whether or where block exemptions might be appropriate, but an example of the sort of arrangement that could potentially be covered is clinical networks. In any event, this protection would remain available and there is no doubt in my mind that Monitor would be better placed than the OFT to determine when and where it might be needed.
In these and other areas, competition is unlikely to be effective in providing services on the scale or in the way that best promotes patient's interests. The NHS often acts to promote social objectives to ensure that patients receive the level of service that they could not afford or which private companies might not find it profitable to provide. Applying competition law in such contexts makes little sense and such activities are likely to fall outside its scope.
Next, commissioners would not have to create markets against the interests of patients. Clinicians will be free to commission services in the way they consider best. We intend to make it clear that commissioners will have a full range of options and that they will be under no legal obligation to create new markets, particularly where competition would not be effective in driving high standards and value for patients. As I have already explained, this will be made absolutely clear through secondary legislation and supporting guidance as a result of the Bill.
The Bill already creates duties on commissioners to secure continuous improvement in the quality of services, reduce inequalities and promote integrated services. The Government intend to complement these by making it explicit through regulations under Clause 73 of the Bill that commissioning decisions must be in the best interests of patients, those decisions must be transparent and commissioners will be accountable for them. We would expect the NHS Commissioning Board to maintain guidance to support commissioners in these decisions, based on the available evidence and drawing on academic research.
It is worth reflecting that without Part 3, the main legal provision on commissioning NHS services would continue to be the general procurement regulations for public bodies introduced by the previous Administration in 2006. The application of that law to the NHS is unclear. Without the provision that we intend to include in regulations under Clause 73, commissioners would continue to face risk of legal challenge when they decided not to open services up to competition, even where the decision was in the best interests of patients. That uncertainty is unacceptable.
Finally, the Bill would prevent private companies taking over NHS trusts or foundation trusts. There has been a lot of misconception about that. I assure the House today, unequivocally, that that could not happen.
I now turn to the opposition amendments. Amendment 163D raises the application of competition law to the provision of NHS services. Its intention is to ensure that competition law does not apply to the provision of NHS services. However, as I have said, there is a basic point to make here: it is not within the gift of this Bill to secure that. It is like saying that if you pass a law saying that black is white, that is what will happen. However, what I agree on absolutely is that we need to protect the NHS from inappropriate application of competition law and its undesirable effects. Equally, as I said earlier, we do not want to leave patients unprotected from potential abuses by providers. That would be the effect of the amendment and I hope that the noble Baroness will reconsider her wish to move it.
I also referred to the fact that this Bill would provide for clinical commissioners to decide how to secure NHS services to best serve the interests of their patients. Hence, I do not agree with Amendment 178A.
The NHS has always been a comprehensive service, free to patients, with treatment and care based on clinical need and delivered through a wide range of diverse providers. That includes GPs, dentists, independent sector providers, NHS trusts, foundation trusts and a range of charities and social enterprises. Taken together, these providers operate across the various sectors of healthcare, including the community and mental health. They provide a range of services, including vital specialist services to people in lower socioeconomic and minority groups, and people with rare medical conditions.
Amendment 178A does not acknowledge that reality at all. Instead, it seeks to create an arbitrary and unnecessary presumption in favour of NHS and foundation trusts which would likely act against patients’ best interests. For example, the amendment would make it more difficult for a clinical commissioner seeking to manage long-term conditions such as diabetes or COPD in primary care and in the community—involving GP practices or social enterprises—instead of sending those patients to hospital. That could prevent choice for patients in a very crucial area. It could also prevent choice in end-of-life care by restricting the extent to which organisations such as Macmillan and Marie Curie were able to extend the services that they delivered for the NHS. It could prevent charities such as Turning Point transforming—
Baroness Thornton
My Lords, has the noble Earl actually read the amendment? Paragraph 6(c) says,
“the need to commission health services in a way that promotes the integration of health and social care services”.
Will the noble Earl accept that he just said that it does not say that? It says that; it is there.
Earl Howe
My Lords, we are talking about Amendment 178A. I disagree with the noble Baroness’s reading of it. It is quite clear what it says. It is geared towards making the NHS the preferred provider. The noble Baroness shakes her head. If I have misunderstood and that is not her intention, I will obviously retract that.
Yet the amendment would increase the risk of commissioners facing legal challenge under procurement law. As the noble Baroness pointed out in 2010,
“procurement must be transparent and non-discriminatory”.—[Official Report, 9/3/10; col. 137.]
Amendment 178A would be a retrograde step. I ask the noble Baroness to withdraw it, as well as the other amendment in this group.
Lord Clement-Jones
My Lords, is the Minister aware that many of us will welcome the statement he made? It was very comprehensive—indeed, more comprehensive than would be possible in many respects under an amendment to the Bill. He has covered so many different areas, both in terms of the provision-commissioning duties of Monitor and also the duties of co-operation.
Lord Clement-Jones
My Lords, clearly I have the Floor. I thought that I had it after the noble Baroness, Lady Thornton, as I was guided. I am very pleased to have the Floor before her.
What my noble friend Lord Howe said was extremely constructive, not only about the state of competition within the health service and some of the patching that had to be done to make up for deficiencies of the 2006 Act, but also to do with competition, the block exemptions available, co-operation and the general duties of Monitor. A law court would probably find it much more useful to have my noble friend’s fuller statement than simply some rather narrow amendment to the Bill. I recognise the deficiencies in my own Amendments 177 and 178. I much prefer the Pepper v Hart solution that has been found and proposed in these circumstances. The dangers of putting matters in the Bill are entirely illustrated by Amendment 178A. The Minister’s criticism of that amendment, which was made to me by expert competition lawyers, of trying to put commissioning in a straitjacket as is proposed—it may give the wrong impression, but it is ineffective in terms of EU procurement law—shows exactly the dangers of trying to put too much into the Bill. The Minister, entirely appropriately, has picked up many of the points made during the course of the Committee and in debate today and put forward a statement that will be used by those looking at provision and commissioning in the NHS in future. On that basis, I wholly welcome it. I may not be able to withdraw my amendment to the amendment, but I shall certainly not be moving my Amendments 177 and 178. I beg leave to withdraw the amendment.
Baroness Thornton
My Lords, I apologise to the House for the confusion that has just reigned. I blame the Liberal Democrats for that, but then I would, wouldn’t I? The noble Lord, Lord Clement-Jones, decided to seek to amend my amendment. Then, when I said that I would like to accept his amendment, he refused to allow me to do so. What can a girl do when she has been rejected in this way? My Amendment 163BZZA is the lead amendment in the relevant group. It is very disappointing that the Liberal Democrats did not feel confident enough to vote for their own amendment, again. They seem to be making a habit of that.
Lord Clement-Jones
My Lords, perhaps I may intervene. Has the noble Baroness received legal advice on the benefits of a Pepper and Hart-type statement versus the kind of amendment that her party has tabled, its effectiveness and the width of the statement made by the Minister?
Baroness Thornton
The noble Lord, Lord Clement-Jones, has a very legalistic manner of addressing the House. Of course I understand exactly what was happening there, and I understand exactly what the deal was between his Benches and the Minister, which was that the noble Lord would get a strong statement in response to his amendment. Is he satisfied with it? If so, he is wrong. That strong statement means that the protection comes when legal action starts to take place. I would prefer the protection to be in the Bill. That is what these amendments are about—protecting the NHS. We disagree about that and the noble Lord knows it. If I may address the Liberal Democrat Benches, it seems likely that the noble Lord’s spring conference will agree more with me than with him. However, that is his party’s problem for this weekend—not ours, for now, on the Bill.
I should like to make two further remarks on the substantive amendment and what the noble Earl said. He suggested that we were making the procurement rules more complex. We were not; we were making them simpler. The NHS deserves protection in the Bill. The Liberal Democrats have made a deal that sells the NHS short, as happened on the issue debated last week on conflict of interest. That is a great shame.
Lord Clement-Jones
I apologise for interrupting the noble Baroness, but does she realise that the more she attacks us, the more chances we have of a very positive outcome at our Gateshead conference?
Baroness Thornton
I was not actually attacking the noble Lord; I was just speculating about what might happen. I feel for Liberal Democrat Peers when they go to their conference this weekend, because they may be in for an uncomfortable time. However, that is absolutely not my business. I will just witness it with interest. It is time that we moved on and I beg leave to withdraw the amendment.
Baroness Thornton
“(c) is to continue as regulator of NHS Foundation Trusts as set out in Chapter 5 of Part 2 of the National Health Service Act 2006.”
Baroness Thornton
My Lords, this is a large group of amendments led by our amendment. In fact, we have only two amendments in the group, but they address issues regarding Monitor. The amendment suggests that Monitor should continue to be the independent regulator of NHS foundation trusts.
Our Amendment 167B would remove Clause 63. It might be easier if I were to explain why that amendment is there. It is not that we are necessarily opposed to Monitor’s functions as a regulator of social care, but something as important as this matter should be done not through regulations but in a proper manner through primary legislation. That is the only reason why that amendment is there and we seek the Minister’s views on it.
Returning to the amendment, Monitor must remain as the independent regulator of foundation trusts. We do not believe that now is the time to relax oversight of foundation trusts. We can be confident that the Francis inquiry will have views on this. We support trusts becoming foundation trusts, but only half of trusts have achieved foundation status, and the issues facing those unable to achieve the required standard remain. There is yet another drop-dead date; my Government had a drop-dead date and that did not work; we do not think that another drop-dead date will change that situation.
We must also be cautious in overclaiming the merits of the foundation trust model, because time will tell. Monitor has an important role in that, which should continue, although we do not support the need for an economic regulator for our NHS, because we do not see healthcare as a market. I do not intend to rehearse those arguments, but patients are not consumers, and choice for patients is not shopping. Economic regulation and privatisation are certainly linked in the view of those who want to break up our NHS—many of those who want the Bill in the private sector.
The Bill is radical, not evolutionary. We believe that the Government should have taken a different approach, but it is important that Monitor continues to carry out its role. It should not be asked to do two roles: those of the foundation trust regulator and the economic regulator for the NHS. We think that that presents Monitor with an insurmountable conflict of interests and that it lacks the capacity and capability to carry out the enhanced role. I hope that the Minister will accept our sequencing idea—I freely confess that it was stolen from the noble Baroness, Lady Williams, who first used the word sequencing— which is to allow Monitor to become an economic regulator only after it completes the job of authorising all those bodies which will get foundation trust status after a few years’ oversight. We believe that Monitor should take on those new duties and roles only at that point, May 2016, which is in the Bill.
Even for supporters, there is a realisation that Part 3 is a direct challenge to the idea that local commissioners will be free to shape local services as they see fit. The more we have patient choice, the more we have any qualified provider, the more regulatory enforcement around competition, the less need for commissioners. That is the central irony of the Bill. Any commissioner needs to read Clauses 19 and 73.
I think we need a discussion about Monitor’s roles and functions. I will wait until I sum up to comment on other noble Lords’ amendments in the group. I beg to move.
Lord Warner
I speak to Amendment 164 in my name, which is in this group. It returns to the issue I raised in Committee: the need for Monitor to produce an early report on the barriers to entry for new providers of services to the NHS. Although he had sympathy with what I was trying to do, the Minister did not like my previous amendment, which would have required Monitor to produce a report within 12 months of Royal Assent on barriers to NHS entry to new providers. I think that he accepts that there are barriers to entry for new providers which we need to tackle. In this amendment, I have added the words “identifying and” to the requirement in Clause 61(3) for Monitor to prevent anti-competitive behaviour.
I recognise that many people in this House and in the Commons do not share my view on the virtues of competition when used selectively for patient benefit. I will not go over all the ground again, but I think there is good evidence—the noble Earl cited some of it in an earlier discussion—that that has proved beneficial to patients. Moreover, the UK is almost unique in large advanced healthcare systems in enshrining monopoly public providers of hospital services, with little challenge to their efficiency or effectiveness. These NHS monopolies have been very good at erecting barriers to entry for newcomers and ensuring—if I may put it as unkindly as this—a quiet life for monopoly incumbents.
We should be concerned about this. Only last week there were some startling statistics in the Health Service Journal about non-foundation trusts’ poor performance in achieving savings requirements in line with the Government’s targets. I have no problems with the Government setting those targets for non-foundation trusts to improve their efficiency. None the less, however we frame the competition provisions in this legislation, we have to face the fact that it is extremely difficult for new entrants to dislodge incumbents in many of these services where the performance is poor. That is why in my view Monitor should, after the Bill receives Royal Assent, quickly identify clearly existing barriers to entry so that they can be dismantled in the public interest. The Co-operation and Competition Panel has already identified some of the barriers for new entrants to the NHS market—and, again, I make no apology for talking about an NHS market. It is important that we see healthcare, in part, as a market where new providers can provide better services and different types of services more effectively.
I hope that the Government will look sympathetically at this modest amendment to try to get Monitor on the case of identifying barriers to entry.
Baroness Williams of Crosby
My Lords, I have two amendments in this group, Amendments 163C and 166B, which also stand in the name of my noble friend Lord Marks. However, before I address those relatively short amendments, I should like to say a word or two about the broader issues that we have been discussing. I begin by perhaps giving a little comfort to the noble Baroness, Lady Thornton, by saying that my understanding is that we will be discussing the whole issue of the relationship of Monitor to foundation trusts later in the proceedings. Our amendment on this matter, which is not far removed from hers, addresses an amendment to the government amendment on this issue, which itself comprises a considerable advance in the position that we have had up till now. I shall not try to get into that debate because it is complicated and I think that it would be better conducted a little later in the light of the various proposals.
I want to say a word about competition, and it is appropriate to do so given that the noble Lord, Lord Warner, has just been speaking. He has always spoken with some courage on this issue, which I recognise is not exactly popular with his party. However, I say quite directly that I feel very strongly that we have allowed the issue of competition to become quite different from the reality that we have encountered in the Bill, in this House and from the argument that is going on outside. That is because we have tried to treat competition as an absolute—either we have a competitive market for the National Health Service or we have no competition at all—and we all know that to be false.
We all know that there is a role for competition but the argument is about how limited it should be, what it should be addressed to and whether it is then balanced by, for example, equally strong duties in relation to co-operation, integration and the bringing together of services. I think we all recognise that competition can make a significant contribution in innovation and bringing in new ideas. For example, we have only to look at the recent developments in the treatment of stroke victims and victims of heart conditions to see that there has often been an innovatory role for the private sector. However, many of us also believe, as I certainly do, that the National Health Service should continue to be primarily a public service, that it should be available free of charge and that it should be accessible to all. Therefore, competition must exist but essentially it must be balanced by other considerations which, in the case of what we have been discussing recently, are clearly of great significance—particularly the role of the integration of services and the role of co-operation, which in terms of our main priorities, including the care of the elderly, are absolutely central and crucial.
Baroness Finlay of Llandaff
My Lords, I have Amendment 165 in this group. It is designed to prevent anti-collaborative behaviour in the provision of healthcare services for the purposes of the NHS. Promoting collaboration and integration must be at least as powerful, if not more so, than preventing anti-competitive behaviour. We are well aware that no two patients are the same and, to date, all too often professional boundaries—whoever is the person providing the care—have created barriers. Those are very evident between primary and secondary care and can prevent a seamless patient experience.
This is not an amendment to prevent different providers coming together. Its aim is to ensure that whoever those providers are, whether they are NHS, whether they are from the voluntary sector or whether they are from social care, they must collaborate for the benefit of each individual patient. Therefore, the ways in which they will need to be able to collaborate will vary depending on the patients they are dealing with. Good care should treat the patient and their experience in the context of their life, social support relationships, cultural experience, gender and a range of other factors, and the services should support people to live productive, independent lives in their own homes for as long as possible. Patients, including older patients, must have access to specialist services, including in-patient, acute care when appropriate. Again, that will require collaboration between homecare services, in-patient services and step-down services to rehabilitate people in their homes. There will be a wide range of providers of all those services.
Population health needs and inequalities must be considered at the planning stage. Even doing that will require close collaboration between those doing the assessments. The tariff should reflect the complexity of clinical care and should encourage integration and collaboration between providers. The danger exists at the moment of a tariff structure that does not reflect clinical complexity but overcompensates for simple conditions and for those where there is a discrete episode of care, and does not recognise ongoing complexity. The tariff must work toward commissioning across the whole patient pathway. Information and data gathered around patients and clinical services should also reflect that. I hope that the amendment will make sure that the need for collaboration occurs at every level across providers, because at the end of the day Monitor will have the responsibility for licensing all providers.
The other reason for the amendment is that there will be times when competition and collaboration might appear not to be one and the same, and may indeed look to be in conflict. My concern is that unless there is a requirement for collaborative behaviour, it will be all too easy for the justification for commissioning to be based more on competition than on collaboration. In the balance of doubt, patients need to know that there is collaboration between their providers. There have been examples in social care and in the delivery of healthcare in care homes where integration could certainly have improved, for example, the unacceptable level of medication errors. Collaboration is going on among a variety of agents and stakeholders to develop practical solutions and an integrated approach to medication safety in care homes. Public health, too, requires the three arms of health improvement, health protection and healthcare delivery to work together, and will be very dependent on collaboration with other aspects of the NHS.
Perhaps I might take this opportunity briefly to correct a piece of information that I gave to the House in our previous debate and which turned out to be a little out of date—for which I apologise. It related to troops coming back from our theatres of war, where the provision of prosthetics has improved. This is an example of good collaboration between all agencies, which has been underpinned by the military covenant that the Government supported and instigated in legislation. The result has been an improvement in the care of those who are extremely vulnerable.
I hope that the House, and the Minister in particular, will see that there is a need to make sure that collaboration is driven forward between all providers, wherever they are and wherever they come from, so that the NHS and its principles can be underpinned for the benefit of patient outcomes.
Baroness Cumberlege
My Lords, I, too, tabled an amendment in this group. Before I speak to it, I will say that I very much support what the noble Baroness, Lady Finlay, said. I was interested in an article in the BMJ that she, too, may have seen. It was a report by Nigel Hawkes on how competition works in healthcare and how it can stimulate the provision of better services. He went on to say:
“The report dismisses claims that competition makes integrated care impossible or that the opening of tendering a service to ‘any qualified provider’ amounts to privatisation of the NHS”,
and that,
“evidence suggests that competition with regulated prices”—
which is what we are proposing—
“can produce higher quality care at the same cost—and without leading to increasing inequity in access to care. Our message is that competition can help the NHS, but proceed with care”.
It is “proceed with care” that many of us want. Although I support the idea of competition, the National Health Service is not a free-for-all but a regulated market.
I think we need competition. Looking at the summary scores of the seven nations surveyed on health system performance, which have often been mentioned in earlier debates in this House, we do very well compared with other developed countries, but when it comes to patient-centred care, we come last—seventh. That is really why competition is necessary: to make the health service much more sensitive to the needs of patients.
I appreciate that noble Lords must label me the greatest bore on earth, but I am going to continue to bore because I am going to relate Monitor to the duties for patient and public involvement. This amendment introduces the same definition and scope of involvement for Monitor as Amendment 142, which I moved earlier on Report, on duties for NHS commissioners, including public and private providers.
On 16 February, I received a letter from my noble friend Lord Howe on patient and public involvement, and since then I have had some useful meetings with him. The context of this amendment is that patient and public involvement must be robust as we are moving towards a stronger, more plural market, which I support. Patient and public involvement is an even more indispensable component in a market where the consumer role is split between commissioners, who hold the money, and patients who consume the service. PPI must bridge this gap for the market to work well, as patient choice will never apply to some NHS services.
Given its pivotal role in the reformed NHS, it is vital that Monitor has a PPI duty that is consistent with that of the providers it is regulating. The Bristol Royal Infirmary public inquiry 11 years ago led to the statutory PPI duty and its report specifically mentioned regulators in the list of bodies that should have this duty, so Clause 61(7) is very welcome. However I do not feel that the wording of Clause 61 goes far enough to achieve the Bristol recommendation that regulators,
“must involve the public in their decision-making processes, as they affect the provision of healthcare by the NHS”.
On the broader PPI duty, my noble friend helpfully clarified at our meeting that statutory guidance will be used to describe what is reasonable in terms of PPI and that there will be consultation on its content. The intention, as I understand it, is that the guidance will require PPI in monitoring the impact of planning decisions or proposals to require the views of patient representatives and their carers. Perhaps my noble friend will confirm this. We also discussed the role of the NHS Commissioning Board in making sure that clinical commissioning groups enforce the model contract clauses on PPI against private providers. This is important as they do not have the statutory PPI duty that NHS providers have.
I think it is the Government’s intention to create a level playing field for patients and the public to influence private providers who are under contract to the NHS in the same way that they can influence NHS providers. Can my noble friend assure me that that is the case? That would be very helpful, particularly as providers may challenge statutory guidance as burdensome under the duty of autonomy in Clause 4 as amended.
Lord Walton of Detchant
My Lords, I will briefly speak to Amendment 167 in this group, which has been tabled in the name of the noble Lord, Lord Hunt of Kings Heath. I understand entirely why he has tabled this amendment but, with respect, I do not believe that it is necessary.
All medical bodies, including the BMA and the General Medical Council and others, now agree that the days of doctor’s orders are long past. The practice of medicine is a partnership in which it is up to the doctor to recommend to the patient what course of action is most appropriate in the patient’s best interests; what it is appropriate to do in order to reach a diagnosis; what tests are appropriate in order to achieve that diagnosis; and what course of treatment would then be necessary. However, it is up to the patient to decide whether or not to accept that advice and it is not possible for a doctor to carry out a test without the informed consent of the patient.
It is also well agreed by these medical bodies that if a doctor has given full and detailed information to a patient about the course of action that is appropriate, and if the doctor recommends a particular course of treatment that he regards as being necessary in the patient’s best interests, the patient may nevertheless have the right to refuse that advice even if refusal of that advice ends in the patient’s death. For that reason, as all of these issues have been dealt with repeatedly in the advice given by the GMC, the BMA and other bodies, I do not believe that this amendment is necessary.
Baroness Barker
My Lords, the noble Lord, Lord Walton, will be aware of many occasions in this house—when the noble Lord, Lord Hunt, was Minister and some of us were in opposition—when we listened to Lord Weatherill speaking on behalf of Christian Scientists, who often wish to refuse treatment. I understand that this amendment originated from the Christian Scientists, who merely wish to draw again to the attention of the medical authorities the fact that they have a belief system that deserves the same amount of dignity and respect as any other. Perhaps he might view the amendment in that light.
Lord Hunt of Kings Heath
My Lords, I do indeed recall the debates that we had during one of the many health and social care Bills that have gone through your Lordships’ House in the past few years. It was indeed Lord Weatherill who raised the issue with me. Essentially, it was about standards in nursing homes where there was some concern that an insensitive regulator would take action against a home that was actually respecting the wishes of a member of the Christian Science religion. We were able to reach a satisfactory solution. An appropriate amendment was put forward and I think the noble Earl, Lord Howe, was also part of what I like to think of as the “second Weatherill agreement”. We may need another one in a couple of years’ time—who knows? I ask the Government for an assurance that the position that we then agreed will continue under the new Bill.
Lord Marks of Henley-on-Thames
My Lords, I will speak briefly, in addition to what my noble friend Lady Williams of Crosby said, to the amendments in our names concerning the Secretary of State giving guidance to Monitor: Amendments 163C, 166B, 173A, 173B and 173C.
These are further amendments concerning the role of the Secretary of State and are intended to ensure that the Secretary of State has a practical and effective influence over Monitor’s overall approach to the work it does. The Secretary of State would exercise that influence by issuing statutory guidance to Monitor that will have to be published and laid before Parliament. The guidance in each case could be revised but the revised guidance would also have to be published and laid before Parliament.
The heart of the scheme is Amendment 166B. The duty referred to in that amendment under Clause 61(9) is the duty on Monitor to exercise its functions consistently with the Secretary of State’s duty to promote a comprehensive health service. The amendment allows the Secretary of State to publish guidance to Monitor on the objectives specified in his mandate to the board and to set out guidance on how those objectives are relevant to the separate work carried out by Monitor. Monitor is, of course, required to have regard to such guidance.
Amendments 173A to 173C empower the Secretary of State to give guidance to Monitor in line with any guidance that he has published under new Section 13E of the 2006 Act. That is the so-called outcomes document issued by the Secretary of State to the board in connection with securing continuing improvement in the quality of services and outcomes achieved by the health service. These amendments make it incumbent on Monitor to have regard to that guidance, which must also be published and laid before Parliament. Amendment 163C concerns reporting by Monitor so that in its annual report Monitor would be required to state what it did to comply with the guidance, envisaged by these amendments, given by the Secretary of State in relation to the exercise of its functions.
These are modest but important amendments. They seek to weave into the fabric of the Bill a clear role for the Secretary of State to give strategic guidance to Monitor in line with the Secretary of State’s overarching duties, in particular with the objectives set out by the Secretary of State in his annual mandate to the board, and in line with the outcomes document that he publishes that is designed to ensure the board’s performance of its duty to secure improvement in the quality of services.
These amendments are part of creating a coherent and consistent framework within the new structures established by the Bill, to ensure a single and purposive approach by all the bodies within the NHS, with the Secretary of State remaining in charge of setting the strategic objectives for the service. In those circumstances I suggest that they are very welcome.
Baroness Meacher
My Lords, I rise with some trepidation, not having been involved in Committee on this Bill but having been upstairs in Grand Committee on another Bill. I therefore have not done the learning that I know noble Lords around the House have done during that process.
Many noble Lords have referred to the term “competition” without distinguishing between competition within the NHS between public sector organisations and competition between public sector and private sector organisations. It is perhaps relevant for me to quote recent research by Zack Cooper and colleagues at the London School of Economics. It came out in February, since Committee, which is my justification for introducing research at this late stage of the Bill. That research looked at competition between public service NHS organisations on the one hand, starting in 2006, and between the different forms of organisation, the private and the public, on the other hand, starting in 2008.
This considerable research looked at 1.8 million patients, 161 public sector hospitals and 162 private sector hospitals and should be taken seriously. It showed that the result of public sector competition was a reduction in lengths of stay both pre-surgery and post-surgery. Those results were significant. As the Minister knows, I support strongly competition in the public sector. I really believe that human beings thrive on competition. Therefore, if the research showed that public and private sector competition worked, I would support it because I believe in the best possible service for patients.
This research also shows that when you look at the competition between the private and public sector organisations, you will find an increase in the length of stay in the public services, albeit that there perhaps is a marginal improvement financially. If you look at the whole policing and monitoring apparatus that you need in far greater proportions once you have all this competition, I am not sure that you would even achieve a financial benefit. However, you find a reduction in quality, most particularly for people with long-term conditions. That is why I needed to speak in this debate.
I hope that whatever happens on these amendments, great care will be taken to protect public service provision. If we do not prevent the cherry picking, which happened in the provisions studied by this research and has occurred in other settings examined by research, without any question we will achieve a two-tier service with the private sector cherry picking the easier and healthier patients and the public sector having the complex care. I know that this issue will have been rehearsed at length in Committee. I do not want to go on further but it is important that we do not just use the word “competition” without clearly differentiating the competition that we are talking about.
Lord Ribeiro
For clarification, perhaps the noble Baroness would say whether we are dealing with apples and pears here. She made reference to the private sector and chronic care whereas she said specifically that the earlier 2006 report related to surgery. My understanding is that quite a lot of the competitive work done in the NHS involved ISTCs. These contracts were held by private practitioners and private companies. I have not read this report but we need clarification as to whether we are dealing with a level playing field of NHS provision or whether this is NHS provision against private provision.
Baroness Meacher
I am grateful to the noble Lord for his intervention. I was trying to conflate a number of points. The research that came out in February has to do with surgery but the point is that those findings support earlier studies which looked at a mixed public-private market by Allen and Gertler in 1991 and Ellis and McGuire in 1986 and others. Their research also showed that if you have private and public services competing with each other, you will see the cherry picking and the detriment to the long-term conditions to which I have referred. I am sorry that I slightly skipped a few things and compounded them into one. The findings are absolutely consistent whether they are concerned with surgery or other settings.
Lord Adebowale
My Lords, I had not planned to speak in this debate but, having heard the contributions of many noble Lords, it is important perhaps to indulge in reminding the House that competition does not revolve around just what one might call private and public. I am the chief executive of a social enterprise organisation, which some might consider to be a new entrant into the health and social care market. However, in substance misuse and learning disabilities, it is a significant, historical provider of services to members of the community and the provision of long-term condition management.
The debate around competition becomes polarised very quickly, as has been pointed out in earlier contributions to this debate. I am in favour of competition. It seems to be currently the case in the NHS that we have competition. I am concerned about the way in which the market is managed. Let me illustrate this with an example: it is possible for a new entrant into a care market—say, delivery of community health services —with very little experience in that market to win a substantial contract against an incumbent provider with vast experience and an excellent track record simply because the interpretation of the way in which procurement rules need to be managed means that that a not-for-profit provider gets ruled out. That happened recently in reference to the provision of community health services in Surrey and the Surrey nurses.
The safeguards that I want to see in regard to competition are those that protect public taxpayers’ money in the procurement of health and social care services. Again, we tend to concentrate on hospitals, surgery and related issues. These days, the health service is as much about what happens in the community. I am concerned that we have safeguards in place to protect health and social care services from new incumbents with a poor track record, or no track record, which can bid at or below cost and win simply because the procurement rules rule out not-for-profit providers who may not be able to access capital. I refer to the intention of this Government to bring in laws that would encourage social value and social enterprise.
It would be helpful for the House to be reminded that the players in the health and social care market are no longer just public and private. The market has to be managed in favour of a mixed economy and in favour of retaining resources in the public realm that could be pulled out in a simple battle between private capital and public service. I hope that my contribution has made sense and I apologise for keeping the House.
Lord Turnberg
I shall speak in support of Amendment 165 in the name of the noble Baroness, Lady Finlay of Llandaff. This amendment is designed to ensure that Monitor encourages integration and collaboration. In all that, it is important that Monitor ensures that the operation of the system of payment by tariffs does not interfere with that integration and, at worse, adds to the costs of the health service.
I shall give two examples of where the tariff system might be counterproductive. The first is in relation to the hospital admission of a patient who goes home, is readmitted and may be readmitted several times. It is in the hospital’s financial interest to have these episodes of care because it gets paid by the tariff each time the patient comes in. There is no inducement in the hospital to try to enlist social services. I am sure that it does, but the system works against that and tends to promote readmission as a way of earning money.
The second concerns patients who are in the hospital for one condition and develop a condition relevant to another consultant. For example, a patient may come in with an orthopaedic problem such as a broken hip, and then develop an acute episode of diabetes, so there is a need to call for a diabetologist to look after the patient’s diabetes. That requires a rather tortuous consultation process which involves a second episode and a further payment by the tariff system. Those are two obvious and common examples of where integration is interfered with by the system we are operating.
I know that the Government are not keen to change that sort of system, but there must be ways for Monitor to look at it critically and see whether the current tariff system can be made to work better than it does at the moment. I hope that the noble Earl will be able to comment on that.
Baroness Wall of New Barnet
Perhaps I may contribute to the debate solely on the comments that have just been made by my noble friend. As regards the first instance he mentioned, that is no longer the case. If someone is brought back into hospital with the same disease or illness, no tariff is paid. As far as I am concerned, that is certainly the guidance we have had from the Department of Health and it is being applied. It is still the case with regard to the second example— I guess quite rightly. But from my experience as the chair of a foundation trust—my noble friend Lord Hunt is nodding in agreement—if someone is admitted again with the same illness there is a presumption that they were not dealt with properly in the first place. As a result, the treatment has to be carried out under the first tariff and no additional tariff is granted.
Lord Turnberg
My Lords, I wonder whether I could comment on that. It depends on the timescale between admissions. If it is longer than two months, I think that you get a second shot.
Baroness Murphy
My Lords, this is a disparate group of amendments. I support the principles that underline Amendments 164, 165 and 166. The Bill has been amended since the Committee stage and may address some issues, and that is one of the difficulties when we discuss competition, collaboration, integration and co-operation. We will have yet another amendment later today or on Thursday from the Government on the duty of co-operation that will further strengthen the role of Monitor in regard to these issues. That, I think, will meet some of the arguments.
My feelings are consonant with those of the noble Baroness, Lady Williams. I am furious at some of the debates in the press about whether we are marketeers or pro-NHS. In fact, the vast majority of people in this House steer a course in order to do what is in the best interests of patients in terms of competition, collaboration and integration. I acknowledge that many of us must feel the same as the noble Baroness in her frustration about that.
The intervention of my noble friend Lord Adebowale was helpful in that it reminded us of how competition has worked in mental health services and substance misuse services. For many years collaboration between organisations to deliver services in both acute care and for long-term conditions has been helpful. I have no difficulty thinking of dozens of situations where commissioners have decided to commission services in areas where there has been collaboration between a group of service providers. They may involve social care services, residential care homes being run independently and so on. Commissioners might seek to put together an improved ortho-geriatric service especially for people with multiple disabilities in later life. There are examples of successful collaborative services which have been competitively tendered for. However, I do not want to take up the time of the House at this stage by mentioning too many examples.
I have a question to ask of the Opposition in relation to Amendment 163BA. This is the first amendment in the group, and perhaps the noble Baroness, Lady Thornton, could help me in one respect. I am not quite clear whether this amendment would return Monitor to the position it is in now—where we would continue with the two-tier system of foundation trusts and other trusts with a simple economic regulator for foundation trusts—and would rule out the rest of the new economic regulation functions. If it has that effect, it would seriously wreck the main purpose of the Bill. However, I may well be reading it incorrectly, so before I decide which way to go, I wonder whether the noble Baroness, Lady Thornton, could reassure me that that is not the purpose of the amendment.
Earl Howe
My Lords, there is a clear purpose to Part 3. It is to strengthen sector regulation of healthcare in England by building and improving on Monitor’s existing role as the regulator of foundation trusts. It does that in three main ways. First, it makes clear that Monitor’s overriding duty would be to protect and promote patients’ interests. Secondly, it makes sector regulation more comprehensive by extending Monitor’s remit to all providers of NHS services. Thirdly, it makes sector regulation more effective in realising benefits for patients; for example, by monitoring the NHS Commissioning Board setting fairer prices for NHS services. Fair pricing is important for a whole host of reasons: to strengthen incentives for improvement, to enable better integration and to reduce the risk of cherry picking.
I shall deal with a simple point. Monitor will continue as the regulator of NHS foundation trusts. The Bill makes that crystal clear in Chapter 1. However, I am most grateful to my noble friend Lord Clement-Jones for highlighting the need for greater clarity on what intervention powers Monitor would have over foundation trusts on an enduring basis as against what would be transitional. I shall say more about that when we come to debate his amendments in a later group.
Before going on, let me address Amendment 167 from the noble Lord, Lord Hunt, on the specific issue of patients’ rights to refuse consent for treatment in the NHS. I can absolutely assure the noble Lord that these rights must be protected and nothing in the Bill would change that.
Returning to Part 3 and the role of Monitor, its overarching duty will be to promote economy, efficiency and effectiveness in the provision of healthcare while maintaining or improving quality for the benefit of patients. I underline those last words. This is the single overarching purpose for which Monitor would carry out all its functions, including its continuing functions under the NHS Act 2006 as the regulator of foundation trusts. Monitor’s overarching duty is clear, unequivocal and focused on improving outcomes for patients. I stress that point since as this is its guiding principle for resolving potential conflicts, there is no need to separate Monitor into two organisations, as the noble Baroness, Lady Thornton, proposes in her amendment. I suggest that she has raised an issue that in reality is not a substantive one.
Let me briefly address Monitor’s role in ensuring that where there is competition in the provision of healthcare it operates in the interests of patients. We will have an opportunity to consider this issue in more detail later. Decisions on whether and when to use competition will be a matter for clinical commissioners. As I have already said, there have always been private and voluntary providers in the NHS. Anyone who reads Part 3 will see that it does not create markets for NHS services, despite what some others have said. This is not the same Bill as that which was debated in the Committee of the House of Commons in March 2011. It has changed significantly as a result of amendments tabled by the coalition in response to the NHS Future Forum.
Baroness Meacher
Lower prices may be determined for simpler procedures, but this matter is far more complicated than that. If a lot of the simpler procedures are creamed off, the public sector institution may not be viable, which the research again shows. It is not straightforward. People concerned with long-term and complex conditions fear that over time such a differential organisational and pricing structure could lead to a two-tier system.
Earl Howe
My Lords, it is a concern that I understand. The destabilisation of the NHS will naturally be a concern to all commissioners, which is why they can protect that situation through the contract. They could insist through the contract that a provider provided the full range of services rather than a select few. I simply say to the noble Baroness that we are alive to that concern and I have no doubt that commissioners will be as time goes on.
On the amendment tabled by the noble Lord, Lord Warner, he will be disappointed to hear that I am not drawn to going any further than the Bill does, much as I understand that his idea is well-intentioned. I say that because of Monitor’s overarching duty to protect patients’ interests and prevent anti-competitive behaviour that would harm those interests. This amended duty reflects what the Future Forum recommended and it is right that we stick with that. I can, however, offer the noble Lord, Lord Warner, some reassurance. First, in carrying out its duty to address anti-competitive behaviour, Monitor will necessarily have to identify it. Secondly, Monitor would have the power under Chapter 2 of Part 3 to conduct market studies and to refer potential barriers to new entrants for further investigation by the competition authorities where necessary. I hope that that is of some comfort also to the noble Lord, Lord Adebowale.
We had a most constructive debate in Committee about the Secretary of State’s accountability for securing a comprehensive health service in England and his role in holding Monitor to account for its duties. I thank my noble friend Lady Williams for proposing an amendment which adds much to the Bill in this area. Clause 61 already requires Monitor to carry out its functions in a manner consistent with the Secretary of State’s performance of his duty to promote a comprehensive health service. My noble friend’s amendment would strengthen these provisions and thereby improve the Bill on a key issue. This would help to ensure that the Secretary of State can discharge effectively his responsibility for the health service in England and that Monitor carries out its functions to that end. I support my noble friend’s amendment.
Clause 64 specifies the range of matters that Monitor would be obliged to have regard to in carrying out its duties. In Committee, the noble Baroness, Lady Murphy, and my noble friend Lady Williams raised some concerns about that list. I agreed to reflect on these concerns and have tabled Amendments 168 to 171, which would rationalise the list and make it clear that maintaining patient safety would be the paramount consideration. I hope that the noble Baroness and my noble friend will be content with that rationalisation.
On the amendment tabled by noble friend Lady Cumberlege, the Bill ensures that patient and public involvement is embedded at every level of the healthcare system. However, unlike the NHS Commissioning Board and clinical commissioning groups, Monitor would not be responsible for securing NHS services to meet patients’ needs. It is a regulator, with economic and more technical functions. Clause 61 reflects this and gives Monitor the responsibility for determining arrangements for patient and public involvement as appropriate to its functions. So I am afraid that I do not regard my noble friend’s amendment as appropriate. She asked what could be done if Monitor did not involve patients in the right way. Well, the Secretary of State would hold Monitor to account as to how it discharged its functions. Monitor would have to report to the Secretary of State on how it was discharging its duty on patient and public involvement as part of its annual report. The Secretary of State could also request a specific report on how Monitor discharged this function and intervene where there had been a significant failure in meeting this duty. The Bill provides for HealthWatch to send advice to Monitor as it seems appropriate. Monitor would then be required to respond to this advice in writing. I hope that my noble friend will take comfort from those points.
I stress once again that the purpose of Part 3 is to strengthen sector regulation in healthcare to protect and promote patients’ interests. The current system is inadequate, fragmented and duplicative. It fails to protect the interests of all patients. Part 3 recognises that the NHS is not and never has been a single institution. The reality of the NHS is a comprehensive health service that has always been delivered by a diverse range of providers.
Part 3 would address gaps in the current system by extending equivalent safeguards to protect patients’ interests irrespective of who provides their NHS services. It would also make sector regulation in the NHS more effective in driving improvements and enabling integration during an absolutely crucial period of economic challenge.
I am very happy to support the amendments of my noble friend Lady Williams, which would improve the Bill, but I urge, following the reassurances and explanation that I have been able to give, other noble Lords not to press their amendments.
Baroness Finlay of Llandaff
Before the Minister sits down, will he answer a straightforward question in relation to my amendment? Given that the Bill at page 88 states,
“functions with a view to preventing anti-competitive behaviour”,
and my amendment, which is not being accepted, states,
“functions with a view to preventing anti-collaborative behaviour”,
will the Minister confirm that that means that competition is trumping collaboration?
Baroness Finlay of Llandaff
What instances are there of when collaboration has not resulted in improved patient outcomes? I have not been able to find any.
Earl Howe
Nor have I, which is why I listed earlier some prime examples of collaboration. Clinical networks are a prime example of collaborative behaviour which is clearly in the interests of patients. The noble Baroness is asking me to think of examples in my head of collaborative behaviour in the NHS that does not advantage patients. I cannot think of any, which is why it would be hard for Monitor to find fault with collaboration where it has clearly been designed to improve patient care.
Baroness Thornton
In response to that last remark, it depends on whether Monitor decides it is collusion or collaboration. That is the key point. We suggested that that was a problem right at the very beginning of the Bill—how you distinguish between collaboration and collusion and what you do about that. I do not think we are any closer to finding the answer.
I turn to remarks that were made during the course of this very useful if diverse debate. I want to take one moment to say something to the noble Baroness, Lady Williams, and her colleagues and to the noble Baroness, Lady Murphy, about the fact that they feel misrepresented in social and other media. Indeed, as politicians it goes with the territory that you may be misrepresented from time to time. I have the greatest respect and admiration for the noble Baroness, Lady Williams, and she knows herself that that is where you are when you are in politics.
However, the noble Baroness herself wrote in an article in the Guardian on 13 February about dropping the chapter on competition, and in a letter that the noble Baroness and her leader wrote to their own MPs and Peers, they set a high bar for how Part 3 of the Bill might be made safe. It is just and proper that everybody will be looking at the noble Baroness and her friends to see and test whether they have succeeded and met their own aspirations. At the moment, I think that that is open to question. I do not think that it has been achieved. I know that that might be painful, but that is the case.
We have had some thoughtful amendments and contributions. As usual, the noble Baroness, Lady Finlay, in her amendment and questions put her finger on a very important issue that the Bill needs to address even at this late stage. I had a great deal of sympathy with the amendment of the noble Baroness, Lady Cumberlege. I rather hoped that she would get a more positive response than she did and I am sorry about that.
Baroness Williams of Crosby
The noble Baroness is perfectly entitled to say what she had said. I accept that fully and I am sure that she said it in all sincerity. But the difference between us is that I believe that the Government have moved a long way, particularly because of the Minister. I believe that that culmination of changes will enable us to bring about an improved NHS. I may be proved wrong. I freely accept that I may be proved wrong. But I believe that the changes that have been made are so far reaching that we can make the NHS better than it is today. I know that the noble Baroness, who herself has been responsible in her attitude towards the Bill, would wish to see that, even though she may not think that this is the way to do it.
Baroness Thornton
I am not sure whether this is the way to do it. We disagree. I do not think that the Liberal Democrats have achieved it, but there we are. As the noble Baroness said, history will see who is right and who is wrong.
I am extremely pleased to see that the noble Baroness, Lady Meacher, has transferred her attention from the Welfare Reform Bill to this one. She is quite correct that it is impossible to stop the negative impact that has been observed in the studies that she referred to. She is completely right about that. This whole debate illustrates the problem: half of the Bill seems to be there to mitigate the damage that the other half does. What used to be, for example, a clear duty to co-operate—and it was a simple duty—is now dense and complex.
Turning to our Amendment 163B, I should like to say to the noble Baroness, Lady Murphy, that it does not rule out the economic regulator function. That amendment does not seek to do that, so I hope that the noble Baroness, with that reassurance, might support our amendment. We seek to clarify and put beyond doubt that Monitor should have that function. We seek to do it in the first part of the Bill. We want Monitor to keep its current role. We believe that there should be two bodies and that it is difficult for Monitor to do both jobs at once, but it is important at this point of this first part of the Bill that we make it completely clear. Where the Bill says that Monitor should be the,
“Independent Regulator of NHS Foundation Trusts”,
we need to make it completely clear that it will continue to do that job.
We are not trying to weaken the role of Monitor. We think that foundation trusts are facing huge risks and huge reorganisation. They need the support that Monitor will offer them. I suspect that the Francis report, as I said earlier, will indeed have something to say about the strength and importance of Monitor as a regulator of foundation trusts. We would like this to be in the Bill because it makes it completely clear that this is an important job that Monitor does and that it should keep doing that job for the foreseeable future. I wish to test the opinion of the House.
“(b) include a statement of what it did to comply with the duty under section (Secretary of State’s guidance on duty under section 61(9))(2) (duty to have regard to Secretary of State’s guidance on duty under section 61(9)), and(c) include a statement of what it did to comply with the duty under section 64(1)(ja) (duty to have regard to Secretary of State’s guidance on relevant parts of document on improving quality of services).”
“( ) Monitor must exercise its functions with a view to preventing anti-collaborative behaviour in the provision of health care services for the purposes of the NHS.”
Baroness Finlay of Llandaff
In summing up after the previous debate, the Minister spoke about the service currently being fragmented and duplicative, and I would agree that it is. I am glad that the Government’s intention is to have a service where healthcare providers collaborate more than they do at the moment. I accept that there will be a range of providers, and I support having a wide range of providers to provide a spectrum of services. However, I do not understand—and have not understood from the answers—why anti-collaborative behaviour should not be up there as a general duty for Monitor with anti-competitive behaviour. Because of that, and because of all the discussion that we have had over integration and collaboration, I feel that it is a duty that I have to those who wish to collaborate in the NHS to test the opinion of the House, so that there is equal status between anti-competitive and anti-collaborative behaviour in the event of there being a conflict between the two.
Earl Howe
I hoped that I had already made it clear to the noble Baroness that collaborative behaviour when it is in the interests of the patients—and I distinguish that from collusive behaviour, which is almost certainly not in the interests of patients—will be regarded by Monitor as trumping the need for competition to be deployed in services. I am not sure that I understand what the noble Baroness’s problem is in this area; she should be reassured by that.
Baroness Finlay of Llandaff
I am grateful to the Minister for trying to clarify these matters, but my concern relates to anti-competitive and anti-collaborative being of at least equal status. I would prefer anti-collaborative to be on the face of the Bill. Is the Minister prepared to have a discussion with me after this debate to see whether we could insert some other wording to prevent both anti-collaborative and anti-competitive behaviour? In that way, even when a provider states that it intends to collaborate and that is put down clearly, if it is demonstrated as time goes on that the provider is not fulfilling that, Monitor will have the leverage to say that it was in open competition but the provider has not fulfilled the requirement to collaborate.
Earl Howe
I am of course willing to hold discussions with the noble Baroness, but I remind her that we have explicitly provided for Monitor to use its licensing powers to support integration and co-operation when that is in the interests of patients. We were fully aware of that issue when drafting the Bill. Later amendments, which we will debate today, will strengthen the ability of Monitor even further.
Baroness Finlay of Llandaff
I recognise that they will strengthen Monitor further and that they will come later, but my disappointment is that they are not in the core general duties that will override the way in which Monitor functions. They will come later on and in detail, and I can see that in the amendments that the Government have tabled. But my concern persists, and I wish to test the opinion of the House.
“Secretary of State’s guidance on duty under section 61(9)
(1) The Secretary of State may, for the purpose of assisting Monitor to comply with its duty under section 61(9), publish guidance on—
(a) the objectives specified in the mandate published under section 13A of the National Health Service Act 2006 which the Secretary of State considers to be relevant to Monitor’s exercise of its functions, and(b) the Secretary of State’s reasons for considering those objectives to be relevant to Monitor’s exercise of its functions.(2) In exercising its functions, Monitor must have regard to guidance under subsection (1).
(3) Where the Secretary of State publishes guidance under subsection (1), the Secretary of State must lay a copy of the published guidance before Parliament.
(4) The Secretary of State—
(a) may revise guidance under subsection (1), and(b) if the Secretary of State does so, must publish the guidance as revised and lay it before Parliament.”
“( ) Regulations may provide for Monitor to make the granting of a licence conditional upon performance in relation to matters set out as in section 64.”
Baroness Finlay of Llandaff
My Lords, some of the amendments in this group are in my name and that of the noble Lord, Lord Northbourne, who is unable to be in the House today because of ill health. They relate to the transition of care between different sectors and build around the principle of integrated working.
The problem that arises is that the responsibility for care of children will sit with different groups. There is a need to make sure that, when children make the transition from being the responsibility of social services to being the responsibility of the local authority and, in adult care, of the clinical commissioning groups, there is adequate provision for how that handover occurs. A clear date for it should be set and it should make explicit the duties for each party involved in handing on information. Without that, there is a concern that as these young people—many of whom will have mixed mental, physical and social care needs—transition across, information about those needs may not adequately pass from one agency to another. There is a concern that they may fall into a gap and that the responsibility at the time of transition will not be clear. We are also concerned that, without a clear, fixed date for the transition with a default time set in legislation, it will be easy for a young person’s care to drop out of sight, particularly if they are not supported by people well able to advocate on their behalf.
Also in this group is Amendment 174A, which concerns the general duties of Monitor and is in the name of the noble Baroness, Lady Young of Old Scone. She has asked me to speak to this amendment, which again emphasises the importance of integration of services. Her concern is about diabetes but goes far wider than that. Where there is a multiplicity of providers, how they work together will depend on how Monitor specifies service in the national tariff. Since patients with complex conditions require input from many different providers, there is a concern that, without a real emphasis in the Bill on provision being integrated, they may end up being told that their care is not the responsibility of one person or another. These amendments, which have been grouped together, seek clarity on the seamless provision of care. The principle behind them is to address those gaps that we have identified in that seamless provision of care.
I return to the amendments in my name and that of the noble Lord, Lord Northbourne. We are well aware that it can be very difficult to differentiate between the social and mental health needs of young people. For that reason, we feel that it is important that transition is clarified. I beg to move.
Lord Beecham
My Lords, we certainly support these amendments. I am particularly pleased by the reference in Amendment 171A to the transfer of information between child and adult social care authorities, which picks up a point that was raised in an earlier debate. These are sensible amendments, although there is an error in Amendment 238G, which refers to health and welfare boards, instead of health and well-being boards. On that not untypically pedantic note, I support the amendments and trust that the Minister will give them a favourable response.
Baroness Northover
My Lords, there is a clear consensus on the importance of further integration and more services being joined up around patients’ needs. The Bill seeks to encourage and enable the delivery of integrated services and contains strong provisions to ensure that this takes place. We are placing a duty of integration on all bodies, including clinical commissioning groups and health and well-being boards, to ensure more joined-up provision of services for patients, social care service users and carers. Furthermore, all NHS bodies and private and third sector providers supplying NHS services are required by the Health Act 2009 to take account of the NHS constitution in their decisions and actions. This includes the principle that the NHS works across organisational boundaries and in partnership with other organisations in the interests of patients, local communities and the wider population.
The Bill takes this further by making it clear that, in exercising any of their functions, commissioners must act with a view to securing that services are provided in a way that promotes the NHS constitution; and with a view to securing continuous improvement in outcomes, including effectiveness, safety and quality of patient experience. Commissioners must also exercise their functions with a view to securing that health services are provided in an integrated way where this would improve the quality of those services, including outcomes, and/or reduce inequalities in access to services and outcomes. The intention is, therefore, that it would be for commissioners to drive integration and co-operation between providers in the light of local circumstances and needs, and to enforce this through legally binding contracts. This would apply equally, and perhaps all the more importantly, in relation to the provision of services for long-term conditions where multidisciplinary care is required.
Baroness Finlay of Llandaff
I am most grateful to the noble Baroness for the assurances that she has given. I am particularly grateful to her for focusing on the integration with educational needs as well as social care needs and physical and mental health needs, with a single point of assessment. I beg leave to withdraw the amendment.
“(1) In exercising its functions, Monitor must have regard, in particular, to—”
“(2) Monitor must, in exercising its functions, also have regard to the following matters in so far as they are consistent with the matter referred to in subsection (1)—”
“(ja) where the Secretary of State publishes a document for the purposes of section 13E of the National Health Service Act 2006 (improvement of quality of services), any guidance published by the Secretary of State on the parts of that document which the Secretary of State considers to be particularly relevant to Monitor’s exercise of its functions,”
“( ) Where the Secretary of State publishes guidance referred to in subsection (2)(ja), the Secretary of State must lay a copy of the published guidance before Parliament.
( ) The Secretary of State—
(a) may revise the guidance, and(b) if the Secretary of State does so, must publish the guidance as revised and lay it before Parliament.”
“( ) For the purposes of this section—
(a) a failure to perform a function includes a failure to perform it properly, and(b) a failure to perform a function properly includes a failure to perform it consistently with what the Secretary of State considers to be the interests of the health service in England or (as the case may be) with what otherwise appears to the Secretary of State to be the purpose for which it is conferred; and “the health service” has the same meaning as in the National Health Service Act 2006.”
Baroness Thornton
“(5) An NHS commissioner shall be entitled to undertake a review (“a Commissioning Review”) of all or any part of the health services that the NHS commissioner considers are reasonably required in order to discharge its functions under this Act, and, upon completion of such a Commissioning Review, an NHS Commissioner shall be entitled to determine that the most appropriate way to deliver all or any part of such services shall be through the conclusion of arrangements with one or more health services bodies or one or more NHS Foundation Trusts.
(6) NHS Commissioners shall, when conducting a Commissioning Review, have regard to the following factors—
(a) the need for NHS services to be provided in a way that is economic, efficient and effective;(b) the need to commission services in a way that maintains or improves the quality of the services;(c) the need to commission health services in a way that promotes the integration of health and social care services;(d) the need for health care services provided for the purposes of the NHS to be provided in an integrated way where this will—(i) improve the quality of those services (including the outcomes that are achieved from their provision) or the efficiency of their provision, (ii) reduce inequalities between persons with respect to their ability to access those services, and(iii) reduce inequalities between persons with respect to the outcomes achieved for them by the provision of those services;(e) the likely future demand for health care services;(f) the desirability of patient choice.(7) An NHS commissioner shall be entitled, as part of any Commissioning Review, to seek expressions of interest from health services bodies or from NHS Foundation Trusts which may have an interest in providing such services, and shall be entitled to undertake such processes as it shall consider appropriate to determine which of such bodies is able most appropriately to provide any such services.
(8) A Commissioning Review and decisions made following a Commissioning Review to make arrangements with one or more health services bodies or NHS Foundation Trusts shall not constitute anti-competitive behaviour for the purposes of this or any other Act.
(9) The Public Contracts Regulations 2006 shall not impose any obligations on an NHS commissioner which undertakes a Commissioning Review or makes decisions to make arrangements with one or more health services bodies or NHS Foundation Trusts following a Commissioning Review.
(10) Regulations under this section shall not impose obligations on an NHS commissioner undertaking a Commissioning Review.
(11) The NHS Commissioning Board may, after consultation with Monitor, publish guidance to NHS Commissioners concerning Commissioning Reviews.
(12) The National Health Service Act 2006 shall be amended by adding the following after section 9(4)(r)—
“(s) An NHS Foundation Trust”.”
“( ) Before publishing guidance revised under subsection (4), Monitor must consult the persons mentioned in subsection (2).”
“( ) For the purposes of Part 3 of the Enterprise Act 2002 (completed and anticipated mergers), each of the following cases is to be treated as being (in so far as it would not otherwise be) a case in which two or more enterprises cease to be distinct enterprises.”
Earl Howe
My Lords, I speak also to Amendments 182 and 183. There is one simple point to Clause 77: it is there to remove the current legal uncertainty and risk of double jeopardy for foundation trusts under the UK’s existing general merger controls. The OFT already has jurisdiction to review foundation trust mergers under the Enterprise Act, but there is legal uncertainty as to when that applies in individual cases. That creates the risk of double jeopardy for foundation trusts under current arrangements, as their mergers are also reviewed by the Co-operation and Competition Panel. Amendments 181 to 183 are minor and technical amendments which make it clear that Clause 77 applies to both completed and anticipated mergers. I will reserve my remarks on the other amendments in the group until I have heard the contributions of the noble Lords who are proposing them. Meanwhile, I beg to move.
Lord Clement-Jones
My Lords, I shall speak to Amendment 184. In Committee, we debated the role of the OFT in merger policy and looking into mergers between foundation trusts. I tabled an amendment because it seemed to me at the time that the Enterprise Act was a relatively blunt instrument for the OFT to use to look at those mergers, compared to the usual way that it would look at the competitive effect or impact on competition of such a merger. The response of the noble Earl, Lord Howe, was extremely helpful in guiding us through the relevant provisions of the Enterprise Act—in particular, pointing out that the OFT has a duty under the Enterprise Act to look at relevant customer benefits.
The issue is that “customer” is not normally how we describe patients in the NHS and the way that the NHS operates is rather different from considering whether Dixons taking over Comet, for instance, will impact on the customer or the consumer. There is a difference. It seemed to me that the best way to handle the matter would be specifically to provide for Monitor to be inserted into the process so that it would give specific advice to the OFT on those matters. Although the definition is “relevant customer benefits”, its perspective would be on the impact on patients.
I appreciate the earlier amendments which the noble Earl has tabled, but this would add the extra dimension to Clause 77 which will enable the OFT and Monitor to have a really powerful role in the way that they oversee foundation trust mergers and, I think, settle some of the concerns which surround Clause 77 as drafted.
Lord Beecham
My Lords, the amendments are a good example of the thickets and undergrowth of the elaborate structures to deal with competition generally in the economy into which the health service is being drawn. I have no doubt that the noble Earl is right in describing the amendments as technical; the amendment of the noble Lord, Lord Clement-Jones, is also technical. It is not the worse for that, but this whole area ought to be removed from the Bill. Our Amendment 184A would remove Clause 77 altogether. Our view is that that elaborate machinery and the use of the Office of Fair Trading is not appropriate for mergers of foundation trusts. Having said that, we do not intend to divide the House; we simply deplore the fact that this machinery, somewhat refined by the amendments, is being cranked up to apply unnecessarily.
Earl Howe
My Lords, as I said earlier, retaining Clause 77 would have several substantial benefits. The OFT already has jurisdiction to review foundation trust mergers under the Enterprise Act. The problem, as I said, is that there is legal uncertainty as to when that applies in individual cases. That creates the risk of double jeopardy for foundation trusts, as their mergers are also reviewed by the Co-operation and Competition Panel. There is also a problem of unnecessary duplication of specialist skills between the Co-operation and Competition Panel and the OFT which, incidentally, brings with it a cost to the UK taxpayer.
Retaining Clause 77 would avoid that duplication and eliminate the current legal uncertainty and risk of double jeopardy for foundation trusts. That would encompass mergers between two or more foundation trusts and acquisitions by a foundation trust of another foundation trust or a private business, such as UCLH’s acquisition of the London Heart Hospital under the previous Administration.
However, it is important for me to make it clear that the Bill would prevent any takeover of a foundation trust by a private company, contrary to what some commentators outside this House have suggested. Secondly, the OFT has a proven track record for light-touch, proportionate regulation of mergers and ensuring good value for public money. By contrast, under the system we inherited from the previous Government, the Co-operation and Competition Panel has reviewed several mergers of community services at considerable cost and delay to the NHS that would have been permitted automatically under the OFT’s materiality thresholds.
Finally, the approach provides better value for public money by avoiding duplication of specialist resources between the OFT and Monitor. Mergers are a specialist area. Given the variable frequency of mergers in the NHS, it would be a far better use of resources to consolidate the responsibility and expertise within the OFT, where they could also be put to good work for the benefit of the wider economy, rather than resourcing another public body at the taxpayer’s expense.
Lord Clement-Jones
“(3A) Where the Office of Fair Trading decides to carry out an investigation under Part 3 of the Enterprise Act 2002 of a matter involving an NHS foundation trust, it must as soon as reasonably practicable notify Monitor.
(3B) As soon as reasonably practicable after receiving a notification under subsection (3A), Monitor must provide the Office of Fair Trading with advice on—
(a) the effect of the matter under investigation on benefits (in the form of those within section 30(1)(a) of the Enterprise Act 2002 (relevant customer benefits)) for people who use health care services provided for the purpose of the NHS, and(b) such other matters relating to the matter under investigation as Monitor considers appropriate.”
“(a) the effectiveness of competition in the provision of health care services for the purposes of the NHS in promoting the interests of people who use such services,”
Earl Howe
My Lords, perhaps I may begin by clarifying the role of the Competition Commission as set out in the Bill because I think that there have been a few misconceptions about this. The commission would not enforce the Competition Act in relation to healthcare services, nor would the commission’s role affect the applicability of competition law to the NHS, and the Bill would not give the Competition Commission direct powers over providers of NHS services.
Instead, the Bill would give the Competition Commission two narrow, specific roles in relation to NHS services. First, the commission would be the independent adjudicator where sufficient providers or, in some cases, commissioners objected to Monitor’s proposals for licence modifications or its methodologies to be used to calculate prices or levies for providers to ensure the continuity of essential services.
Secondly, the Bill currently provides that the commission would undertake reviews of the development of competition in the provision of NHS services and the way that Monitor was fulfilling its functions relating to the provision of such services. Where it concluded that something was or could be averse to the public interest, it could make non-binding recommendations to the Secretary of State, Monitor or the NHS Commissioning Board.
I am aware of a concern that this wording could imply that the review should focus the development of competition as an end in itself. That is absolutely not our intention. That is why commissioners will decide when competition and choice will be used, and indeed whether it will be used, as a means of improving services and enabling patients to have control of their care. To make that clear, we have tabled Amendment 185, which provides that the reviews relate to the effectiveness of competition in realising benefits for NHS patients, rather than the development of competition per se. I hope that noble Lords will agree that this wording provides clarity about the purpose of the reviews and is consistent with the principle that competition should not be pursued as an end in itself. I therefore beg to move Amendment 185.
Lord Clement-Jones
My Lords, it would seem convenient, although it alters the groupings, to talk to my Amendments 186, 187 and 188 at this point.
In Committee—and I am very grateful to the noble Lords, Lord Turnberg and Lord Patel, for supporting these amendments—we flagged our general concern about the risks of EU competition law being applied across the board in the health service. One risk that we considered to be high was the involvement to such a great extent in the Bill of the Competition Commission and, in particular, its role in Clauses 78, 79 and 80, as well as its role in reviewing competition within the health service and the development of competition by Monitor.
On these Benches, we, along with Future Forum and following legal advice, believe that it is necessary and consistent to delete Clause 78, which provides for a review of the exercise of Monitor’s functions and, as I said, the development of competition in the NHS. Government Amendment 185 would of course change this to a review of the effectiveness of competition in the NHS in promoting the interests of those who use the NHS. Nevertheless, we have considerable concerns about the involvement of the Competition Commission. The commission occasionally has to apply non-commission principles in its investigations. It may need to consider, for example, whether media plurality would be undermined by a media merger. However, the commission members and staff are steeped in competition law principles and it is difficult to get them to attribute equal weight to non-competition objectives. The experience of those involved with the commission is that it tends to focus far more on the competition analysis and is often reluctant to accept that it might be required to endorse an outcome that may be suboptimal from a competition perspective in order better to promote other objectives.
Judgments about whether competition or co-operation best promote certain objectives, including health sector objectives, are not clear-cut. Which side of the line people come down on will depend on their standpoints and assumptions about the extent to which competition is helpful in general, as well as on their experience. Regular commission members tend to have a strong bias in favour of the benefits of competition, and that strengthens our view on the inappropriateness of the reviews by the Competition Commission. It is not necessary for there to be a review of this kind either of the NHS or of the operation of Monitor. Indeed, I would argue that its very presence in reviewing both the NHS and Monitor increases the risk of competition law applying more widely.
Following the Future Forum’s report, the purpose of Monitor is no longer primarily to promote competition. Clearly there is now explicit recognition of the overriding importance of the benefits to patients. This is the key determinant of which instrument—competition or integration—is appropriate in the operation of the health service.
I have not put down amendments to the more technical areas where there is Competition Commission involvement. It seems that in many cases that may well be relevant in terms of the tariff and so on. However, we on these Benches believe that Clauses 78, 79 and 80 are a throwback to pre-Future Forum days, and we therefore propose leaving them all out.
Lord Newton of Braintree
My Lords, perhaps I may intervene briefly, if only to avoid withdrawal symptoms from not having spoken on any day this week. I want to support my noble friend Lord Clement-Jones on the general proposition without wishing in any way to threaten mayhem if we do not get a satisfactory reply. The House is well aware, as I have referred to it on a number of occasions, that last year I went through what turned out to be the trauma of trying to engage in what was technically a takeover, although we presented it as a merger, with the neighbouring health trust. That involved Suffolk Mental Health and Norfolk Mental Health. We finally achieved it on New Year's Day, so I am, so to speak, out of work.
There was a real problem. One got the feeling that the people on the competition and collaboration panel, or whatever it was called, which overlaps quite heavily with the Competition Commission, saw us in much the same category—how can I put this without upsetting anyone?—as two rival sellers of washing detergents. They did not recognise that health is not like that. There were health issues, patient safety issues and quality of service issues that needed to trump the competition issues. I know that we have been told that that will happen, but it is very important to make sure that the machinery will ensure that it happens and that the health issues trump those narrower competition issues. All I seek from the Minister is an assurance that, one way or another, that will be the case.
Baroness Hollins
My Lords, I would like some reassurance that the regulation of competition will improve on the current situation in some circumstances. I do not know whether these amendments, or any existing provision in the Bill, will achieve that. I have a couple of examples about which I feel uncomfortable.
First, I am keen to know whether adequate safeguards are in place for the kind of situation that occurred in Surrey, to ensure that the range of providers envisaged by the Government will be able to compete on a level playing field. I remember the wise words of the economist Fritz Schumacher that sometimes “small is beautiful”. Can the Minister tell the House on what basis it was decided that a £10 million bond would be required as surety from bidders for the NHS contract tendered last year for community services in south-west and north-west Surrey? The winning tender was a private company and the loser was Social Enterprise UK, which is currently providing services to central Surrey but which did not have the £10 million in the bank. That organisation is providing high-quality community services which have been acclaimed by the noble Lord's own department. At the end of its three-year contract, will it simply be taken over by the large private company which has more money in the bank?
My second question relates to the culture within the NHS and medical practice. Since the NHS began over 60 years ago, most doctors have worked primarily in the NHS and used their clinical skills first and foremost for NHS patients. There have been special contractual arrangements in place to ensure that NHS specialists with a private practice do not neglect their NHS patients. I think it is fair to say that specialists with a thriving private practice usually put their extra energy into their private practice. They are not the ones who contribute to managing and developing NHS services, and nor do they usually make much contribution to research.
Let me give the House one example of how the culture within medicine is being encouraged to change. The presidents of many if not all of the medical royal colleges have been invited to a champagne reception and dinner at a posh London venue in a couple of weeks’ time. The invitation comes from a firm of solicitors and the Royal Bank of Scotland, and it states:
“Against the backdrop of challenging economic conditions and massive pressure on the public purse, we are keen to explore how other professions might be able to support your membership and the healthcare sector generally”.
This seems to be a new phase in encouraging and supporting doctors to turn their attention to setting up in private practice, in chambers and in other private healthcare organisations. That is a departure from our history. Is this the direction that the Government hope the medical profession will move in? What safeguards does the Bill contain with respect to competition to protect the NHS?
Baroness Thornton
My Lords, I would like to comment on the three amendments in the name of the noble Lord, Lord Clement-Jones, and then speak to the two amendments that we have in this group. They say that imitation is the sincerest form of flattery, so I am very happy that the noble Lord saw fit to take three of the amendments that we tabled in Committee and to make them his own. Those are Amendments 186, 187 and 188. That is fine by us. I understand that the Minister will be very sympathetic to these amendments and might accept them, which is probably just as well, as I would hate to embarrass the Liberal Democrat Benches any further by having votes on amendments that they have tabled and speak to but then do not support.
These three amendments would stop a review from happening. I know that the noble Lord, Lord Clement-Jones, and his colleagues need to tell us that they have won a great victory by getting the Government to concede on these amendments. Far be it from me to intrude on the coalition parties’ love-in, so to speak. When we tabled these amendments in Committee they were part of an overall, comprehensive change to Part 3 of the Bill. In many ways these amendments were part of the tidying up of our suite of amendments to effect radical change to and improvement of Part 3. We certainly support these amendments.
I turn to Amendments 196A and 196B, which stand in my name and that of my noble friend. We do not understand why the noble Lord, Lord Clement-Jones, did not also table those amendments as he is going to be very successful in having his amendments agreed to. In fact we think that there is no need to have any mention of the Competition Commission in the Bill. For the sake of completeness, we would have preferred those amendments to be included. Perhaps I may implore the Minister to accept them as well.
Earl Howe
My Lords, Amendments 196A and 196B, tabled by the noble Baroness, Lady Thornton, would remove the provision for adjudication if a significant proportion of those affected object to proposals by Monitor for methodologies to be used to calculate prices of levies to ensure the continuity of the central services or proposed licence modifications.
I am clear that we must have a process for adjudicating on Monitor’s proposals if a sufficient number of those who will be affected by them object; otherwise, in these circumstances, either Monitor would have no way of proceeding with disputed proposals or those affected would have no other way of disputing proposals other than by judicial review. Either way that would be unacceptable and could result in significant harm to patients, for example if a licence condition that Monitor proposed related to securing essential NHS services. For pricing methodologies, for example, the amendments would mean that Monitor could go ahead with its proposals even if sufficient numbers of those affected objected. The only way that providers, in the case of pricing commissioners, would be able to ensure that their concerns were taken into account would again be through judicial review. We need to ensure a fair and transparent system of pricing, securing competition on quality and not price, and removing incentives for providers to cherry-pick the services that they deliver or the patients whom they treat.
I am therefore clear that we should have a process for adjudication. I am also clear that the Competition Commission should undertake that role. It has other adjudication roles. The commission has experience of working across a range of sectors, on the basis that it does not necessarily have the knowledge which it needs about those sectors in-house. It would be free from political intervention in making these judgments. It is well respected by other regulators across the economy, for which it performs a similar role. In our earlier debates, some noble Lords expressed concern that there should be appropriate checks and balances on Monitor’s powers. The provision for adjudication by the Competition Commission creates one such check and balance. These amendments would remove it. For those reasons, I oppose Amendments 196A and 196B, and I hope that on reflection the noble Baroness, Lady Thornton, will withdraw them.
I turn to the Competition Commission’s role in reviewing how competition is benefiting patients in the NHS. After briefing myself, I came to the conclusion that the reviews will bring considerable benefit to the NHS because they will help us understand further what effect competition has on NHS services for patients. They will also increase Monitor’s accountability because they will consider how Monitor is discharging its functions. The commission will be well placed to conduct them because it is an independent body with a long history of performing such reviews across the economy. It is the body where the expert technical knowledge needed to perform this function already resides, and it understands and reviews how markets and regulation work in the best interests of people. That was why the provision was put in the Bill.
However, I listened to the points made this evening by my noble friends Lord Clement-Jones and Lord Newton. On earlier occasions my noble friend Lord Clement-Jones was quite vocal in expressing his views to me on this subject. I have some sympathy with the argument that prescribing reviews every seven years, as the Bill stipulates, may place too great an emphasis on competition. Greater flexibility about the timing and specification of reviews may be helpful. Therefore, I am clear that such reviews of competition in the NHS, when they happen, should focus on benefits to patients. On the basis that prescribed seven-year reviews may place too great an emphasis on competition in the NHS, and given the role of the Competition Commission, if it is the view of the House that Clauses 78, 79 and 80 should be removed from the Bill, I will not oppose Amendments 186, 187 and 188.
I turn briefly to the issues raised by the noble Baroness, Lady Hollins, on procurement in Surrey. The issue was raised earlier by the noble Lord, Lord Adebowale. I agree with her and with the noble Lord that social enterprises can and do play an important role in providing innovative, high-quality services, often to very vulnerable people. Turning Point is an excellent example. The key aim of our reforms is that patients should be treated by the best providers; that bureaucratic procurement practices should not frustrate this; and that it should be quality that counts. We will take all this into account when framing the commissioner procurement regulations.
On the example quoted by the noble Baroness, I understand that the requirement for the £10 million performance bond to which she referred was subsequently withdrawn and therefore played no role in the decision to appoint a preferred bidder. However, I will write to her with further details on this.
Lord Clement-Jones
Lord Clement-Jones
My Lords, I thank the Minister for what he said. I recognise that it is not easy to take away a piece of architecture that the Government had thought was necessary. I believe that the piece of architecture effectively fell away with the Future Forum report. I do not at all recognise his description of me as “vocal” in any circumstances.
As to the Opposition and the noble Baroness, Lady Thornton, I recognise that it is a bit difficult to acknowledge on the Floor of the House that the Government today made many concessions in collaboration with these Benches. I will promise to be gracious—if the noble Baroness is listening—about the role that she played in tabling these amendments in Committee if she will cease to be ungracious on Twitter about the achievements of, and amendments to, the Bill. I beg to move.
Lord Clement-Jones
Lord Clement-Jones
“(3) Monitor may not set or revise the criteria unless the Secretary of State has by order approved the criteria or (as the case may be) revised criteria.”
Earl Howe
My Lords, I beg to move Amendment 190 and speak to Amendments 193, 194, 195, 299 and 300. We have tabled Amendments 190, 299 and 300 to comply with the Delegated Powers and Regulatory Reform Committee’s recommendations. These sought to ensure that key elements of the licensing arrangements are subject to appropriate levels of parliamentary scrutiny.
In line with that, Amendments 190 and 300 provide that the Secretary of State’s approval of Monitor’s licensing criteria will always be made by order, and the first such order must be subject to the affirmative procedure. Subsequent orders, in the event of Monitor wishing to revise the criteria, would be subject to the negative procedure. Similarly, Amendment 299 provides for the first set of exemption regulations made by the Secretary of State under Clause 84 to be subject to the affirmative procedure.
I turn now to Amendments 193, 194 and 195, which deal with the hugely important issue of integration of services. There is a clear consensus around the importance of having further integration and more services joined up around patients’ needs. The Bill seeks to encourage and enable the delivery of integrated services.
All NHS bodies and private and third-sector providers supplying NHS services are required by the Health Act 2009 to take account of the NHS constitution in their decisions and actions. This includes the principle that the NHS works across organisational boundaries and in partnership with other organisations in the interests of patients, local communities and the wider population. The Bill takes this further by making it clear that in exercising any of their functions, commissioners must act with a view to securing continuous improvement in outcomes, including effectiveness, safety and quality of patient experience. Commissioners must also exercise their functions with a view to securing that health services are provided in an integrated way, where this would improve the quality of those services, including outcomes, and/or reduce inequalities in relation to access to services and outcomes. The intention is, therefore, that it would be for commissioners to drive integration and co-operation between providers in the light of local circumstances and needs, and to enforce this through legally binding contracts.
Monitor would have an important role to play in supporting commissioners by enabling integration of services. That is why Clause 61 expressly requires Monitor to exercise its functions with a view to enabling integration. Nevertheless, in Committee the House raised further concerns around the extent of Monitor’s role in enabling integration and co-operation. We listened carefully to those concerns, and ultimately agreed that there was more that we could do.
We have tabled Amendments 193, 194 and 195 in order to establish express power for Monitor to set and enforce licence conditions for the purposes of enabling integration, and enabling co-operation between healthcare providers where it would improve the quality or efficiency of NHS healthcare services, or reduce inequalities. Licence conditions could therefore be used to support commissioners in promoting integration and co-operation. This would also allow for licence conditions to fully cover the relevant principles and rules of the current Principles and Rules for Competition and Co-operation.
Lord Patel
My Lords, my Amendment 191 relates to the standard conditions that Monitor must determine, in public, to be included in each licence under this chapter. It is a fairly straightforward amendment and I hope the Minister will recognise that it in no way affects the core principle behind the Bill; it is just an attempt to improve it.
Clause 95(7) says:
“Before determining the first set of the standard conditions Monitor must consult the persons mentioned in subsection (8)”.
Subsection (8) mentions the Secretary of State, the Commissioning Board, primary care trusts, the Care Quality Commission and, importantly,
“such other persons as are likely to be affected by the inclusion of the conditions in licences under this Chapter”.
Of course, the people most likely to be affected are the patients. If that is the case, it would be unusual not to include any bodies that work or speak on behalf of patients and the public. Therefore my amendment suggests the inclusion of “Local Healthwatch” and,
“the appropriate health and wellbeing board”,
“Local Healthwatch” being the organisation that speaks for local people and the health and well-being board having a role in commissioning. I hope that the Minister sees the value of including these two bodies.
Baroness Cumberlege
My Lords, I support this amendment, which is in my name and those of the noble Lords, Lord Patel and Lord Warner. The noble Lord, Lord Patel, has introduced it with his customary elegance and clarity. I can see no reason why these amendments should not be made. Bearing in mind that the noble Earl was so generous to me earlier when we included HealthWatch in another amendment, I live in great hope.
Lord Warner
My Lords, I, too, support this amendment. Since the noble Earl was so beastly to me over social care, I hope he will actually support this amendment.
Baroness Finlay of Llandaff
My Lords, the government amendments are indeed welcome because they reflect concerns that have been expressed. I am sure that all those who expressed those concerns are grateful.
The amendments in my name in this group relate to education and training. I know that we have somewhat threaded education and training through the Bill at all stages. Amendment 192 relates to considering education and training when setting licence conditions, and I put “education and training” because in addition to education, staff training at every level is essential.
I hope that the Government will support the view that no organisation should be fit to provide services if it does not ensure that its staff are being kept up to date and if it is not providing an environment from which people can learn. This does not mean that they all have to be recognised educational providers.
Amendment 196 in this group relates to indemnity. This amendment has been tabled again because, despite the response that we were given in Committee, concerns continue over indemnity for patients. Should a patient develop a problem subsequent to a provider going out of business, they should be covered by indemnity. It is interesting that we have the Legal Aid, Sentencing and Punishment of Offenders Bill in parallel with this Bill. We have concerns over legal aid for medical negligence. I have attached my name to amendments to that Bill concerning legal aid for the victims of clinical negligence.
I hope that the Government will see that there is a need to have indemnity within services, whoever the licensed provider is. There should be a read across to the protection of patients in the event of something going wrong or being done wrong that has harmed them, particularly if they have been harmed in such a way as to incur ongoing costs for healthcare and social care as a result of the problem that arose with the provider, whether it be a voluntary sector provider or a private provider.
Lord Clement-Jones
My Lords, I thank my noble friend Lord Howe for putting forward these amendments, particularly Amendment 193, to which I have added my name. In Committee, we were concerned that the powers of Monitor did not reflect the general spirit of the way in which the Future Forum report talked about the mixture of competition and integration. Although the objectives of Monitor at the beginning of Part 3 were changed to reflect the Future Forum report, some of the back end of Part 3 was not changed to reflect that. These significant amendments, particularly Amendment 193, rebalance the Bill and makes sure that it genuinely reflects the intentions of Future Forum. I am very grateful to my noble friend for putting down these amendments.
Earl Howe
My Lords, this has been an interesting debate and I thank in particular the noble Lords, Lord Patel and Lord Warner, and my noble friend Lady Cumberlege for tabling Amendment 191 and for giving me the opportunity to explain the Government’s thinking on the important issue of patient and public involvement in Monitor’s work. We are very clear that patients must lie at the centre of the reformed NHS and that the Bill establishes mechanisms to ensure that that is the case. Health and well-being boards are part of those arrangements and HealthWatch will have a vital role in giving patients and the public a real voice throughout the NHS. I can therefore understand the intent of Amendment 191—and I wish that I could accept it. However, I am sorry to say that in practical terms it is not workable and I will explain why.
The list in Clause 95(8) relates to consultation but this is expected to take place before bodies such as HealthWatch and health and well-being boards are formally established. In other words, Amendment 191 would impose a statutory requirement with which Monitor could not possibly comply. The list at subsection (8) deliberately includes only those bodies that will be in existence at the expected time of the consultation.
I can nevertheless offer the noble Lord and the House firm reassurances on this issue. First, Clause 95(8)(e) gives Monitor powers to include in the consultation “such other persons” as it “considers appropriate”. Clause 61(7) places a general duty on Monitor to secure the involvement of patients and the public in decisions on the exercise of its functions, and we would firmly expect Monitor to use those powers to involve patients and the public fully in the consultation. Secondly, Clause 95(11) would require Monitor to consult with HealthWatch England, with the NHS Commissioning Board and with every clinical commissioning group in the event that the consultation takes place later than currently expected and after these bodies have been established. I hope that I have been able to reassure the House that Amendment 191 is not only unnecessary, but would actually put Monitor in an extremely difficult position, and that the noble Lord, Lord Patel, will feel able to withdraw the amendment.
I turn now to Amendment 196, tabled by the noble Baroness, Lady Finlay. The amendment raises an important issue, that of making sure that patients receive the compensation to which they are entitled in the unfortunate event that they are harmed as a result of clinical negligence. The Government agree that there must be equivalent safeguards in place for patients irrespective of who provides their NHS services. Currently the NHS contract which providers must hold to deliver services requires adequate and sufficient indemnity arrangements to be in place. In addition, to ensure equivalent protection for the future, the Government’s preference is to enable all providers of NHS services access to the clinical negligence scheme for trusts. That would mean that all providers of NHS services would have access to the same level of protection for patients, whether those providers were private, voluntary or public sector. The department has asked the NHS Litigation Authority for advice on the options for modifying the scheme and expects that new arrangements would be in place for the next round of NHS contracts in April 2013.
I hope, therefore, that the noble Baroness will appreciate that I strongly agree with the spirit of her amendment. Nevertheless, I must set out my concerns around its potential effect, if she is thinking of pressing it. First, the amendment could be implemented by employing organisations requiring indemnity from their own staff. Employees would then have to obtain their own personal indemnity. However, I do not believe it would be right to transfer this burden to staff or that employees would support it. Further, I do not believe it would be cost-effective. My second concern is about potential unintended consequences. Currently the Limitation Act 1990 limits the time available that personal injury claimants have to bring their claim. The overwhelming majority of claimants have three years to make their claim under the terms of that Act. Requiring all providers to hold indemnity for the lifetime of all patients, potentially much longer than a patient’s legal entitlement to make a claim, would be disproportionate and incur significant costs. Overall, the effect of such a wide-reaching clause would be to divert resource unnecessarily away from patient care. I am sure that that is not what the noble Baroness would ever seek to do and I do not believe that it is in the interests of patients or the NHS. I hope that on reflection and in the light of my assurances about what we are planning, the noble Baroness will feel able not to press her amendment.
The noble Baroness also referred to her Amendment 192, which I think we debated in a previous group. The Government have listened to concerns on education and training raised by her and other noble Lords and we have brought forward amendments to require the board and CCGs to have regard to the need to promote education and training when exercising their functions. Further, the Bill requires Monitor in Clause 64(j) to have regard to,
“the need for high standards in the education and training of health care professionals”,
when exercising its functions. I suggest to the noble Baroness that Amendment 192 is not required.
At this juncture, it might be worth quickly reminding the House that all providers of NHS services will be licensed by Monitor. The Royal College of Physicians has sought reassurances on how patient choice of any qualified provider would work. Even though the choice of any qualified provider is not in the Bill, I am happy to confirm that providers would always be required to comply with national quality standards. Under our reforms, providers above a minimum size would be expected to take part in the provision of education and training, and to work within agreed local care pathways to ensure safe and joined-up care. I hope that that is a reassurance not only to the Royal College of Physicians but to other noble Lords.
Baroness Finlay of Llandaff
I am grateful to the Minister for his reply on indemnity. Would the risk pool apply to the provider rather than be linked to the individual patient? If there is an acute problem, some hospices will accept referrals directly from patients and their families rather than waiting for a GP necessarily to refer them. Those patients are all being treated in the voluntary sector; they are not paying; they are all being treated the same; and they have been under NHS providers for other parts of their treatment. The Minister may not be able to answer my question now, but I flag up such a situation as a potential that will need to be covered off in providing. However, I am sure that what he has said tonight will be warmly welcomed by the voluntary sector, which provides an important and, in many places, essential clinical service—which, I venture to suggest, hospices do par excellence. Their ability to meet patient and family need at great speed has allowed them to be recognised as being so important.
Earl Howe
My Lords, I understand the noble Baroness’s question. It might be best if I wrote to her because the circumstances that she posits are such as to make it important that I do not get it wrong if I give her an answer now. As she knows, the broad answer to her question is that our aim is for all NHS-funded care to be covered. She has raised a particular set of circumstances on which I shall have to take advice, if she will allow.
“(da) for the purpose of enabling health care services provided for the purposes of the NHS to be provided in an integrated way where Monitor considers that this would achieve one or more of the objectives referred to in subsection (2A);(db) for the purpose of enabling the provision of health care services provided for the purposes of the NHS to be integrated with the provision of health-related services or social care services where Monitor considers that this would achieve one or more of the objectives referred to in subsection (2A);(dc) for the purpose of enabling co-operation between providers of health care services for the purposes of the NHS where Monitor considers that this would achieve one or more of the objectives referred to in subsection (2A);”
“(2A) The objectives referred to in subsection (2)(da), (db) and (dc) are—
(a) improving the quality of health care services provided for the purposes of the NHS (including the outcomes that are achieved from their provision) or the efficiency of their provision,(b) reducing inequalities between persons with respect to their ability to access those services, and(c) reducing inequalities between persons with respect to the outcomes achieved for them by the provision of those services.”
“( ) In subsection (2)(db), “health-related services” and “social care services” each have the meaning given in section 61(11).”
Lord Warner
“Notification of commissioners where continuation of services at risk
(1) This section applies where Monitor—
(a) takes action in the case of a licence holder in reliance on a condition in the licence under section 98(1)(i), (j) or (k), and(b) does so because it is satisfied that the continued provision for the purposes of the NHS of health care services to which that condition applies is being put at significant risk by the configuration of certain health care services provided for those purposes. (2) In subsection (1), a reference to the provision of services is a reference to their provision by the licence holder or any other provider.
(3) Monitor must as soon as reasonably practicable notify the National Health Service Commissioning Board and such clinical commissioning groups as Monitor considers appropriate—
(a) of the action it has taken, and(b) of its reasons for being satisfied as mentioned in subsection (1)(b).(4) Monitor must publish for each financial year a list of the notifications under this section that it has given during that year; and the list must include for each notification a summary of Monitor’s reasons for being satisfied as mentioned in subsection (1)(b).
(5) The Board and clinical commissioning groups, having received a notification under this section, must have regard to it in arranging for the provision of healthcare services for the purposes of the NHS.”
Lord Warner
My Lords, I shall speak also to Amendment 214G which stands in my name. The amendments arise from our debate in Committee about what we then described as a “pre-failure regime”. The argument that I was trying to sustain, with helpful support from different parts of the Committee, was that it would be better for Monitor to get engaged when it could see failure coming at it down the track rather than waiting for the train crash to occur and use the health special administration procedures that were provided for in the Bill.
My amendment then was probably technically defective but it served the purpose of raising the issue. The Minister was not so off-putting that I thought that I would not have another go at this, so, with the help of the noble Lord, Lord Patel, and the noble Baroness, Lady Williams of Crosby, I put down Amendment 217, which is in this group. Following that, the Minister engaged with me in some rather helpful and fruitful discussions and the results of those discussions were Amendments 196ZA and 214G. In my enthusiasm for tabling these amendments I completely forgot to remove Amendment 217, which is why it is still on the Marshalled List. I assure the Minister that I have no intention whatever of moving Amendment 217.
The nub of what is in Amendment 196ZA is that it provides for Monitor when it can see that a licence holder’s conditions are likely to be imperilled by a current configuration of health services in the wider health economy—not just within that licence holder’s own individual trust. It can draw the attention of commissioners—the national Commissioning Board and clinical commissioning groups—to those risks which it can foresee and it has to give its reasons for doing so. But rightly in my view and, I believe, that of the Government, it puts the onus on the commissioners to do something about it. It does not require a top-down intervention, but it flags up very seriously to the commissioners that a problem is looming and they need to do something about it. Just to give more force to that, each financial year Monitor will publish a list of the notifications that it has issued in that financial year, putting commissioners on notice that they have a problem, that they need to do something about the reconfiguration of services and that they need to take some action to ensure that there are sustainable NHS services in that part of the country.
I pay tribute to the civil servants at the Department of Health because they have done something rather ingenious that I never even thought of in Amendment 214G, which is to take an application by a service provider to Monitor to secure some adjustment in the price paid for particular services to make Monitor think about whether there is anything more significant behind that application and whether there is a risk to the sustainability of services in a particular area. If it does consider that that is necessary, it can again notify the commissioners of its concerns about the need to consider service reconfiguration in that area.
These two amendments, which have been given a lot of technical help by the Department of Health and a lot of support from the Minister, meet my concerns and, having talked briefly to the noble Baroness, Lady Williams of Crosby, I believe that they also meet hers. There is an adequate set of arrangements to put commissioners on notice that failure may be looming so that they can take action under their responsibilities. Just to make sure that they do, each year there will be a list of the notifications that Monitor has issued so that it is on the public record that Monitor has spotted that there is something of concern and has required commissioners to take action.
That meets my concerns and I think that it meets the concerns of the noble Baroness, Lady Williams of Crosby and the noble Lord, Lord Patel. In order to table the amendment in time for today’s debate, I did not have time to collect the signatures of my partners in crime on Amendment 217, but I have every reason to believe that they would be satisfied with the Government’s response to our concerns.
With regard to subsection (5) of Amendment 217, which I have mentioned to the Minister, I think it would be a good idea if the Government were to consider assembling a group with expertise to help local people to reconfigure their services. It is often difficult for people at the local level to think through how they might reconfigure services to make them sustainable. I do not suggest a top-down approach but some sort of panel that could help local people and facilitate the reshaping and redesign of services. That would be a helpful way of proceeding. It might help a lot of people to get through the difficult task of reshaping services when the need arises. Without further ado, I beg to move.
Baroness Williams of Crosby
My Lords, my intervention will be extremely short. I am delighted that the noble Lords, Lord Warner and Lord Patel, put down this proposal for what one might describe as precautionary failure. We were very concerned that there might be no regime that would enable services to continue because one had seen in advance the possibility of a particular place getting into a great deal of trouble. This is a very satisfactory proposal to put before the Government to deal with the continuation of health services for an area, even when those services get into difficulties.
I also strongly commend the proposal of the noble Lord, Lord Warner, about the small group of local people. That has one great advantage: that small group will then become part of what one might describe as a lobby for a sensible outcome, for a proper reconfiguration or change in the structure of services. That is very important. Otherwise, you almost invariably get very powerful local opposition to any substantial change and no natural constituency of people who support it. This is an imaginative idea. I am pleased to be associated with the amendment of the noble Lords, Lord Warner and Lord Patel.
Lord Patel
My Lords, I support the amendment. The noble Lord, Lord Warner, and the noble Baroness, Lady Williams of Crosby, have said all that needs to be said. I had my name to Amendment 217. To relieve the anxiety—if they had any—of the noble Lord, Lord Warner, and the Minister, I will not move that amendment either. I strongly support Amendment 196ZA.
Baroness Murphy
My Lords, I also add my support to the very practical solution given in Amendments 196ZA, 214G and 217 that will provide Monitor with a mechanism to deal with future, upcoming failure and intervene early. That is very practical. I hope that it will be attractive to the opposition Benches because, in part, it deals with their anxieties about special administration orders. None of us wanted to see those special administration orders used early. We want them as a very rare fallback position, and to use them maybe once in a decade not once a year. If there were a mechanism like this one, enabling a practical way of targeting and getting local commissioners to address local failure, we could avoid some of the draconian measures that it is necessary to have in the Bill but which none of us wants to see used frequently. I hope that the solution will commend itself to the opposition as addressing their concerns about this regime.
Lord Beecham
My Lords, I can certainly reassure the noble Baroness on that score. I warmly endorse the amendment moved by my noble friend and I hopefully anticipate a warm response from the Minister.
I shall speak briefly to the amendments in the name of my noble friend Lady Thornton and myself. In Amendments 217ZA and 217ZM we propose to leave out the chapter on financing special administration cases. The whole field of health special administration, which would apply to non-NHS providers to deal with failure, is highly complex. It would be better for the financial side to have the NHS operating as a risk pool; that could be factored into the work of commissioners as part of dealing with non-NHS providers in their commissioning plans. However, it was not my intention to divide the House on this matter.
We also have Amendment 220D to leave out the clause on repeal of de-authorisation and Amendment 221A to leave out the clause on the abolition of NHS trusts in England, as we think that that is unnecessary. But the main thrust of our consideration of this group of amendments is undoubtedly to support the amendments of my noble friend Lord Warner, which deal substantially with most of the significant issues here, and we will not press our amendments.
Earl Howe
As I hope will be clear, the Government’s proposals are for a fair, transparent and comprehensive framework that protects patients and taxpayers’ interests by securing continued access to services through early intervention to prevent failure wherever possible and effective arrangements to secure continuity of NHS services should a provider become unsustainable.
The Bill builds on and improves existing arrangements by putting commissioners in the lead for shaping services for patients and providing a clear role for Monitor in supporting commissioners. It will ensure that change happens when the status quo is unsustainable, and there will be sufficient funding to support this. The Bill goes further and addresses the gaps in existing legislation, such the lack of protections for patients whose NHS core is delivered by social enterprises and other independent providers. The Bill gives Monitor a comprehensive range of powers to intervene proactively to support reorganisation and prevent failure to maintain service continuity.
I turn to Amendments 196ZA and 214G. I am grateful to the noble Lord, Lord Warner, for his patience in working with the Government on this issue. I see that the noble Lord, albeit with a tiny bit of help, has really got to the core of our proposals for ensuring the continuity of services for patients by clarifying a role for Monitor, which is to support commissioners and provide them with information that they need to take the right decisions about services in the best interests of patients. The key aspect of the noble Lord’s amendments is that they reinforce the fact that commissioners remain in the lead for responding to risks to services and, in partnership with providers and other local stakeholders, for engaging on service change to reduce those risks. That is why I am pleased to accept these amendments, which also reflect the King’s Fund recommendation on how the Bill could be improved to support vital service reconfiguration.
However, it is not always possible or desirable to prevent provider failure at all costs. As a last resort, when a provider becomes unsustainable—and I emphasise that that will be only when all other interventions have been exhausted or may not be in patients’ best interests—a continuity of services administrator may be appointed to protect patients’ interests and secure NHS services in line with requirements determined by commissioners. For the first time, there will be similar protection for patients who rely on essential NHS services regardless of who the provider might be. The existing legal framework has no such protection for patients who rely on NHS services provided by independent providers, including the social enterprises established by the previous Government when the noble Baroness, Lady Thornton, was Health Minister. I am sure noble Lords would agree that if a social enterprise delivering essential community palliative care became unsustainable, then surely its patients should receive protections that would secure the continuity of that service, as do patients of the foundation trust.
The reality of the NHS is that it is a comprehensive health service delivered by a diverse range of providers. Part 3 recognises that reality and will protect patients’ access to that comprehensive service. I cannot agree with the noble Lord, Lord Beecham, as his amendments would remove this type of protection for patients. Fundamental to our aim of protecting patients’ access to a comprehensive health service is the need to ensure that sufficient funding is set aside for when things go wrong. The King’s Fund and others have said that they support the establishment of a transparent funding mechanism for securing essential services when providers go into administration. When the noble Baroness was a Health Minister, her Government presided over a period of sustained growth in the economy, but sadly that is no longer the case. Despite economic challenges, the coalition has continued to increase NHS funding above the rate of inflation, but we need to be prudent to be able to guarantee that funding will be available to protect patients when any provider of essential services gets into difficulty. The problem with the noble Lord’s amendment is that it would put that at risk.
That funding is essential because we simply cannot be sure otherwise that sufficient funding would be available centrally, particularly when the Treasury will face competing demands on any surplus funds held centrally by Whitehall departments. A further benefit of our approach is that the funding will be built up from commissioners and providers, including private providers, based on a transparent methodology and in proportion to risk. That will strengthen financial incentives for providers and commissioners to manage risks effectively and help to end the culture of back-room bailouts.
I hope that the arguments that I have put forward demonstrate how Part 3 will strengthen the protection of patients’ interests. Once again, I thank the noble Lord, Lord Warner, for his amendments, which will improve the Bill and undoubtedly benefit patients. I hope that noble Lords will join me in my support for them, and I ask the noble Lord, Lord Beecham, to withdraw his amendment, as he has indicated he will.
Lord Warner
My Lords, I am grateful for the Government’s support for this amendment.
“(1) Where Monitor is satisfied that the governance of an NHS foundation trust is such that the trust will fail to comply with the conditions of its licence, Monitor may include in the licence such conditions relating to governance as it considers appropriate for the purpose of reducing that risk.
(1A) The circumstances in which Monitor may be satisfied as mentioned in subsection (1) include circumstances where it is satisfied that the council of governors, the board of directors or the council of governors and board of directors taken together are failing—
(a) to secure compliance with conditions in the trust’s licence, or(b) to take steps to reduce the risk of a breach of a condition in the trust’s licence.”
Earl Howe
My Lords, I shall speak also to government Amendments 197A, 197B, 197C, 198A, 198B, 199A, 199B, 200A, 300ZA and 300ZB.
Monitor will continue as the regulator of NHS foundation trusts, as I have said. We had always intended this to be the case and I welcome the opportunity to clarify our position. Monitor will regulate foundation trusts through a new licensing regime, which it will administer jointly with the Care Quality Commission. This will help to strengthen collaboration between the two regulators. It will license foundation trusts to provide NHS services, as it would license anyone else who wished to do so, to ensure that NHS services are protected as financially sustainable and of high clinical quality.
Part 3 anticipates that Monitor will set differential licence conditions for foundation trusts to reflect their unique status and governance structures. Monitor would have power to intervene and direct foundation trusts to take action to ensure compliance with licence conditions. This would include the power to enforce requirements on foundation trusts to maintain continuity of NHS services and protect essential NHS assets, consistent with its principal purpose, as defined in statute. Those powers are set out in Clause 105. I emphasise that these enforcement powers would not be transitional.
However, I recognise that this was not as clear in the Bill as it could have been. I am grateful to noble Lords, particularly my noble friends Lord Clement-Jones, Lord Marks, Lady Barker and Lady Tyler, for their work in highlighting this issue. I have tabled four amendments to Clause 111—Amendments 196C, 197A, 197B and 197C—which clarify the position. These enduring powers would enable Monitor to require a foundation trust to remove directors or governors in exceptional circumstances as a form of remedial action, where it considered this necessary. This would be appropriate only in the case of a very serious breach of licence conditions.
In addition, for a transitional period until at least 2016, Monitor would retain express powers to fire or suspend foundation trust directors and governors directly. As now, this power could be used only where a foundation trust had failed to comply with a notice from Monitor to remove or suspend individuals itself. These powers are for use when a foundation trust is at risk of breaching its licence conditions to provide NHS services because of a failure of governance. This is more likely in the early years of a trust’s existence, when its governors are all new to the role and are building up their capability to hold its directors to account. That is why the powers consist of those to fire or suspend directors and governors.
I understand the concerns of noble Lords to ensure that this additional power remains available for as long as Parliament considers necessary, while we work with Monitor, the Foundation Trust Network and others to support governors to develop their capability in holding their boards to account. Therefore, I have tabled five amendments—Amendments 198A, 198B, 199A, 199B and 200A—which provide for Monitor to retain this power unless and until the Secretary of State makes an order to withdraw it, either for all foundation trusts or individual trusts. I beg to move.
Lord Clement-Jones
My Lords, I want to speak to my amendments, to express my thanks to the Minister for the amendments that he has tabled, and to give a little rationale for why we were concerned but are now satisfied by the Minister’s amendments. On these Benches we were very concerned about the deregulation of foundation trusts in 2016. We believed that putting foundation trusts on the same footing as all other provider licensees was not only dangerous because of the risk of wider application of competition principles, but undesirable since district general hospitals—essentially foundation trusts—are the core of public provision in the health service. They are public assets, funded either conventionally by the Government or by PFI. Sadly, many of us argued at the time that PFI would be an expensive and inflexible method of financing healthcare infrastructure. Nevertheless, district general hospitals are an essential part of the NHS.
Therefore, we proposed amendments that removed Clauses 111 to 114 and retained Monitor’s special powers over foundation trusts unless terminated by the Secretary of State with the authority of an affirmative resolution of both Houses of Parliament. We were not saying “never” but the Secretary of State, after some years of the new structure, clearly needs to satisfy Parliament as to why particular foundation trusts no longer need to be subject to regulation by Monitor in this way. It may be possible to make the case for the deregulation of foundation trusts in the future, but currently the assumption should be that foundation trusts will be treated differently from other providers in regulation—not just in the transition period but in the medium term—so that Monitor will have the right to appoint and dismiss directors and governors in that period.
To that end, we very much welcome the amendments tabled by the Minister to meet our concerns. Our amendments talk of an order passed by the affirmative process and the Government’s by the negative process but I do not want that to stand between us. The Minister has gone a very long way to meet our concerns, for which I am extremely grateful, as are all my colleagues on these Benches.
Baroness Murphy
My Lords, I have added my name to four of the amendments in this group and I am wholly content that the Government have addressed them satisfactorily.
“(1) Section 111 ceases to have effect in relation to an NHS foundation trust on such day as the Secretary of State may by order specify.
(2) Different days may be appointed in relation to different NHS foundation trusts.
(3) A day specified under subsection (1) must not—
(a) in the case of an NHS foundation trust authorised on or before 1 April 2014, be before 1 April 2016;(b) in the case of an NHS foundation trust authorised after 1 April 2014, be before the end of the period of two years beginning with the day on which the trust was authorised.”
“(6) The Secretary of State, having received a notification under subsection (4)(c), must review Monitor’s determination under subsection (4)(b).”
Baroness Thornton
Baroness Thornton
My Lords, we now move on to pricing. We believe that setting the national tariff is a matter of policy and that it should be set by a Secretary of State, not Monitor. That is the main thrust of these amendments. Amendment 201A is about setting the national tariff as a matter of policy. Amendment 201B proposes that regulations to the national tariff must state how the prices and methods were determined, that any proposed change to the national tariff will be subject to proper evaluation and testing, and that there must be evidence of consultation between the Secretary of State and Monitor. Amendment 201C states that the national tariff should not be allowed to vary in relation to different descriptions of provider. Amendment 201D states that where a commissioner of a health service receives an offer from a service provider who is licensed by Monitor at a price below the national tariff—I am sorry; that is my noble friend’s amendment. I beg his pardon. Then there are a whole set of amendments which seek to delete clauses—Amendments 211A, 214A, 214B and 214C—because if the Secretary of State is setting the national tariff, these clauses are unnecessary.
At present, the national tariff is set by the Department of Health, often in ways that are mysterious, probably less than optimal and without sufficient consideration of unintended consequences, and often without enough testing. Nevertheless, we remain firmly of the view that price setting is such a fundamental part of the system that it has to remain the responsibility of the Secretary of State and the Department of Health. We do not have an answer as to why you would give such a potentially potent policy lever to the regulator. I should be grateful if the noble Earl could explain that. Why keep price control with Monitor? I should be interested to hear what he has to say. I am sure that we would all agree that the key point is that we get tariffs right. We therefore seek to insert the need for proper consultation and transparency in the tariff-setting process. I beg to move.
Lord Davies of Stamford
My Lords, I shall speak to Amendment 201D in my name. I tentatively proposed this in Committee as a probing amendment. I bring it forward now much more seriously because I have been reinforced in my belief that this is a necessary amendment by everything that has been said. My belief has also been reinforced by the support of a number of colleagues, including explicitly by my noble friend Lord Warner, to whom I am grateful.
It has been clear from our debates that the Government’s intention is that there should be two price regimes in the NHS—one for services for which there is no national tariff and one constituted by the national tariff itself. Services that are outside the national tariff will be contracted for on the basis of a tender offer and good value for the taxpayer or customer. I have no quarrel with that, and the Government have clearly stated that they intend to achieve contracts on the basis of the right reconciliation of quality and price. I argued in Committee—and I am sure that I was right —that that constitutes price competition. The Government do not like the phrase “price competition”, but I am not interested in semantics or the party-political reasons that may lie behind their semantic choices; I am interested in the reality, which is that commissioning services on that basis is entirely rational, and I have no quarrel with it.
The problem arises in relation to the national tariff. The Minister set out the position clearly in his response to me on 13 December. He said,
“we want a system of fixed prices”,
and then stated that,
“the tariff would not be a maximum price”.—[Official Report, 13/12/11; col. 1229.]
In other words, the tariff could not be varied either upwards or downwards; it would be an immutable price. I regard this as extraordinarily irrational and perverse, and I hope that I can persuade the Government to think again. It has at least four problems.
First, if there is an immutable price, you may not be able to pay for certain services that are required and are of the quality necessary for patient outcomes. The Government have recognised that point at least. Indeed, Clauses 124 and 125 appear to address that because they make it clear that there is scope for an agreement between a commissioner and a provider to be approved by Monitor at a price above the tariff. The wording in Clause 124(5) and Clause 125(3) is identical, except for the words “approve an agreement” and “may grant an application”, and states:
“Monitor may approve an agreement”—
or “grant an application”—
“only if, having applied the method under section 116(1)(d), it is satisfied that, without a modification to the price determined in accordance with the national tariff for that service, it would be uneconomic for the provider to provide the service for the purposes of the NHS”.
That makes it clear that it is possible for the commissioner to pay more than the tariff in those exceptional circumstances, with the consent of Monitor, and of course I approve of that, but it is not possible for the commissioner to approve less. That is an extraordinary state of affairs.
I can quite understand why the Government do not want to write into the Bill that it will not be possible for a commissioner to accept a lower price. That would not make the slightest sense. It would be all over the tabloids in headlines. Instead, it is disguised in the language of parliamentary drafting as being a power that would exist only if it was uneconomic for the provider to provide the service for the purposes of the NHS. You can never argue that it is uneconomic to provide a service at a higher price. The amendments provide only for the circumstance in which the commissioner finds it necessary to pay a higher price than the tariff to secure the patient services which the commissioner is procuring.
That is the only one of the four problems raised by that approach to a national tariff which the Government appear to have addressed. The second is that in many cases, it may be possible to provide the same quality of service at a lower price, but the Government are excluding, a priori, from the beginning, outright, in principle, any possibility of that happening. That makes no sense. We and the Government surely agree that the NHS budget will always be under great pressure, that there must be financial discipline in the NHS, and that when there are opportunities to secure the same quality at a lower price it should be the obligation of commissioners to achieve that. My amendment does not go so far as to create an obligation—I was more hesitant than that—but at least there must be the possibility for commissioners, if they see an opportunity, to procure that service at a lower price and save money for the benefit of patients and the National Health Service as a whole.
The third and fourth problems created by government policy in this area are perhaps a little more subtle. The third, which I mentioned in debate in Committee, is that if you deny the possibility of bids coming in at a lower price for any given service, you deny the possibility of ever investigating or having insight into the process of price formation in that sector of activity. You simply do not know to what extent the prices you are working on—the prices you are accepting—contain an unnecessary level of cost and overheads, or the extent to which you are not getting a good bargain. In my view, you should not be sleeping at night if you are a commissioner and you do not know how prices are formed, whether you could be getting a better price and, if so, what that better price would be.
The fourth problem created by the Government's approach to this up until now— I live in hope that they may change it in the light of this debate—is that it dampens or may even be fatal to innovation in this area of the National Health Service. I think we are all agreed in principle that we should encourage innovation, but there is no point in any prospective provider spending time and money on developing a better approach to solving a problem or a new technique for diagnostics, therapy or what have you, which has the same quality and outcomes, or even better, which could be delivered at a lower price, because the price is fixed. You can only come up with the same price because you are not allowed to be given a contract if you tender at a lower price. That makes no sense, so I must press the amendment again.
I emphasise, as I did in Committee, that the amendment is in no sense prescriptive. It does not force commissioners to take the lowest price. There might be an argument for forcing commissioners to take the lowest price where quality remains the same, but I have come up with a much weaker amendment. It is purely permissive. It provides for commissioners, where they wish to and where Monitor approves—so there is a double check, a double brake on the mechanism—to accept a lower price. It is extraordinary that they are not allowed to do something which all of us in every other field of economic activity would feel to be the rational thing to do.
My noble friends on the Front Bench have made the point several times that there are many situations in which it would not be sensible to take the lowest price in an NHS context. One of them I described in some detail in Committee, so I do not need to go over it too much tonight. There is no doubt that in any field of economic activity where overheads or fixed costs are a high proportion of the total costs there is a temptation or opportunity for predatory pricing. If the fixed costs are a very high proportion of the total costs, then anyone who has the capacity to make a one-off offer can come in with an offer which may be at a substantial premium to variable costs and therefore very attractive to him if he has spare capacity. It would be much lower than the full cost and therefore very tempting but it might be very dangerous for the customer—the commissioner in this case—to accept because it might undercut and perhaps destroy the capacity on which he relies on a long-term basis. Clearly, no one is going to provide services at below full cost on a long-term basis. Therefore, there is always a danger of predatory pricing in healthcare and we must be alert to it. There is no question about that.
Lord Warner
My Lords, I support my noble friend’s Amendment 201D and I do so for a few simple reasons. I am afraid that I am a bit of a heretic on price competition. It has always seemed to me that, if you want to have competition, simply excluding all aspects of price will not necessarily be in the best interests of any public service, health or otherwise. Therefore, I do not start from the position where I think that a blanket refusal to have any competition on price is a sensible way forward. However, that is not what my noble friend’s amendment does. It is, if I may say so, uncharacteristically modest in its approach.
Although I shall not name the person or the circumstances, I should like to share with the House a recent discussion that I had with an innovative GP running a big group practice in something which looks remarkably like an Ara Darzi polyclinic. This practice is innovating the way that it responds to its patients’ needs and it is doing so by providing services without reference to an acute hospital. However, it is caught in a bind. It is making substantial surpluses, about which it is almost embarrassed, simply because it is required by its commissioners to accept the tariff payments. That is a nonsense in the circumstances in which the NHS finds itself, and I am certainly prepared to talk to the Minister privately about some of those circumstances. I am not fabricating this; it is a real case happening day in and day out. I suspect that, on the basis of what I was told, it is not alone in the country in being in that position.
If one thinks about it, this is bound to happen. If we are really serious about driving services outside hospitals and providing them in a facility where a lot of the things that would be done in hospitals can be done on a more out-patient basis but without reference to any in-patient costs, it is likely that we will get ourselves into difficulty with a tariff which at the moment is very hospital-driven. It is a tariff which is set on a basis of acute hospital costs. For a few years, we are likely to throw money at innovators who do not necessarily want that volume of money simply because we have ruled out the ability to pay below tariff, so that people can provide perfectly adequate, perfectly good services for their patients, protecting their interests, but they will actually be paid more than they need to be paid for providing those good quality services. I think that the Government have to look again at this issue. My noble friend has produced a way forward with many safeguards.
Perhaps I could also say a few words about the Secretary of State setting prices. I do so from my experience as the Minister who was involved in the first sets of price setting, when we introduced them across the country back in 2005 and 2006. In those circumstances, one of the places where we looked for experience was Germany. Germany has a separate organisation which sets the prices and collects and analyses the data. That happened because it was thought that there was a lack of trust in Ministers setting the prices. We got a fair amount of criticism in the beginning from the NHS about the price setting not being transparent. At that point, once we had established the tariff system—the payment-by-result system—we were inclined to move the setting of the price away from the Department of Health so that there would be more confidence in the process of setting prices.
In so far as there is a case for the Secretary of State to be involved, it seems to me that the case is stronger, not in relation to Monitor’s pricing, but in terms of the Secretary of State driving the change in the definition of currencies, which is the function that has been given to the national Commissioning Board. Making changes in the currencies is probably the most significant way in which we can improve the way that the tariff operates. I do not have any particular problem with that being with the national Commissioning Board now, but it is certainly an area where I think the Secretary of State will need to keep a close eye on the national Commissioning Board to see that it addresses the need to move away from episodes of care to patient pathways in the way in which the tariff is set.
I am not so sure that I agree with my noble friend on the Front Bench that we want the Secretary of State to set a price, but I think that the Secretary of State should take a healthy interest in the way in which the currencies are set with the tariff.
Baroness Murphy
My Lords, the noble Lord, Lord Warner, has said more or less what I was going to say. It seems to me that if you remove price setting from the regulator of healthcare, you do not have an economic regulator. From my experience of watching prices and types of funding formula go up and down over the past 20 or 30 years, it is crucial and admirable to remove it into a system that can be independent and transparent.
As the noble Lord, Lord Warner, says, after the Future Forum amendments, we have a system now whereby the shape of the tariff and the bundling systems, if you like, which will enable the sort of integration and co-ordinated care to be effective, will be firmly with the national Commissioning Board, and Monitor will respond to those design structures. I think that working together will be very healthy indeed. I do not underestimate the difficulties of getting it right; it is an ongoing developmental programme. Nevertheless, I think it is a good way forward. I do not like the idea of removing the price setting from Monitor.
I will briefly say that I am quite attracted to the amendment of the noble Lord, Lord Davies. One cannot not be if one wants value for money. I remember seeing the noble Lord’s face when he first realised that there was going to be no competition on price, and having a good deal of sympathy for where he was coming from. However, the matter is one of transition, and of when the public will feel confident that the way that the Bill intends to introduce competition on the basis of competitive tender will improve quality.
I worry about the response that the media could make to a significant change of this kind, even though I agree with the noble Lord that some services—as the noble Lord, Lord Warner, said—are overpriced and that there are opportunities for driving down these prices. That may come through the way that the national Commissioning Board and the regulator together set prices. After all, the price of a tariff will be a moving thing; it will be negotiated; it will change over time; and we will be able to address areas where there is obvious overpricing. I am attracted to the amendment of the noble Lord, Lord Davies, and it may be that eventually we will need to introduce something of the sort. However, I would be nervous of doing it at the moment in this form, even though it seems quite sensible.
Earl Howe
My Lords, the case for regulating prices for NHS services is strong. Many academics agree that competition should be on quality and not price and that this will increase the standard and quality of healthcare services and protect patients’ and taxpayers’ interests. This requires prices to be fixed. Therefore, it is vital that there is an effective system of price regulation that can deliver these improvements and help sustain a universal and comprehensive NHS, free at the point of use. However, a number of problems with the current system have been identified, including by the previous Administration, which mean that it is not as effective as it could be.
In particular, I will mention two things. First, prices are subject to potential political interference. This means that providers are more risk averse. That inhibits investment and innovation in the sector. As the noble Lord, Lord Warner, said, the methodology for setting prices is not transparent. This makes the system unpredictable—again, inhibiting investment and innovation. Secondly, prices can be inaccurate and may not always reflect best practice models of clinical service delivery. This may result in cherry picking and may hinder providers from expanding and improving quality. Therefore, the case for change is clear and compelling. The Government’s vision is for an independent, fair and transparent system of NHS price regulation that reflects best practice and extends the scope of the tariff when it is in the interests of patients; that ensures that competition is based on quality and choice, and not on price; and that addresses the problems of cherry picking. To deliver this vision, prices will continue to be regulated through a national tariff. This will build on and improve the system of payment by results—which the previous Government said that they would improve but failed to do so.
Perhaps it would be helpful for me to explain in a bit more detail how the Bill will support this vision. In other healthcare systems around the world—for example, in the Netherlands—Governments have delegated price setting to independent organisations. The noble Lord, Lord Warner, cited another example: that of Germany. Such bodies create a transparent and stable environment for pricing.
Lord Davies of Stamford
Before we get on to the important matter raised by my noble friend of who is going to fix the tariff, if there is a tariff, and the issues raised by my amendment, will the Minister agree to meet privately me and, I hope, my noble friend Lord Warner—there has been no collusion between us but I hope he will come to that meeting—to discuss in greater detail the technical but important matter of the circumstances in which it is right to accept a lower price bid in the National Health Service?
Earl Howe
I will be happy to meet the noble Lord to talk about that.
I was talking about the example of the Netherlands and Germany and was about to make the point that bodies of that kind can create a transparent and stable environment for pricing outside the influence of politics so that providers have confidence to invest and regulators can develop strong technical skills in setting prices at efficient levels. The Bill proposes that independent statutory bodies—Monitor and the NHS Commissioning Board—would collaborate to regulate prices. This will give commissioners a key role in price setting, whereas the opposition amendments would prevent this and would return control to Whitehall.
Monitor would publish national tariff prices based on a methodology subject to consultation where providers and commissioners could trigger an independent adjudication to ensure transparency and fairness. I am clear that we must have, as I said earlier, a process for adjudicating on Monitor’s methodology. Otherwise Monitor could just go ahead with its proposals, even if there were a whole lot of people affected by the proposals who objected and the only way that they could see those objections through to a conclusion would be through judicial review. The government amendments in this group ensure that the appropriate providers could trigger independent adjudication.
I am also clear that the Competition Commission should undertake this role. As I said earlier, it would be free from political intervention in making these judgments and is well respected as an organisation across the economy for the role it performs. The opposition amendments would prevent any of these benefits being realised. A key priority for improving the system is to expand its coverage so that more and more services are brought within scope. The previous Government failed to do this in line with their own published timetables, for example, regarding mental health services. The Bill would place duties on Monitor and the NHS Commissioning Board to secure the standardisation of service specifications to support the foundation of a comprehensive tariff system. This will make reconfiguration of services and integration across administrative boundaries easier.
To put matters beyond doubt, the national tariff would be a fixed price, with any competition based on quality and choice, not price. We listened to representations made to us about this, and we amended the Bill to make clear that the tariff would not be based on a maximum price. Of course I understand the points made very ably, if I may say so, by the noble Lord, Lord Davies, and the noble Baroness, Lady Murphy. We all want to see best value for money for taxpayers in the way that services are provided, but our judgment was that, for reasons that I will elaborate on, that is not the right way to go. Where services were not covered under the national tariff, there would be rules to govern those prices locally. Prices and rules within the national tariff would be legally binding and independently enforceable by Monitor to eradicate any abuses. Tariff prices could not be varied for different providers according to their ownership status. That would prevent future Governments paying inflated high prices to private providers.
I shall elaborate a little on what I said in answer to the noble Lord, Lord Davies. The purpose of the tariff is to ensure that providers are reimbursed fairly for the services they provide and to allow competition to be based on quality and not price, as I mentioned. When a maximum price was suggested, the fear was that there would be a drive to the bottom on prices, thus jeopardising the quality of care. The evidence from the UK and internationally suggests that quality-based competition with fixed prices can be very beneficial in producing higher quality care—that evidence is reported by the Office of Health Economics—whereas evidence from the USA sounds a note of caution that the wrong kind of competition based on price can lead to a race to the bottom on quality. Our judgment was that we should stick with our position that the tariff will not be a maximum price.
Finally, the Bill addresses the problem of cherry picking, which I am afraid was a problem that the previous Government did not grip. It places a duty on Monitor and the NHS Commissioning Board when setting prices to consider the range of services provided by different providers and the differing needs of the patients treated. As the Royal College of Psychiatrists noted:
“We are particularly glad to note the Government’s moves to prevent the cherry-picking of services and hope that the safeguards are a success”.
The Opposition’s amendments would actually delete these important provisions from the Bill, thus not addressing the concerns expressed by clinicians up and down the country.
To conclude, the status quo is not an option. The Bill strengthens the current system and meets the concerns raised by clinicians and others. I ask noble Lords not to press their amendments which would fail to address the current fundamental problems and would deny patients and taxpayers the benefits of an independent, fair and transparent system. Finally, I hope the House will accept the minor and technical amendments in my name in this group when I come to move them.
Baroness Thornton
My Lords, the Minister has explained this very clearly. We part company about the transparency, clarity and accountability. I resist the temptation at this time of night to start asking questions of the Minister about this matter, but I fear that it is going to take a very long time to sort this one out. One of the reasons why my own Government had not completed this task is that it is fiendishly difficult and fiendishly complex. I fear that this Bill is not going to make it any less fiendishly difficult and fiendishly complex, but it also might make the whole process a lot less accountable.
This was in fact the final group of amendments that we had put down in our suite of amendments to reform the whole of Part 3 in Committee. The noble Baroness, Lady Murphy, is quite right. If you give the responsibility and accountability for the tariff to the Secretary of State, you undermine the role of the economic regulator. Yes, that was the point of this amendment in the very first place. She got it in one—well done.
At this time of night, it is probably best if we do not delay proceedings. I beg leave to withdraw the amendment.
Lord Davies of Stamford
“(5A) Where the Commissioner of a health service receives an offer from a service provider licensed under section 80 at a price below the price that is payable by virtue of this Chapter, the commissioner shall seek the agreement of Monitor before placing any order for this service.
(5B) Before acceding to a request from a commissioner in accordance with subsection (5A), Monitor shall satisfy itself that—
(a) the quality of the service to be provided will not be inferior to the same service provided by another supplier at the price payable by virtue of this Chapter, and(b) there will be no consequent unacceptable impact on the structure or capabilities of the NHS.(5C) Subject to the considerations under subsection (5B), Monitor shall not unreasonably withhold its consent.”
Lord Davies of Stamford
Am I not allowed to say a word in response to the Minister?
Baroness Anelay of St Johns
My Lords, I think the noble Lord on the Woolsack is trying to assist the noble Lord, Lord Davies of Stamford, to realise that the rules as they pertain in this House are that if the noble Lord, Lord Davies, wishes now to speak further to his amendment, he must go through the process of moving it, speaking to it—and I am sure the Minister would hope he might then withdraw it. Having spoken to it already, it is not up to him simply to make an extempore statement; he has to go through a procedure to achieve that.
Lord Davies of Stamford
My Lords, I am very grateful for that guidance. In accordance with it, I have moved my amendment. I think that the Minister and I are still some distance apart. Once again, I put it to the noble Earl that a price that is not based on competition is not an economic price. A price that is negotiated with one vendor and based on the costs of that vendor, even if they are very transparent, is not an economic price. You cannot rest content that you have done an honest job if you accept that price. A fixed price that may be even remotely correct one day will not be correct in six months’ time or 12 months’ time. You need to continue to put that price to some sort of competition discipline. These points are fundamental. The noble Baroness, Lady Murphy, came nearer to the mark when she suggested that the reasons for the Government’s position had more to do with PR, politics or the media than with the economics of the health service. I was grateful to the noble Earl for the offer to discuss this matter in greater detail. Given that offer, I shall not detain the House further on this matter and will not put my amendment to a vote.
“(13A) In this section, a “relevant provider” is—
(a) a licence holder, or(b) such other person, of such description as may be prescribed, as provides health care services for the purposes of the NHS.”
“( ) In this section and section 121 and Schedule 12, “relevant provider” has the meaning given in section 118(13A).”
Lord Warner
“Applications under section 125: notification of commissioners
(1) This section applies where Monitor—
(a) receives an application under section 125, and(b) is satisfied that the continued provision for the purposes of the NHS of health care services to which a condition in the applicant’s licence under section 98(1)(i), (j) or (k) applies is being put at significant risk by the configuration of certain health care services provided for those purposes.(2) In subsection (1), a reference to the provision of services is a reference to their provision by the applicant or any other provider.
(3) Monitor must as soon as reasonably practicable notify the National Health Service Commissioning Board and such clinical commissioning groups as Monitor considers appropriate—
(a) of its receipt of the application, and(b) of its reasons for being satisfied as mentioned in subsection (1)(b).(4) Monitor must publish for each financial year a list of the notifications under this section that it has given during that year; and the list must include for each notification a summary of Monitor’s reasons for being satisfied as mentioned in subsection (1)(b).
(5) The Board and clinical commissioning groups, having received a notification under this section, must have regard to it in arranging for the provision of healthcare services for the purposes of the NHS.”
“( ) In this section, “relevant provider” has the meaning given in section 118(13A).”