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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.