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Mr Kevin Barron (Rother Valley) (Lab)
1. If he will undertake an impact assessment on the effect of changes in resource for the civil service on delivery of Government policy.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
8. If he will undertake an impact assessment on the effect of changes in resource for the civil service on delivery of Government policy.
The Minister of State, Cabinet Office (Mr Oliver Letwin)
Our aim is to maintain the superb quality of our civil service while reducing its quantity. Under this Government the civil service headcount has come down from 487,000 to 435,000, which is smaller than it has been at any time since the second world war. Of course, this reduction helps to reduce the deficit, but it is also a natural consequence of our intention to reduce bureaucracy, improve public services and promote the big society by shifting power to people on the front line.
Mr Barron
A recent National Audit Office report on cost reduction in central Government suggests that the staffing departures revealed an unplanned and haphazard redundancy drive that has paid off 18,000 civil servants since 2010, at a cost of £600 million, to save just £400 million. One of the report’s conclusions is:
“Few departmental systems can link costs to outputs and impacts, making it difficult to evaluate the effect of cost changes”.
Does the Minister agree, and what will his Department do about it?
Mr Letwin
The right hon. Gentleman has a distinguished career, which includes at one time being Parliamentary Private Secretary to Lord Kinnock, so presumably he has some experience of figures that go completely wonky, and the ones he is presenting give a very wonky picture. What the NAO report actually revealed is that the cost to the Departments was £600 million, the payback to the taxpayer was over 10 to 16 months and the total savings in this spending review period alone, in net present value, will be between £750 million and £1.4 billion. There is a massive saving there, which he would see if he read the whole report.
Cathy Jamieson
Recent analysis by the Office for National Statistics revealed that half of all central Government Departments, including the Minister’s, have actually increased staff numbers in the past six months. How does that fit with the Government’s pledge to increase localism? Is that not more central bureaucracy being created?
Mr Letwin
The hon. Lady will be aware that, as I mentioned in my first answer, there has been a massive reduction in the headcount of the civil service as a whole. Of course there have been particular cases in which particular people needed to be hired, but the broad effort we have been making has brought down the deficit and increased dramatically the efficiency of the civil service.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
May I remind my right hon. Friend of the findings of the Public Administration Committee report, “Change in Government”, published last autumn, which identified the reduction in resources as just one of the many changes the Government are trying to achieve in the civil service? We await the plan for civil service reform with great interest, because our main conclusion was that the Government need a plan in order to effect this change.
Mr Letwin
My hon. Friend, the Chairman of the Public Administration Committee, is absolutely right. My right hon. Friend the Minister for the Cabinet Office and Paymaster General and I have had meetings with the Prime Minister, the head of the civil service and the Cabinet Secretary, and under the aegis of those two very senior officials the review to which my hon. Friend refers is now being carried forward. There will be a strategy—much beloved of the Committee—that will emerge from that review, and once it is available Ministers will consider it and produce a plan for further changes in the civil service.
Mr David Ruffley (Bury St Edmunds) (Con)
It has been reported that the outgoing director of strategy for the Prime Minister, the excellent Steve Hilton, wishes to reduce the number of Whitehall civil servants by two thirds. Does the Minister agree?
Mr Letwin
I am afraid that some wildly inaccurate reports have been floating around, but it is certainly true that the review that the Cabinet Secretary and the head of the civil service are leading on, which I mentioned in my previous answer, is looking right across the board to try to work out what a modern civil service ought to look like, bearing in mind all the technology and other advantages we currently have, in order to deliver innovation, change and the delivery of policy in the most effective and efficient way possible.
Jon Trickett (Hemsworth) (Lab)
The Minister has announced the closure of the Central Office of Information, which provides politically independent public information from professional civil servants, and he will instead locate the service in various Departments, with the consequential inherent risk that the Government information service might become politicised. We would of course support any sensible measure to deliver a more economic service, but is not the current flood of leaks, on an industrial scale, in relation to today’s Budget a portent of the public information service’s politicisation, which he is opening the door to?
Mr Letwin
In a word, no. The changes that are being made in the structure and character of the information service are being made in order to have a modern service that can actually do the job properly. The hon. Gentleman ought to pause before talking about politicisation of the civil service, as under the previous Government efforts were made on an unparalleled scale to politicise the service’s activities. By contrast, this Government in all our information have been extraordinarily transparent, providing data on an unparalleled scale and operating a much more open Government than he and his colleagues ever dreamed of doing.
Jon Trickett
But that is all flim-flam, frankly. The leaking of Budget information on that scale is without precedent, and it is in clear breach, Mr Speaker, of your strict admonition that such statements should take place first in the House and not in the media. There is no way that professional civil servants in the COI would have undertaken such leaking, so does the Minister agree that there should be a Cabinet Office inquiry to identify the leakers? If it was civil servants, they are clearly in breach of their code of conduct, but, if it was Ministers, they are playing fast and loose with our democracy.
Mr Letwin
First, if the hon. Gentleman recalls his time as the Parliamentary Private Secretary to the previous Prime Minister, he will be aware that he was serving a past master at giving foretastes of Budgets. Secondly, I am surprised that the hon. Gentleman feels he knows what is or is not a leak, as he has not seen the Budget yet, and nor has the House.
Barbara Keeley (Worsley and Eccles South) (Lab)
2. What recent discussions he has had with permanent secretaries on Government outsourcing of policy advice.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
The head of the civil service has set up a number of themed groups to explore various aspects of civil service reform. One is exploring whether outsourcing policy making could deliver more creative and innovative results, while ensuring accountability and value for money, and I met permanent secretaries recently to discuss that and other issues.
Barbara Keeley
The Cabinet Office spent almost £120,000 in one day in August last year on consultancy, and McKinsey & Company is reported to have earned almost £14 million from Government health policy since the election. Outsourcing policy advice is costly and can lead to conflicts of interest, so will Conservative Ministers stick to their pledge in their manifesto to reduce the amount of consultancy?
Mr Maude
Not only will we, but we have. We have more than halved—I stress, more than halved—the cost of consultancy to the taxpayer. Under the previous Government, such money was spent incontinently, and the result was bad value for money and the serious undermining of the self-esteem of professional civil servants, who like being asked to do difficult things and are very good at doing them.
Andrew Bridgen (North West Leicestershire) (Con)
Does my right hon. Friend agree that every Government need the best possible policy advice available, and that sometimes it comes from within the civil service, and sometimes from without?
Lilian Greenwood (Nottingham South) (Lab)
3. What recent discussions he has had on the types of Government funding models available to the voluntary and community sector.
Phil Wilson (Sedgefield) (Lab)
13. What recent discussions he has had on the types of Government funding models available to the voluntary and community sector.
The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)
We want to help the voluntary and community sector to become more resilient by developing three pillars of funding: traditional giving, income from the state including more opportunities to deliver public service and a new pillar, the emerging market of social investment.
Lilian Greenwood
Many local voluntary organisations were set up to complement statutory services, as Nottingham Community and Voluntary Service reminded me when I met its representatives last week. If the predominant funding source for the voluntary sector is now to be public sector contracts, will not thousands of valuable voluntary groups throughout the country be left high and dry, showing once again this Government’s utter contempt for the big society that they purport to champion?
Mr Hurd
I think the hon. Lady missed my point. We are developing three pillars of funding, with the encouragement of high levels of giving, including a very generous tax incentive introduced by the Chancellor in the previous Budget; a new source of funding, social investment; and the launch of the world’s first social investment bank within a few weeks. But, yes, we want to do more with the sector to help us deliver public services, so, yes, we will be opening up new opportunities for charities and social enterprises to help us do just that.
Mr Speaker
No. The hon. Gentleman asks his supplementary question now, although it would have been helpful if there had been advance notification of the grouping to my office, which there was not. Very regrettable. The Minister must do better in the future, I am afraid.
Phil Wilson
A survey commissioned by Charity Bank has revealed that more than 20% of charities have suffered from the cancellation of contracts with businesses and Government bodies in the past year. Does the Minister agree that the Government’s refusal to recognise the needs and benefits of charities and voluntary organisations in policy formulation is preventing such organisations from getting vital funding to which they are entitled?
Mr Hurd
First, Mr Speaker, I apologise to you formally for that oversight by my office.
The hon. Gentleman makes an important point. Any commissioner in the public sector needs to engage with stakeholders in communities before commissioning services—not least in the voluntary and community sector, whose stakeholders tend to have, on the whole, a much better understanding of the needs of the people we are trying to help.
Duncan Hames (Chippenham) (LD)
Five months ago, the Prime Minister told me here that he would look at the funding gap arising from changes to legal aid funding for advice services such as the citizens advice bureaux in Wiltshire. Does the Minister consider that he has yet found lasting funding arrangements to sustain that voluntary sector service in future years?
Mr Hurd
We know that the charity advice sector is under a lot of pressure; that is why we found the money for a £20 million fund to provide immediate support for the most vulnerable organisations and why we are undertaking a serious review of the longer-term issues facing the sector. We will be announcing the findings of that review later in the spring, so the hon. Gentleman may not have to wait very long.
Nicky Morgan (Loughborough) (Con)
Will the Minister join me in congratulating the work of bodies such as Voluntary Action Leicestershire, which are advising the voluntary and community sector so well in Leicestershire, including my constituency of Loughborough, on how to find alternative funding models and how to do things differently given the changed funding environment?
Mr Hurd
I am certainly happy to do that. Such organisations play an essential role in providing support for front-line organisations. That is why we have found £30 million of funding to support organisations as they improve those services for the front line through the transforming local infrastructure fund.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
4. What assessment he has made of the change in the level of funding to the voluntary sector in 2011-12.
The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)
Most voluntary sector organisations receive no public funding at all, but those that do cannot be immune from the need to reduce public spending. That is why we are taking active steps to help the most vulnerable organisations, to encourage more giving and social investment, and to create new opportunities to deliver more public services.
Seema Malhotra
Given that the most recent report by the National Council for Voluntary Organisations shows that, according to the Government’s own figures, charities are facing cuts of £1.2 billion in public money per year, does the Minister agree that the Government need to do more to support the voluntary sector in constituencies such as mine, Feltham and Heston, as we turn around what the NCVO has described as a “toxic mix of circumstances” affecting our charities?
Mr Hurd
As I have said, almost 80% of charities receive no money from the state, but we have made it clear that those that do cannot be immune from cuts. The Labour leader himself has made it clear that he could not have protected them from cuts at all. We should remind ourselves that the cuts are necessary because of the actions of the last Labour Government. This Government are taking action to protect the most vulnerable organisations, create new sources of funding and open up new opportunities for charities and social enterprises to deliver public services. All they hear from the Labour party are empty words.
Yvonne Fovargue (Makerfield) (Lab)
5. What steps he is taking to ensure that the community and voluntary sector is considered in policy formulation in all Departments.
The Minister of State, Cabinet Office (Mr Oliver Letwin)
Our agenda is to give community groups and other voluntary sector organisations a much wider role in fulfilling the demands and needs of the public than they have had in the past. That is why, in considering each of our public service reforms, we have paid particular attention to the question of how the voluntary and community sector can work through them and help them.
Yvonne Fovargue
Research by the NCVO has shown that Government Departments plan to cut a further £444 million of funding from the voluntary and community sector. Does the Minister agree that that is evidence of the complete disregard of his own Government for that sector?
Mr Letwin
Absolutely not. The hon. Lady should look carefully at what we have done in respect of funding of advice services, to which the Parliamentary Secretary, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), referred a moment or two ago. In 2010-11, the funding stood at rather less than £200 million, but in 2011-12 it went up and it has almost maintained the 2011-12 levels—still above those of 2010-11—for 2012-13. The Government are investing in the voluntary and community sector, not disinvesting in it.
Mr Gregory Campbell (East Londonderry) (DUP)
Some examples of bureaucracy are being faced by many in the community and voluntary sectors. What are the Government doing to try to ensure that those sectors face no undue levels of bureaucracy in delivering their services?
Mr Letwin
The hon. Gentleman is absolutely right—there are major bureaucratic obstacles and regulatory hurdles. My noble Friend Lord Hodgson has been looking specifically at those, and my team and I have been looking at them as part of the red tape challenge. We are going through every single regulation that affects the voluntary sector, the community sector and social enterprises to see what we can do to ameliorate or remove those obstacles, because we are determined to build the big society.
Simon Hughes (Bermondsey and Old Southwark) (LD)
6. How much and what proportion of Government procurement was made from small and medium-sized enterprises in the latest period for which figures are available.
David Morris (Morecambe and Lunesdale) (Con)
9. What recent progress he has made on opening up public sector procurement to small and medium-sized enterprises.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
rose—[Interruption.]
Mr Maude
I am grateful, Mr Speaker.
A year ago, the Prime Minister and I launched a package of radical measures to increase opportunities for small and medium-sized enterprises to supply to Government. One year on, central Government’s direct spend with SMEs is on track to more than double to nearly 14% since we took office.
Simon Hughes
Those are very encouraging figures. In order to encourage small and medium-sized firms and show Government transparency, will the evidence behind the facts and figures be put in the public domain as soon as possible?
Mr Maude
I am delighted to tell my right hon. Friend that we make this information much more public and transparent than it has ever been before. The Contracts Finder website contains much more information about tenders, contracts and successful bids than has ever been the case, but we have more distance to go, and we will do so.
David Morris
I congratulate my right hon. Friend on the work that he has done to help SMEs to access Government contracts, but will he now consider writing protection for small sub-contractors into every major Government contract?
Mr Maude
I am delighted to say that nine of the biggest suppliers to Government have already agreed that they will advertise on Contracts Finder their contracts for sub-contract as well, and that will increase accessibility. In addition, we are taking steps to ensure that payments get made quickly not only to prime contractors but to sub-contractors further down the supply chain. [Interruption.]
Mr Speaker
Order. There are far too many very noisy private conversations taking place in the Chamber. That is unfair to the questioner and deeply unfair to Ministers, who may well be greatly wounded by the experience.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
11. The Government say that they are committed to ensuring that 25% of all Government contracts will be awarded to SMEs, but official figures and the experience of SMEs in my constituency show that the situation is getting worse. When are the Government going to get their act together on this?
Mr Maude
I fear that the hon. Lady wrote her question before hearing my answer. We cannot make a commitment; it would be illegal to do that. We have an aspiration to move to 25%. The Government formed by the party of which the hon. Lady is a member did not even bother to measure how much of this was happening. In the past year, we have more than doubled the amount of spend that goes directly to SMEs, but there is further to go and we will go that distance.
Michael Dugher (Barnsley East) (Lab)
Last week, Mark Taylor, the co-chair of the “new suppliers to Government” panel which is advising the Minister on SMEs, resigned, saying that Government contracts to SMEs were “drying up”, that things were “going backwards”, and that SMEs were
“finding it more difficult to do business with Government”,
and accusing the Government of “recounting” their figures. Given that the Minister has admitted that the Government are nowhere near their promised 25% target, will he explain why the proportion of procurement spend going to SMEs is falling at the Department of Energy and Climate Change, the Department for Culture, Media and Sport, the Department for Business, Innovation and Skills, the Department of Health, the Department for Education, the Department for Transport, Her Majesty’s Revenue and Customs, the Department for Environment, Food and Rural Affairs, the Department for International Development, and the Treasury?
Mr Maude
I say to the hon. Gentleman that if Mr Mark Taylor had come to any meetings of the SME panel over the past six months, he would have been more up to speed with the considerable progress that is being made. The previous Government, for whom the hon. Gentleman was an adviser, cared so little about this matter that they did not even measure what was being done. We have, I repeat, more than doubled the amount that is spent with SMEs over the past year. That amount will continue to grow.
Jake Berry (Rossendale and Darwen) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
My responsibilities as Minister for the Cabinet Office are public sector efficiency and reform, civil service issues, the industrial relations strategy in the public sector, Government transparency, civil contingencies, civil society and cyber-security.
Jake Berry
National citizen service is going to become a rite of passage for many of our constituents. Will my right hon. Friend tell me how young people in Rossendale and Darwen can find out about getting involved this summer?
Mr Maude
Three providers are delivering more than 600 places across Lancashire this year. Those providers are Catch22, The Challenge Network and Fylde Coast YMCA. I strongly encourage young people and their parents in Rossendale and Darwen to find out more about the NCS through its Facebook page or the Cabinet Office’s NCS website.
Jim McGovern (Dundee West) (Lab)
T2. What progress has been made by the commission into the West Lothian question? Many Opposition Members, and I am sure many Government Members, do not want to see a two-tier system of hon. Members in Westminster. What progress has the Minister made on this matter? Will he assure Members that we will be allowed to make a contribution to the commission?
Iain Stewart (Milton Keynes South) (Con)
T4. Will my right hon. Friend tell the House when the plans to refurbish No. 70 Whitehall were approved?
Mr Maude
Those plans were approved in 2008, when the current Leader of the Opposition was Minister for the Cabinet Office. It is therefore surprising that the shadow Minister for the Cabinet Office chose recently to mount an unprovoked attack on the decision made by his party leader.
Barbara Keeley (Worsley and Eccles South) (Lab)
T3. Part of my constituency had a bad experience with the Big Lottery Fund, which awarded it £1 million, but then sat on the money for the best part of two years. Will the Minister give better policy direction to that body so that it does not award funding and then sit on it for two years?
Stuart Andrew (Pudsey) (Con)
T5. Yesterday, Britain showed itself at its best. The Olympics offer us a chance to repeat such a show to the world. Does my right hon. Friend agree that it is disgraceful that strike action has been threatened during such a wonderful opportunity?
Mr Maude
It was distressing that the leader of the Unite trade union made that intemperate threat. I hope that the Leader of the Opposition will take an early opportunity to condemn these bully-boy paymasters, who are threatening, when the eyes of the world are on Britain, to bring the country to a standstill.
Chris Evans (Islwyn) (Lab/Co-op)
T6. Concerns have been raised about the role of Circle health care in the Government’s pathfinder programme. Will the Minister clarify its role in the programme?
Mr Speaker
Order. I am not altogether sure that the Minister heard the question. If he did not, he was not the only one. There is too much noise and Members are yelling even when Members from their own party are asking questions. A bit of order would help.
John Pugh (Southport) (LD)
T7. Had we reached Question 10, I would have asked what recent assessment has been made of Government policy on open source software and open standards.
Mr Maude
We are strongly in favour of using open source software wherever possible. We have established that that can cut the cost of providing digital services massively, while producing better results. On a recent visit to silicon valley, I and a number of colleagues found businesses that were capable of cutting those costs on a massive scale.
Helen Goodman (Bishop Auckland) (Lab)
A study by the Association of Chief Executives of Voluntary Organisations has found that applications by charities for emergency help were highest in the north-east, because the 20 poorest areas suffered 40 times as much reduction in their funding as the 20 richest. A year ago the Minister of State, Cabinet Office, the right hon. Member for West Dorset (Mr Letwin), said that the voluntary sector would
“find that there is access to a large amount of revenue”.—[Official Report, 20 October 2010; Vol. 516, c. 936.]
Has he disappeared because he no longer believes that?
Charlie Elphicke (Dover) (Con)
T8. In the past decade, small business has increased employment by 1 million and big business cut it by 1 million. Does that not show that procurement for small businesses is about not just fairness but more jobs and money?
Mark Menzies (Fylde) (Con)
Q1. If he will list his official engagements for Wednesday 21 March.
The Prime Minister (Mr David Cameron)
This morning, I had meetings with ministerial colleagues and others, and in addition to my duties in this House I shall have further such meetings later today.
Mark Menzies
Small business is concerned that Britain suffers from a sicknote culture. Does the Prime Minister agree that an example should be set from the very top, and that those who throw sickies and then swan off to a football match in a Rolls-Royce are setting a very bad example indeed?
The Prime Minister
My hon. Friend makes an important point. We do have a problem of a sicknote culture, and I have to report that the problem can sometimes go to the very top. The Leader of the Opposition was meant to be addressing a health rally, called a sickie, and three hours later was at a Hull football match. As well as his knowing the miracle cure, I think there is an important question—what was it that first attracted him to the multi-millionaire owner of the Hull football club?
Edward Miliband (Doncaster North) (Lab)
Following the Prime Minister’s recent trip to Washington, we now know that the timetable for the withdrawal of British and other international combat forces in Afghanistan will be reviewed at the NATO summit in Chicago in May. He has previously set out a timetable that would see combat operations for British troops cease by the end of 2014. Given the recent statements by the US Defence Secretary and the French President about an accelerated timetable for their troops, can the Prime Minister confirm the British Government’s position going into that summit?
The Prime Minister
First, let me take this opportunity on behalf of the whole House once again to pay tribute to the magnificent work that our armed forces do in Afghanistan. We had another reminder yesterday of the very high price that we have paid.
On the programme of withdrawal, what I have said absolutely stands, which is that we will not be in a combat role in Afghanistan after 2014, nor will we have anything like the number of troops that we have now. We will be performing a training task, particularly helping with the officer training academy. Between now and 2014, it is important that we have a sensible profile for the reduction in troop numbers, which should be largely based on the conditions in the three parts of Helmand province that we are still responsible for and the transition that takes place.
What I discussed with President Obama in America was that in 2013, if there are opportunities to change the nature of the mission and be more in a support rather than in a direct combat role, that is something that I think everyone will want to see. We can make further progress on that issue at the Chicago summit and make announcements later in the year about that.
Edward Miliband
I thank the Prime Minister for that answer, and I know he will keep the House informed of any change in the British position, and indeed of the precise timetable and any evolution of it.
I am sure the Prime Minister will agree that in the wake of the tragic killing of Afghan civilians last week, which we all abhor, we must carry on with our mission. President Karzai has recommended that international troops should be confined to their main bases. Notwithstanding the tragedy of the incident that occurred, does the Prime Minister agree that while international troops are there, they must be able to perform their role of protecting the Afghan population? Can he tell us what discussions he has had with President Karzai and his representatives about the impact that any change in that role will have on security in Helmand, were that to happen?
The Prime Minister
Obviously our teams are in permanent contact about Afghanistan, and I speak to President Karzai regularly. Obviously what happened in Afghanistan, with the dreadful shootings that the rogue American soldier carried out, was a dreadful event, which must be properly prosecuted and dealt with for what it was: a mass murder. I know that President Obama takes that view very strongly.
In terms of making sure that we work with the Afghans, as I have said, the key is ensuring that we transition in the three parts of Helmand for which we are responsible, that we hand over to Afghan troops, and that they are in the lead as soon as they are capable of fulfilling that task. I do not have any concerns at the moment about the role of British troops—they are able to carry out the tasks that they are allotted. We are making good progress in the three parts of Helmand. We will be in permanent touch with the Afghans about that transition, but transition is a process and, as the Chancellor will explain in a moment or two, we should try to make the most of the transition that will take place.
Edward Miliband
I know that the Prime Minister agrees with me that dialogue with President Karzai and his representatives on the issue is very important, particularly in the light of the comments that were made. A few days ago, the Taliban decided to suspend preliminary talks with the United States. Will the Prime Minister give the House his assessment of the significance of that? Does he agree that we owe it to our troops serving in Afghanistan to be much more urgently focused on the task of securing a lasting political settlement? How do the British Government plan to play their role in getting the political process restarted?
The Prime Minister
I thank the right hon. Gentleman for that question. It is vital that we get this right. Since we took office—to be fair to the previous Government, they took this view as well—the British position has always been that we need a political settlement to ensure the best possible outcome for the people of Afghanistan. Britain has been pushing for political reconciliation and reintegration, and I had very productive talks with President Obama last week because the American view is now the same; they want to support that political process. Of course, the Taliban said what they said last week. I would make this point: we are committed to handing over to the Afghan Government, the Afghan military and the Afghan police—and the numbers of Afghan military and police are on track—at the end of 2014. We believe that that can happen even without a political settlement, with a satisfactory outcome for the United Kingdom, but clearly it would be better for everyone concerned if it was accompanied by a political settlement. The work for that, including setting up a Taliban political office in Qatar, is progressing well, and I believe that it is in everyone’s interest that we keep pushing that agenda. However, the Taliban should be in no doubt: there are opportunities for a political settlement if they give up violence, renounce al-Qaeda and want to play a part in the future politics of Afghanistan, but if they do not take those steps, we will continue to defeat them on the battlefield every time they raise their head.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
Q2. I know that the Prime Minister will agree that the Association of Air Ambulances is a fantastic charity, which enjoys support across the House. However, a typical air ambulance branch needs to raise about £5 million a year, yet can claim gift aid often on only about 5% of that. Will he support my efforts to make it easier for charities to get the gift aid that they are due?
The Prime Minister
First, I join my hon. Friend in paying tribute to the air ambulance service, which does an amazing job in responding to emergencies, and saves many, many lives. We are providing £3 billion a year in tax reliefs for charities, of which gift aid makes up around £1 billion. We are increasing the amount on which charities are allowed to claim gift aid without the need for a declaration. That takes it up to £5,000, and I think that that will be a significant help to great charities such as the one my hon. Friend mentioned.
Ann Clwyd (Cynon Valley) (Lab)
When the disability Minister came to Wales last week, she said that it was for others to consider whether Remploy’s budgets should be devolved to Wales. I think, when she said “others”, she meant you, Prime Minister. The Welsh Government have already said that they are committed to supporting the Remploy workers in Wales. Will the Prime Minister therefore devolve the Remploy budgets for the Welsh factories for the next three years to ensure that all the factories that can have a future do have a future?
The Prime Minister
I will look carefully at the right hon. Lady’s proposal, because I know it is put forward in a constructive spirit. However, whether the decision is reserved or devolved, it does not mean that we do not have to take difficult decisions. The fact is that we asked the chief executive of Disability Rights UK to look at the issue, and the outcome she proposed is supported by Mencap, Mind, Disability Wales, Sense for Deafblind People and the Centre for Mental Health. The point is this: Government funding allows for half a billion pounds over five years for Remploy, but even that is not enough to keep those factories open, because although access to work awards are around £2,900 per disabled person, the cost of each job in Remploy is around £25,000 per person. Therefore, if the aim of policy is to use the money that we have to support disabled people into work, the right hon. Lady will understand why the review came to the decision that it did.
Gavin Williamson (South Staffordshire) (Con)
3. The last few weeks have seen the start of the £350 million construction of Jaguar Land Rover’s new engine plant in my constituency. Does my right hon. Friend agree that that is a sign of growing confidence and belief in British manufacturing, which is in stark contrast to the destruction wrought on it by the last Labour Government?
The Prime Minister
My hon. Friend makes an important point. The Jaguar Land Rover news is excellent news for the west midlands and for British manufacturing and British car making. The good news is that what is happening in the car industry is not confined to Jaguar Land Rover: Nissan, Honda and Toyota are all expanding across our country. That is very good news for British manufacturing.
Huw Irranca-Davies (Ogmore) (Lab)
On the bus to the Commons today I foolishly revealed to a fellow passenger that I was a Member of Parliament. After some light-hearted and customary abuse, our conversation turned to life, the universe and commuting. Can the Prime Minister tell me and the man on the Peckham omnibus this: if that journey cost me 90p under Ken, how much did the same journey cost me today under Boris?
The Prime Minister
The point I would make is that Ken twice promised to freeze fares and twice did not deliver, but the difference between Boris and Ken is that Boris pays his taxes and Ken does not.
Jane Ellison (Battersea) (Con)
On that very subject, I look forward in the Budget later to measures on tax avoidance, but does the Prime Minister agree that people seeking high office in public life should set a better example?
The Prime Minister
My hon. Friend makes an important point. I note that Ken Livingstone has said that if he is elected Mayor of London, he will fully pay his taxes. It is not for me to hand out political advice, but my advice would be to pay them before the campaign gets going.
John Cryer (Leyton and Wanstead) (Lab)
5. Does the Prime Minister recognise that the introduction of regional pay would set hospital against hospital, and school against school, as the Secretary of State for Business, Innovation and Skills has helpfully pointed out, and yet it would almost certainly push up the overall cost of public sector pay? Can the Prime Minister give us a guarantee or a promise today that introducing regional pay will bring down the overall bill?
The Prime Minister
The last Government introduced local pay into the Court Service. The idea of local pay for some public services is not an alien concept, but a perfectly sensible thing to look at. Labour Front Benchers suggested in the debate on benefits that we look at local levels of benefits, so surely the hon. Gentleman should be in favour rather than against.
Richard Drax (South Dorset) (Con)
14. I am sure the Prime Minister will join me in praising the work of the search and rescue helicopter service around our country, but does he share my concern that the loss of the Portland search and rescue helicopter in 2017 will threaten the lives of my constituents and damage the integrity of the search and rescue service on the south coast?
The Prime Minister
I totally agree with my hon. Friend that a reliable search and rescue service is vital. We have looked at keeping the Sea King helicopters, which is one of the things he suggested, but they would not be able to provide a service as good or as capable as a modern fleet of helicopters. That is why we are planning the changes. We believe that it should provide faster flying times and a more reliable service.
Edward Miliband
Following last year’s riots, the Prime Minister came to the House and said that
“we will help you repair the damage, get your businesses back up and running and support your communities.”—[Official Report, 11 August 2011; Vol. 531, c. 1053.]
Last week, a report by the Metropolitan police revealed that of the claims made by the uninsured under the Riot (Damages) Act 1886, only about half had been settled since last August. Does the Prime Minister agree that this is simply not good enough?
The Prime Minister
I agree. There have been problems under the Riot (Damages) Act, which is specifically why we also introduced a number of extra funds run by the Department for Communities and Local Government. Those funds have paid out faster. It is right, in a way, to have the Riot (Damages) Act, although it is quite out of date. However, it takes time to make the payments, and I will certainly do what I can to chase them up.
Edward Miliband
We are eight months on from the riots. The Deputy Prime Minister hosted a reception—[Interruption.] Government Members should listen to this very important issue about the riots. At a reception last week organised by the Deputy Prime Minister, he and I met Amrit Khurmy, the owner of Ealing Green supermarket, which was razed to the ground during the violence on 8 August. She is still waiting to receive any compensation. Does the Prime Minister agree that, eight months on, that is just not right? Does he further agree that ultimately it is the Government’s responsibility to ensure that she gets the compensation that she deserves?
The Prime Minister
I agree with the right hon. Gentleman, and I will look into that specific case. As I said, one reason I introduced funds alongside the Riot (Damages) Act was to get that money out to local authorities faster. If he likes, I will put in the Library of the House of Commons a set of information about what those funds did and where we have got to with that Act. I will also look into the individual case that he mentioned.
Edward Miliband
We are talking about people who have not been helped by the money provided to local authorities and cannot get help. Three things need to happen to make good on this. First, as matter of urgency, there needs to be proper information on the payments made under the Riot (Damages) Act—[Interruption.] Government Members say, “There is information”. There is information from the Metropolitan police, but the reality is that the information available about what is happening around the country is very patchy. So first we need proper information. Secondly, I ask the Prime Minister to nominate a Home Office Minister with the job of ensuring that these claims are paid. Thirdly, will he promise to return to the House with a clear indication of when 100% of legitimate claims will be properly settled?
The Prime Minister
I am certainly happy to return to the House, as I said, putting an answer in the House of Commons Library about all this information. On the individual case that the right hon. Gentleman mentioned, I understand that it was a multiple claim because it was a shop with a number of flats above it, but I accept that eight months is too long. So we will make progress on that case. The Minister for Policing and Criminal Justice is taking the lead on this matter, but I have also held follow-up meetings myself with DCLG and the Home Office to ensure that the money is paid out.
Guto Bebb (Aberconwy) (Con)
Q15. The Prime Minister might be aware that the St Dunstan’s charity, which provides support for injured servicemen, has recently changed its name to Blind Veterans UK. To raise awareness of this name change, will he join me in visiting its new residential centre in Llandudno to see at first hand the wonderful work it does in supporting our veterans?
The Prime Minister
I always enjoy my visits to Llandudno, and perhaps I will be able to schedule one before long. I would like to put on the record my thanks for the tireless and highly professional way in which the charity assists service personnel who have tragically lost their sight. My hon. Friend pays it a great compliment and does his duty by explaining the change in its name, so that people know what it is and can give it money. As a country and a Government, we have a huge debt to pay to former service personnel. They have done extraordinary things on behalf of their country, and we need to look after them through their lives. My right hon. Friend the Chancellor will make some announcements about that in his Budget.
Ian Lavery (Wansbeck) (Lab)
Q6. The Prime Minister said last year that under his Government unemployment would fall year on year, but here we are with unemployment at a 17-year high. In my constituency, 55.4 people are chasing every job vacancy. The regional growth fund has supported only four businesses. Why should the 515 workers in Rio Tinto Alcan, the disabled workers at Remploy and many others set to lose their jobs believe a single word that he or the Chancellor say?
The Prime Minister
First, on the specific case of the Rio Tinto plant, I know how important that is. We are working with Northumbria county council and the company to do what we can to help get those people work, although I understand that Rio Tinto is still in negotiations with a potential purchaser of that plant. What I would say to the hon. Gentleman about employment and unemployment is this. Clearly we need more jobs in our economy, but since the election we have had more than 600,000 new jobs in the private sector. The level of employment in the country is up by around 250,000 and there are fewer people on out-of-work benefits now than there were at the time of the election. In terms of what is happening in the north-east, we should also celebrate the good news—the fact that Nissan is creating 2,000 jobs; the fact that Hitachi is building a new plant in County Durham; the fact that Newcastle airport is expanding; the fact that Greggs is putting more money into the north-east. We should be talking up the north-east instead of talking it down.
Mr Alan Reid (Argyll and Bute) (LD)
The running aground of a cargo vessel on a small island in the Minch showed the need for the emergency coastguard tug that was recently withdrawn from service. Will the Prime Minister please look into this as a matter of urgency, with a view to getting a replacement tug in place before a worse incident happens?
The Prime Minister
I know this issue is being looked into at the moment, so I am happy to write to the hon. Gentleman and give him the details. He represents island communities that can be extremely cut off, particularly during the winter months. He needs to know that those services are there, and I will write to him about that.
Mr Graham Allen (Nottingham North) (Lab)
Q7. Further to his letter to the hon. Member for Nottingham North of 15 August 2011, when he expects the civil service to issue the full tender document required to set up an early intervention foundation.
The Prime Minister
First, let me pay tribute to the work the hon. Gentleman does in this area. Early intervention is absolutely central to what this Government are looking to achieve. That is how we are going to improve the life chances of the least well-off in our country, and genuinely lift young people and children out of poverty. We will base funding decisions on what comes out of the first two years, but as he will know, the early intervention grant, which is a crucial piece of Government funding and policy, is going to rise next year.
Mr Allen
May I thank the Prime Minister and the leaders of all parties in the Chamber for their continuing support for early intervention? Early intervention not only helps babies, children and young people to develop the social and emotional capability to make the best of themselves, but saves the country billions of pounds in the long run. Will the Prime Minister and the Chancellor take this as the first representation not for today’s Budget, but for next year’s Budget? Will he consider theming next year’s Budget around early intervention, bringing forward proposals for tax changes to stimulate the social finance market, which we heard about in earlier questions, and move 1% only of departmental budgets from late intervention to early intervention?
The Prime Minister
In terms of Budget submissions, that was definitely an example of early intervention. I praise the hon. Gentleman for the work that he has done. As he knows, we will be setting up the early intervention foundation, which will be funded to make the arguments that he has put very effectively, whichever side of the Chamber he has been sitting on, for very many years. I will certainly discuss this issue with my right hon. Friend the Chancellor. What we are trying to do is look at all the mechanisms we have, whether it is backing nursery education, introducing a pupil premium, making sure the early intervention grant is going up or actually putting the money in early to try to change people’s life chances before it is too late.
Robert Halfon (Harlow) (Con)
Q8. Is the Prime Minister aware that Harlow has the highest business growth in the whole of the United Kingdom, thanks to a Conservative council that is open for business and a Conservative-led Government who have invested in an enterprise zone, increased apprentices and cut taxes? Will the Prime Minister come to Harlow so we can show Britain how to lead the economic recovery?
The Prime Minister
Although I am in danger of being accused of watching too much television, I think we could summarise my hon. Friend’s question by saying, “The only way is Essex”. I know he speaks up for his county; what I would say is that I congratulate Harlow on its fantastic achievement. The Government want to play their part, not least with the enterprise zone in west Essex, which covers Harlow and which we hope will create 5,000 new jobs.
Mrs Mary Glindon (North Tyneside) (Lab)
Q9. In North Tyneside more than 7,000 hard-working families depend on working tax credits to make ends meet, yet fewer than 200 people have to pay top-rate tax. Which of those groups does the Prime Minister think needs the most support in the Chancellor’s Budget?
The Prime Minister
What I can tell the hon. Lady is that we increased the child tax credit by £255 last year, which was the biggest increase in its history, and that it will go up by another £135 this year. In terms of the very richest in our country, let me reassure her that, after this Budget, they will be paying more in tax.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Q10. Does the Prime Minister agree that, as well as the Liberal Democrat priority to lift the tax threshold to £10,000, one of the best ways of helping—[Interruption.]
Simon Hughes
Does the Prime Minister agree that one of the best ways of helping families on low and medium incomes is to build more affordable housing throughout the country? Given that Labour’s legacy in London was to have 350,000 families on the waiting list, will he assure us that there will be more affordable housing in London and across the country?
The Prime Minister
We do want to get our housing markets started again, including for affordable housing. That is why, with the higher right-to-buy discounts, that money is going to go back into building affordable homes. At the same time, we are doing more to kick-start those places that have planning permission but cannot get under way because of problems with bank and other finance. That is why we are putting extra money into those schemes, to make sure that that building takes place this year or next year.
John McDonnell (Hayes and Harlington) (Lab)
The Information Commissioner has confirmed that some of the information used by the Consulting Association to blacklist trade unionists could only have come from the police or the Security Service. When 3,000 people, mostly celebrities, had their telephones hacked, the Government set up an inquiry under Leveson. When 3,200 trade unionists have been blacklisted, and many have lost their livelihoods, the Home Secretary simply suggests that they go to the Independent Police Complaints Commission. Why is there one route to justice for celebrities, and another for working people?
The Prime Minister
There is one law that has to cover everybody in this land, and if there is any accusation of wrongdoing, that is something that the police, who are completely independent of the Government, can investigate. That is what should happen. I say that on the hon. Gentleman’s behalf, but he could do something on everyone else’s behalf. He runs the Right to Work campaign, which is stopping young people getting work experience places. If he cares about opportunities for young people, he will give up that left-wing organisation.
Jesse Norman (Hereford and South Herefordshire) (Con)
Q11. My county of Herefordshire has below-average household income, but public funding for schools and health care in Herefordshire has been among the lowest in the country for a long time. Does my right hon. Friend share my view that that is unfair, and will he personally support measures to change the funding formulas, to get a fair deal for my county and for other similarly affected rural areas?
The Prime Minister
My hon. Friend will know that we are looking at the funding formula for schools. We want to try to make it simpler, so that people can see what the criteria are and why their area receives the money that it does. At the same time, we are introducing the pupil premium, which will mean that parts of the country such as his, where there are quite high levels of deprivation in parts, will get specific funding for those children who are on free school meals. That should help the funding of those schools that need the money the most.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Will the Prime Minister do the honourable thing and publish the risk register, including the action that is needed to mitigate the risks that the Health and Social Care Bill still poses to patients?
The Prime Minister
What I would say is that, as far as I can see, we have actually voted in this House of Commons twice on the same issue—thank you, Mr Speaker—and on both occasions, there was a significant majority in favour of the Government’s position. I would also add that the last Government had many, many opportunities to publish risk registers, and they did not do it.
Nick Boles (Grantham and Stamford) (Con)
Q12. For 10 years or more, leading Conservatives such as Lord Saatchi and Lord Tebbit have argued for working people and pensioners on low incomes to be taken out of income tax altogether. Does my right hon. Friend agree that this is a thoroughly Conservative idea whose time has well and truly arrived?
The Prime Minister
What I would say to my hon. Friend is that, almost uniquely, I am not going to prejudge what is in the Chancellor’s Budget. However, I think that we can say that it is—if you like, Mr Speaker—a kaleidoscope Budget.
Mr Speaker
I am so encouraged that the Prime Minister is using my language. Good on him!
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Q13. The Prime Minister may recall that at the time of the strategic defence and security review, he described it as a mistake and an error to use the short take-off vertical landing variant of the Joint Strike Fighter. As the Ministry of Defence is about to perform a U-turn on the decision to rescind the original decision, does he now accept and understand that the real mistake and error has been a defence review that has been inadequate and is fast unravelling?
The Prime Minister
The real mistake and error was inheriting a £38 billion black hole in the defence budget. To pay tribute to my right hon. Friend, what he wants as Defence Secretary is to be the first—in a generation, frankly—to announce a balanced and funded budget for defence, for this year and for many years to come. That is what we are discussing. We will look at all the evidence and all the costings. As the hon. Gentleman will know, costings change in defence, but I make this pledge: if costs and facts change, we—unlike previous Governments—will not just plough on regardless and make the wrong decisions for political reasons.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I should inform the House that the Bill on today’s Order Paper is not being presented.
Ways and Means
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Financial Statement
(12 years, 1 month ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the Chancellor of the Exchequer, it is convenient to remind hon. Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. It may also be appropriate to remind hon. Members that it is not the norm to intervene on the Chancellor of the Exchequer or the Leader of the Opposition, as was stated last year.
The Chancellor of the Exchequer (Mr George Osborne)
This Budget rewards work. Britain is going to earn its way in the world. There is no other road to recovery. This Budget supports working families and helps those looking for work. It unashamedly backs business, and it is on the side of aspiration—of those who want to do better for themselves and for their families.
This Budget reaffirms our unwavering commitment to deal with Britain’s record debts, but because we have already taken difficult decisions this can also be a reforming Budget that seeks to repair the disastrous model of economic growth that created those debts—a model that saw manufacturing almost halved as a share of our national economy, while the national debt doubled.
This is how Britain will earn its way in the world: with far-reaching tax reform, with a simpler tax system where ordinary taxpayers understand what they are being asked to pay; with a tax system that is more competitive for business than any other major economy in the world; with a tax system where millions of the lowest paid are lifted out of tax altogether, while the tax revenues we get from the wealthiest increase.
Reforming tax is only part of the story. We will earn our way in the world by saying to all business, large and small, “We will provide you with modern infrastructure, new growth-friendly planning rules and employment laws and the kinds of schools, universities and colleges our future work force need. In return, you, British business, will have the self-confidence to invest, expand, hire, innovate and be the best.” We earn our way in the world if we stop being afraid to identify Britain’s strengths and reinforce them instead, backing industries such as aerospace, energy, pharmaceuticals, creative media and science—a deliberate strategy to create a more balanced national economy where financial services are strong, but are not the only string to our bow.
Stability comes first, and the report from the Office for Budget Responsibility reminds us today of the risks to stability. Despite the welcome action by the European Central Bank, the impact of the sovereign debt crisis on the European economy has been significant. Italy, the Netherlands, Belgium and others are now in recession, and Germany’s economy shrank in the last quarter. In today’s report, the OBR is sharply revising down its forecast for euro area growth this year by 0.8% to minus 0.3%. Its forecast for world economic growth is also revised down over the next two years, by 0.2% and 0.3% respectively.
Of course, Britain is not immune from those developments in our largest export markets, and the OBR says today that
“the situation in the euro area remains a major risk to our forecast”.
Another risk that it identifies is a
“further spike in oil prices”,
and there is no doubt that the high oil price, driven both by real demand and the Iranian situation, is of great concern across the world. It means that the OBR’s overall assessment of the outlook for, and risks to, the British economy is “broadly unchanged” since last November’s report.
Despite those head winds, there are some more positive signs. The OBR expects the British economy
“to avoid a technical recession with positive growth in the first quarter”
of this year. The British economy has, in its words,
“carried a little more momentum into the new year than previously anticipated”.
Indeed, the Office for Budget Responsibility is slightly revising up its growth forecasts for the UK this year to 0.8%. It then forecasts 2% next year—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I know that the House has to breathe, but we want to hear from the Chancellor of the Exchequer, and we cannot do that with too much noise on either side.
Mr Osborne
The OBR forecasts 2% next year, 2.7% in 2014, and 3% in both 2015 and 2016. Its forecast unemployment rate is the same as it was last autumn. It expects it to peak this year at 8.7%, before falling each year to 6.3% by the end of the forecast period, but it has revised down its estimate of the claimant count, which it now expects to be around 100,000 lower in each of the next four years than it previously forecast, peaking at 1.67 million this year, rather than the 1.8 million it forecast in November. It forecasts 1 million more jobs in the economy over five years.
Inflation is expected to fall throughout the period, from 2.8% this year to 1.9% next year, and then 2% by the end of the forecast period. I am today writing to the Governor of the Bank of England to reaffirm the consumer prices index inflation target of 2%. The Government’s credible and responsible fiscal policy allows the independent central Bank to pursue an activist monetary policy consistent with targeting low inflation. I confirm that the asset purchase facility will remain in place for the coming year.
Employment is growing, and inflation is coming down; so too is the deficit. When this Government came to office, the budget deficit stood at over 11%. The state was borrowing one in four of every single pound it spent. Today, I can report that the deficit is falling and is forecast to reach 7.6% next year. The share of national income taken by the state will have fallen from almost 48% when we took office to 43% next year. We must stick to the course, so there will be no deficit-funded giveaways today, but because we have taken difficult decisions we do not need to tighten further. Over the five-year period, this is a fiscally neutral Budget. This is achieved through a modest reduction in both taxation and spending.
Let me turn to those fiscal forecasts. The whole House will be pleased to know that these have improved a little from the forecasts that I presented in November. Borrowing this year is set to come in at £126 billion—£1 billion lower than I forecast in the autumn, and over £30 billion a year lower than its peak in the year before we came to office. Borrowing will then fall to £120 billion next year, if one excludes the transfer of Royal Mail pension assets. It will fall to £98 billion in 2013-14, then £75 billion, and then £52 billion, reaching £21 billion by 2016-17. So, in total, borrowing is £11 billion less than I last forecast, in the autumn, and this will be used to pay down debt.
In my first Budget, I set the Government the fiscal mandate of achieving a cyclically adjusted current balance by the end of the five-year horizon, and the OBR confirmed today that we are on course to achieve that mandate and to have eliminated the structural current deficit by 2016-17. It also confirmed that we are on course to reach our target for debt to be falling as a percentage of national income by the end of the Parliament in 2015-16. Public sector net debt is now set to peak at 76.3% in 2014-15, almost 2% lower than previously forecast, before falling the following year. With a balanced structural current budget and falling debt, our deficit reduction plan is on course, and we will not waiver from it. To do so would risk a sudden loss of confidence and a sharp rise in interest rates, and we will not risk that. Instead, we reinforce today our commitment to fiscal responsibility, not just this year, but in the years ahead.
The transfer of the £28 billion of assets from the Royal Mail pension fund to the Exchequer will free it from its crippling pension debts, ensure the pensions of hard-working staff are paid and help to bring in new, private sector investment. Some would have been tempted to spend the windfall. I do not propose to spend it; instead, I have used it to pay off debt.
We will also maintain our control on welfare spending. The passing of the Welfare Reform Act two weeks ago was an historic moment, and I pay tribute to my right hon. Friend the Work and Pensions Secretary, and to all my coalition colleagues for supporting him against determined opposition from those who defend unlimited welfare. But even with the Act, the welfare budget is set to rise to consume one third of all public spending. If nothing is done to curb welfare bills further, the full weight of the spending restraint will fall on departmental budgets. The next spending review will have to confront this, so I am today publishing analysis that shows that if in the next spending review we maintain the same rate of reductions in departmental spending as we have in this review, we would need to make savings in welfare of £10 billion by 2016.
We will also address the rising costs of an ageing population and the burden this places on future generations. We will publish a White Paper on social care. I have also said we would consider proposals to manage future increases in the state pension age, beyond the increases already announced. I can confirm today that there will be an automatic review of the state pension age to ensure it keeps pace with increases in longevity. Details of how this will operate will be published alongside the OBR’s long-term fiscal sustainability report this summer.
One area where Government spending is expected to be lower than planned is, as the Prime Minister just indicated, Afghanistan. We were reminded again yesterday of the sacrifice so many of our servicemen and women have made. As the Prime Minister made clear with the US President last week, UK forces will cease combat operations by the end of 2014. As a consequence, I can tell the House that the cost of operations—which are funded by the Government’s special reserve and are entirely separate from the Defence budget—is expected to be a total of £2.4 billion lower than planned over the remainder of the Parliament. Let me be clear today: the full cost of operations will continue to be met from the reserve, and our brave armed forces will get the equipment they need to complete the job.
But I can ensure that some of the benefit of the lower cost is felt by those who fight so hard and give so much for our nation’s security. We will fund an extra £100 million of improvements in the accommodation of our armed forces and their families. I will also double the families’ welfare grant, which is used to provide additional support to families left behind when people deploy. We have already doubled the operational allowance. Today, I am doubling the rate of council tax: the thousands serving our country in operations overseas will receive 100% relief on an average council tax bill.
Our commitment to reduce the deficit is keeping interest rates low. In this Budget, we take measures to ensure that the benefits of those low market interest rates are felt across the economy. They are certainly benefiting the taxpayer. Thanks to the reduction in the deficit and our low interest rates, this Government are saving a total of £36 billion in debt interest payments compared with their predecessor. This year is the 400th anniversary of the creation of the Treasury Board and the modern Treasury. There have been times recently when the Treasury has been borrowing money more cheaply than at any previous time in that 400-year history—few countries in Europe could say that at the moment. That reflects the confidence that investors have in Britain’s ability to pay its way.
I now want to test whether we can extend these benefits further into the future and diversify our portfolio. The longest gilt we currently offer to the market is 50 years. The Debt Management Office will consult on the case for issuing gilts with maturities longer than 50 years and the case for a “perpetual” gilt with no fixed redemption date— something that Britain last felt able to do six decades ago. We are also taking the opportunity to rebuild Britain’s reserves, which had fallen to historically low levels. I can confirm that our gold holdings have risen in value to £11 billion. Sadly, that does not include the 400 or so tonnes of gold sold a decade ago for £2 billion, which would now be worth six times that, at over £13 billion.
Working families are already being helped by historic low mortgage rates. The NewBuy scheme that we introduced last week uses the Government’s balance sheet to help those who cannot afford the larger deposits that some mortgage companies are now demanding. It comes alongside a new, reinvigorated right to buy, and to ensure that there are new homes to buy we are today expanding the get Britain building fund that provides up-front finance to construction firms.
We are also passing on our low interest rates to small businesses, through the national loan guarantee scheme, which started operation yesterday. Barclays, Lloyds, RBS, Santander and the new business bank, Aldermore, are all involved, and £20 billion of guarantees, in total, will be available. In the autumn statement, I also allocated £1 billion to invest in funds that lend directly to the mid-cap business that are the backbone of our economy. This is an alternative source of finance to the banks. The response has exceeded our expectations; 24 funds have submitted proposals. I am today shortlisting seven of them and, such has been the quality of the bids, I have also decided to increase the size of the finance partnership by 20%. I am also today expanding the enterprise finance guarantee.
Stability and credibility, the low interest rates they bring, and passing those low rates to families and businesses are necessary for growth, but alone they are not sufficient. As a nation, we have to make a choice. This country became seduced by large deficits and the illusion of cheap finance. Do we watch as the Brazils, Chinas and Indias of this world power ahead of us in the global economy or do we have the national resolve to say, “No, we will not be left behind. We want to be out in front”? That is this Government’s resolve.
Under this Government, Britain has moved into the top 10 of the most competitive places in the world in which to do business—but we have to do more, and here is how. First, on exports, over the last decade our share of world exports shrank as Germany’s grew. We sold more to Ireland than we did to Brazil, Russia, India and China put together. That was the road to Britain’s economic irrelevance, and we want to double our nation’s exports to £1 trillion this decade. So we are expanding UK Export Finance and setting out new plans to help smaller firms in new markets. Exports abroad must be accompanied by investment at home. Britain has a reputation as a remarkably open and welcoming place for investment. We must never allow protectionist rhetoric to creep into our political system.
Instead, we are actively seeking investment from overseas pension and sovereign wealth funds, and working to develop London as a new offshore market for the Chinese currency. We also want investment from British pension funds in British infrastructure, and we are now working with a dozen of the large pension schemes specifically on that. We are the first British Government to set out in a national infrastructure plan the projects we are going to prioritise in the coming decade: the roads, railways, clean energy and water, and broadband networks that we all need and that we have identified.
I believe that this country must confront the lack of airport capacity in the south-east of England. We cannot cut ourselves off from the fastest growing cities in the world, and my right hon. Friend the Transport Secretary will set out Government thinking later this summer. We want to look at the opportunities for increasing the role of private investment in the road network, learning lessons from the water industry. I confirm today that Network Rail will extend the northern hub, adding to the electrification of the trans-Pennine rail route by upgrading the Hope Valley line between Manchester and Sheffield and improving the Manchester to Preston and Blackpool and the Manchester to Bradford lines. For years transport investment in the north of England was neglected. Not under this Government.
We are working with our great cities to devolve decision-making powers and we are striking a ground-breaking deal this week with Manchester to support £1.2 billion in growth-enhancing infrastructure in that city. We will support £150 million of tax increment financing to help local authorities to promote development, and we will provide an extra £270 million to the Growing Places fund. In all this we are working with local areas to support their ideas for growing the private sector in parts of the country where the state has taken a larger and larger share of the economy.
The Mayor of London is a very effective champion for the city he runs so well. We will work with him on plans this summer to go on investing in London transport, lengthening commuter trains, extending the underground and exploring new river crossings in east London. So from the allocation made to the Mayor through the Growing Places fund, he will be creating a new £70 million development fund to attract new business and new jobs. The Mayor has persuaded me of the opportunities that the new Royal Docks enterprise zone offers our largest city if we offer enhanced capital allowances there, so we will.
Twenty-four enterprise zones are now going ahead across England. Chinese investment is pouring into the zone in Liverpool. The Marches zone in the west midlands is already expanding. I want other parts of the United Kingdom to benefit from these policies. My right hon. Friend the Chief Secretary can confirm today that we will offer enhanced capital allowances for businesses starting up in the new Scottish enterprise areas in Dundee, Irvine and Nigg, and there will be a new Welsh enterprise zone in Deeside, and we look forward to the first enterprise zone in Northern Ireland.
I want to see investment in our world-leading energy sector, including renewables. We have launched the Green investment bank, which will be open for business next month. We have introduced a carbon price floor into our tax system to encourage investment and we have set the rate today. Combined heat and power plants will not be liable to carbon price support rates on fuels used for heat.
Renewable energy will play a crucial part in Britain’s energy mix, but I will always be alert to the costs that we are asking families and businesses to bear. Environmentally sustainable has to be fiscally sustainable as well. The carbon reduction commitment was established by the previous Government. It is cumbersome and bureaucratic and imposes unnecessary costs on business, so we will seek major savings in the administrative cost of the commitment for business. If those cannot be found, I will bring forward proposals this autumn to replace the revenues with an alternative environmental tax.
Gas is cheap, has much less carbon than coal and will be the largest single source of electricity in the coming years, so my right hon. Friend the Energy Secretary will set out our new gas generation strategy in the autumn to secure investment. I want to ensure that we extract the greatest possible amount of oil and gas from our reserves in the North sea. We are today introducing a major package of tax changes to achieve this. We will end the uncertainty over decommissioning tax relief that has hung over the industry for years by entering into a contractual approach. We are also introducing new allowances, including a £3 billion new field allowance for large and deep fields to open up West of Shetland, the last area of the basin left to be developed—a huge boost for investment in the North sea.
We should not be shy about identifying our successful industries and reinforcing them. Around one fifth of the world’s top 100 medicines originate from UK research, so we are backing our life sciences sector by creating the Francis Crick institute at St Pancras and cutting taxes on patents to make this one of the most attractive places in the world to invent new medicines. We have protected the science budget. Now we are committing £100 million of support, alongside the private sector, for investment in major new university research facilities. With the world’s second largest aerospace industry, we will also establish a UK centre for aerodynamics to open next year, which will encourage innovation in aircraft design and commercialise new ideas.
Today we set Britain this industrial ambition—that we turn Britain into Europe’s technology centre. We will start with digital content. The film tax credit, protected in our spending review, helped to generate over £1 billion of film production investment in the UK last year alone. Today I am announcing our intention to introduce similar schemes for the video games, animation and high-end TV production industries. Not only will this help to stop premium British TV programmes like “Birdsong” being made abroad, but it will attract top international investors like Disney and HBO to make more of their premium shows in the UK. It will support our brilliant video games and animation industries too, because it is the determined policy of this Government that we keep Wallace and Gromit exactly where they are.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I should have thought that Members on the Government Benches would want to hear more from the Chancellor, because the country does.
Mr Osborne
To be Europe’s technology centre we need to have the best technology infrastructure. Two years ago Britain had some of the slowest broadband speeds in Europe. Today our plans will deliver some of the fastest, with 90% of the population having access to superfast broadband, and improved mobile phone coverage for rural areas and along key roads across the UK. But we should not be complacent by saying it is enough to be the best in Europe when countries such as Korea and Singapore do even better, so today we are funding ultra-fast broadband and wi-fi in 10 of the UK’s largest cities—Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, Manchester, Newcastle and London. My hon. Friend the Member for Brighton, Kemptown (Simon Kirby) asked me to help small cities too, no doubt with his own city in mind. I agree; £50 million will be available for smaller cities too. The fastest digital speeds in the world available in our cities, with the most connected countryside in Europe and the most creative digital content anywhere—that is what a modern industrial policy looks like.
My right hon. Friend the Business Secretary and I have asked Michael Heseltine to review by the autumn how Government spending Departments and other public bodies can work better with the private sector on economic development. From Liverpool to Canary Wharf, Michael knows how it is done. Of course, these projects succeeded because they were not killed off by the planning system. No one can earn their future if they cannot get planning permission. Global businesses have diverted specific investments that would have created hundreds of jobs in some of the most deprived communities in Britain to countries such as Germany and the Netherlands, because they cannot get planning permission here. That is unacceptable.
Next week my right hon. Friend the Communities Secretary and the Minister of State, Department for Communities and Local Government, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), the Minister with responsibility for planning, will publish the results of our overhaul of planning regulation. We are replacing 1,000 pages of guidance with just 50 pages. We are introducing a presumption in favour of sustainable development, while protecting our most precious environments. The new policy comes into effect when the national planning policy framework is published next Tuesday. This is the biggest reduction in business red tape ever undertaken.
As a country, we also want to make the most of the Olympic and Paralympic games. Some of the biggest events will be on a Sunday. When millions of visitors come to Britain to see them, we do not want to hang up a “Closed for Business” sign, so we will introduce legislation limited to relaxing the Sunday trading laws for eight Sundays only, starting on 22 July.
Earning our way in the world means giving young people the skills to compete. In time, the school reforms being introduced by my right hon. Friend the Education Secretary will do more to improve the long-term economic performance of our country than any Budget measure ever will. But we have got to help the young adults who have already been let down by the schools system. We are offering a record number of apprenticeships and our youth contract comes into force next month. I can tell the House that we are also exploring the idea of enterprise loans. Young people get a loan to go to university or college; now we want to help them get a loan to start their own business.
We are also looking to see whether we can make public sector pay more responsive to local pay rates. As we have just heard, that is something the last Government introduced in the Courts Service. London weighting already exists across the public sector. Indeed, the Opposition have proposed the interesting idea of regional benefit rates. So we should see what we can do to make our public services more responsive and help our private sector to grow and create jobs in all parts of the country. We have asked the independent pay review bodies to look at this issue. Today we are publishing the evidence the Treasury is submitting to them, and some Departments will have the option of moving to more local pay for those civil servants whose pay freezes end this year.
New infrastructure and investment and ambitious reforms of planning, education and welfare to help businesses create jobs will all help Britain to earn its way in the world, but we also need a tax system that supports work. Two hundred years ago Adam Smith set out the four principles of good taxation, and they remain good principles today: taxes should be simple, predictable, support work and be fair. The rich should pay the most and the poor the least. The tax system this Government inherited from our predecessor has drifted far from these principles. We have already addressed some of the problem. We have established an Office of Tax Simplification to drive out complexity. Companies are moving to Britain, not away. We stopped the jobs tax. We have taken 1 million low-paid people out of tax altogether. But now we need further reform. We need to give Britain a modern tax system fit for the modern world.
The first goal is a far simpler tax system that businesses can easily navigate and where ordinary taxpayers understand what they are being asked to pay, so we will radically change the administration of tax for our smallest firms. Last year I asked the Office of Tax Simplification for recommendations. It has proposed that we tax small firms on the basis of the cash that passes through their businesses, rather than asking them to spend a huge amount of time doing calculations designed for big businesses. I agree, so we will consult on this new cash basis for calculating tax for firms with a turnover of up to £77,000, double what the Office of Tax Simplification proposed. This will make filling in tax returns dramatically simpler for up to 3 million firms.
We are also pressing forward with our ambition to integrate the operation of income tax and national insurance, which I announced at last year’s Budget, so that we do not ask businesses to run two different payroll tax administrations. A detailed consultation on how we will do this will be published next month.
We will also address some of the loopholes and anomalies in our VAT system. For example, at present soft drinks and sports drinks are charged VAT, but sports nutrition drinks are not. Hot takeaway food on the high streets has been charged VAT for more than 20 years, but some new hot takeaway products in supermarkets are not. Some companies are using the VAT rules that exempt the rental of land to avoid the tax that their competitors are paying. We are publishing our plans today to remove loopholes and anomalies, but we will keep the broad exemptions on food, children’s clothes, printed books and newspapers.
We should also simplify the age-related allowances, which the Office of Tax Simplification recently highlighted as a particularly complicated feature of the tax system. The National Audit Office points out that many pensioners do not understand them. These allowances require around 150,000 pensioners to fill in self-assessment forms, and as we have real increases in the personal allowances, their value is already being eroded.
So over time we will simplify the tax system for pensioners by doing away with the complexity of the additional age-related allowances for anyone reaching the age of 65 on or after 6 April 2013, and I will freeze the cash value of the allowance for existing pensioners until it aligns with the personal allowance. This will protect the existing level of allowance pensioners have while introducing a new single personal allowance for all. It is a major simplification, it saves money, and no pensioner will lose in cash terms.
Under this Government, pensioners next month will receive the largest ever cash increase in the basic state pension of £5.30 a week. Now we want to simplify the basic state pension and its interaction with the second state pension. I pay tribute to the work my hon. Friend the Pensions Minister has done on this. Such is the complexity of this means-tested system that only someone like our Pensions Minister can work out exactly what someone is entitled to and what they need to save, so I can confirm that we will introduce a new single-tier pension for future pensioners, set above the means test. This is currently estimated at around £140. It will be based on contributions and will cost no more than the current system in any year. We will bring forward further details later this spring. It will be a single, generous, basic state pension for those who have worked hard and saved hard all their lives, and a further major simplification of our tax and benefit system.
In the information age people should know what taxes they are paying and what their money is being spent on. My hon. Friend the Member for Ipswich (Ben Gummer) recently proposed to this House that we send taxpayers an annual statement showing them just that. I think this is an excellent idea and intend to put it into practice. HMRC contacts roughly half of taxpayers each year. From 2014, these 20 million taxpayers will at the same time receive a new personal tax statement. This will tell people how much income tax and national insurance they have paid, their average tax rates and how this contributes to public spending—in other words, how much, proportionately, of their tax bill goes to fund the healthcare, education, or welfare bills and how much is spent on servicing interest payments on the national debt. People will know what they are paying and what they are paying it for. A tax system that is simple and transparent: that is our first goal.
Our second goal is a tax system that is more competitive for business than any other major economy in the world. Our predecessors wanted to increase taxes on small businesses. Instead, we have cut the tax rate on small companies to 20%. Our predecessors wanted to increase national insurance on jobs, and we have cut it. Our new controlled foreign company rules will be legislated for in the coming Finance Bill and will stop global firms leaving Britain, as they were, and encourage them to start coming here.
This Government also support research and development here in Britain instead of abroad. We have already increased the generosity of the R and D tax credit for smaller firms. I confirm that from next year we will also introduce an above-the-line R and D tax credit that business organisations such as the Engineering Employers Federation, the Institute of Directors and the CBI have campaigned hard for. We will help new start-up businesses to recruit and retain talent by more than doubling the enterprise management incentive scheme grant limit to £250,000 and easing the rules so that academics in our universities can turn great ideas into great companies. The Treasury will review for this autumn what more we can do to encourage employee ownership.
All these tax reductions will help to win business for Britain, but the headline rate of corporation tax remains the most visible sign of how competitive our country is. We have already cut the rate from 28% to 26%. This April it is due to fall again to 25%. I can tell the House today that we will have a further cut of 1%, to be implemented right away.
From next month, Britain will have a corporation tax rate of just 24%, and we will continue with the two further cuts planned next year and the year after, so that by 2014 Britain will have a 22% rate of corporation tax. That is the biggest sustained reduction in business tax rates for a generation—a headline rate that is not just lower than our competitors, but dramatically lower: 18% lower than the US, 16% lower than Japan, 12% below France and 8% below Germany. That is an advertisement for investment and jobs in Britain, and it is a rate that puts our country within sight of a 20% rate of business tax that would align basic rate income tax, the small companies rate and the corporation tax rate.
I am also increasing the rate of the bank levy to 0.105% from next January, so that the additional corporation tax cuts do not benefit the banks, and so that our levy will in addition raise the £2.5 billion a year that we said it would.
That brings me to the main duties. Let me start with alcohol duty. The Government will shortly be publishing their alcohol strategy to address the growing problem of alcohol abuse, and the many billions of pounds it costs our NHS and criminal justice system, but today I have no further changes to make to the duty rates set out by my predecessor.
Turning to tobacco duty, smoking remains the biggest cause of preventable illness and premature death in the UK. There is clear evidence that increasing the cost of tobacco encourages smokers to quit and discourages young people from taking it up. So duty on all tobacco products will rise by 5% above inflation. That is 37p on a packet of cigarettes, and this will take effect at 6pm tonight.
One area where I am today making substantial changes is gambling duties. The VAT treatment of gaming machines is being repeatedly challenged by operators in the courts, so I will introduce a new machine games duty, with a standard rate of 20%, and a lower rate for low stakes and prize machines of 5%, of net takings. The current duty regime for remote gambling introduced by the last Government was levied on a “place of supply” basis. This allowed overseas operators largely to avoid it, and much of the industry has, as a result, moved offshore. Ninety per cent of online gambling consumed by our citizens is now supplied from outside the UK, and the remaining UK operations are under pressure to leave. This is clearly not fair—and not a sensible way to support jobs in Britain. So we intend to introduce a tax regime based on the place of consumption—where the customer is based, not the company—and, from this April, we will also introduce double taxation relief for remote gambling. These changes will create a more level playing field, and protect jobs here.
I turn now to fuel and vehicle excise duties. High oil prices have put real pressure on household budgets and on businesses. That is why we took action in last year’s Budget to cut fuel duty so that it is 6p lower than our predecessors planned. We have also scrapped the last Government’s fuel duty escalator of annual above-inflation rises, regardless of the oil price, and we are today confirming the fair fuel stabiliser. Above-inflation rises will return only if the oil price falls below £45 on a sustained basis—currently equivalent to about $75. These measures mean that this Government have eased the burden on motorists by £4.5 billion at a time when money is very short. I do not propose to make any further changes to the fuel duty plans already set out.
I am increasing vehicle excise duty by inflation only. To encourage fuel efficient fleets, we will extend the 100% first-year capital allowance for low-emission business cars, reduce the CO2 threshold for the main capital allowance rates and increase the percentage list price of company cars subject to tax. I can also announce that I am again freezing vehicle excise duty for road hauliers.
I now turn to personal and property taxation. My goal is a tax system where the lowest paid are lifted out of tax altogether, while the tax revenues that we get from the richest increase. Most wealthy people pay their taxes, and without them we could not begin to afford the public services upon which this country depends, but under the last Government it was the boast of some high earners that, with the help of their accountants, they were paying less in tax than their cleaners.
I regard tax evasion and, indeed, aggressive tax avoidance as morally repugnant. We have increased both the resources and the number of staff working on evasion and avoidance at HMRC. Taken together, the anti-avoidance measures in this year’s Finance Bill will increase tax revenue over the next five years by around £1 billion, and protect a further £10 billion that could have been lost. This week we have signed a further agreement with the Swiss to stop UK residents evading tax.
We have done all these things, but today we do even more. On coming to office, I asked Graham Aaronson QC to establish whether a general anti-avoidance rule could work in the UK tax system. He recommended that such a rule would improve our ability to tackle tax avoidance without damaging the competitiveness of the UK as a place to do business. We agree, so we will introduce one. We will consult on the details of the new rule and legislate for it in next year’s Finance Bill.
A major source of abuse, and one that rouses the anger of many of our citizens, is the way in which some people avoid the stamp duty that the rest of the population pays, including by using companies to buy expensive residential property. I have given plenty of public warnings that this abuse should stop, and now we are taking action. I am increasing the stamp duty land tax charge applied to residential properties over £2 million that are bought into a corporate envelope. The charge will be 15%, and it will take effect today.
We will also consult on the introduction of a large annual charge on those £2 million residential properties that are already contained in corporate envelopes, and, to ensure that wealthy non-residents are also caught by these changes, we will be introducing capital gains tax on residential property held in overseas envelopes. We are also announcing legislation today to close down the subsales relief rules as a route of avoidance.
Let me make this absolutely clear to people. If you buy a property in Britain that is used for residential purposes, we will expect stamp duty to be paid. This is the clear intention of Parliament, and I will not hesitate to move swiftly, without notice and retrospectively if inappropriate ways around these new rules are found. People have been warned. It is fair when money is tight, and so many families could do with help, that those buying the most expensive homes contribute more. From midnight tonight, we will introduce a new stamp duty land tax rate of 7% on properties worth more than £2 million.
I also intend to deal with the unlimited use of income tax reliefs. Let us be clear: most rich people pay a lot of tax. It is also right that we have tax reliefs that promote investment, support charitable giving and reflect genuine business loss. But it cannot be right that some people make unlimited use of these reliefs year after year. Everyone in this country, and particularly those with the highest incomes, should contribute a fair share to the Exchequer. Some reliefs, such as the enterprise investment scheme and pensions relief, are already capped, and I do not intend to make any significant changes to pensions relief in this Budget. But, to make sure that those on the highest income contribute a fair share, I am introducing a new cap on those reliefs that are currently uncapped.
From next year, anyone seeking to claim more than £50,000 of these reliefs in any one year will have a cap set at 25% of their income. We have capped benefits. Now it is right to cap tax reliefs too.
That brings me to the rates of income tax and the additional rate of 50p. This tax rate is the highest in the G20; it is higher not just than the tax rate of America, but also of major European countries like France, Italy and Germany. It is widely acknowledged by business organisations and international observers as harming the British economy. Like the previous Chancellor who introduced it, I have always said that it was temporary. But I also said, three years ago, that I would not be prepared to reduce it while we were asking the whole public sector to accept a pay freeze, and I will stick to those pledges.
A 50p tax rate, with all the damage it does to Britain’s competitiveness, can only be justified if it raises significant sums of money. In last year’s Budget, I asked Her Majesty’s Revenue and Customs to look at the evidence, and especially to look at the self-assessment tax receipts that have come in since this January. I am publishing its report today. What it reveals is that the 50p tax rate has caused massive distortions.
HMRC finds that an astonishing £16 billion of income was deliberately shifted into the previous tax year, at a cost to the taxpayer of £1 billion—something that the previous Government’s figures made no allowance for whatsoever. Self-assessment receipts this year are below forecast by some £3.6 billion, while other tax receipts have held up. The increase from 40p to 50p raised just a third of the £3 billion that we were told it would raise.
Of course, the previous Government initially proposed a rate of 45p and then increased that to 50p. Let me tell the House what HMRC says about the difference between 50p and 45p. Its figures—
Mr Osborne
I am coming on to the OBR, don’t you worry.
The HMRC figures tell the story. The direct cost is only £100 million a year. Indeed, HMRC calculates that the loss of other tax revenues may even cancel that out. In other words, it raises at most a fraction of what we were told, and may raise nothing at all. So from April next year, the top rate of tax will be 45p. No Chancellor can justify a tax rate—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are nearly coming to the end, and I want the same respect to be given to the Leader of the Opposition.
Mr Osborne
No Chancellor can justify a tax rate that damages our economy and raises next to nothing—it is as simple as that. Thanks to the other new taxes on the rich that I have announced today, we will be getting five times more money each and every year from the wealthiest in our society. So the richest pay more—[Interruption.].
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Flello, you are getting very excited at the back. I am sure that you want to calm down; it is not good for your health.
Mr Osborne
The richest pay more, the economy benefits and Britain is competitive again.
The shadow Chancellor and quite a few Labour Members have said that the HMRC report is not enough and that the Office for Budget Responsibility should pass judgment. It has, because these days the direct costing that the Treasury applies to every Budget measure is independently assessed and certified by the OBR. Unlike the previous Government, it also assesses the cash flow consequences of forestalling.
When it comes to the £100 million direct permanent costs of this measure, the OBR says this:
“we believe that this is a reasonable and central estimate”.
It also assesses as reasonable the estimate that the new taxes that I have introduced on the rich today directly raise five times that amount. That is half a billion pounds that we can now use to help people on lower and middle incomes keep more of their earnings.
In the spending review, we took the difficult decision to remove child benefit from families with a higher rate taxpayer. I said then that I simply could not justify asking those earning £15,000 or £30,000 a year to go on paying child benefit to those earning £80,000 or £100,000, and I stand by that principle. All sections of society must make a contribution to dealing with the deficit. Without this measure, we would not get the job done. But I said that I wanted to do this in a way that is fair and that does not involve setting up some new means-tested tax credit system for millions of families; and I said I would set out exactly how this measure would be implemented in this Budget.
We want to avoid a cliff edge that means that people lose all their child benefit when they earn just a pound more. So I can today confirm that, instead of withdrawing child benefit all at once when people earn more than the higher rate threshold, the benefit will only be withdrawn when someone in the household has an income of more than £50,000, and the withdrawal will be gradual—1% of child benefit for every extra £100 earned over £50,000, so there is no cliff edge and only those with an income of more than £60,000 lose all their child benefit.
This means that an extra 750,000 families will keep some or all of their child benefit, and 90% of all families will remain eligible for child benefit. We can afford to implement the child benefit policy in this way because instead of extending the full benefit of this Budget’s increase in the personal allowance to all higher rate taxpayers, as we did last year, we will pass on a quarter of the benefit to higher rate taxpayers and spend the rest on helping families with children towards the bottom of the higher rate band, as I have explained.
That brings me on to the personal allowance and the central goal of this Budget, which is to support working families. This coalition Government believe that the best way to support working people on the lowest incomes is to take them out of tax altogether, and the best way of getting money directly into the pockets of working families on middle incomes is to increase the amount of their earnings that they can keep before they pay tax.
That is why this Government have set themselves the goal of raising the personal tax-free allowance to £10,000, and we have promised real increases every year to reach that. In my last two Budgets, we made great strides forward. Last year, the personal allowance rose by £1,000; in two weeks’ time, it will go up by another £630 to £8,105. Together, these increases have taken over a million low-paid people out of tax altogether.
Today, I want to go much further and much faster. I am announcing the largest ever increase in the personal allowance—that is, the amount that people can earn tax free. From next April, that amount will increase by £1,100. Every working person on low or middle incomes will benefit. People will be able to earn up to £9,205 before they have to pay any tax. Millions of working people will be £220 better off every year; that is £170 better off after inflation. Because higher rate earners will also benefit, 24 million people earning less than £100,000 a year will gain from this measure. We are in touching distance of the goal of a £10,000 personal allowance that we all share.
I can tell the country that as a result of our Budgets, people working full time on the minimum wage will have seen their income tax bill cut in half. This coalition Government will have taken 2 million of the lowest paid people in our country out of tax altogether.
In the middle of this Parliament, in difficult economic times, this coalition Government have not settled for a do-nothing Budget. We have not ducked the difficult choices; we have taken them head on—a competitive top rate of tax; more revenues from those best able to pay; fewer reliefs; a tax cut for working people; support for families; and low-income earners taken out of tax altogether. Alongside it, we have one of the lowest rates of business tax in the world; a simpler tax code; and a country where its citizens know the taxes they are paying and what they are paying them for. We have achieved all this and kept to our deficit plan.
Let us be resolved. No people will strive as the British will strive. No country will adapt as the British will adapt. No country will value those who work as we will value those who work. Together, the British people will share in the effort and share the rewards. This country borrowed its way into trouble; now we are going to earn our way out. I commend the Budget to the House. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. [Interruption.] Order. [Interruption.] I think we have had enough. Thank you, Mr Baron; you may get a new job at this rate.
Under Standing Order No. 51, the first motion, entitled “Provisional Collection of Taxes”, must be decided without debate. I call on the Chancellor of the Exchequer to move it formally.
PROVISIONAL COLLECTION OF TAXES
(12 years, 1 month ago)
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Mr Deputy Speaker
I now call on the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on that motion that the debate will take place today and on the succeeding days. The remaining motions will be put at the end of the Budget debate on Monday 26 March.
Budget Resolutions and Economic Situation
(12 years, 1 month ago)
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Amendment of the Law
(12 years, 1 month ago)
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Edward Miliband (Doncaster North) (Lab)
The Chancellor spoke for an hour, but one of his usual phrases was missing; there was one thing that he did not say. Today marks the end of “We’re all in it together”, because after today’s Budget—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Gummer, I do not think we need you to lead the cheerleading. We have given respect to the Chancellor of the Exchequer, and I expect the same respect to be given to the Leader of the Opposition.
Edward Miliband
After today’s Budget, millions will be paying more while millionaires pay less. A year ago, the Chancellor said in his Budget speech that
“now would not be the right time to remove”
the 50p tax rate
“when we are asking others in our society”—[Interruption.]
Is the Chancellor saying that he did not say it? He said that
“now would not be the right time to remove”
the 50p tax rate
“when we are asking others in our society on much lower incomes to make sacrifices”.—[Official Report, 23 March 2011; Vol. 525, c. 957.]
That is exactly what he has done. With tax credits cut, child benefit taken away, and fuel duty rising, what has he chosen to make a priority? For Britain’s millionaires, a massive income tax cut each and every year. The fairness test for this Budget was whether the Chancellor used every penny he could to help middle-income families who are squeezed. He has failed that test. Anyone who listened to him will be asking the same question: what planet are he and the Prime Minister living on? There are 1 million young people out of work and 50 businesses going bust every day, and there is a cost of living crisis for families. They promised change, but things have got worse, not better.
What did the Chancellor promise us in last year’s Budget? He said that he would
“put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
He promised growth of 2.5% in 2012, but today he comes to the House and tells us that it will be just 0.8%: growth down last year, growth down this year, and growth down next year. Every time he comes to the House, he offers a different excuse, but the reality is that his plan has failed. Last year, he told us that unemployment would peak in 2011, and what has he delivered? We are into 2012, and unemployment is rising month upon month upon month. His plan has failed. He promised us last year that the deficit would be gone by the end of the Parliament, but today he admits that he is borrowing over £150 billion more than he said he would. His plan has failed.
In the face of failure, what does the Chancellor offer? Not a change in economic strategy, not a guarantee of jobs for the young unemployed, not targeting every penny he can at working families. We know that for the Chancellor the driving ambition of this Budget was to deliver a tax cut for people earning over £150,000 a year. There are 30 million taxpayers in this country; this policy will do absolutely nothing for 29,700,000 of them. How can the priority for our country be an income tax cut for the richest 1% at a time when the squeezed middle are facing rising petrol prices, higher energy bills, and cuts in tax credits and child benefit?
Let us think of what the Chancellor could have done with the money. He could have reversed his cuts to tax credits. He could have done something for pensioners; in fact, I think there is a tax rise for pensioners hidden in the detail of this Budget. He could have done more to undo the damage to child benefit, but he claims he cannot afford it. Let me tell him this: every time in future he tries to justify an unfair decision by saying that times are tough, we will remind him that he is the man who chose to spend hundreds of millions of pounds on those who need it least. Wrong choices, wrong priorities, wrong values; out of touch, same old Tories.
Let me come to his claims on stamp duty. There are 300,000 people benefiting each and every year from his top rate tax cut, and there are 4,000 houses sold each year for more than £2 million. So 99% of those who gain from his millionaires’ tax cut will be totally unaffected by the rise in stamp duty and will get a massive windfall from this Chancellor. He did not tell us what this meant in pounds and pence—[Interruption.] Oh, the Prime Minister thinks that the Chancellor did say how much each person is getting as a result of the top rate tax cut. He did not, and I am going to tell him the figure. There are 14,000 people earning over £1 million in Britain. The Chancellor’s decision today means that each of them will get a tax cut—not of £1,000, not of £5,000, not of £10,000, but of over £40,000—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. It is not good if the Leader of the Opposition is not allowed to speak.
Edward Miliband
That tax cut is not just for this year but for every year. What happens to families who earn in one year half what the Chancellor has so casually given away to the richest in the last hour—families on £20,000 a year, perhaps those of a nurse or a lorry driver? Even after the personal allowance change, they are not going to be better off; they are going to be worse off. Putting aside the VAT rise and all the other tax rises that have happened, from this April alone they will be a further £253 a year worse off. All he is doing for ordinary families is giving with one hand and taking far more away with the other. This is a millionaire’s Budget that squeezes the middle. Wrong choices, wrong priorities, wrong values, out of touch—same old Tories.
Under the Chancellor’s tax cut, a banker earning £5 million will get an extra £240,000 a year. Let us call it what it really is: the Government’s very own bankers’ bonus. Presumably, he wants us to believe that the £240,000 tax cut is necessary to make the bankers work harder. It is one rule for them and another rule for everyone else. This April, the Chancellor will be telling a family working for 16 hours on the minimum wage that, if they do not work more hours, they will lose nearly £4,000 in tax credits. That tells people everything they need to know about the values of the Chancellor and the Prime Minister: the poor will work harder only if they are made poorer; the rich will work harder only if they are made richer. Wrong choices, wrong values, wrong priorities—same old Tories.
While everybody else is squeezed, what is the Chancellor’s priority? It is a massive tax cut for those on his Christmas card list. The Chancellor talked a lot about tax transparency. Let us have some—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Hands, I think that you need to calm down. What you are doing is not good for the House.
Edward Miliband
Let us have some tax transparency. Hands up in the Cabinet if you are going to benefit from the income tax cut. Come on. Come on. Come on. [Interruption.]
Mr Deputy Speaker
Order. Mr Shelbrooke—[Interruption.] Order. Mr Shelbrooke, I have looked at you twice and I do not want to continue to do so. We need a bit of silence from you. If not, you might be better off leaving the Chamber. I think that we understand each other.
Edward Miliband
The Prime Minister is the man who said that
“sunlight is the best disinfectant”.
Here is the challenge. Just nod if you are going to benefit from the income tax cut or shake your head if you are not. Come on. Come on. Come on. Come on, we have plenty of time. [Interruption.]
Mr Deputy Speaker
Order. Members on both sides of the House will come to order. The Leader of the Opposition will be heard with the same courtesy that was given to the Chancellor. I do not want to have to rule further, because I will have to get firmer. It is only right that the country hears what the Opposition have to say. [Interruption.] I do not need any examples from hon. Members.
Edward Miliband
One more chance. Nod or shake your head. Are you going to benefit? I have one thing to say to the Prime Minister: let sunshine win the day. I hear that this is good news for him, because now he will be able to buy his own horse. [Interruption.]
Mr Deputy Speaker
Order. We will not have any clapping in the Chamber. Seriously, it does not do this House or its reputation any good when we cannot hear the Leader of the Opposition. Members on both sides must show courtesy.
Edward Miliband
What about the hapless accomplice, the Deputy Prime Minister? Only the Liberal Democrats could be dumb enough to think that a George Osborne Budget is a Robin Hood Budget. Calamity Clegg strikes again! A few months ago, the Deputy Prime Minister said of the 50p tax rate, with no ifs and no buts:
“I do not believe that the priority…is to give a tax cut to a tiny, tiny number of people who are much, much better off than anybody else.”
The party that once followed Lloyd George is now reduced to following George Osborne. The party that delivered the people’s Budget of 1909 is supporting the millionaire’s Budget of 2012. The Liberal Democrats should be ashamed. For all the talk and all the briefings, the Deputy Prime Minister has done what he has done on every big issue, from tuition fees to the betrayal on the NHS—he has rolled over and said, “Yes, Prime Minister.”
The truth is that for ordinary families, it is hurting, but it is not working. We know why that is. This Government have been cutting too far and too fast. What did the Chancellor say last August about America’s more balanced deficit reduction plan? He said:
“Those who spent the whole of the past year telling us to follow the American example…need to answer this simple question: why has the US economy grown more slowly than the UK economy”?—[Official Report, 11 August 2011; Vol. 531, c. 1108.]
The numbers are in. The Chancellor is plain wrong. The US economy grew by 1.7% last year—twice the rate of ours. The Government have run out of excuses. It is their mistakes and the failure of their plan that are damaging our future.
Today we have heard about more schemes from the Chancellor, but why should we believe him? Every scheme that he has put forward so far has failed. What was the big idea of his first Budget? The national insurance holiday. We did not hear much about the national insurance holiday today, and it is no wonder. He told us in his June 2010 Budget that it would help 400,000 firms. He has missed his target by 97%. The Chancellor’s plan has failed. What was the centrepiece of last year’s Budget? It is easy to forget now, but it was called the “Budget for growth”. This scheme is my favourite. It is called the business growth fund. Six regional offices have been opened and how many businesses are benefiting? Six. [Laughter.] It is true. One business for each office. The Chancellor’s plan has failed. We needed a plan for growth that would work. We needed a guarantee on youth jobs. We needed a British investment bank to help small business. On growth, jobs and how we pay our way in the world, this Chancellor has failed.
On the film tax relief proposal, it is great to support great British success stories such as “Downton Abbey”.
Edward Miliband
Indeed, and Wallace and Gromit. It is important to support “Downton Abbey”, the tale of a group of out-of-touch millionaires who act like they were born to rule, but turn out not to be very good at it. It sounds familiar, does it not? We all know that it is a costume drama; the Cabinet think it is a fly-on-the-wall documentary.
This Budget will be remembered for the Chancellor’s failure on growth and jobs, and for the top rate tax cut. That is not just a bad policy or a misjudgment. It destroys the claims that the Prime Minister made about who he was and what he believed. He said personally in the aims and values document that he sent to every Conservative party member:
“The right test for our policies is how they help the most disadvantaged in society, not the rich.”
The document was called “Built to Last”. That was his test. It is a test that this Budget fails spectacularly. This is the death knell of his project and of his compassionate conservatism. He and the Chancellor have shown their true colours. They promised change, but they have failed on growth, on jobs, on borrowing and on fairness. It is unfair, out of touch, and for the few, not the many—an unfair Budget built on economic failure; an unfair Budget from the same old Tories.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I ask Members who are not staying to clear out quickly. I call Mr Andrew Tyrie.
Mr Deputy Speaker
I remind Mr Tyrie that there is a time limit of 10 minutes.
Mr Deputy Speaker
I have not started it yet. I am allowing the Chamber to clear. The hon. Gentleman need not worry, because we want to hear what he has to say.
Mr Andrew Tyrie (Chichester) (Con)
I am also available for injury time, if anybody wants to chip in. After the generals, it always falls to me to be the first of the foot soldiers.
The first point that I want to make is about the overall Budget judgment. The issue that overshadows all the others to which the Chancellor referred is that Britain is living beyond its means. We are borrowing £1 for every £4 we spend. That is why the last Chancellor of the Exchequer was right, in his final Budget two years ago, to set out a tough deficit reduction plan, even if his neighbour argued about it all the way. It is also why the current Chancellor was absolutely right today to stick to a clear plan for deficit reduction. Although it is not popular with most Members to say this, I also deeply respect the Liberals for helping to make that plan a cornerstone of coalition policy, despite all the flak they take.
Some have argued that the economy needs a further fiscal boost on top of the deficit that we are already running. It is worth bearing it in mind that the last Chancellor injected a £20 billion boost in 2009, but that sum pales into insignificance compared with the £100 billion of quantitative easing over the past 12 months or the £300 billion of quantitative easing since the crisis began. Even though quantitative easing and fiscal policy are not directly comparable, it is clear that monetary policy has played a huge role in managing the recession.
The biggest influence on overall macro-economic policy at the moment, therefore, is probably the Bank of England. It is becoming more powerful than ever before, which is why the Treasury Committee will look closely at how much of the latest round of quantitative easing is finding its way into final demand. It is also why strong accountability of the Bank to Parliament is essential. The Treasury Committee is united in the view that the proposals currently in the Financial Services Bill are simply not enough, and we will press on behalf of Parliament for significant improvements on Report.
Hugh Bayley (York Central) (Lab)
At the time of the last general election, the national debt stood at £760 billion. It has now risen to more than £1 trillion for the first time in history and is on track to rise to about £1.5 trillion. What does the Chairman of the Treasury Committee think the impact on interest rates will be by the end of this Parliament?
Mr Tyrie
I think I will ask the Bank of England that question when it comes to see the Committee, but I agree that the issue needs to be taken into consideration.
One measure that was announced yesterday, about which I might just have time to say a few words now that I have some injury time, was credit easing. Yesterday’s announcement on the loan guarantee scheme responded to many constituents’ complaints that they simply cannot get the money they need to run or start up small businesses. We all have constituents in that position, and the scheme will offer some welcome relief. How much relief? I think it will offer only a little, and there is a risk of the banks pocketing most of the money. The Treasury Committee, the Public Accounts Committee— I do not know whether its Chair is in her place—and the National Audit Office all need to play a role in ensuring that the banks do not run off with the money, and that value for money is secured.
None the less, I still think the scheme may turn out to be valuable, for several reasons. First, by announcing it the Chancellor has raised the salience of an important issue and put pressure on the banks not to dismiss requests for loans without examining them properly. Furthermore, it seems to me that the Treasury’s own pessimistic briefing yesterday that the money will go only to existing borrowers is almost certainly mistaken. There is very likely to be some more lending, because banks will benefit from the stronger financial position of firms to which they have lent. Those loans, in turn, will be less risky for the banks, so they should have some more headroom for new lending without altering their risk profile.
Andrea Leadsom (South Northamptonshire) (Con)
Does my hon. Friend agree that one of the best ways to improve lending to small and medium-sized enterprises is a dramatic improvement in the amount of competition in the British banking system?
Mr Tyrie
I absolutely agree. My hon. Friend serves with me on the Treasury Committee, and we have published quite a detailed report on competition in retail banking that has won the support of Vickers and of the Joint Committee on the Draft Financial Services Bill, chaired by my right hon. Friend the Member for Hitchin and somewhere. [Interruption.] Harpenden, is it? My right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley)? Anyway, wherever it is, it is somewhere in Hertfordshire.
The loan guarantee scheme was at least announced. I have to tell the Chancellor, who is in his place, that several colleagues on both sides of the House have complained to me about the leaks and briefings in the days prior to the Budget. All I will say at this point is that the Treasury Committee will look at the matter.
The Committee will also publish a preliminary report on the Budget in time for the consideration of the Finance Bill. The timetable proposed by the Government is very tight, but we will do our best. In particular, we will scrutinise what the Chancellor has described—correctly, by the look of things—as a tax-reforming Budget. We will examine whether the main tax measures live up to what it is claimed they will achieve. We will assess them against a number of principles that the Committee believes should guide tax reform, which we set out in a report 14 months ago, “Principles of tax policy”.
Dame Joan Ruddock (Lewisham, Deptford) (Lab)
Will the hon. Gentleman give way?
Dame Joan Ruddock
I am most grateful. I hope that when the Committee does its review, it will consider the fact that for an ordinary family with two children, the losses coming this April will amount to £530 and the compensation that the Chancellor boasted of giving will amount to only £220.
Mr Tyrie
We will seek evidence on that point and on all the main measures, and we will publish it as quickly as we can. I thank the right hon. Lady for making that point.
The principles that we set out in our paper a little over a year ago were more or less endorsed by the Chancellor today. They were: does a measure make the tax system more simple, predictable—the Chancellor used that word—stable, fair and coherent, and does it unlock higher economic growth? As last year, we will ask the major accountancy bodies—the chartered accountants, the certified accountants and the Chartered Institute of Taxation—to score each major measure against those principles. We hope the Committee can thereby assist the House in gauging progress towards a simpler, fairer tax system. That is what all our constituents want.
We will also ask those bodies to scrutinise some of the measures that have been announced today—the cap on tax reliefs and its workability; the yield from the 45p rate; the general anti-avoidance provision, about which a number of us have concerns; and the reference to retrospection in the tax system that is associated with that provision, which many have held could damage the yield in the long run. We will also take a look at the Leader of the Opposition’s point that this was a Budget for millionaires, at the expense of the squeezed middle.
A number of colleagues have asked the Committee also to examine measures that were introduced in previous Budgets, to see what the effect of them has been. Have they had the effect of raising more revenue and generating more efficiency than was outlined for them when they were introduced? We have not made up our mind about which measures to examine in that respect, but I suspect that in a few years’ time the cut in the top rate of tax announced today will be a prime candidate. We will be able to judge whether Mr Laffer really was out and about.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
Will the hon. Gentleman give way?
Sir Robert Smith
I thank the hon. Gentleman. In looking at the tax system, will he consider how the constructive engagement between the oil and gas industry in the North sea and the Treasury has led to a change of heart, some certainty on decommissioning and added incentives to encourage further investment and more revenue for the Treasury?
Mr Tyrie
We were a bit concerned about that. The Chancellor announced in either his first or second Budget that he would not alter the framework for the North sea tax regime, and then in his following Budget announced significant changes. That does not do wonders for tax certainty, of course. We need to keep an eye on exactly that sort of thing. We need to move steadily and remorselessly towards a simpler, fairer, clearer, more certain and more reliable tax system. That is what will unlock the huge potential for investment in the private sector; medium-sized and large firms are often sitting on cash piles and have very strong balance sheets.
I am sorry—I have lost my way.
Mr Tyrie
I will do my best to assist the hon. Gentleman and get back into the groove.
The tax changes that have been announced today should play a crucial role in encouraging economic activity. However, that is only part of what is required to transform the growth potential of the economy. We also need a much wider supply side agenda to be implemented. We need labour market reform. The Chancellor has announced his intentions on planning, and we need simpler regulation. He combined the planning and the regulation points in his speech today.
The decision to tell taxpayers in each statement that they receive how their money is spent and how much tax they pay as individuals is a huge step forward. My hon. Friend the Member for Ipswich (Ben Gummer), who is no longer in his place, has been pressing for that for a few years. I argued for it 25 years ago when I was at the Treasury.
Britain is in the early stages of recovery from the biggest boom and bust cycle since the war. The UK has had to absorb the biggest bank failure—RBS—that, as far as I know, the world has ever seen. We are now having to absorb a crisis among our closest trading partners, generated by fundamental flaws in the design of the eurozone. The times are uncertain and confidence is at a premium. Whatever one’s view of the overall Budget judgment, most people agree that confidence is bolstered when Governments do what they say they will do. In the Budget, the Chancellor has done just that.
Ann McKechin (Glasgow North) (Lab)
There has been much trumpeting and advance spinning of the Budget in recent days, so almost every announcement this afternoon came as no surprise. There are also hidden messages in the Budget: those who are poor and whose income is being squeezed are being asked to work longer; but for those in the top income bracket, the message is, “Let us ease your pain. We’ve reduced your corporation tax bills, lowered your banker’s bonus tax, now let’s cut your income tax rate.”
Robert Flello (Stoke-on-Trent South) (Lab)
Was not another thing sneaked through the Budget quickly and carefully: the more than £1 billion hit that British pensioners will take as a result of the announcement on “simplifying” personal allowances for pensioners?
Ann McKechin
My hon. Friend has cleverly noted that hidden message, to which, I am sure, the Chancellor was keen to avoid drawing attention. However, pensioners are not as daft as he thinks, and I think that they will soon reckon that they are paying for the millionaires’ tax bonus announced today.
There has also been complete radio silence on other matters: women, for example, or children. By any rational definition, the Budget has not only ducked the hard issues, but entrenched the division in our society.
Robert Halfon (Harlow) (Con)
For 13 years of the Labour Government, the millionaires’ tax rate that the hon. Lady mentioned was at 40%. That was changed only in the last stage, and it is now 45%. Why was it 40% for so long while she was in office?
Ann McKechin
As even the Chancellor would admit, the economy was very different. [Interruption.] We had job growth and we were taking people out of poverty—that was the difference, which the hon. Gentleman seems to have completely failed to realise.
The Chancellor must by now be all too aware of the criticism levelled at his efforts in the past two years. Women were left paying more than 72% of the net cost of the changes in taxes, benefits and tax credits in his June 2010 Budget, and the subsequent comprehensive spending review ushered in yet more of a burden on women and families. Of the £18.3 billion raised through net direct tax, pay and pension changes up to now, £13.2 billion is coming from women. For children, the position is even worse. If we are to reach the target set in the Child Poverty Act 2010, the Government need to reduce the number of children in poverty by 120,000 per annum.
Ann McKechin
In a minute. The Institute for Fiscal Studies has told the Government that their current policies will see poverty increasing by 100,000 people a year. What does it say about a country when it allows tax cuts for the richest but at the same time allows more of its children’s lives to be stunted? I will be interested to hear what the hon. Gentleman has to say about that.
Dr Huppert
The hon. Lady raises the issue about women, which is clearly important. That is why it is disappointing that at the end of the 13 years of the Labour Government, 28% more women were unemployed than at the beginning. Does she accept that, of the 2 million poorly paid people who will be lifted out of income tax, a huge proportion—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. If the hon. Gentleman wishes to make a speech, he should put in for it. He is not going to do it through an intervention.
Ann McKechin
I am grateful, Mr Deputy Speaker. The hon. Gentleman should remember that under this Government, unemployment among women is at its highest for more than 23 years. The Chancellor did not make one mention of what he will do about that scandal.
The Lib Dem part of the Government has made great play of the increase in personal allowances, but more than 70% of that benefits higher and middle earners and fails to benefit those at the lowest levels, who already do not pay income tax. I point out to the hon. Member for Cambridge (Dr Huppert) that, funnily enough, the majority of them are women.
While middle earners stand to gain £379 when the threshold reaches £10,000, low earners on housing benefit and council tax benefit will gain only a paltry £57, as the rest will be tapered away. Overturning the perverse reductions in tax credits, which increased child care costs and penalised those trying to work on the lowest income scales, would have helped those in need the most. As my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) said, pensioners will also bear the burden as the years go on.
It is estimated that the reduction in tax credits on child care from 80% to 70% has pushed tens of thousands of parents out of the labour market, with 44,000 fewer families claiming support in December 2011 than in April that year. We have a Chancellor who thinks that it should be no problem for a cleaner to increase their hours from 16 to 24 hours a week to claim tax credits. Frankly, that is the reaction of someone living in a parallel universe, who fails to listen to those who have to attempt the challenge at a time when overtime and extra hours are almost impossible in most low earning jobs. As the Union of Shop, Distributive and Allied Workers reported yesterday, two thirds of those already receiving tax credits who are about to lose them next month already live in poverty: 200,000 couples with children face losing £3,870 per annum and an extra 80,000 children will be pushed into poverty by this one measure. It is immoral, unfair and unjust. I wait to see if anyone on the Government Benches can mount any argument to support such an outrageous measure, given that it completely fails their own core test of making work pay in every case. Even at this late stage, I hope that the Government will see sense and postpone the measure until universal credit is in place. If we are all in it together, why was there no mention of that today? It is a scandal of the Budget.
As the Scottish TUC pointed out in its Budget submission, it is now indisputable that Government policy is hitting wages much harder than profits. Indeed, as I pointed out at last week’s Business, Innovation and Skills questions, UK companies are now sitting on the highest ratio of cash reserves of any major western economy. That is not only unfair, but bad economics. We need more of those profits to be converted into real investment, and we need a much greater rise in consumption if we are ever to achieve the necessary higher growth.
The Government’s austerity plan has led to lower tax receipts and further downward revisions of growth, which is exactly the opposite of what we need. The Business Secretary has asked for a report on how to release company cash reserves. I welcome that, but I detect a complete lack of focus or priority in tackling the issue, just as I do in efforts to achieve a coherent industrial policy. Where is the Budget to create jobs? Where is the analysis to explain why, in the past year, female unemployment in Scotland and across the UK has increased by more than 17% , but male employment has increased by only l%? Where is the analysis on the increasing move into involuntary part-time working? Where is the analysis and policy on how to shift jobs into the industrial and manufacturing sectors, and to retrain those who have lost their jobs to enable them once more to hold down secure employment? Answer is there none.
The fact that we now have the highest female unemployment in 23 years was ignored in today’s Budget speech. That is not going to go away, and I fear that the consequences have been heavily underestimated by the Government, economists and our media. Far more women work in the public sector, and increasingly, men enter and compete for traditionally female-dominated work in the private sector. We are told that three quarters of public sector reductions are still to come, with the inevitable contraction of the work force, but there is absolutely no planning on how to create new jobs for the many women who will seek work.
Announcements on infrastructure are welcome, but construction jobs are entirely male dominated. Only about 1% of electricians are female, for example, and we have the lowest proportion of female engineering professionals of any EU nation, at less than 9%. The Government need to use procurement in such a way that will encourage and increase the numbers of women. There is an example for them to follow—the Olympic Delivery Authority has got more than 1,000 women into work in construction jobs—and I want to ensure that that good practice is followed throughout every major Government procurement programme to come.
Charlie Elphicke (Dover) (Con)
I agree with the hon. Lady that we need more women in work, and to look after women and take them out of tax, which is what the Government are doing. Nevertheless, she mentions jobs. In her constituency in the last Parliament, unemployment increased by 44%; in this Parliament it has hardly changed. Does she agree that the previous Labour Government’s policies caused massive damage to this country?
Ann McKechin
The hon. Gentleman distorts the employment figures in my constituency and my city, where jobs were growing before this Government started to suppress demand and consumption and to take away huge amounts in benefit. I do not want women out of tax; I want them to get better-paid jobs so that they are in a position to pay tax. That is the fundamental problem, and taking people out of tax is an acceptance of it. Far too many people work in jobs that are too low-paid, but we are not doing anything about it.
As the Joseph Rowntree Foundation and others have repeatedly pointed out, we have a high level of under-employment in this country—4 million to 6 million people are in that category. The Scottish TUC has calculated that more than 0.5 million people, or more than 17%, are either unemployed or under-employed. Tax and benefit changes do nothing to change that long-term lack of demand for jobs.
The Government had the opportunity today to move away from their failed policy of austerity and to focus on stimulus for growth and jobs. They have failed, but the consequences will stay with this country and the communities we represent for many years to come. I am sure that point will depress many hon. Members, and it should depress all hon. Members on both sides of the House.
Mr John Redwood (Wokingham) (Con)
I fully support the Government’s aim. We need to earn our way out of the fiscal crisis, the massive over-borrowing and the large deficits. I also fully support their aim to get more money from taxing the rich, and we need a tax break for everybody else. We need a stimulus to demand and growth in this country and it is welcome that, given the difficult figures before the Chancellor today and the situation he inherited, he has managed to find a way of cutting tax for most people. That will be welcome relief from the relentless pressures on private budgets that hon. Members and their constituents have been experiencing as we try to climb out of the crisis.
It would be helpful to remind the House of the general shape of the five-year programme to try to get the deficit down. We want to get to a position in which we are adding less to the new borrowing. It is not that we are paying off the debt or dealing with the nation’s mortgage and credit card; we are just not flexing them quite as much as before. The Government have said that, over the five-year period of the planned coalition Government, they wish to increase current public spending by £90 billion and tax revenues by £174 billion a year by the fifth year of the programme, compared with the last Labour year. The House can see that, on most normal ways of looking at the situation, the plan is for the heavy lifting of getting the deficit down to be done by a very large increase in tax revenues.
Those tax revenues best roll in if the economy grows reasonably rapidly. The more quickly the economy grows, the easier and less hurtful it is to get money out of people; the less the economy grows, the more the choices become difficult.
Barry Gardiner (Brent North) (Lab)
The right hon. Gentleman says that the heavy lifting will be done by the rise in tax, but does he accept that there is a ratio of 4:1 in the amount that will come from cuts in public spending and benefits to the amount that will come from tax rises?
Mr Redwood
I have just given the figures—they are taken from past and current Red Books—and the hon. Gentleman must make his judgment. I am giving the House my interpretation. Most people who see spending going up by £90 billion and revenue going up by £174 billion will say that the increase in revenue is doing the job of bringing the deficit down. If he compares that with Labour’s plans for even bigger increases in public spending, he can make a case. He may also have in mind—we have debated this in the House before—whether the cuts are real or not. Some programmes will experience real cuts. We know that because there is a much slower rate of growth in cash spending than anything this country has been used to for a very long time.
If debt interest takes too much of the extra money, and if welfare benefits take too much, other things will obviously be squeezed more, which could lead to very unpleasant consequences. That is even more reason why the Government are right to try to get the deficit down, so that we do not keep on increasing the debt at such a huge rate, and why they are right to keep official interest rates low—that helps with the cost of the deficit. It is also why they are right that we need to earn our way out of the situation by getting many more people back into decent jobs, so that they are paid more in work than they are paid on benefit. Surely the whole House can agree on that and share that aspiration.
Sheila Gilmore (Edinburgh East) (Lab)
We obviously want to get more people into jobs, but will the right hon. Gentleman comment on something the Prime Minister said in Prime Minister’s questions? He said that 600,000 new private sector jobs had been created since the election, but a year ago he said that 500,000 new private sector jobs had been created since the election, and three months before that he said that 500,000 new jobs had been created since the election. Is not the rate of creation of new jobs slowing down massively under this Government?
Mr Redwood
We all know from the output and jobs figures that the economy did not do as well at the end of last year as it had done at other times since the Government were elected, but we also know that the forecasts are that growth will now pick up. I am sure the hon. Lady will welcome that and join me in having a serious debate on what this Parliament can do to make it more likely that my constituents and hers have jobs, and more likely that they are better-paid jobs.
The question whether real public spending is falling or not depends on the rate of inflation in the public sector, so I urge again that we take advantage of the tough times. There is a two-year pay freeze for public sector workers, and the Government say that they are buying things more cheaply throughout the public sector. In addition, there are recessionary conditions in Europe and other parts of the world. If we take advantage of those things, it should mean that we do not have to have big real cuts in spending, because we will have that £90 billion per annum to spend by the fifth year of the strategy.
However, we should focus today on taxation, which is clearly what the Leader of the Opposition wanted to focus on. I do not think he listened to the Budget speech or the numbers he was told, because my right hon. Friend the Chancellor made it very clear that he had come up with a series of targeted measures to tax the very rich more than if he had not made the changes. That is fine by me, and I would hope it is fine by the Labour party, but the Leader of the Opposition seemed to say that it was not fair, because some rich people would still get away with it. However, if we get enough or more out of them overall, is that not worth while? Surely even Labour would accept that if we raise rates too high, the very rich go away—they find ways around paying the tax or do not pay.
Labour in opposition does not take that seriously enough, but the former Chancellor and Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), took it very seriously when he was in office. As Chancellor, he had the option of putting the 40% rate up to 45% or 50%, or the 83% that Labour had when previously in office, but he never chose to do it. I wish he were here today. If he were, I would ask him, “Why not?” I think his answer to Labour groups around the country is, reportedly, that had he raised it above 40%, he would have raised less money in taxation rather than more. Naturally he wanted to get more out of the rich—on that I agree with him entirely—but the way to do that was to keep the rate at a sensible level.
The Opposition should study the figures for tax receipts. If they look in the new Red Book, they will see that self-assessment income tax is plunging this year. That is exactly the problem that my right hon. Friend the Chancellor has to tackle. Under Labour, self-assessment taxation at 40%—the then rate—brought in £22.5 billion at its best, before it made a mess of the economy. The forecast for 2010-11 out-turn is £22 billion, and the forecast for the 2011-12 out-turn—soon to be seen—is only £20 billion. That means that the Treasury now expects a 10% reduction in self-assessment income tax receipts, which is where many of the high earners congregate with their complicated tax affairs. Those, then, who think that a 50p rate raises a lot more money have a lot of explaining to do given that we are in the middle of this collapse.
Mr Redwood
I am sorry but I will not get any more time, so I am afraid I cannot.
If the Opposition study the Red Book, they will also see that when the 45p rate is firmly up and running, there will be a surge in revenues compared with the current bitter experience with 50p. Self-assessment income tax is scheduled to rise to £28.5 billion by the last year of this Parliament, showing that, according to the Treasury’s own model, growth is expected. However, I think we will see a much disrupted experience of tax collection now, because if we give advance warning of a new lower rate, we might have a problem in the year before, but we will have to see—we will watch with great interest.
Overall, however, the House should note that there are difficulties with getting the massive increase in taxation from the country which everyone wants. According to the current receipts table, there has been slippage every year in the current receipts forecast under national accounts taxes compared with the autumn statement. Some of that, of course, is the result of the policy change on lower tax designed to help people—we welcome that very much—but we have to understand that it is very difficult to get as much tax out of the economy as many MPs would seem to like.
The Government are right to want a Budget for aspiration; they are right to want a Budget that allows us to earn our way out of this situation; and they are right that we need to make it more worthwhile to work. I hope that they will reinforce that message in future Budgets. Since the 1970s, in which time we have had Labour Governments as well as Conservative and coalition Governments, no Government have ever been able to raise more than 38% of the total national income from taxes. I am sure that Labour would like to try it, but actually the record shows that Conservatives have taxed a bit more as a percentage of national income than Labour—normally because they have had to clear up the mess, the debts and the deficits that they have inherited.
There is a natural ceiling on how much we can get out of people in a free economy. When we have a footloose international economy, it is all too easy for the people with talent and money—Labour might not like them—to go somewhere else, spend their money somewhere else and invest in jobs somewhere else. We desperately need every job that we can get, and we desperately need the good will of those with money, talent, entrepreneurial flare and ability. We also need the money of some of those who do not have any of the above—we still want them here and to ensure that they spend their money here.
The Budget therefore has to concentrate on the crucial issues of how we reward aspiration and generate true prosperity. A much greater man than I, I think, said, “You cannot tax a country into prosperity.” This country is not short of taxes. Governments have been incredibly inventive in finding all sorts of ways of taking money off people. They are taxed again and again and again—on income, on spending, on savings, on capital gain. There are endless taxes. We are not short of taxes. We do not need new taxes. We need a growing economy and to persuade people to pay the taxes that we have put in place trying to pay for the public services.
We want great public services but we need to understand the language of priorities. I think those priorities are shared across the House. Both Labour and Conservative Members would choose to make health and education their top priorities for public spending. The last Government certainly did that with large sums of money, and this Government are doing it with what money they can find. However, I also hope we would agree—this is more difficult when Labour are in opposition—that we need reform of those public services so that every pound we spend is a pound well spent. We need to increase productivity and quality, and get more for our money, because everyone has to accept that times are hard and the amount of money available will be limited.
The Front-Bench team need to do all they said in the Budget to promote growth; they need to do more to sort out the banks because until we have properly functioning and competitive banks—super-charged to lend against good projects—we will not go as quickly as we would like; and they need to ensure that every pound they spend in the public service is well spent. That is the way to earn our way out of the crisis and into prosperity. We cannot tax our way into prosperity but we can earn our way there.
Derek Twigg (Halton) (Lab)
I am grateful for the opportunity to speak in this debate. As always for the first speakers, the devil will be in the detail—as we pore over the Budget booklets to see what the Chancellor actually said and what it means to ordinary people. It is certainly clear, however, that it is not a Budget for fairness or growth. As the Leader of the Opposition made clear, the cut in the 50p tax rate is a cut for millionaires—not least, of course, for rich bankers.
Derek Twigg
I have just started. Can hon. Members hang on a second? I am sorry to excite them so much. I am happy to give way to one of them in a minute.
As we heard today, it is also a cut for many in the Cabinet. It is a £40,000-plus tax cut for millionaires—an amazing amount.
Charlie Elphicke
The hon. Gentleman said that this is a tax cut for millionaires. If Labour feels so strongly about this, why has the shadow Chief Secretary just been on the television refusing to commit to scrapping it? Does he regret that and think that she should rethink that position?
Derek Twigg
We are here to discuss the Chancellor’s Budget. He is suggesting that it is a fair Budget that helps particularly low-paid people, but, as we have seen, it helps the richest, not least some on his own Benches. Let us be clear about that.
Again, on personal allowances, we need to look at the detail. Let us consider the cuts to working family tax credits and the loss of child benefit. On the latter, by the way, the Chancellor used the phrase “cliff edge”, but we are still on the cliff edge—it is just a bit more complicated to get to it. That is the big change. Then there is the cost of living—energy prices, food prices and, interestingly, petrol prices. The Chancellor used to attack Labour over petrol prices when we were in government. I remember the fuel tax demonstrations. We have not seen many of them recently but the Chancellor has done nothing to ease the burden. We know what he did for VAT. That is what added to the cost of petrol and fuel for the people of this country. But the Chancellor did nothing. Many of my constituents have written to me asking that the Chancellor do something about it, so they will be bitterly disappointed today.
Brandon Lewis (Great Yarmouth) (Con)
Does the hon. Gentleman not agree that the Chancellor has done something about fuel duty by cutting the increases proposed by the previous Government?
Derek Twigg
We can go back to the fuel escalator and see who introduced that in the first place. The fact is that the Chancellor put VAT up, and that has been a major problem for people having to pay the extra, but of course the Chancellor has ignored that and done nothing.
The Budget does nothing for growth. We need growth in the economy to provide jobs and investment in businesses around the country. Someone said that all politics is local, and I will return in a minute to the specific issue and how it affects my constituency. Borrowing is £158 billion more than planned, and today we see that the February borrowing figures are much higher than expected, despite some of the spin beforehand.
Let me turn to unemployment, which is a crucial issue for my constituents. Unemployment has increased in my constituency, with a significant increase in the latest figures, not least in youth unemployment. Many hundreds of young people are not being given the chance for employment in my constituency, because the Government have no growth policy. Their policies are not having an impact in my constituency in terms of providing the additional jobs and growth that are needed. I have had more and more people come to me personally to ask specifically what the Government are doing—and what I am doing, as well—to help young people who are unemployed. I had a mother come to my surgery a couple of months ago who has two young sons who are unemployed and who are desperately trying to get jobs. It is all very well for the Chancellor and the Prime Minister to talk about how we should clamp down on the benefits system to encourage work, but people cannot find work in many instances. That is an important point that we should bear in mind.
Small businesses have been mentioned already. I have raised this issue on a number of occasions with the Chancellor; indeed, he was even gracious enough to say that he had listened to some of the points that I had made in announcing today’s initiative to help bank lending to small businesses. However, let me give hon. Members two examples of problems in my constituency. One company was unfortunately left with a large debt after the larger contractor it was working for went out of business. The company still had a full order book, but the bank refused to lend it money—a scandalous situation. Another example, which is just as scandalous, is that of a business person in my constituency who needed an overdraft for one day because of a short-term problem. However, the banks refused to grant it.
We shall see whether the Chancellor’s initiative will work in getting banks to give more help to small businesses, but my worry is that although those businesses that are able, much more established and probably in a stronger position may be able to get the money quite easily, the businesses that are struggling—the ones that are riskier to lend to—are the ones that we should be helping in particular. We will wait and see whether the Chancellor’s initiatives today will help those businesses. With the right help, a lot of those businesses can survive and maintain or increase employment. The message that I have been receiving from small businesses in my area is that they have not been getting help from the banks. I hope that the Chancellor’s initiative today will make a positive impact. However, I remain sceptical because of his previous announcements on trying to address the problem. When I mentioned it to the Business Secretary even last week, he said, “Yes, it is a problem.” That was his answer. We need real energy from the Government on helping small businesses. I therefore look forward to seeing whether this initiative works in the way the Chancellor has outlined today, although I remain sceptical.
We heard nothing about local government in the Budget. We have talked about fairness, so let me give some examples of unfairness in the way local government is funded—a crucial area that impacts on jobs, investment, planning and other issues. In Halton, for instance, we will be losing £44 a head in the next financial year because of the cuts. That compares with £28 a head for the much more prosperous Cheshire West and the city of Chester, and a loss of £19.32 for Cheshire East. Guess who is one of the MPs in Cheshire East? Surprise, surprise: the Chancellor. The 27th most deprived borough will face the largest cut in local government expenditure among those authorities. I am amazed—although I should not be amazed, really—that the Liberal Democrats are going along with this deliberate attempt by the Tories to push money out to Tory authorities at the expense of the most deprived areas in the country.
Why is this issue important? It is important not just so that local authorities can maintain crucial services such as education, social services, development and so on—many people on low incomes are particularly affected by cuts to those services—but so that local authorities such as Halton can regenerate and attract businesses to their areas. Indeed, Halton borough council has been particularly good at attracting development—it was mentioned the other day in a BBC report—whether in shopping and retail facilities, or development by other businesses, such as Stobart and Tesco, which opened up a chilled warehouse that is a large employer. Halton has been particularly good, including on planning and trying to encourage business.
The Chancellor talked about trying to reform the planning system to ensure that local authorities do more to secure investment and attract businesses to this country, and, of course, to their localities. We have fantastic opportunities in Halton, not only in our retail facilities or the developments by Stobart, but in business development, in areas such as the Heath business park, which is one of the foremost business parks in the region, and Daresbury laboratory, which Labour saved from closure and invested in and, I am pleased to say, whose science and business development the current Government are continuing to invest in. Our local authority has been able to achieve much in difficult times. A lot of that was put in place thanks to investment by the last Government. However, the cuts made by this Government are having a negative impact and will cause councils around the country a great deal of problems.
Interestingly again, there was no mention of the NHS in the Budget. That is no surprise. The Liberal Democrats have now supported the Health and Social Care Bill, which we have heard so much about. I have to say to them that every other month we get new recruits joining the Halton Labour party from their party, because they are fed up with the Liberal Democrats’ support for the policies of this Tory Government. In fact, people can no longer see the difference between Tories and Liberal Democrats, which is why—I am guessing—Liberal Democrats in my constituency are saying that what they are doing is a disgrace.
I want to say a couple of things about infrastructure. I agree with the Government that investment in infrastructure is crucial to give the economy a boost and attract more investment, not least from overseas. With the Olympic games, Crossrail and so forth, we have seen massive investment in London and the south-east. That will of course benefit certain parts of the country, but it will not deliver major benefits to areas in the north-west such as Halton. On the credit side for the Government, they have given the go-ahead to the Mersey Gateway bridge in Halton—a scheme, by the way, that was started under Labour and supported by Labour, and signed off by the coalition some 18 months in government. The project will help to provide up to 4,000 to 5,000 jobs in the Merseyside and Cheshire areas. We have all-party support for the scheme, which will be crucial for encouraging investment in my area, as well as the wider Merseyside and Cheshire areas. However, it will also provide hundreds of construction jobs, which will be important, as we have a particular difficulty with the construction industry at the moment.
At the same time, however, the Government are taking the lion’s share of any toll revenue over and above what is projected, as well as any savings on the project, and they are also limiting the discounts that the council can give to local people. It is important that local people, who use the current crossing for free, should get big discounts or pay nothing at all. I have already written to the Government, but we cannot get a proper answer to why they are doing that. Why should they take the lion’s share of any additional income or savings? They should be ploughed back into Halton, so that local people can be given bigger discounts.
My final point is about town centres and shopping centres. I did not hear much from the Government about how they are going to encourage the regeneration of town centres. We had a debate in this place a number of weeks ago, and I did not hear much in that either. For various reasons, areas such as Widnes in my constituency have done well at improving their town centres and developing their shopping and leisure facilities. However, as I mentioned in a previous speech, Runcorn is struggling to regenerate its town centre, for various reasons that I do not have time to go into today. Runcorn has potential, not least the attraction of its waterways, but the Government have had nothing to say about that. What we want to hear from them is what they are going to do, in real monetary terms, to help town centres such as Runcorn.
Stephen Williams (Bristol West) (LD)
All Budgets are packages, and all of them are balancing acts, and that is particularly true of a Budget presented by a Chancellor in a coalition Government. It is fairly clear for all to see, in bold primary colours, which are the yellow and which are the blue packages in this particular Budget. What is also clear is the string that binds together this Budget and this coalition Government: reducing our deficit from the position that we inherited, where £1 in every four was being borrowed; restoring our economy to balanced and sustainable growth; restoring and maintaining confidence in the international markets; and bringing about a fair tax system that rewards work and enterprise, and taxes wealth. Labour borrowed us all into the mess that we inherited in 2010, but under the coalition Government, Britain will earn its way back to prosperity.
As Liberal Democrats in the coalition, we wanted three tax changes in this Budget. First, we wanted a fair income tax system that would lift the low-paid out of tax and bring about a tax break for middle earners. Secondly, we wanted a system that would tax accumulated and unearned wealth fairly and effectively. Thirdly, we wanted action to tackle the abuse of the tax system that was taking place through aggressive tax avoidance schemes. All three of those objectives have been met by the Chancellor’s Budget.
Two years ago, we were all about to go out on to the streets to start the general election campaign. The Liberal Democrats’ No. 1 priority at the time was to achieve in this Parliament tax-free pay for all our fellow citizens earning less than £10,000. That objective is in the coalition agreement, and significant progress has already been made towards achieving it.
Dame Joan Ruddock
The hon. Gentleman is part of a Government who have voted to reduce the income of the average family with children by £530 from the beginning of next month. There is no measure in the Budget that will make up for that, and frankly, people in my constituency will see it as an insult to their intelligence.
Stephen Williams
The right hon. Lady will hear as I make progress through my speech that working families up and down the country, with or without children, will benefit significantly from the tax changes that the Government are making.
In the current tax year, we have raised the allowance from £6,475 to £7,475, lifting 800,000 people out of the income tax net altogether and providing a £200 tax cut for every basic rate taxpayer.
Stewart Hosie (Dundee East) (SNP)
Before the hon. Gentleman continues with his party political broadcast, may I ask him to look at his own Government’s Budget? Every single quintile will still be worse off after the Budget. It is in the Red Book. He is wrong.
Stephen Williams
These are extraordinarily difficult times, and none of us has ever shied away from the fact that we are in a tight fiscal squeeze or that there is a tight squeeze on family budgets. That is why it is important that we put more of people’s own money back into their pockets through the tax changes that we are introducing.
When the next tax year starts in two weeks’ time, the personal allowance will rise again, to £8,105, lifting 1.1 million people out of taxation altogether and providing a tax cut of £330. Also in two weeks’ time, as well as those tax changes, the largest pension increase for a century will have been delivered by this coalition Government.
Teresa Pearce (Erith and Thamesmead) (Lab)
Will the hon. Gentleman give way?
Stephen Williams
I cannot give way any more.
In this Budget, our Liberal Democrat priority was to move further and faster towards our goal of £10,000 tax-free pay. Liberal Democrats in the coalition Government are therefore delighted by the confirmation that the rise in the personal allowance of £1,100 will proceed in April 2013. It is the largest rise in the personal allowance for 30 years—that is, in all our working lifetimes. In April 2013, people will be able to earn £9,205 without paying tax, which will lift a further 840,000 people out of tax. Over three years, 2 million British people will have been raised out of income tax. That will help everyone who works part time, the majority of whom are women. The measures will lift young people on the minimum wage out of income tax altogether, and 24 million basic rate taxpayers will be better off to the tune of £546. These changes will allow people to keep more of their own money. They will inject spending power into local economies and they will make work pay.
As the front page of the Liberal Democrat manifesto promised, we have delivered more than £500 into the pockets and purses of Britain as a result of this Budget. It will have been obvious from the fact that my colleagues were waving their Order Papers earlier that we are extremely pleased to have achieved that. Let us contrast it with the last Budget under the leadership of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), when Labour MPs waved their Order Papers following the abolition of the 10p tax rate. There could not be a greater contrast between the priorities of this coalition Government and those of the last Labour Government.
Charlie Elphicke
Does my hon. Friend agree that this Budget shows how effective partnership working can be in the coalition? Has he seen chart B.1 in the Red Book, which shows that those in the top decile—that is, the most well off—will experience the greatest reduction in income? They are being made to pay, despite Labour’s 1970s class war rhetoric.
Stephen Williams
I shall come to how the Budget will affect the most well off in society shortly.
Our second objective in the Budget was to rebalance the tax system, so that taxes would fall lightly on work and enterprise and more heavily and effectively on wealth. Already, this coalition Government have raised capital gains tax from the historically low rates that we inherited from the last Labour Government, and there have been no changes to inheritance tax. Some people might have wanted to drop the 50p tax rate altogether. However, we all know that 2012 is going be a difficult year for families up and down the country, and Liberal Democrats have been clear that now would not have been the right time to reduce the top rate of tax. I am pleased that the Chancellor has agreed with our position.
By April 2013, our top rate of tax will be in line with that of our competitor states in the European Union and the United States of America, but we will also have effective taxes on wealth in place by then. Stamp duty will be 7% on house sales of more than £2 million. We might not have got a mansion tax in this Budget, but we have certainly got a mansion duty. That mansion duty alone—just that one measure—will raise three times the amount lost through the lowering of the 50p tax rate by 5p.
The third objective that we set in this Budget was to take action on tax avoidance, and I am therefore pleased by the introduction of a 15% charge on personal property that is under corporate ownership. I am pleased that tycoons will have the reliefs that they claim restricted to 25% of their income, and I am particularly pleased that the general anti-avoidance rule for which I have argued for so long is to be introduced by this Government. I see that rule as a kind of electric fence across the tax system: a clear warning to every taxpayer that this is a line that they must not cross.
The Budget makes further changes to rebalance the economy, to restore green growth to the economy and to build on Britain’s strengths in engineering and the creative industries. In 2012, we shall see the launch of the green deal, which was spearheaded by my right hon. Friend the Member for Eastleigh (Chris Huhne), when he was Secretary of State, and which is now being taken forward by the Secretary of State for Energy and Climate Change, my right hon. Friend the Member for Kingston and Surbiton (Mr Davey). Last weekend, I witnessed the demonstration projects that are already taking place in my constituency under the Bristol Green Doors initiative, which are showing what every householder can do to take advantage of the green deal. Also in 2012, the green investment bank will be making its first investments.
The creative industries are incredibly important to our national economy, and I was pleased that video games were given recognition in the Budget. As a Bristol and west country MP, I was particularly pleased to see the extension of film tax credits to the television industry. The Chancellor mentioned Wallace and Gromit. Despite Wallace’s Lancashire accent, their home is of course Bristol. The films are made in my constituency by Aardman Animations, Europe’s largest animation company. It is incredibly important to the economy of Bristol and is a great British brand that sells millions of pounds of exports all over the world.
Mr John Denham (Southampton, Itchen) (Lab)
Will the hon. Gentleman tell me what the difference is between the tax breaks introduced by the Chancellor in today’s Budget and the tax breaks introduced by Labour that the same Chancellor scrapped in 2010?
Stephen Williams
The difference, as I understand it, is that these tax breaks are going to be focused on high-end television production, so that we no longer find ourselves in a situation in which “Coronation Street” can claim tax credits, as it did under the last Government. I do not think that there will ever be a risk of “Coronation Street” moving to China, but there was a serious risk that Britain would lose its animation industry to the rest of the world. These measures are right if we are to maintain British talent and innovation in this country, but it is also culturally right that children should watch programmes that have been made with the right regional accents and made around Great Britain.
For Liberal Democrats in this coalition, the headline of this Budget is that we have delivered a tax cut for millions of Britons and effective taxes on the wealth of millionaires. It is a Budget that maintains the confidence that Britain is back on track. It is a Budget that delivers the biggest tax break in a generation for millions of hard-working families. As a Liberal Democrat in this coalition, I am proud of the role my party has played in making Britain a fairer country.
Mr John Denham (Southampton, Itchen) (Lab)
My morning newspaper today said that the coalition parties were inviting me to regard this as a Robin Hood Budget. I enjoyed the stories of Robin Hood when I was younger, but I must have missed the bit where Robin goes back to Nottingham castle and says to the sheriff, “You look a bit hard up. Would you like some of your taxes back?” I must have missed the bit, too, where Robin went to the front door of the cottage, cash in hand, while the rest of the merry men went round the back and made off with the tax credits, the child benefit, the VAT and all the rest of it.
This Budget does not deliver what the Liberal Democrats or the Conservatives say it will deliver. The Government will fail on each of the three main tests that they have to meet today. Of course, just a few minutes after the Budget statement, it is impossible to make a comprehensive assessment of it, but I suspect that the detail of the pensioner tax changes will come as a deeply unpleasant surprise to Government Members who were waving their Order Papers so cheerfully earlier on.
Teresa Pearce
It came as a surprise to me to read through the detail of the impact assessment, which says that in 2013-14, 4.41 million people over 65 will be worse off because of the age allowance, and that 230,000 people will be brought into income tax. I wonder whether the Liberal Democrats will be proud of that.
Mr Denham
I am grateful to my hon. Friend: 4.41 people—4.41 million older people—[Interruption.] Government Members may laugh, but they have just cheered a Budget that is going to make more than 4 million pensioners worse off, because they did not understand what they were cheering.
The Budget has three tests. The first is the immediate action needed to create growth and jobs in the economy, to bring in taxes and to reduce the deficit. The second challenge—even if the Government get the first right, painful times cannot be avoided—is to ensure that the burden of the challenges is shared fairly; in other words, whether we get fairness in tough times. Does the Budget really say, “We’re all in it together,” or does it look after those already better placed to get through the next few years more generously than those who struggle hardest?
There is a third challenge for this Budget. The Institute for Fiscal Studies made presentations to MPs this week. It said that the slowing of growth since this Government were elected meant that even by 2016 the economy would be 3.5% lower than it would otherwise have been and perhaps 12% smaller in comparison with the growth rates of 2008. The Resolution Foundation, also drawing on the Office for Budget of Responsibility, calculates that disposable income for low and middle-income households will fall by 8% between 2008 and 2015. What that means is that our economy will have fallen behind, our incomes will be lower and our capacity to fund public services and social security will have been reduced. I hazard a guess that nothing that has happened today will change that grim picture by any significant degree.
The third question, then, that the public will be asking is how, after all this pain, we will pay our way in an increasingly competitive world? If we cannot compete and cannot create wealth by succeeding in global markets, we will never offer new opportunities and hope to those young people whom The Financial Times described on Saturday as “the jinxed generation”. The world economy will have moved on massively and the challenge of building British companies into those that can succeed in ever-tougher global markets will be harder than ever. If we do not lay the foundations for that success now, it will be harder to start later.
The truth is that on each of those three tests—the immediate future, fairness and laying the foundations for the future—the Chancellor’s speech gave little ground for optimism.
Caroline Lucas (Brighton, Pavilion) (Green)
Would the right hon. Gentleman add a fourth test to the three that he has set out, which is whether or not this Budget takes us in a more sustainable direction? On that measure, the Chancellor started by saying that oil prices are of great concern, but what he has now done is to give a huge tax break for more oil drilling.
Mr Denham
I am happy to include that test. One of the missed opportunities will turn out to be in the low-carbon economy that will dominate the global economy in the 21st century.
Things have turned out so much worse than in the heady days of the new Chancellor’s optimism when he told us in his first speech that the economy was set to grow steadily; that unemployment would fall year on year; that the deficit would drop like a stone, yet front-line services would be protected; that the private sector would expand magically, more than filling the space left by public services; that the banks would lend; and that the whole tiresome infrastructure of regional investment, job guarantees for young people and a coherent planning system could simply be swept away. Well, the Chancellor, the Deputy Prime Minister, the Prime Minister and the whole coalition were wrong.
The spending cuts, drawing billions out of the economy, were too far and too fast. The Government’s gloomy talk first unnerved and depressed consumers; then the VAT hike took money from them when we needed them to spend. Now the cuts are really beginning to bite. The Government were so cocksure and complacent that they strung together, purely for cynical political purposes, a series of half-baked, ineffective measures that were more or less abandoned as soon as the last press release had been issued: the national insurance holiday; the regional growth fund that does not pay out any money for months or years; the business growth fund with few investments; the special support for exporters with a handful of users; the Work programme that does not work; Project Merlin; and the youth contract that has not even started two years after the future jobs fund was scrapped. Any right hon. or hon. Member who gets excited by any measures announced in a press release for this Budget should remember what happened to the last lot.
Opportunities were missed—to tax bank bonuses, to fund real jobs for young people, to cut VAT for families, to cut national insurance contributions for small businesses taking on staff, to bring forward infrastructure spending. But what did we get? Just a feasibility study on Monday of this week, two years after the need was first identified. No, the short-term measures have failed, and we have seen no change.
Fairness has been well debated today. Let us remember one point—in April, families with children, taking into account the personal allowances and all the other changes, will be £530 worse off on average. When we look at next year’s personal allowances, I am sure it will also be clear, when the dust has settled and the IFS has done the figures that take into account all the other changes, that those families will still be worse off. Hon. Members should look at the Red Book and see which families are going to pay a higher proportion of their income, and it is those on low incomes.
This Government have been mired in unfairness from the beginning. We should remember that one of their first actions was to cancel changes to pension tax relief, which would have brought in £1.6 billion from the very highest earners in this country. We did not hear the Chancellor reminding us of the things he has already done to tilt the system to those best able to get through the next few years. I believe that the Government will pay the price for that.
The truth is that it is not a matter of whether stamp duty brings in more money or whether the anti-avoidance measures—the Government should tackle avoidance in any case—bring in more money. The challenge for this Government and this Budget was to devote every single available penny to raising the incomes of hard-pressed low and middle-income families and to get the economy growing. There was no justification for singling out the highest rate of income tax on earnings over £150,000 a year. The average person in work in my constituency will have to work for seven and a half years to earn £150,000. To single out that higher-earning group and to cut their tax was wrong.
This was not the fairness in tough times that the country needed, but the other failure in the Budget was the failure to lay the foundations for the economy that we need in the future. The truth is that despite the pressure on the public finances, there is no shortage of money to rebuild the economy. UK companies are cash-rich. Sovereign wealth funds are out there. There are pension funds, closer to home, with money to invest.
Mr Denham
I will not give way, because I have only a few minutes left. The problem is that those bodies are not investing, or at least not investing in Britain. The reasons are clear: in the short term, Government mistakes have caused the economy to stagnate, and there is also no certainty—no “compelling vision”, as the Secretary of State for Business, Innovation and Skills rightly put it. Some of us thought it was his job to come up with a compelling vision, but he is right that it is not there. There is no predictability.
Goodness knows it took my Government long enough to take a decision on Heathrow. That decision was then cancelled, and then ruled out. Today in the Budget, we find that Heathrow is back on the agenda. Billions of pounds of business investment cannot take place because of the failure of Governments to take that decision, one way or another. That uncertainty and unpredictability runs through the Government’s business failures. Low-carbon energy manufacturing and services will dominate the 21st-century global economy, but the Chancellor says that he does not like the environmental policies, while the Deputy Prime Minister says that he does. We had illegal flip-flops on feed-in tariffs, which means that a whole group of investors will never come back and invest in green energy again. Those on the Government Benches have no idea that business needs certainty and predictability, not short-term changes.
We have today heard all that stuff about the oil industry. In last year’s Budget, the Government massively increased the risk penalties for investing in the North sea by means of a last-minute political gimmick that changed the tax regime that applied there; again, that meant uncertainty and unpredictability. Despite the Chancellor’s words, there is no serious attempt to identify the technologies and capabilities that will give us the ability to compete in future. The odd speech here and the odd announcement and press release there does not match up to the job—not when we look at what our competitors are doing.
Today, we again heard about broadband, but what did the former chief operating officer of BT say about the Government’s broadband strategy in another place just a couple of days ago? He said that it was so weak that this country will be
“frozen out of the next industrial revolution”.
Just because there is a mention in the Red Book about the broadband strategy does not mean that there is one, or that it is good enough, so it is a no on that third test, which is probably the most crucial.
The next few weeks, months and years will be hard for everybody. People in this country are stoic. They will tolerate a lot if they think that the right things are being done to build a future for their children and families, and to give us long-term security. The Government do not have a clue how to create the conditions in which investment will take place, business will grow, and we pay our way and have the jobs and wealth that the people of this country desire. The Budget is unfair, has missed opportunities, and will fail the country.
Stephen Mosley (City of Chester) (Con)
I welcome the measures that my right hon. Friend the Chancellor announced in his Budget—measures that continue to lay the foundations of an economy underpinned by enterprise, opportunity and wealth creation. The European and global economies have had a torrid time over the past two years, but the Chancellor has been unwavering in his commitment to bringing our spending and our deficit under control. Unless we do that, we have no chance of creating the future economic success that we all desire. I am delighted that the Chancellor is taking strategic decisions on how our economy should evolve and compete in future.
Jane Ellison (Battersea) (Con)
The right hon. Member for Southampton, Itchen (Mr Denham) completely ignored all the announcements about corporate tax rates. I wonder whether my hon. Friend will cover those rates, and the way that they incentivise business growth.
Stephen Mosley
Corporate tax rates, of course, are one incredibly important area, but there are many others. In my speech, I shall concentrate on some of the issues that the right hon. Member for Southampton, Itchen (Mr Denham) talked about, to do with investment.
Many people rightly ask, “How will we, in Britain, earn our living in the global marketplace of the future?” Like the Chancellor, I believe that there are sectors in which the UK can take a global lead, in which we have the ability to excel, and that have the potential to generate growth for future generations. The one that I will concentrate on is the digital economy.
The UK’s information technology and telecoms industry makes a gross value added contribution to the British economy of some £81 billion a year. That is around 9% of the total economy—it is a very similar figure to that for the financial services industry. Around one in 20 members of the work force—1.5 million people—are employed in IT and telecoms. There are around 100,000 unfilled job vacancies being advertised, and it is estimated that more than 500,000 new IT and telecoms professionals will be needed over the next five years. By exploiting the full potential of the technology industry, we could boost the UK economy by an additional £50 billion over the next seven years.
The Chancellor’s speech gave extremely encouraging signs that investment in information and communications technology is set to continue, but more needs to be done if we are to harness our real potential to make our country a global leader in the digital economy. We have a world-class base from which to grow further, but we require proactive engagement from the Government if we are to speed up growth and increase the economic potential of ICT businesses. We must be much more vigorous in promoting the industry to stimulate wider and sustained economic growth.
Ian Lucas (Wrexham) (Lab)
I am listening carefully to the hon. Gentleman’s speech, not least because he is my neighbour, and I agree with much of what he has said, but does he not regret that the Government put back the delivery of universal broadband by three years, from 2012 to 2015—two years after it will be delivered in Morocco, which I visited last week?
Stephen Mosley
If the hon. Gentleman, my neighbour, will bear with me for 30 seconds, I will get to broadband.
Stephen Mosley
Ultra-fast is, I think, the current term. Mr Deputy Speaker, I know that you have been involved with the Parliamentary Internet Communications and Technology Forum. We recently arranged a series of meetings with parliamentarians and industry representatives, including the UK chief executive officers of some the world’s leading IT businesses—for example, Facebook, Intel, IBM and Fujitsu, among many others.
The universal message emanating from the meetings was that the UK technology industry must be promoted by Government whenever possible, and that greater care is needed if the UK is to attract, train and retain the highly skilled individuals who will help our economy to grow. Specifically, five key recommendations were made. The first had to do with the broadband issue: the Government must speed up the roll-out of superfast broadband. I totally support that, which is why I am absolutely delighted to welcome the Chancellor’s commitment to investing more than £780 million in broadband infrastructure to make sure that Britain has the best superfast broadband network in Europe by 2015. I am also pleased about the Government’s commitment to start the roll-out of 4G mobile networks, with the spectrum auctions planned for later this year.
Mr Graham Stuart (Beverley and Holderness) (Con)
Does my hon. Friend agree that we must reverse the disastrous collapse in the number of graduates coming out of universities with computer science degrees, which took place over the last decade in which the previous Government were in power?
Stephen Mosley
It is funny that my hon. Friend should say that, because our group’s second recommendation was that the Government should increase investment in ICT in schools. I was pleased to hear the Chancellor highlight the importance of education in building our skills base, because if any industry hopes to compete and thrive, the fundamental basis is the skills base of the domestic work force. My right hon. Friend the Education Secretary recently announced a shake-up in the way that computing is taught in schools. That follows calls from industry and academia, who suggest that ICT in schools is too focused on the use of specific software packages, and not focused on the underlying technologies or on learning the computer programming skills that will help to encourage young people to develop their own products and be on the cutting edge.
Rebalancing the curriculum is a vital step, but there also needs to be greater emphasis on the quality of ICT teaching in schools, along with a concerted effort to champion future careers in the sector. I have already outlined the huge significance of IT for the wider UK economy, yet since 2002 there has been a 33% reduction in applications for computing degree courses. More must be done to encourage our young people into an ICT career if we are to reap all the potential benefits to our economy.
Diana Johnson (Kingston upon Hull North) (Lab)
Does the hon. Gentleman share my disappointment that the Education Secretary has not included ICT as one of the core subjects in the English baccalaureate, and therefore as one of the key areas that our young people need to study?
Stephen Mosley
The English baccalaureate covers the key core skills we want people to learn. ICT is an important skill, but I do not think it should be included in the baccalaureate, which covers maths, English, basic sciences—the basics. IT is a highly skilled area. Some people might be suited to study it, but others might not. Those who have an aptitude for it should pursue it and achieve.
Thirdly, it is imperative that the UK trains and retains world-class individuals. Over the past decade, the UK has become a receiver of technology developed abroad, which has slowed down the development of technology in the UK. The overriding message coming from industry is that the single most important criterion when deciding where to make new investment is whether the skills to support the investment are available in that location. We have the broad skills base in this country to push on and achieve great things, but without the right commitment and investment—such as in ICT apprenticeships—the UK risks being left behind by our global competitors.
Fourthly, we need a strategy to encourage the take-up of new technology by small and medium-sized enterprises, and to encourage their growth and development. Specifically, it was recommended that the Government can assist by encouraging venture capital investment for the longer term. We have a huge wealth of talent in the UK but, in order for our entrepreneurs to grow their ideas into successful long-term businesses, they often have to sell their ideas and businesses abroad. A prime example of that is the once globally dominant UK computer games industry, which is now mainly foreign-owned and seeing future investment disappearing offshore. I was therefore extremely pleased to hear that the Chancellor will focus on that industry. If we want our smaller businesses to flourish, we should be encouraging investment to help nurture existing small businesses to become medium-sized businesses, and medium-sized businesses to become large ones.
I pay tribute to the Government for their catapult centre programme. We in the UK have always been on the cutting edge of technology, but our inability to transfer intellectual advances to market has often proved to be a stumbling block. The new catapult centres will help to commercialise the results of research in technology areas where there is potential for multi-billion pound global markets, including the digital economy. That is to be wholeheartedly welcomed.
Finally, the Treasury must emphasise and reiterate the importance of technology to the economy and commit to the long-term opportunities that the sector has to offer. We in the UK are attracting world leaders in new and emerging technologies to our shores. We have the skills base, the flexibility and the economic foundations to encourage more companies to invest here. The Government must champion the technology sector more vigorously if we are to harness its great potential to act as the catalyst for long-term growth in the United Kingdom. I am delighted that, as spelled out in the Budget, the Chancellor and the Government are now grasping that opportunity.
Sammy Wilson (East Antrim) (DUP)
We all recognise that the Chancellor has been confronted with a difficult task in this Budget. He has had to walk a tightrope: if he goes too far one way, our financial credibility is immediately questioned so interest rates have to rise, yet if he goes too far in the other direction, we impair our ability to earn our way out of the recession.
My party does not have any political points to score against the Conservative party, as it is not represented in Northern Ireland, so we simply want the Chancellor and the Government to succeed. That is the basis on which I assess the Budget. Is this Budget likely to achieve the objectives we all want: restored growth and increasing employment?
Some of the Budget’s measures are very welcome. From a Northern Ireland perspective, we welcome the devolution of air passenger duty, which will be included in the Finance Bill. That will enable the Northern Ireland Executive to set its own rate for long-haul direct flights from Northern Ireland, which is essential to our investment strategy and to tourism. We also welcome the reduction in corporation tax as it brings our rate closer to the rate in the Irish Republic, which is our main competitor for foreign direct investment—although those rates are still far apart. We welcome, too, the film and high-end TV tax concessions. We have been seeking to promote that industry in Northern Ireland. The Executive have pushed for that. “Game of Thrones” is now filmed in Northern Ireland, and it has been a big revenue earner. We have also pushed for Belfast to be chosen as one of the broadband cities.
However, although there is clearly much to be welcomed, I am concerned about three aspects of the Budget. First, the Government could spend more money on infrastructure in the United Kingdom. That would enhance economic growth. Such pump-priming by the Government could enable us to draw upon some of the funds—£700 billion in cash—that private companies are currently hoarding.
After all, does the Chancellor believe his own rhetoric? He says that both the deficit and debt have fallen as a percentage of GDP, that the public sector net debt peak will not be as high as previously anticipated, and that we are on course for deficit reduction. He must therefore know that his credibility in the international money markets is sufficiently high for him to be able to invest in projects that offer a rate of return and that could help to promote economic growth, rather than merely pay unemployment benefits. Either he does not believe his own rhetoric, or else he is deliberately—perhaps for ideological reasons—holding back on what I believe could be an important means of investment.
Secondly, I am concerned about a choice that has been made. At a time when we are preaching austerity to people who are bleeding in that many of them cannot pay their heating bills or their rent or buy food, it is bizarre that the Government should choose to prioritise reducing the top rate of tax for the top 2% of earners in this country. That demonstrates a blatant disregard for the very difficult sacrifices that we are asking people to make.
Let us consider how the money could have been spent. There has been much argument today about whether or not the rich will pay more. The one thing we do know, however, is that it has been calculated that that reduction in the top rate of tax will immediately release £3,010 million to the top 2% of wage earners. The Government are relying on tax exiles flooding into the United Kingdom and beating on the door of Her Majesty’s Revenue and Customs to ask, “May I pay my tax in the United Kingdom now?” The Treasury hide behind the theory of “behavioural assumptions”, but we need only look at the literature to see that there are a lot of assumptions that may, or may not, be realised. The same situation applies for the money that could come from stamp duty and limits on the back claims.
The fact is that this money could have been used in a better way. For example, the Government could have used it to lower fuel duty, but despite the fact that fuel prices are going up, the Government are going to take £800 million more off motorists in the United Kingdom this year.
Jesse Norman (Hereford and South Herefordshire) (Con)
I am thoroughly enjoying the hon. Gentleman’s speech and would not wish to interrupt it for a second, but may I ask him what money he is referring to when he talks about a better way of spending that money? What we know from the Treasury is that our top rate raised very little incremental cash and that reducing it is likely to raise more money from the same people. So what money is he talking about?
Sammy Wilson
According to the Treasury, the direct impact—the direct static cost—is going to be £3,010 million. That is the figure that the Treasury has put out. Some of that money will be offset by behavioural change, but that is based on assumptions about tax income elasticity and what happens to income. So real money will go back to people who currently are top rate taxpayers. My argument is this: if the Government were going to release that kind of fund, would it not be far better to release it either to bring more low-income families out of tax or to release the hard-pressed motorist from the fuel duty that is going to be imposed on them?
Sammy Wilson
That is so, and I wish to discuss another measure in this Budget that will affect hundreds of thousands of people.
Mr Nigel Dodds (Belfast North) (DUP)
The people of Northern Ireland are grateful to my hon. Friend for the work he does as Finance Minister in Northern Ireland to move its economy forward. Does he agree that people up and down the country are terribly disappointed that the Budget contains no additional measures to reduce the amount of fuel duty and VAT on petrol and diesel, which, in Northern Ireland, is the highest in the entire European Union?
Sammy Wilson
The continuation of the measures that the Government have in the Budget already will take a further £800 million out of motorists’ pockets over the next year.
The final point I wish to discuss is regional pay. Some people may regard what I am about to say as special pleading for Northern Ireland, but may I remind hon. Members that this will have an impact on those who represent constituencies outside London and the south-east of England? This measure will have an impact on all the rest of the United Kingdom. Some have the idea that, because there is currently a difference between private sector and public sector wages—it is important to make the point that the difference is current—wages should be frozen for people in the public sector, so as to stimulate the private sector. I do not quite understand the economics behind that, because freezing wages in the public sector will have a deflationary impact, especially outside the south-east of England, given the prominence of the public sector not only in Northern Ireland, but elsewhere. The areas of the United Kingdom that are currently falling behind, even given the slow rate of economic growth for the country as a whole, will be the parts that will be most punished. This is one of the most divisive measures that I have ever heard about and it does not even address a problem, because there is no evidence for it. We have 3 million people unemployed and we are not recruiting in the public sector, so how on earth are higher wages in the public sector going to prevent private sector employers from being able to find workers? This argument does not work. The impact of the measure will be very detrimental. I hope that we will have an opportunity to re-examine that in much more detail in this House, because I believe it is one of the most pernicious measures floated in this Budget.
There are things that the Government could have done but have not done. There is an unfairness in this Budget; it is an unfairness in respect of not only different income groups, but different regions of the United Kingdom. I am a Unionist and I believe in the value of the Union. I believe that it is important that, as part of the Union, we bear the burden when there is a problem. As my right hon. Friend the Member for Belfast North (Mr Dodds) mentioned, that is one of the reasons why, despite the unpopularity that this has probably led to in Northern Ireland, I have made the case that if there is an economic crisis facing the United Kingdom, we cannot ask to be exempt from the burden to be borne. However, it makes it far, far more difficult to say to public sector workers that their wages are going to be frozen, to say to the ordinary citizen that they should tighten their belt and to say to people who live in Northern Ireland that they have to go through these hard times when the Government are saying to those who can most afford it, “We are asking you to loosen your belts. We are going to fill your pockets.” That is exactly where the unfairness in this Budget lies.
For that reason, although I want the Government to succeed, I believe that they have not taken the opportunity to inject money into the economy. If they have credibility, they should use it in the financial markets and borrow to invest in infrastructure, rather than paying people to sit on the dole. If the Government want people to face up to the hard economic facts, they should do things fairly and not in a unjust and uneven way. If they want to be the Government for the United Kingdom, let us make sure that some parts of the United Kingdom do not have to bear a bigger burden than others.
Brandon Lewis (Great Yarmouth) (Con)
I wish to focus primarily on the Budget’s impact on business and growth, but before doing so I wish to touch on one other area: duty stamping on alcohol. The Red Book says that the Treasury will look to move forward with its consultation on duty stamping, and I welcome that important step. The wholesale industry estimates that the revenue lost to the Treasury through the lack of duty stamping on beer alone is about £500 million a year and that the loss might be the same again in respect of wine. We need to consider beer and wine together, because the two products are clearly becoming competitors and we cannot deal with one without looking at the other. Duty stamping on spirits is already in place and it has not affected the sale of spirits or the industry, as spirits sales in this country have increased by 8%. So it is really important to examine this area, in order to plug another hole and get back for the Treasury some of the money that was wasted and spent by the previous Government.
Such an approach will also have a knock-on benefit, as so much of the Budget does, for other Departments and other areas. For example, a benefit to the health industry will result from a lack of the cheap alcohol that can be found in small corner shops in some parts of our country. Such shops do not necessarily buy through the legal market, taking advantage of alcohol for which the duty has not been paid and which is then sold cheaply to young people. We can cut that out, too; this has a big economic impact and a big health impact, and I welcome the move in the Budget.
Jesse Norman
My hon. Friend may not be aware that I have just been granted a Westminster Hall debate next Tuesday on precisely this issue, so I am extremely grateful to him for introducing it in the main Chamber.
Brandon Lewis
I congratulate my hon. Friend on securing that debate and I look forward to joining him on Tuesday to discuss the issue in more detail.
No Budget stands alone, and what is important about this one is how it builds on what has been done in the past couple of years, particularly for business. When we consider how we want to move forward in having an economy that grows, with more jobs and more prosperity for all, it is important to remember that we need to rebalance our economy and have growth in the private sector. So the moves that have been taken for business are hugely important, and the further lowering of corporation tax and the speeding up of that process is very welcome. It makes it very clear that our door is open for business. When private sector businesses grow, they need more staff and more money. Less is then spent through the welfare state and our whole economy benefits.
The change in the top rate of tax, which gets rid of the 50% rate, is also important. Apart from the economic arguments that have already been rehearsed today, that has a psychological impact. A message goes out to high earners—the people who are business leaders and business owners—that we value the work they do. People who aspire to get to that position see that they can work hard, develop and grow their business, and benefit as well.
Austin Mitchell (Great Grimsby) (Lab)
Does the hon. Gentleman accept that as well as giving those people that possible incentive, the change also gives them an incentive to spend more time on the golf course?
Brandon Lewis
That shows a lack of understanding of how the business world and business leaders work.
Andrea Leadsom
Does my hon. Friend agree that it is astonishing that the Opposition do not seem to realise that it is the private sector, wealth generation and incentives that create the income for the Exchequer that enables us to pay for good, sound public services?
Brandon Lewis
I thank my hon. Friend, who makes an important and valid point.
One of the important things that the Government have done is to introduce enterprise zones. I appreciate that I have an interest in that as chairman of the all-party group on enterprise zones and local growth, but they are hugely important. In the New Anglia enterprise zone alone, we are looking at about 2,000 extra jobs in the next couple of years, growing possibly to 15,000 in just one enterprise zone in the East Anglia region that is focused on energy.
It was pleasing to hear the Chancellor explain today that one of the industries on which the Government are focused is energy. There are huge opportunities for growth for this country, with £50 billion of business available to companies along the coastline of East Anglia. We have a whole energy offer and proximity to the energy market that are almost unique. We are most often competing with countries overseas for that business, so it is hugely important to companies to understand that the Government are supportive and want that business to be based here in this country.
The moves on corporation tax and capital allowances for enterprise zones are hugely important. I have a couple of asks, to follow on from Prime Minister’s questions today. I make a plea to the Chancellor and the Treasury to look hard at whether we can extend that capital allowance opportunity to all enterprise zones to provide a supercharged boost as they move forward to growth.
Bob Stewart (Beckenham) (Con)
Does my hon. Friend share my hope that we can bring corporation tax down again next year? That would really help business. Does my hon. Friend agree?
Brandon Lewis
Absolutely. That is why I welcome the Chancellor’s comment today. The further and the faster we can go on that, the more welcoming we will be for business, and therefore jobs and economic growth.
I have one other suggestion for the Treasury to consider in the years ahead—how we deal with regulation. The changes to planning will be a massive advantage to businesses. One of the attractions of the enterprise zones is how they make planning so much easier by freeing it up. We can do more on regulation. One in, one out is a great aspiration, but it depends on what the one coming in is. There is a strong argument for looking at the billions of pounds a year that business has to spend on dealing with regulations, and targeting a value figure to cut the cost of regulations in this country.
I welcome the Chancellor’s statement about creating certainty for decommissioning, particularly for the oil and gas industry. That will be widely welcomed by the industry and I am sure it will be welcome in Great Yarmouth, as we have a huge number of businesses working in that field, developing and investing massively in our country and offering more jobs and more employment. It further builds on the opportunities for the New Anglia enterprise zone.
To see the benefit for business, we need strong, growing, improving infrastructure. I appreciate the work that the Government have done and the announcement last year of the dualling of the A11, which will open up that corridor of economic growth right through East Anglia, particularly in Suffolk and Norfolk. I make a small plea for something on which the Norfolk and Cambridgeshire Members of Parliament are working closely—to open up the spine that the A11 joins, with the full dualling of the A47 from Great Yarmouth through to Peterborough. We will continue to build the case for that and the economic growth that it would bring.
The Budget brings further benefits through the mobile infrastructure fund. The A143 from Great Yarmouth to Haverhill will benefit. The Growing Places fund will put almost £6 million into the New Anglia enterprise zone. Both of those provide more beneficial opportunities for business. As well as unlocking infrastructure growth, we should turn our attention to unlocking growth in the construction industry, which is a huge employer. We need more homes and more infrastructure to be built.
Employees and customers must be able to get from their base to the marketplace, and rail infrastructure can play an enormously important part in that. My hon. Friend the Member for Mid Norfolk (George Freeman) is working hard on some ideas about how to take that forward. He is to be congratulated, and I know he will speak in the House shortly. Through the work being done by the Department for Transport and supported by the Treasury, we have a further opportunity to unlock economic growth. We have just over 2,500 railway stations across the country, many of which we would all like to see regenerated and improved. Dealing with them as real estate rather than just as transport hubs would allow us to unlock up to £27 billion of business for the construction industry.
It is important that that kind of infrastructure develops and grows so that people can get to the marketplace quicker and businesses can transport their goods, products and customers from their bases to where they need to be faster. Broadband will open up communications and be a hugely important part of that, particularly for areas, such as Norfolk, with rural hinterlands where the transport infrastructure is not as good as we would like it to be. Broadband communication could make up for that deficit, so the target of 2015 is very welcome in Norfolk.
We have huge opportunities for growth. This Budget knits together work done by a number of other Departments and the past few Budgets and presents a real opportunity to encourage business to grow. It sends a strong message to business that this country is not only open for business, but clearly working hard to create the infrastructure and environment in which business and business people can flourish, and I welcome that from the Treasury.
Stewart Hosie (Dundee East) (SNP)
I will start by welcoming a couple of the measures announced today. The Chancellor spoke about backing the creative media sector, which has the potential to be very helpful for the games industry in Dundee. It is just a pity that the old scheme was scrapped and we had to have a hiatus until this one was introduced. We will of course look at the fine print to find out precisely what it does. I also welcome the doubling of council tax relief for serving service personnel, which some of my hon. Friends have campaigned on for many years, and the Chancellor’s comment that he expects to see exports doubled. I hope that when that work is under way the UK Government will work with Scottish Development International, which is already working with nearly 10,000 businesses to internationalise their work.
At face value, the changes to the decommissioning scheme and the new field allowance for the North sea are very welcome. Of course, that is a huge humiliation for the Chief Secretary to the Treasury, whose bright idea it was to increase North sea taxation last year without consulting the industry. However, I have to point out that from 2013-14 onward the decommissioning scheme will actually bring in an additional £1.2 billion to the Exchequer and from 2014-15 onward the new field allowance will bring in £130 million. That might be behavioural change; we will have to see precisely what it means. I also point out, in a gentle aside to the Liberals who have talked about how marvellous the Budget is, that in relation to the squeezed middle the threshold at which people pay the 40p rate of tax will decrease next year to just over £32,000—they have been not so much squeezed as almost halved by the actions of the Government.
The Chancellor, unsurprisingly, sought to take credit for his stewardship of the economy, but before he and his friends get carried away let us look at what he actually did. The deficit on the current budget for 2011 was meant to be £104.8 billion, and it was forecast to be £90 billion for 2011-12. Today the forecast for 2011-12 was increased to £98 billion. The net borrowing requirement was forecast to be £145.9 billion for 2010-11 and £122 billion for 2011-12. Today the forecast for 2011-12 was increased to £126 billion. The national debt, on the treaty calculation, was due to peak at 87.2% of GDP, or £1.2 trillion, in 2013-14, but today it is now expected to peak at 92.7% of GDP in 2013-14, which is £1.36 trillion.
Therefore, there was not a great deal for the Chancellor to be pleased about. That will, of course, allow him to claim that he is on track to meet his fiscal rules—that the structural current deficit should be in balance in the final year of a rolling five-year programme and that debt is falling as a share of GDP by the end of that period—but both those objectives are highly dependent on GDP growth, which, as we have noted in previous Budgets, is massively dependent, according to the OBR, on quite incredible, unbelievable and unmet rates of business investment.
In 2010 the Government suggested that business investment had to grow between 6.7% and 10.6% a year. By the time we got to the OBR’s fiscal outlook in November 2011 growth in business investment had turned negative for 2011 and the forecasts had been changed to deliver business investment growth from 2012 to 2016 of 7.7% to 12.6% a year. What we expect now, the Government having failed on all their measures so far, is business investment growth of between 6.4% and 10.1% from 2013 onward. I am certain that when we get to the autumn statement and are looking at weaker numbers and next year’s Budget the Chancellor will simply fiddle and make more aggressive the business growth investment figures for future years to pretend he is on target to meet his own rules.
That is why the OBR told us last autumn that the contribution of general Government consumption to UK GDP growth would be negative throughout the spending review period, and according to today’s Budget it still will be. It is also why this coalition’s cuts are hugely damaging not least in Scotland, and the changes over the spending review period that delivered an 11.3% real terms cut to Scotland and a 31.7% cut to the capital budget are barely altered by today’s announcements.
Never letting the facts get in the way of a good attack line, the Chancellor made the point that the UK Government are able to borrow quite cheaply at the moment. What he did not mention, and this was genuinely surprising, was the triple A rating that he normally uses in that argument. I suspect that it is because he has worked out that, although the UK had its triple A rating put under threat in February, it was paying an amount of money in yield on its five-year, 10-year and 30-year bonds, while Japan, which had a net debt twice that of the UK and two double A negative ratings, was paying a fraction of the yield on its bonds.
So, although I am very pleased that the UK is able to borrow at reasonably god terms, I am pleased also that the Chancellor has abandoned his boasts about the triple A rating, stopped fetishising it and is concentrating on what really matters, which is the yield that the UK pays.
Jesse Norman
The hon. Gentleman is slightly understating the case, is he not? The fact is that we are borrowing at extraordinarily low—historically low—nominal yields, and, given the level of inflation, at even lower real yields. That is a result of the deficit reduction strategy that has been followed, and one reason why we should not fret about double or treble A ratings is that the United States itself has been downgraded, as have one or two other countries, and their borrowing costs have not necessarily been affected. That is just a rational reaction to events in the capital markets.
Stewart Hosie
One might also make the case that the United States, with a fiscal stimulus programme, is borrowing money at negative real terms percentages. It has engaged in fiscal stimulus, not in the cut-and-burn approach of the UK Government, and, as the right hon. Member for Doncaster North (Edward Miliband) says, the US has succeeded where the UK is failing.
Andrea Leadsom
Surely the hon. Gentleman agrees that the US economy is not the same as the British economy. The US benefits enormously from being a foreign reserve currency, for example, so the situation is very different, and we cannot simply equate what happened in the US with what happened in the UK.
Stewart Hosie
The hon. Lady is obviously right that we cannot draw a direct comparison, and that is why I would not draw a direct comparison with the yield rates paid in Japan, but the point I was making is that it is wrong for any politician, particularly the Chancellor, to imply that a credit rating agency’s score is in any way related, or correlates directly, to the real yield that a Government pay.
Of all the things that the Chancellor could have done in the Budget but did not, the failure to act on the rising price of fuel was the most disgraceful. The previous Government were awful on fuel. They introduced the fuel duty escalator and opposed the introduction of a fair fuel regulator at every turn, but this Government, notwithstanding the rhetoric before the election, are little better.
Let us understand what this Government’s fair fuel stabiliser actually does. Fuel continues to rise by inflation and will, as confirmed today, when the price of oil is high, rise by inflation-plus—an escalator—when the price is low. A real fuel duty stabiliser would see the duty rate fall when the price rose, precisely because the UK Government already receive a VAT windfall at the pump or a North sea windfall at source in order to pay for it. Given the scale of the North sea windfall in particular, with £70 billion forecast over six years in last year’s Budget, which was £17 billion more than was identified the previous November, the failure to tackle properly the rising cost of fuel genuinely is a disgrace.
This year the forecast revenue for the six years from 2011 onwards is almost £50 billion, but that is based on a price for this year and the next two years of $111, $118 and $112 a barrel. The spot price today is $124.7, so we can safely conclude that, as usual, the UK Government’s assessment of North sea revenues will be understated. There is more than enough money to tackle the rising price of fuel properly, and not as this Government have done.
It has been described as pernicious already today; it is a pernicious measure to be cemented, I think, in future policy—I am talking about the unfairness of the proposal for regional pay. It will be extraordinary if the same person doing the same job in the same office with the same clients is paid differently in different parts of the country. I am very pleased indeed that the measure will not apply to Scottish Government civil servants, although I suspect that there will be huge resistance to the proposal from UK civil servants working outwith London.
Jake Berry
The hon. Gentleman is being extremely generous in giving way. Before I came to this place, I worked in a law firm. We had three offices—one in Manchester, one in Liverpool and one in London. We all did the same job, but we were all paid different salaries. Does the hon. Gentleman think that that was wrong?
Stewart Hosie
That was in the private sector. I am sure that the hon. Gentleman would say that he would negotiate his own wages or join others in a union to negotiate wages. We are talking about public service. If the hon. Gentleman’s attitude is the same as that of his party’s Front Benchers, he will seem to be saying that a public servant in Dundee or Dudley is not worth the same as a public servant doing the same job in Dartmouth. That would be worrying.
The real actions needed to kick-start the economy were almost wholly absent from today’s statement. The limited action on bank lending was announced yesterday and we have heard many of the promises before. I hope that the national loan guarantee scheme works, but to ensure that it does can we have transparency? Can we disaggregate the numbers so that no sector and no part of the UK is sold short in respect of that additional covered lending?
There was no specific action to get people to work or keep them in their jobs. Nowhere is that issue more important than with young people. The introduction of a national insurance break to help employers take on youngsters who do not meet the criteria for the Work programme would have been very welcome, but that was missing.
Shamefully, there was no action on direct capital investment, the most important thing that any Government can do. I am surprised that those on the Treasury Bench did not listen when the OBR said in 2010 that the impact multiplier for direct investment was 1:1, that for tax cuts it was 1:0.3 and that direct capital investment was three times more important and three times more beneficial at creating GDP growth than tax cuts. The Government even kept the squeeze on the very businesses that we need to create the growth. There was no change to the miserly annual investment allowances and that was a shame.
The Chancellor said that the Budget was fiscally neutral. To pay for his tax cut for the rich, he is squeezing the cash for services for those who need them most. When one considers that the total cost of the fiscal consolidation by 2015-16 will be £155 billion, that year and every year after that, and given a ratio of 4:1 spending cuts over tax increases, we can see where the priorities of the Government lie—not with people, not with jobs and not with growth.
Mr Robert Syms (Poole) (Con)
First, I draw Members’ attention to my directorship and shareholding in the Register of Members’ Financial Interests.
We have to understand that the coalition Government inherited an extremely difficult situation, with a massive deficit. The situation cannot be dealt with in one or two years; we are talking about a process over several years to get the public finances into reasonable order. Of course that would be easier with a benign world economy, but given the eurozone issue and higher fuel prices, there have been a lot of headwinds over the past 12 or 18 months. Nevertheless, the British economy has continued to grow and many jobs are being created, although the outlook is more difficult.
I welcome the fact that today the Chancellor has stuck to his plan—long-term fiscal consolidation. Clearly, there is very limited room for manoeuvre. I despair a little when colleagues are always trying to spend more money because, as we heard from the last Government, the money has run out. We are really talking about marginal changes to the tax system. Early in his speech, the Chancellor said that the Budget was fairly neutral in terms of its impact on the British economy, and that is probably right. Indeed, I am of the school of thought whereby I sometimes think it would almost be better to cancel the Budget and continue with the same policy rather than have to jump up and make lots of announcements and pretend that one is being hyperactive.
There are things in the Budget that I welcome. I certainly welcome the rise in personal allowances. It is vital that we increase incentives to work. Universal credit, when it comes in, will be vital in increasing those incentives, and the benefit cap is also significant. On the other side of the equation, it is important that people on low pay, who pay tax at higher rates than many people abroad, should be taken out of the tax system. We have made progress today, and I hope that we will make further progress in going beyond the £10,000 limit, because we have to get to a position in which people on relatively low wages really feel that there is an incentive to get out there, take a job and make a contribution for their family.
I welcome the Chancellor’s reiteration of his view that we should pay our way in the world by restoring the balance of trade, getting investment in, and trying to improve investment in the manufacturing sector, which has shrunk for too long. We need a good financial services sector, but it is vital that we nurse and increase investments in manufacturing. Recent announcements on the car industry are very welcome and bode well for future export levels.
One of the legacies of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) is that we have one of the longest tax codes in the world. We must simplify it because businesses and individuals spend an awful lot of time trying to deal with its complexities instead of running their businesses and selling their products. I welcome the Chancellor’s proposed tax simplifications, which are vital.
Over the past few months there have been negotiations about the European Union treaty on more fiscal consolidation and co-ordination of tax policy. That gives Britain a great opportunity. If we can get our tax rates below those of our competitors on the continent, we will get a lot more inward investment. I welcome what the Chancellor has done on corporation tax, because we must reduce the rate. Let us not forget that most British companies are owned not by multi-millionaires but by pension funds. This measure means that we will leave more money in businesses and create a better environment for investments and pension funds, and that we will all be richer and more employed.
I welcome the Chancellor’s acknowledgement of the fact that we need to do more about airport capacity in the south-east. I recognise that there are problems to do with noise at Heathrow, Gatwick and Stansted, but it is not sustainable in the long term to say that we cannot have another runway at any of those airports; we have to have it somewhere. I do not know whether a new magic runway somewhere to the east of London is the answer. If we are to compete in the world economy, we must have routes to the world so that we can sell our exports. Some continental airports, including Schiphol in Amsterdam, Frankfurt and De Gaulle, now have routes to centres that we cannot accommodate within our system. We must have regard to the environmental problems but we must also, as a forward-thinking Government, consider how we can get more airport capacity.
The 45p tax rate has generated a lot of heat, although it is not happening yet. At the end of the day, one should try one’s best to raise money. The existing rate is not raising sufficient sums, and those who pay themselves greater amounts are in a good position to vary what they are paid in ways that give them opportunities to avoid taxes. Today’s approach has been to see capital gains tax and stamp duty on very expensive properties as a more predictable way of raising money than trying to maintain a rate that is not doing the job.
Dan Byles (North Warwickshire) (Con)
Given all the hoo-hah about the 50p tax rate, does my hon. Friend find it interesting that in its 4,753 days in government, Labour had a top rate of 50p for only 37 of them?
Mr Syms
Absolutely. Most of our competitors have lower top rates of tax, and that is significant because it means that this is about how we compete with them. If we want to get more manufacturing and jobs in Britain, then it is important to remember that some of the people who are looking to invest in Britain are top-rate taxpayers. It is significant that the stamp duty changes will raise five times as much as would have come in from the 50p top rate of tax.
I welcome what we are doing to encourage the oil and gas industry. It is important that we do more to use those assets. The changes that we made last year were not very helpful. One of the components of GDP that has fallen the most over the past 12 months is oil and gas and quarrying. If we want to maintain the advantages of our oil and gas industry, we need to do far more to extend its life. The tax changes in that area are to be welcomed.
Overall, the strategy has to be “steady as you go”. We have to increase the incentives to work. The main aim is to leave latitude for the Bank of England. As the Chairman of the Treasury Committee said, low interest rates and, certainly in the short term, quantitative easing will have more of a direct impact on the economy than anything that the Chancellor could have done fiscally today. If we have increased the incentives for lower-paid people to take work, if we have stuck to the plan, if we have given confidence to the markets, if we have made a number of announcements that will help the economy, such as those about broadband and investments, it is a job well done. I welcome the Budget.
Diana Johnson (Kingston upon Hull North) (Lab)
As usual, the hon. Members who speak later in the debate will have the advantage of having been able to study the Budget more as it starts to unravel. I will make some initial comments about what is clear so far from the Chancellor’s speech. I think that it is hugely discourteous to the House of Commons that almost everything that was announced in the Budget has appeared in the papers and on other media in the past few days.
Unfortunately, I do not believe that this is a Budget for growth in areas such as Hull, which I represent, nor that it is fair for people in my constituency. On 23 June 2010, after the first coalition Budget, I said in the House that
“wealth creation and enterprise will suffer in Yorkshire.”—[Official Report, 23 June 2010; Vol. 512, c. 326.]
It did suffer. On 23 March 2011, after the second coalition Budget, I said:
“this is not a fair Budget; neither is it a Budget for growth.”—[Official Report, 23 March 2011; Vol. 525, c. 1024.]
It was not a Budget for growth. The growth that was starting to return under Labour in 2010 was snuffed out by 2011. We have now had a year of flatlining. In Yorkshire and the Humber, 40,000 private jobs have gone in a year. We are supposed to be gaining private sector jobs, not losing them. Private sector jobs were supposed to replace the public service jobs that are being slashed, to create the growth that is needed to cut the deficit. We all, of course, want to see that.
Just outside Hull, there are 845 long-standing, skilled employees at BAE Systems, working in the strategically vital defence manufacturing industry, who will probably lose their jobs this year because of BAE’s decision. Taxpayers will have to meet costs of up to £100 million because of those redundancies. Those skilled jobs will be exported to countries that have Governments who are willing to nurture their industries for the long term. It is worrying that the defence White Paper, which was produced just a few weeks ago, indicated that the British Government would not necessarily buy defence equipment from British companies, but they certainly want other Governments to buy from British companies. What kind of message does that send out to support exports?
Hull’s future is as a national hub for green technology. Thanks to the local efforts of businesses, councils and others, Siemens will we hope be bringing offshore wind turbine manufacturing to Hull shortly. That would open up a wealth of opportunities for the city and the sub-region. Hull would have been an ideal location for the green investment bank, but unfortunately that has gone to Scotland. In one sense, squandering the chances to attract new jobs in sunrise industries to Hull is more damaging than losing existing local jobs. Recently, 100 jobs were under threat at Warmsure in Hull because of the Government’s decision in the solar feed-in tariff debacle. We know that there is strong overseas competition in renewables. We cannot afford to export jobs in these growth industries. We need to export our products, not our jobs. I was concerned that the Chancellor did not give a clear message today about the Government’s commitment to renewables.
Hidden in the Budget is the announcement that VAT will be charged on caravans. That will have a real impact on the economy in Hull, because we manufacture a great deal of this country’s caravans. I understand that it could reduce demand by almost 30%, which would be another hammer blow.
Mr David Hanson (Delyn) (Lab)
My hon. Friend may not know that only two weeks ago, I opened a new caravan park in my constituency in north Wales with caravans supplied by manufacturers in Hull. The proposed VAT on caravans will have a dramatic impact, and as she has just said, it will reduce demand by 30%. Is it good practice to reduce demand for the manufacturing industry in the UK through a tax that will damage our economy?
Diana Johnson
My right hon. Friend makes a very good point and indicates, again, that this is not a Budget for growth—the very opposite, it seems.
The latest official statistics show that there are 5,447 jobseeker’s allowance claimants in Hull chasing 177 vacancies. That is 30.8 people after each job, which is the 10th worst rate in the country. The overall claimant count across Hull was up by 12.4% in the latest period. Kingston upon Hull North’s long-term youth unemployment among 18 to 24-year-olds has gone up by 155% in the year to February, which is shocking. Hull needs a determined focus on specialist vocational education and training, to equip our youngsters to get the jobs in green industry that could be important to the economy of Hull and the region.
Engineering qualifications are very important, and I was disappointed that the Secretary of State scrapped the diplomas scheme, particularly for engineering diplomas. As I asked the hon. Member for City of Chester (Stephen Mosley), why is information and communications technology not part of the English baccalaureate to show how important ICT skills are for our future?
The Government have talked a lot about rebalancing the economy, but people in the north who are seeking work—the north’s jobless—are being told to move to the south for work, and those in the south who are looking for affordable homes are being told to move to the north. Is that rebalancing the economy? The Government have to think again. They should ensure that there are enough jobs and homes in each region to make the whole country work together effectively.
I wish to focus on some of the key announcements in today’s Budget, starting with the raising of the personal allowance to £9,000 next April. Citizens Advice has already put out a quote on the matter, stating:
“Raising the personal tax allowance is an empty gesture to struggling families on low wages.”
That blows a hole in the argument that the Liberal Democrats try to put forward about the Budget promoting fairness.
Like cuts to income tax rates, raising the personal allowance could be part of a plan to boost demand and growth, provided that it was part of a group of measures such as those outlined in Labour’s five-point plan. In a time of scarcity, the Government’s plan, costing about £3.3 billion, is an inefficient way of helping the poorest in our society. It is clear that middle and upper earners will benefit most from the change. I understand that they will get about an additional £175 each year.
We must consider that against the losses that individuals and families will experience. For instance, the average family is due to lose £530 from 1 April because of the changes to VAT and benefits, including child benefit freezes. This April’s changes to the working tax credit requiring couples working part time to do a 24-hour week rather than a 16-hour week, at a time when a lot of people’s hours are being cut and jobs are disappearing, will affect 212,000 families across the country, including nearly 450 in my constituency. They will lose nearly £4,000 a year, and they are families that are struggling just to get by. What help was announced for those families? There was nothing. If the Government were serious about fairness, they could have done something about that.
Research by the Child Poverty Action Group shows that two thirds of the families who are about to lose tax credits are already in poverty, so I dread to think what will happen to them now. They are punished for doing the right thing and for trying to hold down a job at a time when it is so difficult to get a job or to get further hours of work.
To make matters worse, the coalition is now moving ahead with regional pay in the public sector, with the Liberal Democrats’ support. That is not surprising, because the Liberal Democrats have often advocated a regional minimum wage. Regional pay is more evidence-free policy making by this Government, based on free market dogma. There is no real evidence that national public sector pay crowds out the local private sector. Indeed, public sector workers, living and spending locally, are a vital part of supporting the private sector in Hull’s local economy. We already have London weighting to help workers with the extra costs of living in the south, so there is no reason for different pay rates between the regions.
Local or regional public sector pay could drive down wages in some of the poorest areas, taking billions more out of local economies and accelerating the growing north-south divide. So much for rebalancing the economy.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is making a pertinent point, but in some parts of the public sector will not the opposite be the case, so that, for example, hospitals, desperate to recruit the best clinicians, will end up paying more to compete with hospitals in London and the south?
Diana Johnson
Absolutely. My hon. Friend makes an important point. We know that the NHS is in for a torrid time in the months and years ahead, and he has identified another problem that it has to tackle.
The combination of regional pay and the unfairness in the Budget contradicts the coalition’s rhetoric about making work pay and rebalancing the economy, sucking even more money out of areas such as Hull and the north in favour of the wealthier areas, mostly in London and the south-east.
I am also worried that regional pay could mean that some of the brightest and best, for example, teachers—we need the brightest and best teachers in areas such as Hull—will not come to Hull if the pay is not the same as in some other parts of the country.
Let me comment on the Liberal Democrats’ spin to the effect that this is a Robin Hood Budget. It joins the long list of broken Liberal Democrat promises. We had the abolition of tuition fees, which were then tripled, and education maintenance allowance was axed. The Liberal Democrats promised 3,000 more police but we are getting 16,000 fewer. They promised opposition to VAT, but we how have higher VAT. They seem to have dropped the armed forces pay increase and many more of the opportunist promises they made before 2010, when they had full knowledge of the deficit that would face them. The tycoon tax is just the latest Lib Dem slogan. Increased stamp duty is all very well, but it hits only the minority who sell the property in any year. It needs to be matched by a clampdown on general stamp duty avoidance.
The other major announcement is to cut the top rate of tax. [Interruption.] The Liberal Democrats have no defence on that.
Madam Deputy Speaker (Dawn Primarolo)
Order. The right hon. Gentleman will not shout across the Chamber at somebody who is speaking. If he wishes to intervene, he should do it in the normal way. That applies to all hon. Members.
Diana Johnson
The other major announcement is the top rate of income tax reducing from 50p to 45p for those earning more than £150,000. To do that, given the current state of public finances and the economic situation, is simply wrong and unfair. I do not understand why the Liberal Democrats have agreed to that when it will deliver a £40,000 windfall to 14,000 people. That helps the wealthiest, which always seems affordable to the Government. Boardroom pay rose by 49% last year; the bonus season is running riot—we are not all in this together. It is austerity for the many and wealth for the few.
Jesse Norman (Hereford and South Herefordshire) (Con)
Several speeches have reminded me of Herbert Asquith speaking on the Licensing Bill in 1907, when he gave an eloquent speech for about an hour and a quarter and was then asked for a summary of his notes, which consisted of one page with the words, “Not so many pubs.” In other words, we have had an enormous amount of words but not much content; a lot of
“sound and fury,
Signifying nothing.”
I welcome the Budget on three grounds. First, I welcome it for my county of Herefordshire. Many of its provisions are extremely good. We have 100% council tax relief for servicemen and women, which will make a great difference to many of my constituents. We have a commitment to infrastructure, which we need in our rural areas. We have support for smaller cities and broadband, of which we hope to take advantage, and we have tax simplification for small businesses. All that is extremely welcome.
I also welcome the Budget from the standpoint of the nation as a whole. It has so many things to recommend it. I think of the expansion of support for exports; the northern hub, which will start to fill the gap created by the amazing lack of infrastructure linking northern cities; the integration of the tax and national insurance systems; and the new tax statement, for which my hon. Friend the Member for Ipswich (Ben Gummer) is greatly to be thanked. I also think of the Treasury’s work on its new review of employee ownership. That would be an important repopulation of our system and a move away from the crony capitalism of the past decade.
Debbie Abrahams
Does the hon. Gentleman agree with the Chancellor that “aggressive tax avoidance” is “morally repugnant”? If he does, why does he believe the Chancellor failed to mention how he will address the tax avoidance of private health care companies—the same companies that have been lobbying in favour of the Health and Social Care Bill?
Jesse Norman
The answer is that a general anti-avoidance rule is what it is. If there is avoidance by health care companies, I hope they will be captured by the rule, in just the same way that I hope the rule extends to include the tax affairs of Ken Livingstone as he runs for the London mayoralty.
Finally, I welcome the lower corporate tax rise, and most of all the rise in the income tax threshold. This is an extraordinarily important moment in British history, in which we begin to roll back the ever-pervasive state created under the previous Government, and in which people are given freedom and control over their economic affairs. I greatly welcome that.
The Budget continues a path of renewal that was begun two years ago. We must never forget that this country lost ground during the so-called boom years of the late 1990s and 2000s. When we adjust the gross domestic product per capita numbers, we see that, in fact, they overstate the country’s success, which relied on immigration, a boom in house prices and a boom in personal indebtedness. When those booms collapsed, so too did our economy.
We lived under the illusion of growth. We thought we were doing better than other European countries, but in fact we were not. We were having our breakfast, lunch and dinner eaten in front of us by Brazil, Russia, India and China and other emerging countries. That was also a time in which a culture of crony capitalism took over this nation. The effect of uniquely targeting inflation gave support to those asset bubbles, which in turn created an economy that was reliant on revenues from the financial sector and fed into the lack of balance, which the Government and this Budget are doing much to address.
On local grounds, speaking for Herefordshire, on national grounds, speaking for the country as a whole, and on historical grounds, as this country continues a transition from cleaning up the mess to rebuilding and renewal, I welcome this Budget.
Mr David Lammy (Tottenham) (Lab)
This is my first opportunity to speak about a Budget following the spotlight that fell on my constituency in the summer, so I want to begin by supporting some measures in it. Business and shopkeepers on Tottenham high road recovering from the mayhem and violence, burnt shops, broken windows and the loss of business will welcome the simplification of taxes. Many of those small businesses still grumble and talk about the complexity of such regulation.
There has been a lot of concentration in the House over the past few months on the undeserving poor. There has been heated debate, and I have certainly made my views clear on issues such as housing benefit. I therefore welcome the fact that the Chancellor has concentrated his attention on those who play the system in another way, and that he has looked at unearned income and property taxation. The changes to stamp duty and capital allowances are to be welcomed.
I represent the constituency with the highest unemployment rate in London, and it is right that I ask, on behalf of my constituents, whether the Budget does enough to alleviate that tremendous problem. This is only a week after we discovered that 56% of young black men in Britain are unemployed. That is a huge concern which should be shared across the House. All unemployment, among all members of our population, is a disaster, and long-term unemployment leaves serious scars, but we should be particularly concerned about that statistic.
Much has been said about a feral underclass. I do not like the term. The word “underclass” summons up visions of the caste system in India and we ought to reserve the word “feral” for discussion of rodents. However, those in the House who either grew up on working-class housing estates or have significant housing estates in their constituencies will recognise a workless class—those on housing estates turning from being working class to members of a workless class.
I do not want to be completely partisan about that because there was structural unemployment in our system under Labour. We talked about that largely in the context of those not in education, employment or training. NEETs have remained a long-running sore in this country. However, it should be of huge concern to the House that in a constituency such as Tottenham, 6,000 people are unemployed and 21 are chasing every vacancy.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Does my right hon. Friend share my concern about the particularly high unemployment rate among young black men? It is a scourge that has existed in our society for far too long. The recent figures fill me with dread not hope, but the Government’s policies do nothing to help them.
Mr Lammy
My hon. Friend, like me, recognises that problem and will know, from the history of Hackney, that this is of such concern because in constituencies across the country, in areas as different as Middlesbrough, Hull, Tottenham and Hackney, we are seeing intergenerational worklessness. I hoped that the Budget would make some attempt to deal with that problem.
In my lifetime, there have been serious levels of unemployment twice before. There was huge unemployment in the 1980s, when it was higher than today, and it was even higher as recently as 1996, when more than 10,000 people in the constituency of Tottenham were unemployed. We are talking about a group of young unemployed people, aged 18 or 19, whose parents were unemployed and sometimes whose parents’ parents were unemployed. That is a disaster for our economy. When I looked at the scenes in August with tremendous and deep concern for what was happening on the streets of London, I realised that often some of the children of those who rioted last time were causing the same the problems this time. That is how scarring unemployment is and why we needed a Budget that got to the heart of growth.
It would be wrong, of course, if I did not welcome what has been said about the film and games industries, but it is right that in London I reflect on whether that will come to the constituencies that need it and matter. Although I of course welcome the decisions on capital allowances in the royal docks area of the east end of London, I want to make what may feel like a parochial point, but which is in fact a serious point. Are we committed to one London—where there are not inner cities, but just one city—or will we continue to show a preference for certain parts of London? Despite the huge problems that exist in the east end, it has Canary Wharf and the Olympics, and it now has a Mayor committed to a new airport in the Thames estuary. In north London, in a concentrated area of poverty in Tottenham and Edmonton, we have seen nothing like it.
With regeneration coming around the Spurs development, I would hope that we, too, might get those allowances. To deal with the jobs problem—I am talking not about highly skilled jobs, but about semi-skilled jobs and some jobs that do not require skills—we will need to attract private investment to give us those jobs. The danger now is that there is an incentive to go to another part of London, concentrating poverty even more deeply in north-east London in particular.
There is another issue in the Budget: not those without employment, but the working poor. We should remind the House that someone working in a constituency such as mine, here in London, might be a dinner lady at lunchtime and likely a cleaner in the evening, or a minicab driver during the day and a security guard at night. Such is the situation for those who are unable to make a living wage in our capital city. Of course, the changes to the personal allowance are desirable for those who are working. However, I might add that these are the very same families who saw their tax credits taken away in the last Budget, so this really is robbing Peter to pay Paul. As we know, those who will benefit from the changes will largely be middle-class families and those who are really well-off.
The decision to give a further tax break to those earning more than £150,000 a year will seem bizarre to my constituents, who have seen their incomes fall. Anyone travelling into central London on the tube from Seven Sisters station, either to look for a job or go to a job, is looking at spending £6.20 a day, whereas someone who decides to come down into central London on the 341 bus will have to pay £4.20 a day. Fares are up by 12% on the bus and 16% on the tube, under the reign of Boris Johnson. Those costs are huge for families with babies, who have already seen their monthly costs go up by £8.20 in just the last 18 months.
The cost of living is going up for the working poor, and there are huge concerns about worklessness, yet we heard nothing about how we are going to deal with that. We still have to wait for the introduction of the youth contract. We have also seen two thirds of apprenticeships in London go to those who are over 25, and it is not at all clear that we have got apprenticeships in the right areas of the economy in our country. What is the growth story? My constituents are still waiting to see what it is. There are huge concerns about equity and fairness in this Budget. I predict there will be further disturbances and concerns until we get a grip and deal with this emerging problem.
Richard Drax (South Dorset) (Con)
Perhaps it is appropriate that I should follow the right hon. Member for Tottenham (Mr Lammy). He certainly made a thought-provoking speech. I would just make the point that what we need to do, surely, is to create the environment for jobs, so that that large percentage of his constituents, the black population, can get a job. Until we create the right environment for jobs to be created, there will not be jobs for anyone in this country, whatever colour they are.
I congratulate the Chancellor on his Budget, which was delivered in quite trying circumstances. It has been pointed out that a lot of it was leaked before his statement in the Chamber. It has been delivered in circumstances in which, due to Labour’s undoubted profligacy and the world banking collapse—which I accept played a part—there is little room for manoeuvre. There is still less room for manoeuvre because we are constrained to a certain degree, whether we like it or not, by our coalition partners.
I therefore warmly welcome the good news. I welcome the reduction in corporation tax and the higher personal tax allowance. I welcome the reduction in the top rate of income tax from 50p to 45p. I particularly welcome the extra investment in our armed forces, and especially in their accommodation. Having served myself, I well recall the abysmal standard of much of the accommodation in the 1980s. I am also mightily relieved that we have left our beleaguered pension system alone. It would have been madness to tread on that particular nest at the moment. The right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) did so, and we all remember the consequences.
The 50p rate has engendered a lot of heat, and I can understand where that heat is coming from. I remind the House, however, that it was introduced in the dying throes of the Labour Government as a political move. It was, in effect, an elephant trap; it was well laid, politically, and it is a nightmare to climb out of. We had hoped to come into power as a Conservative Government, but that did not happen. We need to be bold, and I wish that we had gone further and reduced the top rate in the emergency Budget, but we did not. Yes, everyone should pay their fair share of tax, but the top 1% in this country already pay 28% of all income tax, and the top half pay 90%. Milking them of their rewards for all their hard work and aspiration will hardly encourage endeavour, and spending the money that we take from them on a bloated, runaway welfare state is sheer madness. This is the politics of envy. The Institute for Fiscal Studies estimates that, by the next election, one in four of us will be paying tax at 40%. Not so long ago, that figure was one in 20.
As Tories, we must remember what we stand for: less state, less red tape, less taxation, less government, less public spending, more enterprise, more wealth creation and more support for business. We remain deeply in the red, thanks in large part to Labour. Public sector debt is still at £1 trillion, and borrowing will be £120 billion this year. We need that
“forensic, relentless focus on growth”
promised by our Prime Minister. We must encourage that. We should not only cut taxes but slash them. We must release business from all its constraints. We often proclaim that we are open for business but, as Willie Walsh writes in The Daily Telegraph today, the Chinese laugh when they hear that.
The Federation of Small Businesses in the south-west came to see me recently, and begged for more help from the Government. Small businesses are struggling with high fuel costs, as other hon. Members have mentioned, and I regret that we cannot go much, much further in cutting fuel taxes. Small businesses are also struggling with high business rates, with a lack of infrastructure and with banks that are refusing to lend. We have heard those stories repeatedly in the House. The national loan guarantee scheme for small businesses that was announced yesterday will provide credit at a lower rate of interest, but access to that credit is as difficult as it has always been. Indeed, the FSB said yesterday that the scheme is not a “game changer”, yet that is exactly what we need now. We need really radical policies. We must be brave; we simply cannot go on tinkering at the edges.
Most of all, we need to cut state spending; many inroads into it have been made, but in my view we have not gone far enough. We need to take the state out of people’s lives. This is a Conservative philosophy, and, I believe, a right one. The public sector as it currently stands is unaffordable.
I regret that we have made changes to child benefit. At whatever level the “cliff edge”, as it has been called, is set, many hard-pressed, hard-working families will be worse off. I heard my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) saying—on “Newsnight”, if I recall correctly—that he looked at that from every angle some years ago, but could not see how to alter it. What I say, however, is that it is disingenuous to suggest that poorer families were or are subsidised by the better-off, because the better-off pay a higher rate of tax. There must be other ways to give families with children some help—without the unintended consequences. Perhaps a system of tax allowances rather than benefits could be examined.
We must also admit that much of the pressure on public expenditure is ultimately due to immigration. Immigration in this country is at an unacceptably high level, putting huge pressures on this country and her services, and we are struggling to keep our roads and rails going and to provide enough housing. In the longer term, it is unsustainable. A sudden increase in birth rates means, I am told, that we will need 540,000 new primary places by 2018.
Finally, I cannot leave the European Union out of my speech, because it is inflicting a high price on business in this country. We can say a lot here and we can have aspirations here to release our business and let it fly, but we will never get what we want or the jobs and wealth we need to generate until we are free of the red tape from Brussels. Only then can we break free from the shackle of deficit that hangs around our neck. When we have, the important thing to do is to spend only what we earn.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I congratulate my right hon. Friend the Member for Tottenham (Mr Lammy) on the comments he made. For all the Budget figures that we talk about, real people are at the heart. I echo his comments, but I want to talk about the small businesses in my constituency, which I hope, and we all hope, will help to create some of the jobs that my constituents, like my right hon. Friend’s, so desperately need and want.
Hackney is very much a picture of small businesses, with more than 90% of them across the borough as a whole employing fewer than six people—and many of them even fewer than that. The vast bulk of small businesses are located in Shoreditch, in the southern part of my constituency. It is very much the heart of the creative industries and the tech city hub, with nearly 39,000 people employed there. In the Shoreditch town centre area as a whole, there are more than 4,000 in the tech area and more than 5,000 in the creative industries, with about 15,000 people overall. Shoreditch has 77% of the total town centre employment and 93% of all the technical employment.
The growth and dynamism of that area have been going on for some time—before, I have to say, the Prime Minister got interested in it. Of course I welcome any interest shown by the Government in my constituency, but I have to say that some local businesses worry that the increase in rents is partly a result of the talking up in government of the area. Many of the businesses have been there for a long time, as I shall touch on shortly.
Ms Margaret Ritchie (South Down) (SDLP)
Does my hon. Friend agree that today’s Budget simply imperils working families and particularly small businesses because it has no measures to mitigate the effects of fuel prices, which are already high in urban and rural areas?
Meg Hillier
My hon. Friend makes an important point. The fuel issue is not such a big one in my constituency because of our public transport links, but it is different in areas such as Northern Ireland. I recall having a conversation with a man in Carlisle. He said, “Tell them back in London”—I thought that was illustrative in itself—“that I spend more on fuel in a month than I do on food.” He was just an ordinary working man. It is important for the Government to understand the pressures on household incomes; there are important issues there.
The economy in Hackney South and Shoreditch is dominated by small businesses. It is very creative; we have a big fashion industry, and a digital industry at silicon roundabout. We are seeking to improve and increase that economy all the time. A lot of the small and micro-businesses are struggling. They are not getting the lending that they need from banks, because banks refuse to understand their business models, which are often innovative. They are not even able to get the working capital through overdrafts. That is a real issue. Overdrafts are treated in the same way as loans on the balance sheet. Many of the businesses that I deal with, especially those that are growing and have got to a certain stable point, simply need that facility; they are not seeking a loan. The interest rate cut makes no difference to them. They are seeking an overdraft facility, not a loan.
The interest rate cut announced yesterday makes no difference to those seeking a loan, either, if they have a business model that makes banks nervous about lending to them. One person said to me, “We lend only to vanilla companies”—that is, safe bets with well worn business models. We are talking about an area of bursting creativity, an area that is growing enormously and will and does create jobs, so we need a solution. Merlin was a damp squib; the magic wand did not work. I am not hopeful that the Chancellor’s announcement will make any difference to the small local businesses to which I speak.
There is another key issue for small start-ups. We need 600 desk spaces. For those who do not know the area, if they wander around it, they will see, in cafés, hotels and specially designed work hubs, people sitting with their laptop or iPad; they will be doing business in that fashion. Across the area, a few thousand desk spaces are rented out for about £350 a month. That is how a lot of people do business; they grow that way. In the Trampery, a shared desk space area in my constituency, one business has grown to the point of renting 13 desk spaces. It has decided to stay there because of the creative input, but also because it is a big risk to move from that fluid way of working to permanent premises. That is a type of business that Government and this Budget do not really understand.
As I say, rents have gone up enormously, which is a real challenge. As businesses improve and seek to stay in the area—crucially, they may employ local people if they are in the area for a long time—that causes problems. I do not want my constituency to be the nursery of businesses that move elsewhere simply because they cannot afford to stay. If they move elsewhere for good reasons, that is a different matter, but some of them are being forced out.
I want to give examples of what the Budget really means on the ground. Somethin’ Else is a media production company employing about 70 members of staff in Shoreditch. It has an annual turnover of approximately £8 million. Under Project Merlin, it was not able to get the borrowing facility that it wanted. It simply wanted an overdraft, but that was withdrawn from it overnight during the economic crisis. The company is quite interesting, because it produced a film called “somewhere to”, an Olympic-funded project run by Livity. It featured young people performing in No. 10 Downing street. The Prime Minister was so impressed by the work of the company that, as some Government Members will know, the film was played at the Conservative party conference before his speech in October last year. The very company that was paraded by the Conservative party as a success is struggling precisely because of Government policies.
Not Just a Label is an international business, an online fashion promotion platform. It is the only online fashion design platform in the world. It is present in 93 countries and represents 8,000 fashion businesses, including 1,000 in east London alone. It currently employs 15 people in very small offices tucked away in the back streets of Shoreditch. It is looking to expand and develop: it wants a design showroom to complement its virtual presence. That would involve the company doubling in size within six to 12 months, but traditional banks are not willing to fund that expansion, because they simply do not understand that business model. The “vanilla financing” line was used to that group.
Another business, Image Line, is owned by Sue Terpilowski, who is involved with the Federation of Small Businesses, so she knows a lot about what other businesses are putting up with. She told me that her business rates, for 2,200 square feet, went up by £8,000 this year. Rate increases have a big impact on businesses, and on the face of it, we can see nothing in the Budget on that issue.
There are other pressures on London businesses across the board—I am not talking just about Shoreditch now. London members of the Federation of Small Businesses are taking out loans or overdrafts at interest rates that are very high compared to those available nationally. Some 21% of London members of the FSB have loans or overdrafts at interest rates above 15%, compared with 9% of its members nationally. The 1% in question is merely a drop in the ocean in the context of interest rates that are that high. That issue must be tackled.
Has the Chancellor had any conversations with businesses about more innovative ways of providing working capital, such as the next generation funding models, including funding circles and crowd-funding? Such models might work for the new tech businesses in my constituency, but they need to be regulated. There is a lot of talk of one in and one out, but if we are to have innovative funding models, we need Government support to ensure that they are legitimate forms of funding and that scams do not happen.
The Chancellor has announced his seven short-listed funds. I have my doubts as to whether they will lend to the businesses I am talking about, especially when we consider the much vaunted Green investment bank. We hoped it would support new businesses, but we feel sure that it will be controlled by the Treasury and the available capital will go into some of the bigger known providers.
My constituents want to find work in the job-creating new tech businesses in Hackney, so skills is a key area. We have good support from Hackney community college, which has set up an apprenticeship scheme, working with the tech city hub. Thanks to Government funding, we in Hackney will have a university technical college, under principal Annie Blackmore, opening in September at the HCC. She and Ian Ashman, principal of the HCC, have been working closely to try to ensure that we develop the necessary skills through our schools and colleges so that young people in Hackney can secure these jobs. We must make a link with the people who live just north of Hoxton square and in the rest of my constituency, many of whom do not have access to these jobs because they do not have the necessary skills.
I cautiously support the Sunday trading proposals for the Olympic period, as I recognise that that is a welcome global event coming to my constituency. However, I am also concerned that the move could be a trial run for a permanent change in the law. The leaks about today’s Budget announcements were broadly accurate, and I worry that the leaks about the Sunday trading proposals, suggesting that the Chancellor has a secret mission to take on the low paid and families and to ensure that people will have to work long hours, might also be accurate. My local smaller businesses are also nervous about the proposal. The benefit of longer trading hours is very small for them, but it gives more succour to the big retailers, who are already putting a lot of pressure on such small businesses.
High broadband speeds are much needed, and Hackney council is already seeking to increase speeds, first in Shoreditch and then in Dalston. I do not know the timetable for that scheme. However, although the Chancellor says he is funding it, I want to know whether it is new funding and how quickly it can be drawn down. We certainly need these developments in Hackney.
The Chancellor has, through sleight of hand, suggested that the Government greatly support business. The small and medium-sized businesses in my constituency have yet to benefit, however, so there is a great deal of scepticism about the Budget. I want the businesses in my constituency to grow and the jobs to be created, but I am very worried that this Budget will not deliver.
Chris Heaton-Harris (Daventry) (Con)
It is a pleasure to speak about the Budget on Budget day itself, and, indeed, to have quite some time in which to speak. The last time I tried to speak in a Budget debate, I was curtailed at three minutes and 52 seconds, just as I was building up a full head of steam. I hope to enjoy the nine minutes and 42 seconds remaining to me today.
I welcome the Budget for many reasons, but, in common with any Back Bencher trying to represent their constituency, I also have some questions and there are some areas on which I want to probe and seek commitments from the Government for future Budgets.
I listened carefully to the contributions on their constituencies of the right hon. Member for Tottenham (Mr Lammy) and the hon. Member for Hackney South and Shoreditch (Meg Hillier), who serves with me on the Public Accounts Committee. For the first eight minutes of the right hon. Gentleman’s speech, I did not disagree with a single word he said. It was a fantastic speech. I know his constituency very well. A friend of mine has set up a boxing club on White Hart lane, and he takes in young people from the Broadwater Farm estate. The right hon. Gentleman has led his community in a highly commendable way since last year’s riots.
Let me set out what I think we all want, and what I certainly want as a former small business man. Before going into the European Parliament, I ran my own business wholesaling fruit and veg in New Covent Garden market, working nights for 11 years. My second language at the time was Cockney, and the sort of people I used to work with were keen on trying not to pay any tax. These were cash businesses and people tried to keep it that way. They wanted to generate wealth and then to choose how they spent it. There is a delicate balance to be struck in government between encouraging as many people as possible to create wealth and ensuring the bit that is taken in tax is spent well, so that people feel they are getting value for their money. I would like to think that everyone in this House welcomed elements of this Budget, and certainly those dealing with small businesses.
I know that the threshold is set at only £77,000 of cash passing through someone’s small business, but some of the paperwork associated with their return to Her Majesty’s Revenue and Customs goes overboard—it is way too much. These people are normally one-man bands, although perhaps they have a partner, so reducing and simplifying their paperwork is fantastic for them. We are giving people who want to set up a chance to know that they are not going to be hammered by the taxman, because they will understand the form that they are filling in and will not be fearful of getting it terribly wrong.
The Budget contains lots of other good things. I am sure that the whole House welcomes the £36 billion that is being saved as a result of interest that we are not paying because of the low interest rates engendered by this Government’s economic policy. Some Opposition Front Benchers have been suggesting ways of dismantling this fantastic set-up that enables us to borrow at low interest rates, but, realistically, everyone has to welcome the fact that we are paying less for our debt at the moment.
Neil Carmichael (Stroud) (Con)
I am thoroughly enjoying my hon. Friend’s speech and he is hitting on the important issue of interest rates. Does he agree that smaller businesses, too, are going to benefit enormously from low interest rates, both now and in the future, because they mean long-term investment for those businesses?
Chris Heaton-Harris
I thank my hon. Friend for his intervention, and of course I agree with what he says. The more we can spread lower interest rates, the better it is. As hon. Members from across the House will know, it has been difficult getting the banks to lend to all sorts of small businesses in the past two years. Any measure we take that strengthens lending to small businesses is a thoroughly good thing, because these businesses are the acorns from which big businesses grow. The Labour Government had this fantastic policy of how to manufacture small businesses: they took a big business, taxed it and added loads of regulation, and a few months or years later they had a small business. We are doing exactly the opposite.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
The hon. Gentleman has been extolling the virtues of low interest rates. I would certainly agree with the thrust of his argument, but what has he got to say about, and would he condemn, those financial institutions that have started to raise interest rates for mortgage holders?
Chris Heaton-Harris
I would not necessarily condemn them, but I would very much like them to answer the case on why they are doing that. I understand their business case, and people find it interesting when they start to talk to them. I like to think that the measures we have taken in the Budget, whereby we are trying to allow the flow of low interest rate money through our business sector in bigger and better ways—I think, for example, of the seven partners that the Chancellor is now looking at to do that in the future—are a valid way of proceeding.
I also welcome the broadband investment. My constituency is in the heart of England and could not be more different from that of the hon. Member for Hackney South and Shoreditch. My constituency is largely rural with lots of dynamic businesses, including lots of small businesses, based in it. However, we have awful broadband connection. When hon. Members talk about trying to get regular download speeds of 2 megabits, I look at them in awe, because my area is at the end of a copper exchange and we barely get speeds of 1 megabit. Where I live, I still watch my e-mails download, and plenty of hon. Members from across the country find themselves in exactly the same position. If we want proper inclusion across the whole country, we have to have fast broadband. I would settle for fast broadband, although superfast broadband would be a delight, and I very much welcome the measures we are taking on that.
I welcome—not because I am a Tory, but because I was in business—the fact that corporation tax is being lowered. We want to encourage businesses to invest. One way of doing that is by lowering corporation tax and I welcome the trajectory in which we are travelling.
I welcomed the waving of Order Papers when it was announced that this Government are lifting 2 million people out of paying tax, but—
Meg Hillier
Before the hon. Gentleman moves from the issue of small businesses, may I ask whether he has spoken to business people in his area about the possibility of a cross-Government body looking at small business administration to make sure that different Government policies do not have perverse outcomes, which Governments of all parties ought to consider?
Chris Heaton-Harris
As the hon. Lady knows from the Public Accounts Committee, where we have often talked about such matters, it would be lovely if Government Departments had a holistic approach to any area of policy. If we could start with small business, that would be fantastic, but I do not think we are quite there yet. That is something we would all support across the political spectrum and without political point-scoring.
I was speaking about the waving of Order Papers and the 2 million people being lifted out of paying tax altogether—a thoroughly good thing, which I would like to think is welcomed in all parts of the House. It benefits everyone who is working—people who are trying hard for themselves, have got on the job ladder and are moving forward. I benefit. From what I see on Twitter and other media sources, if people are earning around £60,000, have children and drive a car, they are not in a great place after the Budget. That includes most Members here. We have managed to produce a Budget that penalises MPs, which I am sure our constituents will be relatively happy with. Most people want to see the lowest paid in society not paying tax, and long may that continue.
I have one or two concerns and plenty of suggestions. The Treasury Minister will know of my long-running love affair with onshore wind turbines and what they do to my constituency. Although there was not much about renewables or the subsidy levels, I welcome the words spoken by the Chancellor in his speech. An investment in gas and in nuclear is proposed. If we chose that method to hit our 2020 carbon target, we would save more than £35 billion, compared with the route that we are currently choosing to go down, which involves other types of renewables that cost an awful lot more. The subsidy that is given to landowners and energy companies makes energy cost more, increasing fuel poverty at the other end of the cycle. I suggest wholeheartedly that we look carefully at the policy choices we are making when we talk about energy, green taxes and fuel poverty in the future.
Personally, I do not mind consumption taxes. I know that Labour Members take issue with that, so let me give an example. I would love to see the end of vehicle excise duty. Fuel prices are too high, as we all know because we all regularly fill up our fuel tanks. Getting rid of vehicle excise duty would add, I believe, roughly 1.5p to the cost of a litre of unleaded petrol and diesel. But we would not have to pay vehicle excise duty and we would pay as we drove, so if we drove a gas-guzzler we would pay a lot more. The old lady who drives hardly at all would pay a lot less. There would be a huge simplification of the tax system. That might not work, but I would like us to think outside the box and consider areas where we could simplify taxes.
Andrew Bridgen (North West Leicestershire) (Con)
Is my hon. Friend aware of the millions of vehicles that are not paying vehicle excise duty? Putting the tax on fuel would catch them all and bring them within the scope of taxation.
Chris Heaton-Harris
I am aware of that; it is one of the reasons I moot the idea at this point.
I would like to finish by talking about personal taxation and the general excitement across the House about the reduction in the top rate of tax from 50p to 45p, based on the Laffer curve. I have been reading the document that the Treasury has produced and note that the comparison has been made on the changes to the additional rate of income tax and the money that we might have expected to get in, or not to get in, as a result of increasing taxes. I humbly suggest that that completely underestimates the value of reducing taxes, because reducing taxes means that there is more of an incentive to pay and not to try to divert or put off paying them for a certain amount of time. I would love to see more work done in the Treasury on what those figures would end up like, because we want to encourage the creators of wealth, and one way of doing so is by saying to them, “You can keep more of the income you generate.” We want people to take a chance and a risk and to set up their own businesses, and this is one way of encouraging them to do so.
John Healey (Wentworth and Dearne) (Lab)
It is a pleasure to follow the hon. Member for Daventry (Chris Heaton-Harris), and I think that the whole House is glad that he had more than three minutes and 52 seconds in which to speak today, because that allowed us to hear for the first time about his days as a fruit and veg man in Covent Garden and the speed of his e-mail downloads in Daventry. I have to say that we did not hear much that was new from the Chancellor, who spent an hour telling us what we have been reading in the newspapers for the past week. It makes me think how times have changed since Hugh Dalton was required to resign in 1947 over the leak of a single duty rate change. Nevertheless, in my experience announcements that look clever on Budget day often look less certain and more complex in the days that follow, and what often follows is that the economics behind the politics becomes much clearer. It seems valuable to recall the warning that Winston Churchill gave:
“We shall not be judged by the criticisms of our opponents, but by the consequences of our actions.”
Barry Gardiner
Does my right hon. Friend agree that one of the things that might look a little shakier later is the granny tax and the fact that 4.1 million people will be worse off in real terms, with an average loss of £83, and as a result of which 230,000 people will be brought into income tax?
John Healey
My hon. Friend is right. This might well become a Budget in which the closer people look, the less they like. That might apply to the granny tax, as he suggests, but it might also apply to the threshold for the 40p top rate of income tax, which many people might find themselves hit by over the next few years, rather than benefiting from the raised threshold for payment in the first place.
The consequences of the Government’s actions at a national level are already becoming clear. The UK economy grew by 3% in the year before the Chancellor stood up and delivered his spending review in 2010. In the 12 months that followed it grew by just 0.5%. That is because he took the decision to cut too far, too fast and choked off growth. Based on the economic projections we heard today, this country is still set for feeble growth in the coming year and the year after. It seems to me that a credible economic plan to deal with the deficit must be supported by a successful plan for jobs and growth alongside it. At present, the Chancellor is condemning Britain to being a one-legged man in a three-legged race. The International Monetary Fund has made a similar point, stating that
“growth is necessary for fiscal credibility.”
We have to look harder at what we earn as a country, not just what we spend. The UK’s GDP last year was still nearly 4% lower than it was before the global financial crisis hit in 2007-08. In other words, our economy was smaller and our national income was lower. If we draw a comparison with the US or with Germany, we find that both countries have a more balanced approach to dealing with their deficit, both countries are growing more strongly than Britain and both countries now have economies that have regained the loss of productive capacity which everybody in the modern, developed world suffered during the global financial downturn of 2008.
Austin Mitchell
That is a very important point. My right hon. Friend will know that the Institute for Fiscal Studies Budget forecast makes the point that that 4% now lost is lost for ever: it is 4% lost every year into the future.
John Healey
Indeed, and that is one reason why Britain is so far off the economic pace, and why so much more must be done than has been so far to boost jobs and growth in this country.
To use the household income analogy, well loved of the Tory party, I note that if a household looks to pay down its debts at the same time as reducing its earnings, the spending cuts that it must make to do the job have inevitably to be more savage and to last for longer in order to be successful. That is the position this country is in.
If I look at the consequences of the Government’s action locally, I have to say that in south Yorkshire, our area, it is hurting but not working: flat growth, higher unemployment, higher bills, lower confidence. In our area, more than 12 people are now competing for every single job that becomes vacant, and the number of young people without a job for more than six months has more than doubled in the past 12 months alone.
At a time when courts, hospitals, councils, civil service, police and fire service are all cutting public service jobs, any difference that there may be in south Yorkshire between public sector and private sector pay rates is simply not the reason why growth is being held back; it is the loss of jobs, of pay and of support through working tax credits that is sapping demand and confidence.
The Chancellor this afternoon singled out for special treatment those earning more than £150,000 a year, cutting their 50p income tax rate and giving them a tax break that is worth more to those people than many in Rotherham or Barnsley can earn in a year. With more than 800 households and families in Barnsley and more than 1,000 families in Rotherham—working hard, working part-time—faced next month with the total loss of their working tax credit, which could amount to almost £4,000 a year or £70 a week, the Chancellor’s decision to cut the top rate of tax at this point will simply not be accepted or understood.
Let me turn to several of the Budget measures. Any performance report on the Government would be hard put to place the Department for Business, Innovation and Skills anywhere other than close to the bottom, and any judgment on policies would be hard put to say that business support policies have been anything other than close to failure. The Merlin project was supposed to lead to a 15% increase in lending this year; in fact there was a net reduction of £11 billion in net lending to small firms. There was a similar failure of the regional growth fund, of the business growth fund and of the national insurance holiday for small firms.
I look in this Budget with a degree of welcome, however, to the new credit scheme for lending to small firms, and to the new managed funds for lending to mid-sized firms. Those may be small in scale, but they are a start. The margins to make lending more affordable may be modest, but the design and concept, at least, are innovative. Interestingly, the schemes signify that the Government recognise that they were wrong when first elected to say that there was no role for active government and that the private sector would pick up the slack if the public sector stepped back.
The schemes are interesting because they help to reduce risk and cost by using the power of the Government to stand behind them rather than support being funded up front. I say to my hon. Friend the Member for West Bromwich West (Mr Bailey), who chairs the Business, Innovation and Skills Committee, and the hon. Member for Chichester (Mr Tyrie), who chairs the Treasury Committee, that I hope that the Select Committees will make sure that those schemes do not fail as the other business support schemes have and that they provide more lending and lead to more economic activity and support for business in every region of the country.
International experience and all the data underline the fact that, in the long run, high levels of business investment are at the heart of strong economic growth. It seems to me that the case is clear, and has been so since the global financial crash and the requirement for Government to step in and provide big public support to commercial banks, that now must be the time to set up a British investment bank—the sort of industrial investment bank that Germany, Singapore and India have, which can offer strong support to indigenous research and development, domestic manufacturing and regional economies.
The Chancellor told us this afternoon that, taken together, the anti-avoidance measures in this year’s Finance Bill would increase tax revenue over the next five years by about £1 billion. It is interesting that table 2.1 in the Red Book indicates only about a quarter of that over the five years, and that is about half what we did in our first year in government. You, Madam Deputy Speaker, will recognise in the proposal for a general anti-avoidance rule, which I welcome, the same approach that we took and you fought for, against Tory opposition, in respect of the disclosure rules in the Finance Act 2004.
This Chancellor’s Budget was a rich man’s Budget. He chose to cut the top rate of tax and give a kick-back for the rich—and at a time when the deficit is getting bigger, not smaller, when the national minimum wage for young people has been frozen and when the working families tax credit and public services are being cut across the country. This is not a Budget for working people, and the Government are not working for working people. It is not now, and never was, a question, as the Government claimed, of the richest bearing the biggest burden; this Budget proves that the richest are getting the biggest benefit.
Gavin Williamson (South Staffordshire) (Con)
It is a privilege to speak in today’s Budget debate. There has been an interesting contrast in the two speeches made from the Dispatch Box today. One, made by the Chancellor, set out his vision and ideas about bringing growth to our economy, supporting business and families and making things happen in this country. The other speech, by the Leader of the Opposition, had one interest solely—making sure that he stayed the leader of the Labour party. It was not about the national interest or trying to help the country to go forward, but about remaining leader.
Those on the Government side of the House, Conservatives and Liberal Democrats, are here to try to do what is best for our nation. Those on the Opposition side cannot say the same about themselves. If they can—and I hope that they are of that mind—they will march through the Lobbies with us when the Budget vote comes, supporting us and making sure that the country is growing once more.
The Budget helps two principal areas—business and families. Already, this Government have done more for my constituents in our almost two years in power than the previous Government did in 13 years. This Government are already delivering jobs for South Staffordshire, with the £350 million investment by Jaguar Land Rover on the i54 business park, bringing 750 jobs directly into the constituency. I remember Labour Members deriding enterprise zones and saying that they would not work. Well, I am rather proud to have an enterprise zone in my constituency, because it helped to bring in those 750 jobs. I am sure that many Labour Members will now want enterprise zones right across the country, even in the devolved regions.
Mr Marcus Jones (Nuneaton) (Con)
Does my hon. Friend agree that the current situation, with enterprise zones, the regional growth fund and the support that is being given to industry, particularly motor manufacturers in the west midlands, is a complete contrast with what happened with the failed regional development agencies during the period of the Labour Government, when private sector employment in the west midlands fell?
Gavin Williamson
My hon. Friend makes a pertinent point. Although there has been recovery in the automotive sector, unfortunately the supply chain that supports those manufacturing companies was hollowed out over the course of 13 years. I hope that Members on both sides of the House recognise that that is a serious problem. I pay tribute to the previous Government for taking some action at the tail end of their period in office in setting up Automotive Council UK, which has been carried on and strengthened by this Government. That is a positive move, but we need to be doing so much more to support not only manufacturing companies, which I am most passionate about, but many more service companies and other companies across the length and breadth of the country.
The Budget included an announcement on reducing corporation tax. A lot of people say, “That does not matter; it will not make a difference to business.” If that were the case, one might ask why the Republic of Ireland is so determined always to make sure that it keeps its low corporation taxes, but we know that it does that because it knows that it makes a difference in bringing in inward investment. Companies that want to invest in Europe are trying to make sure that they invest in the right place, which, in my view, is the United Kingdom. The moves to reduce corporation tax will have an enormous effect on bringing jobs to the UK—not only to my constituency or the constituencies of Government Members, but to every single constituency in the country.
We must also welcome the moves to simplify our tax system. We see so many people setting up small businesses, giving it a go, and trying to make a difference and do well for themselves, but then being faced with a barrage of bureaucracy and complex regulations that they have to master. It is a shame that anyone could not welcome the moves to make sure that all businesses with a turnover of under £77,000 will be free of many of those regulations. I hope that Labour Members will join us in the Lobby in support of that measure, because it will have an enormous impact on every business.
Another development that we must welcome is enterprise loans for young people. Far too often, young people with great ideas and great ambition do not have the finance to build their own businesses. I think of a constituent of mine, Louis Barnett, who decided against all the odds to set up a business, to go out there and to make a success of it. Finance is not always easy to find, but despite everything being against him, he did it. He has set up an incredibly successful chocolate company, which exports to Mexico, Ireland, China and Korea. He is making a success of it. We need to encourage many more young people to set up businesses across Britain. That is what the Chancellor has done and we should all support it. We need to give our businesses every possible chance.
Some Opposition Members are pouring scorn on somebody who wants to make a successful business by making and selling chocolate and exporting it around the world. Perhaps that is why the previous Government made such a dreadful mess of our manufacturing base and brought this country to its knees.
Mr Marcus Jones
My hon. Friend’s argument is being given a bit of harsh treatment from Opposition Members, who seem to think that all was rosy in manufacturing under the Labour Government. Is it not the case that 1.7 million jobs were lost in manufacturing during the period of the Labour Government?
Gavin Williamson
My hon. Friend makes a valid point. Manufacturing was destroyed under the Labour Government. When the Conservatives were last in power during the 1990s, there was growth in manufacturing. We saw the same amount of gross value added in manufacturing and the industrial sector in the United Kingdom—
Gavin Williamson
No I will not. In the 1990s, there was the same amount of gross value added in manufacturing and the industrial sector in the UK as in Germany. That has now been halved. That is down to the incompetence and neglect of the last Labour Government. I happily give way to the hon. Gentleman.
Mr Bailey
I thank the hon. Gentleman for giving way belatedly. As a fellow west midlands MP, I am slightly surprised by his comments about the record of the previous Conservative Government on manufacturing in the west midlands. Will he list the major employers—employers of thousands of people—that failed during the period of the previous Conservative Government in the black country and the west midlands?
Gavin Williamson
I will happily talk about what happened under the previous Conservative Government, although it is going a little way back. Between 1992 and 1997, exports from the manufacturing base in this country grew and gross value added grew, because we created an environment in which manufacturers could grow. That did not happen under the last Labour Government, when jobs and businesses were destroyed. The Chancellor is committed to reversing that. I can give many examples of businesses that failed under the Labour Administration. This Government are committed to helping businesses grow, which is to be welcomed.
Geraint Davies (Swansea West) (Lab/Co-op)
The hon. Gentleman is being gracious in giving way. I should say that my background is in multi-national companies and in starting my own businesses successfully. Does he accept that after his Government came to office, the growth forecasts reduced massively between the first and the second year? According to the Office for Budget Responsibility, the size of the economy will be down by £50 billion a year for ever because of his Government’s policies.
Gavin Williamson
I thank the hon. Gentleman for making those comments. It is fascinating that the International Monetary Fund has predicted that Britain will grow faster than Germany and France. It is true that the eurozone has had a negative impact on this country, but people see us as a country that is well run, with a Chancellor who is committed to making business growth happen. That is why we will grow faster than Germany and France. I am sure that the hon. Gentleman will welcome that.
I will move on briefly to families. It is often said that raising the personal allowance is a Liberal Democrat idea. Members will be shocked to hear that the matter was raised with me many times during the general election campaign. I told people that if I was elected as their Member of Parliament, I would do all that I could to ensure that personal allowances increased so that the lowest-paid—
Gavin Williamson
I will make some progress, thank you. I told people that I would try to ensure that we made progress on raising the personal allowances for everyone in this country, including the lowest-paid. I am particularly proud to see that the Chancellor has done that, and I am quite sure that every coalition Member will warmly welcome it.
I wish briefly to touch on one thing I would very much have liked the Chancellor to do, which is to tackle the issue of the beer duty escalator. In the Strangers Bar, one of the finest ales, Enville ale, is currently on sale as one of the guest ales. I encourage everyone to ensure that they have a pint of Enville ale, a fine beer but one from which I am quite sure we would raise just as much duty if we got rid of the beer duty escalator. I put in a plea for that, and it would be very much appreciated.
I welcome the news that we are going to have a national centre for aerodynamics. Again, that will support manufacturing, but let us ensure that it is in South Staffordshire. We have an aerospace industry that is highly dynamic and—
Naomi Long (Belfast East) (Alliance)
I start by confessing that I find the Budget quite disappointing, not because I had huge expectations of it at the beginning but more because some of the more disappointing things that have been widely trailed in recent days are indeed in it.
I start with a partial welcome, however, for the increase in the personal allowance, because I believe that it will lift a significant number of low-income families out of paying tax. I qualify my welcome only because, as a means of tackling in-work poverty, it is a broad-brush measure that will benefit the wealthy as well as the poor.
When I consider the changes to tax credits and other in-work benefits that have been announced in recent weeks, I believe that all may not be as it seems when it comes to who will be most affected. Other Members have highlighted that point by referring to those on the lowest incomes, such as those in part-time, minimum-wage employment.
Beyond that, I look to what will create employment for people in Northern Ireland. Although it is a good thing to lift people in low-income employment out of paying taxes, it is a better thing to lift people into higher-wage, better-paid jobs and give them opportunities to succeed.
A couple of measures that would help the Northern Ireland economy significantly have been talked about for some time, and I want to consider them briefly. My concern is that the Budget lacks what I would call regional sensitivity, for want of a better phrase. One of the significant burdens that businesses in Northern Ireland face, and which has an impact on leisure and tourism as well as on business travel within the UK, is air passenger duty. We have raised that many times with the Government, and to be fair and give credit where it is due, there have been some significant and positive interventions in the case of long-haul flights.
The Minister of State, Northern Ireland Office (Mr Hugo Swire)
indicated assent.
Naomi Long
I see the Minister of State nodding vigorously and looking bemused that I should raise the matter today, but I do so for this reason: although the intervention on long-haul flights was welcome and positive, and although I know the Government have recommitted to the devolution of the matter to the Northern Ireland Assembly, which is welcome, I confess that I hoped the Treasury might take some action on the level of short-haul APD. That has an impact on what we pay for regional flights within the UK and places a premium on our connectivity, particularly with the south-east, which the Government reinforced in today’s Budget as the primary income generator for the UK.
In addition, businesses in Northern Ireland and local consumers are challenged by the double payment of APD on flights to other short-haul destinations. That occurs when people have to pass through one of the hub airports here in London but not on a through connection, owing to limited access to direct flights and through carriers. I hoped that the Government would take the opportunity to attract new tourism and grow business, but it appears that APD is simply to rise as planned in April.
Many Members have highlighted the impact of fuel costs on both families and businesses, and the distortion that it causes in the cost environment for businesses in regions such as the one that I represent. Fuel prices there are high, and transport costs make up a higher proportion of business costs than elsewhere because businesses are more rural and remote. Today, there has been little new for those businesses and families, beyond the reiteration of a promise about the fuel duty stabiliser. I hope that it is possible to implement that as a matter of urgency, but I also hoped for something slightly more on fuel duty.
I want to consider corporation tax, which we have been discussing at length and for some time from a Northern Ireland perspective. That has been mentioned today in the context of the main corporation tax rate. I listened carefully to the Chancellor when he extolled the virtues of the changes he would make. He mentioned all those he foresaw as our significant competitors, but not the nearest competitor—which will still have a significant advantage over us even at the end of the period when the main rate of corporation tax reduces to 22%—of those of us who reside in Northern Ireland: the Irish Republic. It has significantly lower corporation tax and is a direct competitor with businesses in my region, particularly those around the border. The announcement on corporation tax will affect very few businesses in Northern Ireland. Most pay the lower rate of around 20% and I do not believe that they will be affected, although I am prepared to be corrected if my assessment is wrong.
I want briefly to reflect on regionalisation of civil service pay and national agreements, which is more for deliberation in Committee than a formal part of decision making at this point, but it nevertheless causes me some concern. I believe that it could be a slippery slope. It presents risks through a brain drain from the Northern Ireland economy, and that is a significant challenge. It is also contrary to the stated UK Government policy of rebalancing the UK economy and reflecting the importance of the regions. Only three regions contribute positively to the UK economy; the other nine are essentially net recipients from the Treasury. As someone who lives in one of those regions, I would like the economy to be rebalanced so that we no longer rely on subvention but can make our way, and, as the Chancellor described, work our way out of the situation. However, it is difficult to do that if the general direction of travel inhibits wage increases and competition and has a negative impact. It is as though people in Northern Ireland doing the same job as people elsewhere are somehow worth less. That is a very bad place to start.
Although it is true that public sector salaries in some areas can rise above private sector pay, particularly in the current climate during a recession, we must remember that, not so long ago, private sector salaries well outstripped the public sector in the same regions. Indeed, the public sector had to pay a premium to attract talented individuals during the boom. We need to be cautious about making decisions based on current circumstances that could have long-term consequences. The policy could also reduce work incentives. People say that it may create competition and attract people into the private sector, and I understand that, but the difficulty is that, with a contracting public sector, there is no competition for jobs in that sense. We therefore need to be cautious.
I have to say that I see the reduction of the 50p rate of tax as simply a major giveaway to the wealthiest in our society. I understand the points that have made about property tax, but if the Government want to simplify taxation, there are better ways of doing it than through that reduction. It sends out the wrong message to people who are suffering and finding it difficult to make ends meet. Tax avoidance has also in effect been simplified because for someone who earns a lot and does not invest it in property, it has been a good day.
I want to highlight some positive aspects briefly. I welcome the fact that Belfast has been included among the cities that will benefit from ultra-fast broadband and wi-fi connectivity. That electronic connectivity is hugely important for us, particularly in the light of the issues that I raised about APD and transport costs. I hope that, when it comes to other cities bidding to gain from that pot, Northern Ireland will get its fair share. I want to share my pleasure at the notion of support for the creative industries. Film and television, for example, are growth industries in Northern Ireland. I would welcome their expansion, particularly in my constituency—“Game of Thrones” was filmed in the Paint Hall in Belfast.
Finally, I make a plea to the Treasury in respect of creating a UK centre for aerodynamics to open in 2012-13. I hope that it will be a genuinely UK centre. We have a number of aeronautical industries in my constituency, including Bombardier, Thales and others. Based on those and the neighbouring aeronautical engineering department in Queen’s university in Belfast South, I hope that Belfast can be competitively considered as a potential home for that UK centre.
My concern is that the Budget will be viewed by many as a Budget mainly for the rich, and perhaps mainly for the south-east. I urge the Treasury to look at how it can ensure that that is not the outworking for individuals’ lives. The Chancellor needs to be seen as a Chancellor for all of the UK, and not a Chancellor just for those who are wealthy or who live in the south-east.
Neil Carmichael (Stroud) (Con)
It is a great honour to speak in this debate because it is an important one, given that the Budget is of decisive importance in terms of our economic future. It is also a great honour to follow the hon. Member for Belfast East (Naomi Long).
There are several reasons why this Budget is a good Budget, the first of which is that it reaffirms the need to tackle the deficit, and demonstrates that the efforts to do so have been successful. That is critical to this country’s interests, because it is about the price of money—interest—and we must secure a long-term, sustainable rate of interest for small businesses, mortgage payers and so on.
Chris Heaton-Harris
My hon. Friend will be interested to hear the views of John Cridland of the CBI, who said in the reaction to the Budget that
“the best news for businesses is that he”—
the Chancellor—
“stuck to his guns and delivered a fiscally neutral programme…by putting more money in the pockets of ordinary people, the Chancellor has provided a much-needed confidence boost.”
Neil Carmichael
I thank my hon. Friend for that intervention and helpful quotation, because it underlines my point, which all hon. Members should have firmly in their minds, because it is the key issue.
Sensible debt management goes on to secure lending at a reasonable price. We have seen how that has worked in Italy to some extent and it certainly works here. It is the real test of good government, and I am delighted that the Chancellor is pursuing it so determinedly.
The second thing I am pleased to welcome is the actions on tax avoidance. It is important that we demonstrate that we will not stand for people deliberately avoiding tax using inappropriate routes. That the new stamp duty mechanism and the mechanism to prevent tax avoidance in stamp duty are scheduled to recoup some £300 million is absolutely excellent news. That will lead to a total of £600 million, which is well worth having. We are therefore sending the right signal and getting some useful money. It is a good thing that the Chancellor has underlined that. There is annoyance in my constituency at tax avoidance, and I am pleased to be able to say that we are taking robust action. The general anti-abuse rule will be extraordinarily useful and a final threat to anybody who goes down that route in future.
Thirdly, I welcome the lifting of personal allowances, which the Liberal Democrats were right to promote. I am not going to argue about who promoted it first, but it is a useful policy for us to have and we should celebrate it.
The final thing I want to celebrate from the headline announcements is the action taken on child benefits. I received a lot of pressure in my constituency about them, right up until the last moment. One person came to visit me in Stroud tourist office while I was doing a stint to promote tourism week. In fact, he was one of many to talk about child benefit instead of buying tickets for various excellent shows and so forth. The fact remains that we have taken action, and I celebrate that fact. The Government have done a good thing.
In my constituency, I am having a festival for manufacturing and engineering next month. I am doing so to celebrate the successes in Stroud, and there are two key messages I want to get across. First, we need to invest in our small and medium-sized sectors, particularly in manufacturing and engineering, and the Chancellor has signalled that that is the direction of travel for the Budget and the Government. Secondly, I want to signal the importance of young people getting involved in manufacturing and engineering, because they need to think about manufacturing and engineering as a career. Again, he has signalled that that is a key part of the Government’s economic strategy. He has signalled many things, but those are certainly the two that matter most to my constituency.
Chris Heaton-Harris
I appreciate my hon. Friend for giving way a second time. I rise to help him with yet another quote, this time from Paul Everitt of the Society of Motor Manufacturers and Traders, who says that these Budget measures
“will trigger substantial extra business investment in the years ahead.”
That is obviously a solidly good thing.
Neil Carmichael
That is another first-class quote from my hon. Friend. He and I agree about many things, and certainly about this. I thank him very much for underlining my point again.
I want to canter through various critical measures announced in the Budget. One concerns infrastructure. It is absolutely right that we invest in infrastructure. The national infrastructure plan is a first-class document that signals the Government’s commitment to taking these measures. The recent announcement, confirmed in the Budget, about the possibility of private firms taking over roads is absolutely right. I would say, however, that although the Government are rightly reviewing the private finance initiative—it is far too cumbersome, has left us with a lot of debt and has created difficulties with procurement and so forth—we have to enable the private sector to invest more easily in infrastructure. Whatever the outcome of the review—I hope it is a robust review in terms of changing the PFI—we must still encourage the private and public sectors to work together to leverage in the money that we desperately need to improve our infrastructure.
On technology, it is great news that we will have a centre for aviation. I hope that it is in Stroud—it would be very convenient for Airbus just down the road—but wherever it is, it is important that we give that platform for development and technology. Technology matters, so I will throw in a comment about broadband, because it, too, is part of this story of ensuring that we are technologically advanced. I visited a firm called Jatech in my constituency last week. It is producing some excellent products for data management, and lots of different industries and firms are accessing that information. That means good technology in the computer and broadband industry. We need to celebrate those things too.
We had a great debate last week in Westminster Hall on UK Trade & Investment. We need to ensure that this organisation continues to do a lot of good work, so I am pleased that the Government are talking sensibly and robustly about encouraging exports and helping firms find office space and so forth. These measures in the Budget draw our attention to the need to export, because we certainly need to do that. At the end of the day, it is no good looking at Germany and saying, “Well, they’re doing better than us,” and putting our heads in the sand. We have to do as well as Germany and then better still. That is this country’s main mission on economics and growth. Let us ensure that we can promote that.
Energy is a critical issue. Again, the Government are right to talk robustly about investment in energy. The Chancellor is absolutely right to talk about supporting the oil and gas industry. That is great news for firms in my constituency supplying those sectors, notably in Brazil. For example, a firm in Eastington, Arc, is doing extraordinarily well. However, we need to provide a market opportunity for new forms of energy and even new forms of storing electricity. We need to think about that. If we can create market conditions where firms feel comfortable about investing in new technology that has not yet properly taken off, but which can add value to our energy infrastructure and provide that platform, so much the better.
Lord Heseltine will be talking about bringing the private sector and Government together—absolutely, and it is great that he is looking at implementing an industrial strategy, as it were, and how that could best be done. There are some good examples of what can be done in countries such as Germany—I mention Germany again, but it is worth looking at other countries, especially when they are doing so well. I remind the House of Germany’s market penetration in countries where we might not normally expect it, such as China and India, and so forth. We have to understand how the Germans do that and learn a few lessons from them. That is something that the Treasury, the Department for Business, Innovation and Skills and other agencies of Government would do well to consider.
The Chancellor quite properly referred to education and training, which we really have to focus on. I am absolutely delighted that, in the Budget and elsewhere, the Government have made a lot of the importance of skills training and education. The Chancellor said that we could put all the fiscal measures in place, but we really need the people to make it work—he did not use those words exactly, but that is the point he was trying to get at. We therefore have to do it. We have to ensure that the resource we have in this country—our people, all of them—have access to decent education, which will enable them to adapt and develop in their careers. It is no longer the case that people just turn up, do a job and then retire; this is about a process of development.
I want to talk a bit about banking. It is essential that we manage to get more money into the right places. One of the things about monetarism in the ’70s and ’80s is that it was quite a blunt instrument, as is quantitative easing, so we have to ensure that we get money into the right places. The issue of banking constantly recurs. The Government have mentioned a large number of measures that they intend to take, not least the national loan guarantee scheme. That is absolutely brilliant and good news, and I look forward to that. However, we need more banks, with a greater variety of offerings and more specialisms in appropriate sectors, and more competition in the banking sector. We also need to be alert to new ways of financing firms and encourage them to think about new ways of doing that. It is not just about the banks, although they need to improve their lending; it is also about firms themselves and the cultural change we need to bring about to encourage small and medium-sized businesses to think out of the box when it comes to borrowing money.
I finish with a comment about the business finance partnership, which is a great scheme. Indeed, the Chancellor mentioned it today, with £100 million in the Budget for non-traditional lending, which is exactly the sort of thing I am thinking about. It is also important that we continue to recognise, understand and promote the development of supply chains, because they are critical in the SME sector—they really do matter. Interpreting how supply chains will develop, recognising where the blockages are and understanding them as part of the export issue to which I referred will enable growth to take place, because the component parts of the chain will understand that process and be ready to support and buy from each other.
This is a good Budget, but there is a lot still to do.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
The Chancellor opened his statement by promising us that this is a Budget that “rewards work”, “backs business” and “is on the side of aspiration”. Fine words, but I remember the last Budget, which he said would
“put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
I have an uncomfortable feeling that in one year’s time, I will be looking back on the Chancellor’s opening words today with the same scepticism and cynicism with which I look back on the words that he used to describe his previous Budget. The fact remains that this Budget is set against a background of increasing unemployment, a squeeze on living standards and flatlining economic growth. It was significant that Government Members were so enthusiastic about the revised Office for Budget Responsibility projection which showed that the economy could grow by an extra 0.1%, given the fact that the economy is performing way below the Chancellor’s original projections. I sensed a hopeless clutching of straws.
Andrew Bridgen
Is the hon. Gentleman aware of recent predictions that the UK economy will grow twice as fast as the German economy and three times as fast as the French economy this year?
Mr Bailey
I am afraid I do not read comics such as The Dandy, and I have not come across any such predictions at all. I do not think that they are in the OBR’s projection, either.
From the moment the Chancellor came into office, he has ruled out any intelligent debate on the right balance of supply-side and demand-side measures that would achieve a level of economic growth that would eliminate the deficit and provide employment. When the Labour Government left office, the economy was growing, unemployment and inflation were falling and our public sector deficit was declining, but the Chancellor seemed to think that that was all wrong, and that the only recipe was austerity. His justification for that was the perceived threat that a credit rating agency would downgrade Britain’s triple A status, with all the horrors that that would entail. I congratulate the Chancellor on one thing: he has transformed credit rating agencies from being the most anonymous part of our financial services infrastructure into bedroom monsters that he conjures out of the wardrobe to frighten anyone who has the temerity to question the underlying philosophy behind the measures that he is taking. We have to suffer job losses, cuts to our public services and pay freezes, because if we do not, Moody’s and Fitch will get us. That is the Chancellor’s underlying approach.
Barry Gardiner
Could they possibly be the same Moody’s and Fitch that gave Lehman Brothers its triple A rating?
Mr Bailey
I think they probably were.
After we have endured two years of pain since the Government came into office, Moody’s and Fitch have rewarded the Chancellor for all his efforts by putting Britain’s triple A rating on negative outlook. The monsters have turned on their master. The pain has been in vain, and the Chancellor should acknowledge that and start genuinely to consider a more balanced approach that would enable us to implement the changes that we need to grow our way out of the deficit.
I remind Members that it was only last August when the Chancellor sneered at the American model and told us that the American economy was growing more slowly than Britain’s. Now, however, America has taken a balanced approach. Its economy grew 3% in the last quarter of 2011, and is predicted to grow further. Its deficit is predicted to drop next year, as is its unemployment. The fact is that the model that the Chancellor sneered at is actually delivering, while his is not. Last week, when I saw the Prime Minister having his cosy discussions with President Obama, I wondered whether he might have taken him aside and said, “Mr President, how is it that you have got your economic strategy so right and my Chancellor has got his so wrong?” But perhaps that was just a fantasy.
Parts of the Budget are good, and they might help, even though they deal with the supply side, when the demand side needs to be addressed. The national loan guarantee scheme is obviously a welcome measure, and some companies will benefit from it. However—this might be a good thing for those companies—some companies that use it would have invested anyway, while companies on the margins will not be able to access it: they will run up against the same problems as before. One cannot help but think that if more were done to inflate the economy and improve the demand side, more companies would become more viable in the future and more companies would be able to access the scheme.
The fact remains that while access to finance is still a barrier for many sound companies, this is not the only issue. Many companies are not going to the banks because their future market projections are such that they do not have enough confidence to invest any more. Although there has been a very modest improvement in business confidence, it is still very fragile overall, and this measure alone is not likely to counteract it.
The Institute for Fiscal Studies projections show that we are only a quarter of the way through the public sector cuts. If future public sector cuts designed to deliver on the Government’s objectives result in further unemployment, I foresee only a further squeeze on the financial situation of individuals and a further decline in the domestic market needed to give those companies the sort of confidence they need.
An earlier speaker mentioned the national insurance holiday that was introduced in a previous Budget. No mention of that whatever was made in this Budget; it has been a colossal flop. However, small businesses are campaigning up and down the country, arguing that if this were reshaped and if the money that has not been used were ploughed into it, all small businesses could qualify, provided that they employ more people. That would be a relatively minor tweaking to the Government’s Budget strategy, yet it could result in a significant increase in employment and a significant increase in demand. I am disappointed that the Government did not look at that.
On construction, much has been said about the national infrastructure plan. Fine, it is a great plan, but it is being projected as if having a plan results in delivery. So far, what has been conspicuously absent is any sort of funding mechanism to achieve this. We have heard about using pension funds, which may be a great idea, and we have heard about private investment, which may also be a great idea—we will see. The key point is that until there is a model for the financing of the delivery of these infrastructure plans, these are really pie-in-the-sky ideas. I have an uncomfortable feeling that these so-called plans are being used as a substitute for doing something.
The construction industry needs action on this level. Having enjoyed a revival in 2010 and early 2011—largely as a result of contracts initiated under the previous Labour Government—it is now shrinking. As of this moment, employment is predicted to drop by 45,000, with a further 3% in output in 2012. If the Government really want an infrastructure-led revival in our economy, they need to move quickly. We have the companies capable of delivering it, and we have the skills within those companies; what we need is Government action. Let me make one qualifying point. About 60% of the projects in the national infrastructure plan are based in London, but the greatest unemployment in the construction industry is outside in the regions, so the plan needs to be revamped to take that into consideration.
The Government are certainly making all the right noises about exports. What the Chancellor did not mention is that if we are to expand our exports to the BRIC countries—Brazil, Russia, India and China—reducing UK Trade & Investment’s budget by 17% is perhaps not the best way of doing it. Also, he did not mention that two of the most significant growing markets that we need to access, India and China—other Members have talked about this—are, as a result of the visa regime, hugely concerned about whether Britain is open to business. There is considerable evidence that that is damaging our economic relations with them.
My last point is very much a personal one. As a long-standing co-operator and as a believer in mutuality and employee share ownership, I believe that measures should be taken to foster and develop employee share ownership in this country. There is a huge body of evidence demonstrating that it leads to greater employee and consumer satisfaction, and greater productivity. The tax allowable savings rate for members who wish to invest in their companies has not been increased for donkey’s years. The Government have said that they will review it. Given the commitment made by both the Prime Minister and the Deputy Prime Minister, I would have wished for something a little more solid than that, and I hope that the review will deliver it.
Madam Deputy Speaker (Dawn Primarolo)
Order. Eight speakers have indicated that they wish to speak, so I am taking the time limit down to eight minutes. I hope that Members will be courteous to everyone else in the Chamber, so that we can ensure that everybody who has applied to speak today gets in this evening.
Mr Edward Leigh (Gainsborough) (Con)
It is a pleasure to follow the hon. Member for West Bromwich West (Mr Bailey), who always makes his arguments well. I apologise for the fact that I cannot stay for the whole of the rest of the debate; I wish to attend the memorial service downstairs for David Atkinson. I will take this opportunity to pay tribute to him on the Floor of the House. He served the House with tremendous distinction for many years, particularly in the Council of Europe. He was particularly hard-working on promoting democracy throughout Europe.
I see my neighbour, the hon. Member for Great Grimsby (Austin Mitchell), on the Opposition Benches. We have been in the House together for a long time, and we have heard many Budgets. I said to my wife this morning, “We have heard so many Budgets. Will this be just another Budget that takes with one hand and gives with the other?” but I think it is a very courageous Budget that is rather different from many that I have heard. I have sat through so many—from Nigel Lawson, John Major and the previous leader of the Labour party.
The Budget is courageous for two reasons. First, my right hon. Friend the Chancellor is persevering with dealing with the deficit, which is the greatest problem that we face. Politically, it is in the interests of the Labour party to claim that we are indulging in a tremendous campaign of cutting everything in sight. One of the problems that it faces is that it knows perfectly well—as do the public—that, if it had remained in power, as it very nearly did, it would have done much the same as us. It is also politically convenient for the Government, of course, to proclaim that they are taking difficult decisions, but we are probably not cutting public expenditure enough to keep interest rates low. We are cutting what would otherwise have been a runaway increase in the deficit, and that is very different indeed.
The decisions that the Chancellor faces are extraordinarily difficult, and he is conducting himself very well. I have watched him ever since he was a freshman Member of Parliament, serving on the Public Accounts Committee. What he is achieving, both on the deficit and on many other things, is important and courageous. The other brave thing that he has done today is deal with the issue of the 50p top rate of tax. I know that that is not necessarily populist. I listened to the speech by the Leader of the Opposition, which was very good, and afterwards I congratulated him on it. It was good politics, and it appealed to his people, but the question that the Labour party has to ask itself is: does it want its leader to give a speech that appeals to his core supporters, or a speech that addresses the real problems of the country? This is the problem in respect of the top rate income tax payers: the top 1% of taxpayers pay about 28% of total taxes and they are highly mobile in the way that they conduct their lives and their businesses, and simply imposing a 50p tax—which Tony Blair and Mandelson resisted year after year—does not actually achieve anything for the economy. It may be good Labour politics, but it does not achieve anything for the economy. As we heard from the Chancellor today, it is only giving us about £100 million. Therefore, although this measure may not be popular, it has to be taken if we are to revive entrepreneurship.
The task facing the Chancellor is very difficult and complex, but he has set about it in the right way. He is trying to close many of the tax loopholes. The difficulty here, however, is that we do not want the very rich just to bury their money in the ground. Instead, we want them to be “white knights”, to set up businesses and to become entrepreneurs. Indeed, many of the so-called tax avoidance schemes were designed by previous Governments to encourage the rich to invest in business.
The Chancellor has also taken a brave decision on child benefit. I was critical of his original proposals, although I understand why he suggested them. There was the overriding need to deal with the deficit, and his child benefit reforms were going to save £2.5 billion. There was also a desire to “detoxify” the Tory brand, and to attack higher income tax payers. There may have been some pressures within the coalition, too. However, we all know that the Chancellor’s original proposal would, as it were, have created a cliff edge and would have been fundamentally unfair, because the situation would have been very different for a family with one higher tax earner than for a family with two taxpayers whose earnings are just below the £41,000 limit.
The Chancellor has taken the courageous and right decision to try to deal with that problem, but we still have a long way to go, and I believe that a better way forward would be to have a tax allowance. That would solve the problem of the higher income tax payer family. In France, instead of getting child benefit, couples are given a family tax allowance, which is spread between themselves and their children, irrespective of their income. An adult counts as one unit of tax allowance, and children count as half units. Therefore, a married couple with two children are given three units-worth of tax allowance. As a result, the level of income at which they start to pay tax is higher than it would be in Britain. That system has the added advantage of addressing the perverse incentives against family life and couples staying together.
I will continue to argue that the Government must fulfil their pledge to recognise marriage in the tax system. Critics of my arguments often say, “Just a little tax break isn’t going to make people get married or stay married.” That is perfectly true, but what we currently have is almost a perverse incentive against family life. A married couple where one parent stays at home to look after the children are hugely more taxed than almost any other taxpayer. We do not want to create a tax break for marriage because we think that that alone will deal with the wider problems; we just want to right an injustice.
The Chancellor has remained true to the overriding need to have a fiscally neutral Budget and to attack the deficit, has demonstrated a determination to promote entrepreneurship even if that means taking unpopular decisions, and has courageously recognised that he may have made a mistake on child benefit and that he should try to reform the system in a more equitable way. Although the Budget may not be popular with everybody, it is certainly a good Budget, and the right Budget for the nation.
Austin Mitchell (Great Grimsby) (Lab)
I cannot agree with my neighbour, the hon. Member for Gainsborough (Mr Leigh), on this Budget, because from both a Labour and an objective point of view it is a pathetic Budget. It is justified by a lot of bravado and bluff, but it does nothing about the major problem of an economy that is nearing recession and needs drastically to boost growth if we are to get out of it. The Budget even fails the five tests for a successful Budget that Anatole Kaletsky proposes in The Times today. The three most important of those are that the Budget should be fair to all—this one is not; that it should be pragmatic, which this one is not, because it is ideological; and that it should be relevant to the problems of the day, which this one is not.
What this Budget does is prolong the failed policies of the past two years of cut, freeze and squeeze, which are not working and need to be ended. The Budget is a disastrous prospect for the Government, because this is the hinge point of power and this Budget means that, instead of strolling to a tax-cutting election victory in 2015, they are faced with flatlining. The huskies pulling the sledge are going to have to pull even harder to get it moving at all. We have already lost 4% of GDP—the economy is that much smaller, according to the Institute for Fiscal Studies—and that will never be made good. We face flatlining, as Japan did in its wasted decade.
The Liberal Democrats have made a desperate attempt to distract attention from that failure. They argue that the rich have been taxed to show that they have got something out of the coalition. They were trying to stop the reduction from 50 to 45%, proposing a mansion tax, a tycoon tax—perhaps it was a Typhoo tax—or something to tax wealth. Well, we have got the cut in the 50% rate, which the HMRC study did not prove brought in big revenues. However, it did not wait for the deferred taxation to come into play—it would do so only with a longer period of running that tax. The public did not want the cut in that tax, which demonstrated that we are all in it together, but it has been cut and the Liberals have got very little in return.
I am not sure what the Liberals were expecting, because what is the Tory party about but helping the rich? After all, this is a Government of millionaires, for millionaires, by millionaires, so we would not expect them, as the Liberals seem to have done, to be giving a tax increase to the rich. What they have given is a couple of symbolic pecks at wealth, but they are more like love bites than serious damage. It does not help that the Government have raised tax allowances in the way that the Liberals wanted. It was a good idea to raise them, but I must point out that that does not really help the poor who do not pay tax, or pensioners—it does not compensate for the VAT increase, for the loss of tax credits and for the child benefit cut. The main benefit goes to the second highest decile of taxpayers, rather than to those at the bottom. So that is the only crumb they have got out of it. The coalition Government are beginning to look like Downton avenue, with the millionaires living upstairs—[Interruption.] Sorry, I meant Downton Abbey. I was thinking about Coronation Street. We have a Government of millionaires living upstairs and the domestic servants are downstairs grumbling, because the only prospect they have now is to go hawking their consciences round television studios to explain why they are getting nothing out of this coalition.
Not only is the Budget not fair—it is certainly not fair to the north and to the area I represent—but it has failed Kaletsky’s second requirement, because it is not pragmatic. It is an ideological Budget because it is obsessed—still crazy over Thatcherism, after all these years—with debt. The problem of this country is not debt. If there is growth, debt can be paid off easily, as the Labour Government did between 1997 and 2000. The problem facing us is a lack of demand. That is why shops are closing in the high street and chains are going bust. Firms are not growing, investing and expanding because they cannot see a demand for their products. As long as that remains the case and as long as there is that uncertainty, we shall not get economic growth. People are being given more hours in which to shop with money that they have not got. Demand is crucial to this economy. It is far too low and it needs to be boosted, but it is not being boosted. There must be a boost to demand.
That brings me to the third failure in the Kaletsky tests. The Budget is not relevant to the economy as it is today. We are an economy verging on recession. We have had a massive loss of growth. We need growth and there are only two ways of getting it. The first is by monetary means. The Bank of England is doing its best with quantitative easing, but that is going into the banks, which are not lending it. It is building up their reserves, rather than going out to the people who spend and generate demand. Secondly, there is the fiscal weapon, which the Chancellor obstinately refuses to use. Only growth will pay off debt. Unless we get growth in the economy, there is no chance of paying off the debt in the way that the Chancellor wants. The only way we will get growth is to borrow, to spend and to let the multiplier work its magic, as Keynes told us it would. That would work, but these policies will not.
Simon Jenkins suggests helicopter money—putting the money in a helicopter and dropping it out on the people, who will spend it. If it drops out on Grimsby, I will be very grateful, but a more sensible way would be to use the money from quantitative easing to sign contracts for a big house building programme to create public housing for rent, which is badly needed in this country, and for big public work contracts. Some of the money should be put in a national investment bank, with an industrial policy to invest in manufacturing and expansion. That is the way to spend the money from quantitative easing.
The Bank of England cannot do that. All it can do is buy debt and give the money to the banks, which stash it away in their reserves. The Chancellor can decide that the money printed by quantitative easing should be used for those benign purposes, and he should, because that would give us growth. Also, there should be municipal bonds for house building, as we used to have, to boost the finance for house building.
The Budget is a failure which foretells three years of bumping along, not on the bottom, but flatlining for an economy which desperately needs to grow to compete with the Americans, whose economy is growing, and to benefit from their growth. The economy should be stimulated by public spending and projects such as house building to get us out of the mess we are in, and I do not see any symptom of that following this Budget.
Andrew Bridgen (North West Leicestershire) (Con)
I draw Members’ attention to my declaration in the Register of Members’ Financial Interests.
The Budget is set in the context of continued uncertainty in the global economy, but it is a Budget that binds many threads of Government policy as we seek to reward work and enterprise and to rebalance our economy. The House would do well to remember that it is only by virtue of the deficit reduction plan set out by my right hon. Friend the Chancellor in June 2010 that the UK has managed to achieve a relative safe haven status and achieve record low interest rates, which will save the taxpayer a projected £36 billion over this Parliament.
The Chancellor today announced measures that will allow companies and individuals further to share in the benefits of these low interest rates, achieved no doubt by international acceptance of the fiscal competence of this Government’s policies. The deficit reduction plan, however, is not just about reducing the size of the increase in Government spending; it is also dependent on achieving growth. Although the eurozone crisis has damaged economic growth rates across the continent and globally, it is a testament to this Chancellor and this Government’s handling of the public finances that the deficit reduction figure was ahead of target this year, while at the same time achieving a growth rate in the economy of 0.8%.
As we have heard during the debate, the Opposition try to argue that deficit reduction is being pursued at the expense of growth, and America has been mentioned. They should look at the International Monetary Fund’s fiscal monitor, which shows that fiscal policy in America was tightened by 0.8% of gross domestic product last year, at the same time as a growth rate of 1.7% was achieved. This fact completely contradicts the inaccurate claims of the Leader of the Opposition in his Budget response and those in the Labour party who still cling to the misguided mantra that the only way to obtain economic growth is through fiscal stimulus. When will they learn that they cannot borrow their way out of a debt crisis?
There is, however, no room for complacency and the economy needs to start growing at a faster rate. I welcome the measures outlined today that will stimulate the economy and see taxes cut for 24 million taxpayers through the increase in the tax threshold. That is another example of the Government’s commitment to the lowest-paid and stands in stark contrast to the actions of the previous Prime Minister, who removed the 10p starting rate of tax in his final Budget, hitting the lowest-paid the hardest. The increase in the personal allowance to £9,205 is very welcome and will lift an additional 66,000 people in the east midlands alone out of income tax and benefit more than 1.7 million individuals nationally. The Government will have lifted a total of 148,000 people in the east midlands out of tax at this rate.
Another damaging legacy of the previous Prime Minister was the 50p rate of tax—a purely political and cynical attempt to lay a bear trap for the Conservative party. As my right hon. Friend the Chancellor explained, it is raising little or no money and damaging the competitiveness of our economy. It was a Trojan horse of a tax. It raised no money and at the same time damaged our economy.
Mr Stewart Jackson (Peterborough) (Con)
Is it not the case that the Opposition have no credibility on this issue, because even though the shadow Chancellor knows that the 50p rate damaged entrepreneurship and collected very little revenue, he still refuses, even this afternoon, to confirm that the Labour party, if in office, would bring it back?
Andrew Bridgen
My hon. Friend is absolutely right; they have no credibility and will not confirm whether they would bring the rate back. I remind the House of the comments of their former leader, Tony Blair, who stated:
“I wanted to preserve, in terms of competitive tax rates, the essential Thatcher/Howe/Lawson legacy. I wanted wealthy people to feel at home and welcomed in the UK so that they could bring more business, create jobs and spread some of that wealth around.”
Whatever happened to new Labour? Even Mr Blair accepted that the top 1% of earners pay almost 30% of the taxes in this country, and many other countries certainly feel the same, but our top rate of tax was the highest in the 10 largest economies in the world.
Mr Marcus Jones
While my hon. Friend is on the subject of tax, will he join me in welcoming the comments of the Birmingham chamber of commerce today that the Chancellor’s tax reforms are a recipe for growth?
Andrew Bridgen
I certainly will. As my constituency is only 22 miles from Birmingham, I always listen to what its chamber of commerce has to say. I am sure that it also welcomes another signal that this country is open for business: the acceleration in the cuts to corporation tax. These changes will encourage business investment, support growth and create jobs. My only regret about the announced cut in corporation tax is that Ken Livingstone stands to gain from the devious arranging of his tax affairs. I also welcome the announcement of loans for young entrepreneurs, which displays a commitment, not always shown by the previous Government, to open up opportunities for young people who choose not to go to university.
We are all well aware of the over-complicated and incomprehensible tax system left by the previous Government. The Chartered Institute of Taxation stated shortly after the election:
“The UK now has the longest primary tax code, and one of the most complicated, in the world.”
We all know that this is stunts growth, and I welcome the tax simplification measures announced today in the Red Book, which abolish 28 reliefs and will make the tax affairs of small businesses, the lifeblood of our economy, much simpler. However, this Budget needs to be the beginning of the work on tax simplification, not the end. We have all become aware of the stamp duty loopholes that have been ruthlessly exploited through schemes such as subsale relief and individuals, through companies, avoiding stamp duty on multi-million pound houses. I welcome the action the Chancellor has taken to close this embarrassing loophole.
I welcome also the announcement on regional pay bargaining. The Opposition will argue that it widens the north-south divide, but I argue that the north-south divide is being perpetuated: areas have become so hooked and reliant on public sector jobs that the private sector, which cannot compete with the pay and conditions agreed nationally by the public sector, is stifled. We need more of our brightest and best to enter the private sector, which in many parts of the country struggles to compete with the pay and conditions on offer in the public sector.
I welcome the measures announced to help military personnel, particularly doubling the rate of council tax rebate and doubling the rate of family welfare grant. That is another example and extension of this Government’s commitment to the armed forces, and, although the announcement of £100 million of investment in military accommodation is long overdue, it will be welcomed by all service families.
We cannot tax our way into prosperity any more than we can borrow our way out of a debt crisis. This is a Budget that is symbolic of this Government’s principles—to promote fairness and to reward work and enterprise so that we can start to earn our way back to prosperity.
Barry Gardiner (Brent North) (Lab)
The trouble with Budgets is that they tend to operate on a five-year cycle that has no relation to the actual cycles of the resources that we profess to manage. The immediacy of the political triumphs over the requirements of the actual.
The focal point of this Budget is 2016-17, when the Government hope that the hole in the public finances will have been filled, but interestingly four fifths—more than £90 billion—of that filler comes from cuts in services and benefits, while only one fifth comes from rises in tax. Yet 73% of the tax rises have already been put in place, and less than 20% of the cuts in services and benefits have happened.
The Government might think it prudent to delay the pain, but Government Back Benchers might care to reflect on what that has done to their electoral prospects.
Mr Robin Walker (Worcester) (Con)
The hon. Gentleman mentions the figure of £90 billion, but will he acknowledge that the £36 billion reduction in interest payments, which we have already seen, makes a substantial contribution to that?
Barry Gardiner
The hon. Gentleman refers to interest payments, but he knows that on that score this Government are paying out £150 billion more than they predicted, so his argument does not hold up.
A Budget is a mechanism for the distribution and allocation of scarce resources, so let us examine what this Budget means for a child born today. A child born in my constituency today brings us this message: “By the time I reach my 18th birthday, the world will require 30% more fresh water, 45% more energy and 50% more food.” This child is part of the generation that will see the global population move from 7 billion to 10 billion people. How do we respond to this child? Do we become the most selfish generation of the most selfish species in our planet’s history? Or do we become the generation that understood that justice and sustainability are essentially the same thing? If you want peace in the world, create justice. If you want justice, live sustainably.
We must get away from both sides of the political divide arguing that they uniquely possess the key to growth. We listen to the stale arguments about whether more spending now will raise growth and reduce the deficit more quickly, or whether less borrowing now will ultimately be a surer path to bring our economy back into GDP growth. But what both sides are talking about is yesterday’s economics: Hayek pitted against Keynes.
The Chancellor wants to set markets free and insists that we cannot spend our way out of debt, but he wilfully ignores Hayek’s equal insistence that the boom gets started with an expansion of credit—the very liquidity that the Chancellor has told the banks they must provide for business. Hayek would have been appalled to find his theories invoked by a Chancellor literally printing money through quantitative easing. In Hayek’s view, that leads only to unrealistically low interest rates and to the cycle of boom and bust starting all over again.
Keynes of course believed in consumption-led growth as an economic stimulus, but he did not live in a world of 7 billion people. He assumed that growth was sustainable and natural resource was, for practical purposes, infinite. We know that it is not. As a result, we have an obligation to make sure that growth is sustainable, not simply to assume that it will be.
Mr Jackson
The hon. Gentleman is making a cogent and interesting argument. We all agree that we should give 0.7% of our GDP to international development. Surely he will concede that unless we grow our GDP, the absolute amount of cash that we have to give to good causes across the world, in supporting sustainability, will not be enough to do the things that he wants to do.
Barry Gardiner
The hon. Gentleman precisely misconstrues my point; the issue is not about the amount of aid given to developing countries, but about understanding the valuation of natural capital and incorporating that into the Government’s accounting framework. That is in the natural environment White Paper, if he cares to read it.
In a world of 7 billion people, growth can be sustainable only if it is predicated on advances that bring increased productivity and greater efficiency in the use of resources. That is what Hayek would have called a sound capital structure and proper allocation of capital. For the world to continue to achieve a 3% per annum growth target, and to maintain a trajectory that keeps carbon emissions below the 2°C threshold of dangerous climate change, we must increase our productivity per tonne of carbon emitted 15 times over.
The Budget simply does not address that technological challenge. It was extraordinary to see the Secretary of State for Energy and Climate Change join forces with the Treasury last Friday evening and issue a press release at 6 pm, embargoed until midnight, to exempt gas-fired power stations from the emissions controls set out in the fourth carbon budget by the Committee on Climate Change. Those emissions reductions were, in the Committee’s view, part of the necessary regulatory framework for achieving our target of at least 80% emissions reductions by 2050.
The press release set out no alternative mechanisms that would be adopted to keep to those targets and no Minister has sought to expand on the issue since last week. It is a measure of the shame that the Government felt on reneging on the fourth carbon budget that they issued their press release in such a furtive manner. What is worse, what happened shows that the new Energy Secretary has no command over his brief and has been fingered by the Treasury as a weak Secretary of State.
Since William Ewart Gladstone instituted the modern accounting and budgetary processes of the House of Commons 150 years ago, modern economics has come a long way in its understanding of capital. In Gladstone’s day, the notion of capital was very simple; it represented money and machinery. Gradually, we have come to realise that capital is not just money and plant. We have developed sophisticated concepts of social and intellectual capital. We know that a well functioning legal system is very much a part of the wealth of a society, inviting commerce and trade to practise where certainty and redress prevail. That is certainly a form of capital different from a bridge, printing press or motorway, but we now measure them all in our assessment of the national wealth of a country.
Resource economists now point out that we have left out of our economic calculations perhaps the most important capital of all: natural capital. We have left it out for a very simple reason—we always took it for granted. We thought that it was a free good. It cost us nothing and we assumed the supply was infinite. In the language of classical economics, natural capital was a mere externality, “as free as the air you breathe”.
What we have now begun to realise is that the air we breathe is not actually free—at least, it is not without a quantifiable value. Any sound cost-benefit analysis of public policy must take that value into account. The Environmental Audit Committee report on air pollution estimated that the costs from air pollution are up to £20.2 billion. That is the cost of respiratory and other diseases associated with poor air quality, both in treatment and lost productivity.
The natural environment provides not just a physical stock of resources—forests and fish, minerals and fresh water that human beings depend on—but a network of services essential for human life. The pollination of our crops by insects, the stabilisation of our soil by trees and the regulation of our watershed by peat bogs are just some of the ecosystem services that a new economic model must begin to incorporate into our Government’s accounting framework. That new accounting renders inadequate the concept of GDP growth because it reveals one of the central conundrums of classical economics: that a country can become poorer while increasing its GDP.
The Chancellor said nothing today that showed that he understood that. Another important consideration is that those wider benefits, although immensely valuable, do not accrue to an individual private property owner; they are experienced by a community at large. They are regarded as free goods by the wider community, and in classical economics as externalities, and because they are not directly captured by a landowner they rarely feature in a landowner’s decision on how or whether to dispose of them. That is why the exercise of private property rights can often be to the public detriment. It is also why the role of the state in regulating the disposal of land is so important. Today we have heard much talk of stamp duty and how to raise revenue from the rich. It therefore seems quaint that no one has commented on the fact that the land registry for England, which was established in 1928, still accounts for only some 64% of the land in England, while in the registry for Scotland the figure drops to a mere 21%.
Of course, there is a reason why almost a century later we have not yet been able properly to map the title of land in the UK—it is that so much of it has never been sold but has been passed down in families, from parent to child, in enormous estates. If the Government genuinely want to raise tax from the very wealthy, they should examine not only houses sold for over £2 million but the vast tracts of our country that have been accumulated in great estates for centuries and are still owned and managed not for the benefit of the population at large but to maximise the income and pleasure of a very few private individuals. I do not claim that all hereditary estates are badly managed in respect of the environment, but I do claim that good management comes not only as a result of inheritance. Land tax reform is long overdue. If we wish to become a more equal society, then we need to consider the taxation of land and land use in different and more imaginative ways, for the benefit of society as a whole.
The Chancellor sought in his Budget to bury another important piece of environmental news. Next Tuesday, the new national planning policy framework is published. That deserves our attention not least because we know that the Chancellor takes the view that the planning system is a blockage to economic growth. The NPPF will cause havoc up and down the country as planning uncertainty and ambiguity filters down to local communities. Fundamental to the new framework is the presumption in favour of sustainable development. In practice, this means—
David Mowat (Warrington South) (Con)
I will talk about four areas: tax avoidance; the effectiveness of the Budget in terms of pension tax relief; regional policy; and some aspects of green policy, which may not be entirely coincidental given the speech by the hon. Member for Brent North (Barry Gardiner).
On tax relief, I am pleased that the Chancellor announced that the Aaronson review is to be taken forward and that we are to have a general anti-abuse rule. Sometimes Government Members express concern about retrospective legislation as though it were all about Magna Carta and attacking the rights of the individual. In this case, however, we are talking about predatory and abusive tax practices. About a week ago, I received an e-mail from a firm of accountants telling me about a tax scheme based around film tax credits—it was presumably perfectly legal—and suggesting that there was a way for me to pay no income tax. If I am getting such e-mails, others are getting them too. It is high time that these schemes were put away for ever. I am pleased that the Government are going to move forward on that, although they may wish to consider some kind of de minimis limit as regards how the measure would work in order to avoid over-zealous tax inspectors getting in the way.
I am particularly pleased about the Government’s announcement on stamp duty. For the past three months, we have known that this measure was coming and that the loophole would be closed on 21 March, and I have been concerned about that, given what often happens in such cases. I assumed, rightly I think, that across London in particular estate agents and solicitors were putting houses into companies in order to avoid the measure. I was therefore delighted when I saw the detail of the proposed legislation, which, as far as I can see, fixes this practice. The Government are going to consult on a proposal that will force people to take their houses out of such companies and, presumably, pay tax at the new higher rate. I commend whichever civil servant thought of that. Tax avoidance matters; it strikes at the heart of the notion that we are all in this together.
Before I leave the subject, I would like to discuss it in the context of the BBC. Members on both sides of the House will remember the “Newsnight” exclusive about the head of the Student Loans Company who was not having tax deducted at source even though he was, to all intents and purposes, a full-time employee. The Government have correctly agreed to fix that and to undertake a review of the rest of the public sector. I sent a freedom of information request to the BBC, asking it how many of its employees did not have tax deducted at source. The answer was that 320 non-talent based employees—in other words, administration employees—earning more than £50,000 a year were not having tax and national insurance deducted at source through pay-as-you-earn. The review that is being conducted across Government to ensure that that is not happening explicitly excludes the BBC. I ask Ministers to reconsider that. I will repeat the statistic: 320 non-talent based BBC employees earning more than £50,000 a year do not have tax or national insurance deducted at source through PAYE. That is not acceptable.
I will talk briefly about pension tax relief. I know that this is a complex area, but I am concerned that the Government are not making the progress on private sector pensions that is needed. In broad terms, the industry is failing. There is market failure in the pension fund management industry and the annuity industry. There is a massive asymmetry of information between the industry and the people it purports to serve. Charges are out of control. I am delighted that the National Employment Savings Trust is coming in. There are limits on who NEST can serve and how it can serve them, which were forced on the Government by the industry.
It is time to look again at the whole area of pensions. In particular, we should look at what the Government spend on tax relief. They spend £8 billion on higher rate tax relief and £30 billion on tax relief in total. If that tax relief was going into people’s pension pots towards their retirement prosperity, that would be one thing. The truth is that 31% of pension pots go on charges. It is possible that that rises to 50% of pension pots when churn costs and the rest of it are taken into account.
I would have liked the Government to remove higher rate tax relief in the Budget, because frankly it is a subsidy for a chunk of the investment management industry in the City. At the same time, I would have liked them to reverse the raid on pensions undertaken by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). That could have been done easily with the money, and they might have been able to increase the overall rate of old-age pensions with what was left over. Indeed, if we removed all tax relief on pensions from this failing industry, we could increase the old-age pension by 60%. That model would put us much closer to how continental Europe deals with this matter, and we could still encourage savings through individual savings accounts and the like.
My hon. Friend the Member for North West Leicestershire (Andrew Bridgen) said that he was in favour of the regional pay policy. Anything that the Government do in that regard must be evidence-based. Taking money out of the regions is not, on the face of it, the easiest or best way of changing the north-south divide. In the last year of the previous Government, London had double the gross value added per head of the English regions. We must tread carefully. The Government must make fixing that statistic a priority. In no other country in the world—not in Germany, France or Italy—does that sort of discrepancy between the capital city and the regions exist. We must be circumspect about the regional pay policy.
I was pleased with the announcements in the Budget on the northern hub and the Manchester earn-back model. However, I was disappointed that of the £30 billion of infrastructure spending that the Chancellor announced before Christmas, 84% was for London and the south-east. We need to fix that.
Unfortunately, I do not have time to talk about green policies, so the hon. Member for Brent North will not hear my thoughts on his speech. I will at least leave the three areas that I have discussed with Ministers.
Mr David Hanson (Delyn) (Lab)
It is a pleasure to speak on the first day of the Budget debate. I feel a slight sense of déjà vu, because although the debate has been going for about six hours since the Chancellor began his statement, I feel that I have known for a little longer than that about Sunday trading, the regional pay cap, the 50p tax rate, stamp duty and other matters in the Budget. Perhaps it is because I am from the north and we are in a different time zone up there, but those measures seem to have been around since at least Sunday, probably Saturday or before. Hugh Dalton resigned as Labour Chancellor for less, and I hope that Mr Speaker and you, Mr Deputy Speaker, will make a really serious examination of the issue in future.
The Deeside industrial park enterprise zone that the Chancellor announced today was in fact announced by the Labour Welsh Government before Christmas. It was brought to us today as a brand-new initiative, but it is one of a range of issues in the Budget that have been around for much longer than just today.
The devil is in the detail, and the difficulty on day one of the Budget debate is examining that detail and deciding which are the important matters. I know that the devil is in the detail because I shared many a Finance Bill debate with the Exchequer Secretary, who is in his place, until I moved to a different position as a shadow Home Office Minister at the end of last year.
The details of today’s Budget are worth focusing on. We have already seen that among them is the fact that 14,000 people who earn £1 million or more will get a £40,000 tax cut. Whatever the arguments for or against that, at a time when the Government are asking people to tighten their belts, giving a £40,000 tax cut to the richest people in our communities strikes me as the wrong priority. Much has been made of stamp duty compensating for that, but I remind the Exchequer Secretary that a £40,000 tax cut is a year-on-year measure whereas people do not move house every year. If they do, perhaps they deserve to pay the higher level of stamp duty, but mostly it is a one-off payment.
At the same time, families earning £20,000 stand to lose £253 this year, along with the rise in VAT that the Opposition voted against, which will cost them about £450 a year. Whatever pleasures the Liberals have brought to the debate, they have said the rise in the income tax threshold means that there will be a tax cut. However, there will not be a tax cut overall, because there will still be rises in indirect taxation.
The devil is also in the details of a £3 billion tax raid on 4.41 million pensioners, who will lose about £83 in 2013-14 through the changes to the higher allowances. I am sure that will come back and bite the Government in Committee and beyond. Also, 65-year-olds will lose £314 next year, which is another devil in the details.
I have noticed only during the debate—the Chancellor did not mention it in his speech—a major issue for me and my constituents in the details of the tax on holiday caravans. I represent a constituency in north Wales where holiday caravans are part of the local economy. Unbeknown to us from the Chancellor’s speech, he has announced on page A101 of the “Overview of Tax Legislation and Rates” that VAT will be levied on static holiday caravans from 1 October. According to the Treasury’s own figures, that will have an impact on some 50,000 individuals a year and, crucially, reduce demand by about 30% if the VAT change is fully passed on. The document states:
“This change is likely to adversely impact on all businesses that manufacture, buy or sell static caravans, from the very smallest to the very largest.”
Only two weeks ago, I opened a brand-new caravan park extension in my constituency, providing 12 new caravans manufactured by Willerby, near the constituency of my hon. Friend the Member for Kingston upon Hull North (Diana Johnson). It is creating jobs and tourism spending in the community. People who come to north Wales do not just stay in the caravan: they go by car to buy food and drink and go to restaurants. The caravans will now be taxed at 20%, which will have an impact on manufacturers. How will that help to grow the economy, given that the impact assessment shows a 30% fall in manufacturing and selling capacity? How will it help when we have 2.67 million people unemployed; when the number of people unemployed in my constituency rose by 34 last month to a figure 169 higher than last year; when youth unemployment is at its highest ever; when my constituency has its highest level of youth unemployment since 1992; and when 49,000 young people have been unemployed for more than a year?
The priorities are wrong when a 45p tax rate is introduced to benefit 14,000 millionaires, but the Government’s changes to working families tax credit will affect part-time workers to the tune of £3,870 if they cannot increase their hours from 16 to 24. My trade union, USDAW, and the Child Poverty Action Group recently indicated that around 200,000 couples will lose nearly £4,000 a year, and a further 35,000, with 80,000 children, will fall below the poverty line if they cannot find extra work. Again, that is a wrong priority from a Government who are concerned more about giving money back to millionaires than helping people who are working hard, trying to increase their hours and facing unemployment challenges.
On top of that, the Government propose to introduce regional pay in areas such as mine in north Wales, thereby affecting the north-west and north Wales economy. It has already been estimated that £1.25 billion will be lost to the Welsh economy if regional pay is introduced. That strikes me as an invitation to people to do the same job for poorer pay. It will drive down those poorer regions, which, by chance elect Labour Members of Parliament and have lower pay. The changes will have a dramatic impact on Northern Ireland, Wales, Scotland and the north.
There is an alternative. We believe that there should be investment in tax breaks for small firms and a VAT cut, which would have an impact on fuel and goods and services. There should be a guarantee for young people who are out of work for more than a year.
I want to end on a positive note because I like to be positive with the Government and the Treasury. I welcome the tax break in the Budget for the video games industry. I particularly welcome it because it mirrors exactly an amendment that we tabled to last year’s Finance Bill. It was discussed on the Floor of the House and the Government voted against it. They argued that it was not practical then. I am pleased that they have seen sense and followed the Labour party’s lead. I now hope that they will look again at the National Insurance Contributions Act 2011. The Exchequer Secretary and I sat through the proceedings, and the Opposition argued that the measure would fail. The 97% failure of take-up vindicates what we said at the time. I hope that he will consider changing the regime for the future.
As a Member of Parliament representing the north, I will oppose the Budget because it is unfair, helps the rich and does nothing for working families in this country.
Andrew Selous (South West Bedfordshire) (Con)
The Budget continues policies to deal with massive issues of intergenerational fairness so that we do not leave this generation’s collective credit card bill to our children and grandchildren. The OBR’s prediction of 1 million extra jobs in the next five years is one of the aspects of the Budget about which I am most pleased. We must also remember what the Prime Minister said in the Chamber today: fewer people are on out-of-work benefits now than at the time of the general election.
The Budget has put a significant tax cut for 24 million lower and middle-income earners at centre stage. Many are women and many work part time. That is a significant move by the Government and shows that our values are to help those at the lowest end of the income scale. It is a huge move in the right direction.
Opposition Members do not seem to realise that the 50p tax rate was doing real damage to our economy. Like it or not, there are some very rich entrepreneurs around the world who can choose the economy in which they set up their businesses. Given that that rate of tax was higher than it was in every other country in the G20, it is surely right to try to attract those people back to the United Kingdom to create the jobs to get our constituents out of poverty. Cutting that rate was therefore the right thing to do. Of course, the Chancellor also told the House that other increases on rich people mean that they will end up paying five times more tax than they would have done if we kept the 50p tax rate. I hope that Ken Livingstone will start paying the income tax that he should pay now, instead of doing it only if he becomes Mayor of London.
The Budget is pro-business, as it should be. It introduces the above-the-line R and D tax credit that all the business groups have been calling for, and a reduction in corporation tax this year, heading down to the 22% rate to make the UK an extremely competitive place to do business.
I was particularly pleased to see the pro-gas strategy, which will help us to create cleaner energy in future, which is vital given that we neglected to build the infrastructure that we need in this country.
There are lots of other practical measures in the Budget, including the Government’s wish to introduce duty stamps for alcohol. That is important, because there is a battle with the smugglers and a massive loss of income to the Exchequer, because the tax that should be paid is not paid on a lot of alcohol. It is absolutely correct that the Government are moving to capture that source of income for the Exchequer.
I welcome the extra focus on enterprise zones around the country. It is absolutely right. It simply cannot be acceptable that an area such as the west midlands experienced jobs shrinkage during the boom years.
We quite properly help young people to go to university in this country through the loans system, which we introduced, and is it not incredibly welcome that we will now help young people to set up their own businesses through the enterprise loan scheme introduced in the Budget?
I very much welcome the national loan guarantee scheme. The £20 billion-worth of guarantees that the Government will give to businesses will mean that they can borrow at a lower rate of interest—it will sometimes be 1% lower. That will be rolled out over the next few months and it is extremely welcome for businesses in all constituencies.
The announcements on the single-tier pension are excellent news for pensioners. Moving to a single-tier £140 a week pension is fantastic news for them. We should remember that very many of the poorest pensioners fail to receive the extra income to which they are entitled in pension credit because of the complicated means-testing system introduced by the previous Government. Single-tier is fairer and more just, it will deal with pensioner poverty much more effectively, and it is hugely to be welcomed.
I like the Government’s vision for addressing our infrastructure needs on a massive scale. This Government are committed to building the new roads that this country needs, as I have seen in my constituency, where an innovative public-private partnership deal will get a new bypass built. I waited in vain for the previous Government to build that, but it will be built under this Government. It is not only roads: we have a vision comparable with that of the Victorians for railways, and we are doing something about our water infrastructure and our energy infrastructure, which is incredibly important if we do not want the lights to go out in a few years.
What we are doing to improve the accommodation for our servicemen and women—increasing the families welfare grant and doubling council tax relief—is vital given the considerable burdens that they continue to bear on our behalf.
I am proud to be a member of a governing party that aims to double our exports in the next decade. It is shameful that this country has in the past exported more to Ireland than to Brazil, Russia, India and China combined. At a time when Germany is increasing its exports, we can, must and will—under this Government—do better.
It is right that we will tell taxpayers what their tax is going on. All our constituents will become much more engaged with tax issues when they see how much they are paying in total and where it goes. I welcome that further move for transparency by this Government.
The Chancellor summed up the Budget very well when he concluded his speech and said that we borrowed our way into trouble, and we are going to earn our way out of it.
Geraint Davies (Swansea West) (Lab/Co-op)
Unemployment is at a 17-year high, more people than ever are being forced into part-time work, there are cuts in tax credits to the low-paid, 170,000 children will be forced into poverty in the coming year, growth is down, the deficit is up, 700,000 public sector workers are being sacked, services are being slashed and the Office for Budget Responsibility says that the Budget measures will have no impact on growth forecasts. What better time to reduce the 50p tax rate to 45p? There are 4,000 people in Wales who pay the 50p tax rate compared with 94,000 in London. Again, then, we have a Budget where the rich get richer and the poor get poorer. There are hidden measures, too, such as the £3 billion being taken from pensioners in their allowances and family tax credits going down for the poorest.
Of course, we need growth to clear the deficit. Labour had a good record on growth—1997 to 2008 saw record post-war growth levels. Then we had the financial tsunami, and obviously the current Government inherited a deficit, but two thirds of it was due to the bankers and a third due to the Labour Government spending and investing above its earnings. That was the right thing to do to sustain growth and not fall into a depression. The Conservatives arrived and immediately focused not on growth but on cuts and announced 500,000 job cuts in the public sector—and Bob’s your uncle, people stopped spending money, consumption fell, growth flatlined and the deficit rose by £150 billion. That is complete incompetence.
The Tory plan is to shrink the public sector, to squeeze the poorest and to move too far, too fast. Owing to these changes, the OBR has made a one-off change in its predictions of £50 billion—3.5% to 4%, as mentioned earlier, of the whole economy. The focus is 20% on tax and 80% on cuts. Perhaps that is the wrong balance for managing the budget. The focus is on getting rid of the budget deficit in four years instead of halving it in four years. Perhaps that is the wrong focus. Furthermore, the cuts themselves are not targeted fairly.
Most recently, we have heard about regional pay. In Swansea, 40% of workers are in the public sector, and 60% of them are women. Already many people are facing job cuts—part of the 700,000 job cuts. They already face zero pay increases for two years, followed by 1% increases for two years, and with inflation at about 5%, that is nearly a 20% real-terms cut in their pay. The last thing they want to hear is that there will be further cuts to regional pay. We need to stimulate private sector investment through, for example, investment in electrification of the railway to Swansea. Wales’s share of High Speed 2 would be £1.9 billion, but instead Wales can look forward to a Trojan horse of cuts to the Welsh Assembly Government, as this idea of regional pay is geared towards health, education and the like. There is a real danger that a general practitioner in Swansea will say, “Hold on, I want to live in Bristol.” There is a concern about the migration of quality workers.
My father—and, indeed, the father of the hon. Member for Worcester (Mr Walker)—was involved in the Driver and Vehicle Licensing Agency and the Mint moving to Wales. These are important resource that help to support the Welsh economy, but now there is a move to reduce that by cutting people’s wages.
What should we do? My view is that a temporary, targeted fiscal stimulus in the autumn, on VAT, national insurance and investment in infrastructure—such a stimulus has been commended by the Institute for Fiscal Studies—would be a sensible idea. In the case of Swansea, if VAT was reduced for one year to 17.5%, it would mean £450 per household. There are about 103,000 households in Swansea, so that makes £46 million in the local economy. That equates to about 3,000 jobs at £15,000 a job. That would have a big impact on confidence, on getting consumer demand going and on getting growth on to a better trajectory.
Similarly, reducing VAT on home improvements would stimulate private sector building, which is important because at the moment it is on its knees; and of course we need to invest in a range of infrastructure projects to support the economy for the future. I have already mentioned rail but investing in our ports, again in Swansea, is also important.
I, too, support doing more to get what we can out of emerging markets and hooking up small businesses in this country to those markets. In Britain we have one of the biggest digital economies in the world—£120 billion—and we have an opportunity for growth in that economy. I support some of the focus on entrepreneurial support, in terms of loans and skills. The problem is that people are now coming out of university with excessive debt.
Business without Debate
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Pharmaceutical Industry
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Last week my constituents received some devastating news. The staff at the Sanofi pharmaceutical manufacturing centre in Fawdon were told that it is proposing to close in 2015, with the loss of up to 450 jobs. The 90-day consultation period with staff and their union, Unite, has now started. Unite wants to work with the company and other stakeholders to mitigate the losses, and is calling on the company to explore all avenues to try to save those valuable jobs. News of the proposed closure was a great blow, because in the north-east we already have the highest unemployment rate of any region in the United Kingdom, at 10.8%. In the last year, the number of jobseeker’s allowance claimants in my constituency has gone up by 15.6%, and the number of people claiming for more than 12 months has nearly doubled.
The UK is a world leader in the pharmaceutical industry. The sector is a net exporter, generating a positive trade surplus, and a key employer, with an estimated 67,000 jobs in the UK depending on it. The pharmaceutical industry is also the leading sector in terms of investment in research and development, at about £4 billion each year. I pay tribute to the work of the previous Government in supporting the sector, and I am pleased to see the shadow Minister for competitiveness and enterprise, my hon. Friend the Member for Hartlepool (Mr Wright), in his place for this debate.
The Sanofi factory has been part of the north-east’s manufacturing base for many years. Andrews Liver Salts, invented by a Newcastle entrepreneur in 1896, was made there, along with other household names, such as Milk of Magnesia and Panadol. In the decade after Sanofi-Aventis acquired the old Sterling-Winthrop plant in 1994, it spent £100 million on modernising its facilities, investing in a new packaging plant for solid-dose oral medications—or pills, to you and me.
Members will recall that, just over a year ago, Pfizer announced the closure of its research and development facility at Sandwich in east Kent. That followed closures and jobs cuts among other leading pharmaceutical companies—for example, research and development job cuts at AstraZeneca’s Alderley Park facility in Macclesfield. The trend reflects long-term changes in the structure of the pharmaceutical industry worldwide. On 7 March last year, the hon. Member for South Thanet (Laura Sandys) raised the matter in an Adjournment debate. The Minister for Universities and Science pointed out to the House that major structural changes were under way in the life sciences industry.
Within days of the announcement that Pfizer would be closing, the Government took swift action to establish a taskforce to lead it to recovery. A package of support was secured for the site and around 650 jobs were eventually saved, enabling the facility to continue its excellent research and development work, although more than 1,000 jobs were sadly lost. In a speech on life sciences in December last year, the Prime Minister set out how the Government were responding to the changing demands placed on the sector—what he said was also confirmed by the Chancellor in his Budget statement today. Those measures included the patent box—a policy initially conceived by the last Government—low, or lower, corporation tax rates, and tax credits for R and D, among other things. However, my concern is that that is simply too little, too late. In the light of the job losses at Pfizer, AstraZeneca, GSK and now Sanofi, it seems that the Government are trying to close the stable door after the horse has bolted.
Surely the withdrawal of manufacturing capability cannot be wise when the national health service is facing shortages of prescription medicines, as has been admitted in the House by the Department of Health. I have support for that view from the highest level. Last month, the Secretary of State for Business, Innovation and Skills kindly shared his thoughts on industry policy with the Prime Minister and the Deputy Prime Minister, and we have all had the chance to study his letter. In it, he bemoaned the lack of a “clear and confident message” about how Britain will earn its living in future, and pressed the need for “strategic pro-growth thinking”. The Business Secretary rightly identified the fact that the manufacturing industry merited close attention and backing.
One of the weaknesses in the Government’s approach that the Business Secretary identified was a need for more strategic and long-term thinking about supply chains and public procurement. My constituents would certainly agree with him. I hope that he has begun to engage with this matter and to take steps to strengthen the supply chain, thereby shoring up the UK manufacturing industry. As he suggested, the Government’s industry policy is not joined up. Much closer working between the Department for Business, Innovation and Skills and the Department of Health could help companies such as Sanofi, but there is no evidence that that is happening. What meetings have BIS Ministers had with Health Ministers and officials to ensure better coherence in respect of the drugs market for the benefit of British-based companies such as Sanofi? If the Secretary of State is looking for a case study to develop his Department’s thinking, together with that of the Department of Health, he could do worse than to look at the role of the Fawdon manufacturing centre. In doing so, he could take the same swift action to aid its recovery as was taken for Pfizer.
A number of issues come to mind. There is increasing global demand for pharmaceuticals, so the Fawdon centre’s capacity is not being withdrawn permanently from the world’s drug manufacturing base, as it will almost certainly be reproduced somewhere else. However, the skills built up over generations to serve the industry in the north-east will go to waste, and the machinery that has been so expensively installed at Fawdon will be scrapped, or removed and taken abroad, which I find worrying.
Where will the new production take place? What are the advantages that another location offers? Is it simply that it is much easier and cheaper for a French company to make people redundant in the UK than elsewhere in Europe, or will the tablets and capsules that currently come off the production lines at Fawdon be made in Brazil or India in future? How content are we to have no indigenous pharmaceutical manufacturing capability left in the UK, given that our ageing population is increasingly dependent on medication in one form or another?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I grew up in Newcastle just 100 yards from the Fawdon plant, and I congratulate my hon. Friend on bringing this important subject to the House tonight. Does she agree that a city such as Newcastle, whose university has real strengths in health care and medicine, needs more active Government intervention to ensure that that research and development is translated into manufacturing capability in the region?
Catherine McKinnell
I thank my hon. Friend for that question. This is a subject that I feel strongly about. We have heard some positive noises from the Chancellor today in his Budget, but I am already hearing concerns being expressed in the science community in Newcastle over how those proposals will be translated into action. People are concerned as to whether the full weight of support will be provided, rather than just small tax breaks. Serious efforts need to be made to encourage research and development in science, particularly in the light of what we can see, if we look closely, is a real-terms cut in the science budget. The science community is still concerned that it does not have the full backing of the Government.
Jim Shannon (Strangford) (DUP)
I, too, congratulate the hon. Lady on bringing this important matter to the House. At present, 10% of the people in Northern Ireland visit their chemist daily, which is a large proportion of the population. That illustrates the importance of our pharmacies. Pricing premiums, generic rivals and falling returns are the key issues for the pharmaceutical industry. Does she think that it is time for the NHS to consider buying British first, and buying from elsewhere second?
Catherine McKinnell
Absolutely, and that is one of the key issues on which I hope the Minister will respond. It should be a key consideration in the way the Government take forward their active industrial strategy.
George Freeman (Mid Norfolk) (Con)
I am grateful to the hon. Lady for giving way, as I appreciate that time is precious. She has referred to the systemic and structural changes in the industry. Does she accept, though, that at the heart of that is a profound problem of the productivity of the traditional model of pharmaceutical drug discovery and development? That means that, although this country can have a bright future in the new models of discovery in translational and experimental medicine, bringing industry, hospitals and universities back together—her city of Newcastle has a lot to offer there—the industry is struggling with the traditional models of discovery and development, which might well mean the closure of yesterday’s plant and the recycling of talent and expertise within the location into new centres of drug discovery.
Catherine McKinnell
I appreciate the hon. Gentleman’s point, but I cannot refer to Sanofi as yesterday’s plans, when it is open currently and there are 90 days of consultation in which to turn the situation around. That is an important point for my debate today. I nevertheless thank him for his intervention.
Retaining our world-class status in pharmaceuticals means ensuring that the Government work actively and intelligently with businesses such as Sanofi to retain research and development and manufacturing capability. There is huge global potential here: as the world’s prosperity increases, with a growing and ageing population, Sanofi’s products made in Newcastle will be in demand. The biggest questions of all are, of course, those raised by the Secretary of State for Business, Innovation and Skills. Where is the clear and confident message about the way Britain will earn its living? When will the Government start to act decisively on their call for an industrial strategy?
In the meantime, there are many practical issues for my constituents, which I urge the Minister to address by way of a Government-backed taskforce. Pfizer staff received a package of support, including counselling, careers advice, CV writing and retraining. What support will Sanofi be able to offer its loyal employees in acquiring new skills? What are the intentions for the site? The Discovery park in Sandwich is being heavily promoted and marketed to attract investment. In the longer term, how can we get into the north-east the sort of jobs and small and medium-sized enterprises that the Minister talked about last year?
Laura Sandys (South Thanet) (Con)
I welcome this debate, and I feel for the hon. Lady’s community, as mine in Sandwich was impacted by the Pfizer closure. I would also like to give some constancy and hope to the community in Newcastle. What came out of the difficulties and major challenges we faced was a reinvigorated environment—in many ways a community similar to what my hon. Friend the Member for Mid Norfolk (George Freeman) described, given his vision of how a pharmaceutical community can work in the new model. After one year, we now have 900 committed jobs on the site, and more spin-out companies on the verge of creating themselves, which is exciting.
Catherine McKinnell
I thank the hon. Lady for her words of comfort, but I do not think that what she said will be entirely comforting to those in Newcastle, given that we face a very different situation. We are talking about a production plant, not a research and development plant, while the north-east faces higher levels of unemployment than any other part of the country. That adds to the deep anxiety in my region, but I thank her for her words.
In his oral evidence to the Science and Technology Committee after the Pfizer closure, the Minister said that he recognised that there was a London-Oxford-Cambridge cluster for research and hence for the SMEs that are the future of pharmaceuticals. In business questions last week, the Business Secretary admitted that there was a financing gap, with venture capitalists unwilling to provide much needed finance to SMEs outside that cluster. My colleague who asked the question referred to it as the “golden triangle”. The Business Secretary said that the business growth fund—a private sector initiative—was already beginning to fill that gap. The Government surely need to oversee that, however, to ensure that my region gets the investment it so badly needs. Newcastle is a long way from that triangle, and I hope that we will not be abandoned.
We have an outstanding tradition of manufacturing and production in the north-east, and a population of adults who are ready, able and willing to work. Newcastle is a great science city with world-class universities that provide excellent research. I want the Government to make use of the north-east’s potential, and to start by keeping the Fawdon manufacturing centre open. I would like the Government to assist in the recovery of the Sanofi Fawdon manufacturing centre, just as it did in the case of Pfizer. That would have been an excellent project for our regional development agency, One North East. Previously, if a major employer had announced job losses, a taskforce would have emerged from One North East to provide help and support for the business and its employees.
Our local community has already established a very determined taskforce comprised of Unite, local councillors, local MPs and other stakeholders. Our aims are to keep the skills of Sanofi staff, make a future for the centre, and secure the investment needed to keep it open. I urge the Minister to give his support to our taskforce without delay to help to save Sanofi and the 500 or so jobs at stake in Fawdon.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)
I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this debate on an incredibly important subject. I fully appreciate the concerns she raises.
I shall begin by addressing the specific issue that prompted this evening’s debate. We in the Government are extremely disappointed by the news of the planned closure of Sanofi’s Fawdon site. I should like to express my sympathy to the work force and their families, who are, obviously, going through a very anxious time. She did absolutely the right thing in raising their concerns with us.
I recognise the challenges in regions such as the north-east, where unemployment is high, but in a sense that is exactly why the Government are seeking to rebalance the economy and rebuild manufacturing and exporting, while taking advantage of the north-east’s incredible assets—it has a skilled work force and is a wonderful place to locate. We absolutely agree on the need to do that.
I want to be clear that Sanofi’s decision was not in any sense based on a judgment of the UK as a location for life science investment. It was no reflection at all on the radical measures that the Government have taken to support the industry. I shall come on to those measures shortly, but we understand from Sanofi that the decision was made entirely for its own commercial reasons. The hon. Lady talked about the major restructuring that many such companies are undertaking globally. We have to recognise that that is a force in play.
Of course, that does not in any way lessen the impact on Fawdon’s employees and the local community. BIS Local has spoken to Sanofi’s local management, as well as to Newcastle city council and the North Eastern local enterprise partnership. We will examine how we can ensure the most effective local support for those directly affected by the proposed closure, as well as plans to support sustainable economic growth in the affected area—plans that recognise the skills of the work force. Naturally, the first priority will be to ensure that those affected by the proposed closure have access to the very best support available for redeployment and, if necessary, retraining, but I absolutely recognise that a consultation is under way; we must let that take place before determining the future course. We will work closely with the company to secure its support at this very difficult time for the employees affected.
The hon. Lady reflected on the closure of AstraZeneca’s Charnwood site in 2010 and the scaling back of Pfizer’s Sandwich site last year, which involved some 1,200 and 2,400 direct jobs respectively. Decisions on how best to respond have to be based to some extent on the economic impact, time scales and most suitable response for the local work force and the local area. The decisions were hugely disappointing to Government, but they were based on the companies’ global restructuring strategies, and were not a judgment on the UK as a location for life science investment or as a location for research. Indeed, both companies have gone on to make substantial investments in the UK.
The hon. Lady highlighted the positive impact of the taskforces we put in place following these decisions. She referred to the taskforce established in Newcastle, and I applaud that local work; it was absolutely the right thing to do in the circumstances. The taskforces have been exemplary and have largely mitigated the impacts.
Let us first consider Pfizer’s Sandwich site. Some 800 jobs were retained or created on the site. The Discovery park has been designated an enterprise zone, offering a package of business rate discounts and planning flexibilities, thus supporting its attractiveness as an investment location. That has encouraged 20 new life science businesses to locate at Discovery park. Some £35 million was secured through the Government’s regional growth fund to provide grant and loan finance to business through the Expansion East Kent programme, with the aim of creating, or safeguarding, 5,000 jobs. I acknowledge the points made in this regard by my hon. Friend the Member for South Thanet (Laura Sandys).
AstraZeneca employees were similarly supported in securing new roles and opportunities, with about 90% of leavers securing their future. My hon. Friend the Member for Loughborough (Nicky Morgan) is also present this evening. She was very active in working to support staff and in finding new uses for the site.
The hon. Member for Newcastle upon Tyne North has rightly expressed the genuine concern that is felt about the potential closure. However, even if the site closes, given the skills of the work force there is some hope that there will be a brighter future than some can see at present. I have every confidence that Sanofi, Newcastle city council and the local enterprise partnership will be able to work well together.
I want to turn now to the broader concerns raised this evening about the status of this key industry in the UK. I am, of course, alive to the challenges we face. The UK has seen a reduction in the number of large pharmaceutical manufacturing sites, as have many other developed markets. However, I wholeheartedly disagree with any claim that this is a weakening industry or that the Government are not providing enough support. The UK continues to have one of the strongest and most productive life sciences sectors in the world, contributing to patient well-being as well as supporting growth.
In the last decade, the UK life sciences industry—pharmaceutical, medical technology and medical biotechnology companies—has not only continued to be strong, but has shown continued growth. It has grown faster than any sector of the economy apart from finance and insurance. It employs more than 166,000 people, many in high-tech, high-skilled jobs, and it has an annual turnover of more £50 billion. It is therefore a very important sector for the British economy.
Data clearly show that we continue to be a leading destination for research and development investment, attracting £4.6 billion of pharma R and D spend in 2010 alone. Indeed, only yesterday Eisai, one of the world’s leading research-based pharmaceutical companies, announced it is expanding its British base to support the company’s growing European, middle eastern and African business, creating new job opportunities for the UK. Gary Hendler, Eisai EMEA president and chief executive officer, specifically cited
“the country’s importance as a global hub for the pharmaceutical industry”
as the reason for choosing the UK, noting:
“Initiatives to support the life sciences sector championed by The Department of Business, Innovation and Skills (BIS) have added to”
the company’s
“ability to cure and care for the health and wellbeing of more people across the EMEA region.”
That is a very recent decision to invest in the UK.
That is not to say that everything is perfect, however. At a time when we are working hard to rebalance the UK economy, we need to ensure that we keep, and grow, our key industries.
Chi Onwurah
I thank the Minister for the points he is making about the strength of the UK pharmaceutical industry’s research and development. The key is to translate that research and development into manufacturing capability, so that we have jobs for technicians—ordinary working manufacturing jobs. What policies are there to ensure that small biotech companies have the help to translate into manufacturing in this country?
Norman Lamb
Let me go on to talk about the steps that the Government are taking, because in large part this will address the points the hon. Lady is making.
The life sciences industry has seen significant changes in the commercial environment, and we have recognised that if we are to remain competitive, the UK must up its game. So I emphatically reject any suggestion that the Government are not doing enough to support life sciences in the UK. I alluded a few minutes ago to the fact that we have taken radical steps to support this important industry and its innovations, and to make the UK the location of choice for investment.
We published “The Plan for Growth” in March 2011 and followed it in December with our “Strategy for UK Life Sciences”. I understand from my hon. Friend the Member for Mid Norfolk (George Freeman) that Lord Mandelson specifically supported that strategy in his Davos speech as an exemplar of this work. We worked in collaboration with businesses, clinicians and researchers from across the sector to listen to what they had to say about the UK environment and to deliver against their needs.
The result was a package of measures that has been unanimously supported across the industry. We are delivering fiscal incentives and removing barriers to ensure that the life sciences industry is primed to operate effectively and efficiently, drawing in intellectual property and investment, nurturing small and medium-sized enterprises, and making it easier for products to reach the market. The approach includes: the patent box, which will be effective from April 2013 and will reduce the corporation tax on profits from patents and similar intellectual property to 10%—that is important in attracting inward investment; research and development tax credits offering 200% super- deduction relief for SMEs; and a £310 million investment to support the discovery, development and commercialisation of research, £180 million of which is for a biomedical catalyst to provide support to both academically and commercially led research and development, to deliver innovative life sciences products and services quicker and more effectively into health care. Ultimately, that is what we want to see.
We are creating a true life sciences ecosystem that fosters collaboration and partnerships to enable the UK to compete globally in attracting investment in research and product development. One of the measures to achieve that is the establishment of a number of academic health science networks across the country, aligning clinical research, informatics innovation, training and education, and, crucially, health care delivery. They will provide industry with clear points of access to the NHS to facilitate NHS-industry collaborations, in order to develop health care solutions. We are also addressing the regulatory barriers, to enable innovative technologies, diagnostics and therapeutics to be identified and taken up across the NHS. That will include a Medicines and Healthcare products Regulatory Agency consultation for an early access scheme for treatments that have not yet been licensed but where there is a high unmet clinical need.
Furthermore, in the most radical move in this area of any Government, we are unlocking the power of the NHS and its unique patient data to ensure that, subject to the necessary safeguards, data from research and clinical practice are available for the benefit of improving clinical outcomes and enhancing the UK’s position as the leading country to undertake research and development.
However, we have also recognised that to provide a truly attractive UK environment, we need to address the adoption and uptake of innovation in the NHS and firmly embed innovation within the NHS. So the NHS chief executive is taking action through the implementation of his review, “Innovation, Health and Wealth: accelerating adoption and diffusion in the NHS”. That will, for example: reduce variation in the NHS; drive greater compliance with National Institute for Health and Clinical Excellence guidance; facilitate work with industry to develop and publish better innovation uptake metrics; improve arrangements for procurement in the NHS to drive up quality and value, and to make the NHS a better place to do business; bring about a major shift in culture within the NHS, developing its people by hard-wiring innovation into training and education for managers and clinicians; and identify and mandate the adoption of high-impact innovations in the NHS.
Saying and doing are, of course, entirely different things, but rest assured this Government are committed to early delivery. We have appointed two independent life science champions, Chris Brinsmead and Sir John Bell, who will work closely with my hon. Friend the Member for Mid Norfolk to drive implementation against the “Strategy for UK Life Sciences”. They will report on progress direct to the Prime Minister every six months.
I conclude by reiterating that although announcements such as Sanofi’s are immensely disappointing—I understand that—the future for UK life sciences looks bright. Not only are the Government proactively delivering for the industry at a time when the environment across many other European countries is becoming increasingly hostile, but we have fantastic organisations such as the Wellcome Trust offering additional support, not least with yesterday’s very welcome news that it is to launch a £200 million fund to invest in biotechnology start-up companies in the UK and Europe. I thank the hon. Member for Newcastle upon Tyne North for raising this really important subject, and I am happy to work with her.
Question put and agreed to.
Ministerial Correction
(12 years, 1 month ago)
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Health
(12 years, 1 month ago)
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Keith Vaz
To ask the Secretary of State for Health what proportion of diabetes patients in Leicester City Primary Care Trust did not have a foot check in 2011.
[Official Report, 13 March 2012, Vol. 542, c. 185W.]
Letter of correction from Paul Burstow:
An error has been identified in the written answer given to the right hon. Member for Leicester East (Keith Vaz) on 13 March 2012. The exception rate in Leicester City was reported as 5.5% for DM09 and 5.5% for DM10. The correct figures were 5.2% and 5.2%.
The full answer given was as follows:
Paul Burstow
There are two sources of data for assessing the extent to which foot checks are provided: the National Diabetes Audit and the Quality and Outcomes Framework (QOF) achievement data.
The National Diabetes Audit shows that, from data received by 92.3% of practices, 18.3% of diabetics registered in Leicester City Primary Care Trust (PCT) did not have a foot check.
The QOF indicators for diabetic foot care in 2009-10 were as follows:
DM09: The percentage of patients with diabetes with a record of the presence or absence of peripheral pulses in the previous 15 months; and
DM10: The percentage of patients with diabetes with a record of neuropathy testing in the previous 15 months.
According to Leicester City PCT's QOF data for 2009-10, for DM09 the average underlying achievement for practices in the PCT was 89.5% and for DM10 89%. Underlying achievement means the percentage of eligible patients (excluding those who were excepted from the indicator) who received the checks. This indicates that for DM09, 10.5% and for DM10, 10.6% of patients (excluding those who were exception reported) did not receive the checks. The exception rate in Leicester City was reported as 5.5% for DM09 and 5.5% for DM10.
The differences in results between the audit and QOF may be ascribable to variations in scope and data assessment methodology. We are working with stakeholders to understand the reasons for the differences and to identify what needs to be done as a result.
The correct answer should have been:
Paul Burstow
There are two sources of data for assessing the extent to which foot checks are provided: the National Diabetes Audit and the Quality and Outcomes Framework (QOF) achievement data.
The National Diabetes Audit shows that, from data received by 92.3% of practices, 18.3% of diabetics registered in Leicester City Primary Care Trust (PCT) did not have a foot check.
The QOF indicators for diabetic foot care in 2009-10 were as follows:
DM09: The percentage of patients with diabetes with a record of the presence or absence of peripheral pulses in the previous 15 months; and
DM10: The percentage of patients with diabetes with a record of neuropathy testing in the previous 15 months.
According to Leicester City PCT's QOF data for 2009-10, for DM09 the average underlying achievement for practices in the PCT was 89.5% and for DM10 89%. Underlying achievement means the percentage of eligible patients (excluding those who were excepted from the indicator) who received the checks. This indicates that for DM09, 10.5% and for DM10, 10.6% of patients (excluding those who were exception reported) did not receive the checks. The exception rate in Leicester City was reported as 5.2% for DM09 and 5.2% for DM10.
The differences in results between the audit and QOF may be ascribable to variations in scope and data assessment methodology. We are working with stakeholders to understand the reasons for the differences and to identify what needs to be done as a result.
Petitions
Graves in Cemeteries in Walsall
Mentally Incapacitated Persons (Rights of Carers to Financial Information)
Westminster Hall
(12 years, 1 month ago)
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Thamesteel
(12 years, 1 month ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I thank you, Mr Davies, for the opportunity to begin this important and timely debate on Thamesteel and the future of UK steel production. I am grateful to hon. Members for attending the debate. Their presence illustrates not only the high importance with which hon. Members regard our country’s steel industry, but the sympathy that we all share for the 400 steelworkers at Thamesteel who are undergoing the most difficult circumstances. Unfortunately, those circumstances, which all steelworkers, if not all workers, are experiencing now, have not been seen since the 1980s.
I and many parliamentary colleagues wanted to secure this debate to highlight the dire way in which steelworkers at Thamesteel have been treated. Any steel site that is lost is a loss not just to the immediate area, but to British steel production and UK manufacturing.
Many steelworkers have been here before; it is a familiar tale for those in the steel industry. Thamesteel, which is based in Sheerness, employed about 400 workers and had a production capacity of 840,000 metric tonnes of billet and 600,000 tonnes of bar rod. The site itself began operations in January 1972, and production started at the UK’s first mini integrated works on the site of the historic Sheerness naval hospital. The site uses recycled steel to produce steel for the construction industry. Surviving the turmoil of MacGregor in the ’80s and a number of trade union derecognition plots by the management in the ’90s, this community and its men and women have seen it all.
In July 2002, when the site was owned by Allied Steel and Wire, ASW went into receivership and the employees lost their accrued pensions, but Community trade union fought a five-and-a-half-year campaign to secure a £12 billion financial assistance scheme, which secured the pensions of 90% of the affected workers, via a European Court of Justice ruling. In my former life, I was a Community trade union officer and lay official branch secretary and knew some of the people who were involved, and they stood by the Teesside Cast Products site and its steelworkers in their hour of need.
Securing this debate for the Sheerness steelworkers is the very least I can do to ensure that their case is heard at the highest possible level. UK steel producer Thamesteel, which was, until recently, owned by Saudi-based Al-Tuwairqi Group, went into administration after failing to secure an investor to rescue it from financial difficulties. That information was made public not by the company, but by Community trade union. Thamesteel became the second steelmaker that day to make an announcement that could result in job losses. Tata Steel Ltd, Europe’s second-largest steelmaker, also announced plans to overhaul its European tube steel business amid weak demand for its products. It said that the move could result in 200 job losses, predominantly at Corby.
Michael Leahy, the general secretary of Community, said that Thamesteel had informed the union’s local representatives that the accountancy firm Mazars had been appointed as administrators after a deal with a Swiss group to secure the plant’s future fell apart at the last minute. Michael Leahy said at the time that it was devastating news for everyone who worked at Thamesteel and for the wider community in Sheerness. Importantly for me, for MPs present today and for the work force, Michael said:
“Sheerness steelmaking can have a future and we will be doing all we can to save our steel in the coming weeks and months.”
It is of primary importance that that is reiterated, and that the site is not talked about in the past tense.
At the time, there were reports that Thamesteel had been in talks with Trafigura to secure a deal for the long-term future of the plant that would have resolved Thamesteel’s financial difficulties. However, Trafigura has so far declined to comment on speculation. We are all aware that the backdrop is one of a European steel industry struggling to cope with protracted weak demand in certain corners of the steel market, particularly in the long product construction sector. We are also all aware that the European sovereign debt crisis has made the situation worse by denting consumer confidence, as fears grow that Europe is set for lacklustre economic growth prospects this year.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Gentleman on obtaining the debate. Although some 40% of the steel from the United Kingdom is exported to the continent, competitiveness has always been an issue. Last year, the Government gave something like £250 million to the steel industry to help towards rising energy costs. Does he agree that for all industry—not just the steel industry—to continue, we need to see some more benefit coming from the Budget today, to help the future of business in the United Kingdom?
Tom Blenkinsop
I agree with the hon. Gentleman, who makes a valid point. The steel industry and other energy-intensive industries are worried about their future. The Government, I think, are willing to listen. We hope that the Budget will take more steps to help and assist industry. We need to consider other measures, but I will come on to them later in my speech.
Across Europe, steelmakers have been restructuring their operations in the light of weaker steel demand. Aside from Tata Steel and Thamesteel, ArcelorMittal—Europe’s largest steelmaker—began mothballing furnaces in recent months as part of an optimisation plan aimed at shifting more of its production to low-cost facilities. Recently, it also announced plans to shut indefinitely an electric arc furnace in Madrid due to weak demand. The move will affect around 270 jobs. It is also considering cutting 630 jobs at its Czech plant, to boost competitiveness.
Everyone here, whether MPs or people in the Gallery, is seriously concerned about what the UK Government are doing about UK manufacturing generally, and UK metal process industries in particular. What are the Government doing in Corby, Scunthorpe and Rio Tinto Alcan, to name but a few? There has been a lot of noise from the Government about the manufacturing sector, but little actual help. With 300 companies involved in the local manufacturing supply chain in north Kent, this issue is crucial. The sequence of events that led to the need for this debate on Thamesteel and the wider UK steel industry illustrate that clearly. I have taken some notes from my former Community union officer colleague, Ryan Slaughter, who has been dealing with the Thamesteel situation alongside local reps at Sheerness.
In late 2002, Saudi Arabia-based Al-Tuwairqi Group bought the Sheerness steel mill and formed Thamesteel Ltd. Al-Tuwairqi aimed to invest in the works and produce grade steel bar and billet for the middle east market. Much of the steel bar and billet produced by Thamesteel workers was used in large-scale construction projects across the middle east.
In April 2009, Thamesteel and Van Merksteijn acquired an equal controlling interest in Kierbeck Ltd—a reinforcing steel fabrication business—of 51%, which was held through the holding company TVM Ltd. In May 2010, Mazars administrators were appointed as joint liquidators of Kierbeck Ltd and the business and assets were sold to Kierbeck Thames Ltd, a sister company to Thamesteel, on 2 June 2010.
In the summer of 2010, a working capital agreement was reached with Stemcor UK Ltd, taking out a charge on various companies within the Thamesteel Holdings Group. In September 2011, Thamesteel stock holding was reduced to clear the balance with Stemcor until the full balance was cleared. Production at the rolling mill was also stopped temporarily, owing to a lack of working capital.
In November 2011, the melt shop stopped production. On 15 December, senior management sent an e-mail to management staff indicating that payment of salaries would be delayed—that was on the day when staff were supposed to be paid. On 17 December, HAT Holdings BSC—an Al-Tuwairqi Group company—agreed to invest £170,000 in Thamesteel after installing a debenture to secure future investment.
On 23 December 2011, employees received their last pay to date. On 24 January 2012, HSBC placed a freeze on all company bank accounts. On 25 January, Rod Weston and Guy Hollander from Mazars were appointed as administrators. Union officials were the first production employees to be informed that the company was in administration.
At 11 am on 26 January, Rod Weston addressed all employees at a mass general meeting, announcing 394 potential redundancies. Mazars told employees that, if they did not receive a call by the end of the day, they were redundant. Community union officials addressed employees and began the Save Our Steel campaign. On 28 and 29 January, 341 redundant employees received notices and RPl forms.
On 30 January, my hon. Friend the Member for Harrow West (Mr Thomas) submitted early-day motion 2663 on the Thamesteel redundancies. On 31 January, Community union jointly organised with Mazars a workers’ support day. The majority of workers received help filling in RPl forms and advice from local colleges, Citizens Advice, Jobcentre Plus, Communitas, the Community trade union information advice and guidance training arm and Her Majesty’s Revenue and Customs.
On 1 February, Michael Leahy wrote to the Secretary of State for Business, Innovation and Skills asking him to meet Community union Thamesteel workers. On 7 February 2012, the first meeting of the Kent county council taskforce was attended by Ryan Slaughter, from the Community union; Ken Pugh, a county councillor; Kevin Lynes, the chair of the meeting and another county councillor; John Burke, who is the constituency manager for the hon. Member for Sittingbourne and Sheppey (Gordon Henderson); Jobcentre Plus; MidKent college; a representative of the Department for Business, Innovation and Skills; Peel Ports; and Citizens Advice. The aim of the taskforce was to provide immediate support and to plan a long-term economic strategy for Sheerness.
Also on 7 February 2012, Michael Leahy, the general secretary of the Community union, Roy Rickhuss and two Thamesteel workers, Pat Wiggins and Tom Butler, met the shadow Minister for Business, Innovation and Skills, my hon. Friend the Member for Hartlepool (Mr Wright). On 13 February 2012, the Secretary of State for Business, Innovation and Skills wrote to Michael Leahy and declined to meet Thamesteel workers who are Community union members.
On 10 February 2012, the first Thamesteel RP1 forms were received by the local redundancy payments office and a further nine employees made redundant. On 14 and 15 February 2012, a second tranche of RP1 forms were received by the redundancy payments office.
Angela Smith (Penistone and Stocksbridge) (Lab)
Does my hon. Friend agree that the contrast between the behaviour of the current Secretary of State for Business, Innovation and Skills and that of the previous Secretary of State for Business, Innovation and Skills, Lord Mandelson, is not to be believed, given that Lord Mandelson worked very hard when the steelworks in my constituency was under pressure and about to go under, and he worked really hard to ensure that it had a future?
Tom Blenkinsop
I support my hon. Friend’s comments and will return to them, as she makes an important point. It is all about how we define industrial activism and whether we have an industrially active policy, where Ministers are willing to roll up their sleeves and get their hands dirty.
On 17 February 2012, the Community union Sheerness works branch met and voted to lobby Parliament. On 21 February 2012, the all-party group on the steel and metal-related industry, which I chair, met and heard representations from two Thamesteel workers, Pat Wiggins and Tom Butler. On 22 February 2012, the second meeting of the Kent county council taskforce took place. On 24 February 2012, the redundancy payments office received a third tranche of RP1 forms. From 27 February 2012, 240 RP1 submissions were paid to Thamesteel workers in a week.
On 8 March 2012, Community union Thamesteel workers held a lobby of Parliament. On 13 March 2012, Michael Leahy, the general secretary of the Community union, wrote a further letter to the Secretary of State for Business, Innovation and Skills, asking for assistance and a meeting with workers. On 16 March 2012, the deadline that Mazars had proposed as a cut-off date for bidders was passed. On 21 March 2012—today—a Westminster Hall debate to raise the concerns of the Thamesteel workers is being held. On 28 March 2012, creditors of Thamesteel will meet at Priestfield stadium in Gillingham.
Throughout this time, it is safe to say that the presence of the Government has been fairly non-existent and those of us who are here today, and the workforce, would like to know why. Why has the Department for Business, Innovation and Skills ignored requests to meet the democratically elected representatives of the workplace that is affected? Why have the Government so far waited for an invisible hand, instead of lending their helping hand? Why has the Secretary of State ignored a trade union that he knows can deliver results in saving steelworks, as was seen at Redcar’s Teesside Cast Products?
If the Secretary of State or the Minister agreed to meet the union, they could have heard directly from men such as Ian Crosby, Paul Davies, Michael John Terry, Aby Abraham, Gary Lewis and Barry Coulthard, who are all workers at Thamesteel who have written down accounts of their plight. Unfortunately, I do not have enough time to read out all their accounts, but if you will indulge me, Mr Davies, I will read out two of them.
Ian Crosby writes:
“I am a 29 year old man that has worked for Thamesteel for the last six years. I applied for the job when my then fiancée fell pregnant with our first child. The salary at Thamesteel was quite a jump from the job I had previously been in, as well-paid jobs to enable supporting a family are few and far between on the island. We are now married and have three sons, aged five, three and five months old. My wife is currently on maternity leave from her part-time job, so it is now more crucial than ever that I can support my family.
When the steel mill went into administration in January, it was absolutely devastating for my family. The fact that we were also not paid for our last month of service was awful for us. I literally had £6 left in my bank on the 25th of January. As you can imagine, with three young children and a house to maintain it is very rare to ever have any money left at the end of the paid month, but with it being the month after Christmas we were even more desperate for payday to come. My wife and I were questioning how we were going to afford nappies or milk for our youngest children, which is something that you should never have to question. My wife was very down about the whole situation and after just having a new baby it hit her even harder. It took almost four weeks before any money was made available to our family. As I had been in employment since I was 16, I am only entitled to contributions-based jobseekers allowance for the time being. This means my children are not entitled to school meals or milk tokens and I am not entitled to free prescriptions, dental care, etc. I find this unbelievable as I have never claimed benefits before and paid my taxes for over a decade, yet it appears you get penalised for that.
I have been applying for every job I can, and my wife has had to return to her part-time job months before her maternity leave was due to end. This is really affecting her as she is missing out on those crucial months with her new son that she was able to have with the other two. She is questioning herself and her parental qualities, but she really has no choice. There are no available jobs on the island and I have been unsuccessful with every application I have made.
I loved my job, and am finding it very hard to try and imagine what I am going to do now. The island has lost its main employer for men, and this is affecting many other areas of business. My only hope now is that a buyer is found to start producing steel in Sheerness once more. I think if this does not happen, then the situation will hit me a lot harder as I am still clinging on to that hope.”
Similarly, Gary Lewis writes:
“First of all, a thank you to all who are doing what they can to try and salvage what was Thamesteel. My story...
I was lucky enough to secure a position there in the autumn of 2006, lucky in that with a well-paid job, my now wife and I could plan our family together. Jen, my wife, has two children from her previous marriage and we also wanted our own. Jen was able to give up work and over the next few years we had two beautiful children, coincidentally both born on 25th June, in the same delivery room at Medway hospital, but three years apart. As people always do, we lived to our means, and managed to stay credit-free. We were able to meet all our outgoings and not build up any arrears. We were never well off, but we were not broke. The occasional night out was still possible, as was the odd short holiday.
We live in a modest three-bed semi in Queenborough, and feel we are part of the local community. My stepdaughter, who lives with us, was tutored at the Isle of Sheppey academy, our daughter Ruby attends Queenborough First School, as will Peter when he is old enough. My wife and I were married locally in January 2009 at the local Methodist church, where my wife’s uncle is a Methodist minister. He…travelled to conduct our ceremony. In the last six months, it’s been clear to all that something was going very wrong at Thamesteel. Bar mill production ceased in August last year, and melt shop production was sporadic to say the least. The message from the senior management was always positive, right up until 23rd January 2012, when it first became apparent that we might not get our pay in two days’ time. With the best will in the world, nobody could ever plan for that. In the build-up to Christmas, all we got was positive vibes, and spent up for Christmas as you always do. Everyone wants the best for their kids, so let them have it, our ‘jobs are safe’.
For the very first time in my life, I found myself on the phone to claim jobseeker’s allowance on 26th January 2012. I spent three whole days on the phone explaining to all my creditors—mortgage, energy, etc.—what was happening. The world was falling in and I couldn’t think straight. I tried to be strong for my family, and did the best I could, but the pressure was—and still is—immense. It’s made a hell of a difference to my life. I’ve applied for loads of jobs in my field of knowledge, in all parts of Kent. So far, I’ve had two replies, both of which have been negative. My JSA is now being paid, £210 a fortnight to cover all my bills. I’ve applied for help with the mortgage, but that only starts after 13 weeks. I’ve made an arrangement to pay reduced amounts for gas and water, and have applied to the Energy Trust for help with arrears on my electric bill. I still have to insure my property, keep a car on the road, and put food on the table. AND IT’S ALL GETTING HARDER BY THE DAY.
We have been lucky, in that the freezer was full when all this happened. We’ve been lucky enough to collect three food parcels from the Seashells centre in Sheerness, a scheme set up to help the steelworkers. I can’t thank those involved enough, as these have been a godsend. It’s a shame that I can only claim one more, but we’ll have to make do.
So what now with the works? Everyone waits with bated breath to see what offers have been made. Even if the mill starts up again, there’s no guarantee we’ll get our old jobs back. And there’s no other viable employer on the island. Nothing. Not for a skilled man with a family to support. Sheerness needs this steel mill, and why aren’t the government helping? Peacocks retail have been helped. Why not us? If there’s a continuation of no investment, either by the government or by the private sector, then Sheerness will be dead in its tracks. A town needs a large employer to survive. 350 of my mates are in the same boat. Then there’s the supply chain. I dread to think how many of us there are. Just a thought, has anyone been to Corby recently?
I can’t see us staying unless there’s a major change. All joking aside, we’re considering properties in Slovakia, northern Germany and northern Scotland. Please, help us.
Gary & Jen Lewis, Sammie, Ruby, and Peter, three chickens, two hamsters and a rabbit.”
During the mothballing of Teesside Cast Products, amid much criticism from the Tories and Liberal Democrats, the previous Government did get involved. Alongside One North East, Ministers were active in brokering potential deals with many potential buyers in the summer of 2009: Marcegaglia; Dongkuk Steel; and obviously SSI. We knew but we could not publicly say that SSI wanted to buy TCP at that time. The previous Government gave £60 million in aid for retraining, specifically for the Teesside area, including for workers at risk in Dow Chemical. That money has since been cut by a third. However, the overarching point is that the previous Government were involved directly. They rolled up their sleeves and got their hands dirty in lobbying and negotiating. I know that to be the case, as I was there in the area and living through the process every day for more than two years. The departure of Kirby Adams paved the way for a sale. It was not a lack of Government intervention that was to blame; there was a deliberate policy by Mr Adams to undermine a Save Our Steel campaign on Teesside. Thankfully, we won, and I wonder whether the Prime Minister would be bold enough to consider Mr Adams such a close political ally now.
I say this again: this debate is timely. How could TCP’s future be saved and Thamesteel be allowed to founder? Why were unions embraced as an integral part of the former’s success, yet ignored, leading to negative outcomes, in the case of the latter? Saying that European markets are in the doldrums is not good enough, because both TCP and Thamesteel have a history of selling to non-European Union markets—Asia in TCP’s case, and the middle east Gulf states in Thamesteel’s. This debate is timely because of the imminent relighting of the now SSI-owned Teesside Cast Products blast furnace. I was part of the Save Our Steel campaign on Teesside, which was supported by our local community, trade unions, the media and the men and women of Thamesteel.
I have a few suggestions for the Minister. Could we use the regional growth fund to attract any potential buyers that he might be aware of to the site? Could we talk to HMRC about holding off a little longer, to allow other buyers to come forward? Can we please at least have the Secretary of State directly involved, meeting with the work force, who are desperate to talk to him?
I will close with the words of the late Geoff Waterfield, the Community union chair of Teesside’s multi-union committee, who led the campaign locally. Sadly, he died at the age of 43 in August 2011 from undiagnosed leukaemia. He said:
“When I see a blast furnace, I see a thing of beauty... I see something that has given thousands and thousands of people a way of life, a good, honest wage, the ability to pay their mortgages, go on holidays and bring up their families. That to me is fabulous, that is a beautiful thing. When you come to Middlesbrough and see that skyline... That blast furnace is the heart of Teesside. As long as it pumps, there is life in Teesside.”
That is not just a Teessider’s fairy tale; the men and women from Kent have the same view of their steelworks. It is a story for all steelworkers in Britain. There is a way to save the site, and UK steel, if the Government do something to facilitate the process and lend their support. So the question for the Minister is: “What are you going to do?”
Philip Davies (in the Chair)
Order. About eight Members want to catch my eye, and I intend to call the shadow Minister at 10.40 am. I want to get everyone in, but that will depend on everyone being accommodating and brief and helping everyone else out.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate in his capacity as chairman of the all-party group on the steel and metal-related industry, of which I am a member. What a passionate and emotional speech it was. I also congratulate members of the Thamesteel taskforce, which he mentioned. The taskforce was a brilliant example of how different, and sometimes conflicting, interests can work together for the greater good. I also put on record my thanks to Members on both sides of the House—although I have to say mainly on the Opposition side—who have supported the Thamesteel workers in their battle for justice.
Before talking about that battle, I want to explain a little about the events that led up to Thamesteel going into administration, many of which the hon. Gentleman touched on. Steel making first took place in Sheerness in 1972, and the plant was operated by a number of companies until it was taken over by Allied Steel and Wire in 1999. A couple of years later, ASW went into administration, and the plant was eventually bought by the Al-Tuwairqi Group, otherwise known as ATG—keep that name in mind. Since taking ownership of what became Thamesteel, ATG has imposed on the site a succession of disastrous management teams, which have run the company into the ground to such an extent that in the last three years Thamesteel lost £91 million.
It came as no surprise, therefore, that Thamesteel eventually went into administration, but what was surprising was the revelation that the work force were told at the end of December that all was well with the company and they should have no fear for their jobs, despite the December wage bill being paid only because of an injection of £170,000 from an ATG subsidiary company, HAT Holdings BSC. The plant stayed open during January, despite Thamesteel having 350 creditors to which it owed a total of £147 million. It has emerged in the past week that at least two creditors issued winding-up notices, one at the end of December 2011 that would have been issued as far back as October except for a technicality. The order would have become effective on 30 January 2012, but on 25 January Thamesteel applied to the High Court to enter into administration, appointing Mazars as administrator. One wonders whether the dates were coincidental.
It has transpired that Mazars met with senior Thamesteel managers as far back as October 2011 to provide directors with a summary of the insolvency scenarios available to them, and a report was sent to shareholders in November. Thamesteel directors clearly knew during November and December that they faced a mounting financial crisis, so why on earth did they not share the information with their work force, rather than spring it on them on 25 January when the administrator made 341 workers redundant?
Those workers had not been paid since the end of December, and it was left to the Government’s Insolvency Service to step in and pay some of the wages, but only up to a maximum of £400 per week. The Government also funded redundancy payments due to workers, and when we talk about the Government we should not forget that it is the taxpayer who has had to stump up the money. As is the way when dealing with public money, there was an inevitable delay in workers receiving anything from the Government, but I must pay tribute to the Insolvency Service, which ensured that the vast majority of the claims were processed within 12 days of receiving the necessary documentation from the administrator. I also add that the administrator went out of its way to work with the Community union and other agencies, including Jobcentre Plus, to get the appropriate redundancy payment—RP1—forms filled in as soon as was practicable after the administration was announced. Nevertheless, there are questions to ask about why it then took 15 days for the forms to be sent by the administrator to the Insolvency Service.
Due to the delay in paying workers, many of them were in dire straits and it was necessary to set up a local food bank to ensure that families did not starve. It is a national scandal that in the 21st century, in one of the richest countries in the world, redundant workers should have to rely on food parcels to survive, and we must ensure that that never happens again. We have to change the benefits system to ensure that redundant workers receive in a more timely fashion the help to which they are entitled. Perhaps the Government will consider providing an immediate interim payment, which could be adjusted as soon as the paperwork was processed.
For now, however, we must move on and address a more pressing question: what is the future for Thamesteel? My big fear is that the rolling mill will be stripped out and shipped to Pakistan. Why Pakistan? Because most of the senior Thamesteel managers are Pakistani nationals and ATG has an agreement with the Pakistani Government to set up a steelworks in that country. I have only recently learned something that feeds my suspicion. It is unattributable information that although the bids for taking over Thamesteel closed on Friday, an offer was received on Monday of this week, which possibly came from Al-Ittefaq Steel Products Company. ISPC is 60% owned by Dr Hilal al-Tuwairqi, who also owns ATG.
Let us be clear: stripping out the rolling mill from the Thamesteel plant would be the kiss of death for steelmaking on Sheppey, but it need not be that way. The Sheerness steelworks, under all its previous owners, was a profitable plant with a skilled, dedicated and loyal work force. Its financial plight has nothing whatever to do with that work force and everything to do with senior managers who had no real interest in or understanding of the British steel industry. To the current owners, Thamesteel was just a vehicle for producing cheap, semi-finished steel billets that could be shipped to Saudi Arabia to be rolled in the company’s Saudi mills. Thamesteel was a steel cow that could be milked, and it was.
I urge the Government to recognise the Sheerness steelworks for what it is: an important industrial asset. Thamesteel, or whatever name the company ends up with, has the capacity to be profitable again. The plant has the capacity to turn over an estimated £500 million annually and employ 800 people. We need that capacity. Britain generates 1 million tonnes of ferrous scrap annually, of which 40% is recycled here, while the other 60% is exported. At the same time, perversely, Britain imports almost 50% of its steel reinforcing products. Surely it makes sense to convert more of the UK’s ferrous scrap into steel in this country. The gap between imports and exports will only get worse if Thamesteel is lost.
I understand that the administrator has received several bids and is in the process of analysing them. I hope that one of those offers, or more, is from a company that is interested in making steel. If a realistic offer is made, I urge the administrator, the creditors and the Government to accept it without hesitation. However, if the worst comes to the worst and the only offers are from companies that want to close down the site and strip its assets, I urge the Government to intervene immediately to save this important national industrial asset until, as the hon. Member for Middlesbrough South and East Cleveland said, somebody can be found who wants to produce steel on Sheppey.
I think that, given the right help, there are people willing to take on the plant, but the biggest problem is the working capital that would be needed to get steel rolling again until sales income was received. Working capital at full capacity would be a minimum of £25 million, but offering that sum as a loan guarantee would be a small price for the Government to pay to keep open the last remaining steelworks in the south-east.
I suspect that Ministers will advance at least two reasons why they cannot intervene. The first is that, under EU rules, they cannot offer subsidies to the steel industry, but if they are honest with themselves and us, they will admit that our European partners find creative ways to help their own industries. In Germany, for instance, the Government have tilted the tax system to help to reduce the high cost of energy in its steel industry. That is a subsidy in all but name. The second argument will be that in the current economic climate, Britain simply cannot afford to help Thamesteel. That will be met with disbelief by many people, including me. I can think of any number of Government budgets from which the money could be lifted.
For instance, over the next four years, Britain will provide £1 billion in aid to India, a country with a thriving steel industry. Now there is an irony. Even more ironically, Britain will give £240 million this year to Pakistan, the country in which ATG is building a Pakistani-subsidised steelworks to which it might well ship the Thamesteel rolling mill. It would be outrageous if British aid were used, albeit indirectly, to help to build a steelworks to employ Pakistani steelworkers while British steelworkers were losing their jobs in my constituency simply because the British Government refused to intervene. Of course, I might be wrong. The Minister might commit to helping to save the Sheerness steelworks and the 400 jobs that go with it. I assure him that if he does, he will make me and my constituents happy.
Before I conclude, I will briefly mention the administration of Thamesteel, as it is important. In my opinion, Mazars has acted professionally and with the utmost propriety, in accordance with the objectives and rules of administration, but I would like to raise a concern about those rules. Is it right that an accountancy firm consulted about insolvency options should then be appointed administrator? Is it in order for the administrator to make workers redundant without paying them the wages and other payments to which they are entitled when the company still has funds in its bank account?
While on the subject of Thamesteel workers, although they can claim back the wages owed for January and those claims will be classed as preferential, claims will be capped at £800 per employee and the balance traded as an unsecured claim. The company has 350 creditors, including employees and connected creditors—people with connections to the owners. For instance, HAT Holdings BSC holds a fixed and floating debenture on the company for £170,000, which will be paid first. Of the £143 million owed to creditors, £137 million is owed to connected parties. I would like the Government to consider changing the rules of administration to ensure that all money owed to ex-employees becomes preferential claims, and that the claims of non-connected creditors take precedence over those of connected creditors.
A final aspect of administration with which I am unhappy is the fact that although the administrator has a duty to investigate the conduct of the directors in the period leading up to administration, and those findings are then reported to the Insolvency Service, the report is confidential, meaning that nobody can question the thoroughness of the investigation or its conclusions. I would like the rules to be changed to allow a representative of the work force access to the report and the ability to object to its content and its conclusions.
Thank you for your forbearance, Mr Davies, in allowing me to make such a lengthy contribution. As you will realise, the issues involved in Thamesteel’s administration and the plant’s future are complex. I could say much more about the events leading up to administration, and there are many more questions that I want to ask, but at this time I want to say nothing that might jeopardise the possibility of Thamesteel being rescued and will save my ammunition for another day.
Philip Davies (in the Chair)
Order. I reiterate that I will call the Front-Bench spokesmen from 10.40, so speeches will have to be considerably shorter.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I, too, congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate, which coincides with this afternoon’s Budget statement. If press reports are true, the statement’s main concern will be the tax affairs of people earning more than £150,000 a year. Our concern is different: it involves the hundreds of jobs lost as a result of the closure of Thamesteel and, more generally, manufacturing and steelmaking and their importance to our economy.
It is likely that we will hear a lot this afternoon about rebalancing the economy between finance and industry—indeed, the Chancellor ended his first Budget with a call for a “march of the makers”—but at Thamesteel, the makers have lost their jobs and, as my hon. Friend said, we as a nation have lost the product. I have some experience of that in my constituency, where the huge Bilston steelworks closed many years ago. I hope that that does not happen to the constituency of the hon. Member for Sittingbourne and Sheppey (Gordon Henderson), but most of my constituents would say that the area has never fully recovered from the loss of such a major employer.
I do not want to do what often happens in such debates by going over the history of the decline of manufacturing in the UK. Too many of this House’s debates on the subject are characterised by looking in the rear-view mirror. Perhaps we focus too little on globalisation’s impact on our manufacturing industries and on the possibilities for the future, which is what I hope we can concentrate on.
Manufacturing and steelmaking are still very important to the UK, even if we do less than we did many years ago. There are things that Governments can do—they are not powerless—to support those activities. I have referred to the Chancellor’s Budgets, and his autumn statement gave a relatively small rebate on energy and environmental costs to energy-intensive producers. The scale of that rebate was a fraction of those available in Germany, but at least it represented recognition that the Government have a role to play in trying to ensure that energy-intensive industries remain in the UK.
Jessica Morden (Newport East) (Lab)
The hot strip mill in Llanwern in my constituency was mothballed last year because of the fall in demand for steel. Does my right hon. Friend agree that what its former workers need is help now? Tata’s £20 million investment in the Port Talbot mill will help Llanwern in the long run, but Government action is needed now, not in 2013, when the measures for energy-intensive industries will be implemented.
Mr McFadden
My hon. Friend makes a good point. I mentioned the rebate to give an example of what the Government can do. They are not powerless when companies have a global choice about where to locate and produce.
Before I ask the Minister some specific questions, let me say that I do not believe that any Government, of whatever political colour, can prevent the closure of every factory. That is not my stance. I was a Business, Innovation and Skills Minister before the election and the Department was not always able to prevent every closure. The Government cannot do that, nor can they magic buyers out of the air if they do not exist, but there are things that the Government, the Minister’s Department, and he and his Secretary of State can do, aided by the good officials who have accompanied the Minister to the debate.
What is the situation with potential buyers? How many have declared an interest? What kinds of bid are on the table? There is a world of difference between someone who simply takes the equipment and the plant and ships them abroad, and someone who is willing to continue production in the area.
My hon. Friend the Member for Middlesbrough South and East Cleveland mentioned the experience of Teesside, which is instructive. When the closure of that plant was announced, many people would have given up on it and thought that nothing could be done and that the situation was hopeless, but that was not the case. The plant might not have had the backing and the belief of the management, but the potential buyers believed differently.
The complaint at the time was not that the Government were doing nothing, but that we were interfering too much. I am prepared to accept that complaint, because, as I had to explain to the management, it may have owned the plant, but it did not have ownership of the overall situation. The Government had a legitimate stake in it, given the jobs that were at stake and the impact on the regional economy and on manufacturing in the UK. I am delighted that a new buyer has come in that has faith in the plant, the product and the workers, and that production has begun again. That shows that it is sometimes possible to find new buyers and that Government can play a role, as an honest broker, in bringing people together.
What role is the Department playing to try to act as a broker and to send out signals to potential purchasers that the UK believes in manufacturing? Is there, as my hon. Friend has asked, any potential for purchasers to apply to the regional growth fund for funding? Are there funds available for training? Such funds have been discussed in similar circumstances in the past and they may make the situation more attractive to potential buyers. There are things that the Government can do.
At a more basic and prosaic level, will the Minister clarify the situation in relation to redundancy and notice payments? The Government have a role to play. My hon. Friend read out letters and spoke movingly about the human effect on families with young children who are waiting desperately for redundancy payments and relying on food banks. This is a desperate situation, particularly for those families with young children. Some payments have been made, but will the Minister assure us that he will use his good offices to ensure that any outstanding moneys, which are the responsibility of the Insolvency Service and the redundancy payments offices, are paid as soon as possible? Families are desperately stretched, so I hope he will do that.
The previous Secretary of State, Lord Mandelson, has been mentioned, but if the Minister does not like that reference, I urge him to consider a different inspiration—namely, a previous Conservative Secretary of State who said that he would be happy to intervene before breakfast, lunch and dinner. I am sure that all Opposition Members would be happy if the Minister took that person as his inspiration.
I hope the Minister will assure us that the practice of not meeting the work force will end—I see no sense in not meeting them when they are desperate to meet—and that he and his Secretary of State will do everything they can to attract a buyer. I also hope that potential purchasers will be made aware of any available funding. Although the Minister cannot prevent every factory closure, he can play an active role in trying to secure a future buyer to continue steelmaking on the site under discussion. That is the commitment that every Member from every party wants to hear.
Philip Davies (in the Chair)
Order. Six more Members have indicated that they want to speak and I will call the Front-Bench representatives in 23 minutes. I am sure that Members can do the maths for themselves.
Ian Swales (Redcar) (LD)
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate, and the right hon. Member for Wolverhampton South East (Mr McFadden) and my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) on their encyclopaedic exposition of the situation at Thamesteel. I intend not to repeat the comments that have already been made, but to talk more generally about the steel industry.
The Teesside Cast Products plant is in my constituency of Redcar and we are still celebrating the fact that Sahaviriya Steel Industries took over the site a year last Monday. The fact that the plant has not yet made steel is testament to SSI’s investment in and refurbishment work on the site and its long-term commitment to steelmaking in the UK. The plant will soon start—within days—to make steel and it will be a world-class site again.
I commend the work force for their constructive attitude towards SSI’s proposed new culture at the site. We have had only one black spot—namely, a dispute between Balfour Beatty and others over certain trades. I am not taking sides in that disagreement, but 20,000 working hours have been lost and I hope that it will be resolved as soon as possible. Our Thai friends are surprised that that has affected them in an area in which jobs are so badly needed and that has such a passion for steelmaking.
Overall, this has been a great story, with 700 jobs protected, more than 1,000 people recruited and at least another 1,000 in related jobs. The local community is right behind it and the effects are already being felt: there is a spring in people’s step and Mary Portas’s recent report to the Prime Minister even singled out Redcar high street as bucking the national trend. That is the effect that such developments can have on local communities.
As well as SSI, I have Tata’s heavy beam mill in my constituency. It makes beams of outstanding quality—nine of the 10 tallest buildings in the world use them—but the mill has been affected by the construction downturn. The Government are doing many welcome things, such as support for manufacturing and apprenticeships, and the regional growth fund, from which SSI benefited to help with training.
The Government also want to invest in infrastructure, in which we have a great tradition on Teesside. In fact, I have a picture on my wall of Lambeth bridge lying in pieces in Middlesbrough before being shipped down here. There have also been announcements on green technology. However, we need a lot more drive on such issues. In particular, we need to ensure that public procurement represents best value for the UK, not just best price. In relation to how we deal with green technology, that includes where transactions might seem to be company to company, but there are actually huge underlying public subsidies in some projects.
Finally, I want to mention energy costs. I and a few other MPs, some of whom are here today, started the all-party group on energy-intensive industries in early 2011. We have had great support from at least 10 industries, but the No. 1 affected sector is, of course, steel. Tata says that its sites in the UK pay 25% to 50% more for their electricity than its sites elsewhere in Europe. In the autumn statement, the Government acknowledged the threat to competitiveness that that poses for UK industries such as steel. The £250 million mitigation measures announced in the autumn statement are welcome, but the mechanisms are still unclear and address only the additional future changes without dealing with the cost gap that already exists between the UK and Europe.
The delay and uncertainty surrounding that are deeply unhelpful. Companies cannot adequately plan for the future in a business where long-term planning is the norm. Uncompetitive business rates also have the potential to drive steel making out of the UK. Again, Tata compared rates payable at two of its sites—one in the Netherlands and one in the UK—and found a gap of approximately £10 million a year. That differential needs to be closed. Those costs are significantly out of line with those in the rest of Europe and are a threat to the ability of companies to invest and be competitive. At a time when the Government are trying to revitalise UK manufacturing industry, we should be doing all we can to support industries such as steel making by creating a level playing field on which it can compete.
I hope that the Minister will say more about the plans to support energy-intensive industries, especially steel. The UK still has a steel industry that is vital for our future security and prosperity, and I hope that the Government will do everything they can to back it.
Nic Dakin (Scunthorpe) (Lab)
I am pleased to have been called to speak in the debate. We have already heard from my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who gave an excellent speech, and other hon. Members how important it is for the Government to act. Where the Government have acted in places such as Stocksbridge, Teesside and, indeed, my constituency of Scunthorpe, there have been better responses for local people. Indeed, the role of trade unions working together with management is significant in getting better outcomes for local communities.
I shall focus briefly on three things. First, I want to consider the need for demand now for steel and the need to introduce real infrastructure projects that create such demand. We know that there will be demand with High Speed 2, renewables and nuclear, but that is further away—towards the end of the decade. We need demand now. We do not need announcements about small things happening; we need real things to happen, with real action on infrastructure now. Today’s Budget gives the Government the opportunity to do that.
Secondly, as we have already heard in relation to energy supply and cost, the UK is far more expensive than its European neighbours. It is therefore difficult for us to be competitive in relation to decisions being taken in places such as Mumbai, because we look potentially uncompetitive compared with the other European options available to investors. On the package in the autumn statement, a consultation was announced in March that will report in March 2013. That continues the uncertainty. Even in March 2013, we will not know what that package of support looks like for energy-intensive industries. In the meantime, there is a policy vacuum and uncertainty, in which there is danger for UK steel. That needs addressing now.
The third element is the issue surrounding supply chain development and procurement, particularly in new industries such as renewables. We need action to ensure that we are in a position to deliver and procure steelmaking for our products that are being bought now. There has been the recent example of TAG Energy Solutions in the north-east, which is a case study of what should not happen. UK investment and UK steel are available, but the procurement process means that steel from elsewhere will be used to fund that development. That is not good enough. There is also the case of the Forth road bridge in Scotland, which will proudly be built with Chinese steel when UK steel in Scunthorpe and Dalzell is available. We need clear action on procurement and supply chain development.
We need action now on those three things to secure the UK steel industry. As the hon. Member for Redcar (Ian Swales) said, it is a crucial part of the security of this nation to secure UK steel. We need action on demand now, not tomorrow, and to bring infrastructure projects forward. We need action on energy security now, not in 2013. We need security for energy-intensive industries now and a package to sort that out now, not one that takes all the time in the world. We also need action on procurement and supply chain development now. If the Government take those actions, I am sure that Labour Members will fully support and embrace that, because it is in the interests of UK plc and of workers, such as the workers we see here today who are rightly concerned about their living. Thank you, Mr Davies, I have said my piece.
David Mowat (Warrington South) (Con)
It is a pleasure to serve under your chairmanship, Mr Davies, and I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on his remarks. I associate myself with his comment on blast furnaces. The first time I saw a blast furnace in Port Talbot was a formative experience for me. Every hon. Member would benefit from spending some time in front of a blast furnace.
I want to talk about one aspect of the issues facing energy-intensive industries such as steel, aluminium, ceramics and cement—that of energy prices. I shall focus on one of the drivers that we can do something about while still meeting our carbon reduction commitments.
Today, business in the UK is paying around €10 a unit for electricity. If a business were located in France, that figure would be €7 a unit, which is the business rate. That is a difference of about 40%, and a very significant margin. That factor is important in the decisions being made. It is not true that our energy prices are more than those across Europe generally—our gas prices are cheaper than nearly everywhere in Europe—but electricity is expensive and continuing to get more expensive. It is hard for a Government to drive an industrial strategy that involves rebalancing the economy when energy prices are on an upward track relative to our major competitors. That is the issue.
About 18 months ago, I received a written answer from the Department of Energy and Climate Change stating that 18% of business energy costs were caused by our green—or our renewables—policies, which is a large chunk. That figure is set to rise to 30% by 2020. What matters is what that means relative to our competitors. It is not possible for gross domestic product to grow if energy is expensive. As we move from a service-based GDP to what I hope is a more manufacturing-based GDP, costs will be more in terms of energy per unit of GDP developed.
This is not about climate change. There are two aspects to what we are trying to do with our energy commitments: reduce carbon and go for renewables. The Climate Change Act 2008, which was rightly passed by the previous Government, committed us to an 80% carbon reduction by 2050. That is about the hardest thing I can imagine doing while we continue to grow the economy. A year later, the same Government signed up to an EU directive that said that, as well as an 80% reduction, we would produce 30% of our electricity from renewables by 2020. That is a contradictory objective. There is nothing in the first objective that says we have to go for renewables at the pace and scale we did. We could have gone much more quickly for nuclear power, or for carbon capture and storage—even more quickly than we are doing now, and I concede that the Government are moving in that direction.
There is a serious consequence here. We have two deltas in energy costs for companies such as Tata, Alcan and others: the delta of increased energy costs due to the need to meet our carbon commitments, which I accept as we have to do our bit, and the additional delta, over and above that, to meet a large component of that carbon commitment through renewables—a larger component than if we had just tried to minimise carbon at the lowest cost possible, which would have created the most jobs. I have sat through many debates, hearing about job losses related to the solar tariff. I remind hon. Members that the tariff was 43p a unit of electricity—the feed-in tariff that the Government belatedly cut. In France, electricity is being generated at 6p a unit. That is not sustainable: it has to be paid for by somebody and the buck is stopping at companies such as Tata.
The Government are continuing to do a lot in their industrial policy, and with the growth fund, which is far more focused towards the north of the country than the regional development agencies were—apprenticeships and all that goes with them. Energy prices are critical, and unless we get them right that will all be for nothing. The £250 million is welcome and is directed at the energy-intensive industries, but that is an error in focus, too, because all manufacturing requires energy. It is a continuum. There are not just a few companies at the top using a lot of energy; all manufacturing companies use energy. If they are paying 18% or 20% more than their competitors as a result of the Government pursuing policies that we do not need so as to meet our carbon commitments, the penalty will be job losses. Unfortunately, the jobs that have been lost are marginal jobs. They tend not to be seen in the same way, perhaps, as jobs in a solar company or a wind farm company, which are very high profile and all that goes with that. The Government need to focus on that and get it right.
Philip Davies (in the Chair)
Order. Three hon. Members still want to speak. There are eight minutes to go before I call the shadow Minister. I call Nia Griffith.
Nia Griffith (Llanelli) (Lab)
I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate and on putting the case very clearly for active Government intervention to secure the future of Thamesteel and to provide optimum conditions for steel manufacturers to invest in the UK in the long term. My sincere sympathies, and those of my constituents, go out to the workers and families of Thamesteel. We know exactly what they are going through and the knock-on effect in the local community. We need to get the conditions right not just for them, but for the whole of our steel industry in the UK.
I have attended two starkly contrasting meetings recently: a very gloomy meeting with steel manufacturers, and a more upbeat meeting with motor manufacturers. The motor manufacturers said that there is investment in the UK. They have high-quality products—high-quality engines and so on—and they asked: what has happened to the supply chain? So much of the supply chain now is not in the UK. We have to get the steel part right, as well as the rest of the supply chain. We have to get the conditions right for manufacturers to want to invest in the UK in the long term.
In my constituency, Trostre does an exciting job of turning around very quickly whatever anyone wants in terms of a tin, to make exactly the right type of can with a two-week lead time. However, it cannot do that if it cannot get the raw materials—not if we end up having to import steel. We therefore welcome the investment in Port Talbot, but we must provide the right conditions for manufacturers to invest long term in steel.
Why on earth are we going down the road of the mad carbon floor price? We must work together with other countries on any form of combating emissions. We know there were faults with the emissions trading scheme. It was not perfect, but at least it was fair—it was a level playing field for everyone across Europe. We are absolutely mad to impose an additional tax on our steel industry that does not apply to any of our competitors across Europe. We have to get energy prices right. We have also got to encourage long-term investment in energy generation.
The mitigation packages, supposedly put in to help because of the carbon floor price going so high, are piecemeal, coming in too late and not giving the long-term stability we need. Furthermore, we need proper, sensible policies on taxation. We need more flexibility in capital allowances. We need money not only for research and development, but for demonstration and deployment. Unless the Government pursue an active industrial strategy, not only Thamesteel but many more steel plants will fail. I therefore hope that the Minister is listening.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
I will not go through all the arguments that have been made in relation to Thamesteel, but the Government need to prove that they are listening to hon. Members and to the workers of Thamesteel.
Steelworkers are part of an industry that is like no other—it can be dangerous and it can be temperamental. It is dusty. It can involve heavy lifting. As I remember only too well, it can be fatal on occasion. Most steelworkers in the modern 21st century do not have university degrees. What we say is that they are graduates of the university of life—the life of a steelworks. Being a steelworker means having a skill like no other, whether working in an ore blending plant, a sinter plant, the coke ovens, the heat of a blast furnace, the basic oxygen steelwork, a degassing unit or a continuous casting mill of strip, slab and plate. Those skills are not learnt by reading a book; they are learnt at the chalk face. The men in this room who are watching the debate should remain part of that chalk face.
In Scotland, there are currently two plants: Dalzell steel plant in my constituency, and Clydebridge in Cambuslang. Those companies have just put in a bid to rebuild the new Forth road bridge—35,000 tonnes of steel. What did they get? Not an ounce. Not one ounce. Some 90% of the old bridge was built by Scottish steel. Not an ounce of UK steel. Not an ounce made in Scunthorpe. Not an ounce rolled in Clydebridge or Dalzell. Nearly 30,000 tonnes of steel will be shipped 12,600 miles from Shanghai, instead of being driven 34 miles along the M8 from Motherwell to the Forth. What a disgrace! What a way to treat a modern industry!
Steel has a very proud history, but it has a very bright future. It is a material that will be used in the future. It will be used for wind farms and offshore farms—all that will be made from steel. Unfortunately, unless the steel industry is helped and unless the Government listen, an awful lot of that steel will come from abroad.
Finally, I started by talking about Thamesteel; I would now like to talk about my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who gave a passionate speech. Quite frankly, as someone who was a steelworker for 15 years, I could not have put it any better, and I congratulate my hon. Friend. I wish the workers of Thamesteel well. I hope that the Government are listening to their argument.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
I will follow on briefly from my hon. Friend the Member for Motherwell and Wishaw (Mr Roy). I represent the Clydebridge steelworks—the other steelworks in Scotland that has been affected by the decision in Scotland. In the short time available, I will build on the comments made by my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) about Government intervention. There are opportunities for Government intervention by using the procurement process properly. What we have seen in the example of the Forth road bridge debacle is an absolute and catastrophic failure of Government policy. Worse, in Scotland in the past few weeks, we have also heard a catalogue of excuses—commercial confidentiality, no Scottish firm bid, the procurement rules prevent Scottish steel to be used for the Forth road bridge—all of which have been proven to be demonstrably untrue.
I remind hon. Members that there is no one from the Scottish National party here to defend its decision. That is typical of how the SNP has behaved and is a wider point and a wake-up call, not just to the devolved Administrations, but to the UK Government, because we should support our manufacturing industry. Procurement rules do not prevent that and imaginative use of those rules can enhance it. It happens in France and Germany, and other places, and we should be meeting that challenge and doing the same thing for the sake of the people here in the Gallery today and the people whom we all represent.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate. It was evident, during his passionate and emotional contribution, that he has steel—Teesside steel—coursing through his veins. He is a massive champion of the UK steel industry.
I shall concentrate on two broad things, and I hope that the Minister responds positively to both. First, I am keen for the Minister to set out the role that he anticipates the steel industry will play in the modern British economy. It is evident that we Opposition Members believe that a productive, thriving and competitive steel industry is an essential part of a modern, prosperous British economy. Steel is a vital component of the industrial sectors in which Britain currently has a competitive advantage and through which we hope to lead the world in future, such as oil and gas exploration, chemicals, aerospace, offshore wind technology and automotives.
It would be unsatisfactory to believe that we in the UK could rely wholly on imported steel from overseas because, somehow, it can be sourced at much cheaper cost. Such reliance would make us vulnerable to supply difficulties, quality concerns and price shocks and in the long run would undermine British competitiveness. In addition, the UK would miss out on valuable research and development opportunities. Tata’s Teesside technology centre at Grangetown, for example, focuses on long product research, which helps our nation retain our valuable manufacturing expertise. Similarly, Tata’s automotive engineering group, again, based in the UK, is essential for developing new generation steel for the automotive industry.
It is strategically important that we in Britain make steel. I hope that the Minister agrees and states what I hope is his strong belief, which we in the Opposition would support, that a thriving steel industry in the UK is a necessary part of a balanced economy based on manufacturing. As we have heard in this debate, we would also expect him to ensure that, as part of active and intelligent government, the Government provide an effective industrial strategy in partnership with business. That is not to pick winners, not to protect lame duck companies and not to embrace protectionism, but to recognise the vital role that British-made steel plays in our economy and to use the power of Government to help support that.
We have heard that the steel industry is notoriously cyclical and subject to difficulties. Cost pressures, especially in raw materials, are increasing. Demand for the product is falling, especially in Europe, and even in China in the last quarter, and steel manufacturers around the world are running down inventories rather than boosting output, and Thamesteel has been an obvious victim. I understand that this is a global matter, but the Government have real power here. What has the Minister done to ensure that he can intervene to stimulate demand to provide support for our steel industry?
We have heard time and again in today’s debate how measures such as the carbon floor price are impacting on energy intensive industries such as steel. It is estimated that British industry and British producers are paying up to 50% more in energy costs than their counterparts in France, the Netherlands or Germany. I anticipate, or at least hope, that the Chancellor will say something about this matter in his statement this afternoon.
Mr Wright
I hope the hon. Gentleman will forgive me if I do not. I have a lot to get through in only seven minutes.
What active role are the Minister and other Department for Business, Innovation and Skills Ministers taking to mitigate some of these additional costs for industry, as is happening on the continent, where the French and German Governments are helping to mitigate such cost pressures?
My hon. Friend the Member for Scunthorpe (Nic Dakin) mentioned the supply chain. What are the Government doing to help establish and nurture a UK supply chain, particularly for the renewable energy sector? We have the biggest market anywhere in the world for offshore wind, and steel is a large part of the manufacturing process. However, the industry estimates that only about 10% of the components going into offshore wind installations are British-made. Tata Steel is investing £9 million in its world-class pipe mills in my constituency to increase the possibility of winning contracts for offshore wind component manufacturing, but the company needs the Government’s active support to ensure not only that there is a level playing field for British steel manufacturers, but that those manufacturers get on the pitch in the first place.
The Teesside offshore wind farm is a good example. It is a major contract that involves 27 turbines off the coast of Redcar, each requiring a monopile using approximately 400 tonnes of steel plate. Tata Steel could have manufactured that plate in the UK at its Scunthorpe plant and used pipe mills in my constituency and elsewhere across the UK to process the plate. However, as we have heard, the contracts have been awarded wholly to Dutch and German steel manufacturers. Why is this allowed to happen? Clearly, the Government are not doing enough to support the creation of a UK supply chain to help steel.
Unless BIS takes a more active role and interest in this matter, the economic benefits in moving to a low-carbon economy will be exported to foreign competition at the expense of British-based jobs. The Minister needs to explain how he will help to create and support the supply chain, which would benefit the likes of Thamesteel and Tata. For example, why do not the licences for such wind farms require a certain proportion of components to be British-made? Why should not at least one British-based manufacturer be invited to bid for every contract? What are BIS Ministers doing to ensure that steel jobs and steel companies based in Britain can benefit from the transition to a low-carbon economy?
Secondly, I want to ensure that Thamesteel and its workers have as positive a future as possible and that the Government are working hard and energetically to support that end. Thamesteel is not a lame duck or an obsolete company whose time has passed. It was regarded as one of the fastest-growing steel manufacturers in the UK. In 2010, which was a difficult year for the construction industry, Thamesteel sales stood at £200 million, and it produced more than 100 tonnes of steel an hour, which was a plant record. There seems to be a strong prospect of a viable business. In that light, will the Minister outline what he, his Department, including other Ministers, and the wider Government are doing to secure a buyer for this business that is not focused on asset stripping? What brokerage is his Department providing, between the administrator and potential buyers, as a means to send out a message to the market that the Government value the steel industry and its component firms, such as Thamesteel? How have Ministers been directing the approach to this matter? Specifically, I should like the Minister to tell us what meetings BIS Ministers have had in this regard.
As my hon. Friend the Member for Middlesbrough South and East Cleveland said, the previous Government rolled up their sleeves and got their hands dirty trying to negotiate a deal, thanks to my right hon. Friend the Member for Wolverhampton South East (Mr McFadden). In respect of the Thamesteel workers, are the Government not only not getting their hands dirty, but merely washing their hands and saying that the company is no longer viable? That would be a tragedy, not just for the 400 workers, but for the local businesses and the supply chain that rely on the firm and for the wider steel industry in this country.
How is the Department linking up with Kent county council, which I understand has set up a taskforce? Is BIS providing a co-ordinating role to ensure that the local authority, good trade unions such as Community, local chambers of commerce, further education institutions such as MidKent college, and local businesses are all co-ordinated and pulling together in the same direction to help Thamesteel be viable? Is there any waiving or deferral of business rates to encourage people who want Thamesteel as a going concern to make that happen? Why do Ministers not have more of a sense of urgency or imagination about this matter?
The workers have rightly been a key concern for hon. Members. Many workers have not been paid since a couple of days before Christmas and are now, as we have heard, having to resort to receiving food parcels. The hon. Member for Sittingbourne and Sheppey (Gordon Henderson) made the point in BIS questions last Thursday, and he rightly did so again this morning, that when a company goes into administration, the wages owed to its staff should be the top priority. In his response to the hon. Gentleman, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), said that he agreed
“that the interests of workers should absolutely take priority” —[Official Report, 15 March 2012; Vol. 542, c. 376.]
He resolved to look into the matter.
Given the urgency of the situation, will the Minister update hon. Members about what can be done to ensure that amounts owing to workers are the top priority and that they are paid? What are the Government doing to ensure that workers receive redundancy packages? Will the Minister update us about on the current situation? Three months after many workers were last paid, the need to ensure that redundancy packages are provided immediately is urgent. Can he confirm and reassure me that all Thamesteel workers have now been provided with their redundancy packages?
The Department needs to act with a greater sense of determination for the wider good of the UK steel industry and for the welfare of 400 workers at Thamesteel. The Minister needs to have listened to the debate; he needs to act; and he needs to act now.
The Minister for Universities and Science (Mr David Willetts)
I congratulate you, Mr Davies, on chairing the debate. A lot of Members have been trying catch your eye, which reflects its importance.
I also congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate. I know how important the steel industry is for him, as he showed in his powerful and emotional speech. I congratulate, too, my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson), who has been working energetically on the Thamesteel issue. His words show his commitment to that industry in his constituency.
I had some involvement with Allied Steel and Wire workers when I was shadow Secretary of State with responsibility for pensions; they faced such pension problems as the hon. Member for Middlesbrough South and East Cleveland referred to, and I was impressed by their dignity and commitment. At that time, I was pleased with the shared, cross-party view on the importance of ensuring that pension obligations were properly met. This morning, we have also heard important contributions from the hon. Members for Redcar (Ian Swales) and for Scunthorpe (Nic Dakin) and my hon. Friend the Member for Warrington South (David Mowat). I followed with great interest the speeches of the hon. Members for Llanelli (Nia Griffith), for Motherwell and Wishaw (Mr Roy) and for Rutherglen and Hamilton West (Tom Greatrex).
Ironically, I came to the debate straight from the Cabinet, where the Chancellor was reporting on the Budget to his colleagues. I must not breach Budget secrecy, but it is a Budget for enterprise and one that will show further commitment to and support for British business. We recognise, however, that UK steel companies and their overseas competitors have been forced to take some uncomfortable decisions as they weathered the economic storms of the past few years—companies such as Tata Steel, which has had to reduce its work force by 25% and its capacity by more than 20%. Nevertheless, the UK steel industry remains a significant employer, and it is a welcome and important part of our broad manufacturing base. Its intensive research and development is an important contributor to the UK economy. The steel industry underpins many parts of manufacturing and, as we heard this morning, many local communities, in turn tying into crucial high-tech industries such as aerospace, automotive and construction.
Thamesteel, however, found itself at a significant competitive disadvantage on world markets, with competition from countries with lower costs, such as Ukraine and Turkey, so, sadly, it went into administration on 25 January, with the immediate loss of 350 jobs. The Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who has responsibility for business and enterprise,has been working closely with my hon. Friend the Member for Sittingbourne and Sheppey to ensure that those affected receive all the Government assistance available to get them back into work as soon as possible. My hon. Friends have met to discuss the matter.
Let me tell the House briefly what is involved. Tailored practical support is being provided by Jobcentre Plus through its rapid response service and by the talent retention solution programme, which can help engineers to find jobs in engineering. A Thamesteel taskforce has been set up locally by Kent county council to co-ordinate assistance; it has already met three times and is meeting again soon. The Department for Business, Innovation and Skills has been liaising with the Insolvency Service on redundancy payments and unpaid wages, and I understand that, with the exception of one or two cases, all claims have been processed. We will of course maintain the pressure to ensure that every claim is processed. Yes, BIS can and does speak to Her Majesty’s Revenue and Customs, although we cannot guarantee what the response will be. The sale of the plant is a matter for the administrators, Mazars, but officials in BIS and UK Trade and Investment have kept in close touch with them and have offered assistance to identify potential buyers for the business.
Mr McFadden
Is the Minister willing to invite potential buyers to the Department to talk about the Government’s backing for manufacturing, what help might be available from the regional growth fund and all such issues that they might wish to discuss?
Mr Willetts
There is indeed practical help available, and I will try to cover that.
Mazars advised that it received some 70 initial approaches and that it organised more than 12 visits to the site. It has received a number of bids, which it is considering as part of due diligence. Mazars set a closing date of last Friday, 16 March, but it is willing to consider any credible bid, including a late bid received on Monday. The bids are all commercially confidential, however, and BIS has not been provided with specific details, so I cannot share any further information with the House. Sadly, we recognise that, given the depressed steel market in Europe and other companies’ idling production facilities, sale as a going concern might prove difficult, although we are absolutely committed to supporting manufacturing in Britain as part of our commitment to rebalance the economy.
As part of the autumn statement, therefore, we announced measures worth about £250 million to help energy-intensive industries, including the steel industry, to reduce their energy bills. That package was intended specifically to mitigate the effect of climate change policies and energy policies on energy-intensive industries such as steel. In February, we launched the third round of the regional growth fund, worth £1 billion, to which steel companies can bid as long as they comply with state aid rules. The £125 million advanced manufacturing supply chain initiative is expected to go live before Easter, and that will offer further funding opportunities for building supply chains.
In addition, UKTI has a programme of support for the UK manufacturing sector, including steel, in partnership with numerous stakeholders. The support includes organising UK groups at overseas trade shows, leading targeted trade missions and bringing potential buyers, investors and decision makers to the UK to see our manufacturing capability at first hand. The UKTI high-value opportunities team is continuing to work with plants throughout the UK to access large projects overseas. I too have been on trade missions on which we have been briefed specifically on major infrastructure projects abroad so that we can help to secure export opportunities for British businesses. That UKTI team recently helped Tata Steel to win a contract to supply steel to the Singapore mass transit railway system.
In addition, the national infrastructure plan identifies a pipeline of more than 500 projects, costing about £250 billion, extending to 2015 and beyond and including, for example, more than £1.4 billion in railway infrastructure and commuter links. Those projects should make a significant difference by stimulating demand for steel and, we hope, creating significant supply chain opportunities for UK steel producers.
Procurement is important, too. After episodes such as Bombardier, we recognise the need to manage the procurement and investment processes in the public sector so that we can sustain a competitive supply base that meets the UK’s strategic needs. The growth review, about which we will hear more in a few hours’ time, looked at how the Government can support businesses and ensure that, when businesses compete for work, they do it on an equal footing with their overseas competitors. That is why we announced a series of measures at the strategic supplier summit last November. We recognise that we need a more strategic approach to how we buy public goods, works and services so that we can better develop and manage our supply markets.
Offshore wind power clearly has great potential as a market for British steel, so we understand the disappointment that an EDF offshore wind project contract, in which a UK company won some of the fabrication work, does not involve UK manufactured steel. We have to recognise that, ultimately, such decisions are commercial, but we are working with the Department of Energy and Climate Change to see how we can help to strengthen the supply chain so that UK companies are better placed to compete for such business. Together with the Crown Estate and senior executives from 17 developers, we have therefore established the offshore wind developers forum.
We are committed to rebalancing the economy and we very much hope that, as part of that, we can see a strong manufacturing sector.
Water and Sanitation
(12 years, 1 month ago)
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Naomi Long (Belfast East) (Alliance)
I am delighted to have the opportunity in the run-up to world water day tomorrow to initiate this brief debate on global access to water and sanitation, and to highlight one of the most significant challenges facing the world. Lack of access to clean water and sanitation remains one of the major barriers that must be overcome if real and sustainable progress is to be made in education, health, food security and economic productivity. Without water, nothing else works.
An estimated 800 million people globally still do not have access to clean water, but an even larger number— 2.6 billion, or more than one third of the world population—have no access to even basic sanitation and so are exposed to the health risks associated with poor sanitary infrastructure. As a direct result, people—the majority of them children—are dying of diseases that the provision of potable water and sanitation could eliminate almost entirely. That is illustrated by the fact that the biggest killer of children under five in sub-Saharan Africa, and the second biggest globally, are diarrhoeal diseases, the vast majority of which are entirely preventable conditions caused by inadequate sanitation and hygiene.
Mr Gregory Campbell (East Londonderry) (DUP)
I congratulate the hon. Lady on obtaining this debate. Will she join me in congratulating some of the faith-based organisations and other charitable institutions that in small parts of sub-Saharan Africa have made significant progress in delivering clean water to those communities?
Naomi Long
I do indeed, and I will name some of them later, but there are many others that I will not have the opportunity to name. I recognise that that co-operation and collaboration is an important part of trying to expand the network of sanitation and clean water internationally.
Mr Andrew Smith (Oxford East) (Lab)
I congratulate the hon. Lady on calling this enormously important debate. Does she agree that initiatives such as Oxfam’s water week, which engages children in both education and fundraising for specific projects in specific countries—Mali last year and Niger this year—are an important way of raising awareness and achieving practical results?
Naomi Long
I agree entirely. It is important to engage young people in that work, because they will no doubt carry it forward.
Annually, more children under five die as a result of diseases arising from inadequate sanitation and hygiene than from HIV/AIDS, malaria and measles combined, so the impact is huge. Open drainage channels and sewers provide the environment conducive to the breeding of mosquitoes, which spread such diseases.
I am a former civil engineer with a long-standing interest in international development, and this issue is particularly close to my heart. During my term as lord mayor of Belfast, WaterAid was one of my nominated charities, and since my election to Parliament I have continued to work closely with it and other charities, such as Tearfund, to pursue this issue with the UK Government. I thank both charities for their support to me in preparing for today’s debate and, more important, for their work with others to maximise access to clean water and sanitation globally.
Glyn Davies (Montgomeryshire) (Con)
I agree that there is a huge amount of cross-party support for the hon. Lady’s case, but will she join me in congratulating the Government on their commitment to overseas spending, which creates an environment in which we can take up the challenge? The money is available to do the job throughout the world, and the Government should be congratulated on that.
Naomi Long
I have congratulated the Government on that on numerous occasions, and I will congratulate them on other matters, but I will also press them on areas where further progress could be made.
This subject is important to my constituents, many of whom signed up to the recent Tearfund postcard campaign calling for more action on water and sanitation. Last October, the hon. Member for Congleton (Fiona Bruce) and I joined Tearfund to present more than 10,000 postcards to the Under-Secretary of State for International Development, to highlight the importance of action.
I recognise that in the UK, the biggest step change in public health and mortality rates resulted not from medical advances, but from widened access to clean drinking water and adequate sanitation. During the late 19th century, as both water and sewerage infrastructure expanded dramatically, the life expectancy of an average member of the population in this country rose by 15 years—a remarkable increase, delivered over a short period.
Mr William Cash (Stone) (Con)
I am chairman of the all-party group on water and sanitation in the third world. Does the hon. Lady agree that whatever progress has been made on access to drinking water, which we acknowledge is improving, only 63% of the world population have access to sanitation, which is well below the 75% target, and that if we do not get sanitation right, water will not be right either?
Naomi Long
I agree entirely with the hon. Gentleman, and I hope to come to that point.
The British Medical Association has recognised that commissioning of the sewerage system in London was the most important breakthrough in public health—more significant than the discovery of penicillin or development of vaccine programmes. If developing nations are to experience a similar step change in their outcomes, there can be no more effective place to start than investment in water, sanitation and hygiene.
There has been progress, particularly on access to clean water, and this month brought the welcome news that the UN millennium development goal on water has been met five years early. However, it is clear that approximately 10% of the world population still have no access to clean water and there is still much work to be done. Also, the global figure disguises the disparities in progress between, and even within, different countries. That needs to be considered carefully when planning future programmes. For example, almost half the progress towards the millennium development goal can be accounted for by progress in India and China alone, whereas progress in sub-Saharan Africa has generally been much slower; and although Sierra Leone, for example, has made significant improvements in access to water, with a national average of 55%, that masks a significant disparity between rural access, at 35%, and urban access, at 87%.
Even allowing for the complexities of the picture, significant progress has been made on access to clean water. However, my understanding is that, by contrast, the millennium development goal on access to sanitation is not on track for delivery. Indeed, it has been identified as one of the most off-track millennium development goals. I would welcome the Minister’s views on what action the UK Government could take to try to ensure that focus is maintained on taking forward work on that specific problem.
At the current rate of progress, it has been estimated that it could take 350 years to ensure that everyone in Africa alone has access to adequate sanitation. That differential delivery between water and sanitation may be due in part to the stigma that surrounds discussion of sanitation in many cultures, including our own. That needs to be tackled in the developing world because education on hygiene is critical to improving public health. In India, for example, it is estimated that almost 51% of the population still defecate in the open, and that poor sanitation costs India around 6% of its GDP.
Fiona Bruce (Congleton) (Con)
I congratulate the hon. Lady on introducing this debate and on her continuing work. Does she agree that if we are to make real progress, the key is partnership working by voluntary organisations and Church groups, which have been mentioned, and substantial Government resources? We are delighted that the Secretary of State is to attend the high-level WASH—water, sanitation and hygiene—meeting in Washington. At that meeting, should he not focus on partnership working between countries globally, and ensuring that resources across the piece are shared and co-ordinated more effectively?
Naomi Long
I agree entirely with the hon. Lady. It is hugely important to maximise the benefit of our investment.
Lack of access to clean water, sanitation and hygiene also carries with it significant gender implications that can, in turn, impact more widely on communities.
Naomi Long
I would like to make a little progress first.
In developing countries, women and girls still shoulder most of the responsibility for the collection of clean drinking water from wells, which may involve long and arduous daily journeys. The provision of simple village standpipes could therefore improve not only health, but education outcomes for women and girls in particular, because, freed from that daily chore, they would have time to attend school. The provision of proper and private sanitation facilities in schools has also been shown to reduce education drop-out rates for girls reaching puberty. Women are more likely to bear the burden of caring for those who contract diseases as a result of poor access to water, sanitation and hygiene, and that significantly restricts the degree to which they can be economically active and independent. Most disturbingly, lack of access to water and sanitation can leave women and girls more vulnerable to violence and sexual assault, either as they travel long distances to collect water, or as they wait until nightfall before defecating in the open.
By investing in water and sanitation, we can improve the health and education of millions of people around the world and tackle gender inequality. Access to water and sanitation transforms lives, improves health outcomes and lifts people out of poverty. With every penny of public expenditure under scrutiny, it is important that the resources available for international development are invested in ways that will have maximum impact and are sustainable. Investment in water, sanitation and hygiene meets that economic test.
The UN human development report estimates that for every pound invested in water and sanitation, £8 is returned in saved time, increased productivity and reduced health costs. It is therefore a prudent as well as a necessary investment. Lack of access to clean water and sanitation is estimated to cost sub-Saharan Africa 5% of its gross domestic product—an amount equivalent to the aid received by the region. That fact demonstrates the link between long-term sustainable development, and the specific direction of aid towards water, sanitation and hygiene projects. The impact of such investment could be multiplied if we collaborate with other Governments and with non-governmental organisations and charities that can assist by providing education to local communities through Church and community networks, and by supporting increased capacity among state and non-state players in the field.
The provision of water and sanitation is a fundamental part of the foundations on which our progress on other millennium development goals will be built. It is also an area that delivers significant economic and social returns. One would imagine, therefore, that it would be the aid investment of choice, but sadly that is not the case. Speaking of water and sanitation, Kofi Annan stated:
“No other issue suffers such disparity between its human importance and its political priority.”
In 2010, the UN-Water global annual assessment of sanitation and drinking water looked at the amount spent by donor countries on aid for that sector. It found that although levels of international aid have been rising since the mid-‘90s, the proportion spent on water and sanitation has declined. In the mid-‘90s, the proportion of aid spent on water, sanitation and hygiene was more than 8%, but that has now fallen to less than 5.5%. The UK’s bilateral aid to the WASH sector made up less than 2% of our total aid budget in 2010, and less than 50% of the average reported by other donors.
Jim Shannon
I congratulate the hon. Lady on bringing this subject before the House. She has mentioned the importance of water for sanitation, but it is used for other things such as watering crops, or the work done by the churches. Water is also used to make bricks for industry, so it is important for employment, health and food. Does the hon. Lady agree that sanitation is one part of the need for wider water provision?
Naomi Long
The hon. Gentleman is quite right. Water security and the cost of water in many developing countries limits crop production, because people cannot afford to irrigate their crops. Countries that are able to develop irrigation systems have more productive fields and are able to produce more food to feed their people. It is a hugely important issue.
Members have asked me to be positive about what the UK Government are doing, and of course I will be where appropriate. The UK Government have taken a lead on development policy, and I commend them on that. In 2006, DFID expanded its list of basic public services to include water and sanitation, and the UK and Dutch Governments announced their support for a global framework for action at the UN in September 2008. The UK Government played a key role in the development of that global partnership, and “Sanitation and Water for All: A Global Framework for Action”, was formally launched in 2010, with a high-level meeting that was linked to the World Bank spring meeting in Washington. The timing allowed Finance Ministers and those with responsibility for the delivery of water and sanitation to attend. The second high-level meeting will be in Washington next month, and through the Minister I wish to thank the Secretary of State for indicating to me and to other right hon. and hon. Members who wrote to him, that it is his intention to attend.
I also thank the Secretary of State for his pledge to continue providing support and guidance to the Sanitation and Water for All partnership. As yet, however, although 35 developing nations have indicated that they will attend, only seven donor countries have done likewise, and I urge the Government to use whatever influence they have to encourage other developed nations to engage with that key forum. I would also be grateful if the Minister outlined how the Government intend to make manifest that pledge of continued support in the coming months and years.
As I understand, DFID is close to announcing its portfolio review of water and sanitation projects, which seeks to identify where more can be done. I await eagerly the publication of that report, and perhaps the Minister will confirm when that will take place.
Fiona O'Donnell (East Lothian) (Lab)
I congratulate the hon. Lady on securing this debate. Does she agree that the Rio+20 summit is an opportunity to link millennium development goals with sustainable development goals?
Naomi Long
Absolutely, and it is hugely important to plan how we can streamline all those efforts. It is hard to have sustainable development unless you have access to clean water and sanitation.
Given that more than 35% of UK official development assistance is now spent through multilateral agencies such as the World Bank, I hope that DFID’s review will have assessed thoroughly the performance of such agencies in delivering progress in the sector, and considered how the UK can influence agencies to deliver increased commitments on WASH. I hope that it will also address the lack of political priority given to investment in water and sanitation when compared with other aid portfolios such as health and education. Without access to WASH, any progress achieved in other areas is significantly constrained.
One practical measure that would maximise the impact of overseas development aid, would be to integrate WASH into other connected health, education and nutrition programmes. In 2006, the International Development Committee recommended that sanitation become an integral part of the work of health advisors. I would be grateful if the Minister indicated what progress has been made on that.
In conclusion, I urge the Department for International Development to build on its activities to date, to be even more ambitious in its future goals, and to use its influence internationally to press others to do the same ahead of the Sanitation and Water for All high-level meeting in Washington DC next month.
The Minister of State, Department for International Development (Mr Alan Duncan)
I thank the hon. Member for Belfast East (Naomi Long) for securing this important debate, and I welcome other hon. Members who have chosen to attend this morning.
Ensuring access to water and sanitation for the poorest is, to pick a metaphor, the bread and butter of development. When we get it right, so much else follows: children become more likely to reach their fifth birthday, and they are healthier and in a better position to benefit from education; women, who carry most of the world’s water, are empowered; and economic growth and prosperity are enhanced and facilitated. While we fail to deliver those most basic necessities, not only are there an estimated 2.4 million preventable deaths each year, but generations of people become trapped in poverty.
Tomorrow is world water day, and this year we have much to be proud of. We learned this month that the millennium development goal of providing access to clean drinking water has been met, and that between 1990 and 2010 more than 2 billion people gained access to improved drinking water. It is rare in international development to get news as good as that, and it shows that when aid money is spent well, it can make a tangible difference. Development works, and that is an example of the sort of progress that we can make. However, a great deal of work remains to be done. Some 783 million people remain without access to clean drinking water, and sub-Saharan Africa remains off track. The challenge is most acute for sanitation, which is one of the most off-track millennium development goals: about 40% of the world’s population—2.5 billion people—still lack basic sanitation.
The UK Government are committed to accelerating progress in that area. Last year, we made a commitment to provide 15 million people with access to clean water and 25 million people with access to sanitation and to improve hygiene for 15 million people by 2015. We are also committed to helping the world’s poorest countries to harness the full potential of their water resources and reduce the risks posed by floods, droughts and contaminated water. In Sierra Leone, for example, the Department for International Development provides support through the Government, UNICEF and NGOs, to improve access to water and sanitation. In 2010-11, that resulted in 100,000 more people having access to clean drinking water, 250,000 people in rural communities having improved sanitation and 380,000 people being targeted in hygiene promotion campaigns.
I hardly need to stress, on Budget day in the UK, how important it is that every pound of investment in this sector delivers the maximum impact. Our work in this sector, as elsewhere, is driven by the imperative that investment should deliver good value for money, be based on the best evidence of what works and be spent transparently and accountably. That is why we commissioned a review of the UK Government’s portfolio of work on water, sanitation and hygiene promotion. In particular, we wanted to know whether our investment was going to the right places, reaching the poorest and achieving the greatest impact possible. I can tell the House today, as requested by the hon. Member for Belfast East, that we will publish the details of that review to coincide with world water day tomorrow.
I am pleased to say that, overall, the review shows that the portfolio provides excellent value for money, delivering results across 14 major bilateral programmes. The review also shows that our programmes are reaching the people who need them most. In 2010-11, three quarters of the money that we spent through our country programmes was spent on basic systems—such as rural water supply schemes, hand pumps and latrines—that are most likely to reach the poorest. That is a higher proportion than for almost any other donor. We are doing that in the countries with the greatest need, such as Sierra Leone, the Democratic Republic of the Congo, Ethiopia, Sudan, Bangladesh and India.
Detailed evidence from the review will inform my right hon. Friend the Secretary of State for International Development and my other ministerial colleagues when they consider whether and how the UK Government could do more. Just as important, the Secretary of State will share that evidence with other donor countries and developing country Finance Ministers when he attends the Sanitation and Water for All high-level meeting in Washington on 20 April. As hon. Members will know, the UK and Dutch Governments were backers of the Sanitation and Water for All initiative, launched in 2008. Through that initiative, DFID has been seeking to secure better targeting of aid to the sanitation and water sectors, as well as improved transparency and accountability from other donors and national Governments.
At next month’s meeting, progress will be assessed against past commitments, and we expect that new commitments will be made. However, we do not want just new commitments to do more. To see an equitable spread of access to safe water and to make better progress on improvements to sanitation, we need better targeting of aid. I can assure hon. Members that the Secretary of State will, based on our own experiences, highlight how well-targeted aid can reach poor people in fragile states and encourage others to target resources more effectively.
It is an injustice that the lack of something as basic as clean water and sanitation should still adversely affect the lives of millions of people. That injustice has the potential to undermine the achievement of a range of millennium development goals. For those reasons, the Government remain committed to dealing with this important issue. To that end, we will ensure that what we do achieves the greatest impact, that we keep learning and refining our aid programmes and that we share our knowledge and evidence with our partners, so that together we can all do more in the sector of water and sanitation.
Safety of Journalists Abroad
(12 years, 1 month ago)
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Mr Don Foster (Bath) (LD)
I am pleased to have secured the debate, which will focus on the sadly topical issue of the safety of journalists abroad. The debate is timely, as a meeting is to take place tomorrow in Paris at which the UNESCO international programme for the development of communication will consider the report, “The Safety of Journalists and the Danger of Impunity”. The UK will be represented by Professor Ivor Gaber.
Recent news has drawn much international attention to these issues. On 22 February, in the Syrian city of Homs, the American-born veteran war reporter Marie Colvin died, along with French photographer Remi Ochlik, when a shell hit the building in which she was sheltering. The 56-year-old had been a reporter for The Sunday Times since 1985 and had covered conflicts from Chechnya to the Arab spring. She won glowing posthumous accolades. The Foreign Secretary said:
“For years she shone a light on stories that others could not and placed herself in the most dangerous environments to do so.... She was utterly dedicated to her work, admired by all of us who encountered her, and respected and revered by her peers”.
The priest at her funeral said, simply, that she was
“a voice to the voiceless.”
Sometimes, reporters such as Marie Colvin play a greater role than that of providing a voice—Peter Oborne, in The Daily Telegraph, wrote:
“At times, Colvin herself intervened in history, as she did in 1999 in East Timor when she helped save the lives of 1,500 refugees encircled by Indonesian troops in a United Nations compound. The situation was so dangerous that the UN commander wanted to evacuate, leaving the refugees to their fate. But Colvin insisted on staying behind, thus shaming the UN commander into staying - and averting a potential massacre.”
Marie Colvin and Remi Ochlik are not the only journalists and media workers to have lost their lives in the course of their duties since the start of this year. Each year the International News Safety Institute publishes its “Killing the Messenger” report. These reports show, on average, two deaths among people working in news media every week—last year, for example, the INSI reported 124 deaths. Already in 2012, there have been 23 deaths, eight of them in Syria. Far more have been injured or have been the victims of abduction, hostage taking, harassment and intimidation.
Because of the threats that they face, many journalists have had to resort to self-censorship in an effort to protect themselves, rather than lose their lives. Not all those deaths, injuries and threats to lives, freedom or jobs have been to journalists and others working in war zones. Some 60% of the loss of life in 2011 occurred away from conflict zones, in areas where investigations were underway into organised crime, corruption or other illegal activities.
A press freedom violation can be an assassin’s bullet aimed to kill an investigative journalist and to intimidate and silence his colleagues. It can be the knock on the door from the police, bringing in a reporter to question her on her sources, or put her in jail with or without a proper trial. It can be a restrictive media law, which puts the power over editorial content into the hands of censors and press courts.
Journalists and media staff have been killed in the line of duty. Often they are local journalists working their own patch who died because someone did not like what they wrote or said, or because they were in the wrong place at the wrong time. Every job has its risks, and journalists, whose job it is to bring into the open what someone wants hidden, are at greater risk than most, but the risks today are unacceptably high. In some parts of the world, harassment, threats and worse have become an unavoidable part of the job. In war or civil conflict, the risks often escalate: for example, the invasion of Iraq triggered the deaths of 350 journalists. Worldwide, more than 1,000 have died in the last 10 years, but sadly, unless the life is that of a well known western correspondent, the world barely notices.
Organisations seeking to ensure improved security for journalists deserve our support and thanks. I have already mentioned INSI, which, since 2004, has provided basic safety training free of charge to more than 2,000 news media personnel in 23 countries. Other such organisations include Reporters Sans Frontières, the Committee to Protect Journalists, the International Freedom of Expression eXchange and the Inter American Press Association. Our own National Union of Journalists, which has 38,000 members, is the voice for journalism and for journalists across the UK and Ireland and is affiliated to the International Federation of Journalists, which is the world’s largest organisation of journalists, with around 600,000 members in more than 100 countries.
Both the NUJ and the IFJ monitor press freedom violations and campaign for greater safety for journalists who are at the greatest risk and have the least protection. They have established support for journalists and media staff in conflict areas through rapid safety training, and ensured that leading media organisations, such as the BBC, Reuters, CNN and major newspaper groups, put health and safety in the mainstream of international media development strategies, take responsibility for the safety of journalists and provide for their safety training.
Despite that work, the continuing high level of media deaths cries out for more action by international institutions, such as the United Nations, to force Governments to pay more attention to the safety crisis affecting journalists and media workers. More has to be done to improve safety and to combat impunity. Impunity occurs when the political will to back investigations into the killing of journalists is absent; when legal frameworks are inadequate; when judges are weak or corrupt; when the police or investigating authorities are incompetent; when meagre resources are assigned to those responsible for providing security and enforcing the law; and when official negligence and corruption are rife. Combating impunity is a vital element of freedom and security. If there is little fear of the case ever being investigated, let alone the perpetrator being identified and brought to trial, there is no deterrent against people threatening, harming or killing journalists. Recent reports from IFEX show that in nine out of 10 cases of journalists being killed while performing their professional duties, the perpetrators of the crimes are never prosecuted. Other research shows that more than two thirds of the people responsible are not even identified because of the failure to carry out sufficiently thorough investigations. In effect, in many countries it is almost risk-free to kill a journalist—murder has become the easiest, and perhaps the cheapest and most effective way of silencing troublesome journalists.
The record of Governments in far too many states in tackling impunity is appalling. I have heard reports of intimidation of staff and families of the BBC’s Persian service. At one end of the spectrum, there are countries such as Gambia where journalists have been targeted, oppressed and jailed. In response to international campaigns in support of Gambian journalists, Yahya Jammeh, the President of the Gambia, declared:
“I will kill anybody caught tarnishing the image of my government. I will kill you and nothing will come of it.”
Of the situation in Syria, the French journalist Jean-Pierre Perrin said:
“The Syrian army issued orders to kill any journalists that set foot on Syrian soil.”
Given the army’s relevance in the death of Marie Colvin, what information does the Minister have on that claim? Since November 2009, the International Federation of Journalists has been campaigning to force the Aquino administration in the Philippines to investigate fully the killing of 21 journalists and media workers in what has become known as the Ampatuan massacre. Some progress has been made, but not enough. For many years in Somalia, which is one of the most dangerous African countries for journalists, no crime committed against a journalist has been investigated and so no one has been convicted, and now it appears that the current Transitional Federal Government have been persecuting journalists, their union and media organisations. I am pleased that our Foreign Secretary raised the safety of journalists with President Sheikh Sharif during his visit to Mogadishu in February, and that he has pressed for an independent inquiry into the death of Hassan Osman Abdi.
What about the leading democracies? The United States has consistently refused to carry out credible and independent investigations of the killing of journalists, including the killing of ITN’s Terry Lloyd near Basra in March 2003, and the killing of Spanish cameraman Jose Couso and others when US forces fired on Baghdad’s Palestine hotel in April 2003. The IFJ has catalogued 16 other cases of journalists who have died since March 2003 at the hands of US soldiers in Iraq without a proper investigation being carried out. When the world’s leading democracy refuses to prosecute those who are responsible for serious violations, what chance do we have when we confront the likes of President Jammeh of the Gambia? But what of our own Government?
Mr Nigel Dodds (Belfast North) (DUP)
I congratulate the right hon. Gentleman on securing this important debate. Before he moves on and talks about our own Government, I want to put on record a tribute to Martin O’Hagan, the only journalist specifically targeted and assassinated during all the troubles in Northern Ireland. He was murdered in September 2001 and sadly no one has ever been convicted of his murder. It is important that everything possible is done to bring to justice the people who carry out attacks on journalists here, and I wish the right hon. Gentleman well in his endeavours to raise this issue.
Mr Foster
I am very grateful to the right hon. Gentleman for highlighting that case. He is absolutely right to say that our own Government must go out of their way to ensure that all cases of our own journalists being killed, whether at home or abroad, are thoroughly investigated. In some respects, however, I do not believe that our own Government have a perfectly clean record on this issue.
Portuguese Timor, as East Timor was then called, became the focus of Indonesian destabilisation in 1974. A civil war from August 1975 to September 1975 killed more than 1,000 people, and instability and unrest continued afterwards. Into that situation flew two British citizens, Brian Peters and Malcolm Rennie, who were working for the late Kerry Packer’s Channel Nine network in Australia. They headed for the East Timorese border town of Balibo, where on 13 October 1975 they met three other journalists who were working for the rival Channel Seven network in Australia. Three days later, all five were dead. Their deaths form the basis of an excellent new film, simply called “Balibo”. As I said in a previous Westminster Hall debate:
“When Britons die abroad, we anticipate our Government doing all they can to help the relatives. We expect the Government to seek as much information as possible and to share it with the relatives. Sadly, in this case, the opposite happened. From 1975 until 1995, there was almost complete inaction. The Government were involved in a disgraceful cover-up.”—[Official Report, 1 February 2006; Vol. 442, c. 97WH.]
Our Government knew about the planned invasion and our ambassador, Mr Ford, advised the Indonesians to keep it covert; consequently no warning was given to the journalists. After their killings, Mr Ford suggested that
“we should ourselves avoid representations to the Indonesians about them”,
to which the Foreign and Commonwealth Office replied, “We agree”.
Eventually it was left to a coroner in New South Wales in Australia to conduct an inquest into the death of Brian Peters, one of the two British journalists who had been killed. Her report in November 2007 said that all five journalists had been “deliberately killed” and she named those responsible. She said that Brian Peters had died
“from wounds sustained when he was shot and/or stabbed deliberately, and not in the heat of battle, by… Indonesian Special Forces”,
including Christoforus da Silva and Captain Yunus Yosfiah. She also said that Brian Peters was killed
“on the orders of Captain Yosfiah, to prevent him from revealing that Indonesian Special Forces had participated in the attack on Balibo.”
The Australian coroner concluded that an international conflict was under way at the time, so the killing of the journalists was a war crime. There are two named Indonesians, both still alive, who are credibly accused of war crimes against two British citizens, but still, five years after the inquest and 37 years after the murders, all our Government are doing is waiting to see whether the Australian federal police will instigate war crimes proceedings. In my view, that is not an adequate response. Our Government should be taking their own action.
If individual Governments are failing, what about the various regional bodies? Sadly, those who look to those bodies for help are often disappointed because they are apparently spineless. Journalists under fire in Asia, the middle east and Africa expect little, if any, support from the Association of South East Asian Nations, the Arab League or the African Union. The African Union, for example, has its headquarters in Ethiopia, which is a known abuser of press freedom, and its human rights body is in, of all places, Gambia, which is a known jailer of journalists.
If more action is to be taken, we have to look to wider international bodies. UNESCO is the sole UN specialist agency with a mandate to defend and promote freedom of expression and its corollary, press freedom, as well as to combat impunity. It has various tools and instruments at its disposal, including international humanitarian laws, universal human rights laws, covenants, declarations and resolutions. They range from UNESCO’s resolution 29, which condemns violence against journalists and obliges states to prevent, investigate and punish crimes against journalists, to the establishment of the Guillermo Cano world press freedom prize, as well as the annual world press freedom day, which is on May 3 each year. All those instruments make it clear that journalists, including embedded journalists, are civilians and must be protected as such. In addition, the Geneva conventions define the murder or ill-treatment of journalists in times of war or major civil unrest as a war crime. Journalists have the same rights as civilians in armed conflicts, whether those conflicts are between nations or situations of widespread civil conflict.
Those instruments are meant to compel Governments to abide by international laws and standards, but the sad reality today is that not many journalists can rely on international institutions to defend their rights when they disappear, are jailed or are murdered. A few years ago, journalists were full of hope when the UN Security Council adopted resolution 1738, which reasserted that journalists and media professionals engaged in areas of armed conflict
“shall be respected and protected”.
Unfortunately, that hope is getting thinner by the day, as UN bureaucracies are often reluctant to confront certain Governments.
Some countries do not even provide information they are requested to give voluntarily. Since 2008, the council of the international programme for the development of communication has encouraged member states to submit information, on a voluntary basis, about actions they have taken to prevent impunity and about the status of investigations conducted into each of the killings of journalists condemned by UNESCO. Such reports are intended to be included in a public report submitted by the IPDC to UNESCO. The 2010 IPDC report, which dealt with crimes committed in 2006 and 2007, showed that only 18 of the relevant 29 countries provided detailed information on judicial follow-up into cases of the killing of journalists in their country. The 2012 IPDC report, which dealt with crimes committed in 2008 and 2009, showed an even worse response rate, with just nine of the relevant 27 countries submitting responses.
Tomorrow, at the IPDC meeting being held at UNESCO, the latest IPDC report will be discussed, as well as a final draft of the “UN Plan of Action on the Safety of Journalists and the Issue of Impunity”. That plan is based on a consultation involving all relevant UN agencies, following, I am pleased to say, an initiative led by the UK at a previous IPDC meeting. The aim of the plan is to work
“toward the creation of a free and safe environment for journalists and media workers in both conflict and non-conflict situations, with a view to strengthening peace, democracy and development worldwide.”
The plan includes strengthening UN mechanisms; doing much more to shine the spotlight on countries that appear to be dragging their feet in the protection of journalists; raising awareness; assisting member states to develop their own legislation and mechanisms for protecting journalists; improving collaboration with relevant agencies; and developing further safety initiatives, which might include the creation of so-called media corridors in conflict zones. I am pleased that it was a UK-inspired initiative that led to the development of the plan.
I welcome the statement given in response to a parliamentary question on 22 February 2012, by the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Taunton Deane (Mr Browne), that the Government “fully supports” UN initiatives to improve the safety of journalists, but I believe that our Government can go further. For example, ours is one of the few developed countries that does not contribute financially to the IPDC’s work. We are a member of its council, but we do not contribute to it. We should do so, especially as much of its funding is used to train journalists in how best to protect themselves from physical attack. We should also consider how we can help other organisations that do similar work. I look forward to the Minister’s response to that. Perhaps he will also explain why our Government does not contribute to world press freedom day.
Our Government can go further in what they press UNESCO to do. Currently, member states are only “encouraged” to supply information on work to combat impunity and on investigations into the deaths of journalists. We should surely press for such reports to be more detailed and mandatory. Reports should also be published sooner and in full—the report on killings in 2010-11 is not due for publication until 2014. The IPDC should be encouraged to speed up the process. Such actions, together with the widest publication of reports—or of failure to report—will help to put teeth into UN Security Council resolution 1738.
Furthermore, we must press UNESCO to make it absolutely clear that the promotion of safety and the ending of impunity have to apply in non-conflict areas as well as in war zones. “Conflict” should be viewed in its broadest interpretation. States where there is impunity should have to face a persistent international publicity campaign, not once a year but every time they acquiesce in, sanction, or turn a blind eye to the murder of a journalist. They should be made responsible for their negligence and, in many cases, their complicity. Again, I look forward to the Minister’s response to that point. We need to be seen to take these matters seriously, so will the Minister consider one other suggestion: that annually the UK voluntarily releases and distributes full details of its representations and actions relating to the rights and lives of threatened journalists?
Today hundreds of journalists are in jail, and scores are killed each year. Journalists working in dangerous conditions feel isolated and abandoned by the very international institutions created to protect their rights. I want our Government to speak out forcefully for press freedom and push back against member states that seek to block international institutions from fulfilling their mandate and enforcing international laws.
Helen Goodman (Bishop Auckland) (Lab)
It is a pleasure to see you in the Chair, Mrs Main. I congratulate the right hon. Member for Bath (Mr Foster) on securing a debate on an issue that is not only important but becoming increasingly so because the problem seems to be intensifying.
When I found out about the debate I was, by coincidence, reading a collection of essays by Vaclav Havel, one of the 20th century’s greatest dissidents and human rights champions. He said:
“Today, in the era of mass media, it is often true that if a deed lacks adequate coverage, particularly on television, it might just as well have remained undone.”
That, of course, is what repressive autocratic regimes rely on, and it is why we need good journalists. We are grateful to them for going beyond the call of duty and normal professional competence to run risks that most of us certainly would not. On that, Havel said:
“Humanity’s thanks belong to all those courageous reporters who voluntarily risk their lives wherever something evil is happening, in order to arouse the conscience of the world.”
I am sure that we can all think of legion examples over our adult lifetimes, and perhaps even from our childhoods, of seeing things on the television that have made us realise how small the world is and how important it is to take action.
I had some conversations with a war correspondent for one of the major British newspapers, and I want to report what he said:
“Despite the recent deaths and injuries to journalists in Syria it is essential that there is independent reporting from there. Otherwise all we are getting are the views of the regime and the opposition.”
That attitude is admirable, because a small number of people run risks for the benefit of a large number. The correspondent also said that
“it is proving to be very difficult to work inside Syria. The sheer ferocity of the regime attacks means that you are vulnerable and unlike Libya for example, where the rebels held half the country, there is nowhere to run to. Another difference between these two conflicts is that the journalists captured by the Gaddafi regime were all eventually freed”.
It does not look as though that is the case in Syria.
This debate raises issues about the role and responsibilities of media organisations and about Governments. British media organisations are obviously careful about where they send their staff, but journalists are concerned about how freelancers are treated—not that they are treated as somehow expendable, but that less responsibility is felt towards them. That is clearly not right when media organisations and the rest of us take freelancers’ stories and pictures. Freelancers are obviously on temporary contracts and are often cash-strapped, and few of them have hostile environment training or are insured. They are under not exactly more pressure but more temptation to run risks that others might not, and I have been told that that might be especially so with tabloids and news organisations that do not maintain international offices in different parts of the globe. Media organisations have responsibilities, and they need to consider how they treat everyone whom they pay to get news for their outlets.
Another thing that came from the remarks made by the right hon. Member for Bath is that the high and growing number of deaths is mainly made up of people working in their own countries. Last year, 106 people died reporting overseas, but people who are reporting in conflict situations or under violent and autocratic regimes are not just caught in the crossfire, but targeted and attacked for what they are writing and filming, by their regimes, terrorist organisations and criminal gangs. We need to consider that issue carefully.
The IFJ research also revealed that the great majority of deaths have occurred in peacetime, which tells us that journalists die not only in war situations but when reporting from countries that do not respect human rights and where the press is not free, as it is in this country. That is a major part of the risks that they face.
The right hon. Member for Bath spoke about the problem of impunity—a serious problem in Russia. The whole world knows of the murder of Anna Politkovskaya in 2006, but it is probably not as well known that the Russian Union of Journalists has found that between 1993 and 2009, 300 journalists died or disappeared. The National Union of Journalists is running a campaign focusing in particular on the situation faced by women journalists. When women journalists are in risky situations, they are threatened not just with violence but with sexual abuse and attack, and particular care must be taken. The NUJ believes that women are put into even riskier situations, which is extraordinary.
The international status of journalists under the Geneva convention is extremely important, as is the role of the United Nations and UNESCO’s potential to protect journalists in countries where they are being threatened and to ensure that their rights are enforced. I do not want to delay hon. Members for long, but I hope that the Minister will be able to tell us what he is doing to ensure that international forums use all available levers to increase the safety of journalists.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
I join others in thanking my right hon. Friend the Member for Bath (Mr Foster) for securing this debate and in paying tribute to journalists around the world for the work that they do to bring important subjects to our attention. One category that might have been overlooked is that of journalists embedded with military units in active conflict zones. Although they experience the greatest protection that the Army or Ministry of Defence can offer, they still willingly and in some cases cheerfully put themselves in considerable danger to bring us the full reality of the circumstances in which our armed forces operate. We should recognise that as frequently as we can.
I will touch on two subjects that are slightly distinct from the theme on which my right hon. Friend based his speech. The first is the impact of the danger that journalists face daily on their families at home. Secondly—to do something unusual that I hope the Minister will approve of—I want to offer a tribute to the Foreign and Commonwealth Office for how it has handled an incident that is close to my heart.
On 22 February, Gareth Montgomery-Johnson—a constituent of mine from a small village called Llansteffan in Carmarthenshire—and his colleague Nicholas Davies-Jones from nearby Llanelli were arrested by the Misrata brigade of the Libyan militia. They were working for Iranian television at the time, and they were held on allegations of spying. As soon as it occurred, the family made contact with me, as the Member of Parliament for one of the journalists involved, and with the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who represents another member of the family. The families, as one would expect, were expressing considerable fear and uncertainty about the prospects and fate of their sons, when several things happened simultaneously. The Foreign Office, spurred into life, made immediate contact with the families and the Members of Parliament contacted on their behalf. Officials in Libya also made instant contact with the two journalists, thus ensuring that they were held in as reasonable conditions as could be expected in the circumstances and that they had food, water, any necessary medical provisions and access, if at all possible, to a telephone to make even the briefest of calls back home. I particularly want to mention Mar Menendez at the Foreign Office in London for co-ordinating that process and ensuring, whatever the time of day or night, that we MPs and the family members knew what was going on as far as that was possible in those unclear circumstances.
Finally, the Minister with responsibility for the middle east and north Africa, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), sent me an unsolicited text at 10 o’clock on a Sunday night simply to alert me that the two journalists had been transferred from the militia to the Libyan authorities, that any charges or potential charges of spying were being dropped and that they would return to the UK as soon as possible—a process that has now been successfully completed.
I use this opportunity to put that on the record, forgetting any party or political differences, to pay tribute to those involved for reminding us that when the chips were down—as they certainly were over the days and weeks that my constituent was being held against his will—the system worked well. Having spoken to Gareth Montgomery-Johnson’s mother and father, I know that they too are particularly grateful for the help, support and guidance that they got from the Home Office. I thought it would be remiss of me not to record that formally.
John McDonnell (Hayes and Harlington) (Lab)
I congratulate the right hon. Member for Bath (Mr Foster) on securing the debate and on his excellent opening speech, which set the discussion in context. I am secretary of the all-party parliamentary group for the National Union of Journalists, of which he is also a member. We have been addressing the subject for numerous years and have had a series of ministerial meetings, including with the Secretary of State for Defence some years ago about embedded journalists and what mechanisms could be put in place. I concur with the statement about the Foreign and Commonwealth Office. When individuals have been detained or gone missing—a number of journalists have disappeared—the FCO has been nothing but superb in the support that it has given to families and the representations that it has made.
We thought that our representations years ago were an opportunity for us to tackle the issue of impunity. Various international instruments were in place, and we thought that the number of journalists dying and disappearing would decline, but that has not occurred. It is shocking. I went through last year’s list. I will not read the names into the record, as it would take too long. Most names are probably not even notable; often, they were simply journalists working on the ground at local level. The list ranges around the world and includes support workers as well as journalists and TV production crew.
I will read out the figures for the past five years. I cannot remember when we last debated the issue, but we certainly debated it in 2006. In 2006, we were angry and concerned because 155 journalists and staff were killed. Then, in 2007, the number rose to 172. It was 85 in 2008, 139 in 2009, 94 in 2010 and 106 in 2011. The right hon. Gentleman is correct: the number has grown to 120-odd in the updated figures and, therefore, things are not improving. Records prepared by the NUJ, working with the International Federation of Journalists, confirm that more than 1,000 journalists and support staff have been killed over the past 10 years. Only one in eight of the killers is ever prosecuted, and two thirds are not even identified.
As the right hon. Gentleman said, we can identify individual regimes. The Gambian regime under Jammeh has been a nightmare, and we have raised the issue time and again. Jammeh will brook no opposition or democratic debate, and any journalist who reports on corruption in the regime is risking their life. Many journalists have left the country, and this country has given many of them refugee status.
Given that we are taking on such regimes, it is embarrassing that we have not been able to secure a proper inquiry into the deaths in Iraq of Terry Lloyd and the person working alongside him. When democratic countries do not pull their weight, it is difficult to enforce proper practices in other countries.
I share the concerns my hon. Friend the Member for Bishop Auckland (Helen Goodman) raised about women. On international women’s day, the NUJ, via the IFJ, once again raised the issue of the extreme violence against women. The IFJ and NUJ have consistently tried to expose and denounce individual cases. As Mindy Ryan, the chair of the NUJ’s equality council and the IFJ’s gender council, said:
“The climate of impunity for crimes against female journalists constitutes a serious threat to the most fundamental of free expression rights. Moreover, there is an on-going concern over the fact that the authorities tend to deny that these women have been killed because of their work as journalists. Instead, they tend to indicate robbery or ‘personal issues’ as motives of the media killings.”
Unless we can demonstrate that women are being raped, abused and murdered as a result of their professional work, what happens to them suddenly becomes just an ordinary crime, and countries and regimes can act with impunity. One of the worst examples involved the journalists who were exposing the sexual abuse and assaults taking place in the Democratic Republic of the Congo, where more than 8,000 cases of sexual violence were perpetrated in a single year. Women journalists, in particular, came under attack and faced threats as a result of the work they did to expose those things.
As the right hon. Member for Bath said in opening the debate, everything comes back to the question whether we can get UNESCO and other international organisations to ensure that there are reports on investigations into crimes against journalists. The investigations that do take place are extremely limited, and the reports on them are often not published. Indeed, even if they are, there is no follow-through against the regime or the country involved—we do not seem able even to expose them effectively.
The Government could take a lead on the issue. That is not a party political point, and Members across parties have urged such action in debates in the past. The UK Government need to be the Government who are seen to stand up for journalists around the world. Where they are a member of an international body that has a role in protecting journalists against such crimes, they should not allow it to meet without our raising these issues and ensuring that we gear up for action.
In addition, we need to put the issue on the agenda in some of our bilateral relationships. For example, the next time the Government meet Putin, we have to put this issue back on the agenda. Russia has been one of the worst places for journalists, who are hounded simply for revealing some of the corruption in that country. We cannot try to develop harmonious relationships with countries while turning a blind eye to the atrocities that are perpetrated against journalists just because they are doing their job.
We need to think in more detail about the mechanisms that can be used not only to expose countries, but to ensure that action is taken against them. We should seek to isolate those countries and regimes that are notorious for assaulting and murdering journalists simply for undertaking their jobs.
The right hon. Gentleman mentioned the Philippines, which is a stark example of what we are talking about. We virtually know who the killers are. We know how journalists have been murdered and what butchery has taken place, but no action is taken. When defendants are brought to court, they are not the real defendants, and the people who motivated or employed the killers are never prosecuted. We should expose such rogue regimes for their attacks on journalists, and the international family should isolate them.
Somalia has also been mentioned, and I pay tribute to the Foreign Office for the work it has done to ensure that we secure the best protection we can for journalists. One issue there, however, is that the secretary of the National Union of Somali Journalists was murdered. We are playing an increasing role in providing assistance to Somalia, and we are developing the country and investing in it to ensure that we bring peace and security to the Somali people. Whatever governmental systems are established, however, we need to embed in Somali culture the critical role that journalists play both in developing democracy and as one of its foundations. We need to embed in the Somali culture and system of government a respect for journalists, as well as protections for freedom of speech, freedom of journalism and democratic expression.
I want our Government to stand up on this issue. There is not a lack of political will, but we need to tell the rest of the world, “If no one else will, we are going be the country that protects journalists and puts this issue on the agenda whenever we can. We are going to be the country that makes sure that international bodies perform the roles set out in their statutes.” There are various protections for journalists in statute; the Geneva convention has been mentioned, and we have various UNESCO and UN directives. All the law is there, but it needs implementing. Our role is to shame international organisations into working alongside us to ensure that such statutes are implemented.
In addition, we must call out those regimes that murder and butcher journalists simply for reporting the truth. In that way, we can stand as a beacon of light on the issue and help to reduce the catalogue of death and murder that has gone on year after year. We were here five years ago, and I do not want to be here in another five years, after another 500 journalists have been killed. I do not want to see any more Marie Colvins, and I do not want to see any more disappearances.
Kerry McCarthy (Bristol East) (Lab)
I join other Members in congratulating the right hon. Member for Bath (Mr Foster) on securing the debate and on highlighting some serious examples of the danger that journalists continue to face while working overseas.
We are all familiar with high-profile cases such as the recent tragic death in Syria of Marie Colvin, an internationally renowned foreign correspondent who was rightly feted for her bravery and for her determination to carry on and get the story, even though she faced great personal danger. However, as my hon. Friend the Member for Bishop Auckland (Helen Goodman) said, we do not hear as much about the local journalists who are investigating corruption or reporting on conflicts, and who also run a serious risk of persecution, injury or death, but who do not have the benefit of a Government overseas who can raise concerns and provide consular support.
Reporters Without Borders has said that local journalists pay the highest price every year to guarantee our right to be informed about wars, corruption and the destruction of the environment. Let me cite one example. I have recently returned from a visit as part of a delegation to Colombia. We looked at the human rights situation there and met a great number of human rights activists, journalists and campaigners for press freedom and civil freedoms. The Minister has also just returned from Colombia, although I gather that his trip was mainly to discuss trade issues. However, he will, of course, be very much aware of the human rights situation and the risk to journalists, and perhaps he will tell us whether he had an opportunity to discuss those issues.
The right hon. Member for Bath talked about impunity, and the crux of the matter is that if we do not ensure that those who are guilty of crimes against journalists are brought to justice, whatever those crimes are, there will be no deterrent to those who want to threaten or terrorise them, or otherwise to prevent the development of a free press, or stop journalists working. A free press is one of the most essential elements of a democracy, and one of the most important tools for promoting it, and opposing oppression. It must be protected, which includes bringing people to justice.
These days, the issue is not just press and broadcast journalism, which we might describe as mainstream journalism. The Arab spring, in particular, has highlighted the role of so-called citizen journalists. People now blog, tweet and post pictures taken on their camera phones, or video footage that they have taken in the middle of unrest. Sometimes that is the only voice that we hear about what is really going on. Those people give a voice to protesters and ordinary citizens who would otherwise be voiceless. It is far more difficult to bring those people, who are sometimes known as netizens, or citizen journalists, under the formal umbrellas of protection. They will not be trade union members or work for companies that can protect them and push their case. However, there is not, these days, a clear dividing line between one form of journalism and another.
Even in this country, we have bloggers who are now regarded as mainstream journalists. They can be seen on “Newsnight”, but the bulk of their work is blogging from the street. In some countries where the mainstream media are banned, or subject to serious repression, the voices of those citizen journalists are the only ones that we hear. I would be interested to know what efforts have been made to bring those informal journalists under the umbrella of protection. There is little mention of that in the UNESCO draft action plan.
My hon. Friend the Member for Hayes and Harlington (John McDonnell) talked about the need to build a strong press in the countries concerned. The stronger the press, the safer and better protected the journalists are, because other people working in the field will be able to highlight abuses. I have been involved with some work being done on that front by the Westminster Foundation for Democracy. Quite often in meetings with members of delegations from abroad, or at overseas conferences, it is possible to talk to politicians about their work as politicians, but rarely is there an opportunity to talk to journalists. The politicians often do not have the support of a free, robust and well equipped and resourced press. That makes it difficult for them to do their work of democratic scrutiny. There is considerable scope for the UK Government, whether through the foundation or otherwise, to do more to promote strong and independent media in such countries.
Today’s debate is timely, as UNESCO is presenting its draft action plan this week. UNESCO notes that there has been little improvement in the safety of journalists in the past few years. Figures for casualties tend to vary quite dramatically from year to year, depending on circumstances, so there was a fall in the number of deaths in 2007 and 2008, because the situation in Iraq improved, but there was a significant rise in 2009 because of the one-off horrific incident of the deaths of 30 journalists in the Philippines on 23 November. There are some differences between the figures cited by the UN, those reported by Reporters Without Borders and those of the International Federation of Journalists, but all the sets of figures make it clear that across the globe journalists are still coming under attack and being censored, kidnapped, threatened, arrested, jailed, forced to flee or even killed.
The draft action plan emphasises the need to extend UNESCO’s work, such as in assisting countries to develop laws and mechanisms that support, rather than suppress, freedom of expression and information, and to implement the rules and principles set out in UNESCO’s 1997 general conference resolution on violence against journalists. The Minister may well say that that the draft action plan stems from a meeting that was called following a UK initiative last year, and I would be interested to know more about the role that the UK played in drawing up the draft plan, and what role it envisages in taking it forward. When will the five aims of the plan be implemented and what resources will be devoted to that?
Recently, the Government have taken considerable interest in Somalia, with the conference in London, which I welcomed. I have met journalists from Somaliland, and even there, where it is relatively peaceful, there have been problems with the jailing of journalists. Are there countries where the Minister feels the UK could play a particular role—perhaps on a pilot scheme or project basis—and do imaginative and innovative things to support the development of a free press, as well as protect those who promote it?
The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)
Thank you, Mrs Main, for giving me the opportunity to conclude this fairly brief but important debate. I pay tribute to my right hon. Friend the Member for Bath (Mr Foster), who has a long record in his 20 years in the House of championing the safety of journalists. It is to his credit and to the benefit of the House that we have the opportunity to discuss it this afternoon. I thank other hon. Members who have taken the opportunity to take part in the deliberations. Of course, the main business of the House today has been the Budget statement in the main Chamber, but there are many other important things happening in the world and the one that we are debating warrants our attention.
I pay tribute to the hon. Member for Bishop Auckland (Helen Goodman) for her speech and for highlighting the threat faced by women journalists, which may sometimes be greater than that faced by males. I am grateful to my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) for his praise both for the Foreign Office—such praise does not always flow as freely during debates as we might wish—and for the Under-Secretary, my hon. Friend the Member for North East Bedfordshire (Alistair Burt). I shall pass the expression of gratitude on to him.
I am also grateful to the hon. Member for Hayes and Harlington (John McDonnell) for his speech today, and for the consistent and manifestly sincere interest he takes in the subject, and to the Labour spokesperson, the hon. Member for Bristol East (Kerry McCarthy), for her contribution. To answer her question, I was in Colombia on Wednesday and Thursday last week, and although there were considerable discussions about trade and commercial opportunities and about political and diplomatic relations between Colombia and Britain, there was also a focus in my programme on human rights issues in the broadest sense, including threats to journalists and trade unionists, and the action that the Colombian Government and others were taking to deal with those threats. It was a broad-ranging visit, which concentrated very much on that issue.
I should say at the outset that the Government are deeply concerned about the safety of journalists; we strongly condemn their harassment and intimidation, and of course the assassinations that take place in some awful cases. I am full of admiration, as are others who have spoken in the debate, for those who bring us news from around the world, many of whom take enormous risks and who occasionally pay a great price to provide that service. I think we are all sometimes inclined to take it for granted that we can switch on the television or radio or read a newspaper and feel that we have been transported to an area of great hazard and danger and given an instant understanding of the political situation and threat to life there. Sometimes it is easy to forget that the person who brings that news and information to us is in that environment, as are the cameraman and other support staff. At great risk to themselves they inform us, and without their doing so we would not be informed.
The efforts of such people enable voices that would otherwise go unheard and events that would otherwise go unseen to reach audiences not just in the United Kingdom, but around the world. Although there are distinguished journalists of all nationalities, British journalists and news organisations play a leading role in informing not just British audiences but global ones about global events. The deaths of Marie Colvin, Remi Ochlik and Rami al-Sayyed while reporting with great bravery from Homs are a terrible reminder of the risks that journalists take to report the truth. Every Member who has contributed to this debate has rightly dwelt on their deaths and paid tribute to their work.
This Government attach great importance to freedom of the media, which with the freedom to express one’s views is fundamental to a strong democracy. A free press allows space for challenge and innovation, supports transparency and deters corruption. It exposes human rights violations and ensures that people can exchange ideas. All citizens must be allowed to discuss and debate issues, challenge their Governments and make informed decisions.
Sadly, according to studies by both Freedom House and the Economist Intelligence Unit, we are witnessing a decline in media freedoms around the world. That is affecting both print media, which in an increasing number of countries are coming under state control or heavy state influence, and the internet, where there has been an increase in blocking and censorship. Many Governments do not wish to be accountable to their people and want to remove all checks on their power.
As my right hon. Friend the Member for Bath has set out comprehensively, that means that in many parts of the world the work of journalists, bloggers and others is obstructed. They are harassed, monitored, detained and, on occasion, subjected to violence. Some have paid the highest price—we have discussed some such cases today. According to the latest figures from Reporters Without Borders, 11 journalists have been killed so far this year in connection with their work. In 2011, 66 journalists were killed and 71 were kidnapped, while 199 bloggers and netizens were arrested and 62 physically attacked. Although such occurrences may not be the norm, they are not quite the exception either. For many years—the hon. Member for Hayes and Harlington referred to this—journalists have faced problems that, while they may or may not be isolated incidents, add up to a consistent pattern of threats to them.
It is vital that the international community continues to speak out in support of press freedom and the protection of journalists. The UK is supportive of the work of UNESCO and looks forward to a positive outcome from its meeting in Paris on the safety of journalists. We fully support the aim to strengthen the mandate and working methods of UNESCO and other United Nations bodies to tackle violence against journalists and the high levels of impunity. We welcome initiatives that encourage UN agencies and special rapporteurs to work closer together and, as my right hon. Friend the Member for Bath has proposed, we are already pressing UNESCO to be more transparent and speed up the publication of its information on the killing of journalists. We also support the proposals to raise greater awareness of the issue and to encourage states to fulfil their commitments on media freedoms. We believe that concerted, co-ordinated action is vital. Later, I will talk about countries that are of particular concern to us—another issue raised by the hon. Member for Hayes and Harlington—but severe abuses take place in many countries.
My right hon. Friend the Member for Bath is right to say that the UK is not currently funding the work of the international programme for the development of communication. I do not wish to sound like I am passing the ball within Government, but that decision was taken by the Department for International Development, although the Government may revisit it in due course. I assure my right hon. Friend that we are providing, and will continue to provide, assistance to journalists working in difficult environments. We are doing so via support for specific projects, such as an ongoing one in Mexico with Article 19 as part of our human rights and democracy programme fund, and other mechanisms, such as the Lifeline fund for embattled non-governmental organisations, which provides emergency assistance to journalists working in support of human rights.
In times of armed conflict, states bear the primary responsibility to respect, protect and meet the needs of civilians. We encourage all states to respect the Geneva conventions affirming that journalists are civilians under international humanitarian law. We fully support UN Security Council resolution 1738, passed in 2006, which makes it clear that deliberate attacks on journalists, media professionals and associated personnel who are reporting on armed conflicts and are not directly participating in hostilities are unacceptable.
At the 31st international conference of the Red Cross and Red Crescent in Geneva in December 2011, we made three further pledges on the protection of journalists, namely: integrating specific components on the protection of journalists into the training of our armed forces; providing journalists embedded with our armed forces with security training; and ensuring that national criminal law makes it possible to prosecute those who commit serious violations against journalists. We will report back on our progress to the 32nd international conference in 2015.
As highlighted by the Foreign and Commonwealth Office’s annual human rights reports, our missions around the world continue to raise freedom of expression issues in countries of concern. That will be reflected in the latest human rights report, to be published in a few weeks’ time. We consistently raise individual cases of attacks against journalists and call for prompt and full investigations into them. We stated publicly our concerns about the treatment of foreign journalists in China when, in February 2011, several were physically intimidated or detained without explanation. In Azerbaijan, support from the UK and others resulted in the release and pardon of blogger Mr Fatullayev on 26 May. In July 2011, we condemned attacks in Belarus, where more than a dozen journalists were detained, beaten and their equipment broken during peaceful protests.
We also frequently raise our significant concerns about the fate of journalists in Iran. A 2011 report by the Committee to Protect Journalists showed that, once again, Iran has more journalists in jail than any other country in the world. The arrest of six journalists in September and October who were accused of working for the BBC and of espionage was particularly troubling. All have now been released, but too many others remain in prison.
My right hon. Friend talked about events in East Timor and Syria. I share the concerns about the two British journalists, Brian Peters and Malcolm Rennie, and the other journalists killed in East Timor in 1975. The UK Government firmly believe that those responsible for their deaths should be held to account. Following publication of the Australian coroner’s report, the authorities there took the decision to review the evidence and consider the conclusions of previous investigations into the case. For legal and investigative reasons, they are unable to provide specific details of their work, which is ongoing. I fully appreciate the frustrations with the pace of progress, but the FCO continues to act as an intermediary between the British families involved and the Australian authorities, and will do so for as long as necessary.
Mr Foster
I know that the Minister has to read what his brief says, but will he tell us whether he seriously believes it is acceptable for five years to elapse since the conclusion of the coroner’s work before the Government decide whether they are going to bring about a war crimes proceeding on behalf of two of their citizens who were murdered in East Timor by the Indonesians?
Mr Browne
I appreciate the passion with which my right hon. Friend brings us again to that case. Let me undertake to go away and look at the matter in greater detail, because I have not only responsibility for human rights policy in the generality, but geographic responsibility for that part of the world. I give a personal undertaking to him that I will consider what more can be done to assist the families of the journalists concerned. There are practical constraints on the British Government, often bigger than the public or even sometimes Members of Parliament fully appreciate, and obviously we are not operating within our own jurisdiction. Nevertheless, we will do what we can. I will let my right hon. Friend know what more, if anything, we can do in that case.
The other country I wanted to mention before I concluded is Syria, where terrible atrocities continue to be committed. The UK sees it as vital that evidence of those atrocities is systematically gathered, documented and securely stored. What form of accountability or justice processes should take will be for the Syrian people to decide. That will be an essential means of reconciling communities in Syria following the trauma that is being inflicted on them both by the regime and, in some cases, by those on the ground who oppose the regime. We want to make sure that comprehensive justice is done in Syria, which requires that information is gathered according to an international evidential standard suitable for local and international courts.
Let me make our central purpose clear: all those who commit human rights violations or abuses in Syria should and must be held accountable for their actions. We commend the work being done by local organisations, the UN independent commission of inquiry on Syria, Amnesty International and others to document what is happening in Syria. The UK is also directly helping to document those atrocities. After despatching a scoping mission to the region in February, the UK sent a further mission between 27 February and 12 March to gather evidence on human rights violations and abuses committed in Syria. The work undertaken by the mission is necessarily a snapshot, but it has had harrowing accounts of President Assad’s brutal efforts to hold on to power. No one who is responsible can act with impunity or believe that the world will not find out who they are. Justice has a long memory and a long reach. In this case, as in others, there will be a process of accountability.
Once again, I thank my right hon. Friend and others for giving me the opportunity not only to address topical issues of concern, such as the situation in Syria, but to talk about individual cases more generally and to address the wider concerns in the House about the safety in which journalists do—or, in some cases, do not—operate around the world.
I reiterate that the Government believe that journalists must be allowed to express themselves freely and safely within international standards. We strongly condemn their harassment, intimidation and assassination. The role of media professionals remains vital in providing citizens with reliable and accurate information. That role must be protected. The UK is one of the world’s greatest and longest standing democracies, and it transmits around the world our values of freedom of expression and of the importance of people being able to exercise free and informed choices. It is therefore right that we should continue to be at the forefront of setting the highest standards and of insisting that others should meet those standards to the benefit of people around the world.
Litigation Friends
(12 years, 1 month ago)
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John Hemming (Birmingham, Yardley) (LD)
I thank Mr Speaker for allowing this debate.
If somebody is in an accident and ends up in a coma, they need a litigation friend to instruct a solicitor to sue for damages. A litigation friend, or next friend, is very different from a Mackenzie friend. A litigation friend makes decisions for the person who does not have capacity. If somebody is not in a coma, there is a question of what threshold is required before appointing such a litigation friend or guardian. Thomas Hammarberg, the Council of Europe’s commissioner for human rights, recently stated:
“Persons with intellectual and psycho-social disabilities are today routinely placed under a guardianship regime in several European countries—they are deprived of their ‘legal capacity’. In the eyes of the law they are seen as non-persons and their decisions have no legal relevance. This policy violates agreed human rights standards.”
He refers to the UN convention on the rights of persons with disabilities of 2006.
In England and Wales, the situation is materially worse, primarily because secrecy of the judicial system has allowed widespread malpractice to develop, as revealed last week by Professor Jane Ireland’s report on psychological expert reports. A good example of that is Rachel Pullen’s case, which is currently grinding through the Strasbourg court. Her daughter was removed and adopted, although there were no hearings at which any of the evidence was challenged, because the psychologist appointed to assess her deemed her too stupid to instruct a solicitor. That was clearly not true, as was determined by a later psychological report. However, it was too late. The psychologist said she was incapable of instructing a solicitor. The Official Solicitor came in as her litigation friend and conceded the case against her on paper and there was no hearing. At her appeal, I made two important points for which the court criticised me.
My first point was that the system allows the local authority to veto the appointment of an expert, thus making the expert financially beholden to the local authority. Professor Ireland’s report revealed that the overwhelming majority of experts in the family courts made most, if not all, their income from writing expert reports. Parents only instruct an expert once, but the local authority does so continually. That creates a complacent environment in which experts frequently write the report the local authority would wish to see—well, those experts who drive Ferraris, Porsches and Formula 1 motor cars do anyway.
My second point referred to a letter from the Official Solicitor to Rosleys solicitors. I expressed the view that the letter was created at a later stage and inserted in the file. It was obvious from the letter that whoever did that did not have access to Rosleys office, as there was no received stamp on it, no headed paper was used for its purported sending out, its address format was unusual and the date of receipt and purported posting out was impossible. The court decided that my mentioning those facts was not providing evidence and was critical of my claim. I stand by my claim, and I believe that what I have just said is indeed evidence of forgery. Real problems remain with the appointment of litigation friends. The Rosleys letter was supposed to explain to someone that the Official Solicitor had been appointed as their litigation friend, which is why the letter was so important.
Given the secrecy of the system, people are not generally aware of how the process works. Lee Gilliland, for example, was evicted without notice because he had the Official Solicitor appointed to defend his probate case. The Official Solicitor did not warn him that he was due to be evicted. The Official Solicitor was appointed on the say-so of his general practitioner, Dr Hoyte, who said:
“He has grievances and fixed ideation about many official bodies.”
I find it odd that that is relevant to his having legal capacity. In my view, the fact that someone has a grievance about an official body does not warrant their being turned into a non-person and prevented from making decisions.
The big problem for anyone for whom the Official Solicitor has been appointed is finding any way to challenge such a decision. Most firms of solicitors simply refuse to act for someone without litigation capacity. The civil procedure rules do not really allow people to challenge the appointment of a litigation friend. CPR rule 21.9 states:
“(2) Where a protected party regains or acquires capacity to conduct the proceedings, the litigation friend’s appointment continues until it is ended by court order.”
The assumption is that litigation friends cannot be wrongly appointed. In Professor Ireland’s review of 126 court bundles, she found that two thirds of the reports were “poor” or “very poor”—84 cases where, if the judge relied upon the report, really the decision should be quashed. That raises questions.
England and Wales do not have the facility for a proper review of expert evidence. We do not have the Daubert process that is used in the USA. Any solicitor appointed to act on behalf of a protected party is in danger of being subject to a conflict of interest. Let me mention the case of Anthony Neil Barker, whose website is www.neebert.net. He has written me long, detailed e-mails about how he has regained his capacity, but cannot escape from the Court of Protection. I have some difficulty understanding how that can happen, but when it involves large sums of money, it is not surprising. It is in the solicitor’s interest to keep him as a non-person, as the solicitor can then charge him for things.
Mrs Anne Main (in the Chair)
Order. Is the hon. Gentleman talking about a case that is no longer active in the UK courts?
John Hemming
In this case, there may be activity, but I am referring to things that have happened in the past. I discussed the matter previously with the Clerk, and I am being careful not to refer to any decisions that are coming before the court.
John Hemming
Noreen Akhtar is a constituent of mine, whom I have been refused permission to meet. She is a secret prisoner. Experts have determined that she does not have the mental capacity to decide where she lives. I have seen the expert reports, and they look as unreliable as many of the other reports referred to.
Husan Pari has now left the country to get away from the system that made her a non-person. The psychologist who interviewed her through an interpreter said that she was a non-person. A psychologist who later interviewed her in her own language was clear that she did have mental capacity.
The Official Solicitor’s office is an unaccountable place. He has told me that he is not accountable to Parliament on the basis of individual cases. Furthermore, he is not subject to the Freedom of Information Act, or at least not within this area, but he is subject to it in other areas of his activity. Instead, the Official Solicitor is accountable to individual secret court hearings. That really is not good enough. There must be some accountability beyond a few people in suits who have a common interest in concealing malpractice. Hon. Members need to read Professor Ireland’s report to find out about that.
An interesting additional function of the Official Solicitor is to deal with people imprisoned for contempt of court. Deborah Paul is currently serving a one-year sentence in Holloway prison for contempt of court, as part of a private family law case that has turned public. The civil procedure rules strictly forbid people being imprisoned in secret. However, it was revealed in Hammerton v. Hammerton that people are imprisoned with reporting restrictions. I wonder who is protecting Deborah Paul’s rights. When I wrote to the Official Solicitor about his duty to protect the interests of contemnors, he gave me no confidence that he was doing anything. The recent striking off of Dr Ruth Coppard and the attempt by Dr George Hibbert to remove himself from the General Medical Council practising register should really ring alarm bells.
Our family legal system is founded on expert opinion. However, these foundations appear to be more like quicksand. The secrecy in family court hearings has allowed a culture of complacency to develop. Although procedures such as a modified Daubert procedure would enable improvements, secrecy creates a culture that tolerates malpractice. Secrecy in family court hearings has led to broader unaccountability in the appointment of litigation friends and their management of decision making.
I was quite surprised when Professor Ireland’s excellent report on the quality of psychological expert opinion was produced, not because I did not know that this was happening, but because the report was part-funded by the Family Justice Council. However, I was not surprised that, although the report was ready for release in September 2011, it was released six months later. There are people who would like to sweep the contents of the report under the carpet.
I will not quote a lot from the report. Anyone who is really interested in justice in our secret courts should simply read it.
Professor Ireland and Professor John Beaumont, who is from the same university, have produced proposals for a modified Daubert procedure, but that is only a partial solution. Secret courts are unreliable courts. What is needed is less secrecy. Anonymous reports by parties to proceedings should not be subject to any constraints. There must be a facility, potentially via the Information Commissioner, to produce fully public reports.
Justice is important, and it is clear that the system is very unreliable. It is also clear that Parliament needs to resuscitate its powers of investigating individual cases. It is too easy for authorities to refuse to provide information. In the Goder case, where a litigation friend was appointed and the daughter, Yvonne Goder, was imprisoned, probably in secret, there is an allegation that the money from three houses was stolen. Even taking the issue through to the legal ombudsman has not identified what happened to the money. Tracking payments is quite easy and accounts can be provided. However, if a case gets to the legal ombudsman without accounts, I am worried about whether the regulatory system is working properly.
The question always is, quis custodiet ipsos custodes? In this case, who is regulating the regulators? The answer has to be Parliament. Parliament needs to establish a small inquiries committee to find answers where none are forthcoming. Where litigation friends are appointed in secret hearings based upon expert evidence that is known to be systemically unreliable in three courts and about which there is no other systemic research, it is very difficult to find out what is happening in a very murky system. We know that large sums of money are being paid, but we are unsure what for and whether that is in the interests of those people for whom the money is held.
There is always a question about who is appointed as a litigation friend. The Official Solicitor is supposed to be a last resort, but seems to me to be the first choice in many instances. I tried to use judicial review through a limited company to find out what was happening with one secret prisoner—Matthew Hawkesworth—but got nowhere, and the court decided to punish me for the effrontery of challenging the system by awarding costs against me personally, as well as against the limited company. That is one reason why judicial review is an insufficient remedy for a quite significant, wide-ranging problem.
Some solutions to the problem therefore rest with Parliament, rather than with the Government, but they do need to review the situation. I have always spoken about how our judicial system is not compliant with the European Union standards as applied to Croatia, and I will not repeat that in my speech. The Government must take such things seriously.
I have rattled through my speech reasonably quickly. The Minister is well aware of my concerns, because I have been concerned about this matter for a long time. One great difficulty in respect of how our constitution operates is that we have developed an approach whereby Parliament is regarded primarily as a body holding the Executive to account, but the courts—the judicial estate of the constitution—are held to account also through public consideration of their decision making, which then influences Parliament. Parliament then makes decisions and guides what happens if any rules need to be changed, and they clearly need to be changed in a number of situations.
One of the reasons why I have ended up helping to get rid of the Official Solicitor, as people might put it, or to remove their litigation friend is that it is almost impossible to find a way of doing so. People who are often quite bright go around phoning up firms of solicitors and saying, “Oh, the Official Solicitor is acting for me,” and the firms reply, “Well, we can’t deal with you.” Even then, there is still the matter of legal aid.
I tend to get involved because people must be aware of my concerns about how the litigation friend system operates and come to me. I have talked to other hon. Members who have encountered difficult situations as well, but people often get excited about the being made into a non-person thing. I do not blame them for that, but they get quite angry, and when they present themselves to other hon. Members, they do so in quite an angry state, yet that is in part because the system is simply not responding to them. As described by Thomas Hammarberg, they are treated as non-persons and their decisions have no legal force.
I have spent some time studying the historical records of Parliament, which are interesting and available in the Library. What Parliament used to do more readily, because people came with casework or whatever, was to establish small committees of inquiry into issues that might have developed because they got stuck and could go no further. Parliament needs to have a willingness to establish a committee of inquiry just to find out the facts. The House of Commons may be a court, but, constitutionally, it would be wrong to revert to taking decisions that have legal force on individual cases. What about investigation, however, and that question of who is regulating the regulators? How do we manage the process when a regulatory system goes wrong? In a limited number of cases—we would not want to overwhelm ourselves with work—Parliament has the power to find out what is going on.
To take the case of the three houses, there is clear evidence of some sort of fraud, and finding out what fraud has occurred is critical. One difficulty, as in the recent Asian royal family case, is that sometimes the regulators or the police will steer clear of an issue. Interestingly, in that case, which relates to the funding of al-Qaeda, the Australian police are willing to investigate, whereas I am told that the UK police are not. I do not have that in writing, but I shall pursue it with the Government if I do so.
I leave the Minister a reasonable amount of time to respond. Some serious issues are going on and have been for some time. With Professor Ireland’s report and the recent regulatory action in respect of Dr Ruth Coppard and Dr George Hibbert, it is becoming more obvious that the problem is serious. I am interested in what the Government have to say.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I congratulate my hon. Friend the Member for Birmingham, Yardley (John Hemming) on securing this Adjournment debate today on a subject in which I know he has significant experience and interest. He mentioned a number of live cases, which he must appreciate I am restricted in discussing, but he also discussed a wide variety of interrelated and serious topics, which I shall do my best to address.
I acknowledge that the family courts and the Court of Protection deal with some of the most difficult questions affecting the lives of individuals and families, their rights and capacity to make decisions about their own future, as well as decisions about who is best able to take care of children and to provide them with a loving and caring home environment. The courts take such matters seriously, and rightly so. They are sensitive and personal matters and there is a difficult balance to be struck between respect for an individual’s privacy, in particular that of children and other vulnerable people, and promoting openness to support public confidence in the court system.
On litigation friends or guardianship, my hon. Friend has written to me on several occasions regarding the effectiveness of the Mental Capacity Act 2005—he has doubts about the effectiveness of the Act and how it is used. The Act is, however, widely supported by stakeholders for the empowerment it gives to individuals. He referred to an article by the Council of Europe Commissioner for Human Rights—I thank him for sending it to me before the debate—on persons with intellectual and psycho-social disabilities under guardianship being deprived of their legal capacity in several European countries. In the article, the commissioner calls on European Governments to review their legislation on legal capacity and urges recognition that supported decision-making alternatives should be developed for those who want assistance in making choices or communicating them to others.
As my hon. Friend is aware, the Mental Capacity Act provides a statutory framework to empower and protect people aged 16 and over who lack or might lack capacity to make certain decisions for themselves because of illness, a learning disability or mental health problems. Implemented in October 2007, the Act encompasses five main principles. First, there is a presumption of capacity—that all adults have the right to make their own decisions and must be assumed to have capacity to do so unless it is proved otherwise, and that capacity is presumed to be ongoing until there is evidence to the contrary. Secondly, it sets out the right of individuals to be supported to make their own decisions—that all reasonable help and support should be provided to help individuals to make their own decisions and, if necessary, to communicate those decisions, before it can be assumed that they have lost capacity. Thirdly, the Act provides that it should not be assumed that people lack capacity simply because their decisions might seem unwise or eccentric. Fourthly, if people lack capacity, anything done on their behalf must be done in their best interests, and the Act provides a checklist of factors that all decision makers must work though when deciding what is in the best interests of the incapacitated person. Finally, if people lack capacity, before a decision is made on their behalf, all alternatives must be considered and the option chosen should be the least restrictive of their basic rights and freedoms.
The Act is intended to assist and support people who might lack capacity and to discourage anyone who is involved in caring for someone who lacks capacity from being overly restrictive or controlling. It also aims to balance individuals’ right to make decisions for themselves with their right to be protected from harm if they lack capacity to make decisions to protect themselves. The Act covers a wide range of decisions made or actions taken on behalf of people who might lack capacity to make specific decisions for themselves. Those decisions can be about day-to-day matters such as what to wear or what to buy when doing the weekly shopping, or about major life-changing events such as whether the person should move into a care home or undergo a major surgical operation. Certain decisions, specified in the Act, can never be made on behalf of a person who lacks capacity to make those specific decisions, either because they are so personal to the individual concerned, or because they are governed by other legislation. Such decisions concern family relationships, such as consenting to marriage or a civil partnership, consenting to have sexual relations, treatment under the Mental Heath Act or decisions on voting in an election or referendum.
The capacity to litigate is based on a common law test of capacity set down by the courts. My hon. Friend is aware of the Masterman-Lister case which makes it clear that the presumption is that all adults are competent to manage their property and affairs; it is for the person alleging incapacity to displace that presumption and to prove incapacity, not for an adult to prove his own capacity; and it is a fundamental right of a person to conduct proceedings. That presumption is not removed lightly. The assessment of litigation capacity is a matter for the court in the individual case to decide and—this is important—not for an expert giving evidence on capacity. I confirm to my hon. Friend that the legislation in force in England and Wales supports individuals to make their own decisions, as called for in the commissioner’s article.
My hon. Friend also questioned how litigation friends are appointed. The appointment of a litigation friend is governed by procedural court rules. The duty of a litigation friend is set out in rules and associated practice directions. The courts would not wish people to be deprived of their autonomy or prevented from conducting their own proceedings in the absence of cogent evidence that they lack the mental capacity to do so.
John Hemming
My intervention might be reasonably long, to deal with some of the Minister’s points. I accept that the Government do not comment on individual cases at all, not only on individual live cases. I accept the Minister’s argument that to some extent the Mental Capacity Act is compliant with the UN convention of 2006 and that movement has been in the right direction, if not as far as one might hope. My argument is that the system itself has no real accountability or any proper checks and balances. The court makes the decision, but it is based on opinion from a social worker or expert, and there is no real opportunity to check that process.
Mr Djanogly
I have addressed the position of the courts, which are independent of the Government. I will come to the question of experts later.
My hon. Friend also queried the role of the Official Solicitor as a litigation friend. The Official Solicitor is an independent office holder of the senior courts whose duties include acting as a last-resort litigation friend to those who lack the capacity to conduct their own litigation. He is not accountable to Ministers or to the Ministry of Justice for his decisions in individual cases, nor are Ministers or the Ministry responsible for those decisions. The Official Solicitor will conduct the litigation on behalf of the person for whom he is acting as litigation friend fairly, competently and in their best interests.
John Hemming
I asked the Minister a question about the Official Solicitor, who I accept is supposed to be the litigation friend of last resort. My point is that he is often the litigation friend of first resort. The most important question is: how do we know that the Official Solicitor is doing his job properly?
Mr Djanogly
That question could be asked of any lawyer who has a relationship with his client.
John Hemming
The Official Solicitor may be legally qualified, but his role is not that of a lawyer: his role is to make decisions and to instruct lawyers. Normally, the Official Solicitor instructs another firm to act. The question is: how do we know that the Official Solicitor is doing his job properly?
Mr Djanogly
The Official Solicitor is an independent appointment, and my hon. Friend could ask the same question about a judge, for example. How do we know that a judge is doing his job properly?
John Hemming
It obviously comes back to the question of secrecy and monitoring of the legal system. If there is transparency, one can have some comfort that people are doing their job properly. I see many examples of people apparently not doing their job properly.
Mr Djanogly
I will come back to my hon. Friend in more detail, but I have to get through quite lot of his other points in the remaining three minutes—
John Hemming
The Minister has more than three minutes; he has nine minutes.
Mr Djanogly
Five minutes perhaps.
I turn now to the family justice review and expert witnesses in the family courts. In their recent response to that review, the Government set out plans to implement a comprehensive programme of reform of the family justice system. We are grateful for the impressive work undertaken by David Norgrove and his fellow panel members in diagnosing the problems of the current system and setting out clear recommendations to remedy them.
The review was clear about the need to create a more coherent system, characterised by trust and co-ordination between the different courts and agencies involved. As the first step towards that, we are establishing a Family Justice Board to provide greater leadership and co-ordination across delivery agencies nationally and locally, and to prepare the system for the changes to come. In private law, we are determined to put in place a framework that will support separating couples to resolve their disputes more reasonably and more quickly. Whenever possible, there should not be a need to resort to litigation in court.
In public law, when the state intervenes to take children into care, our overriding priority is significantly to reduce the current unacceptable levels of delay. The average care case now takes 55 weeks, and many take much longer. That means months of uncertainty for a child trapped in a difficult situation. That must not continue. We intend to legislate as soon as parliamentary time allows for a six-month time limit on care and supervision proceedings. That will send a powerful message that the current level of delay is unacceptable.
We appreciate that the six-month limit will not be achieved without fundamental changes to the way the system works. One aspect of the reform is to the way in which expert witness evidence is used in the family courts. The evidence suggests that in public law family proceedings, expert witness evidence is used in about 90% of cases, and on average, nearly four reports per case are requested. That high number of reports may well reflect an understandable desire for certainty and for as thorough a process as possible to be gone through before life-changing decisions are made. As the family justice review acknowledged, expert witness evidence can often be necessary to ensure a fair and complete court process—for example, to establish whether a child has been harmed by accident or not. Nevertheless, we agree that too many reports are commissioned that add little value to the court’s understanding of the issues and add further delays to the process. We have already announced our intention to legislate to ensure that reports are commissioned only when they are necessary to resolve the case.
In family proceedings involving children, the court must decide whether to permit an expert witness to be instructed, or to allow expert witness evidence to be used in court. Expert witnesses have an overriding duty to the court that takes precedence over any obligation to the party or parties who have instructed them. They are under a duty to assist the court with objective and independent advice and to provide advice that conforms to the best practice of their profession. My hon. Friend mentioned recent research and cases reported in the press showing that there is a problem with expert witnesses in the family courts.
My hon. Friend referred to practice in the United States, and I would be interested to see data on the systems used there, but we do not agree that a review is necessary. The family justice review has already conducted a thorough analysis of the problems in the family justice system, and the Government have made a commitment to significant reform. We will consider carefully the findings of the recent research on psychological expert witness reports. We accept the need for reform of the use of experts in family proceedings and for more research following the study.
John Hemming
I do not think that the family justice review managed to identify the real problems in the system. It was flawed from the start inasmuch as the panel members were generally people who worked within the system, instead of people who have had experience of it and are critical of it. I do not agree with the Government’s conclusions or those of the family justice review.
Mr Djanogly
I hear what my hon. Friend says, but the family justice review has been well received widely and across all sections and stakeholders, and that is the basis on which the Government are proceeding.
My hon. Friend mentioned Professor Jane Ireland’s recently published research on psychological expert witness reports used in family public law proceedings, and I agree that it is a useful contribution to our understanding. As Professor Ireland points out in her report, it is the first study of its kind and is based on only a small sample of family cases. While it is indicative of weaknesses in the practices of some psychologist expert witnesses, it is not possible to determine from this preliminary study whether the findings are representative. Nevertheless, the Government accept that there is a need for further research in this area, including on the quality of expert witness reports, to further our understanding of the issues identified by Professor Ireland and the family justice review.
We also agree that there is a need to improve the quality of expert reports. We intend to work with the relevant bodies, including the Legal Services Commission, expert witnesses, health sector bodies and local authorities, to develop quality standards. Others in the system also have a role to play: they include legal sector professional bodies providing support and guidance to lawyers who are responsible for commissioning expert witnesses; those responsible for maintaining ethical and quality standards within the medical profession: and expert witness representative bodies. Each has an important contribution to make to ensure that expert witnesses undertaking this vital work for the courts have the right training, skills and knowledge.
My hon. Friend discussed openness in family courts, and there are often calls for greater openness. It is of course vital that the family justice system commands public confidence and that justice is not only done, but is seen to be done. At the same time, there is a clear need to balance the desire to be more open with ensuring that the privacy of vulnerable children and families involved in these cases is protected.
John Hemming
Does the Minister accept that there are people like me who perceive that justice is often not done?
Mr Djanogly
I cannot argue against my hon. Friend’s position. He goes to courts and sees cases, and he takes a view. It is not an easy balance to strike. The debate on this issue has been long running and is controversial. It has been subject to two public consultations, but little consensus of opinion has resulted. The Government have accepted the concerns expressed by the Select Committee on Justice in its inquiry into the operation of the family courts and agreed that we should not commence the provisions in part 2 of the Children, Schools and Families Act 2010. We are still looking at ways in which the family courts can release more information. In doing this, we will take into account the findings from the final report into the family courts information pilot, which was published in September 2011.
I emphasise that the Government firmly support the right of every adult to make their own decisions about their future whenever possible, and to be assisted to make those decisions if necessary. We also support the need for greater transparency in the operation of the courts. We accept that the current position in the family courts is unsatisfactory and we are considering ways in which more information can be released. We are committed to radical reform of the family justice system to help to improve the lives of thousands of children and families.
Mobility Scooter Safety
(12 years, 1 month ago)
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Alison Seabeck (Plymouth, Moor View) (Lab)
It is good to serve under your chairmanship for the first time, Mrs Main. Given that this is, I trust, a non-contentious issue, I hope that you will not be called to action.
Like many hon. Members, I have heard complaints and concerns about the design and safety of mobility scooters on the road, and the risks posed to those who use them and to other road users. Only yesterday, the hon. Member for Cannock Chase (Mr Burley) proposed a ten-minute rule Bill to update and clarify the Road Traffic Act 1988 on the use of powered wheelchairs, and his speech in the main Chamber also touched on mobility scooters.
I secured this debate after being contacted by one of my constituents about the design failing of his scooter, and following a meeting that I held with a Plymouth-based organisation called Scoot-A-Long. Both meetings forcefully flagged up significant failings in the system that cut across a number of Departments. I therefore tabled questions and wrote letters to the Departments of Health and for Transport, but the responses have not satisfied me or my constituents.
I would like to mention Mr Brian Fleming and describe his experiences, which have angered and frustrated him. He has been frustrated because, despite every attempt to highlight the problems, no one appears to be listening and he worries, as do I, that at some point a fatality will occur. He has been dedicated to raising awareness about the safety of these vehicles, and he has tried to interest programmes such as “Panorama” in his story.
Let us start at the beginning. What do we know about accidents involving mobility scooters? The answer is virtually nothing, and the full recording of incidents on the road that involve mobility scooters is unlikely to start before 2013. We are also not sure how and where off-road incidents take place, and whether they are ever likely to be recorded.
Recently, there was the tragic death at Bodmin in Cornwall of an elderly gentleman, Mr Moore, whose scooter flipped over on a steep slope. Because of the interest generated by this debate, Thompsons solicitors contacted me to provide a couple more examples of incidents that were linked to mobility scooters or motorised wheelchairs, which are known legally as invalidity carriages—that definition probably ought to be updated. A 79-year-old woman was left with serious injuries after a van collided with her mobility scooter in Sunderland. One claimant was shopping in Newcastle, but as she queued up a mobility scooter suddenly came towards her, knocking her to the floor. She suffered serious damage—a broken hip—and still has difficulty walking. Those are just a few examples, but we need to reduce the risk of such accidents and tragedies happening by increasing our knowledge of where and how they occur.
What do we know about the safety standards applied to imported mobility scooters? Again, not a lot. The Department for Transport has not commissioned safety checks on any vehicle model, and the Medicines and Healthcare products Regulatory Agency—the MHRA—which, according to the Department, is responsible for regulation in that area, does not commission safety checks on mobility scooters before their placement in the market. One has to ask, why not?
I find that astonishing. Would we allow a medicine to enter the market without it reaching a certain standard? No, we would not. Would we allow a car to go on the road without it reaching a certain standard? No. Why, then, is a mobility scooter allowed to go anywhere without a check, particularly when, on occasion, they are used by people who have never driven a car, perhaps have no road awareness and who may be frail? We expect people who drive cars on the road to take a driving test, yet a significant number of people are using a scooter on the roads with little or no road knowledge, other than as a pedestrian. I will return to that point.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Lady on securing the debate. There is an active group in my constituency that makes mobility scooters available, and it has noted the issues that she seeks to address. A lot of police forces have also tried to emphasise the need for safety, and for people to have experience and to take advice when using mobility scooters. Does she feel that the time for the police to give advice, as with The Highway Code, is long overdue and that introducing registration will secure safety for everyone?
Alison Seabeck
The hon. Gentleman is entirely right. A lot of good work is being done by various police authorities and other organisations to try to raise safety awareness. I will return to that point.
There is growing pressure to have a Minister with responsibility for older people, and such a person might be responsible for drawing these issues together—putting them in one place—and considering whether we need to regulate further, or indeed to legislate. The Parliamentary Advisory Council for Transport Safety called for such a post to be created, and there is no doubt that the safety of mobility vehicles was one reason behind that request.
Let me return to Mr Fleming. He is getting on in years—I will not say how old he is—but he has had a distinguished career. He has a degree of engineering knowledge, and he therefore speaks with some authority on the workings of his scooter. He contacted me because he has a Pride Colt 8, which, I understand, the MHRA has received complaints about. Indeed, one Pride Colt 8 was involved in an accident in Staffordshire, and the investigating police officer got in touch with me. He wanted to know what I knew about that vehicle, given the parliamentary questions that I had tabled. That cannot be right: police officers should not need to ring a Member of Parliament who happens to have tabled some questions to seek out information on the background and mechanical failings of a particular vehicle. Such information should be available elsewhere.
The Pride Colt 8 owned by Mr Fleming had a series of failings. Its electric autobrake failed, the head console was affected by corrosion and there was a catastrophic failure of the drive, leading to the product being recalled—need I go on? There is a long list of complaints, and a frankly unsatisfactory response from the manufacturer. The scooter does not appear to be fit for purpose and it can stop without warning. It passes basic requirements for use on the pavement, although not the road, yet it is being used by some on the roads.
Mr Andrew Smith (Oxford East) (Lab)
I warmly congratulate my hon. Friend on securing this important debate about something that affects a growing number of people in our society, either as scooter users or as their fellow pedestrians and road users. Does she agree that we need to set the discussion in the wider context of ensuring that the design of pavements and lowered pavements takes account of the needs of scooter users, so that they are not left in dangerous situations or forced to cross the road? I have been to look at certain locations in my constituency with users of mobility scooters.
Alison Seabeck
My right hon. Friend is absolutely correct, and I will touch on the problems faced by local authorities. His comments reinforce concerns that I have heard from local authorities, as well as from users of mobility scooters.
Jim Shannon
One point that I have been made aware of concerns the advertising of mobility scooters. The adverts show an almost deluxe mobility scooter that can go anywhere. I do not know whether the hon. Lady has seen the adverts, but the scooters seem to be able to go through muck and snow, and go anywhere, almost like a four-wheel-drive mobility scooter. Does she agree that adverts ought to show what is achievable?
Alison Seabeck
I thank the hon. Gentleman for that intervention. I think that between him and my right hon. Friend the Member for Oxford East (Mr Smith), my speech has been covered. The hon. Gentleman’s point is correct: the adverts suggest that some of these vehicles are all-singing and all-dancing. Indeed, there are individuals who soup up their scooters, for whatever reason, but that is clearly a separate issue.
Many imported vehicles are not legal on our highways, yet that is where they are innocently being used by the purchasers. In addition, there is no requirement for insurance. I would welcome the Minister’s view on why that is. Is it because of the cost factor? How many vehicles have been prevented from reaching the market because of design flaws or other concerns? What powers do local trading standards officers have in such circumstances, and are they being encouraged to use them? Mr Fleming feels that he has been going round in circles locally, as one organisation passes responsibility to another.
The Pride Colt 8 has no width-indicating lights for night use and no brake lights, so right hon. and hon. Members will understand the obvious risks involved should these scooters be taken on to the highway. Many owners of the scooters say that they are forced to use the roads because local councils have not created a safe pavement environment for them. We heard from my right hon. Friend the Member for Oxford East on exactly that point. Clearly, with council budgets being cut, they are very unlikely to be able to commit significant spending to this area, however desirable.
Scoot-A-Long supports disabled people to support themselves in getting out and about to places such as Dartmoor and even taking scooters on to Dartmoor. It also runs training courses and has expressed to me serious concerns about the lack of training available generally and about the quality of some scooters. I tried one of them out, and I have to say that the top speed of 8 mph is extremely fast. The limit on pavements is 4 mph, but untrained people do not know that. John Seamons, an excellent chap from Scoot-A-Long, expressed concerns to me about the way mobility scooters are sold to the public. Some highly reputable companies will ensure that the scooter size is correct for the user and that training is offered, but others are interested simply in a quick sale. Anecdotally, there are people who buy scooters and then are far too scared to use them.
Others adapt scooters in interesting ways. I heard yesterday from a person in Stevenage who had been out shopping when he suddenly heard “Land of Hope and Glory” playing. He turned round to see a gentleman on a mobility scooter who was having trouble reversing. The gentleman on the scooter smiled at him and said, “It’s all right. It helps me because it plays when I’ve reversed into something.” That is not really how it is supposed to work. People need support and training. Although that is an amusing story, it makes a serious point.
There are some excellent examples of organisations attempting to ensure that good advice is given. Norfolk constabulary—the police force—is one of many organisations trying to do good work. It is working alongside Halfords and is one organisation whose advice, as part of its Safe Scoot campaign, is extremely thorough and easy to follow. It encourages safety awareness courses, but those are not compulsory. How many mobility scooter users have read The Highway Code? They might have passed their driving test decades ago, when the rules were slightly different. The Highway Code also applies to people who intend to use scooters on the pavements, but I imagine that very few scooter users have gone to the trouble of reading it. How many users understand the different issues raised by using a mobility scooter in icy conditions or that wearing reflective clothing is a good idea? How many users know that they should not be in bus lanes?
I know that the Minister is aware of the issues that I am raising, but I hope he agrees that with an ageing population action must be taken to ensure that standards are maintained with regard to the safety of these vehicles and that some basic training should be undertaken by all users. It is also important that, if scooters are sold to people who have never driven and they intend to use them on the road, training is compulsory. I am not sure whether they should even be on the road if they have not passed the driving test.
We also need to be aware that younger, able-bodied people are buying mobility scooters. Recently, one was seen cruising along the seafront at a Devon resort—the young man driving it had his golf clubs on the back. We see young women who appear to be able-bodied when they get on and off their scooters using them to do the shopping. A scooter may be an alternative to a small car in some circumstances—a much cheaper alternative, because people do not have to pay all the additional road taxes and so on—but that could spiral out of control if we do not get a grip on it.
What action can the Government take to close some of the loopholes? What action will they take to ensure that the products that come to market are safe and fit for purpose, and have been checked? That will require cross-departmental working. What action will be taken to ensure that records are kept of accidents? I suppose I am asking for a coherent, cross-departmental strategy, across the Department for Business, Innovation and Skills, the DFT and the Department of Health, pulling together all the safety issues to ensure that proper guidance is always issued and that vehicles cannot be imported for sale in the UK without the designs being checked and being safe.
The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I thank the hon. Member for Plymouth, Moor View (Alison Seabeck) for securing this debate on an important matter that is of increasing interest to many people—mobility vehicle safety. She referred to the ten-minute rule Bill proposed yesterday by my hon. Friend the Member for Cannock Chase (Mr Burley). She will have noticed that he was arguing that, because these vehicles are a lifeline for many people, we should deregulate to some degree to give them the mobility and independence that we would agree in principle they should have. She argues that they should be safe and that we should take steps to ensure that people are properly trained to use them; everyone would agree with that in principle as well. That is the nub of the problem: both perspectives are valid, but they point in different directions. The Department for Transport is trying to deal with that problem, which is quite complicated, but let me try to give the hon. Lady reassurance about the steps we are taking to try to resolve it.
Officially, the UK has more than 10 million disabled people and our population is increasingly ageing, so mobility vehicles will in future have an even more important role to play in enabling disabled people to live independent lives. It is part of our policy, as it was the previous Government’s, to seek to improve access and safety for all people, including disabled and older people, to help to enhance their quality of life. We consider the issue of mobility scooters in that context.
By the way, if the hon. Lady looks at my written ministerial statement of 1 March, she will see that I indicated our intention to replace the legal term “invalid carriage” as soon as possible. Unfortunately, it is in primary legislation, so we will need a slot to deal with it, but we fully accept that it is an inappropriate term in this day and age.
Our aim is to balance the mobility needs of disabled people with their safety and that of others. The previous Government consulted formally in 2010, and on 1 March this year I published the Government response to that consultation. Let me take first the safety of particular scooter models that are available to buy.
The position on design standards for mobility vehicles sold in the UK is that before a manufacturer can offer a vehicle for sale, it must meet EU manufacturing standards. To obtain that mark in the UK, a manufacturer must first submit a technical file relating to the product to the Medicines and Healthcare products Regulatory Agency. On imports, there is nothing to stop someone buying a mobility scooter from another country over the internet without taking advice. If the vehicles do not conform to European standards, trading standards officers have the authority to seize them, but I cannot imagine that that happens very often in practice. I think that many trading standards officers, if they came across such a vehicle, would be very reluctant to seize someone’s lifeline—the vehicle necessary for them to get from A to B.
There are challenges, but the straight answer to the hon. Lady’s question is that someone can bypass the regulations if they buy on the internet, and trading standards officers have the power to deal with that when they come across such vehicles. Part of the problem is that vehicles are not always bought from reputable dealers. They are often bought on the internet, or second hand, or by some other means where the control mechanism is not in place.
Alison Seabeck
There is a case for information to be passed on by GPs—who may recommend a vehicle to a patient—pensioners’ groups and Age Concern to ensure that proper advice is going out to those who are considering buying mobility scooters. It is about information getting to people before they take the step of going to the internet or somewhere else to buy such a vehicle.
Norman Baker
I agree that information is important, and I will come on to what we are doing, but it may not be a complete panacea.
One of the main concerns about the carriage of scooters on public transport is whether or not they can be safely secured. The design of the scooter may mean that it does not have appropriate anchorage points, so there is a danger that it may tip up and cause injury. There are international standards to which manufacturers can refer to determine how to secure wheelchairs and their occupants when travelling in a vehicle, but there are no such standards for mobility scooters. That is one of the issues that I want operators and manufacturers to consider when it comes to improving the design of scooters for carriage on public transport.
There are also concerns among public transport operators that people are being sold scooters that are inappropriate for public transport and yet they have an expectation that they can use them. There is a space designed for wheelchairs and some scooters will necessarily be designed at a level above that, so transport operators can legitimately say, “This vehicle is unsuitable for carriage on light rail, tram, train or bus.” I want to ensure that we get some consistency of approach from operators and some clarity for members of the public as to which vehicles can and cannot be carried on public transport. If we end up with vehicles that are heavier and bigger and do what my hon. Friend the Member for Cannock Chase argued for yesterday, it will benefit users when they take them on the road, but not when they want to take them on public transport. These are very complicated issues to get right.
As the hon. Lady said, there are also safety concerns about the use of mobility scooters. There are reports of people being injured by them when they are used on pavements, and of users being hit by other vehicles when they are used on the road. Unfortunately, no accident statistics are available to demonstrate that the use of mobility vehicles represents a major public safety problem—the evidence is all anecdotal. However, I have raised the matter, and from 2013 the police will be able to record—I hope they do—whether a mobility vehicle has been involved in an accident on the public highway. Thus we will begin to gather more reputable and objective information than we have at the moment.
I recognise the concerns, however, which is why, in my written ministerial statement of 1 March, I indicated that I do not intend to change the maximum permitted speed of mobility vehicles. I agree that 8 mph does not sound very fast, but it certainly is fast on one of those scooters. I tried one out myself when I went to a scooter place in Rochford, and I was taken aback by its acceleration and speed—and I am someone who has been driving on the roads for some 30 years. I was also rather taken aback by the instability of the vehicle. I believe it is absolutely right not to increase their maximum speed. It is possible that some vehicles might be bought on the internet, without the controls of reputable dealers in this country, but the concerns about the reduced stability of vehicles at speed, and the more serious consequences of any collision if higher speeds are permitted, are such that I will not be increasing the speed at which those vehicles are permitted to travel.
I have also announced that there will be no change to the minimum age for using a class 3 vehicle. There would be safety concerns if a child under 14 years were permitted to take a vehicle on to the public carriageway. However, I have to balance that judgment against the legitimate health and independence benefits that such a vehicle can bring—these are difficult judgments to make—so I have decided to permit class 2 powered vehicles, which are restricted to the pavement, to weigh up to 150 kg unladen in order to help children with more acute clinical needs to have more equipment on their chairs. For reasons of public safety, I have also decided that the use of two-person mobility scooters should not be allowed on the public highway. Two-person scooters are likely to be heavier than the maximum legal weight limit—150 kg for class 3 vehicles. Some two-person models also exceed the maximum speed limit of 8 mph.
The consultation in 2010 considered whether the law is adequate or whether there should be a new means of tackling misuse of these vehicles. I have concluded that no new legislation is required—not even to make these vehicles more conspicuous—but I have asked officials to examine how current legislation could be better enforced. That does not mean that we are looking to prosecute more mobility scooter users. The laws relating to mobility vehicles are not the same as road traffic laws that apply to motor vehicles, but there is legislation dating from Victorian times that can be used to control reckless driving and we want this to be more widely publicised and better understood.
Issues remain around insurance, eyesight tests and training, which brings us on to the question of what we can do to help people who use these vehicles. There is currently no mandatory requirement to insure vehicles, although we strongly recommend that individuals take out insurance voluntarily, or to have eyesight tests, although my Department has for many years advised that people should be able to read a number plate at a distance of 40 feet. I want to look at how the test can be made more practical so that there is much greater take up. I have concluded that mandatory eyesight testing is not necessary for users of class 2 scooters, which are restricted to the pavement, but I am clear that the position in respect of class 3 scooters requires further consideration. I am talking about the vehicles that can travel at 8 mph as opposed to 4 mph and that can be allowed on the highway.
The consultation responses in 2010 emphasised real concerns that mandatory insurance and training could unfairly penalise a particularly vulnerable section of the community. However, we want to find ways to achieve greater take-up of insurance and training, which is why I have been talking to key stakeholders. I held a meeting only yesterday with the trade association, vehicle training organisations, the insurance industry and disabled charities and organisations to review the available evidence and options relating to insurance and the use of specialist training providers. My written statement on 1 March deliberately left open the questions of eyesight testing, insurance and training because I wanted to take advice from everyone concerned, including users, disabled charities and road safety people to try to get to a position that everybody finds comfortable. It was a useful meeting, and my officials have taken away the comments and will use them to take the next stage forward. As the hon. Lady rightly said, it would be helpful if more training was available.
Norfolk constabulary was represented at the meeting yesterday. The hon. Lady mentioned that county, where some really good work has been done—indeed I was in Norwich before coming to this debate. We can learn from Norfolk’s example. The trouble with Norfolk is not that it is not doing the right thing—it is—but that its practice is not emulated everywhere. We need to find a way of rolling that practice out right across England and Wales—I hope that the hon. Member for Strangford (Jim Shannon) will forgive me, but England and Wales are my responsibility—to ensure that that training is available more widely. That is one of the issues that we are trying to address sensibly for the future.
There are clearly issues about basic training and about the safety of these vehicles, particularly ones that have slipped in under the net and do not meet European Union standards. I am not able to answer the hon. Lady’s question about whether models have been stopped from being brought into the country, but I will raise the matter with MHRA. Cross-departmental work on the issue is under way. We have been in touch with the Department of Health, and if she was in the Chamber yesterday, she will have seen that the Minister for Disabled People from the Department for Work and Pensions was with me on the Treasury Bench to listen to the ten-minute rule Bill. We are trying to work collaboratively across Departments.
Alison Seabeck
I acknowledge the work that is going on with all the groups that the Minister has mentioned, but use of these vehicles by people who are neither elderly nor disabled is increasing, and that is very worrying.
Norman Baker
That is a relatively new issue. I have not yet come across anyone going to play golf in a mobility scooter, although I have no doubt that it does happen; nor have I come across scooters that play “Land of Hope and Glory”. I am sure that whoever composed that particular tune did not have reversible scooters in mind. None the less, I take the hon. Lady’s word for it. If these scooters are now being used by groups for whom they are not designed, particularly if people are using them to avoid the requirements of road traffic legislation for other vehicles, that is a serious matter that I will take away to consider.
I hope that I have managed to convince the hon. Lady of two things: first, that we are seized of the need to make progress and we are trying to do so in a constructive and consensual way; and secondly, that this is not an easy issue. There are conflicting demands on us from different directions. Coming up with an answer that meets everybody’s aspirations will be difficult, but we will try.
Question put and agreed to.
Written Ministerial Statements
(12 years, 1 month ago)
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Anti-Avoidance
(12 years, 1 month ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The Chancellor of the Exchequer announced today as part of the Budget the removal of the VAT exemption for grants of facilities for the self storage of goods and the removal of the VAT zero rate for supplies of services and materials in connection with approved alterations of protected buildings. This will have effect from 1 October 2012. For approved alterations that are already contracted for or under way, transitional relief will be provided for supplies made before 21 March 2013.
The Government have taken this step to address inconsistencies in the treatment of these supplies and to prevent VAT avoidance that exploits the VAT exemption for supplies of self storage. To protect the public finances from artificial avoidance of the change in VAT liability, the Finance Bill 2012 will contain anti-forestalling legislation to ensure that the VAT liability changes are fully effective.
Anti-forestalling legislation will apply to these types of supplies made on or after 21 March 2012. This will ensure that the new VAT liability will apply to these supplies if they are performed (or, in the case of supplies of materials, incorporated in the building) on or after 1 October 2012, even if the supply is treated as being made earlier than this because of an advance payment or delivery of materials. The new VAT liability will also apply to grants of rights or options made on or after 21 March 2012 to receive supplies of self storage to be provided on or after 1 October 2012.
Whilst the attached anti-forestalling legislation will apply for supplies treated as taking place on or after 21 March 2012, any VAT arising from its operation will not become due until 1 October 2012. Until then, suppliers should continue to apply the current rules.
Further information on the anti-forestalling legislation is available at: www.hmrc.gov.uk.
Debt and Reserves Management Report
(12 years, 1 month ago)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
The “Debt and Reserves Management Report 2012-13” is being published today. Copies are available in the Libraries of both Houses.
Fuel Tax Policy
(12 years, 1 month ago)
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The Economic Secretary to the Treasury (Miss Chloe Smith)
At Budget 2011, as part of a package of measures to help motorists facing high petrol prices, the Government announced a fair fuel stabiliser (FFS) that would be funded by higher taxation of the profits from oil and gas companies when oil prices are high. As a result, the rate of supplementary charge on oil and gas production is now 32%. The Government also stated that, if the oil price falls below a set trigger price on a sustained basis, we will reduce the supplementary charge back towards 20% on a one penny per litre in each such year.
The Government said at the time that it believed a trigger price of $75 per barrel would be appropriate, and that it would set a final level and mechanism after seeking the views of oil and gas companies, and motoring groups. Following this period of informal consultation, I can announce that the fair fuel stabiliser will be implemented with effect from 21 March 2012.
The trigger price will be set at £45 sterling (being the rounded sterling equivalent of $75 based on the latest OBR exchange rate forecast for 2012). The trigger price will be fixed in sterling, and reviewed every three years. Whether the trigger price is met will be assessed annually on the first working day of February, starting in 2013. This assessment will be based on two FFS reference prices:
The average daily dollar oil price (per barrel) in the three months immediately prior to the date of assessment, converted to sterling using the average daily Bank of England exchange rate across the period.
The average daily dollar oil price (per barrel) in the week before the date of assessment, converted to sterling using the average daily Bank of England exchange rate across the period.
Each FFS reference price will be calculated using the North sea average reference value as established in the Oil Taxation (Market Value of Oil) Regulations 2005 (SI2006\3313).
Both reference prices are required to be met for the trigger price to be met. Thus, under the current tax regime (i.e. with the supplementary charge at 32%), if at the assessment date either of the two FFS reference prices is £45 or above, the trigger price has not been met and supplementary charge will continue to be levied at 32%. If both reference prices are below £45, the trigger price is met.
If oil prices were at a level where the trigger price had previously been met and supplementary charge were being levied at a lower rate, both the FFS reference prices would need to rise to £45 or above for the trigger price to be met again.
Any changes to the rate of supplementary charge and fuel duty that result from the trigger price being met will be announced at Budget in the year in question.
Council Tax
(12 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
Today, my Department has published council tax figures for 2012-13 in England. It shows that thanks to the coalition Government’s council tax freeze initiative, the average change in band D bills will be just 0.3%—a significant real terms cut in council tax. The average band D bill will be £1,444 a year.
I am pleased to inform the House that the overwhelming majority (358 of 421) of eligible local, fire and rescue and police authorities in England have decided to freeze or reduce their band D council tax in 2012-13. The take-up rate was 90% among elected local councils. Participating local authorities will therefore be eligible to receive the additional grant offered by the Government for doing so.
Support for hard-working families and pensioners
This is good news for hard-working families and pensioners who previously experienced a doubling of council tax under the last Administration. This year, over 20 authorities have also cut council tax between 0.1% and 3.75%. Indeed, in London, all households will benefit from a cash terms cut in their bills.
As compared with the typical capping threshold under the last Government of a 5%) council tax rise, a freeze saves a typical household up to £72 in each of the two years of the council tax freeze schemes.
The Localism Act 2011 abolished central Government capping and instead gives local people the power to veto excessive council tax increases in a binding referendum. No authority has reported that it will be holding a referendum in 2012-13 by setting an excessive increase. The Localism Act measures will continue to ensure that local taxpayers are protected in future years.
Such action on keeping down council tax complements the measures already taken to help families—by stopping any council tax revaluation in this Parliament and by abolishing plans to impose bin taxes on family homes.
Council tax freeze grant
The Government set aside £675 million to help authorities in England freeze their council tax for a further year. A local authority that has done so will receive a grant equivalent to a 2.5% increase in its 2011-12 band D figure multiplied by the latest available tax base figure.
Police and single purpose fire and rescue authorities will receive a grant equivalent to a 3% increase. The City of London will receive a grant equivalent to a 2.75%) increase with slightly different arrangements applying to the Greater London Authority (based upon a combination of a 2.75%) and a 3% increase).
My Department will write to individual local authorities shortly informing them of the amount of freeze grant I propose to pay to them for meeting the terms of the new scheme for 2012-13. I intend that this one off grant will be paid in full in April 2012. All authorities which froze or reduced their council tax in 2011-12 will continue to receive a further grant in each year of the spending review.
Winterbourne View Hospital
(12 years, 1 month ago)
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The Minister of State, Department of Health (Paul Burstow)
I promised to update the House about ongoing activity in relation to Winterbourne View private hospital and other services for people with learning disabilities.
The House will wish to note that four people employed at Winterbourne View hospital appeared in Bristol Crown court on 16 March and pleaded guilty to offences under the Mental Capacity Act 2005. They have been referred for sentencing reports, alongside the three people who pleaded guilty on 9 February. A further four people are due back in court after Easter.
The Care Quality Commission (CQC) has now completed their focused inspections of 150 services for people with learning disabilities. The reports from these inspections are being published in batches, and a further 19 reports are being published today. They can be found at: http://www.cqc.org.uk/LDReports?1atest—86 inspection reports have been published so far. These reports have found poor practice in some of the units and frequent areas of concerns include limited person-centred care, limited appropriate activities and a lack of monitoring and learning from incidents of restraint.
Where CQC has identified concerns, the provider is required to inform CQC when its improvement actions have been completed. CQC will follow up to check that the improvements have been made, including further inspections where necessary. Where CQC has issued warning notices it has been back to inspect and found the locations to be compliant.
In the original proposal for the learning disability review the plan was to undertake two phases. Phase one was the inspection of 150 locations. These inspections have now been undertaken. Phase two was the inspection of registered services for people with learning disabilities covering a wider range of services than those included in phase one, notably adult care providers.
However, CQC has taken the opportunity within phase one to inspect 33 adult social care locations. Following discussion at the CQC inspection programme advisory group, CQC decided not to proceed with phase two at this time but wait until the national report on the findings from the LD inspection programme had been published and then reassess the options.
A programme of thematic inspections is starting this April looking at domiciliary care agencies. This will test the tools for inspecting this type of service so they can be used for other care groups. This programme of inspection will focus on older people.
Once the criminal proceedings are completed, we expect the serious case review, chaired by Dr Margaret Flynn, to be published. The serious case review is looking at:
i. the effectiveness of the multi-agency response to concerns raised and events
within Winterbourne View hospital since January 2008;
ii. the role of commissioning organisations in initiating patient admissions and
the role of the regulator; and
iii. the operational policies and practice, including the governance
arrangements of Castlebeck Care (Teesdale) Ltd.
The review is considering information submitted by Castlebeck, NHS South Gloucestershire PCT, NHS South West, South Gloucestershire council and Avon and Somerset police.
These reports will feed into the wider departmental review of Winterbourne View together with evidence from other investigations and reports. The review team are actively engaging with people with learning disabilities or autism and family carers, as well as with commissioners, professionals and providers to explore the emerging issues and possible options.
The review is considering all the evidence carefully and assessing the implications for policy and practice across the system, including for commissioners, providers, professionals, regulators and Government. Everyone has a part to play in addressing these issues to help prevent abuse and to drive up standards for people with learning disabilities or autism and challenging behaviour.
While these reviews and inspections are ongoing, we are taking action to address emerging issues. For example:
CQC has amended its whistle blowing policy;
the whistle-blowing helpline for NHS staff has been extended to staff and employers in the social care sector from 1 January;
on 18 October, the Secretary of State announced that the NHS constitution is being updated to include:
an expectation that staff should raise concerns at the earliest opportunity;
a pledge that NHS organisations should support staff when raising concerns; and
clarity around the existing legal right for staff to raise concerns about safety, malpractice or other wrong doing without suffering any detriment;
we are working on legislation that will require stronger local action in relation to safeguarding adults; and
where issues for local management are highlighted in the NHS review, they will be developing actions plans to deal with this.
Ministers will report findings from the departmental review to Parliament and determine what further action is necessary.
I will continue to update the House as things develop.
Scotland Bill
(12 years, 1 month ago)
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The Secretary of State for Scotland (Michael Moore)
The Scotland Bill is a significant step forward in Scottish devolution. It provides for the biggest transfer of fiscal power from London since the creation of the United Kingdom—including a new Scottish rate of income tax, full devolution of stamp duty land tax and landfill tax, and new borrowing powers. Together, the Office for Budget Responsibility (OBR) forecast that these measures will enable the Scottish Government to raise between £5 billion and £6 billion of their budget in addition to around £4 billion they currently raise in council tax and non-domestic rates.
Since its introduction in November 2010, the Bill has had detailed scrutiny in the UK and Scottish Parliaments. In Westminster, it has passed successfully through its Commons stages and will soon complete Lords Committee consideration. In Holyrood, the Scottish Parliament voted overwhelmingly in support of the Bill last March.
After productive discussions with the Scottish Government in recent weeks, the Government are today announcing a package of measures in the Bill and supporting non-legislative arrangements to show that the powers will operate in a fair and sustainable way to the benefit of Scotland and the rest of the UK.
Agreement has been reached with the Scottish Government on both the finance and non-finance provisions included in the Bill and the Scottish Government will today table a legislative consent memorandum recommending that the Scottish Parliament votes in support of the Bill on a further legislative consent motion for the Bill.
Today’s announcement provides more detail about the operation of the new tax and borrowing powers and about the non-finance elements of the Scotland Bill. The Government are committed to:
Transferring tax and borrowing powers transparently
The Government will ensure that changes in the Scottish Government’s budget are closely linked to the performance of their economy by adjusting Scotland’s budget to reflect new tax powers using the model recommended to the Welsh Assembly in the Holtham report. This approach, agreed with the Scottish Finance Minister and the Chief Secretary to the Treasury, will help protect the Scottish Government’s budget from wider macro-economic shocks.
The Government will work together with the Scottish Government over coming months and years to give operational effect to the powers including the block grant adjustment, in a fair and sustainable way and should reach agreement on all implementation issues.
The Scotland Bill will be amended to require the Secretary of State for Scotland and Scottish Ministers to produce annual reports to the UK and Scottish Parliaments on the progress of transferring the tax and borrowing powers to the Scottish Government.
In line with long-standing principles of devolved funding, the Scottish Government will pay for their new income tax system of administration. The Government will explore the scope to offset some of the savings from HMRC ceasing its administration of stamp duty land tax and landfill tax.
Ensuring the new borrowing regime is sustainable
Borrowing limits will be reviewed regularly ahead of spending reviews through the Joint Exchequer Committee.
The Scottish Government will be given access to loans over a longer period in principle, subject to the ability to repay and the type of asset.
The Government will shortly launch a consultation on the Scottish Government issuing their own bonds.
Further devolution in the future
Aggregates Levy will be devolved once the legal challenges in the European and UK courts have been fully resolved.
The Government are open to considering what further powers might be devolved
after a referendum on independence.
Non-finance elements of the Scotland Bill
The clauses reserving the regulation of health professions and insolvency will be removed, following assurances from the Scottish Government that they will work closely with the Government to ensure consistent regulatory regimes apply to health professions and that insolvency procedures are kept up to date and operate effectively throughout the UK.
The clause allowing partial referral of Acts of the Scottish Parliament to the Supreme Court will be removed at the request of the Scottish Government. This means in the future—as at present—a full Act could be referred to the Supreme Court, even if only a single provision raised competence issues.
The clause on implementing international obligations will be removed following assurances from the Scottish Government that they will work closely with the Government to ensure that the UK continues at all times to implement its international obligations. If there is a failure to implement any international obligation the UK Government may use their powers under s.58 (2) of the Scotland Act to direct Scottish Ministers.
Additional amendments will be made to the provisions on appeals to the Supreme Court from Scottish criminal cases. A certification requirement will not be introduced. However, the new arrangements will be subject to a review, chaired by the Lord Justice General of Scotland, after three years of operation. Certification will be included within the scope of the review, and it will be possible for changes to be made to the arrangements by subordinate legislation following the review.
These announcements today meet the tests the Government have set for changes to the Bill package—they are based on evidence, maintain the cross-party consensus which supports the Bill, and will benefit Scotland without detriment to the rest of the UK.
Grand Committee
(12 years, 1 month ago)
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Arrangement of Business
(12 years, 1 month ago)
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The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.
Immigration and Nationality (Fees) Regulations 2012
(12 years, 1 month ago)
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Lord Henley
That the Grand Committee do report to the House that it has considered the Immigration and Nationality (Fees) Regulations 2012.
Relevant document: 41st Report from the Joint Committee on Statutory Instruments
The Minister of State, Home Office (Lord Henley)
My Lords, these regulations concern fees charged for visa, immigration and nationality services. The fees paid by those making visa, nationality and immigration applications must be specified in regulations made under Section 51 of the Immigration, Asylum and Nationality Act 2006. Regulations that set fees exceeding the administrative cost of processing an application must be approved by both Houses before they are made; this procedural requirement is imposed by Section 42 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004. Regulations dealing with fees at or below cost are subject to the negative resolution procedure.
The intention is to introduce two sets of regulations on 6 April that will replace existing fees regulations. The first set of regulations will deal with above-cost fees and must be approved by Parliament before it is made, and it is a draft of these regulations that is before the House today. The second set, dealing with fees set at or below cost, does not require prior approval from Parliament and has already been made. The regulations were laid before Parliament on 15 March. I recognise that having fees in two sets of regulations makes things a little complicated, and I am happy to take points on any of the fees proposals here today.
In general we are proposing to limit the majority of increases to 2 per cent. For example, we propose to increase the short-term visit visa applications by 2 per cent, as we recognise the importance of the visitor route to the United Kingdom economy. This is still about half the actual cost to the UK Border Agency of processing this type of application. Increases to fees that do not follow this approach include tier 1 general extensions of leave; these will increase by 50 per cent. This route is open only to those currently in the UK on a tier 1 general visa that is due to expire during 2013 and confers benefits including unrestricted access to the United Kingdom labour market, and ultimately the ability to apply for indefinite leave to remain. The new fee better reflects the value of these benefits.
Fees for tier 2 visas for migrants coming to the UK to work for a sponsor will rise by 20 per cent to £480; an incremental step towards our objective of aligning fees for the original entry visa with the fee paid in the United Kingdom to extend stay in this route. Thirdly, for media representatives coming to the UK to work for an overseas employer on a long-term assignment, this fee is being increased to align with the tier 2 visa fee to reflect the similarities between the two routes. Fourthly, for tier 2 intra-company transfer visas of less than 12 months’ duration and extensions under this route in the UK, this increase reflects the benefits conferred by this route.
The tier 4 visa fee is being increased to cover the full costs of processing these visas. In the current economic climate we can no longer subsidise these visas. The visa for extended family members of refugees and those with humanitarian protection coming to the UK is also moving to cost recovery. We are aligning it with similar settlement visa routes following changes that were introduced in the Immigration Rules in 2011.
Licence fees to those organisations that sponsor migrants in the UK are increasing to better reflect the administrative costs. For large organisations sponsoring employees to work under tier 2, the fees will be £1,500, while for small businesses and charities we will charge £500.
New fees being introduced include a graduate entrepreneur route in the points-based system. This route is being developed for those who have been identified by United Kingdom universities as having developed world-class innovative ideas or entrepreneurial skills but have yet to meet the requirements of the tier 1 entrepreneur route. This will allow them to develop their business in the United Kingdom
The new fees will cover extending the mobile biometric enrolment service to include applications for indefinite leave to remain, widening the range of services that we can offer our customers, and enabling those who have come to the UK under the tier 1 exceptional talent route that launched last year to extend their stay; this will ensure that we retain the skills and talents of those whom we have attracted to work and base themselves here.
Finally, the new fees will also cover providing certain stateless persons with the ability to acquire—or renounce—the status of British protected person. In addition, the fees paid by dependants of members of the Armed Forces will be frozen at current levels in recognition of our commitments under the Armed Forces covenant.
Legal migration brings economic, cultural and social benefits to the United Kingdom. We will continue to ensure that fees for immigration and nationality send a clear signal overseas that the country will go on welcoming the brightest and the best, and these proposals support that message.
We also continue to monitor the economic, equality and diversity impacts of our changes and to ensure that our fees continue to be priced at levels which make them competitive when compared with those in other countries.
I believe that these regulations provide a basis for a sustainable immigration system that noble Lords will want, and I commend them to the Committee.
Lord Hunt of Kings Heath
Once again, it is a delight to follow the noble Lord, Lord Henley, as we deal with orders and regulations in Grand Committee. I am grateful for his very persuasive arguments in favour of these regulations, but I have one or two points to raise.
Clearly, the regulations are about making UKBA pay its way in the world. Does there come a point where providing additional services on a premium basis and dramatically increasing the cost of applying for particular forms run the risk of effectively selling British citizenship? How precisely does the Minister assess the value to an individual who is making a particular application? That is how the amount is now set, it seems. It is not the amount it costs to run or provide the service, but the assessment by UKBA or the Minister of the supposed value to the applicants of the benefits that accrue to them. It would be interesting to know how those figures are arrived at.
What impact does the Minister think that the increases will have on the total number of people applying to come to the UK or to stay once they are already here? Will he say a little more about how much additional money will be raised for UKBA? Some increases are higher than others, but the noble Lord referred to an average of 2 per cent. Clearly, it would be interesting to know the impact on UKBA’s income.
Another point raised in the debate on these regulations in the other place was in relation to Armed Forces personnel and charges for visas. The Minister there referred to the relationship to the military covenant. Can the noble Lord explain a little more about this issue?
Finally, I come to the impact on business and the UK economy. The noble Lord will know that the CBI has condemned the Government’s decision to increase visa fees for working migrants and their sponsors as a bitter blow to UK business. Neil Carberry, director for employment and skills policy at the CBI employers’ group, was scathing about the cost upgrades. He said:
“The shock announcement that some work permit charges will rise between 20 and 60 per cent will come as a bitter blow to businesses. Firms have yet to see the improvements in customer service they were promised, in return for the last tranche of inflation-busting rises last year”.
There are two points here. First, there is the concern that increases in fees will be made but the service will not improve. That is a very important issue that the noble Lord needs to address. Secondly, there is the impact on the UK. I do not know whether the noble Lord has had time to study the article this morning by Willie Walsh, the boss of British Airways, who talks about the attitude of business people in China investing in the UK. Essentially, the perceived discouragement of overseas business men and women coming to this country, combined with policies on airport capacity, is having a chilling effect on investment in this country from countries such as China.
I watched the Budget Statement and was very disappointed that it had very little to say about how we are going to get this country growing again. The Minister may say that that is a little wider than the Home Office’s usual brief, but how policy is developed in relation to immigration and to fees can play an important part. It would be good to know how the Minister will respond to the concern of many businesses. This is also very much related to the issue of higher education and the ludicrous restrictions made on overseas students coming into legitimate institutions in this country. All that is doing is undermining one of our most successful economic sectors.
Baroness Hamwee
My Lords, I, too, thank the Minister. As the noble Lord, Lord Hunt, said, some of the reactions to the increase in fees are well known. They are exactly what any Government of any colour would say—that charges should reflect the level of service and be appropriate to it. The problem is that we hear far too often that customer service is relatively poor. It was described to me as a “litany of minor problems”. If you accumulate a set of minor problems, in totality they become more than just minor.
There is a reputational issue, too. I was given the comparison of two people coming to the UK and to Germany; the one who arrived at Frankfurt would be dealt with there and then, whereas the one coming to the UK would have had to send his passport to the embassy in his country in advance. Obviously, there are different arrangements depending on different individuals but, in general, it is a very telling point. Businesses will stop and ask themselves where they should choose to go on that basis. I have been told anecdotal evidence of companies beginning to move their functions away from the UK because of the long-term path of the immigration system. It is, of course, more than just a concern about fees; it is the direction of policy and the complexity of our rules that are in question. I mention complexity in this context because those who have to find their way around the system, being charged what are perceived as high fees—and I hear the point made about the cost—have higher expectations of service. It is quite telling that many businesses engage lawyers and maybe other professionals to advise on how to cope with the system.
The Merits Committee, of which I am a member, commented in its report to the House of the limited analysis of the impact of the increases on business. The letter from the CBI published in the report was really quite measured and clear; it did not use extreme language in any way. It pointed out that in the view of the CBI,
“employers have yet to see the improvements that were promised on the eve of last year's increase, or that of 2010”,
and that,
“where UKBA is seeking to charge firms commercial rates, and is seeking a return … firms have the right to expect a higher level of service”.
I have a question that is obvious, to me, but it may be too soon to give an answer to it. What would be the effect on efficiency and level of service of splitting the border agency into two component parts? It was against this background that I rather blinked to see the proposal for a premium sponsor scheme. I put down a Motion directed to this but decided to withdraw it and simply raise the points during this debate. I have real concerns about this being the thin end of a wedge of our creating a first class and, to use a railway operator’s language, a standard class which is really second or third class. The service is private, but it is a public service as well. I reflect that if there is an attitude that immigration is not of general social value, then that impacts on the whole policy. As I said, it is a public as well as a private service.
Lord Avebury
My Lords, my noble kinsman said that he was going to continue welcoming the brightest and the best, yet some of the announcements that he has made seem to go directly contrary to that, particularly the huge increases in fees for tier 1 general and tier 2 visas for coming to the UK. I suppose that we should give a partial welcome to the graduate entrepreneur scheme. I should like to ask the Minister, in pursuance of the points raised by my noble friend, whether it is aimed at people who have graduated from a UK university. Will they proceed directly from their studies to the graduate entrepreneur route, or will they be required to go back to their own country and make the application from there? Will people who graduate from universities overseas be able to enter the United Kingdom ab initio along this route without having been in a UK institution of higher education previously?
In his Written Ministerial Statement of 9 February, the Immigration Minister, Damian Green, said:
“We have continued with our strategic approach to charging; setting certain fees above cost on the basis of the value of the service”.—[Official Report, Commons, 9/2/12; col. 47WS.]
Both the noble Lord, Lord Hunt, and my noble friend Lady Hamwee have questioned whether there is a proper relationship between these two variables. As I have already said, some of the fees are very high and some were admittedly way above the unit cost estimate. On what basis does the UKBA, or the Home Office, assess the value of the service? What account, if any, do they take of such matters as the appeals success rate and the findings of the chief inspector’s report in determining the quality of the service provided? For example, the chief inspector in his global review of entry clearance made several critical findings. He looked at a sample of the cases decided at all the UKBA’s entry clearance decision-making centres—around 1,500 cases in total—and found that the evidence submitted with the application had not been considered properly in 483 cases, which was 33 per cent of the sample, and that in a further 201 cases, which was 14 per cent of the sample, the lack of evidence held on the UKBA file meant that it was not possible to assess whether the evidence submitted had been considered properly. The chief inspector also found that, in 235 cases—16 per cent of the sample—applications had been refused on the basis that the applicants had failed,
“to provide information which they could not have been aware [was required] at the time of making their applications”.
In 475 cases, there had been a review by an entry clearance manager, and, of those, in 141 cases—30 per cent—the chief inspector found that poor-quality decision-making had not been picked up by the entry clearance manager.
These criticisms indicate that the quality of service being provided is abysmal and that it is sheer exploitation to charge over the cost. In fact, it could be argued that the cost is seriously inflated by the high proportion of wrong decisions, and that the charges should be related only to the costs of decisions properly reached.
A similar view might be taken of the way in which many students have been treated recently when a college’s licence is suspended or revoked, through no fault of their own, but also other migrants whose visas are summarily curtailed. The case of Patel, on the fairness of revoking a sponsor licence, is but one recent example where the Upper Tribunal (Immigration and Asylum Chamber) has needed to issue a reported determination, reminding the UKBA of the general duty of fairness in decision-making, particularly in cases of students whose sponsor’s licence has been revoked and who face, through no fault of their own, losing their immigration application fee and incurring substantial other expenses as a result. The key finding in the Patel case was that, where the applicant was both innocent of any practice that led to the loss of sponsorship status and ignorant of such loss of status, common- law fairness and the principle of treating applicants equally meant that each applicant should have an equal opportunity to vary their application by being afforded a reasonable time in which to find a substitute college on which to base their application for an extension of stay to obtain the relevant qualification. In the curtailment cases, express Home Office policy is to afford 60 days for such an application to be made.
In previous debates on fees orders, I have raised the question of refunds. For example, in March 2010, I said:
“There should be timeframes for deciding 100 per cent of the cases and, if deadlines are missed, there should be refunds to the individuals concerned”.—[Official Report, 4/3/10; col. 1647.]
The then Minister, the noble Lord, Lord West, replied:
“On refunds, we charge for consideration of the application and so do not offer refunds—the consideration is a cost to us as well”.—[Official Report, 4/3/10; col. 1651.]
I should like to ask my noble kinsman the Minister to reconsider that policy. Why should someone who receives an abysmal service nevertheless have to pay for it? The Upper Tribunal (Immigration and Asylum Chamber) has recently issued the following general guidance in a reported decision:
“Fairness requires the Secretary of State to give an applicant an opportunity to address grounds for refusal, of which he did not know and could not have known”.
That indicates that the tribunal is seeing examples of what the chief inspector has found in situations other than the entry clearance cases on which the chief inspector was reporting.
I hope that my noble friend will concede that, in any normal business, a supplier simply would not get away with overcharging for services which are manifestly of such poor quality as this, and that the fees in this order are an abuse of monopoly power.
Lord Henley
My Lords, I have been asked quite a number of questions and will endeavour to answer as many as I can. I apologise in advance for those that I miss and will in due course write to noble Lords to pick up anything that I fail to deal with.
The noble Lord, Lord Hunt, made the allegation that we were simply selling British citizenship. I do not accept that, but I think that it is right that, when setting fees above the cost, it is perfectly permissible to look at the value to the applicant of a successful application while maintaining the United Kingdom as an attractive destination to work, study or visit. That is why we set the fee for a short-term visit below cost, while a tier 1 or settlement fee is set above cost to reflect the value of a successful application. That is certainly not going down the line, as the noble Lord was suggesting, of selling British citizenship.
The noble Lord then asked about the effect of the fee increases on the number of those coming in. We believe that our fees continue to represent good value for money; indeed, the visa fee is only a small proportion of the overall cost that any individual would pay if they decided to come to the United Kingdom. There is no evidence to suggest that the fee proposals will undermine ongoing plans to promote the United Kingdom as an attractive destination. We do not think that they will have the effect that the noble Lord seemed to imply.
The noble Lord also asked what additional income would be available to UKBA. I can give him an assurance that something in the order of £40 million will be raised. I also make it clear to my noble friend Lady Hamwee and my noble kinsman Lord Avebury, who spoke about service standards within the UK Border Agency, that the agency is exceeding most of its service standards. However, it is important that it generates income to be able to continue to improve standards as is appropriate and to invest in making the United Kingdom border secure and effective while providing the right service for individuals as they come in.
The noble Lord, Lord Hunt, then moved on to the question of the Armed Forces, which I briefly touched on in my opening remarks. We have reviewed the entry clearance visa fees that apply to dependants of serving Armed Forces personnel who come to the UK to join their serving family member. The entry clearance fee for these dependants is being held at 2011-12 levels. This is in recognition of the service to the country of members of the United Kingdom Armed Forces and in support of the Government’s commitment and duty of care to members of the Armed Forces under the new Armed Forces covenant.
Baroness Hamwee
I hope that I did not put it in quite the stark terms in which he reflected it back to me. I was concerned, rather than making any allegations, because there are no details yet of a scheme to which I can respond. Is it intended that, when there is more clarity following the work to which he has referred about the particular services that might usefully come within such a scheme, there will be a further round of consultation, discussion or conversation—call it what you will—before the scheme is finalised? What I have picked up is the feeling that there is a real lack of clarity and that it is difficult for employers to respond at present.
Lord Henley
My Lords, I apologise for that misunderstanding of the point being made by my noble friend. I cannot give her an absolute guarantee that there will be further consultation, but I will certainly make sure that she is provided with the appropriate clarity that she seeks. We would obviously want to make sure that employers have that clarity as well, because if they do not they will not be able to make use of the system.
I turn to my noble friend’s questions, of which I was grateful that she gave me notice. First, with regard to the tier 1 post-study work closure supplemental, as my noble friend accepts, the focus of the debate should be on fees, but we have to look at the matter in the wider policy context for immigration. The tier 1 post-study work route will close on 6 April; currently it provides graduates with unrestricted access to the labour market for two years. A UKBA survey revealed that 30 per cent of those with post-study work leave were in low-skilled employment or unemployed. In a time of high unemployment in the UK, it was right that we should close that route. From 6 April graduates who wish to remain in the UK and work will need to apply through tier 2 and the points-based system and need to be sponsored by a licensed tier 2 sponsor. The minimum salary threshold for tier 2 is £20,000 or the appropriate rate for the job as detailed in the tier 2 codes of practice, whichever is the highest.
My noble friend also asked about the advice from the Migration Advisory Committee and what we had or had not asked it. The committee was asked to advise on appropriate economic criteria for settlement and recommended a simple pay threshold as a good indicator of skill. The cooling-off period that we referred to, which my noble friend asked about, was not part of its remit, but that was covered in the Government’s consultation document on employment-related settlement, tier 5 and overseas domestic workers. We believe that it was right to include in the changes to Immigration Rules laid on 15 March, as part of the package of changes intended to break the link between work and settlement and to reposition tier 2 as a primarily temporary route, a 12-month cooling-off period for tier 2 migrants.
I think that I have dealt with most of the points. I wanted to get on to the general criticisms of my noble kinsman—that is, my noble friend Lord Avebury—about service standards and the question as to whether refunds would be paid. As I made clear earlier, we believe that the UK Border Agency is meeting most of its targets. I accept that there will be failings on occasions; that is always the nature of things. The UKBA monitors and publishes its own service standards and makes them available on the website. It is committed to improving the service that it provides; that is why I talked about the investment and why the fees are important. It will take steps to address issues that may prevent it from achieving its service standards.
My noble kinsman then finally asked whether refunds could be paid for bad decisions. He quoted a response from the last time he tried to get something on this from the previous Government, from the noble Lord, Lord West. I do not always agree with everything that came from opposition spokesmen when they were in government, or otherwise, but on this occasion I am in full agreement with the noble Lord, Lord West, and there has been no change in policy. I hope that that deals with most of the points.
Schedule 5 to the Anti-terrorism, Crime and Security Act 2001 (Modification) Order 2012
(12 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Henley
That the Grand Committee do report to the House that it has considered the Schedule 5 to the Anti-terrorism, Crime and Security Act 2001 (Modification) Order 2012.
Relevant document: 43rd Report from the Joint Committee on Statutory Instruments
The Minister of State, Home Office (Lord Henley)
My Lords, I beg to move that the Committee considers the draft Schedule 5 to the Anti-Terrorism, Crime and Security Act 2001 (Modification) Order 2012. The draft order was laid before the House on 1 March 2012.
Protecting the public from terrorism will always be the principal priority of this Government and we are committed to ensuring that the police and others have the powers that they need to tackle terrorism. But there is also a need to guard against placing disproportionate burdens on business, industry and academia.
The purpose of the Anti-Terrorism, Crime and Security Act 2001 is to ensure that the Government have the necessary powers to counter the terrorist threat to the UK. Part 7 of the Act is intended to improve the security of dangerous biological substances that may be targeted or used by terrorists.
Schedule 5 lists the substances that are subject to the provisions of Part 7 of the Act. Any laboratory that intends to hold one of the controlled pathogens and toxins must notify the Home Office and comply with physical, personnel and electronic security advice as directed by the police. A pathogen is a biological agent that can cause disease or illness.
The purpose of the draft Schedule 5 to the Anti-Terrorism, Crime and Security Act 2001 (Modification) Order 2012 is to add one pathogen to the list of controlled pathogens and toxins in Schedule 5 to the 2001 Act and to remove four pathogens. The draft order sets out the specific details of the modification, which I will not repeat now.
The list of controlled pathogens was reviewed by a group of Government, academic and industry experts with the aim of ensuring that it was up to date with scientific advances and emerging terrorist threats and diseases.
Pathogens and toxins should be added to or remain on the list only if we are satisfied that the pathogen or toxin could be used in an act of terrorism to endanger life or cause serious harm to human health. Conversely, where we are satisfied that a pathogen or toxin could not be used effectively in an act of terrorism, we should seek to remove it from the list to remove unnecessary burdens.
The approach used to review the list of controlled pathogens and toxins is a robust one. Experience with lists of pathogens produced for health and safety at work shows that there is always debate about the inclusion of individual pathogens and toxins on such lists and that they need to be reviewed from time to time as more information becomes available. The key is to make pragmatic decisions based on the available knowledge of the experts involved.
The threat posed by the possible terrorist use of pathogens and toxins remains real. It is imperative to ensure that terrorists do not have access to dangerous substances but it is also important to ensure that the measures are proportionate and important scientific research and medical use are not restricted.
If the draft order is approved by both Houses, it will come into force on 1 October 2012. I believe that the modification strikes the right balance and therefore commend it to the Committee. I beg to move.
Lord Hunt of Kings Heath
My Lords, once again, we are grateful to the noble Lord, Lord Henley, for his full explanation of the order before the Grand Committee this afternoon. I support the general thrust of what he said and will support the order. I just want to ask a couple of points. Could he say a little more about the consultation process? I note from paragraph 8.1 of the Explanatory Memorandum that,
“Laboratories and law enforcement staff were consulted”.
Were other agencies also consulted that might have an interest in this area? I also want to ask him about paragraph 12.2. Very helpfully, the Explanatory Memorandum points out,
“The outcome will be subject to expert review in 2013”.
Obviously these are sensitive issues, but I wondered whether the outcome of that review in general would be made available in the public domain and whether there might be an opportunity at that point for further debate in Parliament.
Clearly the UK remains in a state of alert against the threat of the use of biological weapons, and that is absolutely right. The Minister will know that his own department and the police have suffered reductions in their budgets. Will he confirm that that has not had an impact on our capacity to deal with the particular threat posed by these biological substances?
The impact assessment, which I found helpful, makes it clear that, in relation to biological agents, inspections are carried out by the Counter Terrorism Security Advisors, who are located within police forces and are responsible for providing specialist protective security advice to local organisations, with their work co-ordinated by the National Counter Terrorism Security Office. My understanding is that the CTSAs have the responsibility to undertake security assessments of laboratories holding Schedule 5 substances and, as stated above, have the power to require improvements to their security arrangements operation. These are located within police forces.
I want to ask the Minister about police and crime commissioners. Will he assure me that the Home Office is satisfied that police and crime commissioners would not be in a position to inhibit the work of these people to carry out their security assessments of laboratories? What would happen if a police and crime commissioner sought to intervene with a chief constable to say that they did not think that this was a particular priority? If the noble Lord thinks that I am on a flight of fantasy, I would remind him of the actions of the Deputy Mayor of London, Mr Kit Malthouse, who has sought to interfere with the Metropolitan Police in the exercise of its operational responsibilities when it comes to phone hacking. The noble Lord was not, alas, able to be present for our debates on the police and crime commissioners except, I think, at the very end, but we raised those issues. So I think that it is entirely relevant for me to ask that question in relation to ensuring the integrity of our national security and ensuring that any perversity that might come from certain elected police commissioners would not in any way interfere with overall government responsibility for national security.
Baroness Hamwee
My Lords, rather like the debate that we had on the drugs order yesterday, I think it is quite hard for lay people—certainly such as I am—to judge proposals such as this. We have to rely on the experts and are grateful that they are there to advise. My noble friend the Minister has referred to the balance that has been struck. I take the point about the need for there to be a balance, although I was interested to read in the notes attached to the impact assessment the list of criteria used by the Lightfoot review as to which biological agents should be included or excluded from the list. In particular, it was quite interesting that ease of production was one of them, since a substance, a pathogen or toxin was of a level of danger or not. I do not see that as affected by the ease of production, but I suppose that the whole area of risk is quite tricky.
Like the noble Lord, Lord Hunt, I looked at the paragraph on consultation and cannot believe that the health services were not consulted. The impact of any of these getting loose, as it were, is clearly relevant to them. Could the Minister say a word about their involvement in the process?
Apart from those questions, I support the order.
Lord Henley
On consultation and who was brought on to the expert panel, there was a government, academic and industry expert panel comprising representatives of the Health and Safety Executive, the Health Protection Agency, the Defence Science and Technology Laboratory, the Department for Environment, Food and Rural Affairs, the National Counter Terrorism Security Office, the Security Service and the Department of Health. I can give that assurance to both noble Lords. I imagine that it would also have included representatives from the devolved Departments of Health, as well as the National Institute for Biological Standards and Control, the Association of the British Pharmaceutical Industry, Imperial College, the Centre for the Protection of National Infrastructure and, last but not least, the Home Office. That expert panel considered which pathogens handled in UK facilities could have potential to cause very serious harm if used by terrorists. We then had two 12-week consultation exercises, and the consultation document was made publicly available. Communications were targeted at law enforcement and bio-laboratory communities by e-mailing invitations to respond to each force and laboratory through their professional association. We had relatively few responses to that consultation—only about 20—but that is to be expected in such a specialist area.
The noble Lord’s second point related to cuts in the budget. I repeat that it is very difficult in the Home Office and all other departments having to cope with reductions in expenditure. However, we all accept that we can still do the job and do it properly, and I can assure the noble Lord that I still believe that that is possible.
Lastly, the noble Lord raised the point about PCCs. It was a nice try, but they will not be able to inhibit or damage any of the work under the Anti-terrorism, Crime and Security Act. The obligations are set out clearly in Part 7, and the police have a duty to explore those obligations. I do not believe that that is a matter on which we will see interference from PCCs.
I hope that that deals with the questions from my noble friend and the noble Lord. I beg to move.
Localism Act 2011 (Consequential Amendments) Order 2012
(12 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Hanham
That the Grand Committee do report to the House that it has considered the Localism Act 2011 (Consequential Amendments) Order 2012.
Relevant document: 41st Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, the consequential provisions order makes amendments to existing legislation in relation to policies implemented through the Localism Act relating to the general power of competence, compulsory acquisition of land and neighbourhood planning.
The parish councils order, which I will also speak to, sets out the conditions that parish councils will need to fulfil in order to be eligible to use the general power of competence.
The Localism Act (Consequential Provisions) Order 2012, as implied by the title, will make consequential amendments to particular provisions in existing primary and secondary legislation following the enactment of the Localism Act 2011.
The order provides for amendments in three specific policy areas, each of which has its own schedule. These are: the general power of competence; compensation for compulsory acquisition of land; and neighbourhood planning. I will consider each of these schedules in turn. The amendments in Schedule 1, Article 2, deal with the insertion of text referring to the general power of competence into various pieces of legislation, such as the Industrial and Provident Societies Act 1965. References to the well-being power are, however, being retained in two particular circumstances. First, the well-being power is being retained in Wales because Welsh Ministers were offered the opportunity to have the general power of competence but they decided against it. Secondly, it is retained to deal with the historical exercise of the well-being power by English councils—for example, where bodies such as ALMOs were established using those powers.
Schedule 2, Article 3, covers the compensation arrangements for compulsory acquisitions of land. The amendments in Schedule 2 are necessary to fully implement changes brought about through Section 232 of the Localism Act. This section of the 2011 Act reformed the planning assumptions for compulsory purchase compensation and, in doing so, replaced Sections 14 to 16 of the Land Compensation Act 1961 with new Sections 14 and 15 only.
As a consequence, this means that references to Section 16 elsewhere in statute must be removed. This is achieved by paragraphs 1(2) and 3(2) of the schedule. The remainder of paragraphs 1 and 3 are transitional provisions to align with those in the commencement order and interpretation provisions. Section 232 also replaced Sections 17 and 18 of the 1961 Act with new Sections 17 and 18. These make provision for the issuing of certificates of appropriate alternative development.
Paragraph 2 of Schedule 2 amends paragraph 55 of Schedule 2 to the Local Government Act 1972 to reflect these changes. Paragraph 55 deals with any necessary consultation arrangements between county and district planning authorities. The amendments set out in Schedule 3, Article 4, of the order cover neighbourhood planning. Part 2 of Schedule 9 to the Localism Act amends the Planning and Compulsory Purchase Act 2004 to provide for a new category of development plan—a neighbourhood development plan. These plans will be made by local planning authorities on the initiative of parish councils or neighbourhood forums.
The amendments in paragraph 1 of Schedule 3 to the order amend Schedule 8 to the Planning and Compulsory Purchase Act 2004, which makes transitional provision in relation to old plans and policies. To ensure continuity of a plan-led system, the transitional provisions allow for the life of local plan policies to be extended and saved until replaced. Local planning authorities replace the saved polices with new policies in stages as new development plan documents are adopted.
Paragraph 5 of Schedule 8 to the Planning and Compulsory Purchase Act 2004 defines a new policy as one contained in certain planning documents. The amendments to Schedule 8 to the 2004 Act will both extend the types of planning documents that new policies are contained in to include a neighbourhood development plan, and also set out when a new neighbourhood planning policy is published for the purposes of transitional arrangements.
While the amendments contained in this order are in the main technical and, in some cases, quite hard to follow, they are vital to ensuring that the provisions contained in the Localism Act 2011 work as intended. I commend this order to the Committee.
Lord Shipley
My Lords, I thank my noble friend the Minister for the explanation of these two orders. I will speak to them both because, substantially, I have only one point to make.
I am particularly happy with the general power of competence applying to parish councils. It is absolutely right that clerks should be qualified and that there is a clear democratic mandate for the parish to undertake the general power of competence. But I have one question that relates to the duty to co-operate. I seek confirmation that there will be an application of the duty to co-operate.
One of the issues that arose when we discussed the Localism Bill was that neighbourhood planning had been addressed from a rural rather than an urban perspective. Of course it applies in both. Albeit that 1973 is a long time ago, the consequences of the policy in those days are broadly with us today. In rural areas, some parish councils were created to lie within what are now urban areas. My concern relates to a failure of a duty to co-operate between parish councils and the areas around them.
There could, for example, be a situation in which parishes have a neighbourhood plan but the adjacent non-parish area does not have a neighbourhood forum, or where a parish does not have a plan and the adjacent neighbourhood forum has been created and it does. Or there could be a situation where both the parish council and the adjacent neighbourhood forum could be contiguous and the plan of one would impact on the other. It is very important that where they both want to have a plan there is clear co-operation between the two.
There is a whole set of issues around whether urban neighbourhood councils or parish councils should be extended. That is for others to decide. But it is important, particularly in the context of the community infrastructure levy potentially applying, that a clear duty to co-operate should be imposed on parish councils and on other councils in exactly the same way that there is a duty to co-operate between neighbouring district councils.
In short, with a general power of competence, it is important that there is a general duty to co-operate as well. I simply seek the Minister's assurance that that is what is planned.
Lord Beecham
My Lords, I am pleased to join two fellow north-easterners in the Minister and the noble Lord, Lord Shipley, in reviewing these revisions. I certainly endorse their commending the extension of the general power of competence to parish councils.
I do, however, have questions about the detail of the proposals. I confine myself to the second instrument that the Minister proposes. My first question relates to the provision about the resolution, which will allow a council to proceed with the exercise of the general power. The council, having passed such a resolution, is able to continue to exercise that power until the next relevant annual meeting—even if, for example, it loses its clerk at some point during that period. I hesitate to say so, but parish councils do not have the highest reputation for stability in relationships between their own members or between members and clerks. They have been the source of vast numbers of complaints to the now abolished standards board. It is conceivable that a clerk, perhaps because of a disagreement or perhaps simply because he or she moves, leaves a parish council for the greater part of a four-year period. Yet the council could continue to exercise its general powers without the benefit of the kind of advice which, very sensibly, as the Minister outlined, can be secured through qualifications and training. Is it wise to allow for such a potentially long period?
There is also a transitional provision safeguarding those who have to deal with the parish council in those circumstances. I understand this. The Explanatory Memorandum states that the provision would ensure that councils,
“do not lose the incentive to continue to meet the conditions once they have initially become eligible. It also provides certainty for third parties in their dealings with parish councils as to the extent of a particular council’s powers”.
That is the point. It would seem to apply to not just existing projects but new projects to which a parish council, in between the appointment of clerks or resolutions, might embark upon. Is it all that sensible to make that provision? On similar lines, the Explanatory Memorandum points out that if a council does not pass at the “next relevant annual meeting”, for whatever reason, a resolution, either because it does not qualify through having a qualified clerk or because it changes its mind, an,
“activity that has been begun but not completed may be continued”.
I can see the logic of that, but I wonder about the word “completed”. Let us suppose, for example, that a parish council decides to undertake the maintenance of playing fields or provide a facility—it could be anything from a public convenience to meeting rooms or something of that kind. In that example, what does completing that project actually mean? If it is a contract, I can understand it; if it is not, I do not quite understand how it could be judged to be completed. Therefore, it would potentially seem that something could just continue indefinitely, even though the council has either become ineligible or does not pass a further resolution. There is a possibility for difficulties there.
The Explanatory Memorandum says:
“The Government’s expectation is that eligible parish councils will strive to fulfil the conditions at all times”.
That is in the motherhood-and-apple-pie part of the Explanatory Memorandum. If anything, what do the Government have in mind, preferably in conjunction with the National Association of Local Councils, to see that that expectation is fulfilled? I would hope that the national association would be helpful in supporting the Government’s expectation. Of course, not all councils are members of the national association; some have deliberately absented themselves from it, including some of the larger ones—unless they have rejoined since my time, when I was engaged with them on behalf of the LGA. So there is potentially an issue there as well.
There are two other points on which I seek clarification of the present position, or on whether the Government might be interested in pursuing them. The first, in a sense following the point made by the noble Lord, Lord Shipley, is whether the general power extends to councils combining for particular purposes. Would the power extend to allowing two neighbouring parish councils to set up something jointly in the way that councils in, for example, Greater Manchester have come together to do things together across the piece, serving a wider area than the individual parish? I assume that it is intended, but it would be as well perhaps to have that on the record.
Baroness Hanham
My Lords, I thank both noble Lords for their comments and their questions. With regard to the last point raised by the noble Lord, Lord Beecham, it would probably be proper that parish councils should be associated with those regulations as well. It conjures up all sorts of possible things that might happen, but it would be appropriate that they were covered.
First, on the point raised by the noble Lord, Lord Shipley, regarding parish councils and their neighbouring area, the power would work only provided that they both had powers to do so. So in perhaps part of a parish, if the neighbourhood did not have that power because it either was not a parish council or it was not a neighbourhood forum, that would not work; but as long as it does have that power, they are able to and, indeed, ought to co-operate, because it seems very clear to me that that should be what is required. I thank the noble Lord, Lord Shipley, for his support on that point.
With regard to what happens when the department of a clerk or one of the councillors gives up, it is correct that they would be eligible and able to carry on using their power until the next election. That was the case also with the well-being power; there was always an assumption that they could continue. However, they will have to continue doing it under their own mandate to ensure that they do not breach any of the other laws. The order recognises that, if there are longer-term projects in train, they can carry on. The noble Lord asked, “How long is a piece of string?”, and I take his point, but the string is as long as making sure that the project comes to a conclusion. It might be a contract; it might be that a council is deciding whether to make a playground or to ask for the listing of a piece of land; but they can properly do that and cannot be challenged for it. A council is eligible to complete a project for up to four years if that is the time between elections.
I was asked about peer review. Peer review at the moment is voluntary, being carried out by the Local Government Association. With parish councils, I suspect that it would have to be with the co-operation of the National Association of Local Councils—I cannot see anything to stop that happening. As with other local authorities, peer review is often helpful and often produces some very useful results. However, there is no legislation to say that it should happen. If a council wishes to do it, and someone in the local associations feels that it is appropriate, it can happen.
Lord Beecham
Would the Minister feel able, in the language that government use these days, perhaps to nudge the association into suggesting such an idea to its members?
Baroness Hanham
The most that I can do is to record the fact that we see the value of it at the moment and it would seem appropriate, therefore, for people to consider doing it subsequently. I think that I have covered most of the points raised.
Lord Beecham
Could you comment on the scope for authorities to act jointly?
Baroness Hanham
Under the general well-being power, they would be able to act together, but, as I said to the noble Lord, Lord Shipley, that would be as long as they both had the power to co-operate.
I hope that I have covered the points made. That concludes our work on the order.
Parish Councils (General Power of Competence) (Prescribed Conditions) Order 2012
(12 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Hanham
That the Grand Committee do report to the House that it has considered the Parish Councils (General Power of Competence) (Prescribed Conditions) Order 2012
Relevant document: 41st Report from the Joint Committee on Statutory Instruments
House of Lords
Work Capability Assessment: Cancer Treatments
Baroness Morgan of Drefelin
To ask Her Majesty’s Government what changes are planned to the work capability assessment following their informal consultation on accounting for the effects of cancer treatments.
Baroness Morgan of Drefelin
I beg leave to ask the Question standing on the Order Paper in my name, and in so doing I declare an interest as chief executive of a research cancer charity.
Lord De Mauley
My Lords, our informal consultation on accounting for the effects of cancer treatment in the work capability assessment closed on 9 March. We received almost 90 responses to the consultation. We are currently analysing these responses and will in due course publish a consultation response which will outline our proposals. Until we have done so, it would be inappropriate to comment on any changes to the work capability assessment.
Baroness Morgan of Drefelin
My Lords, can the Minister inform the House what action the Government are taking to ensure that the intended introduction next month of the contributory ESA time limit will not impact adversely on those cancer patients who are currently claiming contributory ESA?
Lord De Mauley
Before I do so, my Lords, I would like to place on record our thanks to the noble Baroness and Breast Cancer Campaign for the valuable work that they do in this field. We are committed to supporting cancer sufferers in the most appropriate way through the welfare system. As evidence of that commitment, a year ago we extended the support group to include both those awaiting and those between courses of treatment. As a result, 68 per cent of employment support allowance claimants whose primary condition is cancer are placed in the support group and will be unaffected by time-limiting. We of course recognise that some individuals will be affected. This is a highly sensitive area and we must get our proposals right. That is why, as I explained, we undertook a consultation, are analysing the responses we received and will publish a response soon. We will then fully assess the implications of those proposals, with a view to implementing such changes as are necessary as quickly as possible.
Lord German
My Lords, the Government have had just nine or 10 days since the consultation ended to bring a response. However, does my noble friend agree that the state and the benefit system have to perform the important job of supporting people who have suffered or are suffering from cancer and ensure that not only the method of treatment but also the condition of each individual is looked at? We must treat every person as an individual and not take a tick-box approach to their problems.
Baroness Gardner of Parkes
My Lords, what is the position with people undergoing chemotherapy? In many cases, if they are on a monthly cycle, the first week will be absolutely intolerable; then they will be fine for two weeks; then it will be absolutely ordinary living in the next week; and then they will start the cycle again. Is that treated as a total continuing period for a work capability assessment, or will they be expected to do something in the one week when they are better off?
Lord De Mauley
My noble friend makes a valid point. Of course she is right: they will be treated as being under treatment.
Lord McKenzie of Luton
My Lords, can the Minister give us an update on the success rate of appeals against WCA determinations?
Lord De Mauley
Yes, my Lords. The rate of successful appeals remains at about 40 per cent. We recognise the importance of getting decisions right the first time, and we are committed to improving the decision-making process as part of the drive to ensure that the work capability assessment is as fair and effective as possible.
Health and Social Care Bill: HIV/AIDS Programmes
(12 years, 1 month ago)
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Baroness Thornton
To ask Her Majesty’s Government what assessment they have made of the risks posed by implementation of the Health and Social Care Bill to HIV/AIDS programmes.
Baroness Northover
My Lords, HIV services are, and will continue to be, comprehensive. They include surveillance and national and local prevention, treatment and care. The NHS Commissioning Board will lead on commissioning treatment and care services. This recognises that HIV treatment is specialised and that prevalence varies. Local authorities will commission HIV prevention services in line with their wider remit regarding sexual health and health inequalities.
Baroness Thornton
I thank the Minister for that Answer, which confirms that HIV treatment and care will be commissioned by the national Commissioning Board, that some preventive work will be conducted by local authorities and that national HIV prevention will be commissioned by Public Health England. However, it is unclear who will commission post-exposure prophylaxis following sexual exposure, PEPSE, which is vital specialist work to halt the spread of HIV. Who will commission that work, and how do the Government intend to ensure that all the services will not be diminished by being commissioned by at least three different bodies or lost when those bodies begin their work?
Baroness Northover
I assure the noble Baroness that the current high level of care and commissioning will continue. The reason the Commissioning Board is taking responsibility nationally is that this is a costly disease to treat and its prevalence is varied around the country, so it makes sense if the board has overall responsibility for that. As the noble Baroness knows, public health has moved to the local authorities, which is why it is appropriate for prevention to be placed at that level. With regard to joining up care, as she knows, the health and well-being boards locally will do a great deal to ensure that they look at the needs of the population in that locality and that care is delivered appropriately in their local area.
Lord Fowler
My Lords, in preventing the spread of HIV, does my noble friend agree that the most important step taken in the process of the health Bill was the Government’s decision that free HIV treatment should be made available for everyone in this country? When I withdrew my amendment, it was on the understanding that the Government would introduce their own statutory instrument. When will that happen, and when does my noble friend expect the new system to be in operation?
Baroness Northover
I thank my noble friend Lord Fowler for all that he has done in this area, not least on this particular change, which we were very happy to announce we would be taking forward. The important thing here is the protection of our population. The House of Lords Select Committee had rightly flagged that if some overseas visitors who were not currently covered were left in that situation, there would be an increased risk to our population. I am extremely glad to say that we have extended treatment to cover that group so that we can look after our population. We are on course for the timetable that we laid out before, and this should be introduced in the autumn.
Baroness McIntosh of Hudnall
My Lords, what incentives does the Minister think there will be for local authorities, once they have public health responsibilities, to invest properly in the prevention of HIV/AIDS when the treatment costs will not fall to them? Can she confirm that currently a very much smaller proportion of funds is spent on prevention compared with the enormous cost of treatment? It would be in everyone’s interests if that balance were addressed somewhat.
Baroness Northover
The local authorities will commission the prevention and testing services. They have a public health outcomes framework that they need to address to drive up the situation across the board in public health. There are incentives within that for them to try to improve the health of their populations. Local authorities are best placed to understand the public health pressures, which are not just in this area, on their local populations.
On prevention and treatment, the emphasis in recent years—under the previous Government, as under ours—has been on the high-risk groups, particularly gay men and people from the sub-Saharan region. Those are the groups at greatest risk. However, a sexual health policy document is being worked on at the moment. If it is felt that it is important to feed into it that there is a need for nationwide emphasis on this matter, now is the time to emphasise it.
Baroness Masham of Ilton
My Lords, will the Minister assure the House that there will not be fragmentation in regard to this very complicated condition? Will there be NICE guidelines? The drugs for HIV are very complex and there is a fear that there might be resistance.
Baroness Northover
As with every other area, this will kept under close review to make sure that things are suitably joined up and that we have high-quality prevention and treatment. As for NICE guidelines, the British HIV Association produced clinical guidelines for HIV treatment in 1999. They were taken forward and are widely accepted by clinicians and commissioners. The association is currently revising its guidelines and we will see what it suggests.
Baroness Barker
My Lords, do the Government still support the work of the UK National Screening Committee and, if so, how will its recommendations be implemented in future?
Baroness Northover
Yes, indeed, the UK National Screening Committee will remain as an independent advisory body and will continue to advise the Government and the NHS on all aspects of screening. The NHS constitution, which was drawn up by the previous Government, commits the Government to providing screening programmes as recommended by the UK National Screening Committee. The NHS Commissioning Board will commission national screening programmes on the Secretary of State’s behalf.
Lord Tomlinson
Will the noble Baroness explain how what she said about frameworks in the early part of her rather lengthy answer to my noble friend Lady McIntosh differs from having targets in the National Health Service?
Baroness Northover
I have been allocated much more time for this Question than my colleague was for the previous one, so I apologise if I am taking too long to answer. The noble Lord will have to wait to see how that transpires.
Lord Walton of Detchant
My Lords, does the noble Baroness agree that one of the difficult problems in the area of prevention is the fact that it is not ethically possible to take a blood sample to test an individual for HIV without their informed consent? The problem that arises is that a number of people who are at risk refuse to give consent, even though they continue to have sexual contact, and that is very difficult to overcome.
Baroness Northover
The noble Lord is absolutely right. From my other area of international development, I know only too well that that is true world wide. Things have improved enormously in the United Kingdom, where people with HIV are now living normal lives and there is much less discrimination than there used to be. That helps in encouraging people to come forward for testing. However, the noble Lord is absolutely right and it is extremely important that we reduce the stigma so that they are content to do so.
Lord Roberts of Llandudno
My Lords, as health is devolved to Scotland, Northern Ireland and Wales, how does the United Kingdom national screening project include them? Is there any particular mechanism or understanding there?
Baroness Northover
Public Health England will be liaising with the different parts of the United Kingdom to ensure that what is learnt in one area is propagated to others so that the different parts of the United Kingdom can learn from each other. We look to what happens in England, Scotland and Wales. That came up frequently in the Bill and will continue to be the case.
Baroness Thornton
My Lords, perhaps I may come back to the noble Baroness as she completely failed to answer one of my questions, which was about PEPSE. Who will commission the vital work which halts the spread of HIV?
Baroness Northover
I was accused of answering at too great a length. The Commissioning Board will oversee commissioning. It is working out how that can best be delivered and whether various things should be commissioned at the local level. If the noble Baroness would like to feed into that process, that would be very welcome.
The Earl of Listowel
My Lords, this may be slightly wide of the Question, but can the noble Baroness say what progress has been made in reducing maternal transfer of HIV in this country, and how that compares with the progress made on that issue in sub-Saharan Africa? That may be very wide of the Question and she may like to write to me.
Baroness Northover
I am very happy to write to the noble Earl, but the information I have suggests to me that it has been declining.
Criminal Records Bureau
(12 years, 1 month ago)
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Lord Vinson
To ask Her Majesty’s Government how many checks have been conducted by the Criminal Records Bureau since it was established, and at what total cost to applicants.
The Minister of State, Home Office (Lord Henley)
My Lords, the Criminal Records Bureau has issued more than 31 million certificates since its launch in March 2002 and has received more than £868 million in fees. The bureau does not hold any information to determine what portion of this cost has been paid by applicants, employers or other bodies.
Lord Vinson
I thank the Minister for his very considered reply. Trust is the glue that holds society together. Is he aware that many organisations find that this staggering level of CRB checks is overdone, is disproportionate to the risk and is putting off good volunteers? As aggressive paedophilia is rare, and unlikely in the presence of others, will he reissue the sensible Home Office guidance on this matter and so help re-engender trust and good neighbourliness?
Lord Henley
My Lords, my noble friend is right to draw attention to the importance of trust. He is also right to draw attention to the very high number of certificates that have been issued. This is a matter that we have been addressing in the course of the Protection of Freedoms Bill. I refer my noble friend to the impact assessment of last year on that Bill, which estimated that there would be a reduction of some 50 per cent in the number of such certificates being issued, dropping from about 3.7 million a year to something like 1.7 million. I think that is a step in the right direction.
Baroness Deech
Will the Minister be good enough to give the House his opinion of the effect that the following scenario will have on the outreach work carried out by this House? I invite a small group of A-level students to visit this House, as I have done before, to sit in the Chamber, to have tea and to take a small tour, and the teacher writes asking me please to confirm that I have had a CRB check.
Lord Henley
Obviously, the noble Baroness is a most tremendous risk to the public and to children and I hope that she will consider these matters very carefully. No—that is what we want to address and it is the point of some of the changes we are making as a result of the Protection of Freedoms Bill. It is why we will keep these matters under review and it is why my right honourable friend the Home Secretary launched her initial review into these matters last year. I go back to the supplementary question of my noble friend Lord Vinson when he talked about trust being important. We think it is vital that people take a common-sense approach in these matters.
Baroness Walmsley
When and in what way will the Government be communicating to the ISA and the police the statement that my noble friend made last week during the passage of the Protection of Freedoms Bill in response to the amendment tabled by the noble Lord, Lord Bichard: that the ISA can pass on to the police the information that has led to a discretionary bar so that the police can then use their discretion to release that information to a conscientious employer who requests it?
Lord Henley
My Lords, the Bill has not completed its passage and it will obviously have to come back to this House after consideration of Lords amendments in another place. After completion, when we have had our last chance to discuss these matters, we will issue that guidance.
Lord Harris of Haringey
Further to that question, the noble Baroness suggested that it would be discretionary for the ISA to pass such information to the police. I had understood the Minister to say that his intention was for that information to be passed to the police automatically, so that they could use their discretion. Does he agree that having two sets of discretion in this area is likely to lead to individual cases falling through the net, which could be very damaging to the children who might subsequently be abused?
Lord Henley
My Lords, I do not have the precise words that I used on that occasion, but the noble Lord is probably right to imply that we were offering discretion to the police.
The Earl of Erroll
What percentage of these certificates would reveal either a criminal record or information that would bar these people from working?
Lord Henley
My Lords, I cannot answer that question, but I can say that in the 10 years in which this system has been running some 130,000 potentially unsuitable people have been prevented from working with children and vulnerable adults. The noble Earl can use that figure against the figure of 31 million and work out his own percentage.
Lord Hunt of Kings Heath
My Lords, can the noble Lord confirm that it is the Government’s view that in general the establishment of CRB checks and the system that came from it was essential to ensure that vulnerable people are protected? Having said that, and coming back to the question of the noble Baroness, Lady Deech, does he agree that part of the problem is overzealous interpretation by a number of organisations? Perhaps the Government’s best efforts should be put into working with those organisations on guidance, information and education, so as their decisions on the number of people who need CRB checks might be more proportionate.
Lord Henley
My Lords, I accept that it was necessary to bring in the CRB and these checks, but things had become out of proportion. That is why my right honourable friend announced her review and is why we want to scale things back to allow people to take proper responsibility for these matters. That is what we are trying to do, and it was what we were trying to do in the Protection of Freedoms Bill, but we will obviously keep these matters under review. If we can further scale down the checks without putting children or vulnerable adults at risk, we will do so.
Lord Flight
My Lords, when I was at school, it was quite common for people to have school exchanges and stay with a family in France or Germany, pick up the language and learn a bit. These exchanges have virtually disappeared for the same reason that we have been hearing—checks have to be done on the families with whom the children will be staying. Does the Minister agree that this is yet another system that is over the top? Surely, the schools themselves can do checks on children’s parents.
Lord Henley
My right honourable friend brought in the review exactly because of those concerns—damage to exchange visits, volunteering and the like. That is why she conducted her review last year and is why we made changes during the course of the Protection of Freedoms Bill.
Lord Marlesford
My Lords, will the Minister try to ensure that the Criminal Records Bureau focuses on areas of real priority? For example, does the bureau hold records of people’s passports, including foreign passports? After all, if you want to stop someone on the watch list leaving or entering the country, it is quite useful to know what passports they hold, including foreign ones.
Lord Henley
My Lords, without notice, I am not sure that I can answer my noble friend’s question about passports, but I shall certainly offer to write to him in due course.
Drought
(12 years, 1 month ago)
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Lord Knight of Weymouth
To ask Her Majesty’s Government what action they are taking to protect communities, food producers and habitats from the threat of drought in England.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Taylor of Holbeach)
My Lords, droughts happen in the natural order of things, and the Government’s reaction to the current dry spell is being planned for in detail with the Environment Agency and water companies. The Government recognised the risks early on and, since May 2011, the Secretary of State has held three drought summits to agree actions to manage the impact of drought. Water companies are working closely together to conserve public water supply, and government and key sectors are meeting regularly.
Lord Knight of Weymouth
I thank the Minister for that reply. The effects of drought are now too apparent in some parts of the country. For example, the River Kennet has in part dried up already. Does that not reinforce the urgency of taking forward the Government’s proposals on water abstraction? The contents of the Queen’s Speech have been even more pre-briefed than today’s Budget. Why has Defra failed to land a slot for a water Bill that would mean that we could get on with urgent action on water supply?
Lord Taylor of Holbeach
My Lords, it is not for me to anticipate the contents of the Queen’s Speech, and certainly not to use the opportunity of this Question to do so. Noble Lords will know that next week we will consider a water Bill that deals with time-sensitive matters and which I hope will have the concurrence of the House. The noble Lord will have to wait to see whether the water White Paper is translated into legislation in the Queen’s Speech when it occurs.
Lord Hamilton of Epsom
My Lords, will my noble friend comment on reports in the press recently about the proposal for a main line to be run alongside the high-speed link connecting to Birmingham and beyond, which would bring water down from the north-west to the drought-stricken regions of the south-east?
Lord Taylor of Holbeach
My noble friend anticipates a Question on the Order Paper about a national grid for water. Of course, all those matters have been considered by this and other Governments. It has been found that the interconnectivity of water systems is far more cost-effective than building a mainline grid. Water is extremely energy-expensive to pump around. Unfortunately, it does not naturally flow from the north of England to the south-east.
Lord West of Spithead
My Lords, on that point, has much work been done on the use of operational and non-operational canals to assist in that transfer?
Lord Taylor of Holbeach
Yes, it has, and to a limited extent they can be used in the interconnectivity projects between water companies. The companies are sharing a great deal and have invested considerable amounts. There has been a recent investment in the north-west of England to relieve a drought there by pumping water from Wales.
Lord Naseby
Is my noble friend aware that in 1976, when a severe drought affected eastern England, comprehensive work was done even on reversing the flow of rivers. Could he usefully dust down those files and look at all the work that was done in that period?
Lord Taylor of Holbeach
I can assure my noble friend that these things are constantly under review. I do not know that any particular major projects will alleviate this drought period, but it is important that we make the most of the natural links that we have and the best use of the water that is available to us.
Lord Tomlinson
Will the Minister reflect that if he is going to brush down the files from 1976, to accompany them he must remember that not only did we have a Labour Government but we had Denis Howell? What plans does he have to resurrect the spirit of Denis Howell?
Lord Taylor of Holbeach
How can noble Lords be assumed to have forgotten? I seem to remember that when Denis Howell was appointed Minister for Drought, it did not stop raining.
Lord Stoddart of Swindon
Will the Minister ensure that water companies do not close existing storage capacity for developing housing and other things? In particular, will he get in touch with Thames Water, which is closing storage capacity in Reading?
Lord Taylor of Holbeach
I do not know the details of the particular case to which the noble Lord refers, but it is certainly useful to be advised of that. Thames Water is not in as acute a situation as some of the other water companies. Indeed, it is helping out water companies in Essex by transferring water from its area to Essex. This co-operation between water companies is a very good strategy, and one which the Government are anxious to encourage.
Lord Plumb
My Lords, may I confirm what the Minister has just said? I was a member of Denis Howell’s committee, and I confirm that it rained the moment we met and did not stop for weeks. One hopes that if we can form a committee again, the same sort of thing will apply. I congratulate the Government on recognising the importance of water, its usage and its conservation. It is more crucial than people in this country perhaps realise. However, would the Minister agree that in the interest of food security, irrigation is essential? It is going to be a major problem in many areas. I realise that the Environment Agency has the responsibility for maintaining the main arterial rivers. Many of these have been neglected in recent times, which is a matter of importance that needs to be considered. However, restricting water for irrigation for certain food crops would be catastrophic and would result in crop failure.
Lord Taylor of Holbeach
It is very good to have my noble friend volunteering yet again to deal with this matter on behalf of us all. There are considerable concerns in agriculture, particularly about establishing crops. However, farmers are used to dealing with the weather. They are by nature adaptable creatures. They are changing cropping programmes in some parts of the country, and they will change them in others. It is far too early to say what impact this may have on the food supply. All I can say is that the NFU and the Environment Agency are involved in the weekly bird table meetings that are held on this subject, and that is an extremely effective mechanism for getting the flexibility that we need to deal with this problem.
London Local Authorities Bill [HL]
The Chairman of Committees
That the House do agree with the Commons in their Amendments 1 to 154.
The Chairman of Committees (Lord Brabazon of Tara)
My Lords, I do not intend to move these amendments individually as many of them deal with rather minor matters. There are, however, a number of amendments to the Bill which it may be helpful to draw to the House’s attention.
First, the Select Committee in another place deleted in its entirety the provision that would have required food hygiene information to be displayed in food premises. Secondly, the Select Committee also removed the provisions relating to the management of houses in multiple occupation, and provisions containing powers of entry into such houses. Thirdly, provisions relating to entertainment involving nudity were removed from the Bill at the request of the promoters following a change in national legislation. The promoters also agreed on Report to remove from the Bill a new offence of obstruction of an authorised officer.
The remainder of the amendments are either minor or consequential on the changes that I have mentioned. I hope that the House will agree to the amendments made in another place. I beg to move.
Scotland Bill
(12 years, 1 month ago)
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Lord Wallace of Tankerness
That the House do now resolve itself into Committee.
The Advocate-General for Scotland (Lord Wallace of Tankerness)
My Lords, in moving this Motion, it may be helpful if I indicate that my right honourable friend the Secretary of State for Scotland tabled a Written Ministerial Statement which has been made available in the Printed Paper Office since this morning. He has also written to the Shadow Secretary of State for Scotland, Mrs Margaret Curran MP, and circulated that letter to other party spokesmen in the House of Commons in which he gives an indication of the consultation. He concludes his letter by saying:
“In making this information available now, I am seeking to balance the need to ensure that tomorrow’s debate in the House of Lords is as well informed as possible, with the need to provide Parliament with a full and detailed analysis of the consultation in due course”.
I should perhaps have said that the Written Ministerial Statement reflected agreement reached between the United Kingdom Government and the Scottish Government on the basis of which the Scottish Government will be tabling a legislative consent Motion in the Scottish Parliament. Obviously, we shall bring forward amendments to reflect that agreement. They will certainly be subject to debate, and possibly votes, and we will commend them to the House when we meet on Report next week. I beg to move.
Lord Forsyth of Drumlean
My Lords, I thank my noble friend Lord Wallace of Tankerness for the Written Statement and for circulating the copy of the letter from the Secretary of State. However, without being churlish, I should like to complain in the strongest possible terms about the way in which this legislation is being handled. We agreed to defer the consideration of those parts of the Bill which relate to referendum amendments until after the consultation process had been completed. Your Lordships will recall that we were considering the Bill in Committee when, out of the blue, came the consultation paper, to which responses were required by 9 March. Therefore, we agreed to consider the Bill so that we would be able to debate the issues arising from the referendum on independence with the knowledge of what had happened during the consultation process. As a result of that, the Bill, although it has been before Parliament for well over a year, is being considered right at the end of the Session, so we also agreed that the normal period between Committee stage and Report stage would be truncated.
This afternoon, we are now faced with a two-page letter from the Secretary of State, which tells us very little about the consultation paper but tells us, as my noble friend has just said, that,
“tomorrow’s debate in the House of Lords”—
that is today’s debate—
“is as well informed as possible, with the need to provide Parliament with a full and detailed analysis of the consultation in due course”.
When I was a Minister, “in due course” meant six months. We shall have to consider the Report stage of this Bill on Monday and Wednesday and, therefore, the only opportunity that we have to table amendments which relate to the first parts of the Bill is tomorrow. There is absolutely no time for us to take account of the consultation. I very much hope that my noble friend will impress on his colleague, the Secretary of State for Scotland, that it really is unacceptable that we should go into Report stage on Monday without a full analysis and full information relating to the consultation process and an indication of where the Government stand on this. To add a little zest to that, perhaps I may give notice that, in the absence of that undertaking, I will table a Motion for Monday to provide for that.
I turn to my second point which relates to something that is quite unacceptable. I am not being critical here of my noble friend as I know he is the messenger in this respect—I should have said my noble and learned friend; indeed, I may have played some small part in that, but that is another story—and I realise that he is taking the Bill through the House with great courtesy and skill. However, in earlier consideration of these matters, when we raised the issue of legislative consent and whether the Scottish Parliament was giving legislative consent, we were not informed of what we are now informed of: that the Government have done a deal with the Scottish Government, that the concessions made are very extensive, and that they relate to this Bill. Again, we are being told that amendments will be tabled by the Government. Presumably, these amendments will be tabled tomorrow and, therefore, there will little opportunity for us to consider them. However, I have taken the measure of placing a new amendment on the Marshalled List for today which will give us an opportunity to discuss at least some of the issues set out in the Written Ministerial Statement to which my noble and learned friend referred.
In short, this is a major constitutional Bill which has huge implications for people in Scotland and huge implications for people in the rest of the United Kingdom. The way in which the parliamentary process has been handled has limited our opportunity. I have to say to my noble and learned friend that his right honourable friend has treated this House with a degree of contempt. He knew that we were delaying these proceedings to deal with the consultation process, and to give us such a cursory analysis of the consultation, at the very last minute, at 11 o’clock on the day, makes it impossible for us to have a fully informed debate. Therefore, I am not going to spend any time this afternoon discussing the referendum issues. I shall leave that until Monday. Furthermore, I was told at lunchtime today that on Monday there is to be new business which will be tabled to be discussed before the Scotland Bill, so once again our time for consideration of the Bill is being curtailed.
The behaviour of Ministers towards this House is one of the most persuasive arguments I have ever seen for devolution. We are not giving the proper consideration that we should give to a major constitutional Bill with enormous implications.
The Earl of Caithness
I wonder whether my noble and learned friend can help me with the parliamentary procedure. We are discussing the referendums this afternoon. When are they going to be dealt with on Report? As my noble friend Lord Forsyth has just said, they were delayed at this stage. Is it likely that we will be discussing them on Monday? If so, those of us who have to travel to the far north of Scotland tomorrow will have precious little time to table amendments. It will give us at least a day or two longer to consider matters and read the Official Report if they are to be dealt with on Wednesday. It is crucial for us in how we conduct our business to know whether the referendum issue will be taken on Report on Monday or Wednesday.
Lord Foulkes of Cumnock
I understand the noble Lord’s frustration about the whole process and the way it has been dealt with. The noble Earl, Lord Caithness, makes a very good point, which others made earlier, about the time between Committee and Report. The noble Lord, Lord Forsyth, also made that point effectively.
I think we should absolve the noble and learned Lord, Lord Wallace of Tankerness, of blame in relation to this. He has been faced with great difficulties from a number of sources. I was going to include the noble Lord, Lord Forsyth as one of the people who created some difficulty for him, but I will just put that to one side for a minute. The noble Lord has had to labour with a Cabinet which has only recently begun to realise some of the implications of Scottish independence and what it might mean—to our defence policy and to a range of other things—if it were to go ahead. It has taken some time for it to realise the enormity of the possibility of Scotland seceding from the rest of the United Kingdom, and that is something that the noble and learned Lord, Lord Wallace, has had to deal with. He has also had to deal with a very difficult negotiating body in the Scottish Executive, and its leader in particular. Driving a bargain with it is not easy.
We should consider that earlier this week—and I hope I am not giving any secrets away—we may not have had even this letter and the Statement today if it had not been for the intervention of the noble and learned Lord, Lord Wallace of Tankerness. Admittedly, he was under pressure from the Opposition—both the Front and Back Benches—and no doubt from the noble Lord, Lord Forsyth, as well, but it is to his credit that he got us the Statement. Otherwise we would really have been dealing with it in the dark.
Lord Forsyth of Drumlean
I am most grateful to the noble Lord. I have no complaint about the noble and learned Lord, Lord Wallace, but I do not know what the noble Lord thinks he has. He has a letter from the Secretary of State that states that his preferred solution, which is to use the existing Scotland Act to provide for a referendum, was supported by a large number of people and that he is hopeful that he can reach agreement with the Scottish Government. Frankly, we have known this for some time. I should like to know what the numbers were, what people said and what the Government’s attitude is. What is the point of us debating these matters if we do not know the Government’s policy? This has nothing to do with the Cabinet; it is about the conduct of business in Parliament, and we are being short-changed.
Lord Foulkes of Cumnock
That is a point on which I agree with the noble Lord, Lord Forsyth. Indeed, I have a Question down for next Monday asking when the result of the consultation will be published. I had expected it to be published before now, and certainly for this debate—and, if not, at least for Monday’s debate. However, we also have the information contained in the Statement made today by the Secretary of State. It makes substantial progress—we will discuss this later—in its reference to transferring tax and borrowing powers, ensuring that the new borrowing regime is sustainable and securing further devolution in future.
As someone who favours devolution, I find all these moves very positive. It is very encouraging to see that agreement has been reached. It is also very helpful to have this Statement so that our debate this afternoon can be informed by the details of the agreement that has been reached. I share with the noble Lord, Lord Forsyth, some reservations about the general way in which the Bill has been dealt with, but in the past few days—in particular, thanks to the noble and learned Lord, Lord Wallace—we have been helped to make the debate better informed and more accessible.
Lord Stoddart of Swindon
My Lords, I will not interfere in Scottish matters; I would not dare. However, I have concerns about the business of the House and the way in which the House is being treated. Last Thursday the House sat until, I think, 10.38 pm. Last night it sat until 12.43 am. That is not good enough, particularly when Members of the House of Commons enjoy the privilege of going home very much earlier.
We in this House have repeatedly implored the Government not to bring forward so much legislation that is so badly produced that we have to spend a huge amount of time not only discussing the overload of legislation but correcting the many mistakes that have been made in the framing of that legislation. At the end of every Session, as far as I can remember, we have come up against the problem of time and important Bills have been rushed. The noble Lord, Lord Forsyth, and other noble Lords who spoke were absolutely right to express concern and to raise the matter of rushing through a very important constitutional Bill at the very end of a Session.
I intrude into the debate to express the hope that for the next Session the Government will recall what happened in this two-year Session. If they cannot get things right in a two-year Session, perhaps we may hope that they will reconsider their programme for the next Session to ensure that both Houses of Parliament can consider legislation at a proper pace and level without being kept here in the watches of the night, and that they will produce less legislation that is better prepared so that we can have a little more time to discuss Bills at leisure, at proper length and as deeply as necessary.
Lord Browne of Ladyton
The consideration of this Bill in Committee in this House has been peppered with expressions of frustration from all parts of the Committee at the way in which we have had to handle this business. I have already had my say in that regard, and I welcome the noble Lord, Lord Stoddart of Swindon, to the group of us who have had our say and have expressed how disappointed and, in some cases, angry people have been about what has happened. I do not intend to repeat what I have said in the past, which noble Lords who have heard me speak on this subject before will be pleased to hear.
However, I want to add myself to the list of those who will be shown in the record of today’s proceedings as not criticising the noble and learned Lord, Lord Wallace of Tankerness, who has not been part of the problem but has been, with many of us, part of an attempt at a solution. I thank him for the fact that we have a Written Statement today, because in the normal timetable of the way in which these complicated matters have to be considered in government—and I know what they are—we would not have had a Written Statement, so he must have persuaded somebody who is fairly senior or fairly influential, which are not necessarily the same thing, to have it prepared for today. I think we are all grateful to him for doing that. I want to record how grateful we on these Benches—particularly the Front Bench but the Back Benches too—have been for the open and transparent way in which the Government and the Bill team have engaged with us on the progress of negotiations with the Scottish Government and in trying to find ways of dealing with these complex and difficult matters in a more efficient way.
Since we last met in Committee, there have been two developments of significance. The noble Lord, Lord Forsyth, referred to both of them. As my noble friend Lord Foulkes suggested, they both raise some optimism for the future handling of the Bill, but they bring with them their challenges. The Written Statement reflects the outcome of the negotiations. I do not know about the noble Lord, Lord Forsyth, but I knew that a negotiation was going on, and I think that, on each occasion that he referred to it, the noble and learned Lord indicated that there would be some negotiated agreement that would potentially involve some change to the Bill, so I expected that.
In my darker moments, I anticipated perhaps greater changes to the Bill than there have been, but I am not entirely sure that we can appreciate the significance of the elements of the negotiation that relate to the financial provisions of the Bill without some significantly greater explanation from the Government and greater time for study of them. I was not aware that these particular negotiations were going on. They adopt into the way that Scotland’s budget and the block grant will be adjusted following recommendations from the Holtham report. That report relates to the way in which the Welsh Assembly Government are funded. When I discovered that this morning, I downloaded the executive summary of the Holtham report. It is 72 pages. I do not think my printer would have enough ink in one cartridge to print the whole of the Holtham report.
I have tried to find in that executive summary exactly what this mechanism is and what its implications are. I suspect that I have not succeeded. I suggest to the noble and learned Lord that at some point soon, because we are running out of time, the Government either provide the House with a commitment that we will be given an adequate opportunity to scrutinise properly what amount to significant new details of the process of devolving tax and borrowing powers, or explain the mechanism for doing so, if it can be done in short.
Lord Wallace of Tankerness
My Lords, I think I might deal with the final comment made by the noble Lord, Lord Browne. I acknowledge the comments that have been made not just about this Bill but about the general timetable, but I hope that noble Lords who have taken part in our debates on many amendments to this Bill feel that we have had constructive debates. Almost without exception, the amendments that have been tabled have been pertinent and have done what this House does—properly scrutinise—and the Bill is the better for that. Although, as the noble Lord, Lord Stoddart, pointed out, we sat until 10.41 pm last Thursday, even in the final three-quarters of an hour we had some important debates. Although we had been sitting for some time, some important and thoughtful contributions were made.
On the point about the Written Ministerial Statement paving the way to a legislative consent Motion, the noble Lord, Lord Browne, fairly described the situation as he understood it. When we debated this before moving into Committee last Thursday, I indicated to your Lordship’ House, not for the first time, that work, negotiations and discussions were going on between the Scottish Government and the United Kingdom Government, and that we were hopeful that they would come to a conclusion. On that occasion, I think I said that I hoped that the House, before moving to Report, would have an outcome to these negotiations. I thought that it was important, if it was at all possible, for that Written Ministerial Statement to be available to your Lordships before we met today. I am pleased that in the event that proved to be possible.
There was an encouragingly wide response to the consultation. We received just under 3,000 responses, including many replies from members of the public living in Scotland and beyond. There were contributions from businesses, academics, political parties, trade unions and many others across civic Scotland. A number of these matters will be debated when we move into Committee, but I can confirm that the Government’s key proposal in the consultation was that the referendum should be legal, fair and decisive.
In order to provide a legal referendum, we set out our view that a Section 30 order should be agreed to devolve to the Scottish Parliament the power to legislate for a referendum. Initial analysis of the responses indicates clear support for that proposal. A significant majority of those who responded to this issue agreed that powers to hold a referendum should be devolved to the Scottish Parliament. Of these, the great majority supported a Section 30 order.
However, analysis of any consultation is not just a simple matter of counting responses, so I am pleased that our preference for agreeing a Section 30 order was endorsed by a number of constitutional experts, including Matt Qvortrup, Adam Tomkins and Alan Trench, as well as knowledgeable organisations such as the Law Society of Scotland, the Royal Society of Edinburgh and the British Academy.
The fact that it is not just simply a numbers question was highlighted by the point made by the noble Lord, Lord Browne, who picked out a point in the response from Professor Tomkins on the Electoral Commission and the question. There were a number of substantially written points, although obviously not 3,000. We want to make sure that when we bring forward a report—my understanding is that because the original consultation was a command document, any report has to go through the process of becoming a Command Paper—we do proper justice to the quality of the responses that we received.
Obviously, we will be able to say more in the debates. Nevertheless, it is possible to give some clear indication as to where the balance of opinion lies in response to a number of the detailed points—for example, on whether there should be one question or two, and on the timing; clearly, considerably more people want it sooner rather than later—and to indicate some of the specific points made by a number of leading experts.
I hear what my noble friend Lord Forsyth says about today’s debate and any amendments that he might wish to table for Report. The noble Lords, Lord Foulkes and Lord Browne, have acknowledged that we have tried to structure a debate today on the referendums in a way that is to the benefit of the Committee. After the appropriate amendment has been moved, I wish to indicate the Government’s position by saying something about the consultation. I shall then listen to comments from noble Lords and respond at the end of the debate.
Lord Forsyth of Drumlean
I am most grateful to my noble and learned friend. Given that Section 30 is the Government’s preferred route forward, and given that the consultation process is overwhelmingly in support of that—that is what we are being told—is it the Government’s intention to proceed on that basis? As that basis requires the agreement of the Scottish Parliament, is it my noble and learned friend’s intention to bring forward some other Bill in the next Session of Parliament to deal with the referendum issue? It is clear that there will be no time to do this with the Scotland Bill.
Lord Wallace of Tankerness
My noble friend is right to say that a Section 30 order is the Government’s preferred route and that it is our policy to negotiate an agreement to that end. However, by the very nature of a Section 30 order, it would not be done through primary legislation. Such an order requires the consent of both Houses of Parliament and the Scottish Parliament before being presented to Her Majesty as an Order in Council for approval. That position has received considerable support. I will certainly endeavour to see how many more of the numbers around that particular point can be put in the public domain so that they can be number-crunched before Monday. I will also ensure that my noble friend’s comments on this are drawn to the attention of my honourable friend the Secretary of State. However, from what we have been able to digest, the clear majority of support in the consultation is for that process.
Lord Forsyth of Drumlean
I am most grateful to my noble and learned friend, but I am actually anxious to save the Committee time. If the position is that the Government are planning to proceed on the basis of a Section 30 order, having had the consultation, and if that needs to be negotiated with the Scottish Government, and if Report, which will be the last opportunity to table amendments, is taken on Monday and Wednesday of next week, then to all intents and purposes the possibility of using the Scotland Bill as a legislative vehicle to provide for an independence referendum that would be monitored and administered by the Electoral Commission with a single question has gone. The Minister appears to be saying that he will proceed on the basis of a Section 30 order, but if he is not successful in that, presumably another Bill will be required in the next Session of Parliament. Is that not right?
Lord Wallace of Tankerness
I ask my noble friend to forgive me if I have misunderstood or misinterpreted what he said. A Section 30 order can take into account issues such as the use of the Electoral Commission. It can also take timing into account, as it can on the matter of whether there is one question or more. These are the things that we will seek to negotiate in a Section 30 order.
Lord Foulkes of Cumnock
If we go down that route and there is an agreement between the Scottish Executive and the UK Government about a Section 30 order and it is brought forward, can the Minister confirm that it could be debated in both the Houses of this Parliament?
Lord Wallace of Tankerness
Indeed, not only would it be debated but it would be voted on in both the Houses of this Parliament. If we move into Committee, we can probably have a much wider debate on these matters.
The Duke of Montrose
My Lords, we are up against a slight hoolie on this procedure. The interesting Statement given to us by the Minister shows that quite a lot of the measures that are currently in the Bill have been withdrawn, so it is simplified from that point of view. The question then is whether what we are left with is purely a framework Bill into which all sorts of other legislation will be brought. However, from the point of view of this House, it would be a great shame if the legislation on the referendum were not set out in the Bill because there is a strong restraint on this place in that we never vote down secondary legislation, which is what will come before us if we use the Privy Council route.
Lord Wallace of Tankerness
These are proper issues for debate. It is not the Government’s intention to bring forward any amendment with regard to a referendum, as I shall make clear when we come to debate the matter, when issues such as those raised by my noble friend the Duke of Montrose and others can be more thoroughly aired.
I hear the points made by the noble Lord, Lord Browne, on the provisions of the Holtham model, and those made by my noble friend Lord Caithness on when certain issues might be debated on Report. In the spirit in which some of us discussed matters earlier this week to facilitate these debates, I am more than willing to convene a meeting—either in person or on the phone—to see how we can best order business on Report to meet the different needs in different parts of the House, to ensure proper debate on these issues and to see if there is a way in which we can further debate Holtham. I am happy to commit to write and provide additional detail ahead of Report stage to assist noble Lords. It may be useful if we have a dialogue to see how we might facilitate a proper discussion for Lordships on the so-called Holtham model.
With these reassurances, I hope the House will now resolve itself into Committee.
Lord Sewel
Part of the difficulty with the Section 30 route, of which I am in favour, is not merely that we do not vote against orders—except very occasionally—but also that we cannot amend them. That is a real difficulty. If there is a Section 30 order agreement but the House is profoundly disturbed about one aspect, it is the nuclear option to vote against it. That is a very uncomfortable position to be in. It would require almost a draft Section 30 Motion so that the House can express a view on the details before being forced to come to a decision, one way or the other, on the whole order.
Lord Wallace of Tankerness
I am not sure that a draft Section 30 order exists. However, the noble Lord, Lord Sewel, from his long experience in government, makes an interesting suggestion. The most I can do at the moment is to undertake to reflect on it.
It is not only the responses from the consultation, which will inform much of the content that the United Kingdom Government would wish to see in a Section 30 order, that is of considerable importance today in a debate on the referendum, it is also important to know what issues your Lordships think ought to be included in a Section 30 order. While I do not say that this is a part of the consultation, it is an important part of the process that we have an opportunity, facilitated by amendments tabled by noble Lords, for your Lordships to express views as to what you think should be in the order. I can guarantee that the United Kingdom Government will reflect on those views. I will be very surprised if there is too much difference between our preferences, as expressed in the consultation document.
It is important that noble Lords should take the opportunity today to express their views on what the shape of such a referendum should be and I suggest that we move on to that as soon as possible.
Lord Forsyth of Drumlean
“( ) Section 28 shall not come into force until 60 days after the Secretary of State has laid before both Houses of Parliament a report on the impact of the provisions of that section on the financial privileges of the House of Commons.”
Lord Forsyth of Drumlean
I am sorry that my noble friend Lord Sewel is not here. I beg your Lordships’ pardon. I mean my noble friend Lord Sassoon. It was a Freudian slip. The noble Lord, Lord Sewel, will be forever associated in my mind with the Scotland Bill because he, of course, was the midwife of the legislation.
I am sorry that my noble friend Lord Sassoon is not with us because this amendment relates to the extraordinary revelations that we had at some stage during our 10-hour Sitting on Thursday about how the tax-raising powers of the Scottish Parliament would operate. I see that the noble Lord, Lord Kerr, is in his place. I have always held him in the highest regard. I first came across him when he used to guide us through UKREP in the European Union negotiations on the social chapter. He is not someone who is easily lost to detail. He expressed a surprise that I and lots of people felt. I am of course not a supporter but, as he indicated when we discussed this before, the whole idea of giving the Scottish Parliament a tax-raising power to set the Scottish income tax means that part of the block that has hitherto been determined by the Barnett formula would have to be raised in income tax. If the Scottish Parliament wished to raise more, it would have to raise the Scottish rate of income tax.
Lord Wallace of Tankerness
I might have got this wrong but is Amendment 74B not about the privileges of the House of Commons? At the moment, is my noble friend limbering up to speak to Amendment 74C? I apologise if I have got that wrong.
Lord Forsyth of Drumlean
My noble and learned friend is absolutely right. Amendment 74B is indeed about the impact on the privileges of the House of Commons. Everything that I said can relate to that if I think very carefully on my feet. Amendment 74B relates to the previous debate that we also had with my noble friend Lord Sassoon about enabling new taxes to be created in Scotland by Order in Council. That related to new Section 80B created in Clause 28, which is the power to add new, devolved taxes. It says:
“Her Majesty may by Order in Council amend this Part so as to … specify, as an additional devolved tax, a tax of any description”.
I cannot think of an example since ship-money where it has been possible by Order in Council to create a new tax. We have very particular procedures for creating new taxes. The Finance Bill right up until, I think, 1969 had to be considered on the Floor of the House of Commons in Committee. Special rules apply to the conduct of the Finance Bill, including—still, I think—that it is not subject to guillotine. The noble Lord, Lord McAvoy, would be able to help me with that. I certainly think that it is not subject to a guillotine in Committee. The Chancellor of the Exchequer has a leeway, given to no other Minister in the Government, to have as big a Bill and as much time as required. That is because the Finance Bill is central to the whole nature of Parliament, which is about voting and raising means of supply.
The particular innovation in this Bill enables a completely new tax to be created. Mr Alex Salmond might decide he wants a window tax or a tax on landed estates or our local income to finance local government. All that is required is that an Order in Council is approved by both Houses of Parliament. As has already been pointed out, Orders in Council are not normally able to be amended and are not normally voted against in this House. I am most grateful to my noble and learned friend for telling me which amendment I am speaking to. I have tabled this amendment because I cannot understand how, given the position of this House in respect of taxation, it can be right that first, new taxes can be created by order in the other place and, secondly, this House should be involved in consideration of the imposition of new taxes by order. That seems to impact upon the privileges of the House of Commons.
In truth, however, this amendment is simply another opportunity to raise a serious constitutional innovation, which creates very unfortunate precedents. I am hoping that even at this late stage I can impress upon my noble and learned friend that the explanation we were given for these powers being contained in the Bill, when we considered them earlier, was that the Calman commission had recommended that there should be powers in the Bill to provide for additional, specified taxes. This Bill does not provide for additional, specified taxes; it gives a completely open-ended power.
We have just received, as was referred to earlier, an indication of the agreement that has been made in order to get Alex Salmond’s permission for this House to continue with the Bill. This is the deal that the Government have entered into. It provides for the inclusion of some new taxes—some of which we have already debated, such as the aggregates levy. Why can my noble and learned friend not amend the Bill on Report and make provision for those specified taxes to be included? I do not like the order-making power. He could put that provision into the Bill and it could be approved, then it would go back to the House of Commons and would be approved there. Why can we not have a list of specified taxes which are to be included rather than this open-ended and highly undesirable procedure, which I believe challenges the very basis of this House? I beg to move.
Lord Browne of Ladyton
My Lords, the amendment moved by the noble Lord, Lord Forsyth, seeks by very specific provision to restrict the operation of Section 28 of the Act. We on these Benches are broadly content with the Act, but the noble and learned Lord who speaks for the Government on these matters will, I hope, remember that we moved an amendment seeking to put into the Bill at least a mechanism, which would lead further into secondary legislation, to have some reflection of the criteria that need to be satisfied before either a new or an existing tax could be considered appropriate to be devolved. In response to that amendment, the Government’s position was that those criteria were already set out in a White Paper predating the publication of the Bill.
Our position on these Benches is still similar to that of the noble Lord, Lord Forsyth. It would be better if there were some restriction in the operation of Section 28—or, at least, some shape to how it would operate—by reflecting through primary legislation into secondary legislation the criteria that need to be satisfied, since it appears that the Government have a clear and advanced view of what those criteria will be. This is an issue that we intended to return to on Report, having looked at the drafting of an appropriate amendment. I gave notice at the conclusion of the debate in Committee on Clause 28 that that is what we intended to do. To that extent, we are in agreement with the noble Lord, Lord Forsyth, and I think also with the mood of the House when we debated this provision.
Reflecting on the specific terms of the agreement with the Scottish Government, it appears that the Government’s position on the aggregates levy is now that it will be devolved, as I understand it, not if but when the issues which are preventing its devolution are resolved. Up until now, I had thought that the conditionality in relation to the devolution of the aggregates levy was in the control of the European court. It now appears, though, that the Government’s confidence that these issues can be resolved is such that they were able to agree with the Scottish Government that the aggregates levy will be devolved when that resolution takes place and these issues are resolved.
If that is the case then I agree, with regard to that tax, that it would be more appropriate to have in the Bill a provision that could be activated and brought into force at that point, and that this House and the other place would have an opportunity to consider the implications otherwise for the devolution of the aggregates levy in detail. When we debated that issue, if I remember correctly, the noble Lord, Lord Forsyth, proposed a detailed amendment covering the aggregates levy, and the noble Lord, Lord Sassoon, told him that technically it was broadly correct. I may be misquoting his exact words, but he said that the noble Lord had made a good job of it and that it was fit for purpose. If that is right, at least the Government are in a position where most of the work has been done. That may need to be tweaked, and I dare say that the Government would not want to accept someone else’s amendment wholesale and may want to change it slightly, but we could be in a position on Report to have a debate that would do two things: satisfy this House’s desire to have a debate about the detail of that tax and its devolutionary implications, and immediately show good faith to the Scottish Government because this would put a provision in the Bill that could be activated to devolve the tax.
I turn to the amendment. One of the coincidences of this amendment coming forward, or it may be not entirely a coincidence, is that this House has been exercised by the issue of financial privilege in some detail in committees, briefings, debates and discussion since the House of Commons recently claimed financial privilege in respect of Lords amendments to the Welfare Reform Bill. When I saw the amendment of the noble Lord, Lord Forsyth, I was not clear exactly what he was getting at, but there was no shortage of briefing available to me about financial privilege.
Lord Forsyth of Drumlean
I was simply trying to find a way of raising the subject again. There was no deeper meaning behind it.
Lord Browne of Ladyton
I do not know whether I am grateful to the noble Lord for that, because I had a very clever ending to this part of my contribution and he has prevented me moving towards it as quickly as I wanted to.
I have never been able to do this before in a debate: I intend to quote the Clerk of the Parliaments. There is a Library note on the issue of financial privilege; it goes into this issue in some detail, and only our Parliament could produce something like this that was so interesting and esoteric. Paragraph 18 of this report says:
“In conclusion, it may be worth making two points … First, until the Commons asserts its privilege, the Lords is fully entitled to debate and agree to amendments with privilege implications”.
It seems, and I am grateful for this, that this is the complete answer to the noble Lord’s amendment. It would be ill advised of this House, given that it has that power, to seek for the first time to try to control it with legislation at its own hand. I cannot, as I am sure the noble Lord will be devastated to hear, support his amendment in these circumstances.
Lord Steel of Aikwood
My Lords, my noble friend Lord Forsyth has a technical point about taxation through Orders in Council, but I want to come back to this basic point regarding the Bill: Section 28 talks in bold type about the power to add new devolved taxes. That is something to which my noble friend is opposed; he does not want the Scottish Parliament to have the power to create more taxes, but I do. I think I am right in saying that the Calman commission also wanted to give the Scottish Parliament the power to add more taxes. Going back even to the referendum that we had, I know that my noble friend keeps saying that there is a difference between varying taxes and adding new ones, but that is too subtle a distinction.
Lord Forsyth of Drumlean
There are three members of the Calman commission here. I am sure that my noble friend Lord Selkirk of Douglas will be able to confirm this. I think the Calman commission said that the Scottish Parliament should have the power to add specified taxes. I am not against the Bill allowing for specified taxes; I am against it being open-ended and subject to that procedure.
Lord Steel of Aikwood
That is where we differ. I am not against the Scottish Parliament having such powers. I want the Bill to be stronger than it is. We are on a constant road on devolution. I still believe that we want to get to the point where the Scottish Parliament has responsibility for raising the money that it spends on devolved matters. The Bill does not go that far but at least it moves in that direction.
I give the Committee a specific example. My noble friend keeps talking about a window tax. Nobody in their right mind is contemplating introducing a window tax in Scotland; not even Mr Salmond has suggested that. However, we used to have a dog licence fee in this country. It was abolished some years ago because it reduced to 37.5p. It was collected by local authorities and it cost so much to collect that it was not worth having.
Lord Steel of Aikwood
My noble friend mutters that it was not a tax. However, I am saying that it could be a tax. There is no reason why the Scottish Parliament should not decide, as a matter of good policy, that ownership of dogs, which can be a confounded nuisance in cities and the countryside, should be subject to tax. That is a perfectly sensible proposition and there is no reason why the Scottish Parliament should not decide that it is one way of adding to its tax take and finances. I am totally opposed to the amendment that my noble friend is pursuing. He is making a good case by trying to undermine the basic purpose of the Bill, while I want the Bill to go further than it does.
Lord Lyell
My noble friend made a powerful speech; indeed, I am half way to agreeing with him. However, our noble friend the Commercial Secretary to the Treasury referred 36 times to this extraordinary Scottish dance, the close connection; perhaps my noble and learned friend on the Front Bench can tell us whether it is a Canadian barn dance, a military two-step or a three-step. That close connection refers particularly to individual payers of income tax. In describing this close connection, my noble friend admitted more than 30 times that the individual payers who are classified as Scottish taxpayers would be nothing to do with this Bill. They could easily be English or other UK taxpayers. I hope my noble friend will take that on board. You can look at new taxes but, for goodness’ sake, take care over who will be responsible. If they are not Scottish taxpayers or Scottish voters, we will be in ever deeper water.
Lord Wallace of Tankerness
My Lords, my noble friend Lord Forsyth indicated that this amendment was a hook on which to hang a wider debate. I listened to the debate on Clause 28, to which my noble friend Lord Sassoon responded and in which the noble Lord, Lord Forsyth, made a number of points. He raised the responsibilities and privileges of the respective Houses of Parliament. The noble Lord, Lord Browne, has given a very clear answer on that. It is also important to point out that our role is in relation to a constitutional question: should the Scottish Parliament have responsibility for a particular tax, or should it remain reserved? It is not about how a tax should be structured, who should have to pay it and exemptions to it. That would all have to be set out in primary legislation by the Scottish Parliament, should a tax be devolved.
I am sure it is accepted on all sides of the House that the question of what should be devolved to the Scottish Parliament is an important constitutional issue. I rather think that if it had been suggested that the House of Lords should not express a view on a power such as that contained in Clause 28, I might be in greater difficulty in trying to respond to an amendment suggesting that it should. However, I hear what my noble friend says about the tax in relation to Clause 28. I do not want to engage in a rerun of the debate that we had when my noble friend Lord Sassoon was responding, or indeed anticipate a debate which the noble Lord, Lord Browne, has indicated he intends to run when we come to Report. I am sure that there will be ample opportunity to do so.
I say to my noble friend Lord Forsyth that I think there is a genuine misunderstanding between us with regard to what the Calman commission meant when it referred to a specific tax. I think there are three other members of the Calman commission in the Chamber at the moment and I am sure that, if I have this wrong, they will jump up. The Calman commission identified some specific taxes such as an aggregates levy, which has been referred to, air passenger duty, landfill tax and stamp duty land tax. These were specified and specific recommendations were made in respect of them. Paragraphs 3.170 and 3.171 of the Calman commission report give a general background as to why we thought there should be a power to devolve other specific taxes in the future. By that, it was not intended that we should nominate in the commission’s report, or indeed in a Bill, what these specific taxes might be; rather, it concerned the concept of a specific tax as opposed to devolving a general power of taxation to the Scottish Parliament. I think there is perhaps a genuine misunderstanding on what the recommendation intended. I may have a better understanding of what that intention was, having been party to it.
Lord Forsyth of Drumlean
Can my noble and learned friend give us two examples of taxes that might be added using this general power which he could not put on the face of the Bill?
Lord Wallace of Tankerness
My Lords, the point of not putting that on the face of the Bill is to make sure that there is provision for something that might happen in the future. However, one possible tax could be a dog licence tax, which my noble friend Lord Steel mentioned. I wish to make it very clear that it is not the policy of Her Majesty’s Government to have a dog licence tax, nor indeed, the last time I checked, was it the policy of the Scottish Liberal Democrats. I hope I will not embarrass my noble friend Lord Steel by what I am about to say but I remember that, in an election when I was leader of the Scottish Liberal Democrats—it must have been the 1999 Scottish election—and my noble friend was a candidate in Lothian, he announced somewhere along the line that he wanted a caravan tax. I had to spend a whole day making it very clear that this was his personal view and not the view of the party. My noble friend seems to be a rich source of potential taxes.
However, one of the taxes that the Calman commission considered was a plastic bag tax, which had arisen in the Scottish Parliament where all sorts of ways had been found to try to see whether it could be brought within competence. That is the context. I hope that before we come back to this matter on Report, my noble friend will look at paragraphs 3.170 and 3.171 and will understand the context in which the recommendation was made.
I may be anticipating the debate we will have next week, but putting criteria on the face of the Bill would undoubtedly give the courts the ability to decide whether they have been met. The question of the extent to which these criteria have been met is, I believe, a political one, and one which Government and Parliament would be best placed to determine when a particular issue presents itself. However, it is clear that we will have an opportunity to return to this so I will not detain your Lordships further. I invite my noble friend to withdraw the amendment.
Lord Forsyth of Drumlean
I have to say to my noble and learned friend that that was a disappointing response. I thought that if I gave him the chance to discuss this important constitutional position again, having thought about the arguments, he would perhaps say that he would narrow the rather wide focus of the Bill. I wonder how the House would react if my right honourable friend’s Budget was implemented with a Finance Bill which said that it would be possible to introduce new taxes by Order in Council, approved by both Houses of Parliament. I think there would be an absolute stampede, yet that is what we are proposing should happen to people in Scotland. Having praised my noble and learned friend, I think that he is just a little bit flippant about this. The reason I brought this issue back was not to waste the time of the House but to underline that something very important is being done here which, as I have said, breaches a principle established in this country after ship money.
Lord Forsyth of Drumlean
And caravans. I do not want to detain the House, but I know that my noble friend Lord Steel got into some difficulty with dogs when he gave the former President Ceausescu a puppy dog following a state visit in 1974. My noble friend gave one of his puppies to Ceausescu. When they had gone shooting, the birds were recovered by children, so my noble friend sent one of his fine Labradors to Ceausescu. Many years later, when the regime collapsed and the press arrived, my noble friend received a call from an outraged journalist who asked, “Did you give this dreadful dictator a dog?”. My noble friend explained that he had done so as a result of a state visit and that it had been a courteous thing to do. The journalist said, “Did you realise that this dog had its own coach, its own servants and a whole palace to live in?”. I say to my noble friend that dogs, politics and tax are best not mixed.
My noble friend suggested a tax on plastic bags. The mind boggles as to how large firms such as Tesco and others would operate if there were different taxes on plastic bags north and south of the border.
Lord Wigley
Is the noble Lord aware that there is a plastic bag tax in Wales?
Lord Forsyth of Drumlean
I rest my case. I was not aware that there was a tax on plastic bags there, but if it is thought to be appropriate to have a power to introduce such a tax, it should be specified in the Bill—not as part of a general power. However, I can see that I am making no progress on this and I therefore beg leave to withdraw the amendment.
Lord Forsyth of Drumlean
“(1A) Notwithstanding any other provision of this section, no provision of section 30 shall come into force until the provisions of that section have been approved in a referendum held in England.”
Lord Forsyth of Drumlean
My Lords, this is the amendment that I was speaking to previously. It is a device that provides for a referendum in England on Scottish income tax powers. I tabled the amendment in order to discuss the letter that my noble friend Lord Sassoon circulated, following our debate on the Bill on 15 March.
I suggest that the English should have a say on this because of the extraordinary revelation in Committee on the position of the Scottish Parliament if a change in taxation policy were to be introduced by the Chancellor of the Exchequer—as has happened today, for example, when he raised to just over £9,000 the allowance before people pay income tax. The no-detriment principle is not in the Bill but has, as I understand it, been agreed between the Government and the Scottish Government, or has been proposed as part of the arrangements. I see that in the Written Statement today concerning the negotiations on legislative consent—which we can debate at a later stage—those arrangements go even further.
The idea is that Scotland would benefit from the reduction in income tax that people paid as a result of the increase in allowances, but that England would send a cheque to compensate for the reduction in the tax revenues in addition. The argument for having the 10p tax is that it will affect only a small proportion—by the way, Ministers keep saying that it is 30 per cent; I think we were told today the precise figure by the Office for Budget Responsibility. Hitherto, the assumption has been that about £4.5 billion would be raised by the 10p rate of income tax and that if the Scottish Parliament wanted to spend more it could put that income tax up. The proposition that, because the 10p rate does not raise £4.5 billion any more because people in Scotland are paying less tax, people in England should have to pay more tax to send an addition to the Barnett formula-determined part of the block seems to me to drive a coach and horses through the whole argument of accountability.
If my amendment were accepted and the proposition was put to people in England by a referendum that the Scottish tax powers should operate in that way, I think that there would be an overwhelming rejection, because it is completely unfair and unworkable and will create great difficulty.
In his letter to me, which has been circulated to Members of the Committee, the noble Lord, Lord Sassoon, goes on to deal with another issue, which is benefits. If, as has happened today, the Chancellor raises the thresholds at which people pay tax, that means that there will be a change in their entitlement to benefit. There is a requirement here for changes in people’s eligibility for benefit and the effect that that has in Scotland to be compensated for by taxpayers in England. In his letter, my noble friend says that I should not be too worried about that because the costs are likely to be low. I hope that this letter will be put in the Library or in a form which people outside the House can access.
In the annexe to the letter, my noble friend sets out a little flowchart, which starts with the Scottish budget being £28 billion and Scottish income tax receipts being £4.8 billion. Then, the Scottish block is adjusted downwards by £4.8 billion to create headroom for the Scottish rate of income tax, which means that the Scottish budget is £28 billion, and the block grant is £23 billion because the Scottish income tax receipts would be £4.8 billion. The UK Government raise the personal allowance UK-wide, estimated by the OBR at £3.5 billion. The OBR forecast of the impact on Scottish income tax receipts is a reduction of £100 million. Therefore, receipts from the Scottish income tax are expected to be reduced to £4.7 billion. Therefore, the Treasury adds £100 million to the Scottish budget to offset the impact of what is called UK policy change and the outcome is that the Scottish Government’s budget remains the same.
This is “Heads you win, tails you win” economics. It is completely unfair. It is just reinstating the block grant. I am no advocate of this policy, but if the Government want to go down this track the sensible thing to do would be to give the Scottish Parliament control over the allowances and the rates. This is nonsense. It also applies to changes in the benefit position, because people’s entitlement to benefit will be altered by their net income. If the Scottish Parliament were to put up tax, which it will certainly have to do, and Scotland becomes the highest-taxed part of the United Kingdom, as it certainly will, that means that people’s entitlement to benefit will increase. The cost of that will fall on the English taxpayer. I raise this because, if my noble friend accepts my amendment, which is to give the people in England a referendum on this scheme, I do not think these proposals will stand the test of time. If, as I suspect, he will not accept my amendment, then I urge him to abandon this ridiculous no-detriment principle. The no-detriment principle is a no-accountability principle. It drives a coach and horses through the whole philosophy and thinking of the Bill. I have no idea where it came from. If he is going to maintain this no-detriment principle, then it ought to be written on the face of the Bill. It should not be the product of a quiet deal that no one knows anything about, which flies in the face of what was said in the manifestos of those parties that committed themselves to introducing the Calman proposals. I beg to move.
Lord Kerr of Kinlochard
My Lords, it is déjà vu all over again. I supported the noble Lord, Lord Forsyth, the last time he raised the matter. Although I do not agree with this amendment, I am very glad he has moved it, because it enables us to discuss it again. I had not understood the no-detriment principle. It was painstakingly explained to me by the Minister and the noble Lord, Lord Sassoon. I have not been favoured with the letter of the noble Lord, Lord Sassoon, so forgive me if I am behind with the debate. As it was explained, it is indeed exactly as the noble Lord, Lord Forsyth, says. However, look at it the other way round. It would be paradoxical if the basic tranche of income tax, before the Scottish tax is added in on top, was reduced. The Scots would receive a cheque from the United Kingdom Exchequer. That seems to be very odd. However it is politically even odder, and possibly unsustainable, if it is the other way around. Supposing Chancellor Balls had decided that we needed a higher level of spending, and therefore a higher level of taxation. The Scots would have to send a cheque and they would have paid the higher level of taxation, so would have had less to devote to the higher spending which the proceeds of the tax would have brought in. I do not understand this no-detriment principle.
I draw from that unsatisfactory example exactly the opposite conclusion from the one the noble Lord, Lord Forsyth, draws. I go with the noble Lord, Lord Steel of Aikwood. It seems that we need more but I apologise to the noble Lord, Lord Forsyth, as he was saying much the same today. The trouble with this Bill is that it is a Sir Clive Bossom Bill. Sir Clive Bossom calls on the leader of his party, then the leader of the Opposition, when he joins the House of Commons. The only sentence he gets out of Mr Churchill is, “Bossom, eh? Neither one thing nor the other”. That is what is wrong with this Bill. It is not actually devolving real accountable taxing authority to the Scots. It is still the block grant system with a little add-on which is presentational rather than substantive. I would much rather see a genuine devolution of taxing power. I would start with indirect taxes. Then you will not have any of the problems of defining who the taxpayer is, residence and so on. I would start at that end. I would concede from this Parliament to the Parliament in Edinburgh much greater power in order to deal with the real deficit, which is the accountability deficit. I accept that as a consequence of that, one would have to have a rather strict control on the macroeconomic effect of a degree of fiscal autonomy, so that we did not see a repetition of what we see in continental Europe right now. I accept that that follows.
However, it would be better to get into that area than to pretend to do devolution of taxation and end up with this rather miserable little measure. I understand its logic; I used to work in the Treasury. It is the logic of the Treasury office of accounts. It is the logic of the public expenditure side of the Treasury. It is a book-keeping logic. However, if you think of its economic effect—if you think of it in economic terms—it is absurd.
The Earl of Caithness
My Lords, I support what has been said so far. The present situation, as is increasingly becoming clear, is untenable. It goes against the principle that I have been arguing all the way along. I am in agreement with the noble Lords, Lord Foulkes of Cumnock and Lord Steel of Aikwood. I believe that the only sensible way for the Scottish MSPs to be accountable is for them to be able to raise revenue as well as spend it. We are prohibiting that accountability and to me that is a very serious mistake which needs to be corrected at a later stage of the Bill. I think it is untenable for the future and unless we nip this in the bud now, it will be of increasing concern and will lead to a distortion of some of the benefits of devolution. It will become a real Achilles’ heel for people. Every time there is a change of allowances in one country that is different from another, we will have these consequences. Now that we know exactly what will happen, we have a real problem ahead of us.
Lord Lyell
Perhaps I may put a gloss on what my noble friend has said about these taxes. He refers to accountability. I make the point that in Clause 30 of the Bill, let alone anywhere else, there is no accountability to English, non-Scottish voters, who will be classified by the Bill as Scottish taxpayers. Where is the accountability? It is not there.
Lord Browne of Ladyton
My Lords, I do not support the noble Lord’s amendment. In case anyone should be in any doubt about this, I do not support a referendum on any aspect of this Bill because I do not think that it is appropriate for us to make any of the provisions of the Bill conditional on a referendum, either by the Scots, the whole of the UK or indeed the English. I shall perhaps have an opportunity to explain later that referendums are for extraordinary circumstances and this is not one of those sets of circumstances.
Secondly, in this context, I would never support a referendum by the people of England in any event because, in my view, that would be a fundamental misunderstanding of the concept of devolution. Devolution depends on the relationship between the United Kingdom and Scotland and not between England and Scotland. I am not being pedantic; I could go on to say why England, and not Wales and Northern Ireland. The noble Lord nods so I am sure that he gets the point. This is a vehicle for him to have a wider and broader debate and I understand that. It is important that we do not repeatedly categorise these issues as issues between England and Scotland. This is about devolving power to a part of the United Kingdom and holding that part of the United Kingdom in the United Kingdom. We have done it to Northern Ireland and to Wales and we have done it substantially to London in many aspects of public policy.
It is challenging and difficult for this Parliament and for people to understand because it is utterly asymmetric across the country, but, in my view, it is a celebration of the diversity of the United Kingdom. I know that there are those among us—the noble Lord, Lord Steel, is one of them—who would like to see a more federal structure where there was less of an asymmetry and much greater clarity. However, the reality is that many parts of the United Kingdom are not ready for that, as they have made clear to us, and it should not be imposed upon them. Ironically, in the history of devolution in Spain, that sort of structure was imposed on the Spaniards and those who were least interested in it made the most out of it. I say that in passing. So I do not support a referendum. I would certainly not support a referendum by only English voters.
I turn to the no-detriment principle. I thank the noble Lord for raising this issue again. In the absence of my noble and learned friend Lord Davidson of Glen Clova, who is part of our Treasury team and is also a Scottish affairs spokesman, I have to deal with it. I was reluctant to engage myself in the debate the last time it came up, but got slightly frustrated with the misrepresentation of what I thought was the no-detriment principle. I stuck my nose into it, suggesting, indeed, that this letter be written, but it appears that the letter has just given those who wish to misrepresent the no-detriment principle even more ammunition to do it.
The no-detriment principle in this context was first raised, as I understand it, in the Command Paper that accompanied the Bill. My understanding of the no-detriment principle is probably best expressed, interestingly enough, in a paragraph of the Holtham report. This may be entirely the wrong part of the Holtham report for the purpose of the agreement that has now incorporated this into mechanisms for the future between the Scottish Government and the UK Government, but it does what I want it to do. It is paragraph 5.2 of the substantial executive summary of the Holtham report. The executive summary is 72 pages long. I shudder to think what the whole report is like, and I certainly do not intend to spend a weekend between now and the Report stage reading it.
If I have understood the Written Statement from the Secretary of State for Scotland, the principle of no-detriment is now to be qualified by reference to the Holtham report and the mechanism in it about budgets and block grants. If I have misunderstood that entirely then, at the risk of encouraging the same sort of pantomime that we saw earlier in another place, perhaps someone on the Front Benches could either nod or shake their head, but if I am right this encapsulates the no-detriment principle:
“Risks consequent on the actions of the Assembly Government should be borne by its budget and risks consequent on the action of the UK Government should be borne by UK budgets. Risks outside government control and arising from elsewhere should be pooled across the union”.
It goes on to refer to how difficult that is to do. I accept that it is very difficult, but as I understand it, that is what lay behind the no-detriment principle. If Holtham is now to be incorporated into that agreement, then that may make it easier.
If that is right, with all due respect to the noble Lords who have supported this interpretation, adjusting the block grant for Scotland in response to policy decisions made by the UK Government in no way undermines the accountability of the Scottish Parliament or the Scottish Government. They are accountable for what they do. The point about the no-detriment principle is that they should not be accountable to their electorate for what the UK Government do. We can call it what we like, but that is essentially what this is trying to achieve.
I see the noble Lord moving in his seat. This is what I fear, of course, when I start to get into this area of complexity. Before I allow the noble Lord to intervene, perhaps I may remind the Committee that when we were discussing the developments before we started on the fifth day of Committee I said at the outset that it would be extremely helpful if, between now and the conclusion of the debates on the Bill, the Government set themselves the task of explaining where we are now in relation to this principle and how it works. It may be that the noble Lord, Lord Forsyth, will never be satisfied that accountability should be encapsulated only in the actions of the Scottish Parliament. He has a very distinctive view about the Bill and about the Parliament’s relationship with the rest of the United Kingdom, which few of us share. However, some of us could be satisfied that there might be a way of expressing this with greater clarity than it has been, and perhaps also of incorporating it into part of the Bill before it is beyond amendment so that it becomes clearer than it is at present.
It now appears that we have not only to read a Command Paper but be sufficiently familiar with the details of the negotiations between the Scottish and UK Governments and no doubt adept at finding our way around the full version of the Holtham report to understand how the no-detriment principle will work. I prefer the simple statement in paragraph 5.2. If that is what the Government are about, I support them. If they could find a way of making that clear in a way that we could refer to in future to ensure that that is what will happen when people adjust grants, I would support them even more. I look to the noble and learned Lord, who has not until now dealt with these financial provisions—neither have I—to reassure the House that in the near future there is a mechanism that will allow us to do that.
Lord Wallace of Tankerness
My Lords, I am in a position similar to that of the noble Lord, Lord Browne, in having to deal with matters that hitherto were dealt with by my noble friend in the Treasury. I fully accept that my noble friend’s amendment is a hook. I share the view expressed by the noble Lord, Lord Browne—
Lord Foulkes of Cumnock
Perhaps I may take the opportunity of sending good wishes to the noble Lord, Lord Sassoon, for a speedy recovery.
Lord Wallace of Tankerness
I hope that I did not imply that he was ill. I am not aware that he is.
Lord Wallace of Tankerness
I am sure that, after all the good will that has been expressed, he will relish coming back to the fray next week. I do not for a moment think that he is ill; perhaps I may quash that rumour.
As the noble Lord, Lord Browne, indicated—and perhaps my noble friend Lord Forsyth would accept—to include only the people of England and to exclude the people of Wales, Northern Ireland and Scotland would not be appropriate. We should bear in mind that the proposals in the Bill were in the manifestos of the Conservative, Labour and Liberal Democrat parties, which applied throughout Great Britain at the last election. My noble friend indicated that he wished to return to the issue of the no-detriment principle, which he pursued on Thursday of last week. It prompted my noble friend Lord Sassoon to write a letter. My noble friend asked if it could be put in the Library. I will make sure that that is done, because it has the benefit of a flow chart that I could not begin to describe from the Dispatch Box.
I will try to explain—I accept that I will not necessarily succeed—what the no-detriment principle is about and why we believe that it is fair and does not detract from accountability. I agree with the noble Lord, Lord Kerr of Kinlochard, and with my noble friend Lord Caithness that more accountability is crucial and that the Scottish Parliament should be accountable not simply for spending money but for raising it. My starting point is that it is wrong to suggest that the no-detriment principle is about allowing the Scottish Government to have their cake and eat it.
The first flaw in the argument is to suggest that if there is a tax benefit—for example, through the measure in today’s Budget to raise the personal allowance, which I very much welcome—it will accrue to the Scottish Government. It will accrue to Scottish taxpayers, along with those of England, Wales and Northern Ireland. As I will seek to explain, it has an effect on the revenue that would then be generated for the Scottish Government.
Lord Forsyth of Drumlean
Yes, it does. The effect is that the amount of tax that people pay in Scotland will go down. Therefore, if the Scottish Parliament wished to be compensated for the loss, it would put up the tax so that it remained in the same position.
Lord Wallace of Tankerness
This is where there is a misunderstanding. This is about making a shared tax base work in a way that is fair and revenue neutral to both jurisdictions. My noble friend Lord Caithness said that if the Scottish Parliament chose to change the allowances, it should bear the responsibility. The whole point of these proposals is that it cannot change the allowances. The personal allowance is determined by the United Kingdom Government. That is the nature of a shared tax base. The argument is that if that tax base is changed, there ought not to be detriment to the Scottish Parliament.
Lord Kerr of Kinlochard
Let us look at this the other way around and think about the ease and the political acceptability in Scotland of making the case that if the Chancellor decides to put taxes up, not down, the Scots, in addition to paying the taxes, should send a cheque to London. It is the reverse of the case that the noble and learned Lord has just been discussing.
Lord Wallace of Tankerness
It is very unlikely to happen, but let us say that the personal allowance had gone down rather than up. It would have been a windfall to the Scottish Government. The argument therefore is that on a no-detriment principle, it should operate both ways. I shall come on to explain that.
I shall try to make this as simple as possible, but it is not readily simple. From April 2016, the income tax base in the United Kingdom will be shared between the United Kingdom and Scotland. With 10p from all rates in Scotland expected to yield between £4.3 billion and £5.6 billion over the OBR’s forecast period, the Scottish Government will receive around 3 per cent of UK income tax receipts. The Scottish Government will be responsible for setting their rate of income tax and the United Kingdom Government will be responsible for everything else, including, for example, personal allowances. In such a system, the UK Government must be accountable for decisions that they take on the structure of the tax. Conversely, the Scottish Government must be accountable for the decisions that they take in respect of the rate.
I shall give an example—the example seen in the letter from my noble friend Lord Sassoon, but seen the other way. Last year the United Kingdom Government decided to raise personal allowances from £6,475 to £7,475. This decision cost the United Kingdom Government approximately £3.5 billion across the United Kingdom. Since the proposal in the Bill is to devolve around 3 per cent of income tax, the cost to the UK Exchequer from raising personal allowances would reduce to 97 per cent per cent or around £3.4 billion. The remaining £100 million would fall on the Scottish budget. It would be a cost as a result of a decision for which the Scottish Government were not accountable.
If the Scottish Government had set a budget and a rate of tax and had planned their public expenditure on that basis, and then, some four or five months later, as the result of a decision for which they had no responsibility or accountability, they suddenly found that their budget was £100 million short, the no-detriment principle is intended to make up that difference because it is a decision for which the Scottish Parliament will not have had responsibility. That is why I believe that it is important for accountability, because not to do so means that suddenly a Scottish Government perhaps have to carry the can for particular expenditure to which they were committed but could not longer afford, not through any decision that they had made, but through a decision made by the United Kingdom. The obverse is true; for example, if the Scottish Government get a windfall because the tax base has changed, it is only right that that windfall is recovered by the United Kingdom Government.
Under the no-detriment principle, the UK Government would compensate the Scottish budget for any cost that led to a reduction in the tax, but at the end of the day the cost to the United Kingdom is exactly the same as it would be if this Bill were not implemented—that is, the £3.4 billion that it loses in revenue because of the increase in the personal allowance and the £100 million that it then gives to the Scottish Government.
Lord Forsyth of Drumlean
I am sorry to persist in this; perhaps I am just being thick. To take the example given by the Minister, which is the same example that I tried to give from the flow chart, if the Scottish Government find that their block grant is short of £100 million as a result of the increase in the allowances, that means that the amount that people are paying in tax in Scotland has gone down. Why can the Scottish Government not just use their tax-raising power to get the £100 million back from the people who have benefited? That is how the model is supposed to work.
If the Minister is not happy with that, why does he not go further and give the Scottish Parliament the ability to change the allowances as well as the rates? In those circumstances, if the Chancellor wishes to raise the allowances and the Scottish Government do not, they do not raise the allowances. I am making the case here for more devolution, not less—not on the grounds that I am committed to more devolution but on the grounds that this is a complete dog’s breakfast.
Lord Wallace of Tankerness
My Lords, I cannot accept that last comment, but I can now see where my noble friend is coming from. I welcome anyone who wishes to express the case for going further. Of course, he is well aware that what has been presented to Parliament here is something that was worked on over a long period of time during which a consensus was achieved. There was never likely to be a consensus in favour of devolution of the whole tax base, as opposed to the tax rate.
My noble friend is basically saying that it should never be the case that a change in the tax base—for example, the increase in personal allowances—should benefit taxpayers in Scotland. He is saying that if the UK Government, who are still responsible for a substantial level of services in Scotland, take tax from the Scottish people, the Scottish people should never be allowed to take the kind of benefit that I believe they should—and I think that he once wrote a pamphlet on the benefit of raising the personal threshold—and the Scottish Parliament should raise its rate of tax to account for that. That is not accountability; that is a decision taken by the UK Government to bring benefits right throughout the United Kingdom.
It would seriously undermine the United Kingdom if Scottish taxpayers were not allowed to receive the benefit of a change to the UK tax base. It could mean that the tax change would reduce the amount of money available to the Scottish Government, so that budgetary considerations and calculations that had been put forward and might well have been voted through by Parliament would no longer be sustainable because of a decision taken by a body other than the Scottish Parliament. That is the essence of the no-detriment rule, and something that lies at the heart of the statement of funding policy.
I will read out the statement of funding policy, because the noble Lord, Lord Browne, might find that it echoes the passage from the Holtham commission that he read out. It says:
“Where decisions taken by any of the devolved administrations … have financial implications for departments or agencies of the United Kingdom Government or, alternatively, decisions of United Kingdom departments or agencies lead to additional costs for any of the devolved administrations … the body whose decision leads to the additional cost will meet that cost”.
That is where accountability properly lies.
This is not something new that has suddenly been dreamt up. There are probably people in the House who were involved at the beginning of devolution and this principle has been in the statement of funding policy since then. I believe that it is fair that Governments —be it a UK Government or a Scottish Government—should be accountable for the decisions that they make, but they should not be able to export some of the implications of their decisions on to another Government, who should not be held accountable for the decision of another Government.
Lord Kerr of Kinlochard
I understand the Minister’s logic, which seems to depend on the control total being the block grant. The block grant is what matters. All this stuff about tax is for perception and presentation at the edges. The block grant has to be maintained. Apparently the example in the Sassoon letter, which I have not seen, concerns a case where the Scottish economy would have benefited from the additional buoyancy and spending power of a reduction in the level of taxation paid by Scotland. However, because we are seeing everything through the prism that the block grant is the control, it needs to be maintained in Scotland, so the Scots need to be compensated for the additional buoyancy in the Scottish economy. That is quite difficult politically. The reverse case, which the Minister prefers not to talk about, is almost impossible to present politically in Scotland.
The trouble is that these tax revisions are neither fish nor fowl; they are only a good red herring. We are not addressing the real issue on taxation. I entirely agree with the noble Lord, Lord Browne of Ladyton, that accountability is accountability for spending and for raising the money which you spend. Until we get that and get away from having the block grant as the control, we will have a continuing unsatisfactory situation.
Lord Wallace of Tankerness
My Lords, I certainly agree with the final point that accountability is as much about what you raise as what you spend. The point at the heart of the statement on funding and the no-detriment principle is that one should not be accountable for consequences which you as a Government would have to see through but which are the result of a decision that you have not made. Having to say why a certain project does not take place—following not a decision that you have made but a decision made by another Government—is not accountability. That is what one is seeking to address, and it links in with what has been said about the Holtham principle. Again, there is an intention there that, if the Scottish Government’s tax proposals promote buoyancy in the Scottish economy, that should be to the benefit. Likewise, if they have tax proposals which have an opposite effect—they drive away enterprise and reduce revenues—there should be a negative consequence. A letter is not necessarily the best way to go through this issue but I am certainly open to ways in which we can go through it in more detail. This point links to the Holtham point made earlier by the noble Lord, Lord Browne.
The principal point is that this is not an issue of the Scottish Government getting two bites of the cake. It is to ensure that where a tax decision is made regarding the UK tax base by the UK Government, all taxpayers throughout the United Kingdom are treated in the same way as a result of that decision. It means, too, that if that decision has consequences—either inflating the money coming into the Scottish Government or reducing it—a rectifying amount is paid back or perhaps withheld from the block grant or, alternatively, is paid in addition. I regret that it is not the easiest thing to explain and there may be another way of discussing it other than across a Chamber. However, I emphasise that it is not a question of having your cake and eating it; ultimately, it is a question of ensuring accountability and making sure that the Scottish Government do not become accountable for a decision that is not their own. I cannot put it more simply than that. Although we may well return to this issue, on that basis I ask my noble friend to withdraw his amendment.
Lord Forsyth of Drumlean
My Lords, I have to say that I think this is a complete dog’s breakfast and I agree entirely with the noble Lord, Lord Kerr of Kinlochard. My noble and learned friend has struggled valiantly to try to explain why the Scottish Parliament should not be accountable for a decision made by the Chancellor to change the tax base by altering the allowances. However, he has not dealt with the point made by the noble Lord, Lord Kerr of Kinlochard, about the politics of Scotland having to send a cheque to England, but I thought I would keep off that in case—
Lord Wallace of Tankerness
I hope that I made it clear in my response but I shall repeat the point. This is reciprocal because it goes two ways. If a change to the tax base led to an increase or windfall for the Scottish Parliament, that would be recoverable—not by England but by the United Kingdom Parliament.
Lord Forsyth of Drumlean
Indeed, and I understand that, but I am talking about the politics of it in the context of there perhaps being a higher rate of tax in Scotland. I would not like to be the Minister who had to explain why it was necessary. For example—thank goodness the Chancellor did not do it—let us suppose he had abolished tax relief on higher-income pension contributions. That would create exactly the kind of situation under this odd regime in which the Scottish Government would have to send a cheque to England. My noble and learned friend looks quizzical and perhaps I am wrong, but if the tax relief were removed there would be a windfall benefit for the Scottish Government. The product of a 10p income tax would be less, or are we saying that this would apply only to direct changes to allowances in respect of income tax? If that is the case, surely it would be sensible to allow the Scottish Government to make changes to tax allowances rather than compensate them for the effect of changes. There is an idea that they would be caught midway through a Budget by a sudden change—perhaps the £100 million example given by my noble friend—but, as we have seen today in the reduction in the top rate of tax or the increases in allowances, these are normally planned well in advance. Provision is also made in the Bill for the Scottish Parliament to borrow money and to have access to funds where there are changes.
My noble and learned friend has not dealt with the argument. The simple way to deal with this is as follows. If a change is made to the allowances, the revenue consequences will be that the product of the 10p tax instead of being £4.2 billion or £4.5 billion will be £4.2 billion or £4.4 billion. That £100 million shortfall could easily be recovered by increasing the rate of tax. The Scottish Parliament would not be disadvantaged by that because it would simply have to increase the rate of tax. There might be a problem of timing, but there is a provision for borrowing to deal with it, and that would give direct accountability. I agree that it is messy, but for the life of me I do not understand why we are going on with this exercise where my noble and learned friend will not concede that, rather than have a very complicated provision for tax, it would be better to provide that the Scottish Government are able to change the allowances as well as the rate if the UK Government see this as a great administrative difficulty for them.
My noble and learned friend did not deal in his response with the problems that arise from welfare. As I understand it and as his letter points out, eligibility for benefits will depend on net income. That means that if Scotland, as I suspect it will, becomes the highest taxed part of the United Kingdom, net incomes will be lower and therefore it will be necessary for benefits to be increased. Perhaps my noble and learned friend will help me with this. If, for example, the Scottish rate of income tax was higher and the effect was to reduce net incomes and therefore more would need to be paid in benefits, would the Scottish Government have to send a cheque to the UK Exchequer to deal with the consequences of the fact that in Scotland more people were dependent on benefits? Politically, I think that that, too, would be extremely difficult.
As the noble Lord, Lord Kerr of Kinlochard, has pointed out, the no-detriment principle is basically just trying to replicate the block grant and dress it up as income tax. The consequences will be that everyone in Scotland will end up paying higher income tax than people in England in order to finance a vehicle which does not do what it says on the tin.
Lord Wallace of Tankerness
There is a point that my noble friend is not addressing: no amendment has ever been brought forward to devolve allowances. It would be a major change to make at this stage of the Bill and he has not advanced the idea before but, that apart, it did not commend itself to the Calman commission or to the Government. Is he saying that the United Kingdom Government cannot make changes to a tax allowance which will benefit all taxpayers in the United Kingdom and that, if they do, they will be giving with one hand and the Scottish Parliament will be taking away with the other? That is an untenable position for a unionist to take.
Lord Forsyth of Drumlean
It is not my idea. It is the noble and learned Lord’s idea to introduce a Scottish income tax. We have never had a Scottish income tax. If my noble and learned friend is saying that it is not a good unionist position to have a Scottish income tax along with a UK income tax, I could not agree more. That is what is wrong with the Bill and why I am against it. If you want to go down that road and you have set out the arguments for accountability on that basis, then do it properly and introduce a system that is workable.
Let us leave the issue of allowances. When we have Scottish income tax it will be possible for the Scottish Parliament to set the rate at whatever level it chooses—and not only the basic rate but the intermediate rate and the top rate. Mr Alex Salmond can have a top rate of 60 per cent and a basic rate of 30 per cent if he wants, and you can have a Government in England and the rest of the United Kingdom cutting taxes. Therefore, it is absolutely central to the proposal that there is the possibility—I would say the probability—that people in Scotland will not benefit from wise tax policies such as those pursued by my right honourable friend the Chancellor of the Exchequer today.
When my noble and learned friend says that if you do not have the no-detriment principle people in Scotland will not benefit from increases in the allowances for tax purposes, that is nonsense. It would be up to the Scottish Government. The Scottish Government would find that their block grant was reduced by a set amount, but they could get that set amount by taking the money from the taxpayers in Scotland, who would have benefited from the reduction in the allowances. That is the whole principle. My noble and learned friend shakes his head. The principle is that the Scottish Government are accountable for their spending and they have to raise that money through tax. The change in the allowances means that the tax available to them is less and therefore, if they want to continue the same level of spending, they will have to raise the tax. My noble and learned friend is running away from this because of the administrative difficulties that would be involved in dealing with the allowances.
On the point about there being no amendments on allowing the Scottish Parliament to set the allowances, I shall happily oblige: I shall table one for Monday and we can discuss this again. I shall be interested to hear how someone who is committed to the policy of making the Scottish Parliament accountable can possibly argue against it being able to set the allowances as well as the rates. You would have to have a Scottish allowance, of course, just as you have a Scottish tax, and it would operate in exactly the same way. However, by attacking this principle, my noble and learned friend is attacking the basis of the Bill—and I do so agree with him on that. I beg leave to withdraw the amendment.
Lord Forsyth of Drumlean
“(4A) The following provisions shall not come into force until the Scottish Parliament has passed a legislative consent motion signifying its consent to those provisions—
(a) sections 12 to 14,(b) section 27, and(c) Part 3.(4B) If the Scottish Parliament fails to pass a legislative consent motion under subsection (4A) within two months of the passing of this Act, then the provisions listed in subsection (4A) shall lapse.”
Lord Forsyth of Drumlean
My Lords, I will speak briefly to this amendment, which relates to the Scottish Parliament passing a legislative consent Motion and certain parts of the Bill not being implemented. This has been slightly overtaken by events given the very helpful Statement made by my noble and learned friend. I am concerned about the substance of what has been agreed in return for the legislative consent Motion. This amendment gives us a good opportunity to discuss some of the issues arising from the legislative consent agreement. We are told that the Scottish Parliament will pass the necessary legislative consent today or this week. Perhaps my noble and learned friend can help us on that.
Lord Wallace of Tankerness
As I understand it, the Scottish Parliament has sent its response to its Scotland Bill Committee. In that, it indicated in similar terms to our Written Ministerial Statement what the agreement is. It has tabled or will table a legislative consent Motion on the basis of following on from that agreement. That Motion should certainly be dealt with before our Third Reading but obviously I am not responsible for the timing of debates in the Scottish Parliament.
Lord Forsyth of Drumlean
You have to admire the way that the Scottish Parliament is run. Its committee made 25 major recommendations for changes to this Bill which effectively involve devo-max. They were full fiscal autonomy and a range of other things. Those sat on the table from before Christmas until now. Due to the brilliance of my noble and learned friend, he and his colleagues had a meeting with the First Minister and suddenly everything that the committee said vanished like snow off a dike. We are told that a procedure will be followed that will result in the Scottish Parliament giving agreement. That really is the accountability that we all came to expect from devolution. We have here one man—the First Minister—deciding what happens and everybody else falling into line. Otherwise, it would not be possible to deliver this.
Fortunately, it does not quite work like that in this House. I have a few points to raise on this issue of legislative consent. The first thing we need on the record is the Government’s position on legislative consent. I pressed my noble and learned friend on this before and I hope he will tell us now that he has finished his negotiations. Is the Government’s view that legislative consent is desirable but in the absence of it they will proceed anyway; is there a new constitutional principle that we do not do things without legislative consent; or is the constitutional principle that we try to get legislative consent if it is practical? That is very important because it will impinge on the debates that we are about to have on the referendum, where the Government say that they will proceed by Section 30 but Section 30 requires legislative consent. I want to be absolutely clear where the Government are on the issue of legislative consent. In the absence of legislative consent, would the Government still proceed? That is not a perfect example because of course the referendum issue has nothing to do with the Scottish Parliament as it is a reserved power. In respect of non-reserved powers for the Scottish Parliament, where are we on legislative consent?
I want to pick up one thing from the Statement that my noble and learned friend made today on what has been agreed. That is the first section, which says:
“The Government will ensure that changes in the Scottish Government’s budget are closely linked to the performance of its economy by adjusting Scotland’s budget to reflect new tax powers using the model recommended to the Welsh Assembly in the Holtham Report”.
The noble Lord, Lord Browne, who is a man of considerable ability—as we have discovered in the course of consideration of this Bill, as well as from his previous work—has read the Holtham summary, and I expect that he is as unsure of the meaning of that sentence as I am. What does it mean? Does it mean what we have just been discussing and, if so, why does it say,
“changes in the Scottish Government’s budget”,
as opposed to changes in the Scottish Government’s income? The Scottish Government’s budget is what Alex Salmond dreams up one day and promises the Scottish people, but it has no relation whatever to the Scottish Government’s income, as people are about to discover.
Lord Foulkes of Cumnock
My Lords, I welcome the fact that a legislative consent Motion has been agreed. I also welcome its terms; I mentioned that earlier, and we may have the opportunity to discuss it later on. However, I want to refer briefly to the very important point made by the noble Lord, Lord Forsyth, almost as an aside in his introduction. It was about the speed by which this legislative consent Motion was agreed within the Scottish Executive.
At the end of this week, I am going to one of the most newly independent countries to talk about its request for accession to the European Union. The EU has made it clear to that country that it will not get membership—I am sure that the noble Lord, Lord Williamson, knows exactly what I am taking about—until it can show that there is a clear separation of powers between the legislature, the Executive and the judiciary. It is right that the EU should impose that condition upon the application, and we are going to discuss it and what needs to be done to change the arrangements in the country’s constitution.
It occurs to me now that the situation in Scotland, which has come about because of a series of events, is presided over by someone chosen by the First Minister, and that there are committees—my noble friend Lord McConnell knows more about this than any of us, and I know that the noble Lord, Lord Steel, has looked at it carefully—which were supposed to be the checks on legislation as it went through and to challenge and question what the Executive were doing, as indeed they did until the most recent election in Scotland. These committees have SNP majorities. With committees here, where there is a government majority in the House of Commons among committee members, we get a degree of independence and challenge to the Executive. There is none of that in Scotland now.
Even here in the Cabinet—if the situation is still the same, and I understand that it is—before agreement is finally reached, a letter or memorandum is sent around the various departments concerned, agreement has to be reached by the department and there is some consensus. That takes time and some thought. In Scotland now, all it needs is for one man to make a decision that something will happen and it is automatically agreed by his Cabinet and Executive, which are beholden to him, and by his legislature, which is also beholden to him. That is not good for democracy. It would not be acceptable if an independent Scotland applied for membership of the European Union, which is another reason that could rule it out. That situation is very worrying and something that we have not really addressed in this Committee but should have done at some point.
Apropos this concern, I said jokingly in a tweet yesterday—the noble Lord, Lord Forsyth, laughs, but this is a modern form of communication and even people of my age have to get used to it—that Scotland might need a second Chamber, and I referred to it mischievously, as I have done before, as a “House of Lairds”, which is just a name for it. I was not suggesting that the hereditary Peers from Scotland should be recalled for that purpose—certainly not the noble Earl, Lord Erroll, for example, but that is another story. Interestingly, from a number of people on Twitter who do not normally agree with me I had a lot of agreement; they are genuinely worried that there is no check and balance on what is decided by the Scottish Executive. This issue is worrying, and it is time that those of us from Scotland who are concerned about Scottish democracy paid some attention to it.
The Duke of Montrose
My Lords, I would like to probe a little further the question that my noble friend Lord Forsyth has raised about where we stand on legislative consent Motions. I do not know if what I have will throw any more light on the topic but, as noble Lords will know, we have spent quite a long time considering when a legislative consent Motion might appear. I draw to your Lordships’ attention that there is enough evidence from what Ministers have told us that primary legislation does not require legislative consent.
I am sorry to see that the noble Lord, Lord Sewel, is not in his place because much of what I have to talk about refers to what he told us in this House in 1998. He and others in the House will recall that in the Committee stage of the Bill the question of an application of an Order in Council as being the route by which amendments to Schedule 5 could be achieved was discussed. It is just possible that some people’s recollections might, like mine, be a little hazy since most of this discussion took place at around 11 pm—something that we were beginning to get used to the other day. There was a serious probing amendment, which said that the power to use the Order in Council mechanism should be removed in regard to Part I of Schedule 5. The mechanism was insisted on by the Minister because it was the Government’s intention to make it a condition of procedure that the Scottish Government had to agree to alterations to Schedule 5. Great emphasis was placed on this, which was considered the unequivocal virtue of the Privy Council process. However, the Minister’s view was clearly that primary legislation did not require the agreement of the Scottish Parliament; this can be found in Hansard at col. 849 on 21 July. Therefore, the Scottish Parliament would officially have no say in any primary legislation.
Here, today, we will be only too aware that on previous days the Committee has endeavoured to add amendments to the Bill that would bring in more detailed recommendations by the Calman commission and others. So far, all these efforts have been rejected and many of the amendments at this stage appear to aim to introduce them using the Privy Council route at a later stage. From the approach taken by the Labour Government before us, it seems that any or each of these Orders in Council will properly be subject to a legislative consent Motion from the Scottish Parliament, which is different from the one that we are talking about today. As we have proceeded with this legislation, a great deal has been made of the idea that we are looking for the completion of the Motion before we get on to the Bill.
It is important that the procedures that are required should be absolutely clear. Since this is primary legislation, it would appear—from applying the explanations that were offered to us—that the legislative consent Motion is not strictly necessary for the Bill but would be for the statutory instruments to implement it. Could the Minister tell the Committee whether this argument for seeking some sort of agreement with the Scottish Parliament is just part of a concordat or is being introduced for politeness, or whether some legislative measure has recently been introduced that requires its fulfilment? If not, is it not true that in hard legislative terms the consent of the Scottish Parliament is not required?
Lord O’Neill of Clackmannan
My Lords, at some stage I think we were concerned that this might be a complete waste of time if we were not going to get a legislative consent Motion. Whether it was necessary was not the issue. It was a question of whether there was a nod of approval or acceptance from the Scottish Parliament.
In our lengthy debate last Thursday, some of us raised our concerns about what we considered to be the inadequacies of the committee system in Scotland. It would appear that this concern over those inadequacies is shared by the First Minister in so far as he pays attention to them. We are continually assailed in the Scottish press by the question of which country Scotland should be compared with. Should it be Norway or Iceland? It is not Iceland any more and it certainly is not Ireland. Perhaps Belarus would be an appropriate example of a northern European country that operates on the whim of its leader. However, that will be regarded as an insult to Mr Salmond. Such is his sensitivity and the thinness of his skin that if I were to make such a suggestion, I do not know whether I would get off a plane at Edinburgh Airport tomorrow night, although I would be happy to have a go.
We are also indebted to our new communicator—the new electronic man behind me, my noble friend Lord Foulkes. I have heard it said that he has been called a Twit. I do not think that is an unparliamentary word; it may well be appropriate in this case. I have never known the noble Lord, Lord Foulkes, to express himself in anything like as few words as 140. I am sorry; I meant to say 140 characters. I do not know whether there is a sequential tweet here, but perhaps the relevant material could be placed in the Library so that we could see the Foulkes Twitter sequence.
Coming back to the point, it would be helpful if the Minister could give us some indication of the conversations that he had with the First Minister and how this concordat has been arrived at. If we can reach agreement on that matter so quickly, perhaps other problems can be dealt with in a similarly efficient, if not particularly democratic, way.
Lord Browne of Ladyton
My Lords, I support the general tenor of this debate in so much as it encourages the noble and learned Lord to explain the Written Ministerial Statement more fully and how we will take forward—if we are to do so—the agreement that has now emerged between the Scottish Government and the coalition Government. It would appear that that agreement has encouraged the Scottish Government to do no more, according to the Statement as I read it, than to,
“table a Legislative Consent Memorandum recommending that the Scottish Parliament votes in support of the Bill on a further Legislative Consent Motion for the Bill”.
That sentence has been somewhat extravagantly interpreted, perhaps for other purposes, by some of my noble friends and other noble Lords.
It is incumbent on us to pay appropriate respect to the Scottish Parliament, which will have to debate a Motion. No doubt some members of that Parliament may disagree with the agreement that their Government have reached. How they vote will be a reflection of the way in which that Parliament operates, which seems to copy our voting discipline substantially, from what I can see: that is, people often conform to the position adopted by their party. I was amused by the idea that a country that did not have a genuine separation between its Executive and its legislature would no longer qualify for membership of the European Union. Given that our Executive seems to be part of our legislature, if we were not already members of the European Union, we might struggle to get membership of it on that criterion.
I approach this issue in this way because I have been on record repeatedly in this Committee as being confident that the Scottish Parliament would pass a legislative consent Motion. I am confident because it has already done it and because many significant Members of the Scottish Parliament have already voted for a legislative consent Motion on most of what is before us in this Bill. To the extent that the Bill has been amended, it has been amended at their request. It therefore did not seem consistent or politically likely that that Parliament would not pass a legislative consent Motion at some stage. I have said this before and I am not saying it now in the knowledge that an agreement has been reached. I have been confident that that would happen. However, I have also said before, and I repeat, that as far as I am concerned that has never been a condition precedent for us getting on and dealing with this Bill. I have been prepared to entertain debate with noble Lords about what we need to do if there is no legislative consent Motion, although I have been confident that there would be one, and it seems that my confidence was not misplaced.
However, from my perspective of the politics of Scotland and where we are at this challenging time, it is important that we keep our word to the Scottish people and pass this Bill, which has its genesis in Calman and prior to that in the Scottish Parliament and all the devolution parties in Scotland. We should proceed to offer these additional powers to the Scottish people through their Parliament. It would then be a matter for the Scottish Parliament to decide whether to accept them, and it would not be our responsibility, and certainly not the responsibility of an unelected Chamber of this Parliament, if it did not offer them.
As far as I am concerned, it has never been a condition precedent of completing this work that we guarantee that there will be an LCM. However, it now appears that there will be one. At least to the extent that we can anticipate that the agreement that has been reached will persuade the Members of the Scottish Parliament to vote for this LCM, I think we can work on the basis that there will be one. However, we need to get more detail from the Government of what this deal that they have struck with the Scottish Parliament actually means.
I have already said this afternoon that the Government should assure the House that Parliament will be provided with an adequate opportunity to scrutinise properly what amount to significant new details on the process of the devolution of tax and borrowing powers. I do not fully understand the relevant paragraphs in the Written Ministerial Statement. We do not have much time to get to grips with them, but we will never do so if no one explains them to us. What exactly does the reference to the Holtham report mean? The noble Lord, Lord Forsyth, referred to the paragraph that states:
“The Government will work together with the Scottish Government over coming months and years to give operational effect to the powers including the block grant adjustment, in a fair and sustainable way”.
What does that mean? How will that agreement, when it is reached, be subject to parliamentary scrutiny here in our Parliament?
The next bullet point states that the Secretary of State for Scotland and Scottish Ministers will produce between them,
“annual reports to the UK and Scottish Parliaments on the progress of transferring the tax and borrowing powers to the Scottish Government”.
There must be some method of accountability envisaged in this deal that allows this Parliament to be assured that the Bill we are passing in the context of the deal that has been struck will ensure that the Government are answerable for what they are doing in relation to these issues.
I am content that we should continue with this debate provided we are given some explanation of how this process is to be carried out. I am happy to engage, time permitting, in any number of briefings outwith this Committee with Ministers, or with Members of this House more broadly, so that they can explain how this process is to operate. I would also like to be assured that Members of the other place will get the same briefing, because it is absolutely certain that they will get 15 minutes to debate all this and decide it when it gets back to them. They may all be cut off in mid-sentence as they try to tease out what this means. I therefore encourage the noble and learned Lord to come to the Dispatch Box now, or at some stage over the next few hours, and explain how this is to be done.
I have already said that I broadly welcome the other aspects of this agreement—the non-financial elements—because I do not think that they represent the hollowing out of the Bill that was suggested earlier. They are comparatively small concessions. However, as my previous contributions to this debate, and those of my noble and learned friend, have indicated, they are concessions that we were encouraging the Government to implement in another way because we thought they went beyond the Calman recommendations, which we support. Legislative consent Motion conditionality is less relevant to the Bill now than it ever was. In any event, it was never relevant to my support for it. However, we now have a much more complicated environment that has generated the possibility of that LCM. When the noble and learned Lord comes to the Dispatch Box now or at some stage within the next few hours, I urge him to explain to us the implications of that much more complex environment.
Lord Wallace of Tankerness
My Lords, I am grateful to my noble friend Lord Forsyth for his amendment. He obviously had great prescience in tabling it because it has been debated today when a Written Ministerial Statement has been brought forward paving the way for a legislative consent Motion. As the noble Lord, Lord Browne of Ladyton, made clear, that is what it does—it paves the way for a legislative consent Motion, and it will be a matter for the Scottish Parliament to determine whether to pass it. However, as the noble Lord, Lord Foulkes, indicated, he would be rather surprised if the majority party in the Scottish Parliament did not take the lead from its leader.
I was asked by the noble Lord, Lord O’Neill, for more details. I have not held any direct negotiations with the First Minister on these matters. My right honourable friend the Secretary of State has been primarily responsible for the negotiations involving individual Scottish Ministers. The Written Ministerial Statement sets out the agreement that has been reached and we should be happy to provide further details to facilitate debate on Report. I had already indicated as much with regard to the Holtham proposals. Clearly, if other issues need to be raised, it is only right that I should facilitate that debate. As I think was acknowledged in our short debate before agreeing to go into Committee, a considerable amount of hard work was done to ensure that that agreement was concluded and, in turn, to ensure that that happened before today’s debate.
It is difficult for me to make other arrangements while I am here on the Front Bench, but I am more than willing—even at the conclusion of our discussions this evening—to meet noble Lords to arrange for briefings on paper, and perhaps to see what other briefings between Members of your Lordships’ House and relevant officials could be facilitated, so that when we come to Report or Third Reading, when there may be a bit more time, your Lordships will be properly informed and briefed.
I certainly pick up the point made by the noble Lord, Lord Browne, that Members of the House of Commons have more than a legitimate interest in these matters, because if this House chooses to pass amendments—and the Government will be bringing forward amendments to reflect some aspects of the agreement that require changes to the Bill—they will also have to be considered in the House of Commons. I certainly want to facilitate such discussions as best I can and, if it is thought suitable—and it is not at a ridiculous hour, which I hope it will not be—I shall be more than happy to meet anyone who wishes to have a preliminary discussion at the end of our proceedings today about how those discussions might best be achieved.
It has always been the Government’s intention to secure a legislative consent Motion from the Scottish Parliament in favour of the Scotland Bill, and it goes without saying that we are pleased that we were able to do that in terms of changes to the Scotland Bill and supporting non-legislative arrangements, and that the Scottish Government have also tabled a legislative consent Motion in support of the Bill. It includes finance and non-finance changes. I believe that these changes meet the tests that my right honourable friend the Secretary of State indicated were important, and by which this Government have set store, for any changes to the Bill package—namely, that they are based on evidence, maintain the cross-party consensus that supports the Bill and will benefit Scotland without detriment to the rest of the United Kingdom. We have gone further than in any other Bill in working between parties in Scotland and across the United Kingdom to build on a cross-party consensus. We have carefully considered and—where appropriate and where the case has been properly made—we have taken on board the views of the Scottish Government and Scottish Parliament. This has allowed an agreement to be reached.
My noble friend asked about the legislative consent Motion, and the position was also reflected in the contribution of my noble friend the Duke of Montrose. It may be useful if I say something about legislative consent Motions in the absence of the noble Lord, Lord Sewel, who I am sure would be able to correct me if I got it wrong. During the passage of the Scotland Bill through your Lordships’ House, the noble Lord, Lord Sewel, said that,
“we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish parliament”.—[Official Report, 21/7/98; col. 791.]
It is a convention; it is not law. The words “not normally” are there. An example occurred earlier this Session when the Scottish Parliament passed a legislative consent Motion objecting to parts of the Welfare Reform Bill. The Scottish Parliament consented to some parts that were within devolved competence and rejected other parts that had implications for Scottish Ministers. The United Kingdom Government—probably one of my noble friends from this Dispatch Box—moved amendments to excise those parts from the Welfare Reform Bill.
The Earl of Caithness
My Lords, on that point, will the Minister confirm that my noble friend the Duke of Montrose was right to say that we cannot amend a Section 30 order here and that we have to either reject or accept it?
Lord Wallace Tankerness
It is generally the case for all orders that they cannot be amended. However, in earlier exchanges, the noble Lord, Lord Foulkes, asked whether there might even be a draft order. Actually, it was the noble Lord, Lord Sewel. My apologies —it seemed to happen so recently. He raised the possibility of a draft Section 30 order. I indicated then that if it related to the important issue of the referendum, we could take the opportunity of the debates that we are, I hope, about to have to get the reflections of your Lordships on these matters.
The Duke of Montrose
I am most grateful to my noble and learned friend for giving way. I am very interested in where he has gone with his explanations. It has been an interesting discovery that Section 30 orders can be applied to devolved and non-devolved matters. Section 30 orders can be applied within the legislation. If it is something included in an Act—this is the first time that we have had a new Bill since the 1998 Act—it seems that the legislation does not require the consent of the Scottish Parliament. This is the first time that the devolution guidance note has been before the Committee. It would be interesting to see the whole of the devolution guidance notes so that the Committee is aware of what the noble and learned Lord has to deal with in his negotiations with the Scottish Parliament. We are getting closer to where the legislative terms lie.
Lord Wallace of Tankerness
I am grateful to my noble friend for giving me an opportunity to make things clear. I rather suspect that the devolution guidance was placed in the Library by the previous Administration, but if there is any need to ensure that it is taken from the back shelf and made more readily accessible, I am sure we will see to that.
Perhaps it is my fault for not having explained it, or perhaps we have just glibly used the expression “a Section 30 order” without explaining it. A Section 30 order is not about dealing with things which are currently devolved. The purpose of a Section 30 order is to transfer issues which are currently reserved under Schedule 5 and devolve them to the Scottish Parliament. Perhaps one of the best examples of that since the Scottish Parliament was established in 1999 is the devolution of railways. There was extensive discussion and negotiation between the Scottish Executive and the United Kingdom Government. A Section 30 order was brought forward to bring about the devolution of railways to Scotland. Railways were not previously devolved. There were limits on that, as the noble Lord, Lord McConnell, will no doubt remember. Section 30 orders do not deal with matters that are already devolved. They are to confer on the Scottish Parliament devolved responsibility and powers in areas that are currently reserved. That is why it is important that they have to be passed by both Houses, as well as asking the Scottish Parliament, “Do you want these powers?”.
The Duke of Montrose
My noble and learned friend is describing what has been the habit of the use of Section 30 orders, but Section 30 states:
“Her Majesty may by Order in Council make any modifications of Schedule 4 or 5 which She considers necessary or expedient”.
Therefore, it can be used for both devolved and reserved matters.
Lord Wallace of Tankerness
I do not think that that is the way to transfer backwards. That may be possible; I will have to check. It may be possible to go in the opposite direction. I am trying to think whether that has ever actually happened. When the Arts and Humanities Research Council was established, because it had not hitherto existed and because under the scheme of devolution it was a devolved as opposed to a reserved matter, an order had to be brought forward to establish that it would be a UK parliamentary responsibility. I am not sure that it was a Section 30 order. The noble Lord, Lord Sutherland, may have been involved at the time. I certainly was, because I took the order through the Scottish Parliament.
The important point is that it changes the devolution settlement. It changes the boundaries between devolved and reserved powers. That is why it requires the consent of both Houses of Parliament and the Scottish Parliament before it proceeds to Her Majesty in Council.
I hope that I have shown that there is a distinction between that and a legislative consent Motion, which is by its nature a convention. On the basis of those explanations and the undertakings that I have given to try to identify ways in which we can discuss the matter in more detail—
Lord Kerr of Kinlochard
My Lords, the noble Lord, Lord Forsyth of Drumlean, raised one other question in his reading of the Statement. I am very grateful to the Minister for his Statement, and I feel much less pernickety about it than the Committee as a whole seems to do. It is a good thing that this agreement has been reached. A number of demands from the north have been dropped. A number of changes that the Government propose to make seem to me perfectly earnestful. The reason why it has been possible to negotiate this successfully is that everyone has decided that it is de minimis—it really does not change the price of fish. That is the trouble with the Bill: it does not attack the real issues.
The noble Lord, Lord Forsyth, referred to the sentence in the Statement in which we are told:
“The Government is open to considering what further powers might be devolved after a referendum on independence”.
The noble Lord asked how we should construe that sentence. Scots are good at punctuation. There is no punctuation in that sentence. That, I take it, means, “We are open to considering now, today”. It does not mean, “We are open to considering what further powers might be devolved, after a referendum”. The Minister had a good Scottish education, so I am convinced that I am reading this correctly. That seems to me to be a move from the porridge oats speech, where I think the punctuation included a comma. Am I right? Am I reading this correctly?
Secondly, what mode are we in? The porridge oats man is very muscular. He is very active.
“The Government is open to considering”,
suggests to me a rather passive role. The Government will sit there and if anyone turns up with an idea, they may look at it. Are we active or passive? I think that the porridge oats position, the punctuated position, is impossible—after there has been a referendum, then we will consider what more you might get. Scots have long memories. It will not work; that is an unsustainable position. Therefore, I am very glad to see no punctuation in that statement. Are we actively to define what further measure of devolution would be feasible, or are we to leave it to others to devise devo-maxes, devo- pluses and devo this, that and the other? I feel that there is a strong case in logic for being clear before an independence referendum about what would be on offer after it.
Lord Wallace of Tankerness
They may be very unfair on themselves but officials say, “Blame officials for poor punctuation”. I think I will reserve my position on that. I apologise for forgetting to pick up the point raised by my noble friend. As he and the noble Lord, Lord Kerr, correctly identify, the Statement says that the Government will consider further devolution after a referendum on independence. I believe that that is consistent with the position set out by the Prime Minister and with the evolution of devolution to date. It has involved a careful assessment of the evidence.
One could go back to the constitutional convention or the Calman commission. It has involved consideration of its implications across the United Kingdom—it is important to remember that any devolution has implications for other parts of our United Kingdom—and it has generally proceeded with cross-party agreement. Those are all essential ingredients, perhaps not of porridge oats but for moving forward. The Government are committed to continuing to consider amendments to the devolution settlement on that basis. My party and others are doing their own thinking on what that might be, but, as we have seen to date, any substantial progress has been made on the basis of cross-party agreement. That is important.
I make one further point for clarification. My noble friend the Duke of Montrose is right: the word “modify” means to decrease or extend the subject matter of Schedule 5, and I am advised that the order which I took through the Scottish Parliament with regard to the Arts and Humanities Research Council was indeed a Section 30 order that added something to Schedule 5.
Lord Forsyth of Drumlean
My Lords, we have had an interesting debate. To rescue the Minister, I think that paragraph 3 is headed,
“Further devolution in the future”,
which qualifies the sentence,
“The Government is open to considering what further powers might be devolved after a referendum on independence”.
I think that it clearly means that it is after the referendum.
I noticed that my noble friend did not answer my question when I asked what he could be thinking of, given the scope and nature of the Bill. As I get older, I get more and more interested in gardening. One thing that I have learnt is that it is a big mistake to pull plants up and move them before they have had a chance to settle and put down roots. It seems rather odd that we are discussing a Bill where the tax proposals will not come into effect until 2015-16. The noble Lord, Lord Kerr, wants us to start thinking about further devolution now. If you are going to plant this prickly sort of bush, it is probably a good idea to see whether any flowers are going to appear on it before deciding whether you are going to do more planting. I hope that my noble friend will not be tempted to expand the meaning of that sentence.
Lord Foulkes of Cumnock
“( ) Notwithstanding the other provisions of this section, no provision of this Act may come into force until a referendum has been held in accordance with section (Referendum about Scottish independence).”
Lord Foulkes of Cumnock
My Lords, we now come—at last, some noble Lords may be saying—to what I understand is the first of two substantial debates on the major question of this Bill. It is the one we have been waiting for with great anticipation, holding off until the report of the consultation has been published, on the referendum. I am not going to manage to do it in 140 words, let alone 140 characters, although I can say to my noble friend Lord O’Neill that whole stories, whole sagas, can be written in 140 characters. I will give him just one: Heart of Midlothian two, Hibernian nil. That describes 90 wonderful minutes last Sunday which I am sure he would wish to forget.
However, let us get on to the substantive issue of the evening. We are talking about the future not just of Scotland, but of the whole of the United Kingdom. What happens to Scotland in an independence referendum will have a huge effect on the whole of the United Kingdom, some of the detail of which has not yet been examined. We have started discussing and debating them at last—they are principally some of the effects on Scotland. However, the Joint Committee on the National Security Strategy, for example, only recently started to discuss some of the security implications of an independent Scotland, in relation to the independent deterrent, membership of NATO, and a whole range of other things. There would be huge implications for the whole of the United Kingdom if Scotland was no longer a part of it.
Any referendum, or referenda, should be organised on an agreed basis that we all understand—that the Scottish Parliament and all of its Members understand; that both Houses of this Parliament and all the Members understand; and that the Scottish people understand. The UK consultative document is absolutely right in saying that the three essential elements should be that it must be legal, fair and decisive. First, it must be legal because some people will be predisposed to challenge the basis of a referendum that is not carried out on a legal basis. I cannot say nothing will be open to challenge, but there must be a minimal likelihood of it being challenged. That would be something that would be conducted if not by, then with, the authority of the United Kingdom Parliament.
Secondly, it needs to be fair. That will ensure that all of us will be satisfied that we have had the opportunity of putting our case to the Scottish people fairly. Questions about the timing of the referendum, and the question to be asked—I will come back to that in a moment—are absolutely essential in relation to that. People who seek to choose the timing to make sure that they get a maximum vote for separation are not giving the Scottish people the best opportunity to make a balanced judgment about the referendum. That is clearly the idea of waiting until 2014. The euphoria of the Commonwealth Games, the Ryder Cup, and the anniversary of Bannockburn, will get Scots all fired up, even those from Shetland. I am sure the noble Lord, Lord Lamont, will find a way of coming to a specific amendment in relation to Orkney and Shetland as well.
Of course the timing is also being suggested for 2014 because in the run-up to the United Kingdom election, the SNP wants to try to polarise the debate between a certain kind of Scotland and a politically different United Kingdom, and that would also be to its advantage. I will come back to the question to be asked in a moment.
Thirdly, it has to be decisive. It needs to be clear that the referendum will settle the issue. We know from the experience of Quebec that it may not settle it forever, but it must be settled at least for the foreseeable future. If there is a big enough majority against separation, perhaps it will be forever or at least for our lifetimes, or for a generation.
My Amendment 87 is to hold over provision of this Act until the referendum has taken place. The Amendment 88 tabled by the noble Lord, Lord Forsyth, supported by another former Secretary of State the noble Lord, Lord Lang, and by the noble Earl, Lord Caithness, would have the United Kingdom Government take action to exercise their undoubted right to call a referendum by Order in Council. That is clearly unacceptable to the Scottish Parliament. I would not be averse to it, I have made that clear on a number of occasions. However, on the basis that I suggested earlier—that this whole arrangement needs to be accepted by all the parties involved—we must think carefully before exercising that right.
Lord Forsyth of Drumlean
Is the noble Lord saying what I think he is saying? Is he saying that if we proceeded by using Section 30, and if the Scottish Parliament declined to give consent to that, we should not have a referendum? Then the only alternative would be for the Westminster Parliament to pass the necessary legislation without support. He appears to be ruling that out. I hope he is not.
Lord Foulkes of Cumnock
The noble Lord is anticipating something I am going to say. For once, exceptionally for me, I have written down the argument in some sort of order. I was going to say, before he interrupted me, that we should not rule out such an option if the circumstances made it desirable, or perhaps made it the only acceptable option. That could be because the timing was contrived, in relation to the proposed referendum by the Scottish Parliament, or because we would not succeed because we could not get agreement in relation to a Section 30 order. That is not the preferred option; it is the fall-back position. As I said earlier, the good thing about a referendum organised by the United Kingdom Government would be that it would not only be decisive but it would be legal and would not be open to challenge.
I now come to the other option, which is the proposal of a Section 30 order. I think that is a good arrangement, a clever arrangement and an arrangement that will enable the Scottish Government to legislate for a legal referendum. That would not be likely to be challenged, but it would have to be on an agreed basis. That is why the question raised in our earlier debate about whether the order would be amendable is important. I think the Minister said that, in debating the order, he would consider whether some opportunity might be taken for amendments to be considered. I think that my noble friend Lord Sewel suggested that we might have a debate on a draft order. We may be crossing bridges before we get to them, but that is a good suggestion that would enable us to table amendments.
In this context, the Secretary of State’s letter of 20 March to my right honourable friend the Shadow Secretary of State, Margaret Curran, confirms, as did the Minister earlier, that the consultation indicated clear support throughout Scotland for this proposal, including from constitutional experts—the Minister described them earlier—and knowledgeable organisations such as the Law Society of Scotland, the Royal Society of Edinburgh and the British Academy. The Scottish Government have now accepted this, but a Section 30 order still has to be agreed with Scottish Ministers. That is where the difficulty might arise and where the negotiations will be important, where, in the words of the noble Lord, Lord Kerr, we will need to have had our porridge oats, or Scott’s Porage Oats. The Minister is negotiating, so that they take a firm line.
Lord Reid of Cardowan
As regards what might and might not be the ultimate outcome of such discussions, let us be absolutely clear on one thing. If it is a question of Scotland remaining inside the United Kingdom or leaving it, the Scottish people have the right to decide such a question. However, a wider question about the changed nature of devolution within the union cannot be a question just for the Scottish people or for the Scottish Parliament; it must be a question either for the two Parliaments, or for the people of the United Kingdom. Will he make that clear?
Lord Foulkes of Cumnock
I completely agree with my noble friend. I think that needs to be made clear to Ministers. I was going to turn to the issue of one question or two questions in a moment. We need to set targets for our Ministers when they are negotiating and discussing with the Scottish Parliament. In Amendment 89, the noble Earl, Lord Caithness, talks about the referendum being advisory or binding. There has been much discussion about whether any referendums have been advisory or binding. I think some have been advisory but have been accepted as binding. One target that we need to set the Minister is to decide that both Parliaments should agree in advance to accept the result of the referendum and follow it through with the necessary legislation as the will of the Scottish people.
Lord Reid of Cardowan
I entirely support the thrust of what my noble friend is saying, but it is important to recognise that any change in the relationship inside the United Kingdom must be put before the people of England, Wales and Northern Ireland as well as Scotland, not just because it is a different concept, but because it directly and materially affects them. The Scottish people have the right, if they so wish, to leave the United Kingdom, but if there is a desire for a relationship which diminishes, for instance, the role of England, Wales and Northern Ireland in relation to Scotland within the United Kingdom, that is an entirely different matter in practice as well as in concept.
Lord Foulkes of Cumnock
I am not sure that I fully agree with my noble friend on that. The referendums in 1979 and 1997 were both on the basis of the Scottish people deciding.
Lord Reid of Cardowan
I was careful to say earlier that anything other than leaving or staying in the union must be agreed either by both Parliaments or by the people of the whole United Kingdom. The two instances which my noble friend mentioned were, of course, agreed by the United Kingdom Parliament before they went to a referendum.
Lord Foulkes of Cumnock
I had not appreciated the qualification of being accepted by both Parliaments. If they are accepted by both Parliaments, that will fulfil my requirements and belief.
I have an amendment which suggests a further referendum on devolution—whether we should have the status quo, devo-plus, devo-max or a multi-option referendum. I am not in favour of that now and I shall not press that because that was going to be 35 days after independence. I confess that this amendment has not received universal support; in fact, it has not received any support at all, which is probably why I am not going to press it.
A stronger reason is that we heard a very powerful argument from both Front Benches that the 1997 referendum’s second question gives power to Parliament to decide further devolution. If both Parliaments, as my noble friend Lord Reid has agreed, decide on further devolution, I do not think a referendum is necessary.
Finally, there is the question of further devolution which the noble Lord, Lord Kerr, raised in his interesting intervention about porridge oats and punctuation. I agree—and now it seems the Prime Minister agrees—that further devolution needs to be carefully considered. We have got that in the Statement which the Secretary of State made today. It should be carefully considered; as a number of people have said, the devolution we have at the moment—which is the devolution of the Calman commission, the further extension—has been agreed on an all-party basis, and on the basis of consensus and consultation. That should be the basis of any further extension of devolution.
Both my own party, the Labour Party, and the Liberal Democrats, the Minister’s party, have commissions looking at this. In our debates on Thursday, we had an indication that already there is a degree of a mandate in relation to further fiscal devolution.
There are other issues in relation to the referendum, such as the role of the Electoral Commission, which I strongly support as being responsible for the conduct of the referendum. Another is the franchise, because while the Scottish Government propose to extend it to 16 and 17 year-olds, I believe there should be no unilateral reduction in the voting age just for one referendum. There are a number of other detailed matters which we will come to in the later amendments.
We now have this agreement on the legislative consent Motion. We have substantial agreement that greater tax powers are acceptable, and that borrowing consent, which we are giving to the Scottish Parliament, is welcome, and that specific areas are now being devolved. Let us not make any mistake about it: this implementation of the Calman recommendations is a very substantial increase in the devolved powers of the Scottish Parliament. We should not be hiding that under a bushel. We should be proclaiming it from the rooftops. Many of the advances have come from pressure from Labour MPs and Labour Peers. It is something I am now proud to support fully. I beg to move.
Lord Wallace of Tankerness
My Lords, it was thought at one stage that it might be helpful if I indicated the Government’s position on these points. I shall do that if the House thinks it would be helpful and at the end I will respond to points made in the debate as well as to more specific points made by the noble Lord, Lord Foulkes.
I also wish to thank noble Lords for helping to try to deal with these issues in two discrete groups. The first group concerns how to legislate for a referendum; for instance, whether there should there be one question or two on the ballot paper, the nature of a binding and advisory referendum, and whether it should be held across the United Kingdom. Indeed, my noble friend Lord Caithness has indicated that he wishes to discuss implications for the Scotland Bill of Rockall and, a place dear to my heart, Orkney and Shetland. Subsequently we will have a debate on one of the later groups on more practical but nevertheless very important matters relating to the referendum, including the role of the Electoral Commission, eligibility to vote in a referendum, and oversight of the referendum.
I want to endorse what the noble Lord, Lord Foulkes, said, when indicating that he supports the Government’s view of a referendum that is legal, fair and decisive. I think he said that fairness must be fairness for all, and it is a very important point. We will certainly come to debates on the franchise and the role of the Electoral Commission, but I would want to agree that the referendum must be conducted in a way that is deemed fair to all and that both sides are satisfied and can accept the outcome. There would be nothing worse than to have an outcome where one side or the other was crying foul. In all our views, this means adhering to the well-established rules for referendums, so that neither one side nor the other can claim that there has been a false referendum.
As I set out in my Oral Statement to your Lordships’ House on 10 January, the Scottish National Party won a significant victory in May 2011. In that election it campaigned for Scottish independence and its manifesto included a pledge to hold a referendum on independence. But winning an election victory is not sufficient. The SNP did not explain how, in legal terms, it proposed to deliver a referendum either in its manifesto or in the election campaign. Nor indeed did the Scottish Government set out their legal view or their plans for many months. As has been highlighted before in your Lordships’ House, this is not a matter that can be avoided. To legislate for a referendum on independence, the Scottish Parliament must have the power to do so, and it is the Government’s clear view that the Scottish Parliament does not have that power.
That is why on 10 January we published our consultation paper on how to deliver a legal, fair and decisive referendum. As I indicated earlier, officials are reviewing and analysing the responses and the Government will publish a full report on the consultation, but perhaps I may give some early indications. We received almost 3,000 responses. As I have already indicated, they came from members of the public in Scotland and beyond, and there were contributions from businesses, academics, political parties, trade unions and many others that belong to civic Scotland. I believe this will, and does, provide a sound basis for gauging Scottish opinion on the issues.
The Government’s central proposition in the consultation was, as has been said, that the referendum must be legal, fair and decisive. It is important that the responses we received are analysed thoroughly, but I can indicate some of the preliminary results on the key issues. First, on legality, we must turn to the Scotland Act 1998. The Act is clear. The Scottish Parliament cannot legislate on matters reserved to this Parliament, including,
“the Union of the Kingdoms of Scotland and England”.
Any Act of the Scottish Parliament is simply not law if it is outwith the competence of the Scottish Parliament. An Act of the Scottish Parliament is outside legislative competence if it relates to reserved matters. The question of whether a provision relates to a reserved matter is determined by reference to,
“the purpose of the provision, having regard (among other things) to its effect in all the circumstances”.
We are quite clear that the Scottish Government’s purpose in bringing forward a referendum is to secure independence. Their intended effect is to secure a mandate for this to happen. Both purpose and effect relate directly to the reserved matter of the Union. Your Lordships’ Constitution Committee, in its report published last month, said:
“An authoritative determination of the legal issues analysed in this chapter could be given only by the courts. Having considered the matter in detail, we are of the clear view that the … analysis offered by the UK Government is correct. Without amendment, the Scotland Act 1998 confers no legislative power on the Scottish Parliament to … authorise a referendum about independence”.
The committee welcomed the Government’s proposal that a Section 30 order be made to devolve power on the Scottish Parliament to legislate for a referendum on Scottish independence.
In our consultation document, we invited views on devolving powers using other legislation, including the current Scotland Bill, and for opinions on the possibility of running the referendum directly from Westminster. We have been clear throughout this process that it is the UK Government’s preference to work with the Scottish Government to secure agreement on the way forward. This is not a question about the mandates of Scotland’s two Governments. We believe it is about empowering the people of Scotland to participate in a referendum that is legal, and it is crucial that any referendum is beyond legal challenge. To provide for that legal referendum, we have set out our view that the power to legislate for a referendum should be devolved by the use of a Section 30 order agreed by both Governments and subsequently put to, and agreed by, both Parliaments.
Initial analysis of the responses received demonstrates that a significant majority agreed with that approach. That position was not simply supported by the volume of respondents, but by key academic experts and commentators including Professor Matt Qvortrup from Cranfield University, Professor Adam Tomkins of the University of Glasgow, Alan Trench of the University of Edinburgh, and representatives of organisations such as the Law Society of Scotland, the Electoral Reform Society of Scotland, the Royal Society of Edinburgh and the British Academy.
Noble Lords will also have noted that, soon after we published our consultation, the Scottish Government published their own document on 25 January. In that document the Scottish Government also acknowledged the legal problem and accepted that a Section 30 order was the best way to remove doubts about the competence of the Scottish Parliament. We welcome this endorsement, which the Secretary of State has discussed with the First Minister, and we look forward to continuing that dialogue over the coming weeks. Against that background, and indications that the Scottish Government want to reach agreement on these critical matters, I can confirm that we will not be tabling any government amendments on a referendum in the Scotland Bill.
In addition to ensuring that the referendum is legal, the Government have been clear that it should also be fair and decisive. That will be discussed when we debate the second group of amendments.
Lord Forsyth of Drumlean
When my noble and learned friend says that the Government will not be tabling any amendments to the Bill, he is ruling out using the Bill as a vehicle to run a referendum. The Section 30 procedure requires the consent of the Scottish Parliament. In the absence of that consent—perhaps over the issue of whether there should be one question or two—is he prepared to introduce legislation in the next Session to provide for the referendum to be conducted along the lines that the Prime Minister set out in what the noble Lord described as his porridge oats speech?
Lord Wallace of Tankerness
My Lords, my noble friend was right to say that we do not intend to use the Bill as a vehicle for introducing provisions for the referendum. I cannot be clearer than that.
Lord Forsyth of Drumlean
My noble and learned friend was absolutely clear on the point about using the Bill for the referendum. Everyone agrees that the preference has always been to use the Section 30 power, which requires the agreement of the Scottish Parliament. The Prime Minister stated clearly that there would be a referendum; that there would be one question; and that it would be run by the Electoral Commission. In the absence of agreement to that under Section 30, will the Government bring forward in the next Session legislation to give effect to that? If that is their position, I will be happy not to move my amendments and not to waste any more time talking about referenda.
Lord Wallace of Tankerness
I will make this clear. If agreement could not be reached on a Section 30 order, and if we ensured that the matter was kept out of the courts—which I hope would be the preference of most if not all of us—we would need to consider what other options were open to us to provide a legal, fair and decisive referendum. However, just as we were taken many times down the road of, “What if we cannot get a legislative consent Motion?”, which we have now seen is possible, we should make it clear that we are confident that we can reach agreement.
We reached agreement on the Scotland Bill when some said that it would be impossible. We reached agreement that Section 30 was the preferred route of both Governments to deliver a legal referendum. When I made my Statement on 10 January, I could not have said that that would be the case. The Scottish Government publicly stated that they share our view that the Electoral Commission should review the question. In their consultation paper, they state that their preference is for a single, direct question. Therefore, I am confident that we can continue to reach agreement on all these matters. The focus of our efforts must be on doing that rather than on speculating hypothetically. Just as we achieved agreement on the Scotland Bill, I believe that further agreement will be possible.
Lord Reid of Cardowan
Perhaps I may clarify something in view of our earlier discussion. Apart from the process of Section 30, the substance will count as well. Will the noble and learned Lord be clear with the House that nothing in the Section 30 order arising from any discussions could validate changes in relationships inside the United Kingdom that affect the people of Scotland, and also those of England, Wales and Northern Ireland, unless they are consulted either through their Parliament or Assembly or in a UK-wide referendum? This is an important point and if the noble and learned Lord can clarify it, I will be very happy.
Lord Wallace of Tankerness
I entirely agree with the noble Lord that the point is important. He made an important distinction between a referendum on whether Scotland should remain part of the United Kingdom, and one on whether Scotland should remain part of the United Kingdom but under a different devolution settlement. He was right that it would have implications for other parts of the United Kingdom. In 1997 the Government of whom he was a member came to power with a substantial mandate to introduce devolution, not only for Scotland but for Wales and Northern Ireland. Parliament respected that mandate and passed the legislation. What we are doing in the Bill, although it brings changes, proceeds from the manifestos of three parties.
The noble Lord made that distinction, and it is the Government’s view that there should be a single question on independence and that any other question would be of a different character and therefore would not sit well if it came in the double-question referendum that is sometimes suggested. The point that I was making was that the Scottish Government, in their consultation document, stated that their preference was for a question on independence. We should not lose sight of that, as sometimes it is easy to do.
We believe that a referendum on independence should address the single most significant issue that people in Scotland will face for many generations. That is why in the consultation paper we proposed that there should be a single question on independence.
Lord Reid of Cardowan
I am trying to be helpful to the noble and learned Lord. I urge him not to place too much emphasis on the fact that the Scottish National Party, which has independence as its core belief, expressed the view that it just wants a discussion and a vote on independence. If it had any other ideas about achieving a different strength or form of devolution, it certainly would not say this. Instead, it would point to an amorphous grouping in Scotland that supposedly demanded it, and would concede it reluctantly—because of course it wants nothing less than independence. The politics and the substance of this are as important as the process. Would it be legal to proceed with an alteration in the relationships of countries inside the United Kingdom without the endorsement of the United Kingdom Parliament or the people of those countries?
Lord Wallace of Tankerness
My Lords, I was asked on one or two occasions whether it would be legal to have a referendum on so-called devo-max without authority being conferred by this Parliament, either by a Section 30 order or by legislation on the Scottish Parliament. I was very clear that that, too, would change the relationship between Scotland and England and therefore it would be outwith the competence of the Scottish Parliament. I hope that that reassures the noble Lord.
As the noble Lord, Lord Reid, indicated, there are some who support approaches short of separation, such as devo-max or devo-plus. We must be clear that there has been no single, agreed definition of any of these terms. It is the Government’s firm view that we should not intertwine questions about the future balance of devolution in the United Kingdom with the question of Scotland’s place in the union.
Lord McConnell of Glenscorrodale
On the issue of seeking agreement with the Scottish Government on the nature of the question to be posed on the ballot paper, are the Government willing to look at my suggestion as a way not only of compromising between the two positions outlined by the United Kingdom and Scottish Governments but of producing a clearer answer so that people can understand with absolute clarity what they are voting for, and everyone afterwards can accept and understand the result? The question on the ballot paper should be posed not as a yes/no question, either for independence or for remaining within the union, but as a choice between two statements, the first being that Scotland should become an independent country and the second being that Scotland should remain part of the United Kingdom, with voters asked to put a cross on the ballot paper beside the statement of their choice. It would be consistent with the form of words used in the 1997 referendum. It would also give everybody a chance to campaign for their own positive choice, and for them to accept afterwards that the result was fair and not skewed by who had the choice between yes and no in advance.
Lord Wallace of Tankerness
The noble Lord makes an interesting and constructive proposal. I agree with the object of what he is proposing: it must be a question that is fair and brooks no division or challenge afterwards. This is perhaps relevant for the next group of amendments on the role of the Electoral Commission. It has an important and tried and tested role to play in this, so perhaps this is an issue that we will return to on the next group of amendments.
Lord Neill of Bladen
Someone said that the question, or part of the question, might be, “Do you consider the referendum to be legal?”. That would be a fatal question to put. It is an extraordinarily difficult legal question, and there is no reason why the ordinary voter should have a view that is entitled to any weight on that. However, he will certainly be asked whether he wants to have one country or two, in the language there is for that. To ask, “Do you think it would be legal?”, would be a mistake.
Lord Wallace of Tankerness
My Lords, I do not think anyone is suggesting putting on the ballot paper, “Do you think it is legal?”. That would ultimately be a matter for the courts to determine. The collective view is that we should find a way forward that, as best as anyone can, puts that question beyond doubt. That is why we recommend a Section 30 order as the best way of achieving that.
Let me make progress and allow others to contribute. Early analysis of the consultation responses shows clear support for a referendum with a single question on independence. We will take this support for our position into discussions on the Section 30 order. We must be clear that the Scottish Government in their own consultation paper state that their preference is for a single question on independence.
Finally, on the amendments that consider whether a referendum on independence should be held in Scotland or across the United Kingdom, I readily recognise that a decision for Scotland to leave the United Kingdom would have significant implications for those left in the remainder of the United Kingdom. However, it has already been articulated by the noble Lord, Lord Reid, that the question of whether Scotland remains part of the UK or becomes independent is for the people of Scotland alone to answer.
The noble Lord, Lord Foulkes, said that we should set some targets. I hope that in this debate and the debate on the next group of amendments the Government can get a flavour of what your Lordships believe are the important targets and issues that we should strive to achieve in subsequent negotiations.
The Duke of Montrose
The Minister has been most helpful in explaining the Government’s position. There is one extra element that it would be interesting to know about: would the Order in Council be specifically limited to one referendum? Multiple referendums would raise even more seriously the problem of the involvement of the other parts of the United Kingdom that the noble Lord, Lord Reid, is worried about.
Lord Wallace of Tankerness
My Lords, I am quickly trying to look at the draft Section 30 order that was attached to the consultation. It provides for just one referendum.
Lord Sutherland of Houndwood
May I ask the Minister a question? He may not want to answer it, but clarification would be helpful. He referred to the Government’s belief in the importance of a single direct question. Is that a belief or a sticking point? There is a big difference between the two, and for some of us it would be a sticking point. That is the point raised by the noble Lords, Lord Reid and Lord Foulkes. We have not yet solved the West Lothian question with the current legislation. This Bill will enhance that question in the minds of many people across the whole of the UK. If we were to go further in some undefined form of devo-max, the difficulties would be greater, so I take him back to his point about fairness.
Lord Wallace of Tankerness
That is an important question. If other noble Lords want to make their contributions, I will reply to it and other points when winding up the debate.
Lord Williamson of Horton
My Lords, I have sat through the three and a half hours of this debate. Fortunately, Hansard records our words but not our accents. If it did, it would have to have a little asterisk against mine because, apart from a very brief intervention by my noble friend Lord Neill, I am the only person with a non-Scottish accent who has participated in the debate.
I shall make one point, but it will be quite short. I thank the Minister for what he said in clarifying the Government’s position. It is extremely important. In so far as conditions are going to be set for the referendum in the way in which it is presented in the Section 30 Order in Council, it is extremely important that when we finalise that position, we still carry the support, trust and confidence of the people of the other countries of the United Kingdom that the referendum will be fairly drawn up and monitored. There is more than one party to this referendum. There are the Scottish people and there are the people of the United Kingdom as a whole, and confidence in the political process is important.
For that reason, I will say briefly that although these issues are going to turn up—as we know now, in the Section 30 Order in Council and not in this Bill—none the less the points that are raised in the amendment moved by the noble Lord, Lord Foulkes, and that also arise in his Amendment 94C are extremely important. I emphasise that it is extremely important that we stand by the points that are set out in these amendments. The first is that we are talking about whether Scotland should become independent of the rest of the United Kingdom. There must be a clear question on the ballot paper and in the order. The referendum must be carried out in accordance with the provisions of the Parliamentary Voting System and Constituencies Act 2011 and the draft must be laid before each House of Parliament. The two further points in Amendment 94C seem to be extremely important. The timing must be made quite clear. It cannot be left ambiguous. The question must be equally explicit. I think that the question that the noble Lord, Lord Foulkes of Cumnock, has put forward in that amendment is excellent.
We need to stick to these points, although I have this terrible feeling, based on a long period in public life, that when we come to negotiations—and there will be negotiations in relation to this Order in Council—gradually a little change will come in. It will not be exactly as it started off, and by the time we get to the end we may find that we are not carrying fully the confidence of all the people of the United Kingdom. Those four points are extremely important to me. They are negotiating points that we need to stick to. We have to be extremely careful that we do not just fade away into something that is much too mushy. We need to stick to the clear points that we have often discussed here. They are extremely valuable and must be carried into the Order in Council.
Lord Forsyth of Drumlean
I shall speak to my Amendment 88, which is part of this group. It may help save your Lordships a little time. I am grateful to my noble friend for the statement that he has just made. As I see it, the position is quite clear: the Government are not going to use this Bill as a vehicle.
I tabled my amendment on 13 September, six months ago. Since then, quite a lot has happened. I tabled it because I thought we needed to resolve once and for all the question of whether Scotland should remain part of the United Kingdom, and I thought that the First Minister would use his period in office to drive a wedge between Scotland and the United Kingdom. Nothing that I have seen in the past six months has done anything other than to consolidate that view. It is therefore very important that we get this matter settled, that we concentrate on whether Scotland wishes to remain part of the United Kingdom, and that issues of devo-max and the rest are kept to one side while we do that.
I entirely agree with the noble Lord, Lord Reid, who intervened twice while the noble Lord, Lord Foulkes, was introducing his amendment to point out that devo-max means creating a federal parliament and an English parliament. He is absolutely right to say that that would need to be subject to approval by the rest of the United Kingdom.
We are concentrating here on how to get the Scottish question resolved one way or the other. Seeing how the noble Lord, Lord Foulkes, has suddenly started speaking to a script, I suspect that there is probably a degree of agreement between the Front Benches on the way forward on this. I hope there is. The noble Lord, Lord Browne, shakes his head, but the noble Lord, Lord Foulkes, was certainly speaking to a script, although after three pages we returned to normal service. I suspect that the three pages may very well reflect the view of the Opposition, but we will hear from the noble Lord, Lord Browne, in due course.
The point is that there is a consensus in this House that we need to have a referendum; it needs to have one question—
Lord Foulkes of Cumnock
I can let the noble Lord, Lord Forsyth, see my script and he will see that it is in my own handwriting and no one else’s.
Lord Forsyth of Drumlean
Yes, I just wondered who dictated it. I am sure it is the noble Lord’s own work; it is just that it is such a change of position in such a short time. We have discussed this ad nauseam and it is perfectly clear that there is agreement in this House that there should be one question and that the referendum should be conducted by the Electoral Commission and no one else.
I like the question that is in the amendment moved by the noble Lord, Lord Foulkes, but I am perfectly content for that question to be determined by the Electoral Commission. That is where we may end up. My preference would be for it to be decided by the Government, but I can see how that would create difficulties. The important point is that this whole process needs to be regulated by the Electoral Commission and needs to be conducted under the rules that have been established in statute for the conduct of referenda. I am very happy not to move my amendment and not to spend any more time talking about referenda in the context of this Bill, because this Bill is clearly not going to be used as the vehicle.
My noble and learned friend has been brilliant in his negotiations with Mr Alex Salmond, but I am not absolutely persuaded that Mr Alex Salmond is going to agree to a Section 30 procedure that meets all the criteria. The point that was made by the noble Lord, Lord Williamson, really needs to be taken into account. We do not want any shilly-shallying or giving way on these important points of substance. This is very important.
Mr Salmond does not want to have a referendum on independence because he knows that he will lose, and I am anxious that my noble and learned friend may be optimistic about reaching agreement. However, given his track record, he may well be able to reach agreement: in which case, fine. If he is not able to reach agreement, we will have to have a referendum Bill in the next Session of Parliament that delivers these things. I regret that, because unless there is agreement between the Front Benches to take this through the House reasonably speedily we will have another six or seven months of arguing about process, about the question and about who should run it, whereas I want the debate to be about what happens to Scotland’s young people, the jobless, our businesses, our defence, people’s pensions, and our country as a United Kingdom.
If we are going to go down this track, I very much hope that the negotiations will not be particularly extended. I believe in competition but, honestly, competition between consultation papers is a bit rich. The Scottish Government’s consultation finishes in May. If this is the route that we are going to go down, let us hope that, at a reasonably early stage in the new Session of Parliament, either we will have reached agreement with the Scottish Government on using Section 30 or the Government will have brought forward a Bill that is taken through both Houses speedily and delivers the opportunity for a decision to be made. I would have preferred it if we had used this Bill to achieve that because we could have got on with it, but given the Government’s Statement and the fact that we have to deal with all amendments by next Wednesday, it is perfectly apparent that that is not going to happen. I am content not to press my amendment.
The Earl of Caithness
My Lords, I have put my name to the amendments tabled by the noble Lord, Lord Foulkes, and my noble friend Lord Forsyth. As my noble friend Lord Forsyth has just said, these amendments went down last year, long before the UK Government sent out their consultation paper, let alone the Scottish Government bothering to send out theirs.
I am not in the least bit fearful of a referendum in Scotland but I am worried about the consequences. The break-up of the United Kingdom at the behest of a minority, which might prejudice the majority, is something of great concern. As the noble Lord, Lord Foulkes, has said, it has huge implications for the rest of the United Kingdom. I am told that when Czechoslovakia divided in 1992, some 30 treaties and 12,000 legal agreements were required. There is going to be a huge amount of work resulting from a decision to have an independent Scotland, if that is the one that is taken.
I hear what noble Lords have been saying about this being a matter for Scotland, and indeed it is, but it is such a big matter that the referendum in Scotland should then be followed by a referendum in the UK. There are huge implications for the rest of the UK; for example, in Brussels, where our ability to get a blocking minority at the Council of Ministers will be altered because the number of votes that we have will be reduced. I spoke about this in an earlier debate. It might very well threaten our permanent seat at the United Nations.
There are a lot of reasons why it is so important that the United Kingdom is kept together, which, if it is broken by a minority, will have huge implications. That is why I have put forward my Amendment 89, which says that the referendum in Scotland should be advisory and could be implemented only if it was agreed in the rest of the United Kingdom. We are sleepwalking into a whole lot of issues that have not been discussed, the implications of which nobody fully understands, and which the vast majority of the United Kingdom will not have a say on.
My Amendment 90 is an amendment to Amendment 88 and says that if the vote in a referendum held in Scotland is for a separate Scotland—I do not say “independent Scotland” because Scotland is about as independent a country as you can get—but that if the people of Orkney and Shetland vote to remain in the United Kingdom, they should be allowed to do so.
The obvious argument in favour of that is the argument that has been expounded about Scotland, which I have just spoken about. Here we have a minority of people in the United Kingdom saying “We want to become separate” or “We could want to become separate”. The rest of the United Kingdom has to accept that, as the noble Lord, Lord Reid, thinks is right. I am saying that if Orkney and Shetland decide that they want to stay in the United Kingdom—although that is not the only alternative for them—their wish should be granted.
When this amendment was put down, it raised a lot of concern from the usual rent-a-quote SNP MSPs who jumped up and down and said, “This is Westminster dictating to us in the far north”. No it is not; it is merely giving a chance for democracy. There is a fear in the far north of the centralisation that has taken place in Edinburgh.
Lord O'Neill of Clackmannan
Does the noble Earl anticipate there being a polling station on Rockall and the like? We are dealing with matters of rather greater significance than these flights of geographical fancy.
The Earl of Caithness
In fact, I do not anticipate people living there. But what is important are the oil exploration rights around Rockall, which have huge implications. What I want to ask my noble and learned friend is what takes preference. Is it Her Majesty’s instructions to raise a union flag and it is taken for the union, or is it an Act of Parliament which gives administrative rights so that the island of Rockall is part of Scotland? That ought to be decided. I would say to the noble Lord, Lord O’Neill, that these are the sorts of issues that we need to be clear about when it comes to the referendum. If oil is found within the waters of Rockall, let us have a clear mandate as to who owns it and who is going to have responsibility for those areas, and indeed defend them against attack, perhaps by terrorists, if the oil is developed.
My last amendment in this group is to Amendment 94C, another amendment tabled by the noble Lord, Lord Foulkes of Cumnock. It concerns the second question about the fiscal autonomy of Scotland, for which I know he did not get much support. I want to ask my noble and learned friend what the situation would be should Scotland vote to become a separate country from the United Kingdom. My amendment provides that Scotland should no longer be allowed to use the British pound sterling. I do not see how Scotland could use the same currency as England if it did not have a common Government. That has been the problem with the euro. My noble friend Lord Forsyth has argued strongly that we should not join the euro. Attempts have been made by many politicians, including the present Chief Secretary to the Treasury, to get us to become part of the euro and much more integrated. However, the decision not to become part of the euro has clearly been vindicated. In the event of Scotland becoming a separate country and not having the same Government, it would be quite detrimental both to the remainder of the United Kingdom and to Scotland to have the same currency. It has not worked in the past and it will not work in the future. I would like my noble and learned friend to confirm that Scotland would not be allowed to use the British pound sterling.
That would not be something sensational for Scotland to do because in the days of King David I, somewhere between 1140 and 1150, the weights and measures and the currency of Scotland were based by Act of Parliament in Caithness. It was decreed that there should be a common and even weight for the pondus Cathaniae, so it would be quite simple for Scotland to go back to that.
The Earl of Mar and Kellie
My Lords, I want to ask my noble and learned friend a question to which I do not know the answer, so maybe he will be able to help me. The noble Lord, Lord Reid of Cardowan, talked about the need for a UK-wide referendum to deal with issues such as devo-max. I could probably go along with him on that, but I recall that Jersey, Guernsey and the Isle of Man have a status which is equivalent to devo-max, and I do not think we had a referendum to let them get to where they are.
Lord Reid of Cardowan
I did not say that there had to be a referendum but, if there was a discussion about a change in Scotland’s place inside the United Kingdom, either that had to be done by agreement between the Parliaments or by a referendum that went wider. In the case of the previous referendums, there was agreement within the UK Parliament and then the referendums were held. The situation has now changed because there is a Parliament in Scotland and Assemblies in Wales and Northern Ireland. One presupposes that a decision will be taken on being inside or outside the union and the result of that decision meaning that Scotland should stay inside the union. I have no principled objections to entering into discussions about changing the nature of the relationship, but that has to be decided either by the peoples of the UK or by their representatives in the Parliaments. That is probably the only legal way to do it, and it is the only fair way. The first question, on whether Scotland wishes to leave or stay, is one for the Scottish people on their own, but the next question is one either for the peoples of the United Kingdom or the various representative bodies of those peoples.
The Earl of Mar and Kellie
My Lords, I am most grateful for that advice. Does the noble Lord, Lord Reid, believe that Jersey, Guernsey and the Isle of Man have devo-max?
Lord Reid of Cardowan
I would be able to understand that if I knew what devo-max is. I am presupposing that if there is a subsequent discussion on the decision to stay in the United Kingdom, some of it will be on what the vote is actually about. I hate to add pigs and pokes to porridge—enough euphemisms have been used—but one of the problems with devo-max is that, since it affects the relationship between the peoples of the United Kingdom, it would have to go to the peoples of the United Kingdom or their elected representatives. Also, at this stage no one knows what devo-max, devo-plus or any of these topics other than staying in the UK or leaving the UK actually constitutes. How on earth that is put to a referendum is beyond me, and therefore it reinforces the fact that there should be a clear, fair and legal decision on one issue, after which there may or may not be discussions between the representatives of the various peoples about changing that relationship. At that stage, presumably, devo-max may represent what the islands the noble Earl referred to already have or it might refer to something entirely different. Part of the problem is that at the moment we have no idea of what it refers to.
Lord Forsyth of Drumlean
My Lords, the difference is that Guernsey, Jersey and the Isle of Man do not send Members of Parliament to the House of Commons.
The Earl of Mar and Kellie
I suppose I should continue to look for advice: did they? I also note that Jersey, Guernsey and the Isle of Man have almost complete autonomy, including on foreign policy and the Treasury. The only thing they do not provide overall is their own defence.
Lord Lang of Monkton
My Lords, I intervene briefly in the debate simply because Amendment 88, tabled by my noble friend Lord Forsyth, also bears my name. I begin with an apology because I have been detained away from the House all day and indeed had not expected to be able to get back in time for this debate. Therefore, I speak with some diffidence because I have heard only half of the wind-up speech made by my noble and learned friend to the last debate.
This amendment was tabled when the United Kingdom Government were taking no clear interest in what was going on in Scotland, when the First Minister was being given a completely free run, and when there was a clear need for the Government to get a grip on this matter and represent the interests of the whole of the United Kingdom. That is what the amendment hopes to stimulate, and certainly there has been a lot of progress since then. I wish that I had heard all that my noble and learned friend was able to say this evening but, from the reaction to it, I understand that quite a lot of useful progress has been made.
What seems absolutely necessary is that whatever manoeuvring takes place involving a Section 30 order or whatever else may come along, we have to have a watertight situation in which the Scottish Executive cannot manoeuvre to break away from the commitment that we all now have to holding a referendum in Scotland, with clear wording that forces the issue on whether or not Scotland should remain part of the United Kingdom. That point has been effectively made by a number of speakers today. I particularly agree with the comments made in the last debate by the noble Lords, Lord Williamson and Lord Reid.
My reason for intervening now is to draw my noble and learned friend’s attention to what my noble friend Lord Forsyth said when he indicated that he was willing to withdraw his amendment but sought certain clear and specific assurances and undertakings. He made the case clearly and I shall not attempt to repeat it or improve on the language he used. However, I urge my noble and learned friend to respond directly, clearly and unambiguously to the request that he made.
Lord Maclennan of Rogart
My Lords, at the conclusion of this long debate, I thank my noble and learned friend for what he has contributed so far.
Events have moved rapidly in the past few days and have made it extraordinarily difficult for the House to keep abreast of what is going on. However, my noble and learned friend has made it clear from the beginning that the referendum which is held will have to be legal, fair and decisive. How does he intend to enable the United Kingdom Parliament to satisfy itself that the process is legal, fair and decisive and that the questions being put to the electorate are legal, fair and decisive?
There are many questions about fairness and decisiveness in particular. My noble and learned friend has gone quite far towards satisfying us that there is now a broad consensus on what is legal but, with a Section 30 order, there is some difficulty in being certain as to how fairness and decisiveness might be achieved. I recall in earlier debates about referenda an issue about the proportion of the electorate that would be required to reach a decisive conclusion. It is a matter on which people will have differences of view and it is therefore important that we know what the Government are proposing. If Scotland was to oscillate in its views, as it might, and if large numbers of people did not vote, that might not contribute to the decisiveness of the outcome. I hope that that will be taken into account.
In earlier debates we also considered who should be the electorate. There is an inherent unfairness in precluding from such a significant referendum Scots people who are working abroad with no real property owned in Scotland. It is a difficult question to resolve but we would like to at least consider that the Government have addressed the issue.
Many of these questions, no doubt, will be referred to the Electoral Commission, as is appropriate, but Parliament’s input into this is at least as important. A government agency should not have the final determination on whether or not what is being put forward is acceptable on the grounds of it being fair and decisive. I hope, consequently, that there will be an iterative discussion in Parliament over the next few months about the process and the criteria to which the Minister has attached himself. They have been supported by others but they are not necessarily as clear as they need to be if we are to decide how this process is to be concluded.
Lord Empey
My Lords, the noble Lord, Lord Williamson of Horton, said that up until his contribution, with the exception of a brief intervention by the noble Lord, Lord Neill of Bladen, no voice other than a Scottish voice had been raised in the debate. I agree entirely with the point made by the noble Lord, Lord Reid of Cardowan, that the Bill and the prospect of independence for Scotland affects substantially everyone in the United Kingdom.
The noble Earl, Lord Caithness, made a point about Rockall which brought a response from the noble Lord, Lord O’Neill, who is not in his place at the moment. I remind the House that in the late 1980s or early 1990s, a would-be politician in the Irish Republic changed his name by deed poll and ended up calling himself Dublin Bay Rockall Loftus. He went to place an Irish flag on Rockall and promised that he would visit the island every year to stake his claim. That gentleman has since passed away but the anecdote illustrates the fact that others claim the island as a base. Of course, the concept of oil and natural gas also arose at that stage. The point is not quite as flippant as some people think; in fact, it could be significant.
The implications for the rest of the United Kingdom are substantial but, sadly, there has been an obsession with the personality of the First Minister in Scotland and we should get away from that. As the hymn writer said:
“Time, like an ever-rolling stream,
Bears all its sons away”.
We are thinking here of the long term, of the implications for generations and of the economic implications for the people of Scotland.
However, there are implications for others. For instance, a large part of our energy supply comes through Scotland via pipelines and interconnectors. There is the question, which we discussed last Friday, of access to airports and their status. That is a huge issue for Scotland too, because obviously connectivity is vital to the Scottish economy.
I hope that we can move the debate on to the key issue: that is, what is in the best interests of Scotland? Of course, it is its decision, but let us also take into account that there are implications for the rest of us, some of which have been mentioned. The status of the United Kingdom would be drastically changed in the event of Scotland leaving it. I tabled a Question to the Minister some time ago about what name we would give to Great Britain if Scotland was not part of it. The noble and learned Lord, with his great experience in these matters, answered by saying that he was not expecting such an event to take place. I hope that he is right. Nevertheless, these simple questions are left in the air. We have to go beyond the process and get down to the real issues. What is the economic future for the people of Scotland? What are the implications for the rest of us? I hope the debate can move on to those issues.
I strongly support the point made by the noble Lord, Lord Reid of Cardowan. When we had the referendum in Northern Ireland there was a decision by the United Kingdom to implement the results of the referendum, and that became the Northern Ireland Act 1998. Since then, Parliament has ratified a series of intergovernmental agreements that were politically negotiated. At every stage in that instance, the Irish Government, their Parliament and ours were involved. Every part of the United Kingdom had a say in the arrangements that we were permitted to enter into. That emphasises the point made by the noble Lord, Lord Reid. Yes, a decision on independence is for the people of Scotland. We all have an interest in anything other than that and should have a say in it through our representative Parliament. If that is not possible, there is another route open to us.
Lord Neill of Bladen
Is the noble Lord, Lord Empey, contemplating circumstances where there would be referenda in countries other than Scotland? He said Parliaments, their representatives and the people would have to make up their own minds in their own countries. That was English people, the Welsh Assembly and so on. Supposing that these problems arise, does he envisage by the phrase “another route” that there might be a referendum in England, Wales and Northern Ireland?
Lord Empey
I hope that that would not be necessary. I certainly believe that the best outcome is that Parliament itself, which is a combination of representatives from all parts of the United Kingdom, should be where those decisions are made. The noble Lord, Lord Reid, raised the possibility that, for whatever reason, that might not be possible. I find it hard to envisage circumstances where it would not be, but if Scotland’s relationship within the United Kingdom changed, whether as devo-max, devo-plus or whatever, and it was not possible for Parliament to agree on how that could be implemented, then under those circumstances the rest of the United Kingdom should be consulted. Yet I find it hard to envisage circumstances where Parliament cannot resolve that.
Lord Reid of Cardowan
Perhaps I can help the noble Lord. I, too, have reservations about the fact that, if there was a discussion about some different form of devolution, it would come to the UK Parliament to decide. I have an inkling that if the effect of such discussions at some stage in the future was to effectively constitute a federal Britain, then Parliament might well think that that was a constitutional issue of such magnitude that the people should be consulted. I merely give that as a possibility.
Lord Neill of Bladen
An obvious difficulty arises once you get into consulting constituents of other countries—England, Wales and Northern Ireland—which is: in what order do you take the referendum? What effect will it have if, we assume, in Scotland the referendum is passed with acclaim but other countries, such as England and Wales, say, “No, it is very damaging and we are against it”?
Lord Reid of Cardowan
I hesitate to start discussing another referendum when we have spent so long on this one. To try to take the hypothetical situation, Scotland wishes to stay inside the United Kingdom and the Scottish Parliament or people wish to go on to discuss further powers. The negotiations conclude with what is effectively a federal system in the United Kingdom that affects Wales and Northern Ireland as well as Scotland. Then, one option is for the British Parliament to address that. Another might be, hypothetically, to put it to all the peoples in the UK at the same time as a referendum on the constitutional settlement. The important point is that the first decision has to be a simple one: “Do you want to stay inside the union, or be outside it as a separate nation state?”. That is a decision for the Scottish people alone.
Lord Browne of Ladyton
My Lords, I hope that noble Lords will forgive me if, in the interests of attempting to be brief—I have tried this before and it has not worked—I do not make reference to their contributions to the debate in any great detail. I shall also resist the temptation to go down many of the hypothetical routes or cul-de-sacs that have opened up in the course of the debate. I will try to concentrate on the nub of the issue.
I do that principally because, as the noble Lord, Lord Forsyth, indicated in his opening remarks, there is now a great degree of unanimity across the House about where we are. It may have taken us much longer than it should to get here, and that may be because, as the noble Lord, Lord Lang, pointed out, for a time it was not clear what lead the Government were to give on these issues. That is now much clearer. It may also be that we had, to a degree, a hangover from the past in the sense of the Scotland Bill, which I think we were committed to seeing through. Managing all these things together was challenging and difficult. I do not envy the noble and learned Lord and his colleagues in the Scotland Office having to work their way through this. I congratulate them on getting us to where we are to date. There are still challenges ahead and some of those have been identified in this debate. Given that there is a significant degree of unity and unanimity across the Committee on how we should approach this and the challenges that face the Government, it does not seem very fruitful to pick through all the possibilities. Apart from anything else, I know that that would just encourage Members of the Committee to have other ideas. They might want to make interventions and develop other lines.
I listened carefully to the Minister’s contributions this afternoon. I carefully read the Written Statement which his right honourable friend the Secretary of State for Scotland laid today and which was referred to in this Committee. From the degree to which the consultation has been reported either by the noble and learned Lord or in the Ministerial Statement, or from other pieces of information that are now allowed, we seem to be able to come to some conclusions about where the Government ought to be, and we can encourage them to continue on this path in their ongoing discussions with the Scottish Government.
It appears that the Government have comprehensively won the argument about legality. I do not think there is any question about that. I was privileged to be present when the noble and learned Lord spoke at length on this issue at Glasgow University. He was persuasive then, and the consultation document is persuasive. Since then, the Scottish Government have tried to undermine that advice, but unsuccessfully—so much so that the Deputy First Minister, Nicola Sturgeon, went to the same location, ostensibly to deliver a competing lecture on the issue, and ended up avoiding the question altogether. I understand that during her speech on independence and its virtues, she referred to one text-book supporting the view that she and her fellow Ministers held about legality, and that she was intervened upon or questioned by an undergraduate who pointed out to her that his instructions, when he appeared as a student at the university, were that you should never be in a position where you have to quote a text-book to support a legal proposition as that was just bad law, and she was flummoxed by it. If she was beaten by an undergraduate at Glasgow University, perhaps she should give up trying to make the argument.
The Government appear to have won comprehensively the argument on legality, and they also appear to have done so on the argument that we have to have this referendum as soon as practically possible. That is now being supported by growing evidence from those in business and other walks of economic life in Scotland. They suggest that evidence is now emerging that the uncertainty about Scotland’s future is starting to damage investment in Scotland, and consequently jobs and people’s incomes.
The Government appear to have comprehensively won the argument about the question. I do not think there is any doubt that everybody is of the view that it is best to have one clear question—so much so that the Scottish Government were forced to concede that point in their own consultation document, at least as a headline, although they did exactly what my noble friend Lord Reid of Cardowan suggests. They created a consultation with an amorphous group of people in Scotland, to whom they said: “If you persuade us that we need to go further and have another question, we will reluctantly concede to that but our position is that there should be one question”. I will come back to the issue of the question. I am not in a position to judge between the competing questions that have been proposed in our debate this evening, but there is a mechanism for working out the appropriate, fair question. We should at least begin that process now, so that when proposals are made to the Electoral Commission and to others who have to take responsibility for adjudicating to some degree on questions, they will be in a position to do that.
The Government appear to have comprehensively won the argument that the referendum ought to be run if not by the Electoral Commission then at least according to the rules that it sets and for it to be accountable to the Electoral Commission. I would prefer it to be run by the Electoral Commission. If I have not covered all the bases relating to the issues of contention, then somebody should point that out to me, but I think that is it. It appears that the Government laid out their stall, found support across Scotland and won the argument comprehensively, and now are able to say, “Not only do we know that we have won the argument but here is the evidence in the response to the consultation showing we have won it”. That puts the Government in a strong position, but in negotiating terms it puts them in a difficult position because it does not leave them very much room for manoeuvre, but they should not have very much of that on these issues.
I am inclining to the position that I have always been in about legislative consent Motions regarding the Bill. It is that the Scottish Government, inevitably and for political reasons, will have to come to that position too. As they have gone out and tried to sustain arguments in other areas, they have found that increasingly difficult, and their credibility is being undermined. I suspect that in the negotiations, which I hope will not take too long, the Scottish Government will be brought to that position.
Lord Foulkes of Cumnock
I can understand why my noble friend says that using this Bill to discuss or legislate for a referendum might not have seemed appropriate. However, if the amendments had not been put down all those months ago by the noble Lord, Lord Forsyth, and myself, and if the pressure had not been put on the Government, does my noble friend think that we would have had two consultative documents? Does he think that we would have achieved what we have achieved today? Is there not extra advantage in putting down amendments, even though at the end of the day they may have to be withdrawn? Does it not achieve something in the end, and has something not been achieved in relation to this?
Lord Browne of Ladyton
I thank my noble friend for his intervention, although I have no idea what the answer is to the question that he asks. We get many amendments that allow us to explore issues that are of less relevance and importance to the people of Scotland, but I certainly welcome amendments that allow us to explore issues that are important. Through their amendments, my noble friend and the noble Lord, Lord Forsyth, have been utterly diligent on this Bill. They deserve a great degree of credit for the amount of work that they have put into preparing amendments, by which they have created opportunities for some very good debates in Committee. They will be a quarry for the future for many good arguments that can be put forward about the positive nature of the United Kingdom.
To go back to my point, the noble and learned Lord says, “Not this Bill”, and I agree. He says that the preferred option is a Section 30 Order in Council, and I agree. The consultation reveals some very good and compelling arguments in some of the responses about why that is the right way to go. I have adopted some of them. The noble Lord, Lord Forsyth, asked the Minister, “What if there is no Section 30? Where does that leave you?”. The noble and learned Lord answered, “If agreement cannot be reached, we need to consider other options”. I understand why that form of words is the most that he can give your Lordships.
Lord Browne of Ladyton
The noble Lord, Lord Forsyth, asks me why. The simple answer is: because he is a government Minister. The noble Lord should know that, and I am sure that he was adept at giving those sorts of answers himself when he was at the Dispatch Box.
Lord Forsyth of Drumlean
I never really felt much constrained by collective responsibility, as the noble Lord will recall. My noble friend Lord Deben is indicating that he agrees, which is a bit alarming. I thought that the noble Lord was going to say that the Minister could not say this because he did not want to put a gun to the Scottish Government’s head, but it is quite important that it is clearly understood that we are determined to resolve this question and that we have the lines that we have discussed. It is also clearly understood—and I understand where the noble Lord is coming from—that we would much prefer to do this on an agreed basis and for the Scottish Parliament to legislate, but at the end of the day this is going to be done.
Lord Browne of Ladyton
I am sure that, from the point of view of the record and those who read it, it is probably better that the noble Lord says this and is not contradicted from the Dispatch Box, rather than that those words be put into the mouth of a Minister. I do not want to go too far down this road.
My point is that there are precious few options anyway. Without persuading, badgering or compelling the noble and learned Lord to go any further than the words that he wants to use, it is clear to me and, I think, to everyone who has heard this debate that the options are limited. Whatever option the Government choose in future if that set of circumstances arises, there will be an opportunity for your Lordships’ House to have a detailed debate on the way in which the referendum is conducted.
That leaves us with the challenge of how we achieve that debate if it is a Section 30 Order in Council. We have been teasing out from the Government some concessions regarding that with proposals that have been made—one from my noble friend Lord Sewel and some from others—about iterations. However, it would be helpful if the noble and learned Lord indicated, perhaps even repeating what he said before, that something will be done to structure a process that allows the content of the order to be debated at some length here and in the other place before it gets to the point where it is set in stone and has to be either accepted or rejected and cannot be amended. I have so much faith in the noble and learned Lord, from the years that I have known him, because of his reputation before I knew him and from my dealings with him, that I know he will do his best to deliver that. If he gives the House an undertaking that some process will be found, I will accept that and play my part in that process.
Lord Forsyth of Drumlean
This is all very sensible and I have no problem with any of it, but will the noble Lord say a bit about the timetable? How long will this process run for? I would be horrified if we found ourselves coming back here at the end of the year with this matter still not resolved. Does he think that this needs to be done by the Summer Recess? He said earlier that it should not take too long. How long is too long?
Lord Browne of Ladyton
Clearly it could be done by the Summer Recess, and that would be my preference. It would be contradictory to issue a consultation document and argue for the resolution of this issue as soon as reasonably practicable and then put practical blocks on that being done because we cannot get through the process here. We in this Parliament have all had experience of dealing with things in an emergency. In the context of Northern Ireland, for example, in order to maintain momentum in the peace process or to respond to circumstances, we have taken legislation through each House in one day. So if there is a will there is a way, and there ought to be a will because this is the most important question that the people of Scotland have ever been asked—or at least since 1707—and, as we have heard repeatedly from noble Lords, it has serious implications for other parts of the United Kingdom. People have lots of investment in this. The Government should treat this as a priority and find a way forward. We have stuck to a timetable that is associated with the consultation that the Scottish Government have issued, and to respect them we must observe that timetable. Beyond that, though, we need to move as quickly as possible.
With regard to the noble Earl’s three or four amendments, I think we were all interested in the history lesson that we had about the islands of Orkney and Shetland, the observations about Rockall and indeed the argument about a complementary referendum for the United Kingdom after the Scottish people have had their say, if they determine to leave the United Kingdom. Like other attempts to amend the Bill, the complementary referendum falls down on the next question, which is: if the Scottish people decide to leave and the rest of the United Kingdom wants to keep them, how do you keep them in the United Kingdom? Unless you were going to ask that question, why would you hold the complementary referendum? I listened to my noble friend Lord Reid explaining the necessity for dealing with these issues in series. Many of us who have been in this debate consistently had got to that point a while ago. I read in some of the responses to the consultation attempts to explain this by analogy, but the best analogy that I have heard for this is that if you are a member of a club and you choose to leave, that is a decision for you, but if you are a member of a club and you want to change the rules, that is a decision for all the members of the club. That seems to be common sense. The analogy belongs to Sir Malcolm Rifkind, by the way; maybe he got it from someone else, but he said it to me and I thought, “That’s exactly the position”.
Consulting all the other members of the club about changing the rules, if that is what we choose to do in future, will be a complicated and difficult process because there is a lot to be done if we enact the Bill. First of all, we have to work out the exact implications of what we have already devolved to the Scottish Parliament. We have learnt a lot in this Committee about Clause 28, which is quite substantial devolution. We have to persuade those people who are good at making up phrases to describe what they want and what it means—they had their opportunity with Calman to come forward and explain what all that meant, and precious few of them appeared—and then find some mechanism beyond the separate party mechanisms of finding an inclusive, all-party process of measuring whether all this is in the best interests of Scotland and the rest of the United Kingdom. Then perhaps we can decide how we are going to ask for approval from the people of the country for that deal if we come to some recommendation. That, however, is a process for another day; it cannot be done in the context of this Bill.
I shall deal with the noble Earl’s other two amendments about the islands. My suspicion was that what lay behind those amendments was oil, which was perhaps doing a disservice to the noble Earl as I listened to him explaining the history of the islands and his knowledge of the island of Rockall and how it was claimed for the United Kingdom. He was quite candid about the issue towards the end of his remarks. I say to him that if that is the intention of any person in relation the Bill, that is not a game that people on these Benches will play. The challenge that we face is to persuade the people of Scotland to stay in the United Kingdom for good, positive future reasons. If we cannot meet that challenge, I will be no part of telling the voters of Scotland that if they vote for independence the UK will take away their oil. Starting down that line would be utterly counterproductive.
I must caution the noble Earl. Whatever the underlying motivation may be for these amendments—respecting the wishes of the people of the high north with regard to the United Kingdom, or the history of the island of Rockall, which is much more chequered and less specific than it first appeared—now that he has linked this issue to oil, I ask him please not to repeat these arguments in Scotland, as they will damage our ability to keep the union together.
The Earl of Caithness
That was not my argument. I was responding to an intervention by the noble Lord, Lord O’Neill. My argument was not about oil. That was not my intention at all, particularly with regard to the Orkney and Shetland amendments. As for Rockall, I just wanted to know what the legal position is.
Lord Browne of Ladyton
I am glad to hear from the noble Earl that that is the case. The legal position is that the island of Rockall would not be part of the United Kingdom if it were not so close to Scotland. If we break the relationship between Rockall and Scotland, we will lose our basis in international law for claiming it in the first place. We should be very careful about that.
Lord Wallace of Tankerness
My Lords, I thank all noble Lords who have taken part in this very useful and informative debate. There are clearly issues that go to the core of the referendum issue and what shape a Section 30 order might take. Before I address those points, it might be helpful if I pick up some of the more specific points that were raised, not least in the amendments spoken to by my noble friend Lord Caithness.
In many respects, his amendments proceed on the proposition that in the event of Scotland voting for independence there should be a subsequent referendum of the whole United Kingdom to ratify it. I certainly take the view, which was expressed by the noble Lords, Lord Browne and Lord Reid, that, to use the words of Sir Malcolm Rifkind—if it was he who coined them—“If you want to leave the club, the other members shouldn’t really stop you”. Therefore, it is not a tenable position to suggest that if Scotland were to vote for independence, there should be a subsequent vote in the United Kingdom as a whole. In that sense, the subsequent vote of the people of Orkney and Shetland and the position of Rockall would not arise.
That said, my noble friend has raised an important issue. He gave us the history of Orkney and Shetland’s association as part of Scotland and, subsequently, the United Kingdom, having previously belonged to the Danish kingdom. The Government fully acknowledge the distinct community view of the people in the northern isles. This has been an important feature of previous debates on the Scottish constitutional position. The famous Grimond amendment on the position of the isles was taken through by my predecessor as MP for Orkney and Shetland, Jo Grimond. It led indirectly to the establishment of the Montgomery committee by the late George Younger when he was Secretary of State to look at the position of the islands’ communities. In the debates on the 1997 referendum, distinct issues were raised on the position of Orkney and Shetland. When the Scottish Parliament was established, I was able to ensure through its Standing Orders that a policy memorandum should address the implications of policy for Scotland’s island communities. I also recall that, in the 1987 general election, the Scottish National Party stood down in favour of a candidate from the Orkney and Shetland Movement, who stood on a platform of self-determination.
Since this issue clearly attracts attention, consideration and debate in the islands, we take as our starting point that we very much hope and believe that Scotland would not vote for independence and, therefore, that the position would not arise. For those eligible to vote in Scottish Parliament elections in Orkney and Scotland, our preference would be that that should be the franchise for the referendum. They will have the opportunity to express their views in the same way as those eligible to vote elsewhere in Scotland. As such, we do not see the need at present to treat residents of any particular part of Scotland differently from those elsewhere in the country when it comes to the consequences of the referendum result.
I can assure my noble friend and the Committee that I always listen carefully to the views of the people of Orkney and Shetland. I am in regular dialogue with those who represent them in both this Parliament and the Scottish Parliament. If they choose to make a case for formal constitutional recognition of their social, cultural and economic distinctiveness, I will certainly listen with care and respect. The coalition Government have a very soft spot for and pay great attention to the people of the northern isles.
Rockall is administered by the Western Isles Council under the jurisdiction of Scots law. The amendment, which seeks to change the original Island of Rockall Act 1972, could sow confusion. We do not believe that any of the issues raised by the various approaches to the United Nations about the continental shelf in any way change the United Kingdom’s ownership of Rockall. However, we would possibly be in an anomalous position if there was independence and the amendment went through, since the Act would assert that Rockall was no longer part of Scotland but it would be administered by a Scottish local authority. I am sure that is not what my noble friend intended but he has raised an important issue. The United Kingdom Government are clear that Scotland is stronger in the United Kingdom and that the United Kingdom is stronger with Scotland in it. Although there is no one on Rockall to vote, we are sure that it, too, will remain part of the United Kingdom.
I say to my noble friend Lord Mar and Kellie that Jersey, Guernsey and the Isle of Man have a completely different constitutional history and relationship from that of Orkney and Shetland and, indeed, Scotland. The noble Lord, Lord Reid, pointed out that Jersey, Guernsey and the Isle of Man have never sent Members of Parliament to Westminster. Therefore, their constitutional position is somewhat different.
I have listened carefully to the points made in the wider and more general debate. I certainly found it valuable to hear the different views expressed, although there was considerable consensus among them. As I have set out, the Government believe that it is right that there should be a single-question referendum to address Scotland’s place in the United Kingdom. We have set this out in our consultation paper and have sought views on it. The responses that we have received roundly support this position. Over the coming days and weeks, we will continue to assess in full the detailed arguments made in response to that consultation.
The amendment of my noble friend Lord Forsyth seeks to provide a referendum on independence, to be run by Westminster. It was supported by my noble friends Lord Lang and Lord Caithness. I made it clear that we would not look to use the Bill to deal with a referendum. As we made clear on page 19 of our consultation document, the future of devolution and independence are two entirely separate constitutional issues. The Bill is concerned with the former—the future of devolution—not the latter. It would not be in anyone’s interests to confuse the two issues. Amending the Bill to deal with independence would risk that confusion.
As I have indicated, and as has been widely recognised, our clear preference is that a Section 30 order, agreed between Governments and approved by both Parliaments, should be used to give the Scottish Parliament competence to hold a referendum on independence. As I stated in my opening speech, that position is supported not simply by the volume of responses to our consultation but by a number of experts and key commentators, several of whom have already made their comments public. Professor Adam Tomkins of the University of Glasgow said:
“The section 30 solution is both the neatest and the most compelling solution available, not least because it offers to the Scottish Parliament the fullest possible say in the process”.
The Law Society of Scotland has said:
“The Society is of the view that the making of such an Order should remove doubt as to the question of legislative competence and for that reason it may be desirable that an Order be made”.
The response of CBI Scotland also makes that point. The Scottish Government themselves have accepted that a Section 30 order is the best way to remove what they acknowledge are doubts about the competence of the Scottish Parliament to legislate for a referendum on independence. With that weight of academic and legal support, support that goes much wider than that and the support expressed in your Lordships’ House, we are confident that we will reach an agreement with the Scottish Government on a Section 30 order.
I shall pick up some of the points that were made in dealing with this issue. The noble Lord, Lord Neill of Bladen, asked how we would determine a referendum on federalism across the United Kingdom if different parts produced different outcomes. The noble Lord, Lord Reid, answered that point very effectively. The debate demonstrates why we need a clear referendum on a single question about independence. There should be one question in a legal, fair and decisive referendum to settle this matter before we turn to consideration of any further changes to devolution across the United Kingdom.
My noble friend Lord Maclennan raised the question of the referendum, the importance of the question that is asked and the use of the Electoral Commission. As set out in this Government’s consultation paper, our view is that any referendum held in the United Kingdom would be subject to normal rules on referendums as set out in the Political Parties, Elections and Referendums Act 2000. The commission would have responsibility for overseeing the conduct and regulation of the referendum independently of the Government. Since the Electoral Commission was created, it has overseen three referendums, which have followed the framework of the 2000 Act, and no minimum turnout or threshold has been raised. My noble friend referred to the question to be asked and the noble Lord, Lord Foulkes, suggested that it might be loaded. On the wording of the question, again it is our view that any question for a referendum on independence should be subject to the same rigour and the same rules as a question in any other referendum. It is the Government’s view that the Electoral Commission should fulfil the same role in reviewing the question as set out in Section 104 of the Political Parties, Elections and Referendums Act.
My noble friend Lord Maclennan also asked—I think that the noble Lord, Lord Browne, reiterated this but we are all interested in this—how this Parliament can continue to play a role in ensuring the content of any Section 30 order before it is formally put, and in ensuring that any question is fair, legal and decisive. We have made clear our view that a Section 30 order agreed between Governments and Parliaments is the best way to deliver a fair, legal and decisive referendum. Today’s debate is an important part of seeking views from this Chamber, just as the consultation paper allowed a wider input. It has been suggested that a draft should be made available before debates in this Chamber on any Section 30 order. As I indicated earlier, these are important and interesting suggestions that we will certainly consider further. I know that the noble Lord, Lord Browne, understands that I cannot make any commitment on what will happen. However, I am sympathetic to the concept of identifying a means by which there can be further consideration, and indeed further accountability, on the part of Ministers who are negotiating these matters. We all have an interest in these matters and a part to play. It might be useful to engage with others in opposition and our colleagues in government to try to identify how best we might achieve that.
Lord Deben
I thank my noble and learned friend for giving way but does he accept that this is also very important for those of us who are not Scottish, and for the nation as a whole? We must feel that this decision, which will be made by the Scottish Parliament, is fair. I am not saying that we should have a say in it but we should understand the system. I hope he will ensure that the English, Welsh and Northern Irish are fully informed of the care with which this measure is being taken forward because there is a distinction between this decision and any decision that may be made subsequently on further devolution. The comments of the noble Lord, Lord Reid, on that are very important. However, we must make sure that the whole of the United Kingdom recognises that this process is fair, not just to the Scottish people but to the whole of the United Kingdom.
Lord Wallace of Tankerness
I have considerable sympathy and support for what my noble friend says. I think that the noble Lord, Lord Williamson, was the first Peer to express a view on this matter who did not speak with a Scottish accent, and the noble Lord, Lord Empey, also contributed to the debate. I am certainly acutely conscious—the Government are also acutely conscious of this fact—that although a referendum on independence is a matter for the people of Scotland to decide, nevertheless that process impacts on other parts of the United Kingdom. I believe that this is a two-way process. I believe that Scotland is better off as part of the United Kingdom. I also believe that the United Kingdom is better off with Scotland being part of it. Therefore, other parts of the United Kingdom have a legitimate interest in this matter. A Section 30 order would have to come before your Lordships’ House, and indeed the House of Commons, for approval by the Parliament of the United Kingdom.
Lord Maclennan of Rogart
I am most grateful to my noble and learned friend for giving way. However, it would not be attractive if the Section 30 order, as a result of a process of negotiation with the Scottish Government, had been decided and then presented to Parliament. This is not a treaty for which we are seeking ratification; it is a legislative process. Although I entirely accept all the arguments that have been forward in favour of the Section 30 process, I think this United Kingdom Parliament will feel that it is representative of the country as a whole and would want to feed into the process of getting the thing right so that it is not seen as a divisive issue which we have to pull down after the event.
Lord Wallace of Tankerness
I hear what my noble friend says and the force with which he says it. I suggested that we might try to identify a way in which we can engage without finding ourselves in a position where a negotiation takes place in public. As regards the point made by the noble Lord, Lord Sutherland, I do not think he would expect hands to be declared in any negotiations. Nevertheless, I do not want to be party to any mushy outcome, as I think was suggested by the noble Lord, Lord Williamson. We have been given a very clear steer by your Lordships’ House, not least by the noble Lord, Lord Williamson, as regards what things are important.
Lord Wallace of Tankerness
I hope that I may finish this point and then I will certainly give way. The noble Lord, Lord Williamson, said that there should be a clear question on independence. I hope that I have made that clear. He indicated that each House of Parliament should be involved in that, and a Section 30 order certainly delivers that. He talked about the timing. We may come back to that when we discuss the next group of amendments but the Government have certainly made it clear that they would prefer a referendum to take place sooner rather than later. These are important points which strengthen our position in any negotiation as they are genuinely supported across parties and those attached to no parties in your Lordships’ House.
Lord Forsyth of Drumlean
I am finding it difficult to understand what there is to negotiate about if we are to have one question and the Electoral Commission is going to run the process. I can see that there might be flexibility on timing, which I do not regard as very important. However, I share the anxiety expressed by my noble friend Lord Maclennan, that you cannot negotiate on these central principles. The worry is that we shall end up with a fudge which we will not be able to amend because of the process. If my noble friend is saying, “Look, we’ve got the message; we are committed to”—the point was made to my noble friend Lord Lang—“a single question: the role of the Electoral Commission; and we are not going to move on that, and it will be part of the Section 30 order”, all of us will be a bit less nervous.
Lord Wallace of Tankerness
I tried to note down a phrase that my noble friend used: “We are determined to resolve this question”. We are determined to resolve this question. The noble Lord, Lord Browne, said that there was little room for manoeuvre. The Scottish Government have tried to describe the issues that we have set out to ensure a legal, fair and decisive referendum as having strings attached. We are not attaching strings. We are seeking provisions, such as in any other referendum, that ensures that it is delivered successfully, and where all sides agree that it has been a success and a decisive referendum. The manifesto commitment of the Scottish National Party was to have a referendum on independence, not devo-max. Therefore, if we say that we support a single question, we are actually seeking to give legal substance, a legal basis, for something that that party put in its manifesto. That is why our position is very strong as we go forward in seeking to achieve a Section 30 order.
Lord Forsyth of Drumlean
I do not want to prolong this. My question was: is the Minister saying to us, in pursuing his Section 30 route, that his position will remain the same—that there is no flexibility on these central issues of a single question and the role of the Electoral Commission?
Lord Wallace of Tankerness
There has been considerable agreement between the two Governments on the role of the Electoral Commission, which is vital. I do not believe that we would get a fair, legal and decisive referendum if we did not involve the Electoral Commission. A signal as to why I believe that we can reach an agreement is that already, since I made a Statement on 10 January, the Scottish Government have come a long way and acknowledged the position of the Electoral Commission.
I hope that I have tried to express clearly what the Government believe are the key issues on this matter, without saying—
Lord Maclennan of Rogart
I am grateful to my noble and learned friend. Will he leave it to the Electoral Commission to decide, in pursuance of this goal of decisiveness, that a majority of one vote would be decisive, or does he accept, particularly as regards the Cunningham amendment in the past, that Parliament ought to discuss that issue before it is put to the Electoral Commission?
Lord Wallace of Tankerness
I indicated that we are not generally disposed to supporting the idea of a threshold. My noble friend mentioned the Cunningham amendment, which related to a classic example of a referendum that many of us did not consider, at the end of the day, to be fair. Heaven forbid that we should ever find ourselves in a position whereby, after a referendum on independence, 30 years later one side or the other cries “foul”—with some justification. That is why the oversight of the Electoral Commission is very important.
The noble Lord, Lord Browne, and my noble friend Lord Forsyth raised a point about timing to which I should like to respond. I was asked what the timetable would be. We should press on with this matter very early indeed. We should be pressing for early engagement with the Scottish Government immediately after the close of their consultation. There have already been preliminary discussions between my right honourable friend the Secretary of State and the First Minister—indeed, the Prime Minister met the First Minister. I am sure that they will receive representations. If the Scottish Ministers think that independence is such a wonderful thing, why do they want a delay in getting it? This is a matter on which we should seek to make substantive and early progress to allow their referendum to conclude.
I will take one further intervention before I make my final point in response to the noble Lord, Lord Empey, and my noble friend Lord Forsyth.
Lord McConnell of Glenscorrodale
I thank the Minister for giving way. On the specific of timing, in response to the comment of the noble Lord, Lord Forsyth, that the timing perhaps does not matter as much as the issue of the Electoral Commission and the other issues we have been discussing, we should be cautious. It seems to me, with the Scottish unemployment rate now higher than in the rest of the United Kingdom and Scottish growth now below that of the rest of the United Kingdom, there is a degree of urgency about resolving this uncertainty. I hope that the Government will not de-prioritise the timing of the referendum in order to secure agreement on the other issues. Timing the referendum in advance of some date nearly three years away is vital if Scotland is going to get the growth and jobs that it badly needs.
Lord Wallace of Tankerness
The noble Lord makes an important point, which was reflected in some of the responses to the consultation, not least from SSE. My noble friend Lord Forsyth and the noble Lord, Lord Empey, made the point that we want the debate to move on to the substance of independence, a point also made by my noble friend Lord Caithness when he raised the question of the currency. Those are questions that the Scottish Government ought to be addressing. I entirely agree. It is important that we get the process resolved, and resolved swiftly, but it is equally important that we get on to the substantive debate about the benefits to Scotland from remaining part of the United Kingdom, part of the most successful union of nations, certainly in modern times, and possibly for even longer.
As noble Lords will be aware, my right honourable friend the Secretary of State has raised six questions with the Scottish Government to which we still await answers. Many others, including Members of your Lordships’ House, have raised other questions. I am confident that when we get to the substance of the referendum debate, we can expose the weaknesses in the independence argument and do so on a positive footing by showing what is really positive about Scotland remaining part of the United Kingdom. On that basis, I invite the noble Lord to withdraw his amendment.
Lord Foulkes of Cumnock
My Lords, we have an excellent debate. We have had a very helpful reply from the Minister. We have another debate looming. I therefore immediately beg leave to withdraw my amendment.
Lord Foulkes of Cumnock
“Taxes and excise duties
(1) In Part 2 of Schedule 5 to the 1998 Act, in section A1 (fiscal, economic and monetary policy) omit “taxes and excise duties”.
(2) The Scottish Government shall pay funds to the Government to cover a proportion of the costs incurred as a result of policies made under reserved matters.
(3) This section shall only come into effect if it is approved by a majority of people voting in a referendum on the provisions held in accordance with Schedule (Referendums under this Act).”
Lord Foulkes of Cumnock
My Lords, in view of the excellent progress we are making not only in these proceedings but behind the scenes, and also the work that has been done by the Minister, I shall not move this amendment.
Lord Foulkes of Cumnock
“Referendum about Scottish independence
(1) Her Majesty may by Order in Council, on the advice of the Prime Minister, cause a referendum to be held throughout Scotland about whether Scotland should become independent of the rest of the United Kingdom.
(2) Such a referendum can only be held within 24 months of the day on which this Act is passed.
(3) The question that is to appear on the ballot paper is—
Do you want Scotland to remain part of the United Kingdom?(4) For further provision about a referendum held by virtue of subsection (1), Schedule (Referendums under this Act) applies.
(5) An Order in Council under this section may not be made unless a draft of the statutory instrument containing the Order has been laid before, and approved by a resolution of, each House of Parliament.”
Lord Foulkes of Cumnock
My Lords, we have had a good debate on the whole issue of a referendum. However, there are one or two important amendments in this grouping that I think we should deal with very briefly.
The first is in relation to the Electoral Commission, which we dealt with earlier on. The noble Lord, Lord Steel, who explained to me that he was not going to be able to be here, has raised this issue as well. It is very important that the Electoral Commission determines this, and not the body that has been set up by the Scottish Government. The Electoral Commission has the experience, it has the authority and the respect. Questions in relation to the actual wording of the question on the ballot paper, the amount of finance and the control of financial expenditure and the conduct of the referendum should be left to the Electoral Commission.
The second point relates to the franchise. As I said in the earlier debate, it would be entirely wrong to change the franchise for this one referendum, just because the First Minister of Scotland thinks it would help him to get the right result. So we should stick to the arrangement that it is people over the age of 18 who are able to vote.
There is an interesting amendment by my noble friend Lady Taylor of Bolton which, if I understand fully, suggests that Scots who are now resident in England but who were born in Scotland and still have an interest should also have the vote. She is one of those concerned and one of the more famous Scots residing in England, a supporter of Motherwell Football club no less. There is a very credible argument for that point of view. I am not sure I agree with it exactly, but we certainly deserve to hear it.
There is also an amendment in relation to Scottish nationality in the name of the noble Lord, Lord Selsdon, who does not appear to be in this place at moment. If he were, I am sure he would make a very entertaining and interesting contribution to that amendment. I want to raise the West Lothian question with the Minister. The noble Lord, Lord Selsdon, has arrived so we look forward to hearing him in relation to his amendment. On the West Lothian question, a committee has been set up by the Government to look at whether MPs from Scotland, Wales and Northern Ireland should vote on purely English matters in the House of Commons. I contacted the committee to seek to give evidence and I was told that it is not taking evidence. That seems very strange, given that it is an integral part of the whole constitutional debate that is currently taking place and given that it has some knock-on relevance to the point that we are dealing with. Perhaps the Minister could persuade the committee that it would be wise to consider evidence.
Lord Watson of Invergowrie
Before my noble friend moves his amendment, I wonder whether he would comment on the very interesting proposal made by the noble Lord, Lord McConnell, earlier this evening when he suggested that two questions be posed, so avoiding a yes or no answer on the ballot paper. I recall that in the 1997 referendum the words were “I agree that there should be a Scottish Parliament” or “I do not agree that there should be a Scottish Parliament”, and that there was the same in respect of the tax-varying powers. Would my noble friend like to comment on that as a possible wording, which we all accept is very important, as it would avoid a straight yes or no answer to a question?
Lord Foulkes of Cumnock
My noble friend is a former Member of the Scottish Parliament, as I am, and I thought it was very interesting that the suggestion came from the noble Lord, Lord McConnell, himself a former First Minister of Scotland, as he has a great deal of knowledge about this. I think that is a very interesting suggestion, which I hope the Minister will feed into the discussions that are taking place. If the Scottish Parliament or Scottish Executive suggests one question and we are sticking to another one, perhaps there could be agreement on two counterbalancing questions—questions that have different outcomes—for which people could vote positively. In other words, no one would vote negatively; everyone would vote positively for their option. I think that is a very good suggestion.
The fact that these things have been suggested shows, as I hope my noble friend agrees, the value of these debates, the value of Committee stage and the value of the House of Lords. Earlier we were talking about tweets, and I have been getting tweets asking what right I have, as someone who is not elected, to make any comments on this. I can understand the politer ones that raise that question, notwithstanding the fact that I was an elected representative for many years. One of the answers is that debates in this place, as we have had today and previously, can come up with very useful suggestions which can move things forward in a very positive way. I beg to move.
Lord Steel of Aikwood
( ) Such a referendum must be administered by the Electoral Commission.”
Lord Steel of Aikwood
My Lords, I think this amendment has been overtaken by events. The Minister has made it clear that the referendum will be administered by the Electoral Commission and, therefore, there is no need for me to labour the point. That is very important. The First Minister of Scotland still has to recognise one thing: as he has a particular objective in mind in holding the referendum, he is not the right person to declare what the question should be. Any member of the public would accept that that proposition is correct. You cannot say, “The people must determine this, but I will tell them how to determine it”. In my Amendment 93 to the noble Lord’s Amendment 91, I have suggested that it should be by agreement and that the Scottish Parliament should be consulted and be party to how the question is drafted.
Equally, I disagree with the noble Lord—although I think a moment ago he almost resiled from certain wording—that we should lay down the question. I missed the earlier debate for which I apologise, but the noble Lord, Lord St John, and I had a longstanding appointment with the Prime Minister of Zimbabwe, Mr Morgan Tsvangirai. If you think we have problems in our coalition, you should hear his. I missed the substantive debate on the referendum earlier.
I think it is also important that the people of Scotland are beginning to get scunnered—if I may use a good Scottish word—by the endless argument from politicians, academics and economists about the process and what might or might not happen if Scotland became independent. This cannot go on for another three years. It is ridiculous.
Therefore the part of the amendment that I support is the suggestion that the time should be now. If not immediately, then certainly as soon as possible, we should get this issue out of the way. As soon as we get clear of the independence referendum, we can start, as the Prime Minister has said, serious discussion about how we can add to the devolution package, and that is very sensible.
We have got the Electoral Commission in the frame, so there is no need to press that. Choosing the question should also be a matter for the Electoral Commission, and I agree with the noble Lord, Lord McConnell, who has made this point before, that rather than having a yes or no and putting some people in a negative position, there should be two propositions from which people choose either to remain in the United Kingdom or to go independent.
If that is done, and done quickly, then we can get this issue out of the way and the Scottish Government should concentrate on what they were elected to do, which is to deal with the issues affecting Scotland at the moment: bad housing, unemployment, and the need for more investment in industry. These are the things people want. They do not want three years of argument about a referendum. They want to see a Government tackling the issues, both in Scotland by the Scottish Government, and in the United Kingdom by the UK Government. The sooner we get back to that realistic level of politics, the better.
The Earl of Caithness
My Lords, my Amendment 94E takes what my noble friend Lord Steel said a little bit further, and asks that the Electoral Commission set the question. It is quite clear that nothing the UK Government propose is going to be accepted by the Scottish Government, and nothing that the Scottish Government propose will be accepted by the UK Government.
Why not cut the politicians out? Let us ask the Electoral Commission not only to set the questions but to arrange all the counting, transferring the number of votes into a proper result that is based, exactly the same way the referendums were in 1979 and 1997, on each local authority area, rather than just Scotland. We would know that there would be a clear question—or questions, if we go down the route proposed by the noble Lord, Lord McConnell—but also that each area voted and how they voted, and that it was a fair process.
Taken out of the hands of politicians, it will not only be more acceptable to the people of Scotland, but in view of our earlier discussions, I think it would be more acceptable to the rest of the UK, who would feel that an independent authority is doing this rather than politicians.
Lord Selsdon
My Lords, I will speak to Amendment 96, if I am in order. I feel that because of my voice, I should give a brief introduction. My name is Malcolm McEacharn Mitchell-Thomson, and I carry the burden of being Lord Selsdon, which is actually registered in Scotland. I am also a Scottish Baronet. But on the business of one’s past and the Scottish relationship, I ask: who is a Scot, and where or what is a Scot?
As noble Lords know, 5 million Scots live in Scotland, 400,000 or more live in England, and 40 million around the world. If we are to move towards having a referendum, I for one would like to be able to vote for the first time in my life—because by accident of birth, I have never had a vote—in a referendum. I have reason to believe there are many others in the world who will claim they are Scots who would like to be consulted in one form or another. This is why I tabled my amendment on Burns Night, and it was well received by many of the Burns associations.
It is a very difficult matter. If we do not consult, many people who are not in Scotland will feel that they have been ignored. My amendment draws attention to us. In this House, by accident or by recent legislation, we are deemed to be resident, ordinarily resident and domiciled in the United Kingdom. What happens to us if the referendum goes through and there is devolution? Are we still domiciled in the United Kingdom? Domiciled is an interesting concept. As an ex-banker, I know that there is no way I can be anything other than domiciled in Scotland. The reason is that, as your Lordships know, you take the domicile of your father at birth, which is your domicile of origin. Unless you physically and emotionally make a move to change that domicile to a domicile of choice, your domicile remains your domicile of origin. It passes through the male line if you do not change it. Therefore, there could be more people outside Scotland who have the right to vote than there are in Scotland.
I personally am hooked there—line and sinker. I have not got rid of any property in Scotland. You have to cut off all your links and sell your properties and perhaps resign from your clubs. I have the advantage or disadvantage of having a lair. When you reach the age of 50, you receive from some smart Writer to the Signet a brown envelope containing your lair certificate. I did not know that a lair was a plot. I did not know also that as my family is international—my great grandfather was Provost of Edinburgh and my great-great-grandfather was the first Lord Mayor of Melbourne; my family fled Scotland to earn some money and were the biggest coal people in Canada, so I am spread and twisted across the world—I have two lairs, although there is only one of me. Furthermore, the McEacharn family has a mausoleum in Galloway. When I visited it, I was asked to make a contribution, although the stipend was originally drawn up at the turn of the century. The agreement was that we would effectively allow them to keep the motor mower and gardening equipment in there because there was plenty of room and we no longer had the same number of children as we had had in the past.
My point is simple. However the referendum is constructed, there should be some consultation among the Scottish community around the world to see what their views are. I believe that they are unionist at heart. It is not difficult to identify them because through the Burns society you can identify any Scot in the world, including those who like to pretend that they are Scots. One of the greatest benefits of Scotland is that relationship: the power and influence of Scots throughout the world. It is a Foreign Office that costs them money. It is also a relationship that brings interchanges, and one is pleased at the moment that there are more students coming to Scotland than there were. The dogs have not yet arrived, but more people wish to come there. So Scotland can prosper. It is not a question of coastline or anything like that; it is a question of attitude. Will the Government find some consultation formula that will allow us to consult Scots worldwide?
Baroness Taylor of Bolton
My Lords, unlike the noble Lord, Lord Selsdon, I do not have a lair. However, I was born to a Scottish father in Motherwell, Scotland. My grandfather was the chairman of Motherwell Labour Party, which may or may not be a recommendation. However, I have a Lancashire mother. After several years in Scotland, my mother won the battle and we moved to Lancashire. Many families share that kind of situation. Many Scots have moved away for work, education, sporting or other reasons. I tabled my amendment because I was concerned that, as the noble Lord, Lord Selsdon, suggested, a lot of people will feel that they are missing out on what they believe is their right to have a say in their heritage.
Lord Selkirk of Douglas
My Lords, the noble Baroness has, as usual, made a very persuasive speech, and I look forward to the Minister’s reply to the points that she has raised.
Amendments 93 and 98, in the names of the noble Lords, Lord Steel of Aikwood and Lord Foulkes of Cumnock, and the noble Earl, Lord Caithness, call for a much greater involvement of the Electoral Commission, which I strongly support, on account of two incidents.
The first incident involved the noble Lord, Lord Steel of Aikwood. In the first election to the Scottish Parliament he and I were two of the last three to be elected in Scotland. The counters went on strike at 4.30 am because of the complexities of the proportional representational vote. As a result, we came back the next day and we were elected two out of the last three; the third was Robin Harper, the first Green candidate to become a parliamentarian. However, we did not know that 2,000 votes had not been counted.
When this became clear, with great alarm I wrote to the Secretary of State for Scotland, now the noble Lord, Lord Reid. He replied that he did not have the powers to do anything about it, but that we could take legal action if we so wished. Happily, the chief executive had thoroughly studied the matter, and whichever way the votes were counted all three of us would have been elected. As soon as we knew that, we had no desire to take the matter any further. I think that the votes have now been destroyed and it is impossible to rectify the matter. However, that incident should never have occurred and if the Electoral Commission had been involved, I believe it would not have done.
The other incident occurred during the devolution referendum in 1979. I remember vividly the late Robin Cook being very much involved because 2,000 electors had written “No” opposite the word “No” on the ballot paper, and the counting officer said that writing “No” opposite “No” meant “Yes”. I actually believe that they meant “No”. We asked to speak to the chief voting officer in Scotland but he would not come to the phone. There were murmurings of calls on television for resignations if the matter was to be swept under the carpet. He did come to the phone. He was not very good tempered but he said he would look into it. Within two hours, they had rectified the matter and the votes were counted as no votes. This was important in that referendum because it was on a knife-edge; the results were very close and regarded as somewhat inconclusive at the time.
I mention these two episodes to emphasise how very warmly I welcome the Minister’s statement that he wishes to involve the Electoral Commission in an overseeing role. If you have a Government at Westminster who take one view and a Government in Edinburgh who take a different view, it is very important to have an impartial body that has both objectivity and expertise.
Lord Watson of Invergowrie
I wish to make some comments in relation to the amendments spoken to by my noble friend Lady Taylor of Bolton and the noble Lord, Lord Selsdon, in respect of who should have the opportunity to vote in a referendum on Scottish independence. Much as I respect my noble friend, I cannot agree with her premise that those who were born in Scotland and move to other parts of the United Kingdom or even further afield should have the opportunity to vote in the referendum.
At the time of the referendum, whenever it is—like many other noble Lords I hope that it is as soon as possible—it has to be a vote for people who are at that time living in Scotland. I am aware that that will involve a number of people, not least a considerable number that is reckoned to be about half a million people, who would describe themselves as English domiciled in Scotland, as well as people of various other nationalities who happen to be living and working in Scotland. If they are on the electoral register as EU citizens, I believe that they should have a vote.
The question of Scots who have moved—of course, the Scottish diaspora is considerable—beyond the confines of Scotland is a difficult issue in this situation. To some extent, I have some connection because my son has a Scottish father and an English mother but he was born in England. He is well short of voting age but the point is that many people in that situation would have an interest. In the future, he may choose to live in Scotland.
After leaving university, I went to live in England. I was living and working in England at the time of the 1979 referendum. I was not on the electoral register in Scotland, although I travelled home in the weeks immediately prior to the referendum every weekend to campaign vigorously for a yes vote. Even though I did not have a vote myself, it did not occur to me that there was anything wrong with that. I had chosen for whatever reason to leave Scotland.
It may well be that there are many thousands of people who, like my noble friend Lady Taylor, were perhaps very young when their parents left and they more or less had to go with them. I accept that they may not have made that decision but none the less on becoming an adult they would have the option to go back to live in Scotland if that is their choice. They are more than welcome to do so. For people who have left Scotland—I left, went back and left again—the situation is simple. You have to be domiciled in Scotland to have a vote on something as important as this. Just to say, “I am Scottish in my blood; I feel a Scot; and I do not feel any other kind of allegiance” is not enough.
A very interesting example was raised by my noble friend when she talked of the very impressive Bolton Wanderers manager, Owen Coyle, who I know. When I was a Member in another place, Owen and two of his brothers who were also professional footballers at the time were members of the Labour Party in that constituency. Whether he holds membership now, I do not know. I have not spoken to him for some years. But the interesting thing is that Owen Coyle, born and bred in Glasgow, played for the Republic of Ireland. He is an international but he played for the Republic of Ireland. It is not just as simple as saying, “He is a Scot, living in England and therefore he should have a vote”. He has played for the country of his parents because they were Irish. Various issues muddy the water here.
The noble Lord, Lord Selsdon, introduced the concept of Scottish nationality, which is difficult to define in itself. He says that a person shall be considered to be of Scottish nationality if they are ordinarily resident or resident in Scotland, wherever they come from, however long they have been there and having made their home in Scotland. I would say that someone in that situation should be entitled to a vote in the independence referendum but to say that they have Scottish nationality is stretching it a bit. I do not think that that is the way to define it. I understand the point that he is making and, to some extent, I agree with that part of his amendment but not with the bit that follows.
To conclude, this is a matter of great importance to Scots wherever they live and they are of course spread throughout the world. At the time of the independence referendum, it cannot be justified to say that those people who, for whatever reason of many reasons, have left Scotland and have gone to live somewhere else should have a vote. The people of Scotland—but not just Scots of course—at the time of the referendum, I believe, should be those who make the crucial decision when the independence referendum comes along.
Lord Maclennan of Rogart
My Lords, I would like to say how much I sympathise and agree with the speech of the noble Baroness, Lady Taylor. In the world in which we live, where there is great mobility, residence is not a true test of connection. It is much the easiest way to determine the outcome of a referendum but it is not necessarily going to reflect the views of those who care for Scotland and sense that they belong to it. In my former constituency, Caithness and Sutherland, because there is not a substantial amount of employment in the area, many local people go all over the world to use the skills that they cannot exercise in Scotland. But there is no doubt that they go back when they have completed their jobs, and if they have earned a lot of money, they go back earlier. That is a quite a common occurrence.
I could also talk about my siblings, all of whom feel very strongly that they are Scottish, but for various reasons work in different places. My younger brother works in Glasgow and clearly would be entitled to a vote. My middle brother works all around Britain but returns to Scotland whenever he is free to take a holiday. My sister has worked in Scotland, but she is widowed and now spends part of the time on her own in Greece. However, she still identifies herself strongly with Scotland.
What we are looking for is a referendum that actually reflects the views of those who consider themselves to be Scottish, but it is a difficult issue. I do not think we want just to snap up the easiest decision. I commend the suggestions made by the noble Baroness, Lady Taylor, and my noble friend Lord Selsdon for some clever consideration. If this is left to the Electoral Commission, I hope that it will not simply take the easy way out.
Lord Browne of Ladyton
My Lords, I have already had my say on the issue of different referendums quite extensively and there are only two aspects of our debate on these amendments that I have not expressed a view on, so I shall concentrate my remarks on them. First, I turn to the role of the Electoral Commission. A number of possible roles for the Electoral Commission are reflected in the amendments that have been proposed by noble Lords. It seems to me that the role of the Electoral Commission in relation to referendums is now settled. We had two referendums in 2011 and the Electoral Commission played a role in respect of them both which your Lordships’ House seemed well satisfied with. I have heard no criticism of its role in terms of supervision.
It played a specific role in testing what has become known as the intelligibility of any proposed referendum question in relation to both of the 2011 referendums. I understand that the commission indicated in its response to the Government’s consultation that it does not have the legal power to play that role in relation to the proposed referendum on Scottish independence and it has asked the Government to consider, as indeed have other consultees, using this Bill to give it that power so that it can get on with testing the intelligibility of the proposed questions. Of course, it could take all the questions that have been proposed in amendments and test their intelligibility on Scottish voters, focus groups and others. The commission is willing to do that job and I think that the Government should consider amending the Bill on Report to give it that power.
Otherwise, much as the proposals in the amendments before us are attractive and beguiling, I think that we should ask the Electoral Commission to play exactly the same role it has played in previous referendums, particularly the two which were conducted under legislation passed in this House and in the other place for the referendums held in 2011. There was endless debate about its role and agreement was reached before it set off on its work.
I say this for a very good reason: if we want the process that determines how the referendum will be conducted to be seen as legal, fair and decisive—and we expect now that that will be either in the context of a Section 30 order and the preparation for it, or some other option should the Section 30 order not be consented to—we have to avoid creating special processes or, dare I say, a special franchise for the election. The arguments of those who construct emotional, historical or family reasons for everyone who has an interest in the future of Scotland to be included in a franchise are very interesting. If we were to be all-inclusive we could find a way of doing so, but that would leave us open to the accusation that we are creating a special franchise in order to influence the outcome.
If the referendum is to be seen as legal, fair and decisive we should look to a pre-existing franchise, which is what the consultation did. It referred to the two pre-existing franchises in Scotland—the one for the United Kingdom Parliament and the other for the Scottish Parliament and for Scottish local government—and asked for opinions on which of the two those who responded to the consultation preferred. I am content with either of them but I veer towards the one for the Scottish Parliament. However, we can have that debate in the future when we come to look at the matter in the context of a decision, rather than in the context of a proposal, which is where we are at present.
With all due respect to my noble friend Lady Taylor, I know of the difficulties we had not only in persuading members of the Armed Forces to register but in facilitating that registration so that they could vote. I have great sympathy for people, particularly those in the Armed Forces, who are ordered to be somewhere rather than making the choice and thus being denied the franchise. We ought to look more generally at that issue to see whether we can resolve it and make it easier for members of our Armed Forces to exercise their vote. However, I resist the temptation to do that for this particular exercise for the reason I have articulated.
Lord Wallace of Tankerness
My Lords, this group of amendments has allowed us to look at a number of the practical, important issues which arise in the context of a referendum. As I indicated earlier, it is an opportunity for your Lordships to express views on this. Although we found consensus on a number of issues in the earlier debate, clearly on the issue of franchise there have been different views, to which I shall try to respond.
On a preliminary matter which I am not quite sure related to the independence referendum, the noble Lord, Lord Foulkes, raised a question on the so-called West Lothian commission, which is to look at the implications for the House of Commons of devolution. Its formal remit is to consider how the House of Commons might deal with legislation which affects only part of the United Kingdom following the devolution of certain legislative powers to the Scottish Parliament, the Northern Ireland Assembly and the National Assembly for Wales. The noble Lord asked about submitting evidence. I was not aware that it was not receiving evidence—I am not sure whether the noble Lord meant oral evidence or written evidence—but the commission that has been established is independent of government and I would be wary of trying to intervene. The commission should be free to undertake such work as it deems necessary to consider proposals for handling the parliamentary consequences of devolution.
A number of noble Lords—my noble friend Lord Steel and the noble Lords, Lord Watson and Lord Foulkes—raised the question of timing. The United Kingdom Government’s firm view is that the question of Scotland’s constitutional status should be resolved sooner rather than later. The continuing uncertainty about Scotland’s future is damaging to Scotland and until the issue is resolved that uncertainty will remain and, I suspect, grow. In our consultation paper we asked for views on the timing of the referendum and the majority of responses were in favour of holding it sooner than the Scottish Government’s proposal to hold it in the autumn of 2014. Recently, my right honourable friend the Secretary of State set out a timetable for a referendum to be held in September 2013. We believe that that is a practicable timetable and see no need to delay. That view has been expressed by others. CBI Scotland said:
“The timetable should certainly provide for sufficient facts and analysis to be made available to business and the wider public and for the issues involved to be fully considered but, on balance, we believe that the referendum can and should be held sooner than currently planned”.
By “currently planned”, I think it means the preferred date of the Scottish Government. There seems to be a general consensus in your Lordships’ House on this.
The amendment of my noble friend Lord Steel would ensure that any referendum on Scottish independence was administered by the Electoral Commission. A number of colleagues and noble Lords expressed their support for this and, again, I think there was widespread support for it. My noble friend Lord Selkirk of Douglas gave some practical examples of when he believed that the Electoral Commission would have been of considerable benefit. I am sure we are not calling now for a recount of the Lothian regional vote in 1999. History might have been different in so many ways if there had been a different outcome there.
The Government’s view is that it is right that the Electoral Commission should oversee the referendum. It is a well-established body, known to be credible, independent and politically impartial. As the noble Lord, Lord Browne, pointed out, two referendums in 2011 were overseen by the Electoral Commission without criticism. It has the experience and expertise required to oversee this referendum and can play a key role in ensuring that the referendum and its results are seen to be fair and decisive.
Previously, the Scottish Government suggested that they would create what they called a Scottish referendum commission to oversee the referendum, answerable only to the Scottish Parliament. As my noble friend Lord Steel indicated, it is not a particularly satisfactory position when one of the players nominates the referee. The United Kingdom Government believe it is unnecessary to create a new commission—undoubtedly, that would be done at additional cost—when the Electoral Commission is already in place and has demonstrated its capability. We are pleased that the Scottish Government now agree that the Electoral Commission should lead on the oversight arrangements for the referendum and we will continue to engage with the Scottish Government on this. Again, a number of responses to the consultation concurred with that.
Lord Forsyth of Drumlean
While my noble and learned friend has a drink, is this phrase of allowing the Electoral Commission to have “oversight” not weasel wording? Surely the Electoral Commission should be responsible for the overall conduct of the referendum campaign.
Lord Forsyth of Drumlean
Yes, including the question. I notice that in the Scottish Government’s consultation paper, which was then spun as involving the Electoral Commission, it was invited in as a kind of veneer of respectability. The Electoral Commission has to be the regulator. Is that use of “oversight” by my noble and learned friend weasel wording or does it mean what we all want it to mean?
Lord Wallace of Tankerness
My Lords, in our earlier debate on referendums, in response to an issue raised by the noble Lord, Lord Foulkes, I said that it is the Government’s view that the Electoral Commission should fulfil the same role as it has in relation to UK Parliament referendums, as set out in the Political Parties, Elections and Referendums Act 2000. Its role would be the same in reviewing the question. My noble friend Lord Caithness raised this. The Electoral Commission’s role is to advise and to oversee referendums. It is not appropriate for it to set the question and current legislation does not provide for it to do that. It is my understanding that the Electoral Commission would itself have concerns about doing that. The PPER Act 2000 sets out a clear role for the Electoral Commission that we believe should be respected for a referendum on independence: to review and report on the question. We believe that that is the right approach.
Baroness Taylor of Bolton
I understand many of the difficulties that the Minister is describing, especially if the referendum is to be held earlier rather than later. However, will he take away the thought that perhaps we need to do more for the service men and women who are Scottish in origin and who are serving the whole of Britain, and who have no choice in where they are deployed? Maybe we need to do something more to make sure that they are registered properly, and then able to vote in such an important decision.
Lord Wallace of Tankerness
From the reaction that the noble Baroness has had to that comment, it is clearly one that resonates across the House. I do not pretend that I have an answer to it, but she asked me to reflect on it and we certainly shall. I am not sure if it is practical but she makes an important point well, and it strikes a chord in the House.
I was going to make the point that I in no way underestimate the importance of the franchise, but it does not disqualify people from participation in the debate or the referendum. When the real debate comes, I sincerely hope that we will get contributions from other parts of the UK that have a view to express about how much they value our United Kingdom. I very much hope that Scots from the diaspora will express their views—maybe some that I do not agree with, but I am sure there will be many that I do—about how valuable over many years they and their families have found Scotland being part of the UK.
We believe that we should try to ensure consistency and transparency, which is why we have indicated our preference for a franchise based on the present one for the Scottish Parliament and local government. We will continue to seek agreement on that basis. With those assurances, I invite the noble Lord to withdraw his amendment.
The Earl of Caithness
My Lords, I am grateful for what the Minister said in reply to my amendment, which a number of noble Lords supported. I just wonder whether his mind is totally closed on the issue of allowing the Electoral Commission to set the question. A lot of us are still quite concerned about a Section 30 fudge on which we will have no say except a possible debate. A question could be negotiated behind closed doors in order to satisfy the Scottish Government, rather like the agreement over the past few days to which we were not party. We would have the same situation with a Section 30 order, and we would then have a question that we were not totally content with. Perhaps to avoid that situation, the Electoral Commission might be allowed to set the question. I know that the Minister had reservations about that but I hope that his mind is still open to being persuaded at a future time.
Lord Wallace of Tankerness
I hear what my noble friend says, but I ask him to reflect him on two points. First, it is my understanding that the Electoral Commission would not necessarily welcome that. Secondly, with regard to the point I was making about the franchise: if one seeks to do something different, what are the rules regarding the relationship between the Electoral Commission and the question under the Political Parties, Elections and Referendums Act 2000? If you try to do something different for a Scottish independence referendum, you could immediately open yourself up to a charge of trying to rig or manipulate it. The advantages of consistency in this area are important.
I am told that the Electoral Commission has not, and does not wish to, set a question as its role is properly to review the question and publish that review, which is important. I do not countenance any situation where the commission would not be engaged, nor where its view on a question would not be made public.
Lord Foulkes of Cumnock
My Lords, we have had a fascinating debate ranging from the vicissitudes of the Lothian list elections, which I know only too well, to the lairs—both of them—of the noble Lord, Lord Selsdon. The importance that I attach to these debates is indicated by the fact that I have been here all evening rather than at St Mirren Park where I would have seen Hearts beat St Mirren by two goals to nil. Fortunately, the semi-final when, as my noble friend Lord Browne will know, Hearts will face Celtic is on a Sunday, so I will not have the problem that I have had tonight and I will be able to be there. Having said that, I beg leave to withdraw the amendment.
“Continued effect of provisions ceasing to be within legislative competence
(1) In section 30 of the 1998 Act (legislative competence: supplementary) after subsection (4) insert—
“(5) Subsection (6) applies where any alteration is made—
(a) to the matters which are reserved matters, or(b) to Schedule 4,(whether by virtue of the making, revocation or expiry of an Order in Council under this section or otherwise).(6) Where the effect of the alteration is that a provision of an Act of the Scottish Parliament ceases to be within the legislative competence of the Parliament, the provision does not for that reason cease to have effect (unless an enactment provides otherwise).”
(2) After section 29(4) of that Act (legislative competence) insert—
“(5) Subsection (1) is subject to section 30(6).”
(3) In section 92 of that Act (Queen’s Printer for Scotland), after subsection (4A) (inserted by section 16) insert—
“(4B) If, following an alteration such as is mentioned in section 30(5)—
(a) subordinate legislation is made, confirmed or approved under a provision which continues to have effect by virtue of section 30(6), and(b) the making, confirmation or approval would be within devolved competence but for the alteration,the subordinate legislation is to be regarded for the purposes of this section as being made, confirmed or approved within devolved competence.””
Lord Wallace of Tankerness
My Lords, the reason for disagreeing Clause 10 is that this proposed new clause will replace it. The amendment will widen the scope of the provision contained in Close 10 so that the savings provision does not apply solely in situations where legislative competence has been transferred to the Scottish Parliament only temporarily under a Section 30 order. It will ensure that the savings provision will operate where any alterations are made to reserved matters or to Schedule 4 to the Scotland Act 1998, whether by the making, revocation or expiry of a Section 30 order or otherwise—for example, by amendment in primary legislation.
There is widespread recognition that clarity is required regarding the status of Acts of the Scottish Parliament in the event that legislative competence is reduced. The amendment has been tabled following comments from the previous Scotland Bill Committee and the Law Society of Scotland. It will ensure that Acts of the Scottish Parliament that have been validly made within the legislative competence that existed at the time do not cease to have effect purely because of changes to the boundaries of reserved and devolved matters. Such provisions would cease to have effect only if this was provided for in an enactment.
The amendment clarifies that provisions contained in an Act of the Scottish Parliament that are no longer within the legislative competence of the Scottish Parliament will not automatically fall following that alteration of competence. Therefore, no gaps in the law will be created as a result. This means that a positive decision will need to be made to repeal provisions in an Act of the Scottish Parliament. This could be done in the legislation providing for the re-reservation or in separate legislation passed by the UK Parliament. As a result of this amendment, a provision in an Act of the Scottish Parliament that was once within legislative competence, prior to an alteration in that competence, will not for that reason alone cease to have effect. It will cease to have effect only if an enactment provides otherwise.
The wording of the amendment is intended to clarify two things. First, the previous operation of that ASP and anything done under it, up to point of the alteration in legislative competence, is not affected. Secondly, any alteration in legislative competence does not affect the continued future operation of the ASP, including any powers exercisable under it. For example, it would ensure that any powers of Scottish Ministers under an Act of the Scottish Parliament to make subordinate legislation would continue to be exercisable by them notwithstanding the alteration of legislative competence.
Proposed new subsection (3) of the new provision makes a technical amendment to Section 92 of the Scotland Act 1998, “Queen’s Printer for Scotland”, in consequence of the addition of the provision in proposed new Section 30(6) of the Act. I hope that the Committee will agree that this is a sensible amendment, which will strengthen the provision that was originally contained in Clause 10. I beg to move.
Lord Forsyth of Drumlean
I do not want to detain the Committee, but what problem does the amendment seek to remedy? Has something arisen? Secondly, if we proceed with a Section 30 order on the referendum, would this enable the power to hold future referendums to be retained by the Scottish Parliament?
Lord Wallace of Tankerness
My Lords, on the second point, a noble Lord asked me earlier—it may have been my noble friend the Duke of Montrose—whether it would be possible to have a Section 30 order that applied to just one referendum. The answer is that that is precisely what we plan in our draft.
The issue that the amendment seeks to address is that for some powers it may be thought expedient or wise to give the Scottish Parliament a temporary extension of power. I think I am right in saying that such a power was granted under a Section 30 order following the case of Somerville. We seek to make it very clear that if the Scottish Parliament passes legislation—as indeed it did under that power—under a temporary transfer from reserved to devolved power, it does not automatically repeal any legislation that has been properly and competently enacted when the temporary transfer of power ends.
Lord Boyd of Duncansby
My Lords, my noble friend has suggested that as I have sat here all night, I should at least say something. It seems to me that the amendment puts the issue of competence beyond doubt. However, I am not wholly convinced that this is necessary because it seems to me that once you confer competence, the legislative provision that flows from it will always flow from it even if you subsequently take back the competence, as it is the point at which the competence is exercised which is important, not what happens subsequently. Nevertheless, I note what the Minister says. For our part, we are content that he has put the matter beyond doubt.