House of Commons
Prayers
This information is provided by Parallel Parliament and does not comprise part of the offical record
Hon. Members
Object.
To be considered on Tuesday 3 July.
Canterbury City Council Bill
Motion made,
That so much of the Lords Message [21 May] as relates to the Canterbury City Council Bill be now considered.—(The First Deputy Chairman of Ways and Means.)
Hon. Members
Object.
To be considered on Tuesday 3 July.
Leeds City Council Bill
Motion made,
That so much of the Lords Message [21 May] as relates to the Leeds City Council Bill be now considered.—(The First Deputy Chairman of Ways and Means.)
Hon. Members
Object.
To be considered on Tuesday 3 July.
Nottingham City Council Bill
Motion made,
That so much of the Lords Message [21 May] as relates to the Nottingham City Council Bill be now considered.—(The First Deputy Chairman of Ways and Means.)
Hon. Members
Object.
To be considered on Tuesday 3 July.
Reading Borough Council Bill
Motion made,
That so much of the Lords Message [21 May] as relates to the Reading Borough Council Bill be now considered.—(The First Deputy Chairman of Ways and Means.)
Hon. Members
Object.
To be considered on Tuesday 3 July.
City of London (Various Powers) Bill [Lords]
Motion made,
That so much of the Lords Message [21 May] as relates to the City of London (Various Powers) Bill [Lords] be now considered.—(The First Deputy Chairman of Ways and Means.)
Hon. Members
Object.
To be considered on Tuesday 3 July.
Transport for London Bill [Lords]
Motion made,
That so much of the Lords Message [21 May] as relates to the Transport for London Bill [Lords] be now considered. —(The First Deputy Chairman of Ways and Means.)
Oral Answers to Questions
(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Teresa Pearce (Erith and Thamesmead) (Lab)
1. When he expects to publish the consultation document on tackling excessive card surcharges.
Mr Andrew Love (Edmonton) (Lab/Co-op)
8. When he expects to publish the consultation document on tackling excessive card surcharges.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Department for Business, Innovation and Skills is taking forward work on excessive credit card surcharges. I understand that the consultation to seek views on how and when a ban might be applied is going on in the summer.
Teresa Pearce
For many years, families in my constituency have faced surcharges—sometimes 240 times the actual processing costs—when booking plane tickets. There are now charges on theatre tickets and utility bills and some funeral directors are applying them. Given the prevalence of this issue, does the Chancellor still intend to ban excessive debit and credit card charges by the end of the year?
Mr Hoban
The hon. Lady is absolutely right to highlight the costs imposed by this on our constituents. Our estimate was that in 2010 nearly £500 million was spent by consumers on surcharges. It is still our intention to ban them. Both consumers and businesses should be clear that after many years of inaction by our predecessors, it is this Government’s intention to ban these excessive charges.
Mr Love
The super-complaint was upheld in December last year. The Government have not even started the consultation that would be necessary to introduce this measure. Meanwhile, £8 million a month has been lost just by those suffering surcharges on flights from this country. When are we going to get some action?
Mr Hoban
As I said, we are going to publish a consultation this summer and take action to ban these surcharges as soon as possible after that. We should be very clear not only that we are going to ban them, but that some firms have already responded to the action we are going to take, with a number of them reducing their charges on credit and debit card use. That shows that even without legislative action, consumers are getting a better deal as a consequence of our policy.
Mr David Evennett (Bexleyheath and Crayford) (Con)
This is a matter of very serious concern to our constituents. May I welcome the Minister’s commitment to tackling the payment surcharges and urge him to do whatever he can as soon as possible?
Mr Hoban
I am grateful for my hon. Friend’s welcome. I am working closely with the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for North Norfolk (Norman Lamb), who is responsible for consumer affairs, to ensure that we act as quickly as possible to ban these surcharges and to deliver a better deal to consumers.
Natascha Engel (North East Derbyshire) (Lab)
2. What estimate he has made of the proportion of the money issued through quantitative easing which has been used by banks to pay off their debts.
The Chancellor of the Exchequer (Mr George Osborne)
Quantitative easing is a tool of the independent Monetary Policy Committee and has been designed to work through channels other than the impaired banking system by stimulating activity in capital markets. The Government and the Bank of England are working together on a new funding for lending scheme that will more broadly support sustained and increased bank lending to the economy. I can confirm for the first time that in the three months since the start of the national loan guarantee scheme, over 10,000 cheaper loans worth over £1.5 billion have been offered to businesses. I can also confirm that we have today secured EU state aid approval to extend the scheme to medium-sized businesses with a turnover of up to £250 million. That means 99.9% of UK businesses can now benefit.
Natascha Engel
Quantitative easing was certainly intended to stimulate the economy, but in reality it is being used to write off the debts of reckless banks with hundreds of billions of pounds’ worth of virtual money. Has anyone in Government thought through the consequences of this policy, and if so, what are they?
Mr Osborne
The Bank of England conducted a study of the first round of QE that it undertook under the last Government, and estimated that it had increased real GDP by between 1.5% and 2%. The Bank’s chief economist says that the asset programme regime
“was explicitly designed to go around the banking system”.
I therefore do not accept the hon. Lady’s characterisation.
Mr Andrew Tyrie (Chichester) (Con)
Now that the Bank of England has finally shown more willingness to provide some liquidity support, there should be no obstacle to the exercising of more flexibility by the Financial Services Authority when it comes to how the liquidity buffers are used. That is being desperately demanded by banks. Does my right hon. Friend agree that the FSA should take action as soon as possible, and that such action is what is required to provide borrowing and lending at reasonable rates for the hundreds and thousands of businesses throughout the country that need it so desperately?
Mr Osborne
The liquidity auction undertaken by the Bank of England last week was very welcome, and the Bank is proposing future auctions. My hon. Friend, who chairs the Treasury Committee, has been prescient in pointing to some of the procyclical nature—if unintended—of some of the liquidity regulation in the United Kingdom in recent years. The Financial Policy Committee was set up to look at risks on both the downside and the upside. The Financial Services Authority must make its own independent decisions, but I am sure that it will have paid close attention to my speech and to the speech of the Governor of the Bank of England at the Mansion House.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Notwithstanding the Chancellor’s warm words about the impact of quantitative easing, I have yet to meet a banker, a businessman or indeed a Government representative who can identify the benefits that have accrued as a result of its introduction. While I do not necessarily oppose it, all the evidence that I am being given by bankers suggests that lack of demand is causing the main problem. Will the Chancellor do something to stimulate consumer demand and investment confidence in order to maximise the potential that quantitative easing might bring?
Mr Osborne
In conducting its most recent assessment of the UK economy, the IMF explicitly looked at unconventional monetary policy tools that are currently being used, and concluded that quantitative easing was having a positive impact. I think that we should welcome that. I believe that we are able to pursue loose monetary policy—that we are able to use all the tools that are available to us on the monetary policy side—precisely because we have international credibility on the fiscal side.
Matthew Hancock (West Suffolk) (Con)
21. I, too, warmly welcome the action of the Bank of England last week to increase liquidity in its liquidity auction, but should not the role of the Financial Policy Committee be not only to stand against procyclical financial policy and liquidity buffers, but to lean against the wind and make sure that we can get the lending to businesses in our constituencies?
Mr Osborne
The Government established the Financial Policy Committee because under the previous tripartite regime, designed and implemented by the shadow Chancellor, absolutely no one was paying attention to overall levels of debt and credit in the economy. That is why we had such a deep recession, and why we went from such a large boom to such a big bust—to coin a phrase. My hon. Friend is entirely right: the FPC should be symmetrical in the way in which it looks at risks. We have made that clear, and we are amending the Financial Services Bill in the House of Lords to ensure that that the FPC has, as a secondary objective, due regard for the Government’s broader economic policy.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Yesterday the Financial Times reported that the Bank for International Settlements was warning of the dangers for economies that get hooked on ultra-low interest rates. Is not the reality that monetary policy alone will not kick-start the sustained recovery, and that fiscal intervention will be needed if we are to avoid a lost decade?
Mr Osborne
The very low interest and mortgage rates in Britain are extremely welcome to families and businesses across the country. If we want to know what the alternative looks like, we just have to look across the channel at countries that have not been able to maintain their credibility in international markets, where we see rising bank lending and funding costs and increased costs for Government borrowing. We have now five countries in the eurozone who have had to apply for bail-outs. It is because we have fiscal credibility despite inheriting the largest budget deficit in the European Union that we have been able to keep our interest rates very low.
Ian Swales (Redcar) (LD)
I, too, welcome the announcement of extra liquidity for our banks, but how will the Chancellor ensure that our international banks lend this money to British businesses?
Mr Osborne
The funding for lending scheme, which the Governor and I announced at the Mansion House, is explicitly designed to address the high bank funding costs and it is tied to lending into the UK economy, so that is precisely what this new scheme is designed to do.
Stephen Timms (East Ham) (Lab)
3. What recent estimate he has made of the level of economic growth in 2012.
The Chief Secretary to the Treasury (Danny Alexander)
The Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts. In its March economic and fiscal outlook, the OBR forecasted economic growth of 0.8% in 2012, but more recent independent forecasts have been lower, reflecting the fact that the euro-area crisis remains the biggest risk to the UK recovery.
Stephen Timms
A worryingly large jump in Government borrowing has been reported today. Why is it that of all the G20 countries, only Britain and Italy are in recession?
Danny Alexander
The right hon. Gentleman refers to borrowing, but his Front-Bench team wants us to borrow tens of billions of pounds more, which is not the right response. If he studies the figures carefully, he will see that departmental spending is rising much less than was forecast, but, of course, the automatic stabilisers in the economy are operating. That is precisely the flexibility in our plan, which is tough on the structural deficit but supportive of the economy.
George Freeman (Mid Norfolk) (Con)
Has my right hon. Friend seen the latest Office for National Statistics figures, which show that unemployment is down 50,000 in the last quarter and over 800,000 new jobs have been created since we took office? Does he agree that this suggests that the Government’s programme of deficit credibility, public sector restraint and support for business is laying the foundations for a sustainable recovery?
Danny Alexander
I am grateful to my hon. Friend for that question. He is, of course, right to say that the recent figures show that unemployment has been falling, and that is good news, of course. Inflation is also coming down, which is good news for hard-pressed consumers.
Rachel Reeves (Leeds West) (Lab)
Does the Chief Secretary think the fact that the economy is in recession explains why today’s figures show that borrowing is going up, not down as the Government intended?
Danny Alexander
As I said to the right hon. Member for East Ham (Stephen Timms), the figures reflect a combination of things, including the fact that departmental spending has been held down by more than was forecast, but the automatic stabilisers in the economy are operating. That is the flexibility in our plan. It is because of the fiscal credibility the Government have brought to this country that we can do that.
Rachel Reeves
I do not think the Chief Secretary answered the question. Figures out this morning show that, with the economy in recession, tax receipts are falling, and the benefits bill is going up, so borrowing is already £4 billion higher this year than last. Is it not time that the Government admitted their plan has failed, and without action on jobs and growth, borrowing does not go down, it just goes up?
Danny Alexander
That is an astonishing question from the party that made the mess in the British economy that we are trying to clear up, and the party whose plans wanted this Government to borrow even more. That just goes to show what would have happened to the UK economy if we had been unfortunate enough to have the Labour party stay in power.
Nicholas Soames (Mid Sussex) (Con)
Does my right hon. Friend agree that protectionism is the enemy of economic growth? What steps will he take to re-energise the Doha round?
Danny Alexander
I wholeheartedly agree with my right hon. Friend. It is a very important point that, in times of economic stress worldwide, some countries may seek a protectionist approach. That is why at the forthcoming European summit the Prime Minister will again be arguing for measures within Europe to strengthen the single market and to increase free trade within the EU, and for measures for the EU to take to build on the free trade agreements that, collectively, we are signing with a number of other important economies in the world. We need to keep up the momentum of that process in order to help support the world economy.
Jessica Morden (Newport East) (Lab)
4. What progress he has made on his consultation on regional pay for public sector workers; and if he will make a statement.
The Economic Secretary to the Treasury (Miss Chloe Smith)
The independent pay review bodies are considering how public sector pay can be made more responsive to local labour markets, and will report from July. Nothing has been decided, and no changes will be made unless there is strong supporting evidence and a rational case for proceeding.
Jessica Morden
The Tory finance spokesperson in the Welsh Assembly said that introducing regional pay could disadvantage thousands of public sector workers, and that
“we are making it absolutely clear that we are against”
it. Does the Minister agree?
Miss Smith
As I have just set out, this is a question at present for the independent pay review bodies, which will report back in July. There is an argument that more local, market-facing pay in the public sector has the potential to support more for the same investment, and to help local businesses become more competitive.
Michael Fallon (Sevenoaks) (Con)
23. How can it be fair for small businesses outside London and the south-east to have to compete for staff paid on national rates working in public offices? Given that the last Government committed us to local pay nearly 10 years ago, and that it already operates in the Courts Service, what is the problem with encouraging other departments to follow suit?
Miss Smith
My hon. Friend makes a valuable point that I am sure the independent pay review bodies will consider. If I were to put a number on the average premium for working in the public sector, I could name 18% in Wales.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Last week, it was left to the Minister for the Cabinet Office and Paymaster General to come to the Chamber to explain the Treasury’s position on regional pay. Was that because the Chief Secretary does not support the policy and the part-time Chancellor does not want to make another U-turn?
Miss Smith
We had an extensive and rather premature debate on this last week in the Chamber, and I shall say again what I said then: the independent pay review bodies are producing a report, and it would be premature to review that without the evidence, which they are considering.
Sarah Newton (Truro and Falmouth) (Con)
5. What recent steps he has taken to reduce the cost of living.
The Chancellor of the Exchequer (Mr George Osborne)
Rising global prices have increased the cost of living for families here in Britain. This coalition Government will do everything we can to help. We have already frozen council tax, kept mortgage bills low and abolished the fuel duty escalator. I can tell people that we will now stop any rise in fuel duty this August and freeze it for the rest of the year. This means that fuel duty will be 10p a litre lower than planned by the last Labour Government. We are on the side of working families and businesses, and this will fuel our recovery at this very difficult economic time for the world. The one-off cost of this change will be fully paid for by the larger than forecast savings in departmental budgets, and we will set out details of those, as usual, in the autumn statement.
Sarah Newton
If I were not on crutches I would be jumping for joy. The people of Cornwall will really welcome this move, which proves once more that this Government are on the side of hard-working families.
Mr Osborne
My hon. Friend is absolutely right and I know this news will be welcome in Cornwall, as across the country. I repeat: because of the actions we have taken today and in recent Budgets, petrol duty is 10p a litre lower than it would have been under the Budget plans voted for by the Labour party. We are on the side of working families, we are helping motorists, helping businesses—doing everything we can in very difficult circumstances for the world.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I am glad that the Chancellor is beginning to listen to the shadow Chancellor. However, the Government’s own figures show that cuts to tax credits are leaving thousands of parents up to £72 a week worse off, and some are better off if they quit their jobs. With the cost of living rising and the economy in double-dip recession, surely it is time we saw a U-turn on this perverse policy, to make sure that work pays.
Mr Osborne
First, all families, if we take into account the benefit and tax changes, are £5.50 better off a week from April, and we have actually increased tax credits for the poorest families. We have had to make difficult welfare changes. They were completely opposed by the Labour party, which also opposed the cap on welfare benefits. We have to ask the question: what would Labour Members do to get control of the budget deficit that they created? We have had two years and not a single answer from Labour. That is why, as I say, we are the people trusted to lead this country out of the economic mess that they put us in.
Andrea Leadsom (South Northamptonshire) (Con)
Does my right hon. Friend agree that it is astonishing that Opposition Members do not welcome his announcement to cut the fuel duty that they proposed when they were in government? Does he agree that this Government will focus everything they can on cutting the cost of living for hard-working people?
Mr Osborne
We should judge people by actions as well as words, and Labour Members voted for increases in fuel duty, which this Government have stopped. That is because we are on the side of working families, whereas Labour Members are simply on the side of the economic mess that they created.
Andrew Gwynne (Denton and Reddish) (Lab)
6. What assessment he has made of the performance of the economy in the last 18 months.
The Chief Secretary to the Treasury (Danny Alexander)
As the Office for Budget Responsibility made clear last autumn, Britain’s recovery has faced strong headwinds from the euro area, high oil prices and the impact of the financial crisis being deeper than previously thought. Our actions to reduce the deficit and rebuild the economy have secured stability and kept interest rates near record lows, benefiting families, businesses and taxpayers, although, of course, considerable external risks remain.
Andrew Gwynne
That just does not wash, because by May 2010 the British economy was growing, whereas since the Government’s emergency Budget of June 2010 the economy has at best flatlined and at worst dropped back into recession. Why does the right hon. Gentleman think that is?
Danny Alexander
By May 2010, the hon. Gentleman’s Labour Government had put in place plans to increase fuel duty by above the rate of inflation each and every year of this Parliament. He should be welcoming the fact that we are taking steps to support hard-pressed families and hard-pressed consumers across the country in the very difficult economic circumstances that we face.
Robert Halfon (Harlow) (Con)
Does my right hon. Friend agree that motorists across the country will welcome the cut in fuel tax announced for August and that it will greatly improve the performance of the economy? Does this not show that the Government are on the side of hard-pressed working people?
Danny Alexander
I agree entirely with my hon. Friend. I met representatives of the FairFuelUK campaign yesterday. We have a great deal of sympathy with its arguments, as well as with those made by families across this country, including in remote and rural areas. It is worth saying that thanks to the decisions this coalition Government have made not only is fuel tax 10p a litre lower than under Labour’s plans, but council tax is lower and income tax is lower. In the Budget in March we also saw the largest ever increase in the income tax personal allowance, all of which puts money back into the pockets of hard-pressed families.
Mr David Nuttall (Bury North) (Con)
7. What recent assessment he has made of the effect of EU regulations on economic growth.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government are taking action to reduce the burden of EU regulation on UK business. At Budget 2011, the “Plan for Growth” announced a comprehensive package for tackling EU regulation. The Government estimate that the cost of European regulations to the UK has varied from 27% to 60% of the total UK regulatory cost since October 2009.
Mr Nuttall
I am grateful to the Minister for that reply. Although British businesses will welcome the fact that the United Kingdom is not in the eurozone, and will not suffer from the loss of sovereignty and the new regulations that fiscal union would mean, they are nevertheless burdened by EU-imposed red tape, which means that it is much harder for them to compete successfully for new contracts against companies from outside the EU, which are not subject to such regulations. May I urge him urgently to conduct an investigation into and an assessment of the extent to which that is holding back the British economy?
Mr Hoban
My hon. Friend makes an important point, and that is why we are taking action through the “Plan for Growth”. We want the Commission to publish an annual audit of the cumulative cost of all planned EU regulations, but assessments are not enough in themselves, which is why as a consequence of lobbying by this Government the EU has introduced an exemption for micro-businesses and is looking at lifting the burden of regulation on the small and medium-sized businesses that are key drivers of growth in our economy.
Kelvin Hopkins (Luton North) (Lab)
I am sure I am not alone in believing that what regulation we do have should be made by this Parliament and not by the Commission in Brussels. However, I am sure that the Minister will be aware of the survey reported by the CBI that shows that 94% of businesses are concerned above all about demand and the ability to sell their goods and services. Is that not the problem with Government economic policy?
Mr Hoban
What we need are measures to tackle some of the structural problems in the economy that we inherited from the previous Government and to tackle issues to do with education, transport infrastructure and the complexity of the tax system. Those are the reforms we need to ensure that the economy grows.
Damian Collins (Folkestone and Hythe) (Con)
9. What recent steps he has taken to encourage economic growth.
The Chancellor of the Exchequer (Mr George Osborne)
To help the economy, we are cutting taxes for businesses and families. We are, as we have just heard, freezing fuel duty, helping 10,000 businesses with the national loan guarantee scheme, reforming the planning system, creating enterprise zones, setting up the regional growth fund and creating the biggest number of apprenticeships this country has ever seen.
Damian Collins
The recent Growth Factory report on industrial strategy highlighted the importance of rebalancing our economy. Does the Chancellor agree that the record increase in employment in the manufacturing sector in the first quarter of this year is a welcome sign of the growing confidence at the heart of our economy?
Mr Osborne
My hon. Friend is right and I commend him and his group for the interesting ideas, many of which I agree with, that they are promoting. He is absolutely right to point out the increase in employment, including in manufacturing employment. An interesting recent statistic from an independent international body on the British economy showed that the share of manufacturing in the UK economy is increasing for the first time in a very long time, having almost halved under the previous Labour Government.
Mr Jim Cunningham (Coventry South) (Lab)
Why did not the Chancellor cut fuel duty sooner? Why has it taken him all this time? He has done about 33 U-turns as far as I can see.
Mr Osborne
Last year we cut fuel duty and froze it. This year, we have frozen it again and the hon. Gentleman should welcome that. I know that he is in a slightly difficult position in that he was one of the Labour MPs who voted for the increase that we have now delayed, but he should just get up and welcome these moves.
Stephen Gilbert (St Austell and Newquay) (LD)
Economic growth in Cornwall would be discouraged by the introduction of regional pay or the regionalisation of benefits. Will the Chancellor undertake to publish the Government’s evidence to the independent pay review bodies that are considering this issue?
Mr Osborne
I point out to my hon. Friend that we have published that evidence. As I say, the matter is now with the independent pay review bodies, so let us wait to hear what they have to say.
Roberta Blackman-Woods (City of Durham) (Lab)
10. If he will discuss with his ministerial colleagues bringing forward the timing of public infrastructure investment in order to encourage economic growth.
The Chief Secretary to the Treasury (Danny Alexander)
We are having those discussions as we speak. We are already spending more on new roads and new rail now than we were at the height of the spending boom in the previous Parliament. We have provided £2.4 billion for the regional growth fund, £770 million for the Growing Places fund and £570 million for the Get Britain Building fund. We can also support infrastructure investment through the use of Government guarantees and will be announcing more about how we plan to do so later this summer.
Roberta Blackman-Woods
But will the Chief Secretary listen to the business leaders quoted recently in the Financial Times, who said that they had heard Ministers talking about infrastructure projects for months but with no visible results? Will he publish a timetable today, or very soon, for each region showing the projects that will be brought forward with their delivery dates?
Danny Alexander
The hon. Lady will have seen that last November we published the national infrastructure plan, which does precisely what she said and which was widely welcomed by business leaders and business organisations across the country. She will know that we are spending more on road and rail than the previous Government managed, including on a number of projects in her part of the world.
Jane Ellison (Battersea) (Con)
My constituents warmly welcome the Government’s support for the Northern line extension in the Vauxhall/Nine Elms development area. Is that not a good example of exactly the kind of infrastructure project that the Government could support to help unlock economic growth?
Danny Alexander
It is precisely such an example of the sort of infrastructure that this country needs and the sort of project from which the economy of London and elsewhere will benefit if we can bring the investment forward and make things happen more quickly. As I said, we are looking for ideas about doing just that.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Is the Chief Secretary not aware that the so-called national infrastructure programme is way behind schedule, that the construction industry is flat on its back and that the apprenticeships in that sector, so badly needed by the industry and by the Government, are seizing up? Why does he not get his finger out and do something about it instead of making vague promises?
Danny Alexander
The hon. Gentleman is wrong to say that the national infrastructure plan, which we published last November, is behind schedule, but of course he is right to say that there are problems in the construction sector. That is why we have taken a number of steps to support the house building sector, but we will make further announcements in that area later this summer.
Elizabeth Truss (South West Norfolk) (Con)
Over the past four years, footfall on the Norwich-Cambridge line and the Fen line has increased by 20%. In the Government’s infrastructure plan, will they bring forward the upgrading of the Ely North junction, which will enable half-hourly services on both those lines?
Danny Alexander
I do not know the details of the Ely North junction project but I shall certainly raise the matter with the Secretary of State for Transport. However, that is precisely the sort of project we have been bringing forward over the past two years to support economic growth across the whole of the United Kingdom, rather than having a model of growth based solely on receipts from the City of London, which was basically the policy of the Labour party.
Mr Rob Wilson (Reading East) (Con)
11. What recent steps he has taken to increase bank lending to small businesses.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government have launched a package of credit easing measures to improve credit availability for smaller businesses. This includes the £20 billion national loan guarantee scheme and the business finance partnership, which will provide £1.2 billion of additional finance through non-banking channels. The Government and the Bank of England are working together on the new funding for lending scheme, which will provide funding to banks linked to their lending to the real economy.
Mr Wilson
There are a significant number of small businesses in my constituency that want to expand and create jobs but cannot get sensible bank financing. I therefore welcome the recently announced funding for lending scheme, but I understand that in exchange for this funding, banks will have to provide collateral to the Bank of England. Will my hon. Friend confirm, given that the precise details of the scheme are not available yet, whether small loans will be acceptable to the Bank of England as collateral? Otherwise, the desired lending to smaller businesses will not get off the ground.
Mr Hoban
My hon. Friend makes a very important point. He is right to point out that the details of the scheme have yet to be finalised, but I take on board his comments. We will discuss this with the Bank of England. It is important that the scheme works and that it helps funding and lending to households and businesses.
Mr George Mudie (Leeds East) (Lab)
In view of the banks’ disgraceful behaviour on delivering the Merlin agreement, will the Minister assure the House that this new scheme will be transparent and will be published and monitored independently each month? Above all, will he assure us that every pound of additional money that goes to the banks through this scheme will mean additional lending to small businesses and households?
Mr Hoban
The scheme is designed to encourage lending not just to small businesses and households but across the board to all businesses. We want to make sure that when banks put collateral to the Bank of England, it is in response to their having lent more. That is absolutely vital for a scheme that encourages lending and we will make sure that we design the scheme to do so.
Mr Russell Brown (Dumfries and Galloway) (Lab)
12. What assessment he has made of the effect of the Government's fiscal policies on the level of child poverty.
The Economic Secretary to the Treasury (Miss Chloe Smith)
The Social Mobility and Child Poverty Commission is being set up and will provide an assessment of child poverty using a wide range of measures, including income.
Miss Smith
The Government have confirmed their commitment to child poverty targets and we are going further by consulting on better measures of child poverty in the autumn. We seek a range of views on that.
Andrew Bridgen (North West Leicestershire) (Con)
Does the Minister agree that the real failing of the previous Government was their narrow focus on income transfers instead of addressing the real root causes of welfare dependency such as low aspirations and worklessness?
Miss Smith
I certainly do. The important point is how we help people to get out of poverty and stay out. I note that there are problems with the current measure of poverty. Because median incomes fall, children are considered to have moved out of poverty when there will have been no real change to their lives. That cannot be a fully accurate measure.
Kate Green (Stretford and Urmston) (Lab)
What will the Government do to address the still very high levels of in-work poverty, and how can freezing working tax credit and reducing help with child care costs possibly help?
Miss Smith
Let me name a number of things the Government are doing to support families and let me note our plans to move toward universal credit, which will help with work incentives. Let me note our plans to have doubled the number of disadvantaged two-year-olds receiving free hours of child care each week. On tax credits, let me note that we have had to fix the previous Government’s unsustainable budgeting in that area and that six out of 10 families with children are still eligible.
Charlie Elphicke (Dover) (Con)
Is it not especially important that we take action on child poverty, given the quite sharp increase in the previous Parliament? The targets were missed by about 600,000, I think, and when the previous Government left office, 4 million children were in poverty.
Miss Smith
My hon. Friend is correct: child poverty is a real problem. This Government are committed to eradicating it and to increasing social mobility. We are taking the measures to assist children that I listed in response to the previous question. I should also point out that the average household gains about £5.50 a week from the tax and benefit changes made in April this year. We are making progress and acting where we can. It is important to keep up the pressure on child poverty.
Mr Philip Hollobone (Kettering) (Con)
13. What assessment he has made of the effect on economic growth of increases to fuel duty.
The Economic Secretary to the Treasury (Miss Chloe Smith)
The effects on the economy of fuel prices, including oil prices, refinery margins and tax, are assessed by the Office for Budget Responsibility as part of its economic and fiscal forecasts.
Mr Hollobone
Motorists in the Kettering constituency and local hauliers will warmly welcome today’s announcement by the Chancellor. Has my hon. Friend undertaken any analysis of the negative impact on national economic growth that would have occurred had the present Government increased fuel duty by as much as the previous Government intended?
Miss Smith
I can confirm that, through the actions of this Government, pump prices are 10p a litre lower than they would have been under the previous Government, who had scheduled in 12 fuel duty rises while they were in office and six more for afterwards.
Chris Evans (Islwyn) (Lab/Co-op)
14. What the average waiting time for calls to Her Majesty’s Revenue and Customs helplines was in (a) the last 12 months and (b) the previous 12 months.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The average waiting time for a customer calling HMRC’s helplines in the past 12 months was four minutes and 19 seconds. In the preceding 12 months, it was four minutes and 13 seconds.
Chris Evans
A constituent of mine has had a nightmare experience trying to get through to HMRC: he phoned several times throughout the week, but never spoke to an adviser and kept getting an engaged line. His is just one of many cases involving HMRC in my constituency office at the moment. With 10,000 HMRC staff being laid off, how do the Government hope to clamp down on tax avoidance when they obviously cannot collect taxes in the first place?
Mr Gauke
The first point to make is that the numbers of front-line staff dealing with tax avoidance and tax evasion are increasing over the course of this Parliament, in contrast with what happened during the last Parliament. There has been improvement in contact centre performance in the number of calls that get through, but more progress is needed. HMRC is deploying staff more flexibly and conducting small-scale pilots to see whether the private sector can provide additional capacity. HMRC is determined to improve performance.
Jo Swinson (East Dunbartonshire) (LD)
My elderly constituent Mr George Robertson is concerned about the amount of money that has been wasted because of a catalogue of errors over two years by HMRC helplines and administration. They wrongly issued cheques for overpayments to Mr Robertson, despite his correctly informing them that, in fact, he owed money; and when the saga was eventually “resolved” in April, they got it wrong again. Will the Minister look into that case and the wider lessons that need to be learned, so that HMRC becomes more accurate and cost-efficient?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
15. What representations he has received on the treatment of different savoury products for the purposes of levying VAT.
The Exchequer Secretary to the Treasury (Mr David Gauke)
HMRC is shortly to publish on its website a summary of the responses to its consultation, “VAT: Addressing borderline anomalies”. The response document will contain a list of those who contributed to the consultation.
Chi Onwurah
As I am sure you know, Mr Speaker, Newcastle is the home of the Greggs pasty, so I was hopeful that the Chancellor’s latest U-turn but one would have resolved the great savouries shambles, but now I learn that he has turned his wrath on the pretzel sellers of Newcastle, including Auntie Anne’s in Eldon Square. Could the Chancellor possibly focus on bringing growth to the economy, rather than confusion to our eating habits?
Mr Gauke
I am sure the hon. Lady is aware that Greggs welcomed what we said about hot food. None the less, there has been an anomaly in the tax system whereby some hot foods have been treated differently from others. We are seeking to remove that anomaly and that is exactly what we are doing.
Kevin Brennan (Cardiff West) (Lab)
16. What recent estimate he has made of the effects of his fiscal policies on the rate of growth in output.
The Economic Secretary to the Treasury (Miss Chloe Smith)
Tackling the deficit is necessary for supporting sustainable economic growth. The Government’s credible consolidation plan, which includes important measures to support investment and output, has restored confidence in the UK’s fiscal position, helped avoid a rise in market interest rates and allowed a more activist monetary policy.
Kevin Brennan
Given that the lead-in time for fiscal policy is about 18 months, how can the Minister explain the fact that the UK economy is now in recession, following the full impact of her Government’s fiscal policies?
Miss Smith
It is essential to return the public finances to a sustainable path. It is this Government who are doing that, it is this Government who are keeping interest rates low, it is this Government who are taking action on fuel duty, and it is the Opposition who have no answers at all.
David Morris (Morecambe and Lunesdale) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and manage the public finances so that Britain starts to live within her means.
David Morris
Inflation has now lowered from 3% to 2.8% in May, which should be welcomed on both sides of the House. Does my right hon. Friend agree that it is other Government measures such as freezing the council tax, freezing the fuel duty and increasing the personal allowance that have helped tens of thousands of my constituents in Morecambe and Lunesdale with their cost of living?
Mr Osborne
I absolutely agree with my hon. Friend that it is very welcome news that inflation is now falling. That will help families. The Government want to help families further by keeping those mortgage costs very low, and the only way we can do that is by having a credible plan for the public finances. We have also frozen the council tax, increased the personal allowance, with another big increase next year, and as my hon. Friend has just heard, frozen fuel duty for the second year running, so that his constituents in Lancashire and people across the whole country can be helped at this difficult economic time.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The Chancellor told the “Today” programme a few weeks ago that the only thing worse than listening is not listening. Well, he certainly listened to the “Today” programme this morning. We have now had U-turns on pasties, churches, charities, caravans and skips, and today a U-turn on fuel, which we welcome. It would be interesting to know at what point this morning the decision was made, and whether the Transport Secretary was even told. Now that the Chancellor is on a roll, will he also do a U-turn on the millionaires’ tax cut and rescind the granny tax rise? There is a vote next week. Will he join us in the Lobby or will he do the U-turn first?
Mr Osborne
It is quite difficult for a Conservative Chancellor to do a U-turn on a Labour policy. I am not sure the Opposition is entirely joined up—or maybe it is because the right hon. Gentleman waited half an hour to come in. The hon. Member for Hyndburn (Graham Jones), sitting directly behind him, who is a Labour Whip, has just tweeted on the fuel duty announcement that it is a deferred rise and cannot improve the economy. If the Labour Whip thinks it will not improve the economy, what does the shadow Chancellor think it will do?
Ed Balls
It is about time this part-time, U-turning Chancellor took some responsibility for his own decisions. What is the reality? A double-dip recession, borrowing rising, family budgets under pressure—his plan has failed. Is it not time he listened to the Opposition and admitted that austerity has failed? Is it not time he did another U-time and adopted Labour’s five-point plan for growth and jobs?
Mr Osborne
We enjoyed reading recently that the right hon. Gentleman has been spending thousands of pounds on commissioning private opinion research about why his economic message is not getting through. It was leaked to the papers, saying that he was seen as “uninspiring” and “untrustworthy”. He had no need to spend thousands of pounds on that. He can ask Labour MPs and get that opinion of the shadow Chancellor. He has had two years to come up with a credible economic policy, and two years to apologise for his part in putting Britain into the economic mess that we are taking Britain out of.
Mr David Evennett (Bexleyheath and Crayford) (Con)
T5. Does my right hon. Friend agree with the head of the IMF, who said that she shivers to think what would have happened to the British economy without this Government’s plans to reduce Labour’s deficit?
Mr Osborne
The managing director of the IMF put it in a very graphic way. She presented to the whole country the alternative that we faced in May 2010. If we had stuck with the Labour party’s incredible plans, we would be one of the countries seeking a bail-out, rather than, as we are now, a country that is a relatively safe haven in the very, very difficult European situation. [Interruption.] The shadow Chancellor will not move forward unless he concedes his role in getting Britain into this mess. Until he does that, he will remain a man of the past with no ideas for the future.
Jim McGovern (Dundee West) (Lab)
T2. Will the Chancellor update the House on what progress has been made on his offer to the computer games industry of tax incentives in his last Budget? It is important to get the details of the policy correct, but it is also important that time is not wasted unnecessarily. As the old adage goes, actions speak louder than words. When can we expect to see the words turned into action?
Mr Osborne
We will be consulting on that policy very, very shortly, alongside the new credits for animation and high-end television production. The video games industry is important in Scotland—for example, in Dundee there is a particular centre of excellence—but it is important across the entire UK, and the video game tax credit will help, alongside animation and high-end TV production.
Jessica Lee (Erewash) (Con)
T4. In order to help small businesses and those seeking new opportunities, will my right hon. Friend endorse the jobs fair that I am hosting in Erewash on 5 September? Will he further set out what the Government are doing to support small businesses, which remain the real engine of the British economy?
Mr Osborne
I certainly support my hon. Friend and congratulate her on organising the jobs fair. As the most recent unemployment figure showed, not only is unemployment falling but 200,000 private sector jobs have been created in the last few months in our economy. When it comes specifically to small businesses, as I set out to the House earlier, the national loan guarantee scheme has already helped more than 10,000 businesses with loans, we have cut the small companies corporation tax from the rate we inherited from the last Government, and the freeze in fuel duty will also help small businesses.
Mr Dennis Skinner (Bolsover) (Lab)
T3. In a time of austerity, when food banks are increasing in almost every town and city in Britain, is it not high time that the Government published a comprehensive list of all those people who are profiting from these tax avoidance schemes? Even Graham Aaronson, a Government adviser, forecast today that if something is not done there will be riots on the streets. This is a home-grown problem. Do not blame anybody else. Let us have a list of all those people close to home and those on millionaires row.
Mr Osborne
The last Labour Government, which the hon. Gentleman supported, had 13 years to introduce a general anti-avoidance rule; we are introducing one after just two years in office. The last Labour Government had 13 years to stop stamp duty avoidance schemes; this Government, after two years in office, are doing exactly that and stopping those schemes. The last Labour Government had 13 years to cap uncapped income tax reliefs, which are used for avoidance; we have introduced and are introducing that cap. Frankly, actions speak louder than words.
Mr John Baron (Basildon and Billericay) (Con)
T6. With belt-tightening very much on the agenda right across Europe, will the Chancellor at least consider making deep cuts to our EU budget contributions, and so ally himself with the vast majority of people in this country?
Mr Osborne
We have worked very hard to freeze the EU budget during the last couple of years and avoid the very large increases that both the Commission and the European Parliament have sought. We are now beginning the very important negotiations on the next multi-year budget framework, and our objective is to deliver the best deal for the British taxpayer and make sure that unnecessary money is not going over to Brussels.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
T10. Written answers to my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) reveal that the nationalist Scottish Government have made no approach whatever to the UK Government on membership of the Bank of England’s Monetary Policy Committee. Does the Chancellor think that Scotland would have more influence on monetary policy as part of the UK or outside the UK using sterling as a foreign currency?
The Chief Secretary to the Treasury (Danny Alexander)
The hon. Lady refers to just one of a number of shambolic statements made by the Scottish National party since it launched its campaign for independence a few weeks ago, and not just on the Bank of England, but on financial services regulation. She makes the point very powerfully indeed that Scotland is “better together” as part of the United Kingdom. We have greater strength together as part of a more credible economic unit and part of the shared monetary policy of the Bank of England. All that would be jeopardised if Scotland were ever to become independent.
Andrew George (St Ives) (LD)
T7. The Chief Secretary has rightly committed the Government to clamping down on tax avoidance. Given recent high- profile cases of tax avoidance, and notwithstanding the earlier question from the hon. Member for Bolsover (Mr Skinner), will my right hon. Friend update the House on the progress being made and perhaps give a projection for the progress he expects over the rest of this Parliament?
Danny Alexander
I am grateful to my hon. Friend for his question. As the Chancellor said, the Government have done more on this issue in two years than the previous Government managed in 13 years. In particular, at the time of the spending review I announced that we would invest an extra £900 million in Her Majesty’s Revenue and Customs so that it could employ a large number of additional experts to deal with tax avoidance. That programme is projected to lead to an additional £7 billion a year in tax revenue by the end of this Parliament, and we are well on track to meet that objective.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
Can the Chancellor confirm that the Government are going to spend an additional £150 billion in borrowing above their plan of a year ago?
Mr George Osborne
The Institute for Fiscal Studies was very clear that, had we pursued the plan proposed by the previous Government, borrowing would be £200 billion more than it is today. As I have said, it is this Government’s credible fiscal plan that has brought record low interest rates and market credibility. We can see across the English channel what would happen if we did not have that credibility. That is where Labour would have put us.
Sir Tony Baldry (Banbury) (Con)
T8. Has my right hon. Friend noticed that the most recent figures from the Office for National Statistics show that employment is up by 311,000, the biggest quarterly increase since the general election, and does not that mean that since the general election two jobs in the private sector have been created for every job lost in the public sector?
Mr Osborne
My hon. Friend—a knight of the realm—is absolutely correct. Despite these very difficult and challenging economic times, the private sector is creating jobs. We of course have to help it to create more jobs through the measures I have already outlined—cutting the small companies tax rate, help with credit and the like—but we also need to help those looking for work. That is why we have the Work programme and the youth contract, instruments that are much more effective than the programmes promoted by the previous Government at helping people who are out of work to link up with companies that want to employ people.
Chris Williamson (Derby North) (Lab)
Britain is the only G20 country in a double-dip recession, youth unemployment is at record levels, poverty is on the increase, public services are in meltdown, and the Government are borrowing around £4 billion more this year than they did last year. The lessons of the 1930s demonstrate that the austerity programme that the Chancellor is pursuing will not work. Will he learn the lessons of history—
Mr Speaker
Order. We are extremely grateful, but I am afraid that we do not have time to go back to the 1930s now. We have the gravamen of the hon. Gentleman’s question.
Mr Osborne
I suggest that tonight and tomorrow the hon. Gentleman turns on the television and watches the evening news, because he will see that there are problems facing many economies around the world. The Labour idea that somehow Britain alone faces these challenges because the Government are trying to deal with the debt is absolutely ridiculous. There are all these European economies in recession, the US economy had disappointing jobs data, and the Chinese economy is slowing. These are difficult times, but we are doing everything we can to help the British economy deal with the problems we inherited.
Mr Dominic Raab (Esher and Walton) (Con)
T9. Last year we lost the most working days to strikes in 20 years, and since the last election union leaders have never won the backing of a majority of their members for any major strike. Will my right hon. Friend task the Office for Budget Responsibility to provide annual estimates of the cost to the economy of strikes and of the concessions, paid for by taxpayers, to avoid them?
Danny Alexander
I am not sure that the hon. Gentleman’s suggested idea would be an appropriate task for the Office for Budget Responsibility to undertake, but he is right that strike action is costly to the economy. He would also be right to observe that it has not stopped this Government proceeding with the reform of public service pensions, and with pay restraint in the public sector, too, to help deal with the enormous mess left to us by the Labour party.
Alison McGovern (Wirral South) (Lab)
With regard to the problems at RBS this week, my constituent David Robinson has been unable to access his funds, including disability allowance, from his account with thinkbanking. It is an internet-based bank that uses the RBS platform, so he could not go into an RBS branch to resolve his problems. Will the Minister please make contact with RBS about internet banking users and make sure that my constituents—and everyone else—are not unduly affected?
The Financial Secretary to the Treasury (Mr Mark Hoban)
The hon. Lady makes an important point, and I spoke to Stephen Hester this afternoon to find out what progress RBS has made in resolving its issues. It introduced measures to help people who can access branches, but she makes a very important point about internet banking, and RBS is very keen to learn the lessons from those problems and to put in place contingency arrangements for the future. I encourage her to get her constituent to write to RBS, and, if he has suffered additional costs as a consequence of the situation, to make that claim to it.
Stephen Williams (Bristol West) (LD)
Embarrassing revelations about celebrities’ tax affairs usually bring a flurry of people to their tax accountants, asking them to check whether their affairs are all in order. Will the Treasury ask HMRC to encourage people to come forward voluntarily now and confess to what they may be up to, rather than wait for an investigation into their tax affairs?
The Exchequer Secretary to the Treasury (Mr David Gauke)
My hon. Friend makes a very good point, and I hope that all those who have engaged in aggressive tax avoidance schemes consider whether it is the right thing to do and reconsider their affairs.
Sheila Gilmore (Edinburgh East) (Lab)
One of my constituents was told by her department store employer that she either had to accept a 12-hour contract, which amounts to fewer hours than she works at the moment, or go fully flexible, which does not fit with her child care. Is it not time that the Chancellor decided to do another U-turn and to restore tax credits to those working couples who do not work up to 24 hours a week?
The Economic Secretary to the Treasury (Miss Chloe Smith)
We on the Treasury Bench have argued many times in the House that it is fair to ask couples to work under similar requirements as lone parents, and I urge the hon. Lady to consider that in this case.
Mr John Redwood (Wokingham) (Con)
When will the House be given the details of the three very large schemes for monetary easing announced at the Mansion House, and when will we be given a chance to debate them?
Mr Osborne
It is standard practice for the Bank to announce its own monetary and liquidity schemes. That is what it did with the liquidity proposals, and the Governor of the Bank was answering questions about them this morning before the Treasury Committee in this House. When we have further details about the funding for lending scheme, we will of course come to the House and make that announcement, but I hope that my right hon. Friend will allow me to continue to make Mansion House speeches as Chancellors have before.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
The counter-party proposal and the levy control mechanism fall within the ambit of the Treasury. Within the past hour the Energy Secretary has told the Energy and Climate Change Committee, which is undertaking pre-legislative scrutiny of the Energy Bill, that he would welcome a Treasury Minister going before it to explain those proposals. Why is the Economic Secretary refusing to do so?
Miss Chloe Smith
In correspondence with the Chairman of the relevant Select Committee, I have articulated that there is no precedent in the records that we can find for a Minister from one Department to assist in the scrutiny of another Department’s legislation.
Mr Speaker
Last but not least, the House—and the nation—can hear from Mr Simon Hughes.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Following the exchanges about tax avoidance and the Government’s very robust position, can one of the Treasury team tell us how soon we will have in place a system that targets not just celebrity individuals but all high-worth individuals, so that they all pay a decent share of tax to the nation?
Mr Gauke
HMRC already has in place a particular team that focuses on high-net-worth individuals; under this Government, we have also introduced a team that deals with not just the very top but the next band; and we are looking to introduce a general anti-abuse rule that will address tax avoidance—aggressive tax avoidance—more widely. This Government remain absolutely determined to ensure that people pay their fair share.
Petition
Hugh Bayley (York Central) (Lab)
Private tenants on low incomes in York face a particular problem because their housing benefit is based not on rents in York, but on rents in a broad market rental area that includes towns and villages 20 miles from York, where rents are much lower. I therefore present a petition on behalf of residents of York. The petition is signed by two of my constituents, Helen Graham and Graham Martin, and is supported by the signatures of almost 1,000 people.
The petition states:
The Petition of residents of York,
Declares that York is facing a housing crisis, with homelessness in York in 2010/2011 40% up on the previous year; further declares that the Government’s reforms to Housing Benefits mean that of 6,299 private rented properties previously affordable in the city, 3,700 will be lost, a reduction of almost 50%; declares that this is effectively driving people out of York and away from their jobs, families and friends; and declares that York’s Broad Market Rental Area, which determines the level of Housing Benefit currently available, should be based on the York Unitary Authority area and not on neighbouring towns including, Tadcaster, Selby, and Pocklington, all of which have lower rents than York, in order to reduce the pressure on people to move away from the city which is their home.
The Petitioners therefore request that the House of Commons urges the Government to make changes to the boundary of the York Broad Market Rental Area to include only the York Unitary Authority area.
And the Petitioners remain, etc.
[P001101]
Rio+20 Summit
(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Deputy Prime Minister (Mr Nick Clegg)
Last week, 196 nations met in Rio, 20 years after the original Earth summit. Our task was to find a way to set the world back on a sustainable path. Important progress had been made in the past two decades on reducing poverty and protecting our environment, but all in all, ambitions had not been met. Our dilemma was to agree ways to grow our economies without hoovering up or destroying our precious natural resources, recognising that our economic and environmental agendas must go hand in hand. Our challenge was to take the right decisions, not just for ourselves, but for the next generation which, in just 18 years, will need 30% more water, 45% more energy, and 50% more food.
Was this summit an unqualified success on all those fronts? No, it was not—but few would have expected it to be. But we did make progress on the key areas that the UK sees as the priority for sustainable development and green growth. I pay tribute to my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs for her commendable efforts at the summit itself and for her intensive preparations with the Secretary of State for International Development.
At the summit, the United Kingdom Government played a crucial role in leading on four important shifts. First, while the Rio declaration was not all that we would have wanted, this is the first time that a multilateral document expressing such strong support for the green economy has been agreed. That in itself is a major achievement recognising that, in the long term, greening our economies should not conflict with growing them. The declaration helped to alleviate some of the fears of developing countries that green growth is a veil for a kind of eco-protectionism designed to stymie their development. It united nations behind the simple principle that, as US Secretary of State Hillary Clinton put it at the summit,
“the only viable development is sustainable development which will deliver lasting progress for everyone.”
Secondly, Rio+20 recognised that we need to develop broader measures of progress to complement GDP in order to take account of the natural assets that will contribute to future prosperity—so-called GDP-plus. In the UK we have already committed to including natural capital within our system of national accounts by 2020. We worked hard at the summit to ensure that all nations present recognised the importance of broader measures of environmental and social wealth to complement GDP.
Thirdly, we agreed to set up the sustainable development goals—a concept proposed by Colombia. I was one of the first to welcome this idea when President Santos visited London in November. The UK has been pushing hard to secure agreement ever since, and achieving it, even at this high outline level, was no mean feat. The UN Secretary-General, Ban Ki-moon, said that the SDGs should draw on the success of the millennium development goals and should be an integral part of the post-2015 development framework. We would have liked to see specific themes agreed, focusing on ensuring that everyone can access enough food, energy and water, but getting such agreement was always going to be a huge undertaking. The UK Government will continue to keep up the pressure for rapid agreement. From now on, the process must be coherent and co-ordinated with the work of Secretary-General Ban’s high-level panel on the post-2015 framework, which the Prime Minister will co-chair along with the leaders of Liberia and Indonesia.
Fourthly and finally, at Rio national Governments recognised the importance of working alongside businesses. Thanks in no small part to the leadership of UK firms, Rio recognised the role of corporate sustainability reporting to their shareholders and to prospective investors—something that would have been inconceivable even a year ago. I also announced in Rio that we will be the first country anywhere to mandate large companies to report on their greenhouse gas emissions. A growing number of companies and investors are realising that their own success is directly linked to sustainable, green growth. We hope that the call from all nations for businesses to report their sustainability performance will usher in a new era of transparency and consistency in the global business community.
In summary, although Rio+20 did not go as far as we would have liked, it revived a global commitment to an agenda that has come gravely under threat. Progress was made in the areas where progress needed to be made. The declaration agreed by all 196[Official Report, 3 July 2012, Vol. 547, c. 7-8MC.] countries should not be seen as the upper end of our ambition; it should be our baseline and we should all strive to surpass its expectation. We must build on the steps that were taken to reinvigorate the drive for sustainable development and lasting growth.
The UK played a leading part last week because we are on track to deliver our commitment to spend 0.7% of gross national income on official development assistance to developing countries from 2013; because I announced the adaptation for smallholder agriculture programme, which will improve the lives of more than 6 million smallholder farms; because we are taking the lead in areas such as reproductive health and family planning; because we are the first country whose major businesses will report their greenhouse gas emissions as part of their annual accounts; and because of the range of ways in which we are greening our economy. We will remain committed to working with our partners and will be ambitious for the future. The summit is over but the work continues, and the UK will continue to lead from the front.
Mary Creagh (Wakefield) (Lab)
I thank the Deputy Prime Minister for the advance copy of his statement.
The original Rio declaration sought to eradicate poverty, reduce unsustainable production and consumption, and promote greater co-operation to protect the world’s ecosystems. It is as relevant today as it was 20 years ago. Expectations were low for this summit, and those expectations were met. I pay tribute to the Deputy Prime Minister and the Secretary of State for Environment, Food and Rural Affairs, who worked as part of the EU delegation to prevent the summit from reaching abject failure.
There was a glimmer of hope. Ban Ki-moon’s zero hunger challenge aims for a future in which everyone enjoys their basic human right to food and in which global food systems are resilient. It aims to provide access to adequate food all year round, increase small farm productivity and see zero waste of food. We welcome the UK’s contribution of £150 million to help meet the zero hunger challenge.
Will curbing land grabs by large companies and improving land rights, especially for women, be on the agenda of the high-level meeting on hunger that will take place during the Olympics? What does the Deputy Prime Minister make of the Prime Minister’s comments yesterday that a future Conservative Government would consider handing out some state benefits “in kind” rather than in cash? Does he think that handing out food vouchers to the poor is a good idea, when the Brazilian zero hunger scheme was based on the Bolsa Família, which gave money directly to families in poverty and let them choose how best to feed their children? How will the zero hunger initiative tackle food poverty in the UK, where the Trussell Trust charity estimates that it will feed 130,000 people this year, 45,000 of whom are children?
The Deputy Prime Minister mentioned that the Prime Minister, alongside the Presidents of Liberia and Indonesia, will co-chair a new UN committee to establish a new set of millennium development goals to follow those that expire in 2015. How will the new goals relate to the sustainable development goals that will emerge from Rio?
There was progress in the field of energy, with the Secretary-General’s sustainable energy for all initiative, which received pledges of $323 billion in funding to bring clean energy to more than a billion people in developing countries. We welcome that. We also welcome the Deputy Prime Minister’s announcement at Rio that the UK will introduce carbon reporting for 1,800 quoted companies from April next year, as set out in Labour’s landmark Climate Change Act 2008. That was, sadly, the weakest option that the Government consulted on. It creates the anomaly that British Airways will report its carbon footprint as a public company, but that Virgin Atlantic, as a private company, will not. However, we are the first country in the world to do it, which gives us a temporary, green competitive advantage to make up for the Government’s disastrous handling of the solar feed-in tariffs.
The agreements on biodiversity, oceans and the trade in endangered species are welcome. However, the Government have refused to guarantee funding for the UK’s wildlife crime unit after next April. Does he agree that that unit is on the front line of fighting the illegal trade in endangered species, and will he argue for its benefits at the heart of Government?
Sharing the benefits of the planet’s biodiversity equally is an important building block for what happens after Rio, yet the Government have still not ratified the Nagoya protocol, which was agreed last year, on access to and benefits from genetic resources. What assessment has he made of the action we need to take to comply with the protocol, and will the Government show leadership in the EU by ratifying it?
We know that sustainable development starts at home. Far too often, the Government have been found wanting—they abolished the Sustainable Development Commission and failed to introduce marine protected areas, and their implementation of their forests policy was disastrous. Will the Deputy Prime Minister therefore tell the House how the Government will change how they do business to reflect the Rio conference outcomes?
Will the Government publish a UK action plan as a framework for the changes that they seek after Rio? Does the Deputy Prime Minister agree with his right hon. Friends the Secretaries of State for Environment, Food and Rural Affairs, for International Development and for the Foreign Office that the Government need to invest more in a resource-efficient economy and low-carbon jobs to reduce costs and protect the UK from rising oil prices and energy dependency?
The Deputy Prime Minister should be in no doubt that the Opposition will work with him across party boundaries to achieve the long-term solutions that our planet needs. Rio showed that the solutions to ending hunger and deforestation, and to securing clean energy and water for the poorest, are all out there. We just need to scale them up.
The scientists tell us we must act now and businesses stand ready to play their part. The tragedy is that the politicians did not agree concrete mechanisms by which those things can happen, but as the Deputy Prime Minister has said, Rio was not a destination but a milestone on a long road. We stand ready to support the Government to make the change we need to deliver the future we want.
The Deputy Prime Minister
I thank the hon. Lady for her recognition of what I think is our shared commitment to the agenda discussed at Rio. I totally share her support for the zero hunger initiative; I attended a session in Rio at which the initiative was discussed. She asked about the hunger summit that will be held this summer. I do not know the precise agenda, but she referred to the importance of legal rights to property and land, which are crucial to dealing with hunger sustainably.
The hon. Lady asked about the interaction between sustainable development goals, ill-defined though they were at the Rio summit, and the work on the post-2015 agenda. The Government’s strong view is that the sustainable development goals as defined by the group of 30 representatives, which will be established in September, must feed into the wider review of the millennium development goals through the high-level panel that has been established by the Secretary-General.
I will not disguise from the hon. Lady the fact that within that procedural complexity, there are a lot of sensitivities. Candidly, some developing countries have hitherto felt that their voice is not strongly enough heard in some UN processes. The Prime Minister and his co-chairs will work hard to ensure that the voices of the developing world are properly listened to in the review of the MDGs to allay the concern that precisely the part of the world that will benefit most from the process is shut out from it. We need to do quite of lot of work to ensure that the different acronyms and processes do not start becoming rival acronyms and process—that is a danger.
The hon. Lady mentioned the sustainable energy for all initiative, which I am glad she supports; it is an outstanding initiative. I hosted a preparatory meeting of the group on the initiative in London some months ago. We had hoped that the Rio declaration would adopt the initiative as a core conclusion. In the event, because of the nervousness of some participants on what the initiative means and its implications, it was “recognised” in the declaration. We would have inserted a stronger verb, but none the less, as with all those initiatives, we now need to exploit that recognition and work on it.
The hon. Lady complained that the proposal on greenhouse gas emissions reporting does not go far enough. We have to start somewhere. We are the only country doing this. Some people complain that we have already gone too far and are imposing too many burdens on business. Other business groups, such as the CBI, have welcomed the proposal. I think we are breaking new ground, and I hope she will welcome that rather than cast aspersions on it.
The hon. Lady will know that the Darwin initiative is a robust initiative that we are using to monitor the plight of endangered species. Finally, she rightly said that these summits make sense only if one acts consistently with them at home. We are rightly proud of our record: we are the first country to establish a green investment bank; the green deal, which will be up and running in the coming six to eight months or so, will be the largest initiative of its kind for installing energy efficiency measures and bringing down energy bills in homes up and down the country; and the green sector, the green economy, is growing by about 5% a year, employs close to 1 million people in this country and actually runs a trade surplus. That is something we should cherish and celebrate. The carbon floor price is another major innovation of the Government, while the electricity market reform, which is one of the most ambitious legislative and regulatory overhauls of an electricity market I am aware of anywhere in the developed world, is explicitly designed to ensure that we have a sustainable energy mix for future generations.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I congratulate everyone involved on what was a genuine team effort. Will the Deputy Prime Minister assure the House that one of Rio’s lasting legacies will be the agreement to reaffirm a universal, open, non-discriminatory and equitable multilateral trading system for food and agricultural products? Will he give an undertaking that we will really push for Doha to deliver this through the World Trade Organisation?
The Deputy Prime Minister
No one is in any doubt that one of the greatest boosts to prosperity across the world would be a successful completion of the very, very, very, very long-awaited Doha development round. It is immensely frustrating that getting agreement on it has proved so elusive. Many have written it off altogether, and it is difficult not to be pessimistic about it, but that does not mean that we should not continue to pursue the cause of multilateral trade liberalisation.
Mr Peter Hain (Neath) (Lab)
Given the frustratingly disappointing outcome of Rio and the crisis of investor confidence in solar PV, onshore wind and nuclear in Britain, is it not even more important that the Deputy Prime Minister joins the growing cross-party support for the Severn barrage, which would generate 5% of the electricity in Britain and create nearly 40,000 jobs—a green project that will deliver the Government’s renewable energy commitments?
The Deputy Prime Minister
I pay tribute to the fervour with which the right hon. Gentleman is throwing himself into this new cause in a political career of many great causes. I agree with the underlying assertion that for investors to make investments in major energy infrastructure of whatever kind, they need long-term stability and long-term certainty about the direction of Government policy. That is precisely what the electricity market reform aims to provide.
Zac Goldsmith (Richmond Park) (Con)
Despite the prominence given before the conference to protecting the world’s oceans in the face of the ongoing collapse in world fish stocks and the continued obliteration of coastal livelihoods, it has been widely reported that the concrete steps put forward were effectively blocked by Russia, Canada and the US. Is that true? If not, what specific steps were agreed?
The Deputy Prime Minister
In many ways, it is actually more dispiriting than the hon. Gentleman suggests, because we did not manage to get any agreement on any of the themes governing the sustainable development goals. Sensibly, perhaps, in view of the dynamics at Rio, that has been left for the working group in September. On the plus side, from his point of view, the text reflects the importance of oceans and their sustainable use, and I would be surprised if oceans did not feature prominently in the final shape of the sustainable development goals as they are crafted in the months and years ahead.
Dame Joan Ruddock (Lewisham, Deptford) (Lab)
The Deputy Prime Minister will have heard my hon. Friend the Member for Wakefield (Mary Creagh) mention the Nagoya protocol, which, as he knows, has not been ratified. He knows how important it is to access and benefit sharing. Will he undertake to meet his EU counterparts in order to move forward the EU position on this matter, which is truly critical?
The Deputy Prime Minister
We certainly want to see full ratification of the Nagoya protocol. It is something that this country has done, and I know that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs is working with her counterparts in the European Union to encourage those who have not yet taken the necessary steps to do so. To make one observation, the Nagoya protocol flowed from the original Rio+20 summit, but it was not agreed at that summit. The only reason why I make that point is that, for those who say that an insufficient number of legal texts were agreed this time around, it is worth recalling that the history of the last Rio+20 summit was that, while it was much more substantive than this one, it did lead and create a momentum that subsequently led to legal texts. I say to those who have responded with complete despair about this summit that it is now a matter of what we do with it and whether we can turn it into legally binding documents, which is the challenge for the future.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
Within the privacy of this Chamber, will the Deputy Prime Minister admit that Rio actually showed that it is now blindingly obvious that no other major country proposes to follow us in imposing a legally binding obligation to cut emissions by 80% at a cost of £430 billion to our economy, so we should discreetly shelve the Climate Change Act 2008 as soon as possible?
The Deputy Prime Minister
My understanding is that Mexico has done just that, just now, so it is not right to say that countries are not seeking to follow our lead. In my bilateral discussions with members of the Brazilian Government, I was struck by how forceful they were, as a major emerging economic power, in expressing the view that their own future success would be defined by their ability to grow sustainably, which would require a departure from simply copying how development has been pursued in the past. I am afraid that I do not share the right hon. Gentleman’s pessimism about the virtues of, and potential for, sustainable growth in the future.
Caroline Lucas (Brighton, Pavilion) (Green)
The final text from the Rio summit effectively sells out the vision of a green economy by replacing the usual phrase “sustainable development” or even “sustainable growth” with a phrase of a quite different meaning—“sustained economic growth”. Given that Kenneth Boulding has famously written:
“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist”,
will the right hon. Gentleman tell us whether the problem at Rio was too many madmen or too many economists?
The Deputy Prime Minister
I will not choose which. I think the hon. Lady is selecting somewhat partially from a mammoth text, which refers to “sustainable growth” and “sustainable development” throughout and in almost every paragraph. She has been a little partial in her selection of those two phrases. The whole assumption behind Rio was an overt recognition that it is senseless, and unfair on future generations, our children and our grandchildren, to grow today and clean up later. That fundamental development dilemma, whereby development is pursued at the cost of the sustainable use of resources, was at the heart of Rio thinking before the summit and during it, and it must remain part of our thinking subsequent to the summit as well.
Simon Wright (Norwich South) (LD)
The agreement at Rio for a new high-level political forum on sustainable development could provide the leadership that has been lacking in the past for the implementation of declarations and action plans. Will the UK Government do all they can to ensure that the new forum has a wide agenda, a clear mandate to act and high-level political backing?
The Deputy Prime Minister
Yes; I think there is great potential for that forum to do good work. Given that all these forums are working on agendas to which we have made a great commitment as a Government, we will remain committed to their successful work.
Joan Walley (Stoke-on-Trent North) (Lab)
In thanking the Deputy Prime Minister and the Secretary of State for their work at Rio and notwithstanding the outcome, will the right hon. Gentleman commit to an early appearance before the Environmental Audit Committee, so that all the different strands of all the different groups that want urgent action now, but did not get that reflected in the high-level agreement, and this UK Parliament and its legislators, can map out a way of taking urgent action and ensuring that it is followed up?
The Deputy Prime Minister
I thank the hon. Lady for her invitation, and I will think about it carefully. I know that my right hon. Friend the Secretary of State has attended her Select Committee. She is right, of course, to say that the Committee plays a crucial role in mobilising the opinions of many groups—non-governmental organisations and others—which take an interest all this. I hope that she recognises—as I know she was there—that the Government made considerable efforts to talk to all those groups on an ongoing basis, notwithstanding their evident disappointment in the outcome of the summit, and we will of course continue to do so.
Paul Uppal (Wolverhampton South West) (Con)
There is great news about the economic development of sub-Saharan Africa, which is a possible portent for the future but is also a double-edged sword, because that development is built on the back of natural and mineral resources. Can my right hon. Friend assure me that the UK will continue to take a lead on sustainability, and will tackle concerns about eco-protectionism head-on?
The Deputy Prime Minister
That is one of the issues that were raised forcefully by many of the leaders from Africa. I had a meeting with President Meles of Ethiopia, who is a leading thinker on all these matters. He recognises, in a way that I think is pretty far-sighted, that notwithstanding the challenges that his people now face, he will be doing a disservice to them and, indeed, to future generations of Ethiopians if they do not use the resources that are available to them in a sustainable fashion.
Mr Ben Bradshaw (Exeter) (Lab)
The hon. Member for Richmond Park (Zac Goldsmith) was right to identify as particularly depressing the total failure to make any progress on the second biggest environmental issue that affects us—the need to protect our marine environment—but would not Britain have more credibility in terms of leadership if we were not already two years behind in establishing our own network of marine protected areas, and if the Government had not drastically reduced their number so as to render them almost useless?
The Deputy Prime Minister
I think that it was right for us to take the extra time to secure a firm evidence base in regard to those areas. We are not abandoning the agenda; we are trying to do our job as thoroughly and rigorously as I know the right hon. Gentleman would expect.
Mr John Redwood (Wokingham) (Con)
The UK hit the Kyoto targets, while a number of our leading European Union competitors signed up with a fanfare but came nowhere near hitting them. Is there any sign now that those European big energy-using countries will do better in the future?
The Deputy Prime Minister
My own view is that any developed economy will serve itself best by moving towards an energy mix that is diverse, sustainable, and not over-reliant on unreliable forms of energy and very volatile global prices. I think it is a good thing that we have been leading that agenda in this country while also meeting our Kyoto targets. Those activities are not inconsistent with each other, and I personally rebut the idea that a shift of that kind is incompatible with highly competitive economies.
Barry Gardiner (Brent North) (Lab)
I welcome the frankness with which the Deputy Prime Minister delivered his statement on the outcomes of Rio, which were not what we could all have wished for. I think he recognises that one of the real strengths of the processes surrounding Rio is what is happening at national level. In that context, would he care to comment on the success of the world summit of legislators, which was held during the weekend before the high-level session, and on the progress that was achieved there at national level? He referred to Mexico, but there has also been progress relating to natural capital, the marine environment and deforestation.
The Deputy Prime Minister
I pay tribute to the hon. Gentleman for his work in GLOBE International, the world legislators’ forum. It was very helpful to me in Rio to listen to his views about the work of that body. I strongly agree with him: I think that some Governments and Parliaments sometimes struggle to know exactly what legislative steps they should take in this regard. The establishment of best practice for them, via GLOBE, on a range of sustainable development issues can serve as an important catalyst to ensure they do not just talk the talk, but walk the walk.
Andrew George (St Ives) (LD)
I congratulate my right hon. Friend and his ministerial team on pushing the summit further than I suspect it would have gone without them, although the outcomes themselves were very modest. Does he agree, however, that although binding agreements and legislation were never going to be part of the final outcome, we should welcome the fact that the summit put genuine sustainability back on to the agenda, and also set out a vision for its delivery?
The Deputy Prime Minister
Yes. The breakthrough, conceptual though it is and not concrete enough, is that 196 countries are saying overtly and explicitly, “We think development needs to be resource-sustainable and we want to craft sustainable development goals.” However, in a sense, this is a concept without sufficient content. The test of whether it will be looked back on as a complete wash-out or a great triumph is what we then do with that outline concept, and whether we have the political will to use the mechanisms that have been established—not least the group that will start work in December—to flesh out the content and feed that into the wider review of the millennium development goals as they are reviewed and strengthened in the post-2015 framework.
Mr Mike Weir (Angus) (SNP)
The Deputy Prime Minister has been very candid about the limitations of the declaration from Rio, but he urges us to strive to surpass his expectation. Does he any specific ideas about what the UK might do in this respect? In particular, has he thought about following the Scottish Government’s example of establishing a climate justice fund?
The Deputy Prime Minister
As the hon. Gentleman may know, we have not only set an international precedent by, for instance, announcing that some of the largest companies will be abiding by new greenhouse gas emission reporting requirements; we are also setting the pace by moving towards what I referred to in my statement as GDP-plus by 2020, whereby we do not just take a snapshot of our nation’s wealth and prosperity, but try to include in that new measures of the resources we are using and their sustainability. We have established a natural capital committee, chaired by Professor Dieter Helm, which I think is the first of its kind. Those are not only institutional but methodological innovations that are genuinely world beating, and I very much hope that other countries will follow our lead.
Mr David Nuttall (Bury North) (Con)
Does the Deputy Prime Minister agree with Mr Kandeh Yumkella, the joint head of the United Nations “sustainable energy for all” initiative, who said:
“You can’t save the forest if you don’t have gas”?
Consequently, this country ought to expedite the use of our shale gas reserves in order to reduce domestic energy prices.
The Deputy Prime Minister
As the hon. Gentleman may know, the Chancellor announced at the Budget that we would be developing a gas strategy. Our overall approach to energy policy as a Government is to make sure that the sources of energy we rely on are as diverse and sustainable as possible, and clearly, gas plays an important role in that. That is why we are committed to producing this new gas strategy.
Mark Hendrick (Preston) (Lab/Co-op)
The Deputy Prime Minister referred in his statement to the commitment to providing 0.7% of GNI for development assistance. All three major political parties would like to put that commitment into law. Why, therefore, did the International Development Secretary—he is in his place next to the right hon. Gentleman—categorically refuse point blank to support my private Member’s Bill? Members of both parties in the coalition have said that they will support the Bill, and doing so would save parliamentary time and get it through sooner, rather than later.
The Deputy Prime Minister
As the hon. Gentleman knows, the response to his private Member’s Bill is a matter for the House. I should point out to him that if he attaches such significance to legislating on this issue, why on earth did his party not do it in 13 years in office? We are very clear that we will be delivering our commitment to allocate 0.7% of GNI from next year, and that we will legislate as soon as we possibly can.
Mr Graham Stuart (Beverley and Holderness) (Con)
Across the world at national level, legislators are effecting environmental change and improvement, even as intergovernmental processes stall. Further to the Deputy Prime Minister’s reply to the hon. Member for Brent North (Barry Gardiner), will he support the GLOBE world summit of legislators process going forward, so that, from Mexico to China in the past, and other countries in the future, we can see action today, rather than words at summits?
The Deputy Prime Minister
As I explained in my meeting in Rio, I am intuitively a big supporter of GLOBE, as I think it is far better if these summits are not just a get together of Presidents, Prime Ministers, Deputy Prime Ministers and Ministers, but involve legislators; they should not just be a great big club of the Executive. The more we can involve legislators and Parliaments, the more we can guarantee that action is subsequently taken. I am very happy to look at ways in which the Government could provide more support, in as much as we can, to the excellent work that GLOBE has already undertaken.
Nia Griffith (Llanelli) (Lab)
Following Rio+20, I am sure that we all agree that fine words need to be backed up with practical actions, so could the Deputy Prime Minister tell me what safeguards his Government will put in place to ensure that, with the growing number of biomass-fuelled power plants, imported biomass material comes from genuinely sustainable sources and is not contributing to deforestation and loss of biodiversity?
The Deputy Prime Minister
My understanding is that there are European Union standards that seek to ensure that the biomass industry adheres to basic environmental standards, but it is one industry of many in which this Government are keen to ensure that there is more, rather than less, investment, in order that we get the diverse mix of energy sources and energy generation that I referred to earlier.
Martin Horwood (Cheltenham) (LD)
I commend my right hon. Friend and the Secretary of State on the positive stand taken by Britain in Rio, but given the lack of any landmark agreements comparable to the original Earth summit, how can Britain now promote rapid, timetabled agreement on issues such as GDP-plus and the sustainable development goals?
The Deputy Prime Minister
The SDGs, which are the core commitment at Rio, do have fairly clear procedural timetables; a group of 30 representatives will be established in September, and the UN Secretary-General has been clear that that must feed into the wider post-2015 millennium development goals process. There is a pretty clear process. However, we just have to recognise that a summit in a world where power is shifting to different hemispheres and different continents is different from one that took place 20 years ago. Brazil now has authority and clout on the international stage that it did not have then; the G77 is organised as a caucus of developing countries, which was not quite the case 20 years ago, and they are rightly more demanding that their voice and voices should be heard. That is reflected in the more diverse push and pull that we witnessed at the Rio summit.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
One of the areas of disappointment was the failure to move forward on measures to improve access to water and sanitation for the many millions in the world who do not have that. Given that, and given that I know the Government are committed to that objective, what steps will they take in other international bodies to try to promote the objective of improving access to water and sanitation throughout the world?
The Deputy Prime Minister
I agree with the hon. Gentleman that that is one of the most important issues, as we see from the shocking and scandalous figures on the number of children and women, in particular, who have died because of poor sanitation and restricted access to clean water. It was one of three themes—food, water and energy—that we had hoped would be defined in greater detail under the rubric of the sustainable development goals at Rio. We will continue to push to do that as they are defined in greater detail in the months ahead.
Points of Order
(12 years, 5 months ago)
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Mary Creagh (Wakefield) (Lab)
On a point of order, Mr Speaker. During yesterday’s urgent question on flooding, I asked the Secretary of State for Environment, Food and Rural Affairs what support Calderdale council could expect to receive under the Bellwin scheme to fund both its emergency response and its recovery effort. In her reply, she said that
“the trigger for the Bellwin formula is 15% of a local authority’s income”.—[Official Report, 25 June 2012; Vol. 547, c. 25.]
That did not sound right to me, so I went to the House of Commons Library and discovered that the trigger is in fact just 0.2% of a council’s annual income; that triggers a reimbursement from central Government of 85% of the costs incurred. Would you like to invite the Secretary of State to comment and correct the record on this matter?
Mr Speaker
Clearly this is a key point in the mind of the shadow Secretary of State. As the Secretary of State is with us and literally on the edge of her seat, let her come to the Dispatch Box and respond if she so wishes.
The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
This just shows what we all know in the House: when it is not one’s departmental brief, one probably should not venture an opinion. The hon. Lady has informed the House of this matter. The 15% figure that was in my mind when answering the urgent question comes from the amount that is then disbursed to the local authority. I have taken the matter up with the Department for Communities and Local Government, but what matters is that the council gets help if it is entitled to it.
Mr Speaker
We are grateful to the Secretary of State for that acknowledgement and explanation, which is very helpful.
Dr Julian Lewis (New Forest East) (Con)
On a point of order, Mr Speaker. Although, sadly, the Deputy Prime Minister is no longer with us—corporeally, at any rate—I was concerned, as I trust you were, at the widespread reports in the weekend press that he had vetoed any prospect of a referendum on the possible introduction of a proportional representation voting system for elections to a reformed upper House. Given the constitutional importance of such an issue and the motivation that it is clearly designed to help the Liberal Democrats retain a permanent stranglehold on future legislative processes, should not such announcements be made initially to this House rather than via the media?
Mr Speaker
That was a scintillating polemic for the House to savour, but what I would say to the hon. Gentleman, whom I have known for 29 years this October, is that although the logic of his attempted point of order is compelling, it suffers as a point of order from the disadvantage that the premise on which the logic has been built is, in my judgment, misplaced. The reason I say that to the hon. Gentleman is that the Deputy Prime Minister was not announcing a change of Government policy but, as far as I can tell, merely reiterating the status quo. That will have to do for now, but all these matters will doubtless be explored eloquently, in detail and at length in the upcoming debates on House of Lords reform, to which I fancy the hon. Gentleman will wish to contribute.
Opposition Day
Secondary Education (GCSEs)
(12 years, 5 months ago)
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18:59 - The House divided: - Ayes: 222 / Noes: 298 - Question accordingly negatived.
19:15 - The House divided: - Ayes: 298 / Noes: 217 - Question accordingly agreed to.
Mr Speaker
I inform the House that I have selected the amendment in the name of the Prime Minister.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
I beg to move,
That this House notes the forthcoming consultation on the restructuring of the secondary education system; further notes the proposals reported in the press on Thursday 21 June of Government plans for replacing GCSEs with an O-Level and CSE system; believes that these proposals could, in the words of the Deputy Prime Minister, ‘lead to a two tier system where children at quite a young age are somehow cast on a scrap heap’; and calls on the Government to ensure any proposal for changes to the secondary education system are subject to approval by the House.
In three years’ time, the education leaving age will rise to 18. That change represents a huge challenge to schools and colleges up and down the country. How can the education system adapt to the challenge? How can we enable all children and young people to achieve their full potential? How do we ensure that young people have the skills and knowledge to succeed in life, including in the world of work?
Earlier this month, the Secretary of State was advocating a return to Victorian-style rote learning in our primary schools. Now he wants to bring back a two-tier exam system, which his own party abolished more than 25 years ago. That is all from a Government who are making the biggest cuts to education spending since the 1950s. I am a great supporter of history, but I do not believe that we need a school system that is stuck in the past.
The Opposition believe in stretching the most able students. We believe in rigour, high standards and opportunity for all students in all subjects, academic and vocational.
Stephen Twigg
I will give way shortly, but I want to develop my argument first.
The most important ingredients of success in education are the quality of leadership and the quality of teaching and learning; the Secretary of State is nodding his assent. It is vital that those ingredients are backed by a credible set of qualifications. We support reforming the structure of the examination system to deal with unhealthy competition between exam boards. If that means a single exam board, we will consider those plans in detail, and I understand that the Select Committee is due to make proposals to deal with that precise challenge shortly. Sensible, thought-through and evidence-based measures to increase rigour and tackle grade inflation will have the full support of the Opposition, but let us be clear about the fundamental difference between us and the Education Secretary: the proposal to divide pupils at 14 into winners and losers.
When the Deputy Prime Minister woke up in Rio last Thursday, he said about the Secretary of State’s proposals:
“I am not in favour of anything that would lead to a two-tier system where children at quite a young age are somehow cast on a scrap heap. What you want is an exam system which is fit for the future”
and
“doesn’t turn the clock back to the past…so it works for the many and not just…the few.”
I agree with that sentiment. The question for Liberal Democrat colleagues is whether they have the courage to vote for our motion, which supports the words of their leader.
Alok Sharma (Reading West) (Con)
Labour made a real difference to our education system—there is no doubt about that. However, at the same time as grade inflation was on the rise we were dropping in the international league tables on maths, English and science. Should not the hon. Gentleman be apologising for the disservice he has done to our young people, or is he now championing mediocrity once again?
Stephen Twigg
Well read, I suppose. I must correct my earlier remark when I referred to Liberal Democrat colleagues because I think there is only one Liberal Democrat Member in the Chamber. [Hon. Members: “Two!”] Sorry, there are two. I was going to comment on the absence of the Liberal Democrat Minister of State, Department for Education, the hon. Member for Brent Central (Sarah Teather), but we have instead the Liberal Democrat Minister of State, Foreign and Commonwealth Office, the hon. Member for Taunton Deane (Mr Browne). I think the percentage would be just under 2%—that is my calculation.
Last week, the Daily Mail, in a leaked story, reported:
“None of the plans require an Act of Parliament.”
This week, according to the Government’s amendment on the Order Paper, the Government are calling for proposals that are approved by Parliament. May I welcome yet another U-turn by the Government to give Parliament a proper say, but may I suggest that as well as changing the process, the Secretary of State should change the substance of these leaked proposals? Today’s debate provides the House with an opportunity to reject a move to bring back a system that was created in the 1950s and abolished in the 1980s.
These proposals were leaked just as pupils were sitting their GCSEs. As nervous and stressed young people were queuing up to sit hugely important exams, the Secretary of State was saying that those exams were worthless. How insulting to young people who have studied and revised so hard. How insulting to parents who have helped their children through the stress of exams and how insulting to our brilliant teachers who have worked so hard to prepare their pupils. Why are these changes being made now and why are they being rushed? Is the Secretary of State concerned that his other policies will result in a fall in school standards? Is it that he needs to mask the reduction in standards by abolishing the main existing measure of secondary school results? Is that why the Government are so determined to do this?
Jake Berry (Rossendale and Darwen) (Con)
In 2004, when the hon. Gentleman was criticised for putting a cake decoration qualification on a par with GCSE maths he called it “educational snobbery”. Does he stand by those comments? Does he still believe that cake decorating is equivalent to GCSE maths?
Stephen Twigg
I have never believed that cake decoration is equivalent to GCSE maths, and I certainly think the hon. Gentleman should come up with better interventions than that.
These plans are nothing less than a cap on aspiration. When he introduced the GCSE in 1984, the then Conservative Secretary of State, the late Lord Joseph, said the new system would be
“a powerful instrument for raising standards of performance at every level of ability.”—[Official Report, 20 June 1984; Vol. 62, c. 304.]
Last week, the hon. Member for Beverley and Holderness (Mr Stuart), the distinguished Conservative Chairman of the Select Committee on Education, said that the Secretary of State is
“setting out a policy that appears to be more focused on the brighter kids…and not focusing on the central problem we have which is doing a better job for the children at the bottom.”
The Government amendment this afternoon claims that they want “high standards for all” to boost social mobility, but the proposals leaked to the Daily Mail admit that 25% of “less-able pupils”—about 150,000 a year, every year—would take
“simpler qualifications similar to old-style CSEs”.
Last week, Lord Baker, another Conservative former Education Secretary, said that the certificate of secondary education was
“a valueless bit of paper. It was not worth anything to the students or the employers.”
How will writing off a quarter of young people boost social mobility and standards for all?
Mr David Lammy (Tottenham) (Lab)
Does my hon. Friend recognise the scenario in, I think, the first year in which the GCSE was introduced, where many working-class children in inner-city contexts were streamed off to the CSE and then went on to the failed youth training scheme? We do not want that scenario back in our inner cities. We need to ensure parity for all at 16.
Stephen Twigg
My right hon. Friend is absolutely right and anticipates my next point. We know from analysis of the CSE that it was, in practice, a school-leaving certificate for the poor. In the decade after its abolition, the number of the poorest pupils staying on at school after 16 increased by a very significant 28%. The CSE and O-level system was designed more than half a century ago, when our society was completely different—there were far more unskilled jobs and typically children were split off into grammar schools and secondary moderns. A pupil at a comprehensive in 1971 was 25 times more likely to take CSEs than a grammar school pupil—perhaps not surprising. A pupil in a secondary modern school was 50 times more likely to take CSEs than a grammar school pupil.
Elizabeth Truss (South West Norfolk) (Con)
Does the hon. Gentleman agree with me that the world’s skills are increasing and we need to compete? Can he explain why, under the Labour Government, in 2000 we were ahead of Germany in the maths league table, but by 2009 we were 12 places behind Germany? What did he do when he was in government to raise standards in vital subjects and compete with other countries?
Stephen Twigg
First, how would this solution help? As the hon. Lady knows, there are different international comparisons and analyses. The study carried out by the programme for international student assessment, PISA, to which she refers, shows one thing, but the trends in international mathematics and science study, TIMSS, shows something quite different: English results in mathematics are much better in TIMSS than in the PISA study. I take the challenge she sets out very seriously—we do need to do more and I am in favour of more rigour. What I do not understand is why that cannot be done by reform of the GCSE system. We can make GCSEs more rigorous. We do not have to go back to dividing children into sheep and goats at 14.
The hon. Lady is an authority on these matters and I pay tribute to her hard work, especially on mathematics. The number of young people taking mathematics at A-level started to increase significantly under the Labour Government. We need to do more to accelerate that trend and to explore all the ways we might do that, but surely she welcomes the fact that the number taking A-level maths increased under the Labour Government?
Elizabeth Truss
In fact, there was a massive drop in the number of students taking maths in 2000, when Labour introduced modular exams; that had a massively damaging effect. That number is now beginning to recover, which is indeed good news, but does the hon. Gentleman agree that the previous Government were responsible for the drop in the first place and the decline in standards relative to countries such as Germany? He still has not answered my question about how Germany managed to reform its system.
Stephen Twigg
Let us learn from other countries’ systems. That is the point I was seeking to make. We recognised that there was an issue, which is why we addressed it and why, as the hon. Lady acknowledged, the number taking maths at A-level has started to increase, and not just since the change of Government in 2010; it predated that change of Government. When we debate these topics, it is important that we are balanced in our use of evidence. I am prepared to acknowledge the issue that she outlined as regards PISA, but I am sure she could acknowledge that we do a lot better in some of the other international research, including TIMSS.
The Financial Times has done an in-depth analysis of the proposed new CSE. It says that it
“will tend to be an exam for poorer children”.
It goes on to say:
“There will be a geographical effect, too, with some areas switching heavily to it. . . The CSE will be a northern qualification”.
This matters. The Secretary of State is in danger of putting a cap on aspiration for poorer children and for those living in the poorer regions of the country.
In last week’s urgent question the Secretary of State told the House that we already have a two-tier system, but he knows that at present pupils who sit the simpler foundation papers for GCSE can still get a C. Indeed, if their coursework is good enough, they can even get a B. With the CSE system, they will have a qualification on their CV which suggests to employers that teachers thought they had low ability. There is a real danger that they will simply stop striving for success.
The Labour Government started to narrow the gap in education between rich and poor. These proposals pose a real threat that the north-south divide will worsen and even fewer young people from the poorest families will stay on at school or go on to university. I am sure the Education Secretary has read the OECD’s research, which concluded that social mobility is lower in countries which
“group students into different curricula at early ages”.
Most scientific evidence now shows that teenagers’ brains can change late in life, even up to the age of 16. Professor Cathy Price of University college London found that teenagers’ IQs can jump by as much as 20 percentage points. She comments:
“We have to be careful not to write off poorer performers at an early stage when in fact their IQ may improve significantly given a few more years.”
Gavin Barwell (Croydon Central) (Con)
I am grateful to the shadow Secretary of State for giving way and I apologise for dragging him back slightly, but before we go on to talk about what the solutions might be, it would helpful to have some clarity about where we start from. Does he believe that an A grade at GCSE when it was introduced was equivalent to an A grade at O-level, and that it is easier to get an A grade at GCSE today than it was back in 1988?
Stephen Twigg
I absolutely acknowledge that there is grade inflation in the system—[Hon. Members: “Ah!]— and I have said that previously. The “Ah!”s are very welcome, but it is not something that I have not said before, and I have said today that we will support measures that root out grade inflation. We will support sensible reform of the examination boards because there is a good argument that a kind of competition to the bottom has contributed to grade inflation.
Helen Jones (Warrington North) (Lab)
Does my hon. Friend agree that experience in teaching shows that it is very difficult to predict at the age of 14 exactly where a young person will be at the age of 16? Is not the problem with the Government’s proposal that there is no way of deciding at that age exactly what a child’s performance will be in two years’ time?
Stephen Twigg
Absolutely. My hon. Friend has struck at the heart of the debate and at the heart of where the Opposition differ from the Secretary of State. We cannot write young people off at 14, for the reasons that she set out.
Stephen Twigg
I shall make a little more progress, then I will take a couple more interventions. I know that there are a number of hon. Members who want to speak in the debate as well.
I am, as I have just said, open to sensible ways of improving the GCSE system. We know from businesses and employers’ organisations that they want an examination system that provides young people with the skills that reflect the needs of the modern economy. The recently published annual CBI education survey shows that businesses want our schools to focus on employability skills, presentation skills and practical skills, critical thinking and team working, as well as the crucial foundations of literacy and numeracy.
I was one of those who took O-levels. I know that I do not look old enough. I was just waiting for a Conservative Member to make that point.
Stephen Twigg
I will write to the hon. Gentleman with the results. I took O-level English. I think I got an A in literature and a B in language. When I was doing O-levels I had no way of testing the skills that the CBI tells us matter—no course work, no speaking and listening component; rather the questions often required fairly basic skills, such as summary and reading comprehension. That is one reason why I say that speaking skills should be a priority for all our state schools, as they are in so many of our primary schools. The Education Secretary observed recently that it was “morally indefensible” that some professions are dominated by pupils from private schools. I simply cannot see how bringing back CSEs will address that indefensible position. It will make it even worse.
Guy Opperman (Hexham) (Con)
The hon. Gentleman described how he now accepts that there was grade inflation. When did that road to Damascus discovery take place? Was it in 1997 when he was first elected, 2005, 2010 or 2012?
Stephen Twigg
Anyone listening to this debate is probably not very interested in the progress of my thinking on these matters. They are probably slightly more interested in the opportunity for Members on both sides of the House to hold the Secretary of State to account, which is the purpose of today’s debate. However, I repeat that I do acknowledge that there is an issue of grade inflation. In an interview in January 2012, the Secretary of State said:
“It is important to recognise that it is not just grade inflation that is responsible for improvements in our schools. I do believe that our schools have got better, incrementally in some case, quickly in others, over the course of the last 15 years.”
So in fact we can reach a consensus on this. There has been grade inflation, but there was also significant improvement in our schools during the last 15 years, for 13 of which, as I recall, the Labour party was in government.
Stephen Twigg
I will complete my speech, because a number of colleagues on both sides of the House wish to take part in the debate and I am drawing to a close.
I worry that the Government are ignoring the central issues in the debate. The system does need reform and improvement. Labour made changes in government. For example, we made the main measure of performance at key stage 4 include English and maths, addressed social mobility from early childhood with Sure Start and free nursery places, and focused on literacy and numeracy in our primary schools. I am proud that under Labour we began to see a narrowing of the attainment gap between rich and poor children. That is not me saying that; it is according to analysis published by the Financial Times, conducted by Simon Burgess, professor of economics at Bristol university. He said that the Labour Government was
“turning the tide on social mobility”.
His analysis looked at core GCSE qualifications and the number crunchers stripped out the effects of grade inflation. The outcome was a sustained improvement in the results achieved by children from the poorest neighbourhoods. The cause of that social mobility was certainly not changes to the exam system—sometimes they are needed—rather it was investment, more and better teachers and greater freedom for schools to innovate.
Stephen Twigg
I am drawing to a close.
This debate strikes at the heart of the approach taken by this Secretary of State, a Secretary of State who favours dogma over evidence and pet projects over changes that work for the many. These proposals will introduce a two-tier system, a massive step backwards, closing off opportunity for thousands of young people, and a cap on aspiration.
In Saturday’s edition of The Times, the Secretary of State’s former teacher, W. G. R. Bain, wrote:
“Although Michael Gove was once one of the brighter pupils in my form class, the top stream at selective Robert Gordon’s College, I am afraid that in the intervening years he has learnt little about hoi polloi”—
his phrase, not mine. He concluded that
“combative debating is his strength, not common sense”.
Frankly, I could not have put it better myself: no common sense, instead arrogance; no interest in the evidence, instead dogma; and no interest in the many, instead naked elitism. Those of us on the Opposition Benches believe in high standards for all. We have an opportunity today to consign the idea of a two-tier system to the scrap heap.
The Secretary of State for Education (Michael Gove)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
“notes the forthcoming consultation on the secondary school qualifications and curriculum framework; welcomes the opportunity to address the weaknesses of the system introduced by the previous Administration, which undermined confidence in standards, increased inequality and led to a reduction in the take-up of core subjects such as modern languages, history, geography and the sciences; and calls for proposals which are approved by Parliament and which are based on the principles of high standards for all, greater curriculum freedom, and a qualifications and curriculum framework which supports and stretches every child and which boosts social mobility.”
May I first congratulate the shadow Secretary of State on his kind words about Saturday’s edition of The Times, which will be welcomed in every part of the Gove household, particularly by Mrs Gove, whose column appears on that day? I am also grateful to him for paying such close attention to the words of Bill Bain—if only I had paid closer attention to his words when at Robert Gordon’s college—and I am sure that the alumni of the school will be grateful to him for his generous words.
We are all grateful to the hon. Gentleman for securing the debate this afternoon and congratulate him on doing so. As an experienced former Schools Minister, he brings passion and fluency to consideration of these issues. He has also brought a degree of intellectual honesty to the debate, which is welcome—I do not think that we have ever heard an acknowledgment from the Labour Front Bench that there was grade inflation under Labour. That was not the case with his immediate predecessor as shadow Secretary of State, and it was certainly not when the right hon. Member for Morley and Outwood (Ed Balls) was Secretary of State. I think that it is important that we record this moment, because it seems the first occasion when there has been a genuine acknowledgment of one of the failures of Labour’s management of our curriculum and qualifications system.
In a moment we will discuss the future and how we might reform our examination system and our curricula, but before that I want to note how striking it was that in the hon. Gentleman’s speech, which I enjoyed and appreciated for its honesty and grace, he did not come forward with a single positive proposal for how to make our qualifications more rigorous. He acknowledged weaknesses, but at no point did he say that he would change things in any particular direction. There was no Labour policy or initiative and nothing progressive from that side of the House, merely criticism. Of course, he will have an opportunity in future debates to outline what he thinks on these questions but, at the moment, where thought and initiative should be there is still a vacuum, a hole in the air.
Before we look to the future, let us consider the past and Labour’s record. As the shadow Secretary of State rightly said, there are aspects of Labour’s record that I acknowledge are good and wish to build on. I am looking forward to building consensus across the House on the growth of the academies programme, for example, the growth of Teach First and the importance of improving teacher training. But there are other areas where I fear that a wrong turning was taken, one of which relates to the curriculum and qualifications. In particular, as our amendment to the motion points out, we saw a flight away from the rigorous subjects that employers and universities value. Under Labour, the proportion of students taking history at GCSE dropped to just 31%, the number taking science subjects dropped by 5%, the number taking geography dropped by 15%, and the number taking foreign languages dropped by 34%. That was despite the shadow Secretary of State saying in May 2004, when he was a Minister in the Department for Education:
“In the knowledge society of the 21st century, language competence and intercultural understanding are not optional extras, they are an essential part of being a citizen.”
That is presumably why in September 2004 he took modern foreign languages out of the national curriculum.
The reason why a drop and a deterioration in the numbers following those subjects matters is that they are critical to social mobility. Both parties in the coalition have made improving social mobility the long-term goal—the measure of the success—of the five years that we have in power, and we know that more students studying history, foreign languages, geography, physics, chemistry and biology means more students having a chance to do satisfying subjects at university and fulfilling jobs in the 21st-century workplace.
Michael Gove
In a second.
It is for that reason that we introduced the English baccalaureate measure, in the teeth of opposition from the Labour party—both sides of the coalition determined to redress that decline. What has the result been? In two years, we have already seen the numbers taking languages up by 21%; taking history at GCSE up by 26%; taking geography up by 70%; and taking physics, biology and chemistry up by more than 70%. What we have seen as a result of that determined change to the way in which we set aspiration for our young people is improved social mobility—Liberals and Conservatives working together in order to achieve it.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
I remember contributing to an Adjournment debate about the dropping of foreign languages, but how will the Secretary of State deal with a situation such as that in Birmingham, where in about half of our schools English is the second language? Will his proposals fit in with their first language and with English as their second, or will his crude measure of just any other foreign language actually not address the problem of learning the skill of a second language?
Michael Gove
I have enormous respect for the hon. Lady, who makes a very important point about Birmingham. It is the youngest city in Britain, and its multicultural traditions are part of its strength, but it is important to recognise in Birmingham that, although there are some excellent schools, such as Perry Beeches and Arthur Terry, there are some underperforming schools.
The excellence of a school is not, however, related to the number of children who have English as an additional language; all research shows that such children are just as capable of succeeding as children from any background. What matters is the quality of the school, not the nature of the home background, and what matters for all children in the 21st century is developing the language skills that will enable them to take their place in university or in the modern workplace. That is why it was a disaster when language learning was dropped under the previous Government, and why it is so welcome that the coalition Government have seen it restored.
Some people will ask why, if performance in those core GCSEs that matter so much declined, the headline figures for GCSE performance improved under Labour? What was going on? What was filling that gap? The truth is that we had a growth in so-called equivalent exams, which were called vocational although most employers did not rate them, and which were called equivalent to one or more GCSEs when most employers and colleges did not believe that they were. They have been eloquently criticised by the hon. Member for Stoke-on-Trent Central (Tristram Hunt), by the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and by Professor Alison Wolf in her universally praised report on vocational qualifications. There was fantastic growth in low-level qualifications under Labour, most of which, she says, had
“little to no labour market value.”
In 2004, students were taking just 15,000 of those qualifications, and then the Minister for Schools changed the rules. The then Minister for Schools is now the hon. Member for Liverpool, West Derby, and as a result of those changes a certificate in nail technology counted as two GCSEs, a diploma in horse care counted as four GCSEs and, by 2010, where previously 15,000 such qualifications had been pursued, 575,000 were being taken, crowding out real study, driving rigour to the margins and holding back social mobility.
Incentives were created by government which, as Alison Wolf points out,
“deliberately steered institutions and, therefore, their students away from qualifications that might stretch (and reward) young people and towards qualifications that can be passed easily.”
She says also that, of the current cohort of children between the ages of 16 and 19,
“at least 350,000 get little to no benefit”
from such qualifications.
Gloria De Piero
I asked the head teacher of a really successful academy in my constituency what he thought about the issue, and he told me:
“We will have to limit success by choosing tiering well before students have hit their potential.”
Does the Secretary of State believe that that fantastic head teacher, who is taking his school from strength to strength, is an enemy of reform?
Michael Gove
I absolutely do not. I am sure that that school, like many of the schools in the hon. Lady’s constituency, is doing a fantastic job, and I am grateful that she has been so enthusiastic in embracing the academies reform programme.
As the hon. Member for Liverpool, West Derby acknowledged, the two-tier system that he talks about is not something that the coalition Government are planning to introduce, but something that the Labour Government presided over and we want to tackle. The problem is that we already have a two-tier GCSE system. As he acknowledged but then skated over, we have two types of GCSE—foundation and higher tier—in English, maths and science. We have a two-tier system of first-class and second-class qualifications. The higher tier allows anyone who takes a paper to get an A, B or C, and so on; the foundation paper is explicitly designed to limit student success. In ordinary circumstances, it is impossible for a student who enters for a foundation-tier paper to achieve a grade higher than C. It is impossible, in other words, for thousands of students to achieve the most basic grade that is respected by employers and will in many colleges allow them to progress to A-levels. The very act of entering a child for a foundation-tier paper at GCSE is a way of saying, “Don’t get above yourself—A-levels are not for you.” Even colleges that set a C grade as an entry requirement often demand a grade C from a higher-tier paper because they treat higher-tier and lower-tier GCSEs as separate qualifications.
A cap on aspiration was Labour’s policy for the 13 years it was in power, and this coalition Government are determined to remove that cap.
Mr David Ruffley (Bury St Edmunds) (Con)
According to the Organisation for Economic Co-operation and Development world rankings, between 2000 and 2009 this country fell from seventh to 25th in reading and from eighth to 27th in mathematics. Without my right hon. Friend’s very welcome radicalism, we will find it increasingly difficult to compete successfully in the global economy.
Michael Gove
I am grateful to my hon. Friend, who is absolutely correct that we need to have higher aspirations for all students. That is why, in our forthcoming consultation on how we can improve GCSEs and get world-class qualifications, we will suggest that we end the tiering of papers and ensure that this barrier—this cap on aspiration—is removed. That is genuine radicalism that embodies greater aspiration for all students. After 13 years of Labour when there was a cap on aspiration, under this coalition Government social mobility is at last advanced.
Mr Frank Field (Birkenhead) (Lab)
Given that practically all the studies show that the differences between children when they are first sent to school at the age of five are not changed by schools of any nature or under any exam system, why does the Secretary of State think that the introduction of his proposed reforms will change the life chances of the poorest children?
Michael Gove
I think that their life chances can change. I usually agree with the right hon. Gentleman on almost every issue, but in this area I differ with him. I do not believe that birth or even the early years determine a child’s fate. I have seen children from very similar backgrounds, often from troubled and chaotic homes, go into primary schools and then on to secondary schools with very different qualities of teaching and, as a result, have their outcomes transformed. The right hon. Gentleman has been a fantastic advocate for the growth of the academies programme, including in his own constituency. His actions suggest to me that while he is, of course, as determined as I am to improve the early years, he recognises that we can intervene at every stage to help children and young people to succeed.
Mr Field
Of course we need to intervene at every stage as effectively as possible. While all of us, thank goodness, have seen examples of children escaping their circumstances such as those the right hon. Gentleman cites, the truth is that if we look at students as classes we do not free whole groups of pupils.
Michael Gove
It is absolutely right that we make sure that we recognise that children are individuals and that teaching should, as far as possible, be personalised towards them. Children will not only have different abilities in different subjects but will mature at different stages.
That is one of the reasons why we wanted to ensure that we developed qualifications that are not only without the tiers that set a cap on aspiration but can be taken at different points in a child’s career. At the moment, far too many children fail to secure a GCSE pass in English and maths at the age of 16 and never manage to secure a meaningful qualification in maths or English thereafter. We want to learn from Singapore, where students at the age of 16, then 17, and then 18, secure those passes. We must not give up on children simply because they have not reached an appropriate level at the age of 16. That is why we are reforming post-16 education and why we are placing a requirement on students who have not secured those qualifications at the age of 16 to secure them at 17 or 18. The generation that had been written off under Labour is at last, under the coalition Government, receiving support.
Stephen Twigg
The Secretary of State said that the Government will abolish tiering in GCSEs. Will he clarify whether that is because 20% to 25% of students will take not O-levels, but the new CSE?
Michael Gove
The hon. Gentleman, not for the first time, has misunderstood. We want to ensure that more and more of our children do better and better.
There are two poles in this debate, neither of which I am happy with. One pole holds that only a minority of about 20% or 25% will ever be able to pass academic qualifications—the A stream, the elite. The other view, which was incarnated in Labour education policy in the past, is that to ensure that a majority of children pass the qualifications, we need to make them less demanding. I reject both those views. I think that more children can succeed if we make our exams more demanding, because we have a higher degree of aspiration and ambition for all our children.
I understand why the right hon. Member for Liverpool, West Derby and other Opposition Members find it so difficult to grasp this point. Sorry, he is an hon. Gentleman—there is no cap on his aspiration or ambition. They find it difficult because the only way in which they felt that they could succeed was to lower the bar. We believe that it is by raising the bar that we can deal with this issue.
Michael Gove
No, thank you.
We not only have a two-tier system in the split between foundation and higher tier GCSEs, over which Labour presided—
Michael Gove
Quite right. I did not come into Parliament to defend the status quo, unlike the small-c conservatives opposite. I am a radical who believes in liberating human potential. It is interesting that the hon. Member for Liverpool, West Derby and the hon. Member for Cardiff West (Kevin Brennan) are disciples of Keith Joseph. I regard myself as being in a slightly more radical, reforming, modern and liberal tradition than the late Member for Leeds North East, bless his soul.
As a reformer, it offends me not only that is there a division incarnated in our state schools, but that independent schools are opting for the IGCSE because the GCSE is not rigorous enough and that, as a result, there is a two-tier system between state and independent schools. There is also a two-tier system between this nation and other nations because other countries have more testing examinations at the ages of 16, 17 and 18, whereas we have incarnated low aspirations in the way in which we judge our young people.
Michael Gove
Un embarras de richesses, as they say in west Derby! I give way to my hon. Friend the Member for Ealing Central and Acton (Angie Bray).
Angie Bray (Ealing Central and Acton) (Con)
As my right hon. Friend may know, Acton high school is about to open a sixth form. The most important thing for the students who study there is that we give them the best possible start as they pursue their A-levels. Does he agree that more rigorous preparation, whether through an enhanced GCSE or an O-level, would help them to get through their A-levels and go on to university?
Michael Gove
My hon. Friend makes a characteristically acute point. One problem with the current system is that GCSEs are not, in many cases, adequate preparation for A-levels, and A-levels are not adequate preparation for university, particularly when our students are compared with those from other jurisdictions. That is because, notwithstanding the incremental improvement in state education over the past 15 years, other countries have reformed their education systems faster than we have reformed ours. We have to match them and that means reform.
Mr Graham Stuart (Beverley and Holderness) (Con)
Will the Secretary of State give way?
Michael Gove
I am happy to give way to the Chairman of the Select Committee on Education.
Mr Stuart
The Secretary of State wants more rigorous exams that more people pass. That is an aspiration that we would all share, but it is not immediately obvious how it is to be brought about. Today, 42% of children do not get five good GCSEs including English and maths. If we make the tests more difficult, it is not immediately obvious how more people will pass them. I welcome that he is aiming higher and that we will have more rigour, but we need more detail. He is very good at explaining what is wrong with what Labour did, and I agree with every word, but he is not so good at giving us the detail of precisely what this Government plan to do.
Michael Gove
It is perfectly clear what we need to do to get more children to pass more exams: we must press ahead with the reforms that we have introduced to create more academies and free schools, to get better teachers in our schools, to have continuous professional development in which we invest in the very best people, to expand the Teach First programme, and to ensure that we have a relentless focus on raising the bar. Complacency on performance in our schools will lead us only to continue to be backmarkers. One point I would make to the Chair of the Education Committee and the House is that some schools manage to do every bit as well as schools in Singapore by getting 80% or more of their students to five good GCSEs or equivalents. We should ask ourselves why more schools are not doing as well as them. The whole point of the Government’s education reforms is to ensure that we raise standards for all.
The Chair of the Committee asked what the Government will do to change things. We have already taken some steps. We have banned modules and re-sits, and introduced the English baccalaureate to put a stress on rigorous subjects. It is not clear whether the Opposition agree with us. We have explicitly said that we believe there is a case for one exam board per subject in English, maths and science. The Opposition inched towards agreeing with us, and I hope we can reach a consensus.
One problem I have in attempting to tease out where the Opposition stand in order to build the consensus we all want is that whenever the Government put forward a case for reform, it is difficult to know where the hon. Member for Liverpool, West Derby stands.
Ms Gisela Stuart
The Secretary of State mentioned Alison Wolf. He wants to be the great radical, but he must recognise that he needs to widen the skills base. He must show the House that he is attempting a dual system rather than a two-tier system if he prays in aid Alison Wolf.
Michael Gove
I would never accuse the hon. Lady of falling into the fatalist camp, but some do. The fatalist position—that we cannot improve—was touched on by my hon. Friend the Member for Beverley and Holderness (Mr Stuart), the Chair of the Education Committee, but I believe Andrew Adonis, who said: “The fatalists who say”—[Interruption.] As Front Benchers say, “If the cap on aspiration fits, wear it.”
Andrew Adonis has said:
“The fatalists who say that countries with strong academic school traditions cannot create, in a short timescale, quality vocational education institutions and pathways with real prestige should take note. It is being done abroad and must be done here.”
It is being done here through the introduction of university technical colleges, and through the development of studio schools, which were introduced by the Government of Andrew Adonis and expanded massively by this one. It is also being done with a review of vocational qualifications, which will mean that apprenticeships are at last possessed of the rigour that all hon. Members might expect, but which did not happen under the previous Government. Thanks to the Minister for Further Education, Skills and Lifelong Learning, we have extended a requirement so that all apprenticeships will be for 12 rather than just six months. We have also extended the important work-related learning in apprenticeships. I acknowledge that there are improvements to be made, but the Holt and Richard reviews will ensure that we make them.
If those improvements are to be enduring and if we are to succeed, if the university technical colleges and studio schools are to succeed and take root, and if the changes we are making in the academies programme are to succeed, such as the welcome addition of the Liverpool college—an independent fee-paying school—to the state sector, which was welcomed graciously by the hon. Member for Liverpool, West Derby, we need, as Andrew Adonis pointed out today, a consensus in the House.
In calling this debate, the hon. Gentleman has asked Parliament to approve certain propositions. Let us try to approve certain propositions on where Labour stands on critical issues.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
It’s not about Labour; it’s about you.
Michael Gove
It is about the House. When the hon. Member for Liverpool, West Derby was interviewed just a couple of weeks ago, he was asked about academies. He said that one of the freedoms Labour extended to academies is freedom over the curriculum. He said we should extend that to all schools. He is therefore for the academies programme. In the same interview, however, he said: “We have now got 2,000 schools that are academies. I do not think that is desirable. I do not think that is a good system.” He was for our academies programme before he was against it.
Andrew Adonis was quoted as saying that free schools were Labour’s invention. When the hon. Gentleman was asked about free schools, he said: “Yes, free schools are being established, some of which will be excellent.” So he was asked, “Will you create any more?”, and he replied, “That we need to look at. We need to look at that.” It was then put to him that, in fact, before looking at the policy, he had voted against it.
Michael Gove
Yes, in a minute.
The hon. Gentleman then said, “Our policy was to oppose free schools, and we voted against them.” So he was for it before he looked at it and before he was against it. Perhaps he might now illuminate the House on his position towards free schools—position 1, in favour; position 2, don’t know; or position 3, against?
Stephen Twigg
If the Secretary of State wants to ask me questions, we can always swap places. I would be happy to swap places and answer his questions, but this is a debate where he has to defend his position. Lord Adonis, whom he mentioned, has been clear in the past few days about what he thinks of the Government’s latest proposals to bring back CSEs. Will the Secretary of State rule out bringing back a new version of the CSE?
Michael Gove
I have explained exactly what we will do, which is to strengthen GCSEs and world-class qualifications. Nothing we want to do is a step backwards; everything we want to do is a step towards the high-class qualifications that other countries have. I have ruled out as clearly as I can any two-tier system. I have said that we want to move to one tier and a set of high-level qualifications. I can bring clarity to the Government’s position but not to the Opposition’s.
Michael Gove
No, no.
We want to know whether, as we make changes to the curriculum, the hon. Gentleman will back us on modern foreign languages, for example.
Michael Gove
The hon. Gentleman says yes, but his position on modern foreign languages has changed over time. As I pointed out, he said in July 2004:
“In the knowledge society of the 21st century language competence”
is “essential.” Then, in September 2004, he said, “We don’t want to go back to the old days when we tried to force feed languages to students.” Then, when he was asked in May 2011 what his real position had been on languages in 2004, he said: “I had mixed views.” Given this lack of consistency, can we be certain that his position now, in backing modern foreign languages, is a consistent one? And will he assent to our other proposals? Does he believe that we should get rid of modules at GCSE and end the re-sit culture? Yes or no? A simple nod will suffice. [Interruption.] No, he is not going to get into it. No consistency! He is uncertain. Is he for it, or against it? What about the English baccalaureate? All he needs to do is nod. Will he support the English baccalaureate? We know that the hon. Members for Hackney North and Stoke Newington (Ms Abbott) and for Birmingham, Edgbaston (Ms Stuart) do.
Tristram Hunt
I support the English baccalaureate. But my question is this: does the Secretary of State think the Daily Mail reported his intended reforms accurately and fully?
Michael Gove
I am grateful to the hon. Gentleman for supporting the English baccalaureate. The frock-coated communist has become the grey-suited radical. One of the things that matters to me is whether the hon. Member for Liverpool, West Derby supports the English baccalaureate. Yes or no? [Hon. Members: “Answer the question.”] After my appearance at Leveson, it probably ill behoves me to pass commentary on the press in this country, other than to say that I support the right of a free and rigorous press to report and comment on things with their usually pungency.
Does the hon. Gentleman support our position on equivalents? Does he support stripping them out of the school system?
Stephen Twigg
I know that the right hon. Gentleman wants everything to be black and white, but sometimes there is nuance in these debates. One of the equivalents I certainly do not support—this is the issue I tried to intervene on earlier—is changing some of the diplomas, including the engineering diploma. The excellent JCB academy, the first university technical college, has lobbied me strongly to say that it disagrees with how the Government have downgraded the engineering diploma. There is a real risk that vocational and practical subjects will be crowded out of our schools at a time when we need more young people getting good qualifications in engineering and other areas.
Michael Gove
I am grateful to the hon. Gentleman for asking about one of the more than 1,700 vocational qualifications. So he supports the engineering diploma being an equivalent. Does he support nail technology or horse husbandry or any of the others? Again, answer comes there none.
The hon. Gentleman says that there is nuance in his position. I say, rather than nuance, there is an absence of clarity, without which we cannot secure consensus. Does he believe that we should continue with foundation and higher-tier GCSEs? Yes or no? A simple nod would suffice. Again, answer comes there none, but we probably know what he thinks. When he was a Minister in the Department for Education and Skills in 2003, the “Excellence and Opportunity” White Paper said that:
“the GCSE has become a qualification at two levels: Level 2 (or grades A*–C) is viewed by the public as success, while Level 1 (or grades D–G) is seen as failure. For many young people achieving Level 1 is demotivating. Some young people prefer not to reveal that they have taken GCSEs than admit to a lower grade. This undermines motivation and discourages staying on”.
That was the view of the hon. Gentleman and his Department in 2003, but they took no action to deal with the problem. At last, 10 years later, the coalition Government are taking action to end the problem of failure, to ensure that we no longer have an examination system that is demotivating and to end a system that discourages staying on.
Nia Griffith
Does the Secretary of State accept that with the foundation and higher-tier system there was always the opportunity for pupils to transfer, and there was always a motivation to try to drive pupils to get better than a D by getting a C? How will the new system of separating a CSE and an O-level examination allow a pupil to be pushed so that they can attain the higher level—the O-level qualification—if they have already started on a CSE syllabus, which is significantly different?
Michael Gove
I have to ask the hon. Lady where she has been for most of this debate. At no stage have we talked about separating children at the age of 14, and at no stage—
Liz Kendall
The Secretary of State is supposed to be a man of his convictions. Parents and pupils in my constituency want to know whether the Daily Mail report was accurate—yes or no?
Michael Gove
I am grateful to the hon. Lady for asking her question. I am a man of my convictions, and my convictions are that we need to improve our GCSE system. That is why we have outlined proposals that will ensure that we change the way in which children sit qualifications at the age of 16. In place of a two-tier system, with GCSEs split between foundation and higher-tier, we will have one qualification for all students. In place of competing exam boards where there is a race to the bottom instituted under the Labour Government, we will have exam boards that will be asked to compete to go to the top, and all those exam boards will be asked to produce qualifications that are more rigorous.
Instead of 60% of students being assumed to succeed and 40% being written off, we will set a benchmark whereby at least 80% and a rising proportion of students succeed over time. Instead of a flight away from rigorous subjects like history, geography and modern foreign languages, physics, chemistry and biology, we will ensure that those subjects are incentivised in league tables and accountability measures. We will ensure as a result of these changes that the drift towards mediocrity that the last Government’s qualification system incarnated is finally addressed.
Andrew Selous (South West Bedfordshire) (Con)
I applaud the measures my right hon. Friend has taken more greatly to value spelling, punctuation and grammar. In that respect, does he share my concern about a school I came across recently whose policy was to correct no more than three spelling mistakes in any piece of work? Does he agree with me that that is a false kindness to children who might put in with a CV a covering letter with spelling mistakes, which is then put in the bin with the child’s potential being wasted?
Michael Gove
My hon. Friend is absolutely right. One change we have already made to GCSEs—again, I do not know whether or not the Opposition back it—is to reintroduce marks for spelling, punctuation and grammar so that all students know that rigour is demanded at every point.
During the course of this debate—including the speeches from the Front Bench and subsequently—we have not heard a single constructive proposal from the Opposition on how to change exams. By contrast, the coalition Government have spelled out steps to ensure that more students take more rigorous subjects; steps to ensure that we deal with a race to the bottom and the wrong type of competition; steps to ensure that we remove a cap on aspiration; steps to ensure that we match the quality of the International GCSE and Singapore O-levels.
Michael Gove
I shall not take any more interventions at this stage.
The reason for doing that is that we need to ensure that our curriculum and qualifications system moves on from being one that, as I mentioned earlier, has been trapped by two opposing and equally out-of-date views: either that only a minority can succeed, or that, for a majority to succeed, we have to lower the bar. I believe we can ensure that more children succeed by ensuring that the policies of the coalition Government are implemented with vigour and energy. That is why we need to press ahead with the academies programme, it is why we need to invest more in Teach First, and it is why we need the changes in education for children with special educational needs that are being introduced by the Minister of State, Department for Education, my hon. Friend the Member for Brent Central (Sarah Teather).
For all those reasons, I commend the amendment to the House, and I look forward to the vote.
Madam Deputy Speaker (Dawn Primarolo)
As all Members can see, many of them wish to take part in the debate. We will not be able to fit everyone in without a time limit, so all Back-Bench contributions will be limited to seven minutes. If interventions slow us down even further, it may be necessary to shorten that limit.
Pat Glass (North West Durham) (Lab)
I think that we must give the Secretary of State’s speech eight out of 10 for style, but nought out of 10 for content. It was a very good speech which, I am afraid, did not deal with the issue in hand at all. The Secretary of State was asked on numerous occasions whether the Daily Mail had reported him correctly, and he was completely evasive. He was asked again and again how the abolition of GCSEs would raise the bar, and I have to say that his responses were divisive, evasive and at times even destructive.
What is so important about GCSEs is that they are examinations for all pupils of all abilities. They were introduced in 1988 by Margaret Thatcher and Kenneth Baker in response to huge unhappiness, largely among parents. Those of us who were in the education system at that time will remember that it was middle-class parents whose children were sent to underfunded secondary moderns and forced down the route of CSEs who brought about the abolition of CSEs and the introduction of the GCSEs that we have now, which have brought together the best of what was in the CSEs and the old O-levels.
That approach was welcomed by the whole education community, but it seems likely that it will be abolished on the say-so of the Secretary of State, who has apparently not consulted anyone on his proposal. As far as I am aware, there has been no consultation with pupils, parents, teachers or the wider education community. The Secretary of State convened a two-year curriculum review group consisting of the great and the good to consider the issue of the curriculum, but appears subsequently to have completely ignored everything said by that group, choosing instead to develop an education policy that has no evidence base and is founded on personal prejudice.
So what is the evidence behind the Secretary of State’s review? We have heard a lot from him about our cascading down the OECD PISA scales for English, maths and science. I am sorry, but no matter how many times he says that, it is simply not true. In the three years leading up to 2007 many more countries entered their data in the PISA tables, so the outcomes in 2007 did not measure like with like. When the Secretary of State talks of cascading down the scales, what he is really talking about are a couple of percentage points in a table that would now include many more countries than it did at the time when it was last drawn up. That is not measuring like with like. If the Secretary of State were a teacher instead of a journalist looking for the best negative headline, he would understand that.
The Secretary of State used Singapore for his evidence base. The Education Committee visited Singapore last year just to see what was happening there. It must be said that there are many good things in the Singapore system, but what he failed to tell us was that in Singapore education is not free, and is not compulsory for children beyond the age of 11. When PISA measures the outcomes of 16-year-olds in England against those of 16-year-olds in Singapore, it is measuring the outcomes of all 16-year-olds in England against those of some 16-year-olds in Singapore. Again, like is not being measured with like.
In Singapore the curriculum is restricted to English, maths and science, and there is no creativity whatsoever. Here we have a broad, advanced curriculum. Again, like is not being measured with like. The Secretary of State failed to tell us that in Singapore seven out of eight children have up to three hours of additional tuition every day paid for by the parents, over and above the tuition that is received in schools. So again, like is not being measured with like. He also failed to tell us that the Singapore system is one of the most centralist education systems in the world, where the Minister for education dictates what is taught, how it is taught and when it is taught. It goes so far that head teachers do not even apply for places in schools; they are allocated a school and they are moved on every three years—and they have no say whatever about which school they move on to.
In using Singapore to provide evidence for his plans, the Secretary of State is comparing our state-funded, diverse, teacher-led, innovative, autonomous system with a broad and balanced curriculum that caters for all children up to the age of 16 and beyond with an almost Soviet-style centralised system where education is not free, compulsion ends at 11 years of age and there is a highly restrictive curriculum. That is not measuring like with like.
The Secretary of State also looked for his evidence base to polls telling him that parents want to see a return to O-levels. He may well cite the recent YouGov poll that shows that 60% of those who are old enough to have sat the old O-level want to see a return to a two-tier system. However, that is what we would expect from any poll that asked questions of people over 40; they hanker back to what they know. The YouGov poll also shows, however, that 40% of those who sat O-levels do not want to see a return to a two-tier system, and that 65% of those who took GCSEs do not want to see a return to a two-tier system either.
I accept that the system we have is not perfect, but I do not believe that the answer is to return to qualifications that were designed a lifetime ago for a world that no longer exists in which children without qualifications were able to find jobs in low-skill industries—in factories, mines, shipbuilding, steel-making and agriculture. That world no longer exists. Today’s young people need skills that were not previously taught: resilience and reasoning skills, negotiation skills, team-working, speaking skills, interpersonal skills. Those are the skills that employers are telling the Education Committee that they need. They are taught in private schools; we should be making time for them in our state schools.
In designing our state education system, we should say, “If it’s not good enough for my child, it’s not good enough for your child.” That should be our guiding principle in designing an education system, rather than, “Outcomes for some at the expense of others.”
Mr Graham Stuart (Beverley and Holderness) (Con)
It is a pleasure to take part in this debate, and to rebut allegations of fatalism thrown at me by the Secretary of State. I hope I am no more of a fatalist than he is. I have observed in many of our debates that able politicians, on both sides of the House, are brilliant at describing and critiquing the inheritance from the Labour party and at painting a picture of the kind of country we would like to be, but our job in this House is to address the third aspect and examine the route map to get from position A—not very good—to position B, or nirvana and where we want to be. Too often in our education debates in this Chamber, we spend an awful lot of time on aspects one and two, and not a lot on the third aspect.
Following the Secretary of State’s speech, I am a little clearer about what his plans are. I think he has said—I hope he will intervene on me if I am incorrect—that the Daily Mail was mistaken, and that there is not going to be a return to a two-tier system. He did not, for whatever reason, try to spell this out, but it sounded as if he was talking about a more rigorous GCSE. It is progress that the Labour spokesman, the hon. Member for Liverpool, West Derby (Stephen Twigg), acknowledges that there was grade inflation during his party’s time in office, and the Secretary of State makes powerful points about equivalences. The Government have certainly had my support in tackling that and in tightening up in various ways, such as by removing entirely the vocational qualifications that Alison Wolf identified as offering no real labour value to people.
So what is the vision? If we were just talking about a more rigorous GCSE with a removal of the perverse incentives to dumb down over time—it has now been acknowledged that that was the case, even by Labour—I think there would almost be cross-House consensus. There is a recognition by Labour that it did not get everything right, even if Labour Members cannot quite bring themselves to say that yet; it is fair enough for the Secretary of State to tease the shadow Secretary of State for his failure to do so. It seems that the Labour party is beginning to recognise that a lot of the Secretary of State’s moves towards rigour have been correct. However, if we are to have a beefed-up GCSE, and if we are not moving towards a system that is more two-tier than what we have now, I would like to see more detail. I know that a consultation paper is coming, but it seems disappointing that we did not get more detail from the Secretary of State today.
Dr Lewis
I am very grateful to the Chairman of the Education Committee for giving me the opportunity to ask the question that I was hoping to ask of the Secretary of State. Given that both sides now seem to accept that there has been a problem of grade inflation, could we pay a little bit of attention to the marks that underlie the grades? One of the problems that I felt many years ago with the introduction of grades for O-levels, rather than marks, was that it did not matter if somebody got 70%, 80% or 90%: anybody who reached a certain level—70%, I think—still got the same top grade. This was the beginning of an inflationary process. Would not the stating of actual marks—
Madam Deputy Speaker (Dawn Primarolo)
Thank you. That is quite enough. That is a very long intervention in a very short debate.
Mr Stuart
Fortunately, my hon. Friend takes me to the issue I wanted to address next, which is the administration of examinations. Unfortunately, however, I am unable to comment on that now. The Education Committee has conducted a long inquiry into precisely that issue, looking at the trade-offs between a single board, competition between boards, franchising by subject and various other ways of cutting it. We have concluded our report, but because of the examination season—whoever leaked this story to the press last week was obviously less sensitive than us to the fact that children were taking exams—we decided to delay the publication of our report until 3 July. So, I am afraid that, until then, I cannot engage in that issue. However, we have looked at it in depth, and I hope I am not in contempt of Parliament if I say that the Committee came up with a unanimous recommendation and report. I hope that those on both sides of the House will wait until at least 3 July before allowing any of their opinions to solidify further.
If the Secretary of State is talking about a more rigorous GCSE system—whether it is given a new name or not—which is effectively a single examination system, as we have now, that would rather destroy the entire premise of my speech, leaving me short for words.
Mr Stuart
Time for a coffee and to let others speak.
However, over the last two years the Government have made a series of announcements looking to put greater rigour into the system. They announced the ending of modularisation of GCSEs, tackling the culture of re-sits, ending equivalences and promoting the English baccalaureate, which, of course, rewards those students who achieve good GCSEs in English, maths, two sciences, a language and either history or geography. However, at the end of that process, if the leak is to be believed—I am in a state of confusion now—they suddenly announced the scrapping of GCSEs altogether. That does not seem terribly coherent.
Just last June the Secretary of State said the following about GCSEs:
“So next year the floor will rise to 40 per cent and my aspiration is that by 2015 we will be able to raise it to 50 per cent. There is no reason—if we work together—that by the end of this parliament every young person in the country can’t be educated in a school where at least half of students reach this basic academic standard.”
He went on to say:
“A GCSE floor standard is about providing a basic minimum expectation to young people that their school will equip them for further education and employment.”
That was the direction of travel then; suddenly, a year later—if we are to believe the Daily Mail—that has been scrapped. On the other hand, if I understood correctly what the Secretary of State said today, that was an entirely false idea and there is no plan to do such a thing at all.
Kevin Brennan
I think we are all trying to decipher what the Secretary of State said. Is it the hon. Gentleman’s understanding that the Secretary of State said that he would expect 80% of pupils to sit this new single-paper GCSE, and if so, what does he think ought to happen to the other 20%?
Mr Stuart
As I have said, I think that increased rigour throughout the system is necessary and important. I think that the accountability system for schools needs to be changed so that it does not have perverse outcomes, such as putting people on courses that lead nowhere but allow the institution to meet its benchmark—we on the Committee have been critics of that for some time. Perhaps the announcement, or the leak, suggests a change in view by the Secretary of State on that front.
If we look across the system, where we need more rigour and we need to ensure that we end the perverse incentives, we find that the biggest problem we face in a global knowledge economy, where the first rung of the ladder keeps rising up, is what we do about people who are not getting those basic skills and that basic education. The Government have two priorities for education: raising standards for all; and closing the gap. Those are right, but when setting priorities it is terribly important to show what the top priority is. I am yet to understand how the changes specifically will help the least able, but then again I am unclear as to what exactly the proposal is—even if I have not quite fallen to the level of the hon. Member for Cardiff West (Kevin Brennan), who of course got so confused about percentages last week.
Mr Stuart
That is a lot better than I did, so I will leave it there.
Ofqual now has a statutory duty to ensure two things, one of which is that we maintain standards over time. We shall see whether it does its job right; it is relatively newly empowered and we need to give it the chance to see whether it can reverse this grade inflation and keep us up there with our international competition. Has it said that there needs to be a restructuring of the examination system, not necessarily the administration of it, but the whole quality of it and the possible tiering of it? I would like to hear from the Secretary of State about that.
I have only a minute left, so I shall finish by repeating that the central problem is what we do about the young people, all too many of whom are now not in education, employment or training—NEET—and are being left behind. A more rigorous system is great, but the only way to raise standards ultimately—this is the only thing that matters in education—is through quality of teaching. We need to ensure consistent, high-quality teaching and an excellent institution for everyone, everywhere. At the moment, there are all sorts of incentives in the accountability system to focus on borderline pupils at the expense of those at the bottom, and within the system for people to move from a school that is very challenging to one in the leafier suburbs—a much more congenial place for many people to teach in. We need to look at re-gearing our whole system in a way that the Labour Government failed to do, despite efforts in that direction, to ensure that we provide opportunity for all, because both socially and economically we cannot afford to have so many children left behind, unable to get on the first rung of the economic ladder and thus be full members of our society. If any proposals from the Secretary of State are driven by that central insight, he can certainly look forward to my support.
Liz Kendall (Leicester West) (Lab)
In 2006, New College school in my constituency was the worst secondary school in England for truancy, the worst in the value-added league tables, and fifth from bottom overall for GCSE results. Just one in 10 pupils taking GCSEs at the school scored five grade Cs or better, while the truancy rate was running at more than 10 times the national average. I was therefore very proud when last Friday New College was named by the Specialist Schools and Academies Trust as being in the top 10% of improving schools in the country. The number of children getting five A to C grades at GCSE including in English and maths has gone up by 450%, and the number getting five A to C grades overall has gone up by a staggering 700%.
Jane Brown, the head teacher at New College, says that three key things have helped it to achieve those phenomenal results, and that the first and foremost is having the right teachers—moving on those who were not up to scratch and replacing them with the very best. The second thing is the focus and financial support from the national challenge programme, which has enabled New College to get external support, including from the ex-head of education at Nottingham, and pay for additional resources, such as tutors to give intense one-on-one support in English and maths. The third thing is not allowing the school to get blown off track by different Government initiatives, and instead focusing consistently and relentlessly on what really matters to help children learn, aspire and achieve. The teachers, support staff, volunteers and students at New College deserve huge congratulations on their hard work, commitment and success. Although they are rightly proud of their achievements, they are not complacent, and they are determined to make even greater improvements in the future.
I have spoken to Jane and to some of the other heads at secondary schools in Leicester West about the Secretary of State’s plans—or, at least, reported plans—to change GCSEs. They think—and I agree—that a single exam board could be a positive step to help tackle unhelpful competition between exam boards and stop some heads thinking, “Which exam will get the best results for my school?” rather than, “How can we give our students the best education for life?” Achieving A grades in GCSEs should be really demanding, and with a single syllabus there is no reason that cannot be achieved. That is something we should be considering.
Jane and the other heads do not support a return to a two-tier system where children are told at age 14 what they can and cannot achieve. Telling some children before they have had a chance fully to develop that they are not good enough to do O-levels will not boost their self-esteem, but crush it. Telling them they can manage only CSEs, which will inevitably be a less valued qualification, will not raise their achievement, but cap it. We should not be putting a ceiling on children’s aspirations; we should be blasting those ceilings away.
This proposal is a terribly backwards step from a Secretary of State who does not seem to understand what it takes to help children from chronically deprived backgrounds to aspire and achieve. Jane Brown, who has proved through her hard work and effort what can and must be done to turn schools around, says labelling children as failures so early would be disastrous. Instead of helping schools such as New College, which have created a “yes you can, yes you will” culture for all the students all the way through to the end of year 11, the Government’s proposals will return us to the days when some children ended up believing that they could not aspire and achieve and that they were failures, particularly if they came from very disadvantaged backgrounds. That is why I urge the Government, in the strongest possible terms, to rethink their plans. If the Secretary of State would like to visit New College and see what it really takes to turn around a school that was in a terrible state some years ago, so that it is now doing really well for the people I was elected to represent, I am sure that he would be welcomed.
Damian Hinds (East Hampshire) (Con)
Young people are working harder in our schools than ever before, guided by probably the best ever generation of teachers. Certainly, lessons are planned and progress tracked in a way that it never was when most of us were at school. Young people are also examined more, at considerable cost to our schools—the average cost of exams to maintained secondary schools was £44,000 in 2003 and £96,000 by 2010. Those pupils and teachers are being let down by a system that has allowed the erosion of confidence in their qualifications.
There is massive pressure on schools, as we all know, from the five-plus C-plus measurement in league tables. Although it is true, as many right hon. and hon. Members have said, that there have been real improvements in educational attainment, it is also true that ever since those league table ladders were created, ingenious schools have found ever more ingenious ways of getting up them, aided and abetted by public policy and the exams industry, with things such as double awards, short courses, half GCSEs, new subjects and, of course, the granddaddy of them all, equivalents, which make a 19 percentage point difference in the league tables. If equivalents are included, 75% of children get five or more GCSEs at grade C or above, but that goes down to 56% if those equivalents are taken out.
Like economic growth, improvements in grade have both a real part and an inflationary part. The real growth comes from better teaching, better teachers and more engaged parents, and I think we have see ample evidence of those things.
Gloria De Piero
In that case, would the hon. Gentleman listen to a maths teacher from my constituency and the 11th most improved school in the country from 2012, who says:
“The current GCSE system allows every pupil to achieve beyond their potential and is fully recognised by employers regardless of tier”?
Damian Hinds
I am always happy to hear from distinguished maths teachers, but I am not quite sure how the hon. Lady’s intervention relates to or contradicts what I just said. I was saying that there have clearly been real improvements, but I do not think there is anyone left, including that distinguished maths teacher, who doubts that on top of those real improvements there has been significant grade inflation, as acknowledged by the shadow Secretary of State.
There are four key elements to the grade inflation. First, there has been the gradual easing of what we used to call the syllabus—now called the specification—on the part of the exam board. Secondly, at the school end, there has been teaching to the test. Thirdly, there have been all sorts of elements in the design of examinations, including modularity or what is now called unitising, early takes, re-sits, the use of calculators and so on. Fourthly—this sounds a bit dull and technical but it is very important—there is the statistical tolerance in the results. Every year, there is rightly a normalisation to say what results, for example, a key stage 4 cohort should get relative to what they achieved at key stage 2, with perhaps a 1% tolerance either way on a finding—but of course the tolerance only ever goes up. That is the most pure form of grade inflation.
Mark Tami (Alyn and Deeside) (Lab)
The hon. Gentleman is making these points about how people work within the rules to maximise the effect, but even when I was at school there were children who were thought to be marginal when it came to getting an O-level and were dissuaded because it was thought that they would skew the results and do the school down. Let us not pretend that this is something new.
Damian Hinds
The hon. Gentleman is very youthful looking but I am not sure the league tables were in place when he was at school, so I find that point slightly confusing.
Does it matter that there has been grade inflation? I think we have all heard from higher education institutions, employers in our constituencies and members of the public that it does matter. One witness who gave evidence to the Education Committee’s exams inquiry said they did not believe that employers expect to be able to compare exam results over time, but I have news for him: that is exactly what employers, higher education institutions and parents expect to be able to do, and quite justifiably so. However, the system does not support them in doing that. Although there have been many factors at play with grade inflation, there are three root causes among which there is interplay: the pressure on schools to deliver the results; the competitive land grab for volume market share on behalf of the competing exam boards; and a too malleable system that attempts to put everything on a single scale when everything does not necessarily fit together.
I think we have moved on a good way in this debate. Over the past few days, the phrase we have heard most often on this subject has been about not wanting to return to a two-tier system, but increasingly there is a recognition that there are two tiers now, with 40% of youngsters being left behind. One could even argue that there is a third tier, with the young people who are put on to other qualifications that are of so little value to them in later life. Even in the purer sense, within a single-subject GCSE there are the two tiers of the foundation level and the higher level. Although this has been talked about much today, it is in many ways the best kept secret in education. I keep finding, when I talk to the parents of 14 and 15-year-old pupils, that they are not aware of that distinction. In many ways O-levels and CSEs never went away—they were just rebranded, but into one thing.
Let us take the example of GCSE maths. If someone is entered for GCSE maths at foundation level, that decision will be taken when they are in year 10 and the highest grade they can then achieve is a grade C. That sounds very much like getting a CSE grade 1 in the 1980s. And it is not just maths. Other subjects that are tiered include biology, physics, chemistry, general science, classical civilisation, Latin, English literature, English language, geography and modern foreign languages— almost every one of the core academic subjects that most of us did at school, with the single exception of history.
Liz Kendall
Will the hon. Gentleman explain how having O-levels and CSEs would make that two-tier system better?
Damian Hinds
I have a great deal of respect for the hon. Lady, who is an erstwhile colleague of ours on the Select Committee, but I am not proposing a return to anything from the past. What we must do is build an exam and qualification system that is fit for the future and reflects the new reality in which the participation age is 18, not 16. We must make sure that all young people can reach their potential at 15 to 16 and that if they have not done so by that point, particularly in key subjects such as English and maths, they go on to do so at 16 to 18 and beyond.
Damian Hinds
I am sorry, but I am running very short of time.
There is a bunch of complications in this two-tier system—for example, it applies to some subjects but not others, and there are even subjects for which students can enter one paper at foundation level and still score a grade B or A. There might be good reasons for all that, but one thing this system is not is clear. I understand the argument that all must have prizes, and in some ways that seems like a good thing, but it does young people no favours to kid them that the worth of the qualifications they are taking is greater than it really is. Instead, we must strive so that all merit prizes. We should aspire to the vast majority of children getting those key subjects aged 15 and 16, but as I said in reply to the hon. Member for Leicester West (Liz Kendall), there must be the facility to return to them at age 16 to 18. One of the key points in the Wolf report was the lack of post-16 focus in our country compared with others on English and maths in particular—subjects that command a huge premium in the workplace.
Damian Hinds
I am sorry, but I cannot.
For our country, we need world-class exams to win in the fiercely competitive new global economy. For our young people, we need worthwhile qualifications with the right breadth, depth and usefulness that will serve them well in their work and in their life.
Mr Gordon Marsden (Blackpool South) (Lab)
The Secretary of State ducked and dived round the Daily Mail’s ring like a bantamweight, but that did not disguise the fact that he has still not this afternoon come out and denied the newspaper’s central thesis of a return to CSEs. The reality of a return to a form of CSEs and a form of selection is a return to educational apartheid. The Secretary of State, like many others, including me, went through a selective system and did well out of it; we went there and got the T-shirt, but I will never forget the shiver that went down my spine as I did my 11-plus and nor will many others. The truth is that that system failed too many of our young people, and 20 years as an Open university tutor taught me that the backs of many of the people who had a second chance with the Open university were scarred by that experience.
When the shadow Secretary of State, my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg), talks about a cap on aspiration, he is absolutely right. In 2010, the Secretary of State said that Dickens and other authors should be studied in English lessons to improve young people’s grasp of the English language. As this is the year of Dickens, perhaps the right hon. Gentleman will reflect on the words of the Ghost of Christmas Present to Scrooge in “A Christmas Carol”:
“Oh God. to hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust.”
It is the hungry brothers and hungry sisters in the dust we need to be concerned with.
The Secretary of State ducked elegantly around the subject, but I know how important GCSEs have been in my Blackpool constituency—an area with low skills and historically modest academic achievements. They give students the ability to bridge the academic and vocational divide and to develop skills in creative, leisure and tourism activities that are vital to keep people in the local economy, and the flexibility of mind that comes from coursework as well as exams. What use to them would CSEs be? What use, for example, would CSEs be in special schools? That is another aspect the Secretary of State should take into account.
My hon. Friend the shadow Secretary of State rightly referred to the comments by Chris Cook in the Financial Times and I shall not expand on them, except to say that Mr Cook made the important point:
“Take a look at the belt from Liverpool to Hull—the CSE towns of tomorrow.”
Blackpool will be one of those towns and I have no wish to see it go into the Secretary of State’s pot.
The Secretary of State says he is a man of convictions, and I agree. He is guilty as charged, and the charges should include the following: scrapping vocational diplomas in the system regardless of the lack of concrete plans to involve business in the curriculum; introducing an English baccalaureate that gave no space to vocational education; creating havoc in the careers system by taking £200 million out of face-to-face communication; failing to have any policies on the sort of life skills and communication skills that were discussed earlier; and not listening to his colleagues in other Departments, not least the Minister for Further Education, Skills and Lifelong Learning, on vocational issues. The Secretary of State spoke about world skills. Would the WorldSkills people who won gold medals for Britain last October benefit under his two-tier system? Absolutely not.
Like Robert Louis Stevenson, the Secretary of State was born in Edinburgh. Perhaps that explains why, from time to time, he appears to resemble one of Robert Louis Stevenson’s famous characters, Jekyll and Hyde. One day he can craft an eloquent paean to vocational aspiration, but the next day he talks about micro-management, which is not what we want to hear. Young people and schools are not train sets to be broken up every few years and re-arranged in a different pattern.
Both the Secretary of State and his Minister of State, the hon. Member for Bognor Regis and Littlehampton (Mr Gibb) sit on the Front Bench like relics from the past. As Talleyrand said of the Bourbons, they have forgotten nothing and they have learned nothing. They have forgotten nothing about the failures of the past, but they have learned nothing, as is clear from the way they wish to turn back the clock.
The Secretary of State spoke of being a radical and spoke in the tone of a mad Maoist. I do not know if it is possible to be a mad Maoist Bourbon, but he is making a passable attempt at it. I do not know whether it is a leadership manoeuvre or the latest quaffing of the potion from R. L. Stevenson that turns him periodically into Mr Hyde. I do not know and, frankly, I do not care. What I care about passionately, as all Members of the House should, is that the life chances of hundreds of thousands of our young people should not be jeopardised by his “Mad Monk” half-hours.
If the Secretary of State wants to look at reforming GCSEs, at the balance between coursework and examinations, and how we make GCSEs work properly, we can help him with that. He could do worse than turn, for example, to my hon. Friend the Member for Huddersfield (Mr Sheerman), who has done a great deal of work in this area.
We should be building bridges in education, not burning them. We should be offering young people, as we offer others, every opportunity to show that they can deploy a variety of skills, not putting them into blocks on the line or forcing them into second-class status. I yield to no one in pursuing academic excellence, seeing the strengths of traditional education, stretching young people and not soft-landing them, but we want an education system that combines the best of traditional strengths with an understanding of how we need to relate to a modern world of green skills and a low carbon economy.
We should be raising young people up, not putting them down. If we do not do so, not only will they and their families be harmed, but our economy and our ability to compete will be maimed and morphed into a grotesque Hogwart’s parody of education, for which this Secretary of State would bear a solemn responsibility.
Dan Rogerson (North Cornwall) (LD)
We seem to be having a remarkable outbreak of consensus in the Chamber—
Dan Rogerson
The hon. Gentleman is welcome to the Chamber. We look forward to interjections from him.
What was presumably billed, as Opposition day debates are, as a good knockabout seems to have collapsed into consensus. I am left feeling that I agree with much of what has been said from both sides of the House about the way forward in terms of rigour and a genuine consultation and re-examination of the examination system. I am left disagreeing only with the Daily Mail, a situation in which I often find myself, so it is reassuring territory for me.
If we are to consider the key points of the debate, we should look at what was floated in that esteemed publication as a bid to end the GCSE and restore the O-level and a qualification equivalent to the CSE. It is a little like those debates about selection, in which one hears a lot about grammar schools but not so much about secondary moderns. That is not to say that there are not excellent schools out there which are now no doubt called comprehensives or academies, but which once upon a time were known as secondary moderns. They are doing good work in areas where selection still exists, but that it not a position that my party would seek to push forward.
I was delighted to hear the Secretary of State at the Dispatch Box talking about a thorough examination of the GCSE, what it is, what it offers, how testing it is of young people, and its ability to stretch young people at all levels of ability, so that we celebrate the fact that not everyone will get an A*, and for those who were at one time predicted to get an F in some subject but who manage to get a D, that is a real success for them.
Mr Graham Stuart
We are raising the participation age by looking to use the extra years up to 17 and 18 to deliver a basic and rigorous standard. The most successful state school in the country, which I think is Lawrence Sheriff school in Rugby, uses a three-year course for its GCSEs and gets a tremendously high level of success. Perhaps it would be helpful to find out more about how education can be structured so that children can keep on learning until they get to that very high standard.
Dan Rogerson
The Chairman of the Select Committee said that he had to rewrite his speech. He has clearly been doing that and has made an additional contribution to the debate. I welcome his intervention.
The debate is about how we can ensure that all young people are stretched by the system—that they are driven forward, that they are inspired and that they can aspire to reach the very best. That is what teachers, head teachers and their parents want for them. It is clear that there has been grade inflation, a topic that has been covered by several right hon. and hon. Members. People are perhaps being given the impression that there is an endless arc upon which we will see results improve. We had a brief discussion about the Deputy Prime Minister’s progress at the Rio summit and the issues there of exponential growth without due consideration being given to sustainability. Perhaps what we are talking about in this debate is sustainability in the examination system.
When the Secretary of State came to the Dispatch Box last week to respond to an urgent question from the hon. Member for Cardiff West (Kevin Brennan), we had a slightly more Daily Mail-influenced discussion across the House, as the news was hot off the press. The Secretary of State at that point was clearly responding to the leak, from wherever it came, and was not able to present a more thorough position, as he has done today. He ruled out the idea of returning to the 1950s with the O-level and the CSE, and instead proposed re-examining the GCSE and moving forward. I welcome that.
The proposal relating to examination boards seems to be moving forward to consultation. I can see the strengths of a system in which a board concentrates on a particular subject area. There are those of us who might be surprised not to see the Secretary of State looking at a more market-based solution. The proposal could be said to be a little centrally directed, but as my hon. Friend the Member for Wells (Tessa Munt) pointed out, young people are increasingly moving with their families to other parts of the country. If they join a school or college part-way through a course where the syllabus is different from their previous course, that presents problems. There have been one or two examples where the head teacher of an academy, who is responsible for admissions, has said that they are not able to take a young person on a course offered at their institution because the syllabus is different. Perhaps progress could be made in that respect.
These issues would need close examination to ensure that a range of courses was available so that all young people are inspired by what is on offer. There must be no sad homogenisation, and teachers must have the scope to ensure that they cover a broad curriculum.
We have an opportunity to look closely at the issue of rigour. I am delighted that we are not moving towards a wholesale change of the system, which could prove to be a distraction. As a Government the coalition has rightly moved to lift burdens on teachers and to remove unnecessary bureaucracy. Teachers want from us the support to use the skills that they have acquired. The Secretary of State was absolutely right to point out that we have a fantastic generation of teachers out there inspiring and working with young people. They do not want another upheaval and change; they want the confidence to know that the examinations to which they are submitting their students will be correct, robust and a fair assessment of those young people’s attainment, and, in some senses, of the attainment of the school or college in supporting those young people to the best of their potential.
I am delighted to say that the motion hangs on the words of the Deputy Prime Minister, unlike the shadow Minister, who sadly is not hanging on the words that I am offering to the Chamber. He clearly was hanging on the words of the Deputy Prime Minister last week, and it is good to see that the Opposition take such close account of what he has to say, as they did earlier this afternoon. The motion talks about a Government proposal to do certain things, which, as has become clear, the Government are not proposing to do. Therefore, it would be entirely the wrong thing to support a motion based on such a false premise. On the other hand, we have an amendment, around which I hope the House can coalesce, which talks about rigour and the need to ensure that there is a broad-based curriculum focused on the key areas of study and encouraging all young people to aspire to the best of their potential, and tackling social mobility, as the coalition agreement and the Government have set out to do, to ensure that all young people, no matter where they start out, are given every opportunity to achieve the very best for them and for their communities.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
In contrast to the Chair of the Select Committee, because I have a more cynical frame of mind, I will work on the assumption that the Daily Mail report of 21 June was correct and that the briefing came from someone close to the Secretary of State’s office, from a special adviser or perhaps the hon. Member for Grantham and Stamford (Nick Boles) at last earning his crust. I will also work on the assumption that today’s debate is part of testing the response to that. If at any point the Secretary of State wishes to stand up and say to the House, “No, Mr. Tim Shipman of the Daily Mail as ever got it totally wrong and we have no plans in this direction,” I will happily yield the floor. But I also warn the Secretary of State that he is going down a dangerous road, because if, as we have heard this afternoon, he has no plans in this direction, there is little more dangerous than the Daily Mail spurned. But for the moment I will work on the assumption that it is correct.
Kevin Brennan
If my hon. Friend is incorrect and the Secretary of State has performed some kind of humiliating climbdown today, does he think that the Secretary of State will have to apologise to all those who came on the media to back him, including Toby Young and all his other friends in the right-wing press?
Tristram Hunt
It was amazing how they were all ready, almost whipped in, but perhaps the Secretary of State will have another visit to the High Court and his friend Judge Leveson to explain all this.
The Secretary of State will know that I have no problem with some of his policies. I am happy to support the English baccalaureate, much greater rigour in standards, and the ending of endless repeat examinations and an end to semi-vocational, grade-inflating GCSE-equivalent exams. However, I share with my hon. Friend the shadow Secretary of State serious reservations about the downgrading of the engineering diploma, at a time when we are interested in rebalancing the British economy. I am in favour of schools being allowed to conduct internal streaming, of academy schools in the right circumstances, of apprenticeships when done properly. As an historian, I am also in favour of pupils learning dates and poems, because that provides the structure and the architecture that allows for greater learning and understanding. I am in favour of the Wolf report and what it means for skills training.
A large part of the agenda I can concur with, but this bizarre decision to think about abolishing GCSEs and reintroduce O-levels and CSEs strikes me as deeply misguided. How would this help children in my constituency of Stoke-on-Trent? I want students in my city to take GCSEs in relevant subjects, to be taught well and to aspire. I do not think that at the age of 14 they should be hived off into CSEs; for their aspirations to be put into a straitjacket. As the Chair of the Select Committee said, we know the problems about standards, but no Government Member has been able to stand up and say, “Yes, the solution to this problem is, as reported in the Daily Mail, the O-level/CSE divide.” Until we hear that, this is, as the Chair also said, a slightly bizarre debate. But I will continue working on the dangerous assumption of Daily Mail correctitude.
Looking at the Financial Times research, 25% of children in my constituency would be put into the straitjacket of CSEs. That is not the soft bigotry of low expectations, but the hard bigotry of low expectations in action. It demonstrates a total poverty of ambition.
Mr Graham Stuart
An interesting outcome of this debate was texting my office to ask how many people—I realise that as Chair of the Select Committee I should know this—take these foundation GCSEs. The answer I got back is that that information is not collected by the Department for Education or by the exam boards. Go figure.
Tristram Hunt
I thank the hon. Gentleman for that intervention. That is why I found the discussion about employers knowing the difference between a C at GCSE at different levels attained wholly fallacious. If the big problem of educational attainment is the long tail of under-achievement, the measures to combat that need to be there for all. There is no evidence to suggest that dividing at 14 will help that. We had an interesting contribution today on some of the neurological evidence of the potential for growth from 14 to 16. What we do have evidence for is how overwhelming it will be for the poor and those from socio-economically challenged backgrounds who will be condemned to the new CSEs. That is why the 1980s Conservative Government abandoned this policy. In 1985, Sir Keith Joseph, who became Lord Joseph, unveiled evidence that there is a
“strong association between low achievement and the poverty-related factors of poor housing, single-parent families and a low proportion of children in higher socio-economic groups”.
This policy of division was too divisive even for Sir Keith.
We also hear that with the new O-levels there will be no national curriculum—although a back-door one because of a single qualification authority. This strikes me as a rather strange route to developing the kind of curriculum we want, drawing on a wide knowledge base. It also flies in the face of the Secretary of State’s ambitions to create a national narrative of British history, to teach in all our schools a single notion of British history that imbues notions of citizenship which develops a—rather Whiggish in my view—conception of the British past that all will share. They will not all share that if there is no national curriculum. The greater the division between schools, the greater the division in the teaching of history. Any ambition to teach a cohesive notion of citizenship through the teaching of history is totally undone by the elimination of a cohesive national curriculum.
Internal reforms of the GCSE would be welcome. Clampdown on grade inflation and the proposals vis-à-vis the examinations board are to be welcomed. An end to generalised humanities GCSEs—the merging of history and geography—are to be welcomed. We can learn from the international GCSE, the I-bac. But all that can be achieved within the current system. That is the tragedy of what the Secretary of State is up to.
Mr Andrew Turner (Isle of Wight) (Con)
The hon. Gentleman mentions the baccalaureate and international GCSEs. If those are acceptable, and it seems that they are, and they are the examinations for able pupils, which they are, what would happen to the other GCSEs that would be occupied by the less able?
Tristram Hunt
The point about the GCSE is that it is a general certificate of secondary education. The point about the CSE is that it had stigma attached to it. At GCSE one can have an A and an A*. There is still the GCSE and a structure. The briefing to the Daily Mail is that there is an ambition to return to a more divisive system. The tragedy is that there is so much work to be done: the quality of teacher training; ending the scandal of an ever-expanding key stage 4, which means pupils are finishing history or geography in year 8; ending the relentless examination culture that sees AS exams in the January of the lower sixth—we need to get rid of that; embedding a new strategy for the teaching of foreign languages; driving up numeracy and literacy. These are the real challenges confronting schooling. In the face of these challenges, this political strategy seems a massive misallocation of the Secretary of State’s time and resources and those of civil servants in his Department. The Government are already reviewing the primary and secondary school curricula, so why also begin this tub-thumping policy that is not based on empirical evidence?
This is no way to make policy: revealing these kinds of ideas in the Daily Mail, a newspaper usually opposed to deep thinking, learning and cohesive policy development, and at a time when young people are taking their exams. All we can hope is that it is a rather cack-handed example of kite-flying by a Secretary of State who is slightly puffed up at the moment and that the kite will soon be shot down and normal service resumed.
Guy Opperman (Hexham) (Con)
This has been a confectionary debate featuring a number of individual sweets, not least the polo mint that constitutes the motion. I have studied it in great detail and found nothing that takes forward this country’s education debate. In the words of one coalition colleague, it is an “opportunistic wheeze.” Having studied the motion and found nothing of substance, we should then go back to the words of the hon. Member for Cardiff West (Kevin Brennan), who so enlightened the House when he outlined the Opposition’s education policy last Thursday:
“We on the Opposition side of the House believe in a modern education system that promotes high standards, rigorous exams”.—[Official Report, 21 June 2012; Vol. 546, c. 1026.]
He had earlier sought an apology, but of course thus far we have had no apology for his claim that three in 10 pupils equalled 60% of them. When one studies the specific proposals he put forward last Thursday, one has to ask oneself, “Is this not lighter than air?” It is the Aero policy we are now studying—
Guy Opperman
No. I can assure hon. Members that it is the hon. Gentleman’s proposals that are lighter than air; I have studied them and found that there is not much in them.
We then move on to the Celebrations moment. While I was in hospital last year, when something took place that was of good order I would be provided with a large box of Celebrations. There was such a time earlier today: the shadow Secretary of State, like St Paul on the road to Damascus, stood forth and admitted for the first time that there had been grade inflation under Labour. However, despite repeated questioning by me and others, he refused to state when he first discovered this grade inflation. Was it 1997, 2005, 2010, 2012, or was it yesterday? He failed to divulge when that magical event took place. That is a crucial point, because the discovery of grade inflation is utterly important to an assessment of how this policy is going forward.
Despite throwing money at the problem, the previous Government did not see the results. As other Members have outlined, maths, literacy and science all declined, whatever type of test was taken. Academies do work, and I applaud the expansion of that programme. Let us take as an exemplar the words of Andrew Adonis, the former Schools Minister, who said there should be “strong independent governance” that was “free of local authority red tape”, with exemplary leadership and “brilliant teachers” who were specially chosen. That is the way forward.
In Northumberland, part of which I represent, schools saw little of the financial benefit that the previous Government bestowed on individual local authorities. The situation has changed, I am pleased to say, with the rebuild announcement for Prudhoe community high school, and I look forward to welcoming the Secretary of State when he visits Northumberland shortly. I will also be showing him the amazing Queen Elizabeth high school in Hexham, another school that was denied any sort of funding or rebuild under the previous Government.
However, I have two reservations that I want to raise with the Minister. First, we should be wary of change for change’s sake. Every teacher in Northumberland I spoke with before the last election explained with growing depression how every year there was a different syllabus, a different amendment or a different set of textbooks, all costing huge amounts of money, in circumstances in which some consistency was clearly needed so that they could get on with what they wanted to do, which was to teach.
Secondly, I wish to echo some of the comments that have been made on vocational education. I am not a fan of nail technology being a GCSE. However, I represent a constituency in rural Northumberland where we value vocational education very highly. I suggest that the lesson the Minister should take forward is not to throw the baby out with the bathwater. It is absolutely vital that we hang on to the engineering and alternative qualifications. I totally understand and applaud the desire to reduce the number of vocational qualifications, but there is a danger of being excessive in that policy, and in rural areas in particular that will affect the quality of education provided.
Given the time limit and the number of Members who wish to speak, I will bring my remarks to a close. I suggest that in these circumstances there is a great deal of scope. I support what the Government are doing and think that the motion has absolutely no merit whatsoever.
Mr Deputy Speaker (Mr Nigel Evans)
Order. I am grateful to the hon. Gentleman for the self-restraint he has shown. I am now reducing the time limit to five minutes.
Alex Cunningham (Stockton North) (Lab)
Young people are our future, yet the value some people place on them and their achievements is extremely low. I feel that many members of the current Government must be trying to secure some kind of medal, in this Olympic year, for driving the value of our young people and their achievements to a record low. Time and again they send young people negative messages, undervalue their hard work in sitting their examinations and then, when they do well, put the boot in again by suggesting that their certificates are hardly worth the paper they are printed on.
The Secretary of State wants to drive up standards—we all do—but the actions he now proposes will effectively write off a large number of young people who need the greatest support and lower their expectations for a happy and productive life. Does he really believe that that is the way forward, or are his latest pronouncements about something else? Is he using our children and their education to create a debate in the Tory section of the Government, where attitudes are very different from those of their coalition partners? Is he just playing controversial games with our children’s future, as the newspapers suggest, as he aims to take over from a weak Prime Minister who is struggling to harness his partners and achieve the right-wing agenda he thought he would be pursuing after the general election?
The former Prime Minister, Margaret Thatcher, axed the two-tier O-level/CSE system. She, like the president of the Liberal Democrats, recognised that it was divisive and dumped millions of young people into a second division from which they could not escape. I never thought that I could agree with such people on anything, but on this I cannot help agreeing with them both. I never thought that a son of Thatcher—perhaps a grandson—could be the one to turn against her in such a way.
The Secretary of State has said:
“The coalition Government’s education reforms are designed to raise standards in all our schools and give every child the opportunity to acquire the rigorous qualifications that will enable them to succeed in further and higher education and the world of work.”—[Official Report, 21 June 2012; Vol. 546, c. 1025.]
However, I, along with the vast majority of educational professionals, can see the opposite happening. Rather than reducing educational inequality, the reforms that those in the Tory part of the coalition propose will do the opposite. Under the new proposals, around three quarters of pupils could sit tough tests modelled on the old O-level while the remaining pupils take more straightforward qualifications modelled on traditional CSEs in subjects such as maths, English and science. But separating 75% of pupils from the other 25% will do nothing but divide children into winners and losers at the incredibly young age of 14, capping aspiration and putting up a barrier to social mobility.
Like my hon. Friend the Member for North West Durham (Pat Glass), I am a member of the Education Committee and visited Singapore earlier this year. Some children there go into the elite education programme at age 12 while the others are shoved down the technical route. We visited both types of schools and found that the facilities were very good. However, I was extremely saddened to hear young people talk of themselves as the elite. They are encouraged to talk themselves up, which is good, but what about the young people who are not the elite? If the Education Secretary wants to replicate Singapore’s system here, what would that contribute to equality of opportunity?
This is not just a moral argument against segregating pupils; it is also an argument based on strong evidence. Relegating 14-year-olds to a lesser qualification brands them as underachievers and could drain both students and schools of any incentive to push for higher performance. If we move on to the CSE track a child who would otherwise be aiming for a C at GCSE, we may find that they are very likely to stop trying and not to value the qualification that they finally achieve. One third of children who score in the bottom 25% at 11 years old break out of that group by 16, but if they are placed in a second-class category at an early age they risk being written off. Quite simply, schools cannot predict with 100% accuracy the future of their pupils, and many will struggle to place children correctly.
Once again, the north-east of England will bear the brunt of the Government’s changes, as research shows that the CSE will be most prevalent in northern towns. That the Secretary of State is intent on limiting the ambitions and opportunities for people in my constituency and many others throughout our region is shameful.
While in office, Labour managed to narrow the educational gap between the rich and the poor, not through dumbing down, as Government Members like to believe, but through more investment in schools and teachers and through giving schools more freedom to innovate. Even the Secretary of State recognises that we have the best cohort of teachers ever, but that did not happen by accident. It was investment in their training, and excellent support in the classroom, that helped them to raise their game and to support our children as never before. That is what makes a real difference to our children’s education, not imposing outdated ideas that have already been shown to fail.
Gavin Barwell (Croydon Central) (Con)
This has been an historic debate, because for the first time the Front-Bench spokesmen on both sides of the House have acknowledged clearly and unequivocally a truth that has been obvious for a long time: our exam system, over a number of years, has been dumbed down. I give great credit to the hon. Member for Liverpool, West Derby (Stephen Twigg) for saying that clearly and unequivocally in response to my question.
I was in the first year group to sit GCSE exams. My class did one O-level in January and eight or nine GCSEs in June. In the O-level, three of the class of 27 got an A grade; in every GCSE subject, a majority got A grades; and in some, almost every member of the class did. It was clear when GCSEs were introduced that it was easier to get top grades in them than in O-levels, and research by the university of Durham and feedback from employers and parents shows that there has been a further deterioration since then.
The Secretary of State has already done a lot to try to address the problem in respect of the English baccalaureate, ending the modular system, re-sits, an emphasis on spelling, punctuation and grammar and by getting rid of some equivalents, but further measures are needed. It is good that there seems to be consensus on a single exam board and on ending the race to the bottom, so I shall focus on the main issue in the debate, the fear of a two-tier system, and say clearly and unequivocally that I do not want to go back to a CSE system.
Gavin Barwell
I will not take interventions, for reasons of time.
I do not want to go back to a CSE system, but we need the radical reform of our GCSEs in order to bring back a degree of academic rigour. The Education Committee Chairman made a very important point to the Secretary of the State about how raising the threshold will raise the number of people who succeed. I believe passionately, as a parent and from my experience of visiting schools, that paradoxically if we raise the threshold we will find that young people respond to it. That is the experience of schools that have switched to the IGCSE exam.
In the briefing pack for this debate, I saw some research from King’s college, London, showing the decline in maths over the past 30 years, with many 14-year-olds not understanding concepts such as algebra and ratios. I am not satisfied that my nine-year-old is stretched at his primary school, so I work with him on his maths at home, and he has already grasped those topics. I do not think that he is especially bright or clever, but I passionately believe that our young people are full of talent, and if they are pushed and stretched they will respond.
We also need to acknowledge that at 16 years old the right outcome for all our young people is not necessarily to sit a full suite of academic qualifications. For years and years this country has lacked a proper, respected vocational alternative, but if we secure such an alternative, we should not deride it as part of a two-tier system in which people doing vocational qualifications are somehow failures or second best.
Gavin Barwell
I am not talking about going back to CSEs, which were second-rate academic qualifications; I am talking about a system in which most children should be capable of getting robust academic qualifications and, through that, pushed to achieve their maximum. But we should recognise that it is not the right outcome for all young people, so there should be a proper vocational alternative, and we should not regard the young people who go down that route as failures or as second best in any way. I believe that absolutely passionately.
I shall end my speech—I know others want to speak—with one final point. Changing our exam system is not in and of itself a solution to the problems that the Education Committee Chairman has identified, but it is part of the mix, alongside the other things that the Government are doing: getting the basics right in primary school so that everybody learns to read and can access the curriculum that follows; emphasising discipline so that young people can actually learn in the classroom; giving teachers the freedom to innovate within their schools; giving parents a proper and effective choice through the free school model; and, finally, setting a floor and saying to schools that do not live up to the minimum standards that we have a right to expect, “That’s not good enough. We’re going to bring in an academy to replace you.”
That package of measures, together with a robust exam system, is what we need to give this country what it needs—the best equipped young people in the world. That is the only way to get the companies that will give us the jobs we want to locate themselves here, so we need to have the courage to bite the bullet and say openly, as both Front Benchers have for the first time today, that we have dumbed down our system over a number of years—not just under the previous Labour Government; it has been going on for a long time—and that that process needs to be reversed. We need to bring back rigour, to provide a proper vocational alternative and to stop the sterile argument about a two-tier system.
Nic Dakin (Scunthorpe) (Lab)
Having a good look at our examination system is a valid thing to do. Indeed, the Chair of the Education Committee has reminded us that next Tuesday it will publish its report into the matter, and I know from my time serving on the Committee that it will have fully interrogated the issues and will produce a robust report to drive forward policy.
Such a principled, considered approach contrasts with the Secretary of State’s way of doing business—by hunch, lunch and leak. Indeed, after sitting through 40 minutes of his speech today, I was still no clearer at the end about his proposals. It was a content vacuum, I am afraid, but things need addressing. Are there plans to scrap the national curriculum at 14 years old, and would that allow schools and colleges greater flexibility to offer a more skills-based curriculum to those young people who prefer a more practical, vocational approach? Will the millions of pounds—a sum that has doubled in the past 10 years—being spent on examinations be reduced?
At the heart of the Secretary of State’s leak to the Daily Mail, there seemed to be a half-baked idea about some back to the future, imaginary utopia, enshrined in a return to O-levels and CSEs. I fear that that has far more to do with clever politicking than with intelligent policy making, however, and that the Secretary of State is keen to deliver soundbites for the Tory tabloids rather than sound policies for the young people of today and UK plc.
It is all a bit like a Monty Python sketch in which someone says, “Exams were much harder in my day. I had to recite poems and parse sentences.” The reply would be, “Recite poems and parse sentences? You were lucky. I had to recite the complete works of Shakespeare and then write an essay on a day in the life of a pound note.” Seriously, however, people like to believe that things were harder in the past, although the evidence is far from clear, and the Secretary of State is tapping into a populist instinct: nostalgia politics.
One of the few things I know a bit about is preparing young people for exams. I have prepared them for a range of exams: CEEs, CSEs, O-levels, A-levels, S-levels, AS-levels, BTECs. You name it, Mr Deputy Speaker, I have prepared young people for it, but in terms of setting and assessing standards, the worst exam that I ever prepared people for was O-level English, which was a total lottery, so if the Secretary of State thinks that going back to something like that will improve standards, he really is on another planet: planet dogma, or planet not in this place.
When Sir Keith Joseph was introducing the changes, he made very clearly the case for their necessity, stating that
“the system we propose will be tougher but clearer and fairer…it will be more intelligible to users…better than O-levels…and better than CSE…it will stretch the able more; and…stretch the average more.”—[Official Report, 20 June 1984; Vol. 62, c. 306.]
I believe, from my professional experience, that that is what the GCSE has done. That does not mean it is perfect, or that it does not need improving, but any idea about going back to the 1950s, and to exam systems that may or may not have been appropriate for that time, is unfortunate.
It is worth noting, however, that the debate about an exam at 16 years old is actually rather odd and anachronistic, because, with the raising of the participation age, the qualification that young people leave with at 18 years old is what really matters. Focusing so much attention on what happens at 16 misses the point, because with rising participation levels, the main thing is the skills, attributes and experiences that young people leave school with at 18 to allow them, one hopes, into a world of work.
One of the big problems regarding aspiration for young people is the fact that young people’s unemployment is at a record high on this Government’s watch. That has a genuine impact on aspiration in classrooms. I am afraid that despite the skills, expertise and professionalism of those great teachers, led by great head teachers, up and down the land, that remains the context in which they are working. As people providing policy and governance, one of our gifts should be to produce a mechanism to enable young people to move into employment and ensure that they have the proper skills, attributes and aptitudes to do well in it.
Charlotte Leslie (Bristol North West) (Con)
I agree with my hon. Friend the Member for Croydon Central (Gavin Barwell) that this has been a historic debate. There has been a tendency for people in this country to live in a fantasy land. We think that as long as we allow grades to go up and tell ourselves it is okay, it is okay, but in an era of globalisation it is not enough to tell ourselves that everything is okay; it really has to be so. We have been doing this in relation to grade inflation and what we have been telling our young people. We have been saying, “Do this nice course—it’s all going to be fine and no one is going to tell you that you’ve done badly”, but reality has to hit them at some point, and that happens when they go out into the world of work and find that the cosy story they have been told behind their school gates does not match up to the reality outside. What the Secretary of State has said is therefore massively important. I am extremely pleased that the hon. Member for Liverpool, West Derby (Stephen Twigg) has acknowledged that grade inflation has been taking place.
I would like the House to acknowledge that we have seen the creation of a two-tier system by stealth. Any two-tier system is bad, and this one has IGCSEs and the international baccalaureate for the well-off and the sharp-elbowed, with the less sharp-elbowed left with GCSEs, or their equivalents, that will not get them a job at the end of the day. That is absolutely appalling. No one can defend the status quo, and anyone who tries to do so has a much lower opinion of the country’s children than I do. I want to concentrate on a premise that underlies a lot of the debate about this two-tier system. Of course, every child must have the opportunity, and must be pushed, to do the best they can at core academic subjects; I am a great supporter of the E-bac in that respect. However, to suggest that unless a child does those core subjects they are thrown on to the scrap heap, as Labour Members have repeatedly done, betrays an extraordinary attitude towards so-called vocational education.
Again, I agree with my hon. Friend the Member for Croydon Central. If we did not have people who did not find grammar and algebra books the most interesting thing in the world, we would not be standing in a building that is so intricately and beautifully built, with incredible craftsmanship. I object to the term “vocational”, which has arisen in the past decade or so, because it is a euphemism that betrays a slight embarrassment about the kinds of skills that have made our cities and our country great, and a reluctance actually to name practical, manual and technical skills, crafts and tradesmanship. In future, I should like the term “vocational” to be abolished and replaced with something far more honest. In terms of equivalence, we have been doing nothing for tradesmanship, craftsmanship and so-called vocational trades and everything for academic qualifications. Nail technology is not studied to get a job, because there are not enough nail technology jobs to go round for all the hundreds of thousands of people who are doing these courses. It has been all about the exam results, not the jobs.
There has been an overwhelming need to get real, and the Secretary of State’s bravery in tackling the underlying problems in our GCSE system is a welcome attempt to do so. I hoped for a moment that Labour Members had got real, but it seems that they may not have done.
Nia Griffith (Llanelli) (Lab)
I am certainly not against change. As a former teacher, examiner and Ofsted inspector, I spent a lifetime trying to raise standards of teaching and learning and to develop programmes of study that better prepared pupils for the modern world so that, for example, in foreign languages we moved on from talking about boys falling out of cherry trees to teaching children realistic phrases that they could use in business and leisure situations.
Did I detect the Secretary of State retreating from the position attributed to him in the press last week? Did he really say that he was not going for a CSE/O-level divide? I am not sure. I remember, though, that back in 1981, well before the GCSE was rolled out nationwide, I was piloting the 16-plus. That is because we believed very much in piloting things to see how they worked out and what the problems were. We were trying to put together two very different examinations, with a D grade being attributed to pupils of average ability. That is how we got to the system whereby the A to C grade was seen as the superior way of designating some children, with D to G grades for the rest, and with the foundation and higher papers. I make no apology for that; it is the history of how it came about. It is extremely difficult to set questions that will stretch a very able pupil but not prove to be complete gobbledegook, and a complete deterrent, to the very least able, and that was the point of having different papers. The key thing was that right up until March or April, pupils could move between the examinations that they were going to take in June. That was very important because it gave everyone an incentive to keep working the whole time and not to think, “Oh well, they’re only CSEs, so I don’t need to work so hard.”
I have serious worries about the introduction of a dual system. For example, in small subject areas such as music or a second foreign language, children of a larger range of ability are often taught in the same class. Will they now have to be taught two different syllabuses, or programmes of study, because one class will include the more able and the less able, with some going in for a CSE and some going in for an O-level? In smaller schools, that will affect not only small subjects but mainstream subjects. It may be very difficult to accommodate everybody. The teacher might have to run about trying to cope with two programmes of study at once, or perhaps some pupils will be discouraged from taking the subject having been told that they can do it only if they are capable of doing the O-level-type examination.
Dual entry could arise, because a child who might fail the more difficult O-level-equivalent exam would therefore do the CSE as well. A lot of money is already spent on examination fees, and dual entry is extremely expensive. As well as creating additional costs, it would place a lot of extra pressure on children and staff. There is a danger that children will suddenly not be given a chance to do the more difficult exam and be withdrawn because they might mess up the results. There would be the sheer disruption of introducing two completely new examination systems when there are many simpler and more effective ways of raising standards.
I do not understand the Secretary of State saying that people in this country do not re-sit English and maths, because they certainly do. When we go to any institution for 16 to 18-year-olds, we will find people making sure that they give every pupil the chance to get the A to C grades in English and maths that are so essential to their going on to their future careers or university courses. On international comparisons, it is not at the top end of the ability range that we do so badly in this country, but at the middle and lower ends. Creating segregated systems will do nothing to improve the morale of the middle-ability and less able pupil; in fact, it will do precisely the opposite.
As regards examination boards, the Secretary of State alleged that there had been some shopping around to find the system that provided the highest grades for the least effort. It is true that there has been some choosing of different programmes of study, perhaps because some are more inspiring or user-friendly to the pupil. I am not against having more than one examination board, but will the Secretary of State please confirm that we are not going to have separate examination boards for different subjects, which would be an examination officer’s nightmare? I also plead with him to allow some space for innovation. Having different examination boards has allowed us to innovate without a 100% roll-out.
Kevin Brennan (Cardiff West) (Lab)
We have had a fascinating debate, with contributions from 13 hon. Members: my hon. Friend the Member for North West Durham (Pat Glass), the hon. Member for Beverley and Holderness (Mr Stuart), my hon. Friend the Member for Leicester West (Liz Kendall), the hon. Member for East Hampshire (Damian Hinds), my hon. Friend the Member for Blackpool South (Mr Marsden), the hon. Member for North Cornwall (Dan Rogerson), my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt), the hon. Member for Hexham (Guy Opperman), my hon. Friend the Member for Stockton North (Alex Cunningham), the hon. Member for Croydon Central (Gavin Barwell), my hon. Friend the Member for Scunthorpe (Nic Dakin), the hon. Member for Bristol North West (Charlotte Leslie) and my hon. Friend the Member for Llanelli (Nia Griffith). It has been an interesting, although not entirely illuminating, debate.
The Opposition have no disagreement with the case that there is a need to reform the GCSE. As the House knows, the GCSE was first sat by pupils 25 years ago. I was teaching at the time. The idea that the world has not changed sufficiently since then for the GCSE to require reform is as ludicrous as the idea that the world is sufficiently similar to how it was 50 years ago that we have to return to O-levels and CSEs. The raising of the education and training leaving age to 18 raises the fundamental question of what public examinations we need at 16 and what they are for. That is a legitimate debate. One hon. Member asked whether we need to spend the huge amount of money that we spend on examinations at the age of 16. We have to ensure that GCSEs are fit for purpose, but we do not need to go back to the future.
In the words of the Deputy Prime Minister, we do not need to recreate
“a two tier system where children at quite a young age are somehow cast on a scrap heap”.
The more observant hon. Members will have noticed that we included those words in our motion. However, the Government amendment, which is signed, among others, by the Deputy Prime Minister, would expunge those words from the motion. That is a novel approach. It might well be the first time that a senior Cabinet Minister has tabled an amendment to delete his own words.
Dan Rogerson
There would be a problem if the Deputy Prime Minister had said something in the amendment that disagreed with what he said before. The amendment has a different emphasis, but there is no contradiction between the two.
Kevin Brennan
In that case, the Deputy Prime Minister could have left his own words in the amendment that he signed, but he chose to delete them. I am tempted to say, in the words of the late, great Amy Winehouse, “What kind of Lib-Demery is this?” Let us allow for a moment the notion that the Deputy Prime Minister meant what he said about a two-tier system, despite trying to delete his own words from the motion.
The Government amendment appears to contradict the leaks from the Secretary of State’s advisers last week that he would not need parliamentary approval or Lib Dem support for his proposal to bring back CSEs and O-levels. We have it from the Financial Times that Downing street now insists that the Secretary of State cannot go ahead without approval with the proposals that he leaked to the Daily Mail last week. The Financial Times article goes on to say that
“the idea of a lower qualification for less academic children”
is “dead in the water.” Perhaps when he responds, the Minister of State, Department for Education, the hon. Member for Bognor Regis and Littlehampton (Mr Gibb) will confirm whether that idea is dead in the water. If it is, why are the Secretary of State’s advisers at this moment spinning to the press lobby in the House of Commons that a lower qualification known as an N-level will be introduced—something that he did not announce to the House?
The Minister needs to come clean when he winds up. Is the two-tier plan that was leaked to the Daily Mail by the Secretary of State’s closest advisers dead in the water or not? Is it full steam ahead for the Secretary of State, or is this a humiliating climbdown? The Secretary of State was asked on three occasions—or as he would say, thrice—whether the Daily Mail report was wrong, and thrice he demurred and did not tell us. If he is making a humiliating climbdown, he must apologise to all his friends who came out in support of the proposals in the media.
The manner and timing of the leak to the Daily Mail were a disgrace, at a time when students up and down the country, who have been working hard for months on end, were sitting their GCSEs. What a contrast that is to the way in which the GCSE was introduced all those years ago. A debate was kicked off in 1976 by Jim Callaghan, the former Labour Prime Minister. It was developed by Shirley Williams, although she has gone off the tracks a little since then. Come to think of it, we have not heard much from her on this subject. It would be interesting to know what she thinks. The idea was picked up by Keith Joseph—that well known lily-livered, liberal, loony lefty—and implemented by Mrs Thatcher’s Education Secretary, Kenneth Baker, following thorough debate and consideration. It was welcomed across the House.
In contrast, we now have a proposal to rip up the GCSE, with accompanying disparaging rhetoric, cooked up by a cabal, no doubt using private e-mail accounts, with no reference to the Department’s officials or to other Departments, and kept secret even from one of the Secretary of State’s Education Ministers. What a ludicrous way to run a Department that is, and how symptomatic of the Secretary of State’s seething lack of trust in his own Minister and officials.
At least we can assume that the Secretary of State would be kinder to and have more faith in those on his own side. Not so, because we now find out that not even the Prime Minister knew the details of what he was about to leak to the Daily Mail. A Downing street spokesman told the Financial Times:
“It looks as if we’re being bounced into something we weren’t prepared for.”
What about the Education Committee, which is chaired ably by the Secretary of State’s Conservative colleague, the hon. Member for Beverley and Holderness, who as always made a thoughtful contribution today? Let us be clear that the Chair of the Select Committee is no fan of Labour education policy. We have had many discussions about it and, to save him any embarrassment, I confirm that he is no fan of Labour education policy. Nevertheless, we respect his long-standing commitment to raising the standards for those at the bottom. As the Secretary of State well knows, the Committee is at this moment undertaking a review of qualifications and examinations that seeks to address some of these questions. What contempt the Secretary of State has shown for the Education Committee by publicising his plans in the press without any consideration of the Committee’s work. I took a sharp intake of breath when the Secretary of State said to the Chair of the Select Committee, “If the cap on aspiration fits, wear it.” That was uncalled for and was off the mark with regard to the hon. Gentleman’s commitment to helping those at the lower end. However, I know that he needs no help from me.
I met the CBI earlier today. Like us, it thinks that the GCSE needs to be looked at again. Like us, it thinks that a much wider debate is needed than the headline-grabbing call for a return to O-levels and CSEs that we have had from the Secretary of State. GCSEs are not, despite the impression that the Secretary of State tried to give last week, a worthless piece of paper, but that is exactly how Kenneth Baker described CSEs, which the Secretary of State last week seemed so keen to bring back. As my hon. Friend the Member for Scunthorpe pointed out, many O-levels were not rigorous qualifications, but required little more than a Gradgrindian regurgitation of facts. Factual knowledge is not enough in a world in which, as the CBI told me today, more data will be created this year than have been created in the previous 5,000 years. Rote learning is insufficient in a world that needs citizens who can process intelligently a mass of information and data in their daily lives. We need breadth and balance in the curriculum.
The GCSE was brought in not as a single examination paper, as some Government colleagues seem to think, but as a single examinations system that would give everybody the chance to succeed if they reached the required standard. That is a principle worth preserving. Reform, yes; back to the future, no.
The Minister of State, Department for Education (Mr Nick Gibb)
This has been a good debate, but as my hon. Friend the Member for Bristol North West (Charlotte Leslie) pointed out, we need a reality check. The overarching objective of the Government’s education policy is to close the attainment gap between those from wealthier and those from poorer backgrounds, which is wider in this country than in many of our competitor nations. The gap means that 49% of pupils eligible for free school meals achieved a grade C or better in GCSE maths last year compared with 74% of all non-free school meal pupils; that 67% of pupils eligible for free school meals achieved the expected level in reading when they left primary school last year compared with 82% of non-free school meal pupils; and that just 8% of pupils eligible for free school meals were entered for the English baccalaureate combination of core academic GCSEs compared with 22% overall.
That attainment gap is morally unacceptable and, as my hon. Friend the Member for Bury St Edmunds (Mr Ruffley) said, economically damaging to this country. It has all the hallmarks of the two-tier education system that hon. Members say they wish to eliminate.
Mr Gibb
I will not give way because of the time.
Under the previous Government and that two-tier system, a sizeable proportion of young people were persuaded to take qualifications that scored highly in performance tables, but that turned out to have less credibility with employers than the young people had been led to believe, as so aptly pointed out by my hon. Friend the Member for Bristol North West. That is why, on the recommendation of Alison Wolf, we have looked again at all vocational qualifications taught in schools to ensure that only those highly valued by employers count in performance tables. That will raise both the value and the esteem of the vocational qualifications taught in our schools, which is supported by my hon. Friend the Member for Croydon Central (Gavin Barwell).
Last year, the OECD produced its seminal report, “How do some students overcome their socio-economic background?” It states that, in Britain, only a quarter of deprived children were able to overcome their background in terms of academic achievement, compared with more than 70% in Shanghai and Hong Kong, which places Britain 39th out of 65 OECD countries.
Addressing those inequalities lies at the heart of every radical education reform implemented, announced or mooted by the Government since May 2010, which includes: the academies and free school programmes, which bring professional autonomy and diversity to our school system and raise standards in some of the most deprived parts of the country; the focus on phonics in reading and the phonic check—we last week checked the basic reading skills of every 6-year-old in the country—which mean that no child slips through the net with their reading problems unidentified; ending the re-sit culture and modularisation in GCSEs; restoring marks for spelling, punctuation and grammar; the pupil premium, which provides significant extra school funding for pupils who are eligible for free school meals; allowing good schools to expand; raising the floor standard of underperforming primary and secondary schools; giving more power to teachers to tackle unruly behaviour; reviewing the national curriculum; publishing draft primary school programmes of study in English, maths and science; and putting greater emphasis on reading, scientific knowledge, languages, arithmetic and the essentials of grammar, spelling and punctuation.
Those are the important reforms, but as my right hon. Friend the Secretary of State has said, the evidence shows that we must go further. A few weeks ago, a CBI survey showed that nearly half of all employers were unhappy with the basic literacy skills of school and college leavers—35% expressed concern over maths. This week, King’s College London reported that teenagers’ maths skills have declined over the past 30 years.
The Government are clear that we need fundamental reform. We want a broad, inclusive conversation to consider how we address the concerns of employers, parents, pupils and schools. We must learn our lessons not from the past, but from the best—from countries such as Singapore, where students are required to have a proper knowledge of syntax and grammar, an understanding of the scientific laws that govern our world, and an understanding of maths, which allow them to progress down both technical and academic routes. None of that is beyond the children of this country, but we too often lack the most basic aspiration on their behalf.
In Singapore, the exams designed for 16-year-olds are rigorous, academic, stretching and comprehensive. They are taken by the vast majority of the population. Those exams—O-levels drawn up by examiners in this country— set a level of aspiration for every child that helps to ensure that Singapore remains a world leader in education. We want to ensure that children in this country have exactly the same opportunities as their peers in Singapore and other high-performing nations; that our pupils are as comprehensively equipped to compete in a world of international commerce; that every single child has the opportunity to succeed to their full potential.
The Government’s reforms are designed to achieve a fundamental change in expectation and academic achievement. We should expect all schools to have the academic attainment of Mossbourne academy. We want our qualifications to be world class, with the expectation that all will study for them, and that the great majority will achieve them, if not by aged 16, then by 17, 18 or 19.
The hon. Member for Liverpool, West Derby (Stephen Twigg) made a revealing speech. I am not aware of any Education Minister from the previous Labour Government who would accept the existence of grade inflation in GCSEs. His acceptance of that and his change of view are welcome—they help to bring honesty and candour to the debate.
My hon. Friend the Member for Beverley and Holderness (Mr Stuart), in seeking to defend himself from accusations of fatalism, spoke of establishing a route map from point A to point B—good luck with that—and sought more detail on the Government’s proposals before the publication of our consultation document, while refusing to give the Government a glimpse of the Education Committee’s forthcoming report on qualifications, which is due out next week.
I welcome the support of the hon. Member for Leicester West (Liz Kendall) for the single exam board proposal and wholeheartedly congratulate New College school on its transformation, and on the “yes you can, yes you will” ethos.
My hon. Friend the Member for East Hampshire (Damian Hinds) raised concerns about grade inflation, early entry for GCSE, re-sits and modularisation, and rightly pointed out that today we have a clear, two-tier GCSE system, which he called a rebranded CSE and GCE system. He revised the phrase made famous by Melanie Phillips—“All must have prizes”—by saying that all must merit prizes.
I welcome the support of my hon. Friend the Member for North Cornwall (Dan Rogerson) for rigour. He is right to be reassured about genuine consultation. The hon. Member for Stoke-on-Trent Central (Tristram Hunt) falsely accused my hon. Friend the Member for Grantham and Stamford (Nick Boles) of earning his crust, but I welcome the hon. Gentleman’s support for the English baccalaureate and for children acquiring knowledge in history and learning poems by heart. I take on board the caution of my hon. Friend the Member for Hexham (Guy Opperman) against change for change’s sake.
The Government are accused of wanting to create a two-tier education system, but this country already has one, which we believe is letting down too many children and young people. Professor Wolf said in her important review of vocational education that English and maths are fundamental to young people’s employment and education prospects, yet less than half of all students have good GCSEs in English and maths at the end of key stage 4. There are two tiers: those with English and maths, and those without. There are two tiers in the current structure of GCSEs—a foundation tier and a higher tier—including in English, maths and science. The highest achievable grade in ordinary circumstances in the lower tier is C. We have two tiers in the grading system, with 19% of pupils achieving grades E, F and G in GCSE Maths, and 11% of pupils achieving those grades in English.
We need to ensure that our exams are on a par with those in the highest performing countries in the world, and that our schools are delivering the kind of education that equips and prepares all pupils to take and excel in those exams. That is what the Government mean by closing the attainment gap. I urge the House to reject the cynical motion tabled by the Opposition and to support the radical education reform agenda being delivered by this Government to ensure rigour and high expectations for all young people in this country.
Question put (Standing Order No. 31(2)),
That the original words stand part of the Question.
Defence Reform
(12 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
21:59 - The House divided: - Ayes: 210 / Noes: 294 - Question accordingly negatived.
Mr Kevan Jones (North Durham) (Lab)
I beg to move,
That this House recognises the need for defence reform; notes with concern the speed and depth of redundancies and the threat to historic regiments and battalions; supports the armed forces covenant but is anxious about the implications of changes to Service pensions and allowances and the effect of these and other measures on morale; further recognises the necessity of an advanced equipment programme but is worried about capability gaps, notably carrier strike; calls on the Government to end disadvantage and discrimination against the Service community in order to strengthen the covenant; and further calls on the Government to reassess the assumptions on which the Strategic Defence and Security Review was based.
Let me begin by acknowledging the courage and professionalism of our armed forces and recognising the invaluable support provided to them by their families. I know that that sentiment will be shared by all Members in the House. We ask servicemen and women to risk making the ultimate sacrifice, and to forgo many freedoms in the name of our national security. Their contribution to our safety must never be forgotten or underestimated.
Opposition Members recognise that our armed forces cannot be allowed to stand still. The combination of changing threats in an increasingly uncertain world with budgetary challenges means that we must be ahead of the curve in terms of technology and the tactics that we apply. We must be bold and practical in order to create an efficient fighting force which serves the primary requirement of our national security while also ensuring that we do the right thing on behalf of our servicemen and women and their families.
The major conflicts of recent history are drawing to a close. Meanwhile, a wave of popular uprisings throughout the middle east poses new challenges, as do new technologies and threats from cyber. Global changes will alter the balance of power, risk and how resources are allocated in the modern world. That is why Opposition Members support armed forces reform. Since May 2010, we have not opposed the Government simply for opposition’s sake. National security and support for our armed forces are worth more than cheap political point-scoring, although when we believe that the Government have made an error or strayed from their pre-election pledges, we will righty criticise and scrutinise their decisions.
We welcome the coalition’s commitment in 2010 to launch the security review. It built on the Green Paper published by the last Government, and our commitment in the last Parliament to undertake a defence review. Unfortunately, however, the one thing the coalition Government’s strategic defence and security review was not was strategic. The SDSR has unravelled quickly, displaying the same short-term, ad hoc and rushed decision making that is becoming characteristic of many areas of Government policy. The decisions that have been taken have left Britain with serious gaps in its defence capability. Events in the middle east last year—the Arab spring uprisings—were not foreseen, which meant the review was rendered out of date almost as soon as it had been printed. The Government were forced to use resources they had planned to scrap and bring back capability at very short notice.
Mr James Gray (North Wiltshire) (Con)
The motion calls for a reassessment of the “assumptions” on which the SDSR was based. Which assumptions does the shadow Minister not agree with?
Mr Jones
I know the hon. Gentleman takes a close interest in defence issues, but if he had read the Green Paper he would have seen that it takes a strategic look at the world. The SDSR was very rushed, and did not have the long public consultation and engagement with stakeholders that the 1998 review had. It was basically a Treasury-led review, which has resulted in some strange decisions that I shall describe later, which have affected the capability and capacity of our armed forces.
Mr Gray
I am simply focusing on the word “assumptions”. In the motion, the Labour party criticises the assumptions that lay behind the SDSR. My opinion is that those assumptions are absolutely fine—although I agree with the hon. Gentleman that some of the other detail was not so good. Which of the assumptions behind the SDSR does he not like?
Mr Jones
I would talk about the developing situation in the middle east, some of the decisions made post-SDSR in taking away maritime capability, and the whole issue of the deployability of our armed forces. All those decisions were taken within a financial straitjacket, instead of addressing questions such as where we need to deploy in the world and what our priorities are. That has overridden the security needs that are so vital and that were outlined so well in the Green Paper.
As a former Ministry of Defence Minister, I know only too well that the easiest ways to make the kind of in-year savings in the defence budget that are being demanded by the Treasury are to scrap capability or to make personnel cuts. However, the Government have scrapped important capabilities—Nimrod and the Harrier fleet—without any plans as to how they will be replaced. It appears that Ministers have been inflexible in their pursuit of short-term savings at the expense of our long-term security. Too often we are given the impression that the Government are presiding over decline, rather than planning for the future. The Government must reassess the security and spending assumptions on which the review was based.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
How would a Labour Government have dealt with the £38 billion overhang that the Conservatives inherited from the previous Labour Government? Also, is the hon. Gentleman saying he would, in fact, spend more on defence than the current Government? He should be explicit about that, but his motion is not explicit.
Mr Jones
I am glad the hon. Gentleman has asked about the £38 billion black hole, because it has become folklore, but the Government have not produced any evidence to justify that figure. Let me quote from an excellent Defence Committee report—which I am surprised he has not read as he is a former member of that Committee. It says:
“We note that the MOD now state the genuine size of the gap is substantially in excess of £38 billion. However, we also note the Secretary of State’s assertion that the ‘for the first time in a generation, the MOD will have brought its plans and budget broadly into balance, allowing it to plan with confidence for the delivery of the future equipment programme’. Without proper detailed figures neither statement can be verified.”
We should also consider the evidence given to the Committee by the then Secretary of State. He promised the Committee he would give details, but the final report states, at paragraph 205:
“We are surprised that this assessment has not yet begun and expect to receive a timetable for this exercise in response to this Report.”
The £38 billion figure has been bandied around ever since it was spun out of Conservative central office in the election campaign. The Government have been asked on numerous occasions to justify it, but they have not done so. They should.
Nick Smith (Blaenau Gwent) (Lab)
On the subject of wasting taxpayers’ money, the Government said last week that almost £39 million had been spent on preparing the carriers for “cats and traps” and the variant carrier aircraft, but the media says a quarter of a billion pounds have been spent. How much money does my hon. Friend think the Government have wasted?
Mr Jones
As with the £38 billion figure, the Government are very good at not explaining their mistakes. The original figure was, I think, £37 million. It then rose to £39 million, but the MOD subsequently briefed that it was £100 million. However, some informed sources say that it could be upwards of £250 million. The Government should state how much was spent in respect of that disastrous decision, which was taken at a time when the defence budget was experiencing savage cuts. They seem to have swept this matter aside, however, as if it is not important.
The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)
The hon. Gentleman is right: £38 billion is a huge amount of money. However, I should draw his attention to a note entitled:
“Note to Ed Miliband: Defence team work update”.
It states that Labour needs to be
“credible on defence spending and neutralising the ‘£38bn’ charge, which is our biggest weakness.”
So the Labour Defence team think that that charge is Labour’s biggest weakness.
Mr Jones
The Minister is making various assumptions, which is not unusual for him. That note says precisely what I am saying today, which is that we need to shoot down this erroneous myth that has been put about by this Government. If he wants more evidence on this, he should read the National Audit Office “Major Projects Report 2009”. It says of the defence budget:
“The size of the gap is highly sensitive to the budget growth assumptions used. If the Defence budget remained constant in real terms, and using the Department’s forecast for defence inflation of 2.7 per cent, the gap would now be £6 billion over the ten years. If, as is possible given the general economic position, there was no increase in the defence budget in cash terms over the same ten year period, the gap would rise to £36 billion.”
Even the NAO did not reach the £38 billion figure, therefore. I acknowledge that the figure it gives is £2 billion out and this Government seem to think such sums are unimportant, but I have just quoted from the NAO report. That is possibly where Conservative central office first got the figure of £36 billion, but there is a big difference between £36 billion and £38 billion. The £36 billion is based on an assumption of a flat-cash budget over the next 10 years and every single item in the equipment budget being maintained, when everyone who has ever been involved in MOD matters knows that things come into the equipment budget and things fall out of the equipment budget.
Mrs Madeleine Moon (Bridgend) (Lab)
The Defence Committee was advised in one of its briefings that the projected figure of £38 billion included a roll-forward of all items on wish lists—not things for which contracts had been let, but items the MOD had expressed a possible interest in purchasing for the future. This was, we were told, the equivalent of an individual becoming bankrupt because they fancied buying a Ferrari but never actually bought one.
Mr Jones
I thank my hon. Friend for that. Let me quote from the evidence given to the Select Committee by the former Secretary of State. In response to a question from a Member, he said:
“There is a huge ability to reduce a very large proportion of that. My guess is that of that £38 billion we are talking of something like £8 billion to £9 billion, and that is a ballpark figure.”
During that evidence session, he gave a commitment to the Select Committee Chair that he would write giving details of how he arrived at that figure, but he did not. The Committee was still waiting for that information when the report was produced, but it did not appear. I heard one of the Government Front Benchers scoff when I said that certain things move in and out of budget, but they clearly do. My hon. Friend the Member for Bridgend (Mrs Moon) is right: the Government racked up everything in the programme over a 10-year period and assumed that it would all be delivered. That is similar to the argument used about pension black holes, the assumption being that all the money is paid out, today. That is not the way the defence procurement budget is structured.
Mr Bob Ainsworth (Coventry North East) (Lab)
The Government obviously intend to keep the myth going, and who could blame them for that? However, can my hon. Friend explain how, on two separate occasions—we should remember that this Government have only been in power for a little over two years—two separate Secretaries of State can have claimed that the £38 billion gap has already gone and that the budget is now in balance? If the imbalance was as large as they alleged, how on earth have two separate Secretaries of State been able to claim within two years that the budget is in balance already?
Mr Jones
My right hon. Friend, like me, knows the MOD budget very well. Clearly, what the Government have done is to take out in-year capability. We should also remember the reductions in armed forces personnel—the people who are paying for some of this. My right hon. Friend is correct: the idea that such a big black hole can be filled in two years is complete nonsense. [Interruption.] The Under-Secretary, the right hon. Member for South Leicestershire (Mr Robathan), says that it is 10 years, but that is not the impression the Government have been giving. All their decisions, such as slashing personnel numbers, are predicated on this £38 billion black hole. Earlier last year, the previous Secretary of State stopped using that figure—for a while. Suddenly, under the new Secretary of State, it has come back. The Government have got to explain their use of it, because it is the entire raison d’être for some of the cuts they are making.
Mr Jenkin
I remind the hon. Gentleman, the right hon. Member for Coventry North East (Mr Ainsworth) and the hon. Member for Bridgend (Mrs Moon) that the £38 billion figure was furnished to the Defence Committee under the previous Labour Government when the hon. Gentleman was a Minister in the Ministry of Defence. At the same time, Mr Bernard Gray produced a report saying that, on present plans, the MOD could order no new equipment at all for the next 10 years, so dire was the state of its finances. It is only by bringing defence spending within the Department back into balance that any new equipment has been able to be ordered at all.
Mr Jones
I am sorry but that is complete nonsense. The hon. Gentleman should read the NAO report that I referred to earlier, which makes the assumption that many people have made in respect of flat cash. I will read the quote again, because he has obviously not picked up the argument:
“The size of the gap is highly sensitive to the budget growth assumptions used. If the Defence budget remained constant in real terms, and using the Department’s forecast for defence inflation of 2.7 per cent, the gap would now be £6 billion”.
There is a huge difference between £6 billion and the £38 billion figure that the Government are claiming. Even if, in line with the NAO report, we assume a flat cash budget for 10 years, we only get to a figure of £36 billion. Where the Government get the extra £2 billion from, I do not know. This issue was also dealt with in Bernard Gray’s report, and as my hon. Friend the Member for Bridgend said, the £38 billion figure is based on the principle that every single piece of equipment that was planned for would actually be delivered. However, anyone who knows the defence budget knows that that is not how things work. [Interruption.] I am sorry, but the £38 billion figure is a fiction, and this Government have got to justify it, because they are using it to justify some of their most draconian cuts, not only in equipment but to the service terms and conditions of members of our armed forces.
Christopher Pincher (Tamworth) (Con)
The hon. Gentleman seems to accept that there is a gap and that it could be up to £36 billion. What is the gap?
Mr Jones
Let me read what the NAO report says—for the third time:
“The size of the gap is highly sensitive to the budget growth assumptions used. If the Defence budget remained constant in real terms, and using the Department’s forecast for defence inflation of 2.7 per cent, the gap would now be £6 billion.”
The figure of £36 billion is reached only if flat cash over 10 years is included. Ministers said that the £38 billion figure is over 10 years—that is not the impression they have been giving to the media, the armed forces and the public. Instead, they have been suggesting that we somehow have to lay our hands instantly on £38 billion. As my right hon. Friend the Member for Coventry North East said, the idea that that figure can be wiped out in two years is an accounting fantasy.
Mark Lancaster (Milton Keynes North) (Con)
Listening to this debate, the one thing that is clear and that the hon. Gentleman accepts is that there is a gap, be it £6 billion or £38 billion. Given that there is a gap, why did the last Government not balance the budget?
Mr Jones
We were on line in that regard. One of the jobs that my right hon. Friend the Member for Coventry North East gave me when he was Secretary of State—it was something of a poisoned chalice—was to draw up some reductions. Just before the general election, I had already identified some £1.2 billion of savings, but some of that involved investing money in order to save it. The problem at the moment is that the Treasury want instant cash out of the budget, and the only way to do that is to slash personnel and equipment straight away. The more sensible approach that we were going to implement was a planned phase of three to five years, involving some investment and some reductions. That is in stark contrast to the Government’s approach. What is driving this process is not defence strategy but the desire of this Government and the Treasury to take 8% out of the budget in years one and two. That has led to the short-termism we are seeing now.
Mel Stride (Central Devon) (Con)
If the gap is a mere £6 billion, as the hon. Gentleman is suggesting, does he believe that that in itself is acceptable—yes or no?
Mr Jones
Yes, because some of the programme was not committed. The former Secretary of State was asked by the Defence Committee how much of that budget was committed, and quite a large portion of it was not. One approach could be to delay projects, as this Government and the previous Government have done, or to cancel them.
When the previous Secretary of State took office, he said that he was going to save a load of money by renegotiating contracts with various suppliers. We have yet to see a single example of his having been able to renegotiate procurement contracts and make great savings. [Interruption.] I am sorry, but I am not going to take any lessons from the Conservatives on the carriers, given that they have wasted upwards of £100 million through a decision that—[Interruption.] Government Members are shouting, but I do not remember either the Minister for the Armed Forces, or the Under-Secretary of State for Defence, the right hon. Member for South Leicestershire, saying when in opposition that the carriers should not be ordered. That is the problem: they were calling then not only for the carriers, but for a larger Army and a larger Navy, but now that they are in government they are doing completely the opposite.
Dan Byles (North Warwickshire) (Con)
Is the hon. Gentleman interested in the fact that the Royal United Services Institute, which is known for being a very independent-minded organisation, stated in September 2011:
“Whichever detailed assumptions are made, however, there was no doubt that the funding gap was large and real. It would take considerable energy, and political cost…to escape from…It was, in a very real sense, a black hole.”?
Mr Jones
That is fine—[Interruption.] Well, it is fine; if it was true that the previous Government were doing nothing to address the situation, that would not be the case. But if the Government are going to claim that the black hole is £38 billion, there is an onus on them to explain in detail exactly how they arrived at that figure, because they are using it to justify every single reduction in defence expenditure that they are making. It is important that they do that. We had plans to balance the budget.
Christopher Pincher
The hon. Gentleman seems to be accepting that there is a black hole. He denies that it is a £38 billion black hole, but he will not say whether it is a big black hole or a little black hole. What was the size of his black hole?
Mr Jones
The last Labour Government were committed to looking for efficiencies and reviewing the procurement contracts. So some of the things that were planned would not have been procured, which would have closed that black hole to which the hon. Gentleman refers. [Interruption.] He asks me what the size of the black hole was. He and others have kept saying it is a £38 billion black hole, but if that is the Government’s sole justification for what they are doing, they should have the guts to explain it to the public.
Valerie Vaz (Walsall South) (Lab)
One of the battalions that recruits from my constituency, 3rd Battalion the Mercian Regiment, is one of only two specialised mechanised infantry battalions. It is due to be disbanded under the current proposals, so is it a proper use of public money for it to be disbanded only for these specialised services to have to be recruited again?
Mr Jones
There are so many leaks coming from the Ministry of Defence, some official and some unofficial, and it is not helping the process. We are seeing a ludicrous situation whereby in order to claim that the headcount of MOD civil servants, in particular, is being reduced, people are being made redundant only then to be rehired as consultants, at huge cost to the taxpayer.
Last month, the Secretary of State told the House that he had brought the MOD budget “back into balance”. Every announcement or decision made by the Government is based on that claim; he says that he has “balanced the defence budget”. However, unless we get hard evidence soon, it will remain impossible for us to believe those claims. Ministers must be honest with our armed forces men and women, who deserve to know the full picture of the MOD budget so that they can understand why they are having to undertake the pain that they are taking under this coalition Government.
Mark Menzies (Fylde) (Con)
The hon. Gentleman has said that the previous Labour Government had looked at making £1.2 billion-worth of cuts. Will he share with the House details of where those cuts would have fallen?
Mr Jones
One example is that we would have taken some strategic decisions on basing around the world. I must say that, in the spirit of co-operation, I gave one of the papers to my good friend the hon. Member for Aldershot (Mr Howarth) to assist him in the process. Some efficiency savings could have been made, including some through restructuring the Army and other things. The other point to make is that some of these things also needed investment, and I had been given clearance by the Treasury in some areas to invest to make longer-term savings. They were not just in-year savings to try to satisfy the Treasury and the deficit reduction programme on which this Government are embarking.
Pete Wishart (Perth and North Perthshire) (SNP)
Can we leave black holes to one side for the minute and concentrate on the Black Watch? On Saturday, the colours of the Black Watch were lowered for the last time, marking its passing as a regiment. It was the Labour party that amalgamated the Scottish regiments and they are fighting for their survival now as a battalion with cap badges, insignia and the heritage and culture that has been maintained. The Labour party moots a threat to the battalions and our regiments, so will it support us in ensuring that their survival continues and that the fantastic heritage and culture will be continued in the Royal Regiment?
Mr Jones
I understand people’s emotional attachment to the regiments, and I understand the proud traditions and how they are held. However, I must say that I always find the Scottish National party talking about this issue difficult. If we had an independent Scotland, not only would many of these regiments doubtless have their cap badges removed, but they would be abolished altogether. The SNP’s so-called campaign on this issue is a little hollow, to say the least. The SNP needs to explain exactly what the new Scottish armed forces would be if Scotland were to be independent. Would the Navy be something like fishery protection vessels? Would the Army be downgraded to some type of border force to patrol the border between Scotland and Northumberland? [Interruption.] The hon. Gentleman comments from a sedentary position, but the SNP claims to be supporting these regiments and the onus is on him to say exactly what the SNP is going to do if there is to be independence in Scotland, not only on regiments, but what the shape and format of the defence forces of an independent Scotland would take. I am sure that they would be a lot smaller and a lot more ineffective than what we have now. I doubt whether they would be larger, and I am not sure what their role would be and whether they would be in or out of a NATO command structure.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Before the shadow Minister takes that intervention, may I just point out that this is a time-limited debate and he has been incredibly generous in the interventions he has taken? That is not, however, to stop the intervention he is about to take.
Anas Sarwar
I come back to that important point about the separation of Scotland from the rest of the United Kingdom. Is my hon. Friend aware of comments made by Alex Salmond, Scotland’s First Minister, earlier this year? He called the MOD plans exactly the sort of “configuration you’d want”.
Mr Jones
That is right, but this point about an independent Scotland is not just about the regiments and the size of the armed forces; it is about all the procurement. I am sorry, but many English shipbuilders will be arguing strongly for contracts to be placed with English yards rather than Scottish yards if Scotland becomes a foreign country. We do not procure warships from foreign Governments.
The Secretary of State’s statement dealt primarily with the 45% of the budget that is spent on equipment and support. There will be no 1% real-terms rise for the 55% that is spent on other areas of defence, including personnel. We are very concerned that this will result in a real-terms cut to the armed forces personnel budget, particularly given that these costs tend to rise higher than the usual rate of inflation. Not only was the announcement therefore less comprehensive than it was spun to be in the newspapers, but it would appear that the limited investment in equipment budgets is coming at the expense of investment in personnel, who are already suffering under the Government’s cuts to personnel numbers, allowances and pensions. So it is becoming clear to many that the Secretary of State has balanced the budget on the backs of our brave service men and women, and Ministers will have to offer this House the information it needs to take these claims seriously. [Interruption.] The Whip says from a sedentary position that that is a silly thing to say, but I think I might have a little more knowledge of the intricacies of the defence budget than he has.
On the capital investment side, Ministers have not factored in the costs of the proposals to withdraw British military bases from Germany. They will have a significant short-term cost, which they seem to have conveniently just ignored. I considered that idea when I was a Minister and even four years ago the price tag was some £3 billion. Again, that seems to have been conveniently forgotten in this so-called new balanced budget.
On top of all that, the Minister has failed to substantiate the figure of £38 billion. I will not reiterate the points I have read out already, but I will add a third example. Mr Jon Thompson, the director of finance at the MOD, told the Public Accounts Committee that Ministers were committed to producing a report in autumn 2011 on the extent of the so-called gap in the budget. We are still waiting. That information is vital because the legitimacy of everything the Government are doing through the defence cuts is predicated on that so-called gap.
I would be grateful if the Minister could answer a few questions. As the post-2015 1% rise is an “assumption”, could it be revised between now and 2015? What rate of inflation was used to calculate the 1% real terms annual increase in the equipment budget between 2010 and 2020? When will we get the National Audit Office’s assessment of the MOD budget and, more importantly, when will the House have an opportunity to debate that report?
The Secretary of State also needs to factor defence inflation into his calculations. It would be interesting to know what figure he is using for the real-terms cuts to the 55% of the MOD budget that lies outside the equipment and support budget. Members might be aware of reports over the weekend, for example, that an ongoing study of British shipbuilding might result in the delay of one of the new aircraft carriers and the potential closure of Portsmouth dockyard, with a threat to some 3,000 jobs. That casts even greater doubt on the Ministers’ claim to have balanced the budget. It is hard to see how they can justify their triumph when such issues remain unresolved. The Minister’s comments on the Portsmouth report would be welcome.
We now hear announcements from the MOD by leak—either official or unofficial—and an interesting one is on the future of Defence Equipment and Support. The Chief of Defence Matériel is supposed to be pushing forward the Government-owned contractor-operated model. Restructuring is important in defence procurement, as we would all agree, but there are huge questions about the impact on accountability to Parliament of privatising decisions that deal with many millions of pounds of taxpayers’ money.
As for the carriers, the Government have sought to present themselves as economically competent and the Opposition will resist the temptation to take Ministers at their word. As was mentioned earlier, the costly, unnecessary and humiliating U-turn on the British aircraft carrier capability meant that we ended up with a policy that the Prime Minister had rubbished the year before and that millions of pounds of taxpayers’ money have been wasted at a time when the defence budget is being cut deeply. The Government must come clean and explain in detail how much was squandered by that reckless decision.
Britain is a proud maritime nation, but as a result of the decisions taken in the SDSR we are left with no maritime surveillance capability and with no carrier strike capability until at least 2017. Huge issues remain unaddressed. The Secretary of State has not decided how many aircraft he will purchase, just as he has deferred his decision on whether a second carrier will be operational. He stated to the House that he would be committed to “continuous carrier availability”, but that might now not be the case.
With such a backdrop, it is not surprising that morale in our armed forces is low. Morale has been described as in freefall as a result of some of the decisions on redundancies, cuts in allowances and permanent pension reductions. The Forces Pension Society has said that it has
“never seen a government erode the morale of the Armed Forces so quickly”.
I hope that right hon. and hon. Members have had the opportunity to look at today’s report on housing by the Select Committee on Defence. It shows that the cuts in expenditure on improvements in forces accommodation are leading to real pressures in Army housing.
Dr Andrew Murrison (South West Wiltshire) (Con)
The hon. Gentleman mentions pensions and a number of right hon. and hon. Members in the Chamber have a particular interest in service pensions. No doubt they will want to hear whether, if he were returned to office in 2015, he would reverse the changes that have been made.
Mr Jones
We need to consider armed forces pensions as a whole, which is something else that I considered as a Minister. Many people do not realise that although the armed forces pension scheme is non-contributory, members of the armed forces pay for it through abatement in their increases. As the Government have abandoned the Armed Forces Pay Review Body’s recommendations and our proud record on such recommendations when we were in office, it is time to look at how armed forces pensions are dealt with as a whole. Interestingly, when I wanted to look more closely at such issues, the Secretary of State who resisted was Lord Hutton, who is now advising the Government on pensions in general. The issue needs to be considered as a whole—not only pensions but abatement in pay, too.
In 2010, we were committed to spending £8 billion on accommodation in the next decade, £3 billion of which was for improvements and upgrades. In contrast, this Government have slashed spending on housing by some £41 million. I remember that when I was a Minister and when my right hon. Friend the Member for Coventry North East was Secretary of State, despite our record investment in accommodation, the then Opposition were highly critical of what we were doing. Many in the armed forces will now be dismayed by their actions in government.
It is also important to listen to the armed forces federations. Dawn McCafferty of the Royal Air Force Families Federation has commented that families felt as though the covenant had already been broken within months of its announcement because of the cuts. Until the fall in morale is acknowledged and acted on, many will question Ministers’ commitment to upholding the military covenant.
A particular concern for us is the way in which reductions in the number of armed forces personnel are taking place. Two weeks ago, the Minister ordered yet another tranche of redundancies affecting 4,100 personnel, 30% of which were compulsory. It is a great worry that we are losing not only important skills but expertise and capability that we can no longer afford to lose. The public and armed forces community are quite rightly angry that individuals who are ready to deploy to Afghanistan are being given their P45s, despite all the assurances given by the previous Secretary of State and by this one. I know from experience that if we had treated the armed forces in such a way when we were in government, Conservative and Liberal Democrat Members would rightly have pilloried that decision. We feel it is only right to hold them to the same high standard that they put forward when they were in opposition, which they seem to have conveniently forgotten now they are in government.
Many will be concerned by the rumours that are circulating about the Government’s plans to cut regiments and battalions. Our regiments embody our proud history and the national prestige of our armed forces. Many have served with distinction in the fields of Flanders, on the beaches at Normandy and, more recently, in the deserts of Iraq and Afghanistan. The Secretary of State’s now-trademark lack of sensitivity when dealing with this issue is understandably creating anger among many serving in the armed forces and those who have retired.
Patrick Mercer (Newark) (Con)
May I remind the shadow Minister that his Government cut and disbanded regiments while they were on operations? They also wholesale disbanded historic regiments and invented names from “Alice in Wonderland” for new regiments, so there can be no lessons from the Opposition about the maintenance of historic and honourable regiments. Many of us wear the scars to bear witness to that.
Mr Deputy Speaker
I am worried. It is no use telling me not to worry because Members—I ought to warn them now—may be down to a five-minute limit or less if we are to get them all in. I wanted to let people know so they could alter their speeches.
Mr Jones
I will take your guidance, Mr Deputy Speaker, and not take any more interventions. On the comments of the hon. Member for Newark (Patrick Mercer), he knows that the recommendations put forward at that time regarding structure and names were put forward by the Army.
Any uncertainty needs to be clarified. It is almost a month since the Secretary of State told the Royal United Services Institute that some units will inevitably be lost or merged. Given that he has gone outside Parliament to light bonfires of rumours, it is not acceptable for him to throw more petrol on them by delaying. We are told that the Ministry of Defence has signed off on this issue now but that matters are being held up by Downing street for political reasons. That uncertainty is leading to a lot more rumours, which are causing more uncertainty.
In conclusion, when they were in opposition the Conservatives called for a larger Army, a larger Navy and increased investment in the armed forces. In government, their actions have been to do exactly the opposite. It is not surprising that they are losing the trust of the armed forces community and the public so quickly. We in opposition want to support strong reform on procurement and the principles of the military covenant and we want the equipment programme to be improved. Too often the Government have put austerity before security. I hope that in his response the Minister will not just answer the questions I have put forward but will also agree with the terms of the motion and the recommendations regarding the assumptions of the defence review to give those whom we ask to serve on our behalf the confidence and certainty they deserve.
The Minister for the Armed Forces (Nick Harvey)
Let me start as the hon. Member for North Durham (Mr Jones) did—by paying tribute to the men and women of our armed forces. The job they do is difficult, dangerous and sometimes deadly, but they do it with a professionalism, commitment and courage that we have come to expect but should never take for granted. This weekend is armed forces day, which will give all of us the opportunity to pay tribute to the contribution of the entire defence community.
The House will note that we do not have the pleasure of the company of the shadow Defence Secretary this evening. No criticism attaches to him for going on a defence visit to Australia or for staying on for a few days afterwards. No criticism attaches to him for allowing the Secretary of State to honour a commitment to host Defence Ministers from several of our allies this evening. The only criticism of the shadow Secretary of State is that he has left the poor old hon. Member for North Durham the unenviable task of trying to move this completely nonsensical motion.
Mr Kevan Jones
The Minister is correct that the shadow Secretary of State is in Australia—unfortunately with the hon. Member for Devizes (Claire Perry), but I understand that they did not travel on the same plane so that is one good thing for him. He has stayed on after the defence visit because a member of his family there is seriously ill. That is why he is not here today.
Nick Harvey
I am sure we all wish the family member well. I did say that no criticism attaches to the shadow Secretary for his absence and I mean that most emphatically.
The matter before us is this nonsensical motion. It seems to say that the Opposition recognise the need to make the changes we are making, but the fact is that they ducked these changes year after year. They went for 12 years without a defence review, with pressure building up in the defence programme all the time, and there was a black hole of whatever size—we will come back to that in a minute—by the time of the strategic defence and security review. They left our armed forces overstretched, under-equipped and underfunded for the tasks they were set. That is the legacy of the Government in which the hon. Member for North Durham served. The blame for the need to remove platforms, reduce manpower and make the other reductions we have had to do sits very squarely at the previous Government’s door. They wrecked the economy, they wrecked the defence budget and they failed to make the changes necessary to prepare our armed forces for the future.
The hon. Member for North Durham made heavy weather of the black hole. When we began the SDSR process in the summer of 2010 we asked the officials who were presiding over it at the MOD, “What is our baseline and what is the true financial situation as we start this process?” The explanation came that if we took the manpower commitments, all the overheads and all the committed expenditure, including the contracts that had been signed for procurement and those that had been announced by the previous Government as Ministry of Defence policy, and planned to bring them on stream when the Labour party said they would be, over the 10-year period, there was a gap between all that and a “flat real” terms assumption on funding—not a “flat cash” assumption—in relation to the 2010-11 budget. We were told that the gap over the 10-year period would amount to £38 billion. It was a 10-year period because that is the length of time over which the MOD plans its budgets.
The hon. Member for Bridgend (Mrs Moon) said that that was an unreasonable thing to view as a starting point. She compared it with the situation of someone who was about to go personally bankrupt aspiring to buy a Ferrari, but I do not think that is very kind to the right hon. Member for Coventry North East (Mr Ainsworth). When he came to the Dispatch Box a few weeks before Christmas in 2009, he announced that there would be 22 new Chinook helicopters. He did not sign a contract or find the money to pay for them but he announced there would be 22 new Chinook helicopters. I do not know whether in the fantasy budget of the Labour party it does not think that that was a commitment, but it was one of the commitments that that Defence Secretary made, and it was on that basis that the £38 billion black hole was presented to us by officials.
I do not call into question the personal commitment of the hon. Member for North Durham, but he has to recognise that his motion opposes everything that this Government are doing and is pretty scant when it comes to proposing any alternatives. He says that he recognises the need for defence reform, but the only response in his motion is to be concerned, “anxious” and “worried” about how we are clearing up the mess he made. He has not presented one properly costed plan or given us a coherent alternative. He has not given us a plan A, let alone a plan B. He needs to recognise that he has to do better if he wants to hold us to account for what we have done.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Does the Minister think the decision he has just criticised was better or worse than switching to a “cat and trap” system when first coming into office and then reversing that decision at great cost only a year later?
Nick Harvey
I think it was a perfectly sensible alternative to explore the “cat and trap” option. As we said at the time, it would have given us the ability to project a much better aircraft type off the carrier. I think that to commission the detailed work on that proposal was entirely responsible. If it ends up costing us the maximum, as the Secretary of State suggested, of £100 million, that is a small sum compared with the £1.5 billion the previous Government added to the carrier project in one afternoon, when they announced from the Dispatch Box that it was to be postponed by a year. That was a far greater drain on the defence budget than the relatively small bounded study, which unfortunately concluded that the costs of going ahead with the plan were such that it was not viable.
The shadow Defence Secretary has identified £5 billion of cuts that he says he supports, but that would barely scratch the surface of the black hole that his party’s Government left behind. Of course, his cuts are not new; they are already being made. On Labour’s current public plans, the defence budget would still be in chaos. They have pledged neither to make any extra savings, nor to restore the cuts that have been made. What is interesting is not what they are saying in public, but what they are saying in private. Earlier, reference was made to the interesting correspondence between the Leader of the Opposition and the shadow Defence Secretary. It is worth quoting the letter from the Leader of the Opposition to his colleague, dated 23 January this year:
“You have powerfully made the case in your recent interventions that there is no easy future for Defence expenditure and clearly in the context of the current fiscal position we can expect to have to make further savings after the next election.”
In public, the Opposition are against the cuts that we are making, but in secret, they are planning even deeper defence cuts. Today’s debate is not simply opposition, but opportunism as well.
Mr Kevan Jones
We said that at the last general election. What we were not going to do is rush the process. I challenge the Minister of State to place in the Library of the House the details of how he arrived at the £38 billion figure. Today he has said something that no other Minister has ever said: that the £38 billion is over 10 years. The impression has always been given that it is there right now. Will he produce that information? Without it, some of the cuts he is making are not credible.
Nick Harvey
That is absolute nonsense. It has been clear from the outset that the £38 billion figure was over 10 years. I remember many a debate with the shadow Defence Secretary about whether we were talking about the 10 years being measured out on the spending side in flat real or in flat cash, and I have said again tonight that it was by reference to flat real. It has always been a 10-year figure, and the suggestion that we have magicked £38 billion out of spending in two years is clearly nonsensical; it has always been over 10 years. I am happy to give the hon. Gentleman further details of how we worked that out, but there is no getting away from the fact that the Labour Government left behind a massive black hole. The right hon. Member for East Renfrewshire (Mr Murphy) has identified a tiny number of cuts that he thinks need to be made and he has secret plans to make more, but he is not prepared to face up to the difficult decisions that have to be made to clear up the economic inheritance across the piece and specifically in defence.
Transforming Britain’s armed forces by implementing the 2010 SDSR is necessary to recover capabilities after a decade of enduring operations. It is necessary to prepare the armed forces for a future in which threats are diverse, evolving and unpredictable. It is necessary to help to tackle the fiscal deficit and to put the defence budget and equipment plan back into balance. We have to build for the future with strict financial discipline, making certain that the armed forces have confidence that projects in the programme are funded and will be delivered. As my right hon. Friend the Secretary of State announced last month, the black hole has now been eliminated and the 10-year defence budget is now in balance. I readily acknowledge that Future Force 2020 will be a smaller fighting force, but it will still be able to deploy a brigade-sized force on a sustained basis on operations, or a divisional-sized force on a best effort.
There was much criticism from the hon. Member for North Durham because we have had to reduce manpower numbers, but it is worth noting that in the memo the Opposition defence team sent back to the leader of their party, they said, in reference to Royal Navy and Royal Air Force personnel, that they recognised that there would be reductions in personnel numbers. On Army restructuring, too, the memo stated that they recognised the need for manpower reductions. So they recognise the need for the measures we are taking; they just do not like the grim reality of having to do it.
Despite all the changes that we are making, we will still be supported by the fourth-largest defence budget in the world, meeting our financial responsibilities to NATO. We will configure the armed forces for a world where threats to our homeland and allies are increasingly to be found outside Europe, rather than on the north German plain, and we will move from a heavily armoured force to a more mobile, adaptable and deployable force.
Mr John Baron (Basildon and Billericay) (Con)
My hon. Friend is right to take no advice from the party that, when in government, more than doubled the national debt, but may I pursue the point about recruitment and downsizing the British Army? Reports suggest that 2nd Battalion the Royal Regiment of Fusiliers is to be axed, despite being one of the best recruited battalions in the British Army and forecast to remain so. Does the Minister accept that decisions about which battalions to axe should be based on the ability to recruit? In that case, the Ministry of Defence should be looking at the Scottish battalions, which consistently have trouble recruiting, with their numbers made up by English soldiers. I would suggest that no Englishman should ever be forced to wear a kilt.
Nick Harvey
I urge my hon. Friend and all other hon. Members not to give credence to speculation about which battalions might end up having to be disbanded or merged. I repeat what I said at Defence questions: the decisions will be taken on the most objective criteria, not on a snapshot of current recruitment. Those criteria will be ensuring that we get the right balance of forces for the future, that we maximise our operational output and that we have the right geographical spread across the country, and that our long-term ability to recruit is assured.
Jim McGovern (Dundee West) (Lab)
My grandfather, Hugh Macdonald, served gallantly in the Black Watch and is buried in the military cemetery in Gibraltar, where he died in 1941. I am sure that he was proud to wear a kilt. There were Englishmen serving in the Black Watch then and now—indeed, the Liverpool Scottish part of the Black Watch comes up to Dundee every year. Can the Minister of State give my constituents and serving members of the Black Watch some sort of assurance that, on his watch, there will always be a Black Watch?
Nick Harvey
I can give the hon. Gentleman the assurance I have just given the House: the decisions to be taken will be objective decisions against the four criteria that I have just set out. No one should give in to the temptation to believe what they read in the newspapers.
Pete Wishart
Scotland is suffering badly from what is happening in defence spending. Only four of the 148 major Regular Army units are based in our territory. That represents 2.7% of the entire British Army, yet we have 8.4% of the population. Why is Scotland doing so badly when it comes to defence cuts and defence spending?
Nick Harvey
I do not accept either the analysis or the figures offered by the hon. Gentleman. Scotland does well out of defence, and defence does well out of Scotland. We plan our defences for the defence of the United Kingdom as a whole in the most coherent way we can, and Scotland will do a great deal better out of being part of the UK’s defences than it will ever do if it goes on its own and plans its own defence force.
Mr Jenkin
There is speculation that the process is being elongated, perhaps over a number of months, because of political considerations. Does my hon. Friend accept what a large number of armed service men and women are saying—that uncertainty is extremely corrosive, damaging and morale sapping, and the sooner these decisions, however difficult and unpleasant they are, can be made, the better?
Nick Harvey
I agree. Uncertainty always has a destabilising effect. I can assure my hon. Friend and the members of the armed forces that they will not have long to wait. However, it is more important that we get this right than that we do it quickly. These decisions are a once-in-a-generation rebalancing of the Army’s structure. If we get it wrong, the Army will suffer the consequences for decades to come, so it is important to take a little time and get it right. The House will not have long to wait for announcements to be made.
Richard Drax (South Dorset) (Con)
We hear reports that people are being targeted for redundancy and will therefore not qualify for their full pension. Is that correct? If it is, will the Government look kindly on those affected?
Nick Harvey
Let me say first to my hon. Friend that the issue of disbandment of battalions, which we were just discussing, and redundancy have nothing to do with each other, so nobody should read into the decisions that are taken about particular battalions that members of those battalions will be made redundant. In answer to the specific question that he puts, nobody has been selected on the basis of their proximity to a retirement date, but inevitably it is the case that where there are lines, some unfortunate souls will fall just the wrong side of the line. It is a matter of great regret, but the redundancy payments will in any case be bigger than the lump sums that those personnel would have received at retirement.
Dr Murrison
In making the very difficult decisions that my hon. Friend undoubtedly will have to make in the near future, what attitude does he have to the very gallant men and women from countries other than the United Kingdom who serve in our armed forces? How does he imagine they will be affected by the redundancy programme?
Nick Harvey
In no way will they be singled out. These decisions are being made in the most objective and scientific way we can make them, but inevitably some who serve from overseas will be affected and others will be more fortunate. There is no getting away from that.
Some of the reductions that are to take place will be accounted for by reduced recruiting and fewer extensions of service, but as I said, a redundancy programme is, sadly, inevitable to ensure that the right balance of skills is maintained across the rank structures. Compulsory redundancy will not apply, as we have made clear from the outset, to those in receipt of the operational allowance, those within six months of deploying, or those on post-operational tour leave following those deployments. In all cases it is for the individual service to determine how the necessary reductions can be achieved and over what timeline, making sure that the right mix of skills, experience and ranks are retained.
The main programme for the Royal Navy and the RAF have been concluded, but protecting the Army’s contribution to Afghanistan has meant that two further tranches are still to come for the Army. We will, as I said, make an announcement on Army 2020 very shortly, which will provide clarity on the future structure of the Army. We will have a land force of 120,000, composed of a Regular Army of 82,000, plus 30,000 reserves and an 8,000 training margin. An Army of this composition will have to be structured differently, and it is impossible to do that without losing and merging some units.
Although we cannot avoid difficult decisions as the Army gets smaller, we will seek to do this in the most sensitive way possible, respecting the traditions of the Army, respecting the traditions of our great regiments, but always recognising that military effectiveness must be the first requirement in designing our future structure.
Mr Julian Brazier (Canterbury) (Con)
I commend what my hon. Friend has just said. When we think about which TA regiments to keep, which to lose and where to put them, I urge him to bear in mind that a unit in the Territorial Army cannot be moved more than a very small distance without losing the people. It is even more critical than in the Regular Army to pick those that have an officer and soldier base that is well recruited; many units do not have such a base. It is vital that we build on the best ones.
Nick Harvey
My hon. Friend makes a good point, which is being taken into account as these difficult decisions are made.
The current financial situation makes it difficult to act as swiftly as we would wish to address some of the issues that make day-to-day life that bit more difficult for personnel and their families. Mention was made of the pause we have had to make on major housing upgrades, but thankfully the £100 million additional investment in accommodation that was announced in the Budget will deliver more than 1,000 new and refurbished single living and service family accommodation units. That will help the MOD to continue to meet its commitment, set out in the armed forces covenant, only to allocate homes that are standard 2 or above.
On the issue of the covenant, I start by recognising the important work done by the hon. Member for North Durham, along with the right hon. Member for Coventry North East, in preparing the ground for the publication of the tri-service armed forces covenant in May last year, which built on many of the suggestions in their Command Paper. We have been able to double the operational tax-free allowance and we have improved rest and recuperation. Council tax relief has been doubled twice since the Government took office, and now stands at nearly £600 per person for a six-month deployment. In health care, we are investing up to £15 million in prosthetics provision for personnel who have lost limbs during service, extended access to mental health and increased the number of veterans’ mental health nurses.
On education, we have set up scholarships for bereaved service children, provided financial help for service leavers who want higher and further education, and introduced the pupil premium for the children of those currently serving, making extra funds available for state schools with service children. More than 50 councils have signed up to the community covenant scheme with another 47 planning to do so, and there is a £30 million grant pot to support that. However, there is a long way to go.
For the first time, the armed forces covenant has been formally published and recognised in legislation, and we are working across Government to ensure that no disadvantage is faced by armed forces personnel, their families and veterans compared with other citizens.
Ever since the publication of the SDSR, the Opposition have been calling for another SDSR. They went 12 years in government without one, but they now seem to want another one every time the wind blows. We have put in place a system for regular strategic review through the National Security Council, and preparations for the SDSR of 2015 are already under way in the MOD. However, none of the strategic assumptions underpinning the 2010 SDSR have significantly changed, so we will press ahead with the implementation of the SDSR based on formidable, adaptable and high-tech armed forces, built on balanced budgets and supported by an effective and efficient MOD, taking the tough decisions that the previous Government ducked, providing our armed forces with the tools they need to do the job we ask of them, upholding the armed forces covenant, and protecting this country’s national security, which is the first and foremost duty of any Government.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I will have to bring in a five-minute limit on speeches and I may have to reduce it. If Members are good to each other and do not intervene too often, I hope to get everyone in.
John Woodcock (Barrow and Furness) (Lab/Co-op)
We got a lot of heat from the Minister, but we are not much clearer on the key issue on which I want to expand—defence procurement. My hon. Friend the Member for North Durham (Mr Jones) and my right hon. Friend the Member for Coventry North East (Mr Ainsworth) have already made excellent points on the issue. It is of course true that any incoming Government at the last election would have had to make savings and the process could have been difficult. The Labour Government put in place the process to consider how we should do that, but the important thing was to learn and see where the next Government could improve. So far, the signs are that this Government have comprehensively failed to do that.
When the right hon. Member for North Somerset (Dr Fox), who became Defence Secretary, was not making promises in opposition about increasing the size of the Army, he used to tell the House how terrible it was that Ministers increased the costs of projects by delaying them, but in government his party is doing precisely that, with significant added cost to the taxpayer.
As we have seen again today, Ministers are patting themselves on the back as if they have finally and magically squared the circle on defence procurement. I am afraid that what they have done is simply seek the appearance of order, in the manner of a child tidying his bedroom in great haste. They have done this in a number of ways. Some costs have been swept under the bed, increasing the burden on taxpayers and storing up risk for future years. In that category, of course, I include the successor deterrent.
Ministers can announce the necessary long-lead items initiated in recent weeks with as much fanfare as they like—they know that I have welcomed the commencement of each one so far—but they know that that is now being done to a tight timetable and with increased costs caused by the delay they imposed in bringing the successor into service when they first came into office. When the Defence Secretary boasts about balancing the procurement budget, he knows that that has been made possible only by shifting the project’s cost profile to the right, largely out of this spending round, which is precisely what Conservative Members used to rail against from the Opposition Benches. The extra cost of refuelling the existing Vanguard class submarines alone, which was made necessary by the delay, was estimated at between £1.2 billion and £1.4 billion by the former Secretary of State. We are yet to hear the full cost of this exercise in political management and short-term debt clearing. Perhaps the Minister will seek to enlighten us when he winds up.
In their desperation to present a false image of order, the Government have gone beyond simply sweeping things out of immediate sight. Some projects have been subjected to the procurement equivalent of being hastily hurled out of the window, with little thought for the waste that that causes or, most importantly, the implications for national security. Any claim they might have made to have got to grips with defence procurement was surely destroyed by the farce over the aircraft carriers, which my hon. Friend the Member for North Durham set out well in his speech.
The final trick for those worried about their shoddy work being exposed is simply to turn off the lights. The Government have produced no credible evidence today or in the past about where this £38 billion has come from or how it will be filled in future. We are left with a lingering lack of certainty over the cost of big-ticket items and the personnel are bearing the brunt, with the Army that the Government promised to expand possibly set to get another whack. The books are cooked on the assumption of long-term increases in MOD funding post-2015, and black holes, which were never properly described in the first place, are apparently filled. The truth is that Ministers do not have a grip on procurement or cost overruns and have failed to put considered policy and the defence interests of the nation ahead of political posturing.
Sir Menzies Campbell (North East Fife) (LD)
For the past 40 years, RAF Leuchars in my constituency has been responsible for providing air defence for the northern half of the United Kingdom. It is ideally situated for the purpose, close to centres of population and training areas, and easily able to deal with intrusion by aircraft—formerly Soviet and now Russian—into British airspace. Even as this debate takes place, there are aircraft at Leuchars on standby to provide the quick reaction alert, which is an essential part of our air defence. Even as this debate is taking place, No. 6 Typhoon squadron has been stood up and is fully operational, and No. 1 Typhoon squadron is in the course of being stood up. Even now, preparations are taking place for one of the Royal Air Force’s few remaining air shows, which provides a valuable shop window, and it is able to do that, in particular, because of the accessibility of RAF Leuchars to Scotland’s central belt.
I have no doubt that a seamless and uninterrupted build-up of the Typhoon force is essential to the security of the United Kingdom. Is it true that Leuchars now has a dedicated Typhoon engine bay? Is it true that there is now a dedicated Typhoon ejection-seat facility at Leuchars? Is it true that there is Typhoon-specific survival equipment at Leuchars? Is it true that there are Typhoon-modified power supplies and Typhoo-specific IT systems already in place? It is suggested that the Army might be sent in some form or another to Leuchars, but it has not been possible to identify any capital investment in advance of such a decision.
We know that the proposal is to transfer to Lossiemouth, but no preparations have been made there for the arrival of Typhoon squadrons, which allows me, I hope, the colloquialism, “Leuchars ain’t broke, why is it necessary to fix it?” The truth is that Leuchars is in the right place at the right time and doing the right job.
Typhoon aircraft from Leuchars can be over London 12 minutes sooner than Typhoon aircraft flying from Lossiemouth. The Olympics, as the head of MI5 identified only yesterday, will be a severe test of our security, but that test is unlikely to end with the Olympic games, and the capacity to provide air defence throughout the United Kingdom will be an essential feature of our future security.
I have a profound belief that the original decision to move the Typhoon aircraft from Leuchars to Lossiemouth was based on financial and political considerations, which were put ahead of strategic obligations and of the clear operational advantages provided by Leuchars. The financial case has been substantially undermined by the Army reductions that we have heard about, by the rejection of the building of a super-base at Kirknewton near Edinburgh, by the inability of the Ministry of Defence to obtain the sums originally estimated for the sale of properties such as Redford barracks, also in Edinburgh, and by the additional costs of transferring Typhoons to Lossiemouth and of operating from Lossiemouth once they have been transferred there.
In my view, there is no question but that the deployment of the Typhoon force should be revisited as part of the ongoing review to which my hon. Friend the Minister referred but a moment or two ago. The original decision was flawed. It will be even more flawed if it is executed in the way that is proposed.
Mrs Madeleine Moon (Bridgend) (Lab)
I, like my hon. Friend the Member for North Durham (Mr Jones), look at some of the defence reforms—I use the word “reforms” very loosely—and have to question the decisions that were made, including whether they were in the best interests of the defence and security of the United Kingdom, or in the best interests of the Treasury-driven agenda to cut spending.
Chief among my concerns is the scrapping of the Nimrod MRA4, which has denied us the ability to protect our nuclear deterrent and offshore oil and gas platforms properly; to gather intelligence of threats developing way beyond our coastline such as in the high north; to respond adequately to offshore emergencies; and to contribute to international efforts against terrorism and piracy.
The Government assumption that we can do without maritime capability until 2020, with the replacement of the MRA4 not being commissioned prior to 2015 and an average commissioning period of five years, is nonsensical. We lost not just Nimrod, but the individuals with the skills that need to be nurtured in the area; and they are not just skills that we need to retain in design, building, flying and the analysis of electronic intelligence data, but skills that we cannot afford to see fleeing the country for work abroad, as is happening now.
The loss of the Harriers—sold for spare parts, we were told—was based on the short-sighted assumption that we can do without planes to fly from our carriers. Ministers insisted that it was a good deal for the British taxpayer, but as one US rear admiral said:
“We’re taking advantage of all the money the Brits have spent on them. It’s like we are buying a car with 15,000 miles on it.”
We are losing our prestige overseas, and we should not underestimate how we have gone from being a respected player on the international stage to being, in many quarters, pitied for what we have lost and can no longer do.
We have been well accustomed to the problems of defence procurement and the conspiracy of optimism that has led to delayed and expensive procurement decisions, but the Ministry of Defence is in great danger of falling into the same trap with its plans for Future Force 2020. The plan seems simple—rebalancing the armed forces to increase the number of reservists, thereby saving money but gaining the benefits of the skills and experience that reservists can bring. I have to say that there is a shocking naivety in this plan. Members of our armed forces are tough, resilient people who welcome the challenges thrown at them, but I fear that reducing their numbers to 82,000 will mean that we face overstretch, burn-out and a loss of capacity, skills and capability.
As part of Future Force 2020, a threat is hanging over many regiments, including the Queen’s Dragoon Guards. That is deeply unsettling. I make no pretence about the difficulty of the decision to be made, but the amalgamation of any Welsh regiments will be a bitter pill to swallow, especially given the Prime Minister’s speech in the Welsh Assembly this time last year, when he said:
“While speaking about the part that Wales has played in our past and present, I want to put on record…here…my gratitude to the brave Welsh regiments. From the trenches of northern France to the mountains of South Korea, they have fought and died in defence of our nation and values. Today, in Afghanistan, they continue to serve with courage and distinction, and I pay tribute to them. For them, and for all the people of Wales, I will always be an advocate of this country and everything that it has to offer.”
Jessica Morden (Newport East) (Lab)
My hon. Friend makes a very powerful point in reading that quote. She knows just how angry people in Wales are about the uncertainty facing the Queen’s Dragoon Guards. Does she therefore welcome the Welsh Affairs Committee’s decision to carry out an urgent inquiry into this matter, and does she think it important that we get the chance to question Defence Ministers in person?
Mrs Moon
I certainly do think it is very important that the Welsh Affairs Committee looks into the issue, but it needs particularly to consider the most important part of it—the potential future of all three major Welsh regiments. It is also right that Defence Ministers should be available to answer questions. In Wales, the sons, daughters, brothers, sisters and families of our regiments are deeply distressed at the potential loss of one of the regiments.
Defence reform risks becoming defence vandalism—destroying trust, reputations, capability, capacity and skills that are urgently needed to protect our country in these uncertain times. We in Wales take this extremely seriously, because we risk losing important regiments that make important contributions to the defence of the UK. It is the equivalent of leaving all the windows and doors in one’s house open to potential burglars and going up to bed. However, it is not a burglar who I fear coming into the house that is the UK; it is a murderer, who will murder us in our beds because we have failed to put in place the protections that we need.
Penny Mordaunt (Portsmouth North) (Con)
I draw the House’s attention to my registered interest with the Royal Navy reserve.
I have mixed views about today’s debate. I am always glad when defence is discussed on the Floor of the House, but it is very important that we build a consensus between all parties on these important issues. When the Defence Committee requests time in this Chamber, it is always keen to have a motion that will not divide the House, and I have always tried to adopt that non-partisan attitude in events and campaigns that I have run for the Royal Navy and Royal Marines—for example, in asking the shadow Secretary of State to co-host last year’s Trafalgar day event with me.
I therefore approach an Opposition day debate on defence with a heavy heart, but today I have a doubly heavy heart because I have to correct a falsehood that has been running for the past few days, perpetuated by Labour’s spin operation. I do not believe that the shadow Secretary of State or his shadow Ministers would have been involved in this, but I hope that in winding up they will take the time to correct it.
Portsmouth dockyard is the home of the surface fleet. It has a wonderful natural harbour, which is being dredged to house the new carriers. New power facilities are being built, and moves are afoot to put the vacant historic dockyard to new use so that it ceases to be a drain on the defence budget. The operational stress that the carriers will be under will be considerable, so repair and support services must sit alongside the ships in their home port. There is much activity, much investment and more work for the dockyard’s partners and suppliers, most notably Rolls-Royce in my constituency.
In the face of all that activity and progress, Labour has spent the past few days telling those who work in the dockyard and their families that it will close. It has not been discussing the BAE review; it has been telling people that the Royal Navy base is toast. That is a new low. Government Members have come to expect Labour policy and its lines to take to be divorced from reality, especially where the economy is concerned, but I had thought, perhaps naively, that defence might warrant a more grown-up attitude. This sort of distortion is indefensible not just because of the unnecessary hurt and worry that is caused to people in my constituency, but because of the damage that it causes to British businesses.
We have to retain a shipbuilding capability in the UK—it is a sovereign capability. To afford the Royal Navy ships of the future, we need a slower drumbeat in our yards in building those ships. We therefore need to export more Royal Navy-designed ships. We also need to make better use of the gaps in work in our yards, rather than put the brakes on contracts, especially those that will deliver much-needed and much-missed capability, such as carrier strike force.
There is a gap between the carrier work finishing and the building of the new Type 26 combat ship starting. Rather than making the mistakes of the last Government and paying for the work to be delivered slower, we should use that time and money to do something more useful, using designs that we already have. We should build ocean patrol vessels and perhaps an ice ship, which would certainly be of use. That would be a better use of public funds, retain the capability and provide more options either to carry out operations or to generate funds for the Department. We must have no let-up in the Government activity to hook in any buyer who is looking to purchase a combat ship. I know that Ministers are considering all those options.
These are important issues, but on them, Labour is silent. It does not seem to be remotely interested in ensuring that the Government do the right thing, that we have the capability that we need or that we are getting value for money. Nor has it stated what its view is on the future of shipbuilding in the UK. Instead, over the past few days Labour’s press office has misled people in my constituency by saying that the Navy base will close. The Government could not have been clearer in their statement that all three Navy bases will be retained. The shadow ministerial team know that. I therefore hope that whichever shadow Minister responds to the debate will tell us what they think about shipbuilding in the UK. At the very least, they should state that they know that the Government are committed to the three Royal Navy bases.
The shadow Ministers should reflect on the actions of their party over the past few days. If Labour wants to have a debate about the BAE Systems review, that is fine. I will show up. In the meantime, I ask that it treats my constituents working in and with the armed forces with a greater degree of respect.
Hugh Bayley (York Central) (Lab)
With all the pressure on defence spending in this country and abroad, it is hardly surprising that at the NATO summit in Chicago, smart defence was one of the key items of discussion and NATO pledged to do more with less. I believe that NATO, like the Defence Ministries in its member states, will deliver greater value for money if its expenditure is transparent, subject to independent audit and scrutinised by Parliaments in member states.
NATO’s external audit function is overseen by the International Board of Auditors for NATO, which consists of six board members who are nominated by the national delegations. The members rotate between the NATO member states, so there is no continuity of oversight. The IBAN board is accountable not to Parliaments, as is the National Audit Office in relation to UK defence expenditure, but to the North Atlantic Council, the executive branch of NATO. The audits are carried out by 22 able members of staff, who are not independent, but are employed by NATO.
Bob Stewart (Beckenham) (Con)
As an ex-NATO officer, may I point out that the North Atlantic Council can sit in Prime Minister or President form, Foreign Minister form, Defence Minister form or permanent representative form? Governments are therefore represented on the North Atlantic Council, to which IBAN reports.
Hugh Bayley
Governments are represented, but Parliaments are not. The principle in the UK is that the National Audit Office belongs and reports to Parliament. It has reported to Parliament for 150 years on UK defence expenditure, while obviously keeping secret things that must necessarily be kept secret, so there is no reason why we cannot have public reporting of defence expenditure.
NATO’s international board of auditors audited 49 separate sets of NATO accounts last year. I recently met Tim Banfield, a director of the NAO who is responsible for UK defence audits. He told me that NATO’s financial statements are frequently audited late, sometimes by as much as three years, which is not compliant with decent accounting standards—auditors who are trying to track expenditure cannot find the answers to the questions they need to ask three years after an operation has closed down. I asked a Foreign Office Minister how good the audits are, because they are not published. He told me that of the 49 sets of accounts last year, 14 were qualified by the auditors because of irregularities.
In addition to the financial audits, five performance audits—value-for-money audits—were carried out last year, but there is little evidence that NATO changes how it works to improve value for money in response to their conclusions. Only one of those 49 sets of accounts has been put into the public domain, according to NATO’s website.
The failure to publish accounts reduces the pressure on NATO managers to respond to deficiencies when they are revealed by audits, and to improve their performance. I raise this matter with the Minister now because I believe there is a narrow window of opportunity to change things, because the NATO Secretary-General has commissioned the new deputy Secretary-General to review the audit function. I shall share with the House a brief extract from a document provided by the Secretary-General to national delegations, including the UK ambassador to NATO. The Secretary-General said:
“We must adopt best practices employed by other international organisations. NATO is very unusual in having its own auditing service…Organisations that employ external public-service auditors include UNESCO, WTO, OSCE and the OECD.
To bring us into line with best practice, I propose the adoption of the same approach, phased in to ensure continuity of work.”
He goes on to make the point that the only other body that does not have an independent external audit function is the EU, from which some hon. Members would not like to take lessons in that respect.
The NATO Secretary-General clearly wants change, but the decision will not be made by him; it will be made by the North Atlantic Council. Will the UK representative at the North Atlantic Council, whether our ambassador, one of our Ministers or the Prime Minister, support the change agenda? Will the deputy Secretary-General’s report be shown to the NAO and the supreme audit institutions of other member states, such as the US Government Accountability Office, for comment before it is shown to the North Atlantic Council? Will our ambassador lobby representatives of other member states to build a coalition to change the audit function within NATO and to bring the information, apart from that which necessarily must be kept secret for security reasons, into the public domain?
That information will drive improved value for money within NATO. NATO can hardly urge its member states to deliver more value for money if it does not take a lead by doing so itself.
Mark Lancaster (Milton Keynes North) (Con)
I declare an interest as a member of the Territorial Army.
I listened with interest to the hon. Member for North Durham (Mr Jones), who has just left his place. I thought he was a perfectly competent Defence Minister, although not quite as competent as the Under-Secretary of State for Defence, my right hon. Friend the Member for South Leicestershire (Mr Robathan). Having listened carefully to the hon. Gentleman’s remarks, I am clear about several matters being pursued by the Government that he does not support, but, given his acceptance that there is a deficit and that it needs to be addressed, I am less clear about what exactly the Labour party would do to address it. I hope that in her winding-up speech the hon. Member for West Dunbartonshire (Gemma Doyle) will explain to the House exactly what the Labour party would do to deal with the deficit. Without that explanation, I fear that many of its claims will look rather hollow.
I want to focus on the plan for an integrated Army by 2020. I congratulate General Carter on his review. Frankly, he was handed a poisoned chalice, but he has managed to deliver an optimal military solution from very clear terms of reference. I want to be equally controversial by saying that sometimes arguments in the House about which regiments should be saved leave me slightly cold. I understand the historic significance of many regiments, and it is right that hon. Members should defend those regiments, but ultimately, if I were a senior officer, I would be holding my head in my hands, because, following this review, politicians are now tinkering with it and seeking to influence the decision for reasons based on political grounds, rather than optimal military grounds. It is not beyond the wit of the British Army to save various regimental cap badges, so I think that my hon. Friends should relax—I am sure that these cap badges will be saved. Instead, we must focus on the optimal military solution.
The integrated Army 2020 proposition, the skeleton of which was unveiled earlier this month at the Royal United Services Institute land warfare conference, is a neat solution to dealing with a period of strategic uncertainty at a time of economic austerity, and inevitably it involves smaller land forces. Indeed, it proposes a reduction in the regular force from 102,000 to 82,000, countered by an increase in the trained reserve forces to about 30,000, with an additional 8,000 under training. It aims to deliver an Army designed to meet the capability, aspirations and commitments of the strategic defence and security review 2010.
Equally, however, the proposal has to deliver contingent capabilities and meet the requirements of the Government’s “Building Stability Overseas Strategy”, published last year. Although I am confident that General Carter’s proposals provide an optimal military solution for the requirements of the SDSR, some cross-Government work is clearly still required to flesh out how this upstream engagement in fragile states will be delivered in order to meet the requirements of the overseas stability strategy. It is here, I believe, that the unique specialist skills that so many members of the reserve forces possess should be utilised. As I understand it, the proposed force structure aims to hold defence capabilities at different levels of readiness based on a balanced mix of reaction and adaptable forces. It is key, however, that to deliver this desired outcome, the Army must be able predictably to integrate its regular and reserve components, with the reserves likely to be required routinely to undertake roles such as providing for the UN battalion in Cyprus, as it has done sporadically in the past.
At the heart of the plan is a progressive move from a reserve force that provides individual augmentees for current operations to one that delivers a scalable, adaptable response by individuals to formed sub-units. This aspiration would certainly be welcomed by the TA, but will be welcomed by the Regular Army only if the TA can be relied upon to deliver. For the individual reservists, this calls for sustained commitment to regular training attendance and predictable periodic mobilisation. This is undoubtedly an ambitious target, but it can be achieved. It is important to realise, however, that there must be not only the military will to achieve it but significant political will and leadership, if the structure and reliance on reserves is to work.
Bob Stewart
There is one other requirement: money for the reserves to train properly. Otherwise, they cannot attain the same level as the regular forces.
Mark Lancaster
I agree. Indeed, I would argue that ambition without funding is simply hallucination, which is why I am delighted that £1.2 billion has been allocated for this upskilling of the reserves.
I have two concerns about the upskilling, however. First, I want to add to the comment from my hon. Friend the Member for Canterbury (Mr Brazier). When it comes to the reserve units, we must be careful, because a larger TA might actually result in a smaller footprint. We must be careful about which TA units we close, simply because, as I know from my experience as an officer commanding a squadron, we cannot simply move personnel and expect them to move units and travel some 20 miles to continue training.
Equally, I am convinced that there must be a compulsion to train. At the moment, we simply have a gentlemen’s agreement to turn up and train with the TA. Without that compulsion, I fear that the reserves cannot fulfil the commitment that they are being asked to make. We are fortunate that section 22 in part III of the Reserve Forces Act 1996 already allows for compulsory training, but we need to look carefully at how to implement it, so that we do not end up offending employers, who might then not wish to allow their reservists to go and train. It is a very difficult circle to square. Equally, we need to look at TA regulations to ensure that bounty, a tax-free payment for people who are fit for role, can be adjusted to ensure that such compulsion can be taken into account.
In my last 27 seconds, I would like to highlight to hon. Members that tomorrow is “wear your uniform to work” day, which is a celebration of our reserve forces, with some 1,900 of them currently being mobilised in support of the Olympics and some 700 on operations in Afghanistan. I hope that hon. Members will join me in celebrating their reservists, although they do not have to go as far as I will by wearing my uniform tomorrow.
Diana Johnson (Kingston upon Hull North) (Lab)
This is the first opportunity I have found in the parliamentary calendar to make any remarks about the Government’s defence procurement White Paper, which came out in February. Unfortunately, it was issued as a written ministerial statement, so there was no opportunity for debate. I do think it is worth looking at what that defence procurement White Paper says. On a number of occasions, I have raised with Ministers my concerns, which arose out of spending the last nine months, along with many trade unionists, employees and family members, fighting for workers at BAE Systems in Brough, who are facing 800 or 900 redundancies.
We have heard a lot this evening about being in economic difficulties and about the deficit that we need to get down, and it seems to me that defence procurement provides potential not only for growth but for defence exports. I think the Government are missing a trick in this area. My understanding of the White Paper is that the Government are moving towards open procurement, buying off the shelf and getting good value for money, that there is no preferential treatment for British industry or British manufacturers and that they will protect the operational advantage and freedom of action of this country only where it is essential to national security. As I said, the economy is flatlining and we are in a double-dip recession, but we know that countries that invest in, and buy from, their own home-grown defence industries do the best at exporting around the world. That makes sense: if a Government are willing to buy from their own industry, it shows a commitment to, and a belief in, providing the very best. That is absolutely what we want for our armed forces.
Brough is the home of the Hawk, and when the Red Arrows go around the country and the world flying the Hawk, people know that it is an excellent, British-manufactured plane. The Red Arrows display amazing acrobatic aeronautical feats, showing again Britain’s excellence in manufacturing. My real concern, then, is about the Ministry of Defence’s approach to future procurement, as it seems to treat itself as if it were a private company, just looking for best value and not recognising that it is part of the Government as a whole. The Government have a commitment—the Opposition support them in this—to growth and rebalancing the economy.
An interesting piece of work has been done on “The Destinations of the Defence Pound”. It is a RUSI—Royal United Services Institute—pamphlet written by Trevor Taylor and John Louth. They point out that buying off the shelf has a negative effect on Government revenues so it does not help the country to deal with the public sector deficit. Buying British, on the other hand, will ensure that British taxes are paid during the course of the procurement process, and there is likely to be a British supply chain, too. The pamphlet shows that spending £1 million will lead to a 36% return to the Exchequer via tax, national insurance and other means. It does not go into the wider benefits, which would obviously include jobs—a key issue for the Government and the Opposition at this time. Then there are all the other multiplier effects of buying from the home defence industry. If the Government buy abroad, that money—those taxes—will go to another Government, and will be lost to us.
It would be helpful if the Minister said something about the European procurement defence directive, and about the need for us to monitor carefully what other countries are doing. Why does the United States of America, when it purchases defence items, demand that they be produced in the United States, and why, in most cases, is any company applying to that market required to have a United States partner even to get a hearing?
I should like the Government to hold a proper debate on procurement, because I think that it might give them an opportunity to get themselves out of the economic difficulties into which they have got themselves since May 2010. Given that we are now in a double-dip recession, such a debate might be of help to them.
Christopher Pincher (Tamworth) (Con)
In the light of your injunction, Mr Deputy Speaker, I shall shorten what I was going to say, and speed up what I am going to say, in order to stay well within the time limit.
It is a pleasure to speak in the debate, occurring as it does on the 150th anniversary of the first investiture of the Victoria Cross in Hyde park. My constituent Samuel Parkes—a long-dead constituent, I should add—was the first private soldier to receive the Victoria Cross, so the debate has extra significance and resonance for my constituents.
I was pleased and privileged to serve on the Committee that considered the Armed Forces Bill, which became the Armed Forces Act 2011 and enshrined the armed forces covenant in law. Although it is fair to say that the Opposition were broadly supportive of the implementation of the covenant, it is also pertinent to point out that it was implemented within a year of the coalition Government’s inheriting a parlous economic state. The hon. Member for West Dunbartonshire (Gemma Doyle) was involved in the Committee stage of the Bill. It is clear that the Opposition, although they played their part in the covenant’s implementation, had 13 years in which to introduce a covenant themselves. They had the time, the money and the majority to introduce one, yet they failed to do so. I am pleased that they appear to be supporting what we achieved.
We in Tamworth recruit heavily to the 3rd Battalion the Mercian Regiment, the former Staffordshire Regiment. Housing is one of the biggest issues raised by my constituents who are in the forces, and by their families. Given the strides that we have already made in improving housing, I hope that, as the Strachan report is implemented and as we proceed with the covenant and report on it, we will do three further things.
I hope that we will increase the accommodation allowances that are available to our servicemen and women, and will expand the pilot shared equity scheme that was introduced by the last Government. I know that the Minister for Housing and Local Government has announced that £400 million will be spent on helping 10,000 families with the Firstbuy scheme.
I also hope that we will help more armed forces families to get on to the property ladder. I hope that we will do something that will cost my right hon. Friend the Secretary of State nothing, and prevail on the Chancellor to prevail on the banks to offer more forces-friendly mortgages to help servicemen and women and their families to secure a fixed address, a stable home, and a foot on that property ladder. If we send people abroad to fight for us, it seems only right and proper that we should help them to get a decent home, at home. Such action would also help to reduce the £285 million a year that it costs to service 50,000 homes for forces personnel, some of which is sub-standard.
The motion suggests that the Opposition still want to make the armed forces covenant very prescriptive. That flies in the face of the messages that we receive from the service chiefs and from the armed forces families’ representatives, who have said that they want a much more flexible and current armed forces covenant that can respond to the current concerns of our armed forces.
I conclude by quoting Bryn Parry, founder of Help for Heroes. He said in the Armed Forces Bill Committee just 12 months or so ago:
“I have never seen something written down or the principles of something discussed or made into law work as well as somebody who gets up and says, ‘Right, this is what I want to happen. Let’s make it go.’”––[Official Report, Armed Forces Public Bill Committee, 10 February 2011; Q336.]
That sums up what the armed forces covenant should be: a flexible arrangement and a current arrangement—and I trust my right hon. Friend the Minister will make it go.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
Members may know of my concerns regarding the number of military personnel who end up in trouble after leaving the services, and sometimes end up on the street. The Welsh Affairs Committee is currently taking evidence on that, as well as on the regiments question.
Wales has traditionally provided more than our share of military personnel. It makes sense that returning Welsh veterans—and, indeed, returning English and Scottish veterans—should be treated as close to their families as possible and should have their fair share of resources from charities and the UK Government, to help them recover from their injuries. Having seen how the US treats its veterans, I am sure there are lessons we can still learn. Some of the earlier comments on the covenant are most welcome, however.
Certainly one lesson we can learn is the importance of ensuring that former members of the armed forces do not feel that they are left behind when they are discharged from the services. The cuts that have happened, and those that are currently taking place, must take into account the need for support networks to be in place for them.
In Wales, there is a great deal of concern about proposals to merge or disband Welsh regiments such as the 1st the Queen’s Dragoon Guards, also known as the Welsh cavalry, and The Royal Welsh, which includes battalions from the Royal Welch Fusiliers and the Royal Welsh Regiment—it was only recently put together, and one would have thought it would have stayed in place for a while.
The reduction in the number of Welsh regiments to three has already left a bitter taste, and further cuts will lead to a feeling that Welsh regiments are not being recognised and appreciated for their effort and dedication. Successive generations have joined the Queen’s Dragoon Guards and fought with pride, honour and determination. Some argue that this is due to the method of recruitment, with cultural ties and local knowledge being part of both recruitment and loyalty. New recruits should have the opportunity to choose an armoured regiment or infantry regiment in which they will feel comfortable and safe in the company of their peers while facing potentially dangerous circumstances. However, despite the Queen’s Dragoon Guards carrying out more operational tours in the past 20 years than any other armoured regiment, it is under threat of amalgamation. That is in spite of its being the only remaining Welsh armoured regiment. If these decisions are made, on the order of precedence under the Ironside/Levy rules, both the Queen’s Dragoon Guards and the Royal Scots Dragoon Guards will be maintained.
There are six objective criteria to be met in this regard: recruitment strength, or the number and quality of those who wish to join; regional or national identity; proportionality to all parts of the UK—we are not looking for favours; the right geographical spread, as the Minister who opened the debate said; capabilities; and operational output. I believe that, on these criteria, the case has been made for maintaining these important and historically significant Welsh regiments.
On Trident, last week the Government announced £1.1 billion of investment in infrastructure that will make the next generation of Trident missiles. Although the main gate decision will not be made until after the next general election, by investing so heavily, they are, in effect, pushing us towards the decision, so that, as with the aircraft carriers, it becomes a fait accompli.
This has been done without a proper discussion or a debate on the Floor of the House. Opponents of Trident object for a variety of reasons: some because they are pacifists, others because they do not believe that it represents good value for money or a meaningful deterrent. Large numbers of young men and women are being made redundant from the conventional armed forces over the coming years, and regiments will be lost, but there is enough money for these weapons.
However, in Wales Labour First Minister Carwyn Jones apparently wants these nuclear weapons based near the major international trade port that deals with 30% of UK gas and 25% of UK oil and petrol. The oil refinery was the reason why Polaris was not sited at Milford Haven in 1963, and it is unclear why a busier location would be considered today. According to Chalmers and Walker in 2002,
“it remains the case that refineries would have to close if submarines were relocated there.”
Therefore, this man is arguing for Trident to come to Wales, for weapons of mass destruction to be sited on Welsh soil and for there to be a net loss of jobs for Wales—not, I think, a very good deal.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am introducing a four-minute limit. I call Neil Carmichael.
Neil Carmichael (Stroud) (Con)
It is a great honour to contribute to this debate. I begin by paying tribute to all members of the armed forces for the fantastic work they do. I attended the trooping of the colour and I noted that many had recently returned from the line of fire and were still performing absolutely magnificently. That is emblematic of our armed forces, and we should always remember them and salute them for that.
I want to make a general point about returning soldiers from Germany, because clearly that is happening; in my constituency there are several who are in need of support from organisations such as Family Lives. It is important to recognise that such major transitions do take place.
On the black hole that we were discussing previously, I want to make clear what I think a black hole is: a great expenditure commitment over a long period for which there is no money. That was the situation under the last Labour Government, and there definitely was a £38 billion black hole. It has now effectively been filled in and concreted over by our Government, but a black hole is what I have just said it is.
The motion also refers to the possibility of changing the assumptions on which the strategic defence and security review are based. In fact, many of the assumptions the Government made two years ago were absolutely right and stand the test of time; but obviously, there are nuances that one must bear in mind and adjustments one must make.
The interesting move that the United States has made in refocusing its efforts towards the Pacific and Asia is a fascinating one that we as a country should be mindful of in having a flexible approach to our naval forces. I noted that, while dealing with Libya, we did not actually need an aircraft carrier. Because we had sensible relationships with allies, we were able to accomplish quite magnificent feats with our fixed-wing aircraft. We have to remember that the advantage of having good allies—an assumption that we made as part of the SDSR process—is absolutely critical.
We should also celebrate the Government’s creation of a National Security Council, which brings together foreign affairs, international development and defence. Without an appreciation of our foreign affairs objectives, we will not be very successful at putting together a defence strategy. This Government have understood the direct and obvious link between those areas, which is why we are so much better at calibrating, assessing and understanding our defence needs.
Clearly, we need hardware, and one good thing we are introducing is heavy-lift capacity, which we do need. It is great that Airbus, in the form of the A400M, is part of that package—an aircraft that is doing extraordinarily well elsewhere. The quality of our surface fleet is also an important issue—new frigates and destroyers that are up to the necessary standard for the tasks that we have.
On aircraft carriers, it was absolutely right to look at what is happening with the new Gerald R. Ford-class carrier in the United States, which has the electronic “cat and trap” system. It must have been tantalising for us to consider, certainly given our relationship with the French and their one aircraft carrier, which is also cat and trap. We did not go down that route, but it was sensible to consider it, because we have to make the right decisions in the long run.
Yasmin Qureshi (Bolton South East) (Lab)
I wish to start by talking about the young men and women who serve in our front-line services. I pay tribute to all members of the armed services, be they in the back room or on the front line, but special consideration has to be given to those on the front line, such as those in Afghanistan and Iraq. I went to Afghanistan in 2007 and met some of the young men who were fighting for us. They were 18, 19, 20, and they were being faced by and had to see all sorts of cruelties. They had to face so much hurt and they had to see so many injuries among their comrades. When they come back, we need to look after their physical and psychological needs. That means that if they have been injured in combat, all the best treatment should be made available to them. Even if they have not suffered any physical harm, they must be treated in respect of their emotional and psychological needs as well. They must be supported appropriately when they leave the Army and come into civilian life. That means that if they want to go to university, they should be given free tuition. Although we rightly always pay respect to our fallen heroes, we forget that what people are exposed to in war and in battles is an experience that nobody else is ever going to see and hear. So we should spend a lot more money on looking after our armed personnel who have served on the front line when they come back.
It is also important to equip these people properly when they are on the front line. They should be properly trained, and the armour, the helicopters and everything else that is required for them to do their job properly should be in place. That also means that the right amount of personnel should be there; 100 people should not be sent to do a job that requires 300 soldiers to do it. That means that the Government should reconsider the abandoning of certain regiments. The fighting force, the infantry and the regiments that go out to fight should not be reduced. One of my constituents who served in the Yorkshire Regiment, which was founded by the Duke of Wellington, says that it is one of the best regiments and has received many Victoria Crosses for the services it has rendered to the country, so I ask Ministers to reconsider reducing the number of soldiers on the front line.
We are told that some of these re-evaluations of our defence expenditure are to do with the money. I want the Minister, and indeed Labour Members, to consider whether we really need Trident. I know that people think that this is a debate of the left, but everyone knows that four years ago a number of generals and senior people in the Army and the Air Force said that Trident is actually irrelevant and is no longer required, as a result of the end of the cold war. They have also said that it is not ready to deal with the current levels of international terrorism. The generals set that out in a letter to The Times in January 2009. I have copies of the documents where they have asked that more money be spent on conventional forces, which we require to deal with the imminent threats we face. As I said, those people are not pacifists and they are not people who do not know what they are talking about; they are—
Mr Speaker
Order. We are extremely grateful to the hon. Lady for her contribution. I call Oliver Colvile.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Thank you very much for calling me in this debate, Mr Speaker.
I agree with the comments that my hon. Friend the Minister for the Armed Forces made about how important this weekend is going to be, as it is national armed forces weekend. Not unnaturally, I am delighted to have this opportunity, because my constituency of Plymouth, Sutton and Devonport, more affectionately known as “Guz”, is going to be the national focus for the armed forces weekend. Plymouth is the home of 3 Commando Brigade, the Royal Marines and flag officer sea training, and it has an enormously big heritage, of which we are incredibly proud. I pay tribute to Commander Crichton for all his hard work in putting together the national armed forces weekend.
During this debate we have heard a great deal about how we need to make an assessment of where we are going. In my submission to the strategic defence and security review, I made it clear that Britain is a maritime nation, and we need to protect our sea routes. That means that we have to ensure that we are not sea blind. The Royal Navy’s role is to ensure not only soft diplomacy but that we can engage as and when Parliament decides where to go. It is a tool of foreign policy; indeed, some people would say that it could be a provisional tool in foreign policy, too.
I welcome the building of the aircraft carriers, but we need to ensure that when we move on to the next tranche of the SDSR we look long and hard at how to ensure that the supporting frigates are included.
Plymouth has a good story to tell about its harbour, which is the finest natural harbour in the world. It sits on the western approaches and is the one place in the United Kingdom that can deliver the refuelling and refitting of our nuclear submarines. That is our stake in the ground. I believe it is important that we retain our nuclear deterrent, because it is important not only strategically for our country but for my local economy, as 25,000 people are dependent on the defence industry.
Our dockyard was consistently under threat for the time that the Labour party was in power and I am delighted by the hard work my right hon. and hon. Friends on the Treasury Bench have been able to do in government to ensure that we can secure its future. The Government have been successful in ensuring not only that we will retain our Type 23s but that the £350 million refit of HMS Vengeance will take place in Devonport. The Government have been rebuilding confidence in Plymouth and Devonport, ensuring that we can do the very important job of engineering research, too, and making us one of the global leaders in maritime activity.
I am surprised by the Labour party’s approach and ask them to reconsider it. We need to ensure that those involved in our armed services have support in education, that they have decent housing and that they have provision to deal with mental health issues. We must work hard on that. This has been an important debate and we must ensure that we continue with the armed services covenant. I will welcome the opportunity to listen to the next debate on the subject, which will be important.
Steve Rotheram (Liverpool, Walton) (Lab)
Britain has a proud military history and throughout that history, sailors, soldiers and airmen served our country with a courage and bravery that has become synonymous with the British armed forces. It is a pleasure to place on the record tonight my appreciation for our armed forces, as I will when I attend a ceremony in Liverpool town hall on Saturday. I will be remembering the eight brave men from Liverpool who made the ultimate sacrifice in Afghanistan, but of course the deaths of those brave men do not tell the full story. Countless others from the Merseyside area have been killed or injured in the line of duty during other conflicts and it should be recognised that Liverpool produces more men and women in our armed forces per capita than probably any other area of the country. As people will know, the Mersey is the lifeblood of our great city and Liverpool has a long history with the Royal Navy and the merchant navy. Its maritime history is a reminder to us all of the sacrifices and bravery of our ancestors.
In the somewhat limited time I have left, I want to talk about the lack of consideration that this Government have recently shown to our armed forces. I am primarily referring to the widespread reports that the Defence Secretary is to make soldiers who are currently serving redundant on their return from their tour of duty. What kind of Government would do that to their own brave soldiers? Decisions taken today, matters of life or death, spending commitments and diplomatic negotiations can and invariably will have ramifications for generations to come. What is more, some of the policy decisions made by the Defence Secretary today are likely to take decades to become manifest.
Yes, we need reform—that is why my right hon. Friend the shadow Defence Secretary outlined £5 billion-worth of reforms recently—but a reduction in Britain’s capability based on opinion polls is irresponsible. Controversy is not an excuse for carelessness or, dare I say, callousness.
The Defence Secretary should not underestimate the part that morale plays when it comes to our soldiers and armed forces. He would do well to remember the words of Dwight D. Eisenhower:
“The best morale exists when you never hear the word mentioned. When you hear a lot of talk about it, it’s usually lousy.”
Our armed forces deserve a Defence Secretary who understands defence and does not use it for political expedience. Our British armed forces deserve a Secretary of State who demonstrates compassion for the mission, empathy for the families and a determination to stand up for defence in Parliament.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
It has been a pleasure to listen to this evening’s debate on defence reform, in which hon. Members have spoken on a number of topics. Let me say at the outset that the right hon. and learned Member for North East Fife (Sir Menzies Campbell) posed some very pertinent questions to Government Front Benchers.
I am pleased that we are having this debate in the week before armed forces day because it gives us the opportunity to pause and reflect on the bravery of our forces and the sacrifices they make, as has been mentioned by my hon. Friends the Members for Bolton South East (Yasmin Qureshi) and for Liverpool, Walton (Steve Rotheram) among others. Our forces do what is asked of them without question or hesitation and they often place their lives on the line to protect others. I am sure that the national event taking place in Plymouth this Saturday will be a great success. In West Dunbartonshire we celebrated armed forces day on Sunday past with a march-past in Dumbarton high street and a service in Riverside parish church.
There is no doubt that the armed forces will face challenges in the coming years, not least as part of the new employment model and the Future Force 2020 plan. Some 30,000 troops will have been removed by 2020. That will have an enormous impact on the UK’s capability, and clarity from Ministers on the decisions they have taken about future capability would be welcome. My hon. Friend the Member for Bridgend (Mrs Moon) made some excellent points about our maritime capability.
Recent reports have raised concerns that certain regiments are at risk of being scrapped. Belonging to a regiment is a very strong part of many soldiers’ identity. That is why the shadow Secretary of State launched our “Respect Our Regiments” campaign last month. I know that many Members are concerned about regiments and battalions being scrapped, including colleagues from Wales, Yorkshire, Scotland and Staffordshire. I apologise if I have missed anyone out. The Government intend to rely much more heavily on reservists in future, and the Minister knows I am concerned that he and the Government plan to scrap employment protections for reservists while asking for more from them.
Gemma Doyle
The Minister shakes his head but I raised this with him last year and again last week. I know he is going to write to me and I await that letter because our understanding of the situation differs.
Last year, we reached agreement across the House on the armed forces covenant. I will resist the temptation raised by the contribution of the hon. Member for Tamworth (Christopher Pincher). As he knows and as the record shows, his party and the Minister had to be dragged kicking and screaming into putting the provisions we now have in law into the Armed Forces Act 2011. Anyone can read the record of the Committee proceedings to see that that is correct. The hon. Gentleman’s recollection was frankly a little wobbly. The Minister knows that I do not think the armed forces covenant is yet being taken seriously enough across all of government and the public sector in accordance with the principles set down. I do not doubt his commitment but more work needs to be done to make sure that it is a reality and that it works in practice.
I want to raise the issue of discrimination towards our forces. This concern is highlighted in the recent report by Lord Ashcroft, “The Armed Forces and Society”, which states that one in five members of the forces reports have been refused service in a bar or hotel while wearing their uniform and that around the same number reports being verbally abused while wearing their uniform. That is clearly unacceptable discrimination and if we take the covenant seriously we should be looking at how to tackle such behaviour.
Gemma Doyle
I am afraid that I really do not think I have time, but if I have time later I will.
The service community can face indirect discrimination, creating difficulty with day-to-day matters that we take for granted such as getting credit, mortgages or even a mobile phone contract because they have moved around so often. We should not accept that as inevitable. The principles of the armed forces covenant should apply throughout society, and where those principles are routinely or blatantly breached, it may be necessary to consider introducing measures to deal with the matter. Routine disadvantage or discrimination should never go hand in hand with serving one’s country.
Gemma Doyle
Great strides were made under the previous Government through the Green Paper and the service personnel Command Paper, which set up the provisions we now have.
Legal protections are in place for other groups in society and we believe that consideration should be given to whether they should be extended to our armed forces. I thought the Minister agreed to cross-party talks in our Westminster Hall debate last week, but that does not appear to be what is on the record. I hope that he is willing to take part in such talks and I would welcome confirmation of that today.
When referring to the wider service community, we must of course mention forces’ families. They put up with an awful lot and we do not do enough for them. We have to make many improvements, particularly in housing, on which the hon. Member for Tamworth made some welcome comments. The Minister has side-stepped concerns about the missing £41 million for forces’ housing, so I urge him to take cognisance of today’s report from the Select Committee on Defence, which sets out the concerns about housing very well. In last week’s Westminster Hall debate, I urged him to think carefully before making any changes to the rules on service accommodation. As he knows, leaked plans to change the entitlement to married quarters were not well received earlier this year. Perhaps he will tell us tonight whether those changes are still being considered.
Our motion makes specific reference to pensions. There are concerns that some individuals have been made redundant with only a few weeks to go before being entitled to a full pension. It has been suggested that that was done deliberately to cut cost. The Minister has the opportunity to say today that that is not the case and that getting rid of people from the forces before they qualified for a full pension was not a deliberate policy. Will he also comment on media reports last week that the Government may be considering raising by five years the age at which forces personnel can receive a full pension?
Many Members, including my hon. Friend the Member for Kingston upon Hull North (Diana Johnson), have highlighted the importance of the defence industry in the UK. That includes a range of industries—shipbuilding, manufacturing, maintenance, aerospace, technical support, clothing and optics. Let me say to the hon. Member for Portsmouth North (Penny Mordaunt), who raised some specific issues, that reports about Portsmouth dockyard have appeared in the media and the shadow Defence team has responded to those reports. I assure her that we share her concerns and we are on the side of her constituents and the people of Portsmouth. My hon. Friend the Member for Barrow and Furness (John Woodcock) made some excellent points about defence procurement and in particular about the successor deterrent programme.
The hon. Member for Milton Keynes North (Mark Lancaster) asked us to explain some of the savings that we have identified. He will be pleased to hear that details of a full £5 billion have been published on The Guardian website, if nowhere else, and I refer him to that site.
I want to say a little about defence in Scotland. This week saw the launch of the “Better Together” campaign—Scotland’s cross-party campaign making the positive case for staying part of the UK. It is a shame that the nationalist spokesperson for defence has chosen not to be present tonight. For more than 300 years, service men and women from Scotland have served alongside their countrymen and women from the rest of the UK, with a shared identity and goal—protecting the people of the UK and defending those unable to defend themselves around the world. The defence sector is extremely important across the whole of Scotland, supporting around 50,000 jobs and in the west of Scotland pumping about £270 million a year into the local economy.
On the “Better Together” website, Members can hear Craig and Tanya, both from Dumbarton, and Robert from Cumbernauld, who all work in the shipyards on the Clyde, talking about why they want to stay part of the UK. If any Members are in any doubt about the importance of MOD contracts to the people of Scotland, I suggest they listen to those whose jobs depend on them. Although breaking Scotland off from the UK is a reform too far for me and for the majority of Scots, we have had a good debate this evening on many aspects of defence reform.
The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)
May I say what a pleasure it is to agree with the hon. Member for West Dunbartonshire (Gemma Doyle) in rejecting any idea that Scotland would be better off independent, and how much stronger we are—both Scotland and the United Kingdom as a whole—as a Union?
Many of the contributions to the debate today show how wide and how deep the admiration and respect for our armed forces runs in the House, and that reflects the feelings across the country. We should not forget that the purpose of our armed forces is to succeed on operations, to protect our national security and to provide the ultimate guarantee of our country’s security and independence, as well as helping to project its values and interests abroad. In Afghanistan today, that is what our soldiers are doing, risking life and limb to keep us safe as we sit in comfort in Westminster.
Operations remain the No. 1 priority for the Ministry of Defence and we will do everything we can to achieve success not just in Afghanistan, but in standing operations around the world and in helping to deliver a safe and secure Olympics this summer. But to make sure that this success continues into the future, we have to make sure that our services are structured properly, that the equipment programme is funded and that the needs of our forces are looked after.
That is why the programme of implementing the SDSR is so necessary—putting the years of Labour mismanagement behind and sorting out the mess. Although it appears that the Opposition recognise the need for change, they still do not appear to understand why there is such a need for change. The shadow Secretary of State for Defence—I am sorry he is not here—has written:
“In beginning to develop future policy we have to be honest about the past.”
Today, not one Member on the Opposition Benches has been honest about the mistakes that the Opposition made in the past. Not one has said sorry—sorry for 12 years without a defence review, sorry for the £38 billion black hole in the budget—[Interruption.] The hon. Member for North Durham (Mr Jones) should stop digging. He has been digging quite enough today. Not one Opposition Member has said sorry for ducking the tough choice required to put our armed forces back on track.
I am afraid that in the limited time available I will not be able to address all the contributions to the debate. The right hon. and learned Member for North East Fife (Sir Menzies Campbell) yet again made an impassioned case for RAF Leuchars. It remains our intention that the Army move to Leuchars and the RAF move to Lossiemouth. He asked some very detailed questions. Will he please take those up and I will make sure that my excellent civil servants in the Box bring them to the attention of the Under-Secretary of State for Defence, my hon. Friend the Member for Mid Worcestershire (Peter Luff), who would be better at answering than I would be this evening?
Sir Menzies Campbell
The questions were rhetorical. The answer is yes in every case.
Mr Robathan
In which case I do not think my hon. Friend the Minister will be writing to the right hon. and learned Gentleman.
The hon. Member for Bridgend (Mrs Moon) made a point about the Nimrod MRA4. It was a procurement disaster. The aircraft were never in service and never flew in service. I say to the hon. Lady and to the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) that the Government value the Welsh regiments that she spoke about. I have Welsh antecedents. I had a great uncle killed in Gallipoli in the Welsh Regiment and other relatives in the Welsh regiments, so I can assure her that we value the Welsh regiments. I do not know what is in the report. We must wait until General Carter’s report is published, which it will be, shortly.
My hon. Friend the Member for Portsmouth North (Penny Mordaunt) drew attention to misleading statements on the naval base that she attributed to the Labour press office. If that is the case, it is regrettable. We have no intention whatsoever of closing the Portsmouth naval base.
The hon. Member for York Central (Hugh Bayley) raised an important point about audit, accountability and the need to reform NATO. I suggest that he takes that up—I am looking again at my excellent civil servants—with the Under-Secretary of State for Defence, my hon. Friend the Member for Aldershot (Mr Howarth), who is responsible for such matters, and I am sure that he will get back to him on that.
I thank my hon. Friend the Member for Milton Keynes North (Mark Lancaster) for his sensible look at defence strategy and the future of the reserves. I am sure that we are looking forward to seeing him in uniform tomorrow as a serving officer. The hon. Member for Kingston upon Hull North (Diana Johnson) was keen to encourage the defence industry and exports. Three Defence Ministers spend their time going around areas trying to encourage defence exports. My right hon. Friend the Prime Minister was widely criticised, including by Labour Front-Bench spokesmen, when he tried to encourage exports to the middle east. I am very glad to have the hon. Lady’s support. She referred to the economic difficulties that the Government have got themselves into since 2010. I do not think so. I really do not think so.
My hon. Friend the Member for Tamworth (Christopher Pincher) made a good point about housing. We are working on banks and mortgages, as he asked, and BFPO addresses will now be accepted as proper addresses for security. I am very much looking forward to seeing my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) on armed forces day in Plymouth this weekend.
I must tell the hon. Member for Liverpool, Walton (Steve Rotheram) that we are not making reductions in the armed forces out of callousness, but with huge regret, and it is painful to us. We are doing it because of the appalling financial situation that the Government received when they took office in 2010.
The hon. Member for West Dunbartonshire is not correct that there is any intention to reduce protection for employment of reservists deployed. I am delighted to hear her praying in aid again my noble Friend Lord Ashcroft. I have never heard praise from the Labour Benches for Lord Ashcroft before, but I am pleased to hear it now. Perhaps she will bring forward an analysis of discrimination. I draw her attention to a letter that has been sent to the shadow Defence Secretary from my right hon. Friend the Secretary of State, which says:
“I welcome the work conducted by Lord Ashcroft…I was reassured that that public support for our Armed Forces remains ‘very high’”.
He particularly says:
“I would welcome a discussion with you on how we can ensure that everything we do in Parliament emphasises our cross-party support for the Armed Forces and the people who serve in them.”
The Opposition probably rather regret calling this debate today. They have made themselves look somewhat foolish. While I remember, may I say how sorry I am to hear about the shadow Secretary of State’s relation in Australia? I understand that he is very ill and we wish him the very best in that illness, and I mean that sincerely. However, having been nice to the hon. Member for North Durham, let me say that he admitted that Labour was planning savings in restructuring the Army and then attacked us for doing just that. The Opposition remain in denial. They seem to say that everything was great in defence at the general election. It was not. As the shadow Secretary of State has identified, the Opposition’s greatest weakness remains the black hole that they left us. Today, the team has been revealed in all its glory. The Opposition have shown that they have no real defence policy. They have no answers to the problems in defence. They have no acceptance of the difficult position that we are in and no acceptance of the mess made by the Labour Government of the Government finances and of the defence budget.
In conclusion—
Mr Alan Campbell (Tynemouth) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Question put accordingly (Standing Order No. 31(2)), That the original words stand part of the Question.
Business without Debate
Sir Peter Bottomley
On a point of order, Mr Speaker. Motion 3 on the Order Paper includes the words,
“welcomes the Commission’s support for the Government’s efforts to reduce the deficit and set the public finances on a sustainable path”.
Is that an issue on which the Opposition could have called for a debate, rather than just a vote?
Mr Speaker
I think that the matter has already been debated in a European Committee. It is therefore not immediately obvious to me how a debate would have been sought today. The answer to the hon. Gentleman’s question—
Mr Speaker
I do not require any further point of order. The answer to the question is no.
Mr Speaker
Order. I have made the point. The hon. Gentleman will resume his seat.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
On a point of order, Mr Speaker. The administrators, PricewaterhouseCoopers, have announced this evening that the Coryton refinery has been sold, not as a refinery, but as an import and export terminal, meaning that most of the 850 jobs will go. Have you had any indication from Ministers from the Department of Energy and Climate Change that they intend to come to the House to make an urgent statement on the implications of that announcement for UK fuel security and energy resilience?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. As of now, I have received no such indication. I recognise the importance of the matter to the hon. Gentleman and to others. What he has said will have been heard by those on the Treasury Bench.
If the hon. Member for Worthing West (Sir Peter Bottomley), having exercised a modicum of restraint and patience, wishes to pursue a different point of order, he may do so.
Sir Peter Bottomley
On a point of order, Mr Speaker. The question that I put to you was whether the Opposition could have had such a debate, rather than whether they should have had one. The answer may be the same, but the answer that the House was given was not relevant to the question that I had put.
Mr Speaker
The answer is no. I am grateful for the linguistic clarification, but the answer is the same.
Housing Benefit (York)
Hugh Bayley (York Central) (Lab)
Private tenants on low incomes in York face a particular problem because their housing benefit is based not on rents in York, but on rents in a broad market rental area that includes towns and villages 20 miles from York, where rents are much lower. I therefore present a petition on behalf of residents of York. The petition is signed by two of my constituents, Helen Graham and Graham Martin, and is supported by the signatures of almost 1,000 people.
The petition states:
The Petition of residents of York,
Declares that York is facing a housing crisis, with homelessness in York in 2010/2011 40% up on the previous year; further declares that the Government’s reforms to Housing Benefits mean that of 6,299 private rented properties previously affordable in the city, 3,700 will be lost, a reduction of almost 50%; declares that this is effectively driving people out of York and away from their jobs, families and friends; and declares that York’s Broad Market Rental Area, which determines the level of Housing Benefit currently available, should be based on the York Unitary Authority area and not on neighbouring towns including, Tadcaster, Selby, and Pocklington, all of which have lower rents than York, in order to reduce the pressure on people to move away from the city which is their home.
The Petitioners therefore request that the House of Commons urges the Government to make changes to the boundary of the York Broad Market Rental Area to include only the York Unitary Authority area.
And the Petitioners remain, etc.
[P001101]
Decent Homes Programme (Nottingham)
Lilian Greenwood (Nottingham South) (Lab)
I feel a mixture of pride and anxiety speaking about Nottingham’s decent homes programme. I am proud of the difference it has made to the lives of my constituents, but anxious for the future, because the final two years of investment have yet to be confirmed.
I want to explain my pride that, thanks to a unique study produced through the knowledge transfer partnership between Nottingham City Homes and Nottingham business school, we can measure the impact of Nottingham’s decent homes programme. I shall also set out exactly what is at stake for my constituents, including tenants, their neighbours and the wider city of Nottingham. If the promised funding is not delivered, the objective of bringing all council homes in Nottingham up to a decent standard is at risk.
Twelve years ago, the Labour Government set out their vision in a housing Green Paper and made a commitment to tackle chronic under-investment and to bring all housing up to an acceptable standard. In 2010, the National Audit Office found that, although the decent homes programme had probably had a wider beneficial impact, a lack
“of data on these wider benefits means that it is not possible to identify the Programme’s true impact throughout its life.”
The impact study helps to prove what MPs knew: that the programme was making a difference on the ground.
In January 2011, the House debated “Beyond Decent Homes”, a report from the Select Committee on Communities and Local Government. MPs on both sides of the House, including me, described what good-quality housing meant for their constituents. NCH was awarded funding by the Department for Communities and Local Government in 2008 and work began to complete £187 million-worth of planned investment to tackle the 32% of council homes in Nottingham classified as non-decent. The work was carried out under three streams to maximise efficiency and match tenants’ priorities. The secure stream was to replace all single-glazed windows with secured-by-design double-glazed units and replace any old or damaged doors; the warm stream was to improve heating and insulation; and the modern stream was to make internal improvements, including replacing outdated kitchens and bathrooms. Adaptations to meet the special needs of some tenants, including level-access showers or wet rooms, would also be undertaken alongside the secure, warm and modern—SWM—programme.
When the 2010 general election brought new uncertainty, tenants and leaseholders launched their “Nott Decent” campaign, and I was proud to join them in presenting a petition to No. 10 to ask the new Government to honour the commitment that had been made to them. We were pleased and relieved when the Minister re-allocated funding—albeit reduced funding over a longer period—to complete the programme. By January 2012, 15,900 properties—more than half of all council homes—had new windows; 3,400 doors had been replaced; 10,200 heating systems had been upgraded; 2,900 lofts were properly insulated; 9,000 kitchens and 7,200 bathrooms had been replaced; and 284 aids and adaptations had been made to make properties more accessible for their disabled tenants.
The impact study measured the effect of those changes to tenants’ homes. On crime and security, the results are dramatic: burglary fell by 42% between 2007 and 2010 on two sample estates where single-glazed windows were replaced, compared with a 21% reduction across the city. The study identified that timber doors were a weak spot in houses’ overall security, which provided evidence to support replacing all external doors, not just those that were especially old or damaged. Tenants reported feeling safer in their homes—an important contribution to improved mental health and general well-being.
Together with the installation of energy-efficient central heating systems and loft insulation, the new windows have raised the average energy efficiency rating of NCH homes from 60 to 68 points. That represents a 15% decrease in carbon emissions from NCH properties, which is equivalent to taking 2,700 cars off the road or planting 360,000 trees and growing them for 10 years. By the time the SWM programme is completed in 2015, energy efficiency from NCH homes will be saving 43,500 tonnes of carbon per year and achieving 17% of the city’s target for carbon reduction from domestic properties.
Of course, not only are energy-efficient and better-insulated homes good for the environment; they have a real and immediate benefit to the people who live in them. Tenants not only report that their homes are warmer, suffer less damp and condensation and give them pride in their neighbourhood, but that they are saving money—and given that an estimated 12% of all city residents were in fuel poverty before the programme began, that is money they desperately needed.
The Energy Saving Trust estimates that new windows alone can save £95 to £223 a year, and new boilers up to £225 a year. In total, improved homes are saving Nottingham tenants £3.5 million each year, making a significant contribution to reducing fuel poverty, which fell to 6.8% of city residents by 2010-11—after the programme upgraded thousands of properties. The improvements also enable tenants to get rid of extra appliances such as old electric heaters, which can often present a health and safety hazard. Combined with better security, these changes to the physical fabric of their homes have a marked effect on the health and well-being of NCH tenants.
The impact study estimates that, as a result of the SWM programme, two lives a year are saved by protecting vulnerable tenants from the cold; that the respiratory health of 1,000 children is improved; that, every year, 12 hospital admissions resulting from falls are avoided; that 144 accidents requiring medical attention are prevented; and that, as a result of providing warmer homes and reduced fuel bills, more than 1,400 tenants have better mental health. Based on just those examples, where a measurable change and cost impact for the NHS in Nottingham could be calculated, the savings are almost £700,000 per year.
In a time of economic austerity and public sector spending cuts, the benefits accruing from public capital investment matter more than ever. Nottingham, along with the rest of the country, is feeling the devastating impact of a double-dip recession: 19,000 people are out of work and there are six jobseekers for every vacancy. Construction, the fifth largest employment sector in the city, has been badly hit by the economic downturn and reduction in house building. The decent homes programme is providing vital work, and of the 560 people currently delivering SWM in Nottingham, about one third live in the city and over half in Nottinghamshire.
Investment in decent homes is not only providing much-needed jobs for joiners, plumbers, and other workers in the construction industry; the analysis shows that every £1 of investment in the programme generates £1.36 in Nottingham city or £1.46 in Nottinghamshire as a whole, which means that the £37.6 million spent on the decent homes programme in 2010-11 generated an extra £17.3 million of additional spending in Nottinghamshire, £13.5 million of which came into the city.
The SWM programme also makes an important contribution to training and skills development through the “One in a Million” scheme, which requires contractors to take on an apprentice for every £1 million of their contract. That has already created 105 apprenticeships, with a target of creating a total of 200 by 2015. In addition, staff on the SWM team have completed 2,000 hours of training, including externally accredited qualifications. As a result of this investment in skills, these staff can expect to earn an extra £13 million in additional lifetime earnings.
The impact study shows that investment in decent housing works both for tenants and the wider community. However, the benefits accruing from decent homes are not secure. The funding from the Department for Communities and Local Government for the decent homes programme remains indicative for the final two years of Nottingham’s programme. In the reallocation of funding in January 2011, 53% of NCH’s allocation was weighted towards those two final years, amounting to a total of £45.6 million.
If that investment does not go ahead, the consequences for our city will be dire. For every £1 million spent, 21 jobs are created, so cutting the funding could result in more than 950 job losses over the two years. Furthermore, NCH is committed to taking on an apprentice for every £1 million spent, so the reduction in funding would result in 45 fewer local people starting apprenticeships. If remaining heating upgrades are not completed, savings of 2,440 tonnes of carbon and £600,000 from tenants’ fuel bills will no longer be made, and a cut in funding would mean the loss not only of the original investment of £45 million into the construction industry, but of an additional £21 million of re-spending in the local economy. Most importantly, of course, if the funding is not confirmed, 7,000 tenants and their families would be left living in substandard housing.
The loss of the investment would hit some harder than others, and one neighbourhood in Nottingham that stands to lose most is the Meadows in my constituency. Before the last election, the Meadows, one of the 5% most deprived wards in the country, was due to benefit from £200 million of new investment, which would have transformed the area. The incoming coalition Government cancelled the housing PFI scheme, and I raised my concerns about that decision back in December 2010. Subsequently, together with representatives of the local community and the council’s regeneration team, I met the Minister for Housing and Local Government to discuss the impact of his decision, and he agreed to visit the Meadows to see for himself the needs of our neighbourhood. Unfortunately, he has not found time in his diary to make good on that commitment, so I would like to use this opportunity to reissue that invitation.
Nottingham City Homes was forced to reallocate funding within its decent homes budget so that Meadows residents were not left behind—to ensure that, having been let down by the new Government, they would still get their new doors and windows, boilers and insulation, kitchens and bathrooms, even though their hopes of transforming their neighbourhood were dashed. Thanks to the hard work of the SWM team, every NCH property in the Meadows has new windows, a third of the homes have better heating and insulation, and NCH hopes to complete the other two thirds before the end of this financial year. Those promised doors, kitchens and bathrooms, however, rely on those last two years of funding. The Minister really should come to Nottingham and meet some of those families in my constituency so that he can understand what his decision will mean to them.
I also want to touch on the wider impacts. A cut to this funding would also have knock-on effects on NCH’s self-financing position under the housing revenue account, and on other investment programmes that need to be match funded by investment from the decent homes programme. Nottingham City Homes and Nottingham city council are currently making proactive use of the community energy saving programme started by the last Labour Government to insulate hard-to-heat properties in our most deprived neighbourhoods.
Although it was right to focus resources, individual low-income householders in more affluent areas also face fuel poverty. These are often social housing tenants, and social landlords such as NCH have a strong track record of working with utility companies to help stop such homes leaking heat, making a huge contribution to the country’s carbon reduction obligations. Social housing providers need the maximum ability to retrofit their homes under the new green deal with its associated new energy company obligation arrangements. This will include the ability to match fund ECO money with housing investment programmes to get better value in tackling excess cold, helping reduce fuel poverty and reducing carbon emissions from domestic properties.
I hope the Minister will address the following questions in his response. In 2008, a third of Nottingham’s council housing failed to meet the decent homes standard, but if funding is confirmed, all council homes will meet it by 2015. Can he confirm that the £45.6 million of indicative funding for Nottingham City Homes for the last two years of the decent homes programme will be forthcoming? If he cannot provide that assurance tonight, can he tell us when housing providers will know, so that they can plan work, keep contractors on schedule and avoid the waste of winding down programmes only to have to start them up again? Can he explain how the Government will ensure that social housing tenants benefit from the green deal and ECO work to improve hard-to-heat homes and to tackle fuel poverty?
The Minister has said outside this House today that Nottingham receives substantial housing funding. The truth is that, as a deprived city that suffered from a lack of investment during the ’80s and ’90s, this funding is needed. The impact study proves that the money has been well spent. Our homes should be the places where we can shut out the world and feel safe, but if our home is cold, damp, overcrowded and outdated, there is no escape.
Decent housing matters; investment in good council housing changes lives. This study shows that investing in social housing delivers real, tangible benefits to whole communities, including jobs and growth. Surely the Government will not turn its back on this chance to do the right thing. Good council houses are not just bricks and mortar; they are homes to my constituents, who are entitled to a decent standard of living. I hope that the Minister will confirm the funding and enable Nottingham City Homes to finish this essential work.
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)
I congratulate the hon. Member for Nottingham South (Lilian Greenwood) on her speech, and on securing the debate. She spoke with great eloquence, and presented a very thorough picture of the circumstances in Nottingham and the value of the decent homes programme. I am very much on the same page as her, given the improvements that the programme can make to the health and well-being and security of tenants, and the impact that improvements in the insulation and energy performance of homes can have on carbon reduction. I also know that Nottingham has an excellent record of tackling climate change at local level.
I think that, before dealing with the intricacies of the situation in Nottingham, I should say something about the decent homes programme in general. The Government believe that all social housing should meet the decent homes standard, which, according to the technical wording of the definition, means that it should be free of category 1 hazards, should be in a reasonable state of repair, should have reasonably modern facilities and services, and should provide a reasonable degree of thermal comfort.
I must tell the hon. Lady that the present Government inherited not only a decent homes programme, but a huge deficit and a £3.2 billion backlog in capital investment in housing. The Government have already announced plans to invest £2.1 billion in the completion of the decent homes programme, of which £1.6 billion will be allocated to 46 local authorities—including Nottingham—and £500 million will go to registered social landlords in the form of gap funding. Those funds will make 127,000 council homes decent by the end of 2014-15, which will cover nearly 60% of the council housing that remains non-decent. The final slice of those non-decent homes will be made decent by local authorities using their own resources, and, as the hon. Lady said, Nottingham will be able to do that.
We have already been very successful in reducing the number of homes that are not fit for people to live in. In April 2010, shortly before the general election, local authorities had 291,600 non-decent dwellings. By April 2011 the number had fallen by 26%, to 217,000. Figures for the past year are being collated, and the Homes and Communities Agency predicts that we will prove to have reduced the number by about a further 20,000 during that period. As the hon. Lady said, more is being done even as we speak.
We believe that our funding—together with the introduction of self-financing for housing authorities and the increases in allowances that that brings them—will give local authorities the means to deal with any newly arising non-decent stock from within their own resources. In other words, they have the finances with which to maintain a steady state once we have achieved a high standard of decency.
Let me now deal with the position in Nottingham. Nottingham City Homes is a strongly performing arm’s length management organisation. Incidentally, my area of Stockport contains an ALMO which also performs very well. Only last year, Nottingham city council extended its agreement with Nottingham City Homes for a further 10 years, which I think constitutes a very good vote of confidence. That ALMO has been able to demonstrate an increase in tenant satisfaction; it has reduced rent arrears from £5 million to £1.8 million; and it was given a two-star rating under the old regime which unlocked its original decent homes funding programme.
When the time came for us to allocate funding to Nottingham, we recognised that the city had a significant backlog of non-decent homes—the hon. Lady has given the figures on that. That is why we allocated £86 million in indicative funding with the first two years confirmed—£40.5 million committed in the first two years. That is the largest award to any council outside London, and the Homes and Communities Agency is putting £78 million of additional investment into new housing and regeneration across Greater Nottingham by 2015, to produce 536 new homes.
As the hon. Lady said, the impact of the decent homes funding has been substantial. It has produced a big improvement in many people’s lives, not just in better homes, but in all that flows from that. The hon. Lady eloquently explained some of those benefits, and I entirely agree that this programme has brought, and can continue to bring, real benefits to tenants in Nottingham.
The hon. Lady referred to the study, undertaken by Nottingham City Homes with Nottingham Trent university, of the wider impact of decent homes. That study has made a very useful contribution to our knowledge, and ought to be required reading for those who doubt the importance of investing in our social housing stock. It shows why the coalition Government were right to fund authorities to make homes decent. As the hon. Lady said, every £1 million spent has created 21 jobs in Nottingham. The study gives a series of impressive statistics about the benefits that have been secured, not least reductions in crime. There are health benefits as well, of course, but some of those listed are, perhaps, a little tenuous; reductions in falls is one thing, but improvements in the respiratory health of children and in the mental health of tenants are more clear-cut.
We have already confirmed almost half the allocation we set out in the comprehensive spending review. I know that Nottingham and others are keen to get certainty on their budgets for April 2013 onwards.
The hon. Lady was, perhaps, wearing rose-tinted spectacles when she spoke of the performance of the previous Government. The Labour Government cut the decent homes programme by £150 million in July 2009, cannibalising one part of the housing programme to pay for new housing policies elsewhere. They also failed to meet their decent homes target. They pledged in 2000 that they would ensure that all social housing was of a decent standard within 10 years. Sadly, that was not the case by 2010.
Labour also made it clear in the general election campaign that they considered investment in housing, and social housing in particular, not to be a top priority. The then Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), told “Newsnight”:
“Housing is essentially a private sector activity. Let’s be honest about this...I don’t see a need for us to continue with such a big renovation programme.”
Therefore, although Labour started the programme, it has to be reported that they were throttling it back and were planning to do so more.
When this Government came to power we were borrowing an additional £400 million every day in order to close the gap between what we were spending and what was coming in. It is absolutely right that the Government should keep a tight hold on all their spending. The economic circumstances that have unfolded since show the sense of taking that initial decision and the importance of continuing to keep a tight grip on what we spend and how we spend it. That does include the decent homes programme.
I can assure the hon. Lady that we are expecting to make an announcement on the decent homes allocation for the final years in due course. I very much take her point that it would be sensible to ensure that the timing of that allowed continuity of contracts and employment. That is a point I will take away from this debate.
I also want to say on behalf of the Minister for Housing and Local Government that his undertaking to visit the Meadows was given in good faith. He is very busy and very active, and I am happy to confirm that he will in due course visit the Meadows, as he undertook to do.
I understand the hon. Lady’s enthusiasm to get ahead, and I share it. The Government are still supportive of all the work that the decent homes programme is doing and all the benefits that it brings. We remain committed to supporting backlog authorities such as Nottingham in making its homes decent, and to supporting some of the most vulnerable in society who live in those homes.
Mr Speaker
The hon. Gentleman is a generous fellow. I call Lilian Greenwood.
Lilian Greenwood
I thank the Minister for giving way. I obviously listened carefully to his response, although I should say I am rather disappointed with its lack of clarity. Can he confirm how many tenants of Nottingham City Homes he expects to be living in non-decent housing by the time this Parliament comes to an end in 2015?
Andrew Stunell
Like the hon. Lady, I very much hope that the programme we originally announced will have been completed and that the successes we predicted will have been achieved.
On that note, Mr Speaker, I am sitting down.
Sir Peter Bottomley (Worthing West) (Con)
On a point of order, Mr Speaker. May I ask that the House and you accept my apology? During a point of order I used the word “could”. You sensibly used the word “would”. I thought that you had said “should”. I was wrong and misrepresented what you had said, and I apologise.
Mr Speaker
The hon. Gentleman is courtesy and good grace itself. I did not think that an apology was necessary but it is very much appreciated, and I thank the hon. Gentleman for what he has said. This is the first time that the question of the Adjournment being moved has been punctuated in this way during my tenure, but I thank him.
Question put and agreed to.
Ministerial Corrections
(12 years, 5 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Defence
(12 years, 5 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I am trying to find out how much of this expenditure is in the £3 billion mentioned last year by the Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff), the Minister with responsibility for procurement, and how much is new expenditure? How much will be spent on Trident development and how much on the Astute submarine fleet?
Mr Hammond
The answer is about a quarter. Of the £1.1 billion, £500 million is investment in the capital infrastructure at the Rolls-Royce plant. The remaining £600 million represents the purchase of long-lead items for the production of the core for the reactor for the seventh Astute-class boat and the first successor-class boat.
[Official Report, 18 June 2012, Vol. 546, c. 615.]
Letter of correction from Philip Hammond:
An error has been identified in the answer given to the hon. Member for Linlithgow and East Falkirk (Michael Connarty) on 18 June 2012.
The correct answer should have been:
Mr Hammond
The answer is about a quarter. Of the £1.1 billion, £500 million is investment in the capital infrastructure at the Rolls-Royce plant. The remaining £600 million represents the cost of sustaining the capability out to 2023 and producing the core for the reactor for the seventh Astute-class boat and the first successor-class boat.
The following is the answer given by the Secretary of State for Defence, the right hon. Member for Runnymede and Weybridge (Mr Hammond), to the supplementary questions asked by the hon. Member for Islington North (Jeremy Corbyn) during the Urgent Question concerning nuclear-powered submarines on 18 June 2012.
Jeremy Corbyn (Islington North) (Lab)
A week ago, the Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff), told the House that the total cost of long-lead items was £3 billion, but that has risen by a third in the Secretary of State’s statement today. Does the right hon. Gentleman agree that all he is doing is building up huge expenditure in advance of a main gate decision in 2016, which will lead this country towards wasting £100 billion on a weapon of mass destruction of dubious legality and total immorality? Do we not need to think again?
Mr Hammond
The hon. Gentleman will not be surprised to hear that I do not agree with any of that; I do not think he listened to the answer to the previous question but one. This is not an increase in the £3 billion previously announced; the part of it that relates to the successor programme was included within that £3 billion.
[Official Report, 18 June 2012, Vol. 546, c. 615-16.]
Letter of correction from Philip Hammond:
An error has been identified in the answer given to the hon. Member for Islington North (Jeremy Corbyn) on 18 June 2012.
The correct answer should have been:
Mr Hammond
The hon. Gentleman will not be surprised to hear that I do not agree with any of that; I do not think he listened to the answer to the previous question but one. This is not an increase in the £3 billion previously announced; the part of it that relates to successor programme expenditure through to 2016 was included within that £3 billion.
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Women (Global Economy)
(12 years, 5 months ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Esther McVey (Wirral West) (Con)
It is a pleasure, Mr Turner, to serve under your stewardship today. Today’s debate is on women in the global economy. It is true to say that women now drive the world economy. Globally, they control £20 trillion of annual consumer spending, and that could climb as high as £28 trillion by 2015. Their £13 trillion in total yearly earnings could reach £18 trillion in the same period. In aggregate, women represent a growth market more than twice as big as China and India combined. Given those sums, it would be foolish to underestimate that economic force.
Carol Bagnold, HSBC’s regional commercial director for London, said:
“The female economy is hugely important for the UK and globally in terms of the international stage. Wealth is shifting, and the scale of contribution from women in both the business and consumer world is growing.
The States have recognised this with a plot of research done. In the UK the statistics show the same opportunity and we need to grasp this. 60% of personal wealth will sit with females by 2025, 37% of start-ups are now female owned, within the corporate world there”
is a
“growing number of females controlling the finances.”
Women are now the largest emerging economy. British women in their early 20s already earn 3.6% more than men of the same age. Women in full-time work are seeing their wages grow at more than twice the rate of men’s, and if that growth continues the average pay of women in the UK will overtake men’s by 2020.
Philip Davies (Shipley) (Con)
I apologise for interrupting my hon. Friend’s flow so early in her speech. Does she agree that those figures show that there is no need for politically correct positive discrimination, quotas or targets, because women are more than capable of competing on equal terms with men, and that we should focus on jobs and opportunities being given on merit alone?
Esther McVey
I agree with half of what my hon. Friend says. We are taking significant steps forward, and I will refer to various women and business executives who make similar comments, but they include the caveat that different sorts of support are essential for women to enable them to achieve the positions they want, and to continue their jobs and professional advancement through a complex cycle, because women are the carers and nurturers in society.
In the UK, 700,000 businesses are female-owned and estimated turnover in 2011 was £130 billion according to the International Centre for Entrepreneurship. For the first time, there are more young female millionaires than young male millionaires, so women are becoming wealthier younger. It seems that women are now truly an unstoppable economic force. However, in tandem with those positive statistics is the fact that although women may be earning more when younger, things change dramatically in their 30s when they have families. Between the ages of 40 and 49, there is a significant difference—about £3—in the hourly rate of women and men of the same working age.
We are often told that if women set up businesses at the same rate as men, there would be 150,000 new starts a year. As well as that, if we increased women’s participation in the workplace, we could add another £15 billion to £22 billion to the UK economy. We are also told that it will take another 70 years to achieve gender balance in the boardroom, such is the state of affairs there. Both sets of statistics are true, but neither does justice to the full role that women play globally.
Academics talk of women’s achievements reaching a plateau after a high point pre-2000 when a diverse raft of ground-breaking women took to the national and international stage. In this House in 1979, Margaret Thatcher became the first and only female Prime Minister. Elizabeth Butler-Sloss was appointed the first woman law lord in 1988. Stella Rimington was appointed the first female head of MI5 in 1992, and Debbie Moore was the first woman to establish a public limited company in 1984.
The rapid rise of women to leadership roles faltered as we approached the 21st century. Martin, Warren-Smith, Scott and Roper commented on the alarming lack of progress, and Vanhala stated that there has not been a significant increase since the early 1990s. That prompted Broadbent and Kirkham to write that:
“after a promising start why aren’t women moving on, even in ‘feminised’ professions such as accountancy”.
In their book, “Through the Labyrinth”, Eagly and Carli wrote about the distinct lack of women in powerful roles. However, others, including Broadridge, Broadbent and Kirkham are now asking whether we have reached a pivotal point in the advancement of women in leadership, and suggesting that to deliver the next level of progress a new understanding of female leadership might be required.
Philip Davies
I am sure that my hon. Friend is too modest to mention it, but I commend her work with her book “If Chloe Can”, and the magazine that she set up and has delivered to thousands of schoolgirls throughout the country in scores of schools. She turned it into a play, and what she has achieved is remarkable. Does she agree that role models are crucial, and that women and other people can achieve their ambitions, whatever their background, if they have other people’s paths and examples to follow?
Esther McVey
I thank my hon. Friend for his kind words. I do indeed believe that, and I am not the only one. A huge body of work has been done on that. Ofsted did a report last year, and this year Girlguiding UK did a report on the importance of role models. I came to the same conclusion after 10 years of research on the Genda Agenda, and in the Ideopolis report and the Merseyside Entrepreneurship Commission. I originally sought to look specifically at Merseyside where evidence unfortunately showed that the statistics for girls claiming benefit were double the national average, but for those setting up in business they were half the national average. That was not because of the academic qualifications they did or did not have, not because they did not have drive and determination, and not because they did not have the wherewithal; it was purely because of a lack of role models. If girls do not know what opportunities are out there, they cannot follow a path and achieve.
If I wanted to make a chocolate cake, I would not try to fathom out how much butter, flour and chocolate I would need. I would go to a recipe book, or follow the recipe of someone who had got it right. If I then wanted to tweak and perfect it with extra chocolate flakes and buttons, I would. In the same way, I teach young girls and older girls that there is a path that they can follow, and show them the raw ingredients that they need to achieve.
Another positive comment I always make to young girls from all backgrounds—this is key—is that when I did an academic qualitative and quantitative study of the top 100 women in the world from all backgrounds, the determining factors were not who someone was related to, or what academic qualifications they had. Personality and character traits determined their future. Being persistent, determined, consistent, a good team player, optimistic, and able to find a way of doing things even when hurdles were put in the way were the key determining factors for whether people achieved. That was a long answer, but it encapsulates 10 years’ work.
Philip Davies
I thought that at this point I would urge the Minister—if my hon. Friend wants to comment, she can—to do the following. It seems to me, having been one of the many colleagues who went to see the performance of “If Chloe Can” when it was turned into a play and who also saw the production in Speaker’s House, that if the Government and the Minister really want to do something useful, giving some support and funding to allow that to go around the country as my hon. Friend envisages would be far more worth while than just talking about these things.
Esther McVey
I thank my hon. Friend very much. I would never have been so bold as to make such a plea, but as he has, on my behalf, I shall endorse it thoroughly.
I argue not only that women have reached a pivotal point, but that we need to understand and ensure that we in the broader sense—all of society—support the complex female life cycle. I am talking about the life cycle of a woman as mother, carer and nurturer. We also need to understand how those biological and atavistic needs drive, motivate and influence women’s choices. Women’s natural predisposition to be carers and nurturers regularly dictates the style and type of job that they do, the type of business that they establish and the choice of hours worked in order to fit around the needs of their family. Perhaps targets for the extra number of businesses that women should set up, how much extra they could add to the economy or how great a percentage could be on a board are artificial and too simplistic a range of targets and do not take into account innate human desires.
As we look to the global stage and look at businesses, we are noticing that there has been a change from a hierarchical structure in business and organisations to a flatter one. Executive leaders are seeing and feeling that, but is everyone else convinced? Targets are not enough. They do not work sustainably and are not as effective as they need to be. We can look to other countries. In China, the Philippines and Thailand, things are very balanced. In Japan, that is not the case. There, women take only 6% of the top jobs. We have to look at the cultural effects. The McKinsey study in Europe showed a much improved gender balance. In China, 70% of women are in work, but India is far behind, with 35%. Again, that shows the cultural significance and difference.
Eve Baldwin, the global human resources director for Unilever, says that she has noticed that 50% of entry-level positions are taken by women, but 80% of promotions go to men. Why are we still not landing job promotions? It seems that organisations still prefer a male style. Perhaps there is still a lack of acceptance of different styles. Perhaps organisations do not appreciate the different dimensions and character types that women can bring to the business world. That needs to be fixed internally.
Anna Soubry (Broxtowe) (Con)
I congratulate my hon. Friend on securing the debate and on the very thoughtful and extremely well-researched speech that she is giving. Does she agree that one reason why women are not progressing in the way that we would all obviously like them to progress is that for many there is an absolute tension between wanting to have and rear a family and, at the same time, wanting to nurture a career? We have not resolved that tension yet. One reason why we have not resolved it is the cost of child care, which of course went up under the previous Administration. The current Government must address that in a significant way if women at all levels are to make progress at work.
Esther McVey
That was a very pertinent point and well made. Child care is key and needs to be addressed in many ways. It is not just a question of costing it out and paying for it. There could be tax incentives. There could be tax reliefs. We could perhaps start with just women setting up in business or look to help people on the new enterprise allowance. Obviously there will be budget constraints, but we have to think smarter. We have to think about how we will use Government money, but we also have to facilitate women so that they can add to the economy, because a woman’s life is, as we have stated, a complex life. The desire to have children is one of the most basic desires and needs to be fulfilled.
Anna Soubry
One change that has occurred in recent times is that the number of child minders has gone down—in my view, because of over-regulation. Does my hon. Friend agree that we must ensure that there is less regulation to enable more people to act as child minders? That would reduce the costs of child care and be much more convenient to a number of women, especially those who do not have the money available to them to put their child in a nursery, to employ a nanny or to use some other rather expensive means of looking after their children.
Esther McVey
Absolutely. That is a point well made. I will be raising those issues at the end of my speech so that the Minister can take them forward and see what we can do. We believe in market forces and fairness. Obviously, if there are more people prepared to do child minding as a job and support other people, that should bring the costs down. We have to ask why the costs have risen so dramatically and therefore limited women in what they can do. They have to put their ambitions on hold while they look after their family.
As well as considering the support provided and the size and shape of business, we must examine lifelong learning. We must examine education for girls. Helen Fraser, chief executive of the Girls’ Day School Trust, said:
“We are living in a time of change and flux and it’s almost impossible to predict what the eventual outcome will be. What we can and must do is prepare our young people, and for the certainty of change, ensure they have the skills and attitudes they will need to survive and thrive, and help them (young women especially) develop the resilience to overcome setbacks, whatever happens.
The idea that your education finishes when you leave school or university no longer holds true—today’s young people can expect to learn and re-learn throughout their lives. Additional qualifications, second and even third degrees are likely to become more commonplace as people re-invent themselves and re-energise their careers. And if education is no longer linked only to the early stages in life—to childhood and youth—then developing attitudes that characterise successful learners is just as important as developing knowledge. Learning how to learn, developing physical and mental discipline, being open and engaged with the world, cultivating a true love of learning—these matter as much as knowing facts and figures and formulae.”
The reason why I asked Helen Fraser to contribute a quote to this important debate was not just—I say “just” lightly—that she is chief executive of the Girls’ Day School Trust, a group of girls’ schools. Before that, she was managing director of a global company, Penguin Books. Therefore I felt that she had seen both sides of the coin. She has been a mum and wife and a successful business woman, and now is a business woman again in the world of education.
Following on from that, Professor Lesley Yellowlees, president-elect of the Royal Society of Chemistry—the first woman to be elected president in its 171-year history—says:
“The UK needs a highly skilled workforce, particularly if we are going to make headway in these bleak economic times. More and more young women are studying science at university to the point where we have a near 50-50 balance in chemistry.
The problem today is not women entering science, but keeping them there and retaining all those skills and talent that can and does make a massive contribution to the global economy.
For the chemical sciences, that contribution is worth £258 billion, or 21 per cent, to the country’s GDP, according to an independent report the RSC commissioned in 2010.
Women are playing a greater role in science than ever before—but we can do much more. This is just one of the areas I will be focusing on as I begin my two-year term next month as the first female President of the Royal Society of Chemistry.”
She says that she will make helping women not just to get into science but to stay there a key issue. She will be doing that through role models.
Maxine Benson, a co-founder of everywoman, says:
“GenderDiversity isn’t just a nice thing to have; it is the solution to a business loss. Businesses with fewer women on the board make 42% lower return on sales, 66% lower return on”
investment
“capital and 53% lower return on equity. The differing attitudes to risk and governance means that having a female board member cuts your company’s chances of going bust by up to 20%.
The retention and promotion of talented women at senior levels is one of the simplest, most…effective and easiest methods of dramatically improving your business’s bottom line.”
All those things must be taken into account. People must appreciate and understand the differences between men and women, embrace those differences and bring them on board, because only then will they truly understand the benefit of having more women in key positions.
I want to move away from the business world to look at global leaders, because they are key. Women are coming of age as global leaders. Things are shifting. We have gone into a financially chaotic period, and women are coming through in places experiencing war-torn upheaval. We cannot talk about female leaders and understand them, or have today’s debate, without referring to Nobel prize winner, Aung San Suu Kyi, who spoke in Parliament last week. She was awarded the Nobel peace prize in 1991 for her non-violent struggle for democracy and human rights. She is one of the most extraordinary examples of civil courage in Asia in recent decades and has become an important symbol in the struggle against oppression. The Nobel committee gave her the peace prize for her unflagging efforts and to show its support for the many people throughout the world striving to attain democracy, human rights and ethnic conciliation in peaceful times.
We also need to refer to the latest Noble peace prize, which went jointly to three women: Liberian president, Ellen Johnson Sirleaf; Liberian peace advocate, Leymah Gbowee; and Tawakkol Karman, a leading figure in the Yemeni pro-democracy movement. They were all recognised
“for their non-violent struggle for the safety of women and for women’s rights to full participation in peace-building work”.
I would argue that women’s mothering and nurturing predisposition helps in non-violent struggles, with co-operation, consensual understanding and empathy; perhaps, like a mother for a child, there is the same love for supporters and country, and they could take their country and the struggle of the nation to a new phase of development.
Professor Parveen Kumar, the president of the Royal Society of Medicine, professor of medicine and education at Barts in London and the leading light in global health, wrote the definitive medical textbook used all round the world, including Asia and Africa. She is trying to take on new technology to distribute it as cheaply as possible to emerging nations. She set in motion active support and engagement with Royal Society members—all 23,000—so that they could help and support some of the most needy people in the world. She analysed the health statistics on child and infant mortality, and, with Carolyn Miller, chief executive of the international health charity, Merlin, assisted Madam Ellen Johnson Sirleaf to raise health standards, provide books, support and a new wing of a hospital, and to teach, not only doctors, but, this year, the first cohort of midwifery qualifications. As Professor Kumar and Carolyn Miller say, helping women globally is key—if you help and educate a women, you help the family, the child and the next generation.
If we put together a picture of women globally, we see that it is not only about finance, the support that they give others or education. They are not necessarily driven by high status or the turnover of a business, but appear to be a cohesive glue. A woman will be the mother of every child who ever populates the earth. Through that, they seem to act more laterally and less hierarchically. They seem to reach out to fill the vacuum that might be left in society.
I want to talk about global communicators.
Anna Soubry
Before my hon. Friend moves on to the next subject, would she agree with me about charities? I am slightly connected with Women for Women, which raises a considerable amount of money to invest in women in what are often war-torn countries. It recognises that one way to restore broken lives and families, including in areas of strife, is to empower and enable women to work and rebuild families. That charitable work is to be commended.
Esther McVey
Absolutely, it is indeed. We can see such efforts in many organisations, of which that is one, where women come together to build lives, help co-operation and make the world a better place, as they perceive it, for their children and the next generation. Part of that message has to be about communication; getting the story to the outside world and telling the tales of women that might not otherwise be heard can help.
The formidable Christina Lamb is possibly one of our best war journalists. She said that she always thought that she would help people, perhaps providing assistance and support as a doctor, but she turned out to be a journalist, travelling the world providing a voice for particularly women, families and children, who would not otherwise have one. In doing so, she has told their stories around the globe and got them the medical help, the medicine and the support and protection that they required. In her own way, she has been a healer.
I make special reference to Boni Sones, who set up Parliamentary Radio to link women and women MPs not only in the UK but around the globe. She says:
“Women journalists in the UK and women across party in the British Parliament have been using new technology and new journalistic practices to talk about the issues they have been championing to improve the lives of the women and families they represent in their constituencies. They are now trying, via a BlackBerry applications to ‘link in’ women in Parliaments across the Globe to their web based radio station so that they then broadcast stories”
and success stories, not only about them, but about other women across the globe. She continues:
“The World is indeed becoming ‘flat’ as new media allows new connections like this one to take place. Previously broadcasters required FM frequencies and line-bookings, now the internet and mobile phones like the BlackBerry device can allow programme makers to broadcast all over the World.”
Boni is a visionary. She set up that project in Parliament, but she is seeking to make global links to tell stories across the world.
It is important to celebrate women’s achievements. That in itself can provide role models, allowing others to see what has been achieved and what women, too, could achieve. I want to talk specifically about Merseyside women of the year. The award is ten years old this year, and the ceremony will take place on Friday. It began as a very small event looking at women in business, but grew and grew with the formidable courage of the ladies involved and did not remain just about business.
I am struck by the various avenues and fields that the award has covered: charity, learning, support and media. Past winners include Claire Lara, the chef; Lisa Collins, the business woman; Pauline Daniels, the stand-up comedian; Kim Cattrall, the actress—yes, she came from Merseyside too—Edwina Currie; and Carla Lane. A plethora of women have won the award, which is supported by three incredible women: Jean Gadsby, Ellen Kerr and Elaine Owen, who have come together and supported the award. This year—the 10th year—they are taking it to the next level. They want to support and fund women. They are putting a bursary together to do that for the next generation of women.
There are things to be asked of the Government. I have spoken at length about the various things that women do and achieve but, as has been touched on, we need role models for women—visible signs of female accomplishment. Something simple that Boni Sones wanted was pictures of women, even in Parliament, or in the National gallery, celebrating success. The images of women constantly before us do not show them in successful, powerful roles, but in weaker, consumer or sexualised roles. A few more paintings would seem a meagre request.
Anna Soubry
Is not that one of the peculiarities and tensions of the issue? Speaking—forgive me, Mr Turner—as an old feminist, I suggest that one of the ironies of the feminist movement is that in this day and age arguably there is even more pressure on young women to aspire to a certain body image. Equally, we have a terrible celebrity culture. We could have good, strong role models for women, but young women aspire to what the media too often put forward. That does not advance women in society. In many ways it has taken us back decades.
Esther McVey
I would completely agree, as would many young girls. The 2010 survey by Girlguiding UK examined what was forming girls’ attitudes to work and what was driving and motivating them to take up jobs. It was what they saw in the media; and usually the jobs were powerless ones. In 2010, it was still a major ambition of girls to be a hairdresser, rather than an engineer, because that was what they saw. The ambition was to be a beautician rather than a scientist, to be a WAG rather than a lawyer, to be someone’s other half rather than to achieve in their own right.
Anna Soubry
Does my hon. Friend agree that, despite the fact that she received a lot of criticism, there was much merit in the speech by Cherie Blair last week? She identified a problem with the aspirations of too many young women, who aim just to marry a rich man, and see that as the be-all and end-all of their lives. In the same way, unfortunately, the only aspiration of a number of very young women in our society is still to be a mother. That is why we have such a high teenage pregnancy rate. They see nothing else in their lives besides having a baby.
Esther McVey
When I go round schools, one of the key things that I say is “What would you like to achieve for yourself? It is great if you get the perfect partner and have children. Those are other things, and part of your life; but what are you doing with your life? How will you shape and craft it? Should your husband leave you, what will you do? When your kids eventually grow up, as they do—and there is a massive vacuum in a mother’s life when a child leaves—what will you do; and how can you fulfil your aim?” Sometimes, when I am speaking to 12 to 18-year-olds, that all seems so far away. Tomorrow seems far away. When I am speaking on a Monday, Friday night seems a long time away. Nevertheless, I try to make that point.
I hope that she will not mind my mentioning this story, but I always tell the girls I speak to about Debbie Moore. It is funny in hindsight; but so many things seem funny in hindsight. She was a successful model and at 19 married the man who would have been the love of her life, a photographer. She thought that was it; her life was perfect. She had peaked. Two years on, it was their second wedding anniversary. He went off to work and she waved him goodbye, knowing she had a magnificent celebration prepared for him when he came home that night. She waited, and he did not come home. The next morning he still did not. He had run away and dumped her for a younger model. She was only 21 and he had run off with a 19-year-old girl.
She suffered turmoil, devastation and upset, of course, and through the stress a thyroid imbalance set in, so she ballooned, then lost weight. That was not conducive to a modelling career, because she would arrive at an interview one size, and arrive at the photo shoot another size. When she asked the doctors if there were potions or pills to help her, they said that there were not, but that possibly gentle exercise would suit her. She said, “I hate the gym, and I hate jogging. Oh, but I don’t mind dancing.” She took up dancing and learned more and more. From that beginning she set up the Pineapple dance studio and dance clothes range, and became the first woman to set up a public limited company. She always says that the best opportunities can come from the greatest adversity. It is a question of what people do with them. Who would think, she asks, that after all the devastation and upset, she would, many years after the event, thank the man who left her, because he made her a multi-millionairess? I try to emphasise to girls that the question is not what someone else can do for them, but what they can do for themselves.
A list of the percentage of women in business and in various careers shows that they account for only 22% of MPs, peers and Cabinet members. Women have 35% of senior civil service places; 9% of Supreme Court justices are women. They account for 45% of general practitioners, 31% of NHS consultants, and 19% of university professors. There is much that can be done to change that, but the question to ask is “What do you want to do; what do you need to fulfil in yourself? There are a plethora of jobs out there; what do you feel would fulfil your potential and aspirations?” To go back to the point made by my hon. Friend the Member for Broxtowe (Anna Soubry), seeing women purely as glamorous, sexualised beings has many ramifications. If women are thought of only in visual terms, rather than in terms of what is in them, that takes away their power. That stunts their aspirations, because they do not see women in powerful positions; they see them only as an addition to someone else.
Chief Guide Gill Slocombe said:
“We believe that today’s young women have enormous potential to promote change at a local, national and international level. This belief is further backed up with the results of our Women in the Lead survey which showed that an amazing two thirds of award-winning women have previously been a Brownie, Guide or member of the Senior Section.
Therefore we call upon all those involved in public life to join us in ensuring that they play their role in providing opportunities to enable young women to exercise their power, make their voices heard and strengthen their role in the global economy.”
To return to what I ask of the Government, the issues are role models, visible signs of accomplishment, and child support, for women and children. Greater family and pre-family support and education is a key thing, so that, as early as possible, women fully understand the life-changing choice of whether to have a child. Other issues are support for women setting up businesses—women are nearly five times more likely to cite family reasons for setting up a career—and support for female-run businesses, although I do not exclude male-run businesses, which should have support too. Access to finance for business is also relevant to both males and females, but particularly to women, because usually they start off with much lower capitalisation. They have humbler aspirations and desires, and are more than happy to start off with less money. Equally, they take fewer gambles, so they will have done more research when they set up a business, and they ask for less money. We feel that more mentoring support is key.
I will close today with a quote from my colleague and good friend, Bettany Hughes, who is an award-winning historian and broadcaster, and a research fellow at King’s College London. She said:
“The oldest surviving 3D sculpture in the world, 40,000 years old and carved from the tusk of a woolly mammoth, is of a woman. For the next 40,000 years, close on 92% of all extant human figures are of the female form—telling us that when homo sapiens tried to work out what it was to be human, the female of the species was conspicuous not by her absence but by her presence. In this epoch human-kind invented religion, cities, farming, tools, philosophy, democracy…the list is endless. Archaeology and history show us that throughout this massive bulk of human experience—from 400,000 BC to around 400 AD—women have enjoyed substantial standing and influence and sway in society. Plato opined, ‘Nothing can be more absurd than the practice that prevails in our country of men and women not following the same pursuits with all their strength and with one mind, because when this happens, the state, instead of being a whole, is reduced to a half.’ How true. Why choose to live in the half world of Plato’s imagining when we can flourish in a full one?
The word Man comes from…‘Manu’ meaning mind or thought. Mankind is a global community not of humans with an excess of the Y chromosome, but of creatures who think. We, both man and woman, think best together. This is not a plea from 50% of the population—but a recommendation for all 100%. Both male and female can draw comfort from this truth—I think and therefore I am, a man.”
Anna Soubry (Broxtowe) (Con)
I congratulate my hon. Friend the Member for Wirral West (Esther McVey) on securing this debate. As I have mentioned before, I support much of what she says. I also congratulate her on her careful thought, the construction of her speech and her considerable research.
I will not speak for long; unfortunately, I am sitting on the Defamation Bill, which starts at 10.30. I should not say “unfortunately”, because it is always a great pleasure to sit on a Public Bill Committee, but I will have to keep my comments short.
Obviously, I speak as a woman. I am an old feminist and the mother of two daughters, aged 20 and 21. All my life, I have been opposed to any form of stereotyping, whether it is based on gender, sexual preferences, colour of skin, race, religion or whatever.
Although I agree with so much of what my hon. Friend said, I just put into the mix a little bit of caution. I accept that as a woman, my biology means that there will be some natural urge or instinct to have a child. As a mother, therefore, I realise that many of us have mothering instincts. However, there is a danger of saying that all the great attributes of someone such as Aung San Suu Kyi, for example, come from the fact that she is a woman. I take the view that she has a steely determination, which is found in both women and men. Her nature to care and to make considerable self-sacrifice is not because she is a mother but because she is a great human being, and both men and women have those attributes. There is a danger if we say that women have a particular side of them that lends itself to the more nurturing and caring professions.
Those of us who have practised law will remember the days—I am certainly old enough to—when as young female barristers we were undoubtedly encouraged to practise in the family law division. There was an assumption that we would want to do so. When I first went to the Bar, more than 30 years ago, it was difficult for women to advance not only within the profession but at the criminal Bar because it was seen as a combative arena, which indeed it is, and not the sort of arena that women would want to engage in.
Esther McVey
My role model was a woman called Rose Heilbron, who went to my school. She was the first woman to get a first in law from Liverpool, to get a first at Gray’s Inn and to do a murder trial. When the male criminal, who was up for murder, saw her, he said, “My God, I knew things were bad, but now I have seen who is representing me, I see things are worse.”
Rose’s desire to go into the law came from a desire to help other people. It was a case of, “There but for the grace of God go I”. She had been a refugee. Her desire to support others and to ensure that everybody had access to the law was what motivated her. Although I agree that women are not the only part of the population to have these caring, nurturing and mothering beliefs, many studies have linked those qualities with the fact that we give birth. They say that our biological differences are the key motivating factor for why women take up a job and pursue a profession. More than 80% of social enterprises involve women, and that is down to our biological differences.
Anna Soubry
I am extremely grateful for that intervention from my hon. Friend who has researched the matter and clearly knows a great deal more than me. Although I agree with much of what she says, I want to add a note of caution so that those who perhaps do not fully support the advancement of women or the feminist cause do not rely too much on our natural instincts as mothers, nurturers and carers to say, “That is all well and good and that is where you should stay.”
Let me return to the point I was making before my hon. Friend’s intervention. When I returned to the Bar, some 20 years ago, I was struck by how much its attitude had changed—not only to background, school, the colour of skin, race and religion, but to women. There had been a great advancement of women at the criminal Bar. We are now reaching the point when almost half of the people at the criminal Bar are women, which is to be celebrated. Women are just as capable as any man at either prosecuting or defending in criminal cases, however difficult that case may be.
I will not delay you for much longer, Mr Turner, but I want to reiterate this point about child care. There is a very real need, especially among those who are not particularly well paid, to return to the world of work. The reasons for that are often economic, but not always. This may not be understood by some men, but many women want to go back to work not just because they want to earn the money, but because they want the social side and the interaction that comes from it. At the moment, however, we have a profound problem in our country. A number of women, on finishing their maternity leave, look at the cost of returning to work and find that the amount of money that they will earn is the same as what they will have to expend on child care. We need to tackle that.
Finally, mentoring was mentioned by my hon. Friend. How right she was. Certainly at the Bar, there were mentoring schemes to help women. Mentoring is an admirable scheme and works especially well for women.
Philip Davies (Shipley) (Con)
Thank you, Mr Turner, for calling me to speak. It is a pleasure to follow my hon. Friend the Member for Broxtowe (Anna Soubry) in this debate. She has to go off to a Public Bill Committee. I hope that you, Mr Turner, the hon. Member for Stretford and Urmston (Kate Green), who is the shadow Minister for Equalities, the Minister for Equalities and my hon. Friend the Member for Wirral West (Esther McVey) will all forgive me as I have to go off to a Select Committee soon, so I will be unable to stay for the wind-up speeches. I apologise in advance for that.
In all honesty, I was not intending to speak in this debate. When I heard my hon. Friend the Member for Wirral West speak, I was even less keen, given how much research she has done on this subject. She made a fantastic speech and clearly knows her stuff. I have not done any research at all, Mr Turner, so I would not want you to compare my speech with that of my hon. Friend, because it certainly will not compare. However, the things that she said have prompted me to make a few points.
I commend my hon. Friend because, as I said in one of my interventions, her work with “If Chloe Can” is truly inspirational to lots of girls. She attended a theatre production, when “If Chloe Can” made its debut in the west end, and saw a thousand schoolgirls from many deprived parts of London hugely excited, not only by the production by the National Youth Theatre—which I also compliment—but by seeing some fantastic women from all walks of life whom she had persuaded to attend. Those women talked about their life stories and encouraged those girls to think they could achieve something with their lives and achieve their ambitions if they set out to do so, irrespective of their backgrounds. All that is inspirational.
The work that my hon. Friend has done in pursuing that aim is truly amazing. Lots of people in politics talk a good game, but I must say that there are not that many who go through the motions of doing something. She does not just talk about things; she goes out and does the things I have described, quietly getting on with it. She should be commended greatly for the work that she does. I say that even though she only half-agreed with my opening intervention, but I will overlook that fact for now.
I will talk about a couple of things. My hon. Friend talked about the pay gap between men and women in their late 30s and 40s, which contrasts with the situation when they are in their 20s. It struck me that there was something rather inevitable about that particular problem, and I am not entirely sure that anything can be done—or indeed, should be done—to address it.
If a man carries on working through his 20s and 30s, one hopes that he will progress in his job, whereas a woman may have made her own choice to leave work to have a child before coming back to work later. It would be bizarre if the woman came back on the same pay or higher pay than the man who had been slaving away for an extra 10 or 15 years in that particular company. It seems to me that some of these things, whether they are right or wrong, are simply inevitable and are not a matter for the Government to start interfering with. They simply reflect the inevitability of life.
Kate Green (Stretford and Urmston) (Lab)
I am always interested in hearing what the hon. Gentleman has to say on this subject. Although I understand the argument he is making about the impact of taking time out of the workplace, does he accept that one potential solution to the problem he describes is to share the time out of the workplace more equitably between fathers and mothers, and to take measures to promote that sharing of time away from work?
Philip Davies
The hon. Lady makes a fair point. The bit that I am not particularly convinced about is that even if we equalise the opportunities for men and women to take time off work to look after children, my guess—I am not an expert in these matters, but this is my guess—is that through nature women will be more likely to want to take that time off work than men. I could be completely wrong, but that is my guess. We can equalise the opportunity as much as possible, but I suspect that even if we did so, women would be much more likely to take maternity leave than men would be to take paternity leave.
Philip Davies
The hon. Lady may disagree and if the Government implement such a scheme, we will see what happens. I hope that, if the Government do so and what I say proves to be true, she will come back and acknowledge that that was the case, rather than sticking to her sort of feminist dogma, which is not really wedded to the real world.
However, I agree with some of the points that my hon. Friend the Member for Broxtowe made about child care and its regulation. We seem to have an obsession in this country with making every job in the world a job that someone needs a degree to do. One of the latest examples of that is childminding. When parents look for a childminder, the most important factor—it would certainly be the most important factor for me regarding my children—is that their children are happy and safe, and that they are in a happy and safe environment. Whether or not the childminder has a degree is of no consequence to me whatever.
The Government have to start trusting parents a lot more. Parents are perfectly capable of deciding who is a good childminder and who is not without the Government imposing unnecessary regulations on the child care sector and making people have increasingly large amounts of qualifications that are totally unnecessary. The Government should just let parents get on with choosing the right childminder for their children, which may end up being cheaper, thereby allowing women to return to work.
However, there is scope for helping children with child care. My starting point is that so many people in this country seem to have decided that they do not want to work that when people clearly want to work, the Government should be out there, giving them as much support as possible so that they can. If there are lots of women who would prefer to go out to work and who want to achieve something in life, there is a role for the Government in trying to make that process as easy as possible.
I should say in passing that I do not think that it is useful to frown on those women who want not to go out to work but to stay at home and bring up their children. They should be encouraged to do so and they should not be looked down on by others for making that choice. The issue is that we should help people to fulfil their ambitions and to make the choices that they want to make.
I also want to touch on maternity leave and the kinds of regulations that apply. I do not think that anybody objects to the principle of maternity leave, but we should be rather careful because lots of things that can be well meaning and that seem, on the face of it, to be a good thing for women can end up, in practical terms, being a barrier for women.
Whether people like it or not, and whether other hon. Members in this room want to acknowledge it or not, I suspect that there are still many people in businesses out there who look at a woman of a certain age, see how old they are—perhaps somebody in their late 20s, who has recently married—and think to themselves, “Hold on a minute. If I take this person on, the chances are that they will be leaving to have a child and I will be having a huge disruption to my business, and possibly a huge cost as well. I will find it very difficult to replace this person, particularly for a fixed period of time.”
As a result, that businessperson may not give that woman that particular opportunity, although otherwise they would have done. We have to guard against these well-meaning schemes that are not actually providing opportunities for women, but providing barriers to women getting a job in the workplace. Before anyone runs away with the idea that it is just male employers who will think like that, I should say that I suspect that female employers are just as prone to make that kind of decision as male employers are.
We have got to look at certain companies. For my sins, before I entered Parliament I used to work for Asda. For a company such as Asda, regulations and obligations are meat and drink. Asda employs 140,000 people, so having people take time off for maternity leave is absolutely no problem at all. In fact, many companies of that size will make a point of offering enhanced employment terms as a way of attracting the best people to work for them, because they can afford to allow people to take time off.
I ask you, Mr Turner, to bear in mind those companies that employ one or two people. If a small businessman employs two people and one person takes off an ever-increasing amount of time, that causes huge disruption to their business—there may not even be a successful business for that woman to go back to, given the disruption and cost incurred. Nobody objects to the Government’s wanting to introduce measures that genuinely help people, including women, in the workplace, but we should be very careful about going over the top in imposing too many onerous conditions on businesses that will end up having exactly the opposite outcome to the one intended.
If the Government want to help women in the global economy and help them to fulfil their potential, the way to do that is exactly the way that my hon. Friend the Member for Wirral West has been going about doing it, which is to provide people with role models and to show them how they can achieve their goals, irrespective of their background. It is to show them that even people who leave school with very few qualifications can achieve their goals if they have the right characteristics and the right determination to go about their lives. I urge the Government to do those encouraging things and not to go down a politically correct route with quotas and other such things.
All we want—all I want, certainly—is for people to be given jobs and opportunities on merit and merit alone. If we believe in true equality, surely we should be gender-blind; it should be irrelevant whether someone is male or female. I could not care less whether the board of a company has 95% men or 95% women. All we should care about is that they are the best people for the job and for the company. It will not advance women if the Government go down the route of having quotas for this and quotas for that and politically correct decision making; that will make people feel that women have got to where they are only through some situation that has been concocted to achieve a particular outcome. That does not do women any good; it does no one any favours. Everyone has to feel that everyone has got there on the same basis, and that basis should always be merit.
I commend what my hon. Friend the Member for Wirral West has done in pursuing the agenda of merit and in allowing women to fulfil their ambitions and dreams, and I hope that the Government follow that model rather than trying to have some “get equal quick” scheme, which would not advance women at all but advance political correctness and build up huge resentment among the public. I will now allow the Front-Bench spokespeople to have their say. I apologise again for having to leave for my Select Committee.
Kate Green (Stretford and Urmston) (Lab)
It is a pleasure to participate in this debate under your chairmanship, Mr Turner.
I congratulate the hon. Member for Wirral West (Esther McVey) on securing what has been an engrossing debate. She is absolutely right to set as her territory the celebration of the socio-economic achievements of women in this country and across the world. As I listened to her speech, I was struck by how much our shared experience as women unites us right across the world, in both developed and developing economies.
In the workplace, in business and in the family, in our role as caregivers and managers of the household and its finances, and in our role in our communities, women’s experience is the same right across the world. It is important to recognise that the structural barriers to women’s advancement in this country are different not in kind but in degree from those experienced by women in other economies, and that measures taken to dismantle them will have global applicability. It is absolutely right that we should seek to dismantle the barriers, for exactly the reasons that the hon. Member for Wirral West highlighted in quoting Plato, that proto-feminist—the personal fulfilment of women and men, and the benefits for our world and for society as a whole.
I want to highlight some structural issues, a number of which have not been mentioned in the debate but are important. The hon. Members for Broxtowe (Anna Soubry) and for Shipley (Philip Davies), who unfortunately have had to leave the debate, raised some of these issues and contributed interestingly to the discussion.
Despite progress in women’s socio-economic position, which the hon. Member for Wirral West rightly highlighted, there is still a clear difference between the income made and assets held by women and men, although to some degree that is mitigated by cash transfer programmes, which are effective in supporting women’s financial positions and those of their children—if women have money, they spend it on their families. In many developing economies, there are still limitations on women’s property rights. It is important that we have strategies to address those economic, income and wealth inequalities, and that we keep up a clear line of sight on progress.
Several hon. Members rightly highlighted the importance of access to education as a route to well paid jobs. Across the world, women are typically in less secure, more vulnerable and less well-paid employment, often because they work in sectors of the economy in which pay and conditions are poorer. Education is clearly an important answer to that segregation and employment disadvantage, and it is key, therefore, that we look at whether our education system addresses that inherent segregation.
The hon. Member for Wirral West pointed to the progress in the participation of women in chemistry studies but, regrettably, we do not see the same picture across all the STEM subjects. In engineering, maths and IT, women are under-represented after the age of 16, and in computer science the position is worse than it was 20 years ago. The same picture is also seen in the much-fêted Nordic countries. We need strategies in our schools to address the education choices made by young women as they approach further and higher education, and schools themselves must think more creatively and imaginatively about career routes for women, and encourage girls to progress down them.
I am sorry that the hon. Member for Shipley has had to leave the debate, although I understand why, because I want to pick up on a couple of his points. On women as mothers, and on how that inhibits their labour market participation, he suggested that part of the problem was some of the maternity rights that have been secured—after considerable fighting, to which the Minister has, in the recent past, contributed.
What determines women’s unpopularity with the kind of employers that the hon. Gentleman characterised is not the right to maternity leave but the fact that they can become mothers at all. Removing the right to maternity leave would not increase the propensity of such employers to take on women; they would simply not employ them in the first place. It is right that we should establish an institutional requirement that women who have contributed to an employer’s business, have skilled up to be able to make that contribution and have a continuing contribution to offer should have their ability to return to their employment assured. As we know, retention of staff is a cost-effective way for employers to operate their businesses, so there is an employer advantage as well.
It is also important that we design shared parenting arrangements in a way that genuinely facilitates equal parenting by women and men. We await the Government’s response to their modern workplaces consultation, and I am concerned that any plans for redesigning parental leave should take account of what we know is effective in ensuring that both women and men are likely to take up leave entitlement. Much depends on whether the leave is paid, and women, but particularly men, find it extremely difficult to take parental or paternity leave if there is no income replacement. It is also important to recognise that it is absolutely right to protect a certain period of maternity leave only for mothers, because of pregnant women and new mothers’ health and well-being needs.
I was interested in the statistics on women in senior positions that the hon. Member for Wirral West highlighted. She cited a number of disappointing statistics from the public sector, but in many ways the position is even worse in the private sector; only 15% of FTSE 100 companies have a woman on their board. I congratulate the Government on their work over the past year or so to influence a change in behaviour at board level in our leading companies, and it is good to see some of that bearing fruit.
I hope that the next thing that the other political parties would like to learn from—I am thinking about what genuinely advances women into positions of influence—is the Labour party’s success in significantly increasing female parliamentary representation through the use of all-women shortlists. I would say to the hon. Member for Shipley that of course we want people to advance on merit, but we must first ensure that they are advancing from a level playing field; too often, as I am sure the Minister would agree, women are not.
I was interested in the points made by the hon. Member for Wirral West about encouraging more women to become entrepreneurs and start new businesses. We absolutely want to encourage that, both in this country and around the world. Much of the difficulty that women experience in starting a new business relates to factors such as lenders’ perceptions. Interesting experiments have been done in the developing world with microfinance and access to credit, and they could be translated into this country. I hope that the Government will consider why only 25% of their enterprise allowance is taken up by women and whether more can be done to encourage women entrepreneurs to take advantage of it.
This debate has rightly discussed women’s role as care givers. Lack of access to child care is inhibiting girls’ and women’s participation and economic success. We still hear, for example, of girls being forced out of education when they become pregnant or are unable to access child care. The hon. Members for Broxtowe and for Shipley both suggested that the answer to the lack of affordable child care was to diminish regulation. I warn the Minister and her colleagues in the Government to be cautious about that.
I am proud of the progress made under Labour to increase the supply of child care. Between 1997 and 2009, we went from one place for every nine children under the age of eight to one place for every three. We massively increased child-care supply. I am pleased that the coalition Government are continuing down the track of creating more places for two-year-olds, but I urge Ministers strongly not to weaken quality through deregulation.
A strong body of evidence suggests that good-quality child care and early-years interventions are the most important factor in improving long-term outcomes, especially for the poorest children highlighted by the hon. Member for Broxtowe. In the Netherlands, where steps were taken to deregulate the provision of child- minding services, the adverse impact on children’s outcomes has led the Dutch Government to reverse their decision. I hope that Ministers learn from that.
Finally, I will mention a couple of issues that did not come up in this morning’s debate but are important to women’s participation as global economic actors. Violence against women continues to be a major issue. Of course, if a woman is suffering violence and abuse, that is likely to affect her economic and educational performance as well as being a fundamental attack on her human rights. All Governments have rightly given the issue considerable attention. It is not confined to our country; we must fight and address it around the world, as well as addressing women’s voices and autonomy to control and determine choices relating to their own lives.
I could highlight many such choices. We have discussed educational choices, but we have not talked much about health and reproductive choices, or women’s opportunity to shape their own communities and whether or not they can secure political participation. It is important that the right institutional structures are in place to ensure that women’s voices can be heard and are given a legitimate place in the public political process. The Beijing platform for action for the advancement of women is a useful framework in which to do so. If the Minister has time, I would be interested to hear, now that we no longer have the Women’s National Commission, how she thinks the institutional machinery will work to preserve women’s institutional political influence in the UK.
It has been a pleasure to participate in this debate. I congratulate the hon. Member for Wirral West and all speakers on their consideration of an interesting and worthwhile set of issues. It is important that we continue to celebrate women as decision makers and women’s participation in the economy, family life and their communities, and continue to strive for their continuing advancement—not just for women’s sake, but for the good of our society as a whole.
The Minister for Equalities (Lynne Featherstone)
It is a pleasure to serve under your chairmanship, Mr Turner. I hugely congratulate the hon. Member for Wirral West (Esther McVey) on securing this important debate and making one of the most exceptional, wide-ranging and well-researched speeches on the issue that I have heard.
We all know that the UK, European and world economies continue to face significant challenges. In these tough times, Governments and companies around the globe are looking for every available competitive advantage. This Government believe that in doing so, we must utilise fully women’s skills and potential. It is a no-brainer, really; it is obvious. It makes sense: it is good for women, for our economy and for British business. We will create a more competitive economy and a more equal society.
I congratulate all who have taken part in this debate. Significant contributions were made by almost all the Members who have taken part. The hon. Member for Wirral West mentioned role models and global leaders. Aung San Suu Kyi and others have been significant in raising our eyes to the magnificence that is possible. There is something exceptionally wonderful about someone of the size and shape of Aung San Suu Kyi standing against the military might of Burma. The contrast was incredibly effective, and we were all moved listening to her.
While I am praising famous women, I mention Hillary Clinton, who has done magnificently in her role as Secretary of State, as a good example of someone who has raised the profile of women. So are the women who stood shoulder to shoulder in Egypt during the revolution. We now wait with bated breath to see whether they will secure the political rights and freedoms that should go with such a change.
I am proud that this Government have placed women and children at the heart of our international development policy with a strategic vision for girls and women, which highlights the importance of economic empowerment, for example, and sets ambitious targets for developing countries to reach by 2014 in order to help 18 million women access financial services and 4.5 million to strengthen their property rights. Hon. Members are right that we in the United Kingdom have much in common with our sisters around the world who, wherever they are on the spectrum, tend not to be on an equal footing.
Interestingly, the hon. Member for Wirral West mentioned image and gender stereotyping. It drives me mad that we are always represented as either servile or sexual. The Government are doing a great deal of work on that. Although some say that that is the nanny state, I say that it is essential that the Government take a stand on the sexualisation of children and the conformity imposed on us by singular images and gender stereotyping.
My hon. Friend the Member for Broxtowe (Anna Soubry) discussed how, when she was younger and planning to be a lawyer, she was almost forced into the family law division, but resisted. Things have changed in law, which is fantastic, but unfortunately, in many other areas, they have not. The career choices made by school leavers have huge economic consequences. As my hon. Friend said, if someone chooses to be a beautician or a hairdresser, that is absolutely fine, but they should recognise that it is an economic choice. If they choose a higher-paying career, their choices in life will be very different. That is an important issue in our action on careers.
The new national careers service will encourage girls and women to challenge stereotypes by giving the broadest options. It will provide information on a wide range of opportunities, such as studying science and maths, for example, which were mentioned by the hon. Member for Stretford and Urmston (Kate Green). She also mentioned STEM subjects. A recently announced funding programme, in which the Department for Business, Innovation and Skills will work with the Royal Society, will focus on increasing diversity in the scientific work force. Over four years, a total of £700,000 will be invested in work to overcome the barriers to girls studying STEM subjects and entering related industries. That is incredibly important. Early choices are hard to make up for later.
I will mention the hon. Member for Shipley (Philip Davies) only briefly, as he is not here. I must cast aspersions on the idea that men get there on merit alone. Often, men get there just because they have been there all the way.
On enterprise, as we have heard, if we want our economy to grow, it is vital that we support more women to set up and grow their own businesses. Last week, we published details about the army of women who are backing us to boost business. The Government have provided funding for 15,000 mentors to support those setting up and growing their own business. The hon. Member for Wirral West has said how many more businesses we would have if more women began start-ups. I am pleased to announce that, as of last week, more than 12,000 mentors have registered, 40% of whom—almost 5,000—are women. I was fortunate, because my mother had her own business, so when I needed help to set up my design business, I could ring her to ask how to do a business plan, a VAT return and so on. It was easy and, in a sense, the business mentors are like mothers or fathers who can give people personal advice that they may otherwise feel inhibited about requesting.
On women in rural enterprise, we have published details of a £2 million programme to help female entrepreneurs in rural areas—there is a specific difficulty in such areas—to start or grow their own businesses. We have set up the women’s business council, which is chaired by Ruby McGregor-Smith, the chief executive officer of the FTSE 250 company Mitie. She was named business leader of the year at the Orange national business awards in 2011 and leads a prestigious group of UK business people drawn from a wide range of sectors. Over the coming months, the council will examine the full range of issues affecting women’s economic participation in education, work and entrepreneurship, both from the perspective of women and the choices they face and, importantly, from the perspective of business. The issue of women’s lives, which are complex, has been raised, and at its next meeting the council will consider issues relating to women’s economic participation with regard to three key life stages. Following its deliberation, the council will consider its conclusions and produce its final report, which will outline a series of practical steps that Government, business and individuals can take to support women and the economy. The report will be presented to Ministers next spring.
On work, I do not know about the two remaining Members—the hon. Members for Wirral West and for Stretford and Urmston—but I have children, and negotiating responsibilities is very difficult. I have to do a lot of planning and be very good at multi-tasking, organising and responding to unexpected last-minute events. It can be done, but nevertheless the introduction of the right to request flexible working for all, as well as shared parental leave will address some of those very difficult issues. Many of our most forward-thinking employers already understand that. Although the hon. Member for Shipley said that small businesses have difficulties, it is actually the case that businesses such as mine—I had one with four members of staff—go to the ends of the earth to be flexible for their staff. Arranging work around the familial needs of a good member of staff benefits businesses in the long run. They need to invest in the good employees who work for them—they will give back more than they could ever give them. That is an important development.
The hon. Gentleman also said that businesses look at women of child-bearing age and say, “I’m not going to employ her, because she may go off and have a baby,” but shared parental leave will mean that employers will no longer to be able to say with any certainty whether it is the man or woman who has applied for a job who will take that leave when they have children. Frankly, when I had children, men were involved in the process.
Last week, the Government announced that they will establish a new commission to look at the costs of child care, which is one of the biggest issues that women face across the board. The cost of child care is huge. I spent all my money on child care when my children were young and I was working. The new commission will be led by Ministers from the Department for Work and Pensions and the Department for Education. We realise the huge costs and the bearing they have on women and their families.
On top of that, as has been mentioned, we are supporting child-care costs to families who work less than 16 hours a week, by providing an extra £300 million for child-care support under universal credit. Eighty thousand more families with children will be able to work the hours that they choose. We have increased free early education to 15 hours a week for three and four-year-olds, and we are extending the entitlement to free education and care for 260,000 of the most disadvantaged two-year-olds to 15 hours a week. Working families can currently claim substantial help with additional child-care costs through working tax credit. From 2013, the Government’s new universal credit will support those who work, by ensuring that they are better off by doing so. More will always be needed on child care, but the new commission is specifically tasked with dealing with the costs of child care, because that is one of the biggest inhibitors for women who want to return to work.
On equal pay, which I think the hon. Member for Stretford and Urmston mentioned, we have published our updates on our “Think, Act, Report” initiative, some of which relate to the economic consequences of choices made early on. The case studies show that adopting the principles behind the Government’s voluntary approach to diversity at work has helped leading firms reap business benefits. We strongly believe that a light-touch approach, such as “Think, Act, Report”, is the best way to encourage most employers to deal with the complex causes of unequal pay. They have to think about gender differences, act on them and then publish, in whatever form suits them best, what they have found, what they are doing and their best practice.
If the voluntary method is the best way to progress, we also need a stick for those companies that do not follow this progressive agenda, so it is right that we take strong action in the few cases in which employers have been shown to have breached the law. That is why we recently announced that we intend to proceed with our proposal that where an employment tribunal finds that an employer has breached equal pay law, it will order them to conduct a pay audit in cases where continuing discrimination is likely. If an employer has already been found to be bad, there is reason to instruct further. We intend to legislate when parliamentary time allows.
I am slightly short of time, but let me address access to finance, which is a huge issue. I have been working with the British Bankers Association to understand those areas in which there may be discrimination or barriers against women accessing loans for business or mortgages. A report will be issued shortly.
The Government and Lord Davies have made progress on the issue of women on boards. There has been a great improvement in the number of women on FTSE 100 boards—representation has risen from 12.5% to 16%—and it is on target to reach 25%. Only eight all-male boards remain in the FTSE 100, which is eight boards too many. One woman on a board is insufficient, but we will reach the 25% target. From October, there will be a new provision in the corporate governance code, which will require companies to comply or explain their policies.
We have made it clear that we will not introduce quotas. We have a role to play in ensuring that the right frameworks are in place to enable business to thrive, which is what our business-led approach does. We do not believe that European Union-wide standards are appropriate—a discussion is ongoing and we have responded to a consultation on quotas—given the different corporate governance rules, economies and labour market conditions across member states. We also recognise that cultural expectations play a role. In the UK, we do not have a culture of using quotas. In fact, they are not lawful under our domestic legislation. At the moment, we are making good progress.
The hon. Lady raised the issue of all-women shortlists, which led to a step change in representation in Parliament. I believe that they are available until 2030. Both Labour and the Conservatives have taken huge steps forward, and the Liberal Democrats would also have done so had we had more women in winnable seats.
This has been an excellent debate. We could discuss many things that Members on both sides of the House are trying to address. I do not think that the differences between us on this issue are as huge as some of the views expressed in Parliament may lead us to believe. We all need to make sure that, from the earliest point in life, girls are given the choices that will enable them to progress. There is a difference between the lives of men and women, but we are trying to equalise their status as much as we can by providing the support that is needed. There is a whole world of people out there, and half of them are women.
In conclusion, in a global economy the action that we are taking across the world makes sense. It is good for women, good for our economy and good for British business. In doing so, and in advancing the role of women, we create a more competitive economy and a more equal society.
BME Communities (Educational Attainment)
(12 years, 5 months ago)
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Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I am grateful to have been awarded this debate on educational attainment in black and minority ethnic communities, which was triggered by a couple of things that have happened to me recently.
First, I have been holding a series of round-table meetings in my constituency to help to define my priorities and constituency strategy, and the differential attainment levels of our young people were a particular concern. For example, the proportion of young black people achieving more than five A* to C GCSEs in 2011, including English and maths, was 38.5%, compared with 47.5% for young Asian people and 69% for young white people. Although there has been significant improvement in those disparities since 2008, they remain of grave concern.
Secondly, I was horrified to hear—as I am sure many others were—the recent statistical release from the Office of National Statistics, which revealed that, nationally, 55.5% of economically active black men aged between 16 and 24 years are unemployed, and that this rate has doubled since 2008. For young black people, the unemployment rate is 44.4%; similarly, 27.6% of Asian young people are unemployed, rising from 22.8% in 2008. Breaking that down, 33.6% of Pakistani and Bangladeshi young people are unemployed, and 24.2% of Indian young people, which compares with 20% of white British young people. Those national trends are reflected in my constituency, too.
I have called the debate to examine educational attainment in BME communities, but it is important to note at the outset that although educational attainment influences employment, people with equivalent qualifications to those of different ethnicities experience different levels of employment. For example, young Indian people, who are the second highest performing group educationally, are more likely to be unemployed than their white peers. Similarly, Chinese graduates can expect to earn 25% less than their white counterparts. Thirty-six years on from the Race Relations Act 1976 and 12 years after the Race Relations (Amendment) Act 2000, that is indefensible. We cannot wait for another 30 or 40 years to ensure that we deal with such questions.
What are the specific issues in equalities and educational attainment? From the evidence, gaps in achievement can begin in the early years. For example, the Equality and Human Rights Commission triennial review states that the proportion of pupils achieving a good level of development in the early years foundation stage varies between different ethnic groups. Pupils from Irish, Indian, white British and mixed white and Asian backgrounds achieved more than the national average for a good level of development in 2009, but pupils from black, Bangladeshi and Pakistani ethnic groups did not perform so well. In all ethnic groups, girls outperformed boys significantly.
The 2008 research undertaken by the Learning and Skills Network and the National Bureau for Students with Disabilities indicated that poor experiences at primary school often began a gradual but cumulative process of disengagement, which became entrenched in secondary school and resulted in lower achievement and lower engagement in post-16 participation in education or training. I was particularly struck by the following statement from the report, on education:
“Engagement is not a simple choice for all young people. Young people can feel disengaged from learning for various reasons, and this can be mild or severe...For some young people, this is a process that they feel powerless to stop.”
At GCSE level, although national attainment by ethnicity has improved since 2006-07, and the achievement gap between some ethnic groups and the national average has disappeared, there are still some gaps. For example, 52.6% of Pakistani and 48.6% of black Caribbean heritage pupils achieve five or more A* to C grades at GCSE compared with the national level of 58%. That is a massive improvement since 2006, when the rates were 35% and 34% respectively. During the same period, Bangladeshi pupils improved from 40% to 59.7%, and black African students from 40% to 57.9%. Chinese and Indian students have performed consistently above national levels; currently, 78.5% of Chinese students and 74.4% of Indian students achieve five or more GCSEs. Travellers, Gypsies and Roma people are still the lowest achieving groups, with 17.5% of Irish Travellers and 10.8% of those from Gypsy or Roma backgrounds achieving five or more GCSEs including maths and English. Those inequalities are even more pronounced when looking at those who gain the English baccalaureate.
The data available on A-level attainment is limited to the number of A-levels, rather than subject or grade. Based on the number, the gaps in attainment are reduced or disappear, and the proportion of BME students in higher education has increased significantly from 13% in 1994-95 to 23% in 2008-09, broadly reflecting their presence in the youth population. In spite of that, however, 44% of all black, Pakistani, Bangladeshi and Indian graduates attended post-1992 universities. Shockingly, in 2009, only one black Caribbean student was admitted for study at Oxford university. So although BME participation in higher education is increasing, there are restrictions. Attainment also reflects earlier patterns, with 66.4% of white students receiving a first- or second-class honours degree compared with 48.1% of BME students overall and only 37.7% of black students. Drop-out rates were also notably higher for black British and Asian heritage students.
I want to touch briefly on training opportunities for young people, specifically apprenticeships. Data from the Black Training and Enterprise Group has shown that, again, there is under-representation of BME young people in apprenticeships: in 2009-10, only 7% of apprenticeships were taken up by young people from BME backgrounds, although the BME population represents 14% of the working population as a whole. Provisional data for 2011-12 indicates that 9.2% of those beginning apprenticeships are from BME backgrounds, although 16% of 16 to 24-year-olds are from ethnic minority groups. The data are worse for completed apprenticeships.
As policy makers advocating a fairer society, such data and the issues that they reflect should be one of the reasons why we get up in the morning—they should drive us to do more, to do better. Educational attainment is not only a key indicator for the jobs we will do and the incomes we will earn but, as the recent health inequalities review undertaken by Professor Sir Michael Marmot showed, a predictor for how long and how healthily we will live. Our education, good or bad, affects our whole lives. We must ensure that policy—education, employment, welfare and economic—strives to reduce the inequalities that still exist.
For those people less motivated by social justice arguments, it is important to note that reducing educational inequalities is associated with higher national standards of educational performance, as evidenced by Wilkinson and Pickett in “The Spirit Level” of 2009, and that enhances economic productivity, not to mention tax revenue. Furthermore, all politicians are concerned about the low turnout at elections—again, people with higher educational attainment are more likely to participate in voting.
So what causes those educational inequalities and what can be done about them? The reasons for inequalities in attainment are many and varied, often interacting with one another in a complex way. Evidence indicates, however, that key determinants are the education system, family background and poverty. Although schools of poorer quality were associated with poorer educational outcomes for all pupils, the 2007 report by the Centre for Analysis of Social Exclusion on understanding low achievement calculated that the major determinant was living in poverty. That effect is compounded for BME young people—more BME children are likely to go to poor-quality schools.
The particular school characteristics associated with quality and achievement include head teacher leadership, school processes and school ethos, but many of those characteristics are not measured. School resources are also associated with school quality, in particular when pupil-teacher ratios are included, although the extent to which extra resources can add value has been contested—for example, by Hanushek. The composition of the student body is another important factor: the poorer the socio-economic mix of students, the poorer the school quality and attainment levels. In addition, a neighbourhood effect was also identified, suggesting that although household income is a key determinant in educational attainment, it is also influenced by wider socio-economic factors. A poor-quality neighbourhood, not providing a particularly salubrious educational environment, is associated with lower educational attainment levels.
Another key determinant of educational attainment, both at school and later, in higher education, is family background. All children do better if their parents are well educated, and if education is valued. However, an evidence review published in April by the Joseph Rowntree Foundation shows that parental involvement is the most important characteristic, showing a strong causal relationship with attainment levels. Parenting style and expectations are also important, but less strongly so. The effects of both household and neighbourhood poverty on children’s educational attainment are obvious, and have been mentioned. However, analysis by Wilkinson and Pickett, comparing international data on educational achievement from the programme for international student assessment, shows that countries with high levels of income inequality also have lower scores for maths and literacy. Fairer societies do better on a range of measures, and educational attainment is one of them.
Heidi Alexander (Lewisham East) (Lab)
I congratulate my hon. Friend on securing the debate. I apologise for not being able to stay for all of it. She is discussing some of the factors behind differential attainment between BME and other populations. Does she agree that in finding the solutions to the problem, it is critical to involve parents, the school and the pupils? Indeed, that is what the black pupils achievement programme in Lewisham found. When all those elements can be brought together, it can make a difference.
Debbie Abrahams
I totally agree. We need to engage young people and parents in the solutions to the problems associated with educational inequalities.
The Joseph Rowntree review also considered the influence of individual attitudes, aspirations and behaviour, to see whether those are causal factors in determining attainment levels. At this stage, there is not enough evidence to suggest any positive association, although involvement in extra-curricular activities or sport showed a weak link. If we are to deal with those inequalities in educational attainment, what should we do?
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
My hon. Friend will be aware that for at least 10 years I have run a project—London Schools and the Black Child—looking at black children and under-achievement. Although all the social issues that my hon. Friend raised are important, one thing is clear: one problem for black children is a culture of low expectations in education. Controversial as Sir Michael Wilshaw, the chief inspector of schools, is, he showed, first at St Bonaventure’s and then at Mossbourne community academy in Hackney that, even if they come from deprived backgrounds, when black children are given high expectations, structures and limits, they can achieve.
Debbie Abrahams
I would not be at all surprised about what my hon. Friend says. The review examined systematic review-level evidence. My hon. Friend’s point is valid. I am sure that a greater amount of research will prove the causal link.
What should we be doing? I am proud that many of the improvements in BME attainment levels in the past six years can be attributed to the interventions of the Labour Government. The ethnic minority achievement grant was particularly effective, for example, in meeting the needs of bilingual pupils. Disadvantage because of language issues is one reason for the attainment gap in primary school, but that gap can be made up with specialist support. With the abolition of EMAG in April, there are concerns that that vital work will stop.
Aiming High was another effective programme aiming to increase participation and attainment for black pupils at key stage 4. Similarly, education action zones, targeting resources to improve attainment in inner-city areas, and curriculum development such as citizenship education contributed to positive changes in the education system, and to increased BME attainment levels. The 900,000 reduction in the number of children living in poverty achieved under Labour will also have had an impact on attainment levels.
Measures in the Education Act 2011 do not deal with disparities in attainment and could reverse the progress that has been achieved. For example, the measures on behaviour and discipline relating to detention, searching and exclusion have particular significance for Traveller, Gypsy and Roma children, who are four times more likely to be excluded, and Black Caribbean boys, who are twice as likely to be excluded. Excluded pupils are four times more likely to leave school without any qualifications. The measures have been introduced despite research conducted by the former Department for Education and Skills that acknowledged that exclusion is partly due to the conscious and unconscious prejudice of some teachers.
The expansion of academies and free schools without fully considering the potential and unintended consequences is another concern. Resourcing through the pupil premium may contribute to improvements in educational attainment if associated with increases in the teacher-pupil ratio. My right hon. Friend the Member for Tottenham (Mr Lammy) has written:
“If the premium is allocated precisely according to need, it is surprising that the area getting the largest increase in their allocation this year is Rutland (8% of children living in poverty), while the smallest increase goes to the Wirral (26% of children in poverty).”
The most recent proposal to reintroduce GCEs and a two-tiered exam system where children are streamed at 14 will only exacerbate the inequalities that already exist. Black and minority ethnic students are currently more likely to be put into lower attainment sets and, as such, would be more likely be put into CSE streams, thereby pigeon-holing their futures.
The economic and welfare policies which, according to the Institute for Fiscal Studies, are projected to increase the number of children living in poverty to 4.2 million by 2020, should alarm everyone who wants a fairer Britain. We cannot and should not let these children endure such hardships, but to compound that by failing to give them the support they need to reach their potential at school is unforgivable.
Finally, I want to make some recommendations. It is important to reintroduce the ring-fenced ethnic minority achievement grant; to develop teacher training to equip all teachers to teach a diverse range of students; to explore issues around unconscious bias; to reinstate targets for BME teacher recruitment; to increase research into the causes of differential attainment, including effective independent careers advice and guidance for young people from BME communities; to reduce the number of exclusions of black Caribbean boys, and restore powers to exclusion appeal panels; and to ensure that the curriculum is inclusive and promotes diversity, and that the call to reinstate GCEs is rejected.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this vital debate. There has been much talk about this subject in the media and in the report by Alan Milburn, and I know that the Government are taking seriously the work on social mobility. None the less, unless we deal with the issue of differential attainment, we will be letting down a generation of young people.
We have a mixed story to tell. I applaud my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) for her pioneering work on this matter. Had she not been making noises about the underachievement of black boys in particular, some of the progress and bureaucratic changes that have been made would not have taken place. I will touch on that matter in my suggestions to the Minister at the end.
Over the past week, the Secretary of State has talked about changing and splitting the GCSE, which is relevant to many of my constituents in Hackney. I do not disagree that we need to see rigour in standards—in Hackney, we have seen huge improvements in schools, which were achieving well below the national average 10 or even seven years ago, but most are now achieving well above that, with Mossbourne academy, which my hon. Friend cited, achieving 84% A to C grades including maths and English. A number of children are going on to not just good universities but Oxbridge as well as other Russell group universities.
We have done a lot in Hackney to improve standards, which we attribute to good heads, rigorous standards and a clear framework of expectations for young people of all backgrounds. We accept no excuses because of poverty or ethnicity and no low expectations. In one school, City academy—its principal, Mark Emmerson, is now also acting executive principal of City academy Islington because of his success so far—the pupils have not sat GCSEs. He has told his staff that they should see all the pupils in his highly ethnically mixed school, which is populated mostly from the dense local council housing estates in the area, as future A* pupils, and that that must be the teachers’ expectation. The school has been growing year by year, and is now in its third year. Most of the pupils are a couple of terms ahead of the expected achievement at the end of year 8, their second year in secondary school. A couple of them are more than a year ahead of where they would normally be, but they did not necessarily come in with the highest level of achievement at key stage 2—level 5. Some were achieving below that. Mark Emmerson has got them back not just to where they should be, but to above that.
I spoke about one school, but I could spend a lot of time talking about good practice in Hackney schools. Everything is not perfect, but there are good heads and good rigour, and we have seen huge investment, thanks to the previous Government, in new schools and good buildings. Young people have been amazed when they have gone into their new schools, and feel that they deserve them. They have a feeling that they have the right to be in a good-quality environment. The schools operate long days, with breakfast and after-school provision.
Another school in my constituency, Petchey academy, gives same-day detentions, but that is seen as positive. If a child is falling behind, for whatever reason—they may have been messing around in class, they may just not understand something, or they may have difficulties at home and bring other issues into the classroom—at the end of the day they spend an hour focusing on that area of under-achievement so that by the next day at school they are back with the rest of the class. I am sure that that does not always work, but that aspiration is surely needed. Many pupils in Hackney come from challenging homes, and often live in overcrowded conditions in families with long periods of worklessness. I will touch on some of the issues of ethnicity and language in a moment.
Returning to the Secretary of State’s comments, I do not agree that reintroducing a two-tier system for education is the answer. The idea that 25% of Hackney pupils at 11, and certainly at 13 or 14, will be pigeon-holed and earmarked for a lower qualification is a retrograde step. The example I have just given of Hackney’s City academy shows that much can be done at secondary school for pupils who may not have achieved their full potential at primary school. It would be a retrograde step for a cohort of teachers to expect a percentage of pupils to take a lower-grade exam. The benefit of the GCSE is that whatever someone’s ability, they can progress on the same programme of attainment, and if they work hard they can achieve higher than C grade.
Changing the landscape massively confuses matters for employers, who tell me that they have several issues about the qualifications that young people leave school with, and I certainly do not believe that changing them will make a difference. I am not alone in thinking that. Lord Baker, former Secretary of State for Education, gave the Minister and the Secretary of State good advice when he said:
“The CSE certificate which we did away with in the eighties”—
I was one of the last pupils to sit the old GCE, which shows my age, but we are talking more than 20 years ago—
“became a valueless bit of paper. It wasn’t worth anything to the students or to the employers. That means that there has got to be rigour for the other subjects at 16 as well.”
Lord Baker is promoting university technical colleges, as I am. I have one in my constituency, Hackney university technical college, where young people will be studying from the age of 14 and taking more technical qualifications alongside academic qualifications, but that will not be seen as second best or something different, and will be not instead of but as well as GCSEs.
I am one of the vice-chairs of the all-party group on social mobility, and in the discussions I have touched on there is much talk about universities and getting young people into university, but the issue starts much earlier. That is one reason why I was a great champion of Sure Start. The investment in children under 5, and helping their parents to parent better and to understand the benefits of wider education through play, is very important. Professionals say that they can see the difference between children of parents who have been supported by Sure Start and those who have not, because the former have been positively engaged with the child. We must start there.
We need a raising of attainment in primary schools and a raising of ambition. That is why many Hackney primary schools take pupils to universities and into the workplace, through work programmes, to see those places for themselves. That is particularly important for a range of young people, including some from ethnic minority backgrounds, who do not have a pattern of work in their family.
I shall touch on some of the data, which show why this issue is so important and why the Minister, who I am sure is listening hard, needs to ensure that the Department does not take its eye off the ball. The inequality is still quite stark: we have seen some improvements in Hackney, but provisional data from 2011—last year’s results—show a 6% gap in achievement at GCSE level between Caribbean-heritage boys and all other boys and a 5% gap between the same cohort, Caribbean girls, and all other girls. We can look at the pattern from 2005. Due to interventions by various schools and the Learning Trust in Hackney, we have seen the number achieving five A* to C grade GCSEs, including maths and English, steadily improving for both boys and girls. It is a good story so far, but we should not sit back and say that that gap is acceptable.
Ms Abbott
As a Hackney resident and a Hackney mother, I am glad to see the very many improvements, but we need to be careful about what we say about improvements, because some of the stats go back to a period when there was the use of NVQ equivalents to GCSE. My concern is that although on paper the gap may have narrowed, it is because some black children have been palmed off with NVQ equivalents, which do not in fact equip those children to compete in the marketplace.
Meg Hillier
I completely agree. Statistics can bury many issues, which is why the point made by my hon. Friend the Member for Oldham East and Saddleworth about ensuring proper teacher training and support so that assumptions are not built in at the beginning is a key one. I shall give a couple of examples of where I have seen that in the past.
Some issues that probably do not figure on most hon. Members’ horizons, although my hon. Friend the Member for Hackney North and Stoke Newington and I will come across them regularly, are those to do with Turkish, Kurdish and Cypriot children, who are still massively underachieving compared with their cohort group. Although there has been an improvement since 2011, we still see a gap in attainment between Turkish, Kurdish and Cypriot boys and girls and all other pupils of 14%. That brings in one of the other issues—language. At home, many of these young people will speak only their mother tongue. That is fine. The mother tongue is very important, and of course parents and mothers in particular are the first educators of a child. However, if the parent is not very literate in the mother tongue, the child may not be getting the range of educational input required from the parent in the mother tongue. Often, the only adult whom many of these young people speak to in English is their teacher. Their exposure to the wider world is sometimes a bit limited. Often, the young people will be helping in the family business, which will involve working with other Turkish families, for instance; and in the mosque and other community groups, it will be only the mother tongue that is spoken.
I do not want anyone to go away with the impression that I do not think that the mother tongue is important, because it is very important. Actually, it is very important for our young people as they go out into the world and develop their careers. Given that the Turkish economy, for example, is growing by about 7% a year, speaking their mother tongue is a real skill and strength for young people in Hackney. However, there is an issue and it may not hit the Minister’s radar screen because, in terms of the national population, this group is relatively small and focused in parts of north-east London.
I take the point made by my hon. Friend the Member for Hackney North and Stoke Newington about statistics, but let us look at the differences between young people when they leave primary school at 11 and when they get to GCSE level. In Hackney in 2011, 77% of white boys left school at key stage 2 at the end of year 6 with a level 4 in English and maths. At GCSE level in the same year—so it is not the same cohort, but this shows the gap that we have to bridge—51.7 % got five or more A* to C grade GCSEs, including English and maths. That is a differential of 26 percentage points. If we look at the same figures for black boys, we see that 69% achieved level 4 in 2011 and, in the same year—so it is not the same cohort—42% achieved five A* to C grade GCSEs. That is a differential of 27 percentage points. The differential is similar, but there are endemic issues, on which I and others have touched, about why certain groups achieve less well.
I want to illustrate the importance of the point made by my hon. Friend the Member for Oldham East and Saddleworth about teacher training. For about nine years, I was a governor, and latterly chair of governors, at a primary school in north Islington. During that time there was a big shortage of teachers. We had a lot of very bright, talented, young teachers, who were keen to teach, but many of them, to put it bluntly, had never seen a black face in their lives.
The head teacher, who was a black woman, which was still quite unusual, and I were very concerned on a couple of occasions. On one occasion, a child was very scared about going into assembly to see African dancing. My immediate reaction was that it was terrible that a child was worried about seeing something that reflected, to a degree, their own heritage. There were a number of issues to unpack about witchcraft and pride in their background, but the other teachers saw it as naughty behaviour, because they had not come across the cultural issues involved.
On another occasion, they were casting for “The Wizard of Oz”. In the film, Dorothy is played by Judy Garland—a young, white girl—so presumably, that was the image in the minds of many teachers. Each class was asked to do a bit of “The Wizard of Oz”, so they each had a witch, a Dorothy and so on. The Dorothys, when they came out of the classes, were all little white girls. The head, being from a different background, challenged it, but at the time I was worried; this was a cohort of good teachers, but teachers who did not have that perspective, which was a real worry. We need young people in schools now not only to achieve well, but to go on to become teachers themselves.
The Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton) and I were at Sebright school in my constituency, which is one that works with City Year kids. Through City Year, young people on a gap year work with pupils, providing mentoring, physical training and an extra adult to support the students. They have found different ways to engage and are very popular with the Hackney schools they go into. They are now moving into secondary schools. What is good about that cohort is that the groups of young people, aged between about 18 and 22, coming into Hackney schools better reflect the wider Hackney community. They are not all from Hackney, but they better reflect what you might see, to put it simply, on a Hackney bus.
To a degree, there is a time lag with teacher training, but the teachers in our schools do not necessarily reflect the ethnic background of the pupils they teach. What is the Department doing to encourage change? Are the Government being proactive? Let us be honest, we do not have enough teachers from ethnic minority backgrounds. Just as we have concerns that there are not enough male teachers in primary schools to be role models, the Government need not to be shy at addressing this issue. That brings me to my final point and recommendation to the Minister.
We used to see a quite detailed breakdown of achievement by ethnic background. I pay tribute to my hon. Friend the Member for Hackney North and Stoke Newington. If she had not talked about, and made it acceptable to talk about, the difference between black and white children, the Department at the time would not have had the courage to produce a much more granular breakdown by different ethnic groups. We have gone back and shrunk to broad-brush breakdowns—black, white, Asian and so on. That breakdown does not work for me, because it would not pick up Kurdish, Turkish and Cypriot achievement, which is a big issue. We collect some of those data locally, but no wider dataset is collected.
I know that there has been nervousness about labelling and pigeonholing pupils by ethnic background, but used properly, such information can be very helpful. It can be used by MPs, parents and others to challenge what a school does and by good teachers and head teachers to ensure that they focus on areas of proven underachievement and do not contribute to it. I understand that that is a detailed point, but if the Minister cannot comment now, will he write to me with exact reasons why the Department no longer breaks down the data to that level of granularity? Will the Department consider doing so again? Will he also pick up the point about teacher training and attracting more young people from ethnic minorities into teacher training?
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this important debate.
The first thing to say is that the underachievement of black children is not a new issue. It goes back all the way to the 1950s, when children would come here from the Caribbean—bright and able children, who had excelled in the classroom in the Caribbean—but they suddenly found themselves in units for children who were educationally underachieving.
There is a clear pattern to that underachievement. When children of African and Caribbean descent enter the school system at the age of five, they are doing as well as white and Asian children. In some cases they are doing marginally better, because there is some medical evidence to show that black children are a little more developmentally advanced at the age of five. By the age of 11, their achievement levels, particularly for boys, start to drop off and by the age of 16 there is a huge gap. Although we—my Government—masked that gap, partly by the use of national vocational qualification equivalents for GCSE, it still remains startling.
Ministers might say, “Why does this matter to us? We don’t have many of these people in our constituencies. Maybe it’s their families. Maybe it’s them. Why should we bother?” First of all, as hon. Friends have said, it is an issue of equity and justice. If it means anything to be a British citizen—even in austerity and even in the times that we face—it ought to mean that there is the chance to make something of yourself through an educational system that treats people fairly.
As the child of immigrants who came to Britain in the 1950s, I know that that generation of West Indian immigrants knew that it would be tough, that they would have to work two jobs, that often they would live in overcrowded conditions and that they would encounter racism, but they thought—as immigrants always think—that for their children it would be better, and that education was the means by which it would become better. All the challenges faced by minorities today—whether about employment, policing or immigration—pale to nothing, in my view, in comparison with the betrayal of an earlier generation of immigrants who came to Britain to better themselves and their families, and thought that education would be the ladder for them, as it has been historically for immigrants all over the world.
Education matters because equity matters; it matters because fairness matters; and it matters because justice matters. I throw into the debate a quote from Martin Narey, who is the former director of the Prison Service and the former head of Barnardo’s. He said years ago that on the date and time a child is permanently excluded from school, they might as well be given a date and time to turn up in prison. The link between educational underachievement, social disorder and eventually a life of crime is a very clear pathway. Rather than spending money on rehabilitating young people and on dealing with the consequences of crime, let us focus on and pay attention to what I believe is the root of a lot of these issues—the educational underachievement of too many of our children, particularly black children, in our schools.
Post the riots last summer, people talked about the rioters being in gangs, about their parents, about lack of religious leadership and about all sorts of things. People did not talk about the fact that the biggest signifier when we looked at the young people who were arrested and charged with incidents in the course of the riots was that two thirds of them—I think that was the figure—had special educational needs, and the majority of them had been excluded from school. Those were the two biggest indicators. I am not saying that educational underachievement is an excuse for criminality or rioting, but the link is there. If we are talking about a business case, the business case for making sure that all our children achieve their very best in school is unanswerable.
As colleagues will know, this is an issue that I have harassed Ministers about, both in my Government and in this Government. On the question of the figures, I remember going to see a brand-new Labour Schools Minister in 1997 and asking him about the figures about ethnic achievement. I will not give his name—he was a very nice man—but he looked at me and said, “Well, Diane, we have got these figures and, you know, they seem to show that ethnic minorities are doing better.” I said, “How can that be?” I think he had a youth cohort study and the figures were broken down into white and ethnic minority, so I said, “I tell you what, you tell your officials to go away and break down those figures between white, Asian, African and Afro-Caribbean.”
The Minister looked at me, but he was a nice guy, so he went away and came back a few months later and said, “We have broken them down, and we find that you have the whites doing how they’re doing, and the Asian students doing better than the black students, but even the black students are creeping up a little bit.” I replied, “I tell you what, you go away and break down the black student figures between boys and girls.” He came back with what I and the black community knew, that black boys’ results were flatlining. What was happening to black boys at the end of the ’90s, and had been happening for decades, was masked by a failure to keep statistics. Although it seems arid and technical to ask for stats, we cannot have programmes that reach those children effectively without a statistical basis.
Meg Hillier
There is an emerging concern that although girls from certain ethnic minority backgrounds now achieve well in Hackney schools at 16, and in particular at 18, and some of them even go on to university, a number of them drop out of education after 18. Studies show that, and it exactly illustrates my hon. Friend’s point about the need to track the figures and keep the statistics at a detailed enough level for them to be meaningful.
Ms Abbott
I entirely agree with my hon. Friend.
I also remember, a few years into that same Government, going to see the then Secretary of State for Education and asking for a breakdown by ethnicity of GCSE results. She said, “Sure Diane, of course you can have them,” but her officials looked shifty. At that time, schools were supposed to keep the figures; they just were not published. Months later, I got a letter from my colleague, who is now in another place, saying that unfortunately the data could not be released because they were “not in a usable form”. Even if schools are made to keep data, unless they know that the figures will be made public and used, it is in their interests, particularly those of schools that are failing our children, to keep them in all sorts of higgledy-piggledy ways so that no one can drill down and see what is happening to the children. I cannot stress enough the importance of examination data broken down by ethnicity, because if we do not have that we cannot reach those children because we do not know what is happening to them.
I suppose this is the appropriate point at which to raise the question of why. Why do black children fail? That is something I have struggled with, as have academics, parents and community workers. As my hon. Friend the Member for Oldham East and Saddleworth said, it is a mix of things. It is partly to do with poverty in an absolute sense, although all the research shows, particularly that done by the Institute of Education, that even when we allow for poverty—usually by using free school meals as an indicator—black children systematically do less well than children of other ethnicities. There is no question but that poverty is an issue. Nowadays there is also increasing peer group pressure. Parents can be devoted to their children’s academic futures but if, as the children reach adolescence, their cohort thinks that studying is not cool, that can be problematic. I have mentored the children of friends in that situation, and I do not discount its significance.
There is also a culture of low expectation in some schools. I am not talking about bad teachers, but about teachers who say, and have said to me, in effect, year on year, “What do you expect?” Well, let me tell Members what communities in areas such as Hackney expect: they expect each and every child to reach their potential. There is a culture of low expectation, of saying, “Well, if we can make school a nice, safe place, and the children come in and make samosas and bang steel drums, isn’t that nice?” That sort of culture masks the failure to give young people the academic equipment they need to fulfil themselves as people and to compete in the world of work.
Some educationalists, some teachers and perhaps some Ministers might say, “Well, you know, Diane, you can’t expect schools to make good the failings of society.” That is a strange thing to say because if we read the history of education in this country, the Victorians believed exactly that: school could make good the failures of society. Had we said to Arnold, the first inspector of schools, “Oh, you can’t expect schools to make good the failings of society”, he would have said, “That’s ridiculous! This is what we’re here for.” Hiding behind—I emphasise “hiding”—real social and youth culture issues to say that schools cannot make a difference is to take a position that the Victorians would not have recognised.
One reason why it is important to keep detailed stats is that it is not sufficient to talk generally about black and minority children. I have worked on the subject for years, and in London, which is the part of the country I know best, the figures and outcomes are complicated. Chinese children, I think, do best in London, white girls do second best, then children of east African, Asian or Indian origin and, going down the list, Bengali boys, who are bumping along at the bottom with white boys and black boys. Black girls always do better than black boys. The London stats show us differences in out-turn between Asian children from the subcontinent, Asian children from Bengal, Asian children from east Africa, African children or Caribbean children, and not keeping detailed statistics about out-turns year on year is failing such children. Only when we see the differences can we start to identify what the issues are.
For instance, one of the reasons why Bengali boys do so badly compared with Asian boys from other backgrounds is to do with rural Bengal and the conditions that they come from. Unless we have the detailed statistics, however, we cannot identify that. One of the things I have seen as the years have gone by is that first-generation African children tend to do better than Caribbean children. That is an interesting fact, which is worth contemplating. In my opinion—having studied this, held events and looked at the figures—the results of first-generation African children may speak to more stable families in the African community at this point and a stronger sense of personal identity. Until we have the figures and can analyse why there are differences, we cannot help those children.
We have not spoken much about higher education, which the debate is not primarily about, but we cannot talk about educational underachievement without mentioning what is happening to BME children in higher education. A case in point is London, where it is striking that universities within a few miles of each other and in theory serving the same population are very different in their demographic make-up. In fact, some of the former polytechnics in London educate more BME young people than some of our Russell group universities put together. I do not accept the argument, “Well, that’s because it’s all they are capable of.” A lot of things are going on, such as poor advice at school level or poor A-level choices. There is a lot to say about what is happening in higher education to BME young people.
Meg Hillier
As my hon. Friend knows, a lot of interesting work has been done on that, but for me it is summed up by the bright young woman from Hackney who was offered places to read medicine at Nottingham and Cambridge universities. She turned down the place at Cambridge because she said that she did not think she would fit in there. That demonstrates that it is about more than the academic side; it is about the attitudes of universities and their welcoming of the wide population of this country.
Ms Abbott
It is an interesting issue, and I hope that on another occasion in the House we shall have the opportunity to debate BME communities in higher education specifically.
The issue we are debating has engaged me for many years, almost since I first entered the House, and there are two specific things that I have done about it. I set up an initiative called London Schools and the Black Child. Over a decade we have had annual conferences at which we brought together parents, community leaders and teachers, not to say, “Oh, the system is terrible and these teachers are terrible,” but to ask what we could do to help our children. The heart of those conferences—officials can tell Ministers about them, if they look through the files—were workshops, where parents dealt with issues such as how to cope with exclusions, how to help black boys to achieve, and how to help children to achieve higher standards.
The extraordinary thing about the conferences was that every year more than 1,000 parents would turn up. We held them at the Queen Elizabeth II conference centre just across the way. The first one was due to start at 10 o’clock, and at 9 o’clock we had people queuing outside the door. Parents really want to help their children. There is an assumption that perhaps black children do badly because the black community does not value education. No. If I only ever say one thing in this House let it be that the black community does value education. That is why it is so important to me to keep making the case for focusing and having practical strategies.
The other thing that I have done, with the support of UBS, the international financial services company and bank, is to run an awards ceremony for London’s top achieving black children. One is always trying to counter stereotypes. The Minister might be surprised to know that there are black children at inner-city schools turning out 10 or 11 A* grades and four As at A-level, and going on to study medicine or law at Russell group universities. One year, we got Lenny Henry and the newscaster Trevor McDonald to hand out the awards, and we rang the Evening Standard and said, “We are having this awards ceremony—London’s top achieving black children; would you be prepared to cover it?” They asked, “Are any of the children gang members?” In other words, unless those children fit a stereotype they do not get coverage. We can open a London newspaper any day and see gang atrocities, stabbings and shootings. We do not hear enough about the children, of all ethnicities, who are achieving, and trying their very best. I thank UBS for its support. After the debate, I have a meeting with UBS to plan this year’s awards ceremony in the autumn, which will be held in the House of Commons.
I want to talk about what I think the solutions are. I have never doubted that part of the solution is to get parents to engage. The children who come to the awards ceremony are often from underachieving schools in socially deprived areas. One of the problems is that the room is always packed, because they bring their mum, dad, aunt and gran; the children who do best are those whose parents are most engaged in their education. It is important to get parents to engage, and that is why I have held conferences every year. Often parents do not quite know what to do for the best. The education system is very different even from when I was at school in this country. It is important to get parents to engage, but it is also important that the education system should recognise that. It is important to recruit more black teachers, not because only black teachers can teach black children, which is clearly absurd—I have mentioned Sir Michael Wilshaw—but because, particularly in metropolitan areas, unless the demographic in the staff room bears some relationship to that of the children who are being taught, there is unlikely to be the overall cultural literacy that will help teachers to engage with the children. It is also important, for all working-class boys, to recruit more male teachers. I deal with boys in Hackney—black, white, Asian, Turkish—who throughout their education have engaged only with women and have never seen a man as an educational role model. More male teachers are important. Teacher training is also important so that teachers have cultural literacy.
In closing, I will mention a subject on which I could talk for an entire hour and a half, because I have spent a lot of time on it in my life as a Member of Parliament. I had to have this debate with Labour Ministers: it is not good enough to adopt a colour-blind approach. With a colour-blind approach, ethnic minority children continue to slip under the radar and are palmed off with substandard qualifications, education and life chances. A colour-blind approach will not work. Comprehensive statistics are vital, as is recognising the importance of parents.
I must mention the institution of Saturday schools. For 20-odd years, Saturday schools have been run on a voluntary basis by the black community in London and other big cities. The same children of whom teachers in their mainstream school say, “Oh, what do you expect? We can’t get them to sit down,” go to a Saturday school, get their heads down and do their work. That is partly due to parental involvement.
We need statistics, recruitment of black and male teachers and teacher training, but above all we need to recognise that the issue is easy to ignore or to utter pieties about. If we abandon a cross-section of the community in our inner cities, they have a way of bringing themselves back into the political narrative—a way that is not good for them or for society. Better people than me have worked on the issue over their lifetime. I implore the Minister: let us not lose the advances made under the Labour Government. Let us continue to move forward.
Kevin Brennan (Cardiff West) (Lab)
I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this debate. I welcome the debate, and the tone so far. It is correct to point out at the outset, as other hon. Members have done, that the title of the debate deals with educational attainment in black and minority ethnic communities. High attainment is found in all black and minority ethnic communities, and, as other Members have highlighted, some minority ethnic communities seem to be doing particularly well. We should all be as interested in why that is the case as in why pupils in other communities are not doing so well. Why some communities do well should be of great interest to us.
My hon. Friend the Member for Oldham East and Saddleworth presented a thoroughly researched and well-argued speech, obviously born out of a desire to do something about an issue that she has encountered in her role as a constituency MP. She is to be commended for bringing to the House an issue that she has discovered in her constituency in order to highlight the need to do something about it. She emphasised the need for a well-rounded approach to educational attainment and mentioned, as did other hon. Members, the importance of parental inclusion. She also pointed out the abolition of the ethnic minority achievement grant, which I may comment on later. I congratulate her on her remarks.
My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) made an excellent speech, also born out of her constituency experience. She emphasised, as we all should, the importance of rigour and standards in our schools, saying how much had been done, particularly in her borough of Hackney, through effective leadership in our schools. That is a key part of high achievement, as is having no excuses or not accepting low expectations in our schools.
In recent years, there has been real improvement in achievement and attainment in our schools, particularly in our London schools through measures such as London Challenge. That was acknowledged recently on television by the Mayor of London, who said that huge improvements in standards had been made in London schools in recent years. He was absolutely right to highlight that, but, as other Members have mentioned, that may well mask some of the underlying problems in relation to black and minority ethnic communities.
[Hywel Williams in the Chair]
My hon. Friend mentioned the importance of work on exclusion, which I will say more about in a moment. She was also strong in her opposition to introducing any kind of two-tier qualification system, which she called a retrograde step. We will debate that issue on the Floor of the House later today, so I am sure that the Minister will understand why I do not want to go into it in detail now.
Ms Abbott
My hon. Friend has mentioned one of the Secretary of State’s innovations, which we will debate later today. Does he agree that the principle behind the English baccalaureate—that every child should get certain core GCSE qualifications—is a good one and that it would help avoid a situation in which too many children are damaged by a culture of poor expectations?
Kevin Brennan
I agree that it is extremely important that every young person and child should understand the implications of the pathways that they choose at GCSE. It is important that they understand that certain choices may lead to closing off opportunities at a later stage. I do not, however, support the crude mechanism of the E-bac, because I do not think that it is the way forward for qualifications at 16, and it will not necessarily mean that people will opt for those subjects that it is in their interests to take. There should be a clear understanding of the implications of choices made at 16. We should retain high expectations for young people in their GCSEs, particularly in English and maths, but also allow them the opportunity to make informed choices about the subjects that they want to take.
I want to address a number of points made by my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott). She is right to emphasise that this is not a new issue. Indeed, she has been making that point for the 25 years she has been a Member of this House, which she entered in 1987. It is only right that we pay tribute to her efforts on the subject, including her practical efforts in relation to the initiative that she mentioned in her speech.
My hon. Friend and I debated the issue when I was a Minister in the Department for Children, Schools and Families in 2008 and I can confirm that she is passionate about the subject and has a lot to say. As I recall, she took 26 of the 30 minutes that we had to debate the issue and I did my best to respond in the remaining time available. She was quite right, however, because she had a lot to say on the subject. She was right to emphasise its importance and to take me to task, as a Minister, on the subject, as she had previous Labour Ministers and as I am sure she will continue to do to coalition Ministers. It is important to hold our feet to the fire and make sure that our attention is maintained. That applies not just to those of us on the Opposition Benches, but, more importantly, given that the Minister is in government, to those who hold the levers of policy in the Department for Education. My hon. Friend was also right to mention the need for detailed data, which I will return to in a moment.
When we debated this topic in 2008, my hon. Friend made a number of points that caught my attention, one of which was that research by the former Department of Education and Skills confirmed:
“Black Caribbean pupils are significantly more likely to be permanently excluded—3 times more likely than White pupils.”
However, as my hon. Friend has said today, and as she said in 2008:
“In relation to base-line entry tests, black pupils outperform their white peers at the start of school”.
We need to understand what is going on.
My hon. Friend went on to emphasise the importance of teacher training, pointing out that only 35% of newly qualified teachers
“rated their course as good for preparing them to teach black children, as opposed to 60 per cent. who rated their course as good preparation for teaching children of all abilities.” —[Official Report, 1 April 2008; Vol. 474, c. 223, 224WH.]
That is still a significant issue that we all need to consider and that the Minister must not lose sight of in his reform of teacher training.
My hon. Friend talked about exclusion, which absolutely needs to be tackled. When we were in government, we started to look at that subject in more detail and in greater depth than Ministers had at the start of the Labour Government in 1997, when my hon. Friend had a meeting with Education Ministers. In 2007, the Department published a priority review entitled “Getting it, getting it right” on the exclusion of black pupils. It discussed the iconic status of the issue of exclusion in black communities. Black Caribbean parents in particular believed that the school system would not meet the needs of their children unless something was done about the disproportionate level of exclusion of pupils from that particular background. It was extremely important that that report was undertaken at that time, and I would be interested to hear from the Minister about what the Government are doing now to follow up on that issue in relation to the exclusion of black and minority ethnic pupils. It was a priority of the previous Government to try to do something about that, even though they accepted that it was a complex and difficult issue. We undertook a number of initiatives that were specifically designed to tackle the issue of exclusion.
Another matter that was raised in the debate was the expectations of teachers. As long ago as 2003, the London Development Agency undertook major research that showed, among other things, that many teachers had lower expectations of black pupils and that black pupils felt that they received less positive input and, in some cases, even discrimination from teachers in the course of their school lives. Under the Race Relations (Amendment) Act 2000, schools have a duty to ensure that they deal with this issue. A significant amount of literature for schools has been published by the Department and, in the past, by the Commission for Racial Equality on the subject. One report found that a significant minority of schools were failing to implement their duties under the race relations legislation. Given that we now have a more fragmented system of education in which a number of schools are no longer run as community schools in a local authority system but have become academies, independent of any local accountability, how will the Department ensure that such schools fulfil their obligations under race relations legislation in relation to black pupils?
Kate Green (Stretford and Urmston) (Lab)
I am sorry to have missed part of the debate, but I am pleased that it is taking place this morning. Does my hon. Friend agree that that is a particular concern now given that the Government intend to repeal the good relations duty on the Equality and Human Rights Commission, which is of course the institutional framework by which this kind of mechanism can be applied?
Kevin Brennan
Yes. My hon. Friend speaks with a great deal of expertise on this subject. We are all concerned that a lot of very good work on equality could be undone—perhaps not in a deliberate sense—by Ministers who desire to follow their own path and ensure that they distinguish themselves from the previous Government in their approach to education and schools. They could be undoing very good work and taking a significant step backwards in relation to the education system and the topic that we are debating today.
My hon. Friend the Member for Oldham East and Saddleworth talked about the impact of exclusion on people’s lives and about the fact that the Department itself had calculated that there would be a significant loss of earnings for pupils who were excluded in the course of their lifetime. At the time of that study, I think the reduction in lifetime earnings as a result of exclusion was calculated at £36,000. Worse than that, 80% of the juveniles in prison had been excluded from school at one time or another. That statistic made me sit up at the time, and should make the Minister focus on the issue. If 80% of juveniles in prison have been excluded from school, that must tell us something about exclusion and whether it is effective in trying to change the sort of behavioural problems that probably led to exclusion in the first place. If that exclusion has a racial component, we should be significantly concerned.
Meg Hillier
I would always defend a head teacher’s right to manage their school, and clearly exclusion may have a place in that, but a concern that I came across recently is a child who was excluded but brought back into school with intense provision for a short period. That intense provision was for only half a day, so the working parent was left with half a day to try to cover, and it also took the child out of their normal environment. Has my hon. Friend given any thought to how that might have an effect on the outlook of that young person when they re-enter the school?
Kevin Brennan
For many years, the scandal was that excluded pupils received little or no education after they had been excluded. My point is that exclusion should be a last resort, and it is sometimes necessary. As a former teacher, I absolutely defend the right of schools to exclude, having followed due and proper process. The Government have reformed that process, and changed the way in which an appeal can be made against exclusion. Instead of insisting on reinstatement, they have introduced fines on schools and head teachers who refuse reinstatement after that has been recommended on appeal.
I do not want to go into the details of that, but I want to make the point that responsibility for that child does not end when they are excluded, and that includes a responsibility on the head teacher and the school that excluded the child, on other schools in the area, even if they are independent academy schools in the state sector, and on all of us who are interested in education. Responsibility for that child does not end at the point of exclusion. One reason why so many young people end up in the juvenile justice system is not that they are inherently bad, but that, at the point of exclusion, there is no proper follow-up to ensure that the child receives an education, let alone attempts made to try to prevent exclusion in the first place whenever possible, given that it should always and everywhere be a last resort.
My hon. Friend the Member for Hackney North and Stoke Newington said that improvement in GCSE achievement might have been due partially to the use of equivalencies at GCSE, but I think the facts will show that even if that were taken out of the equation, the improvement in London schools in recent years is real, as the Mayor of London said. In fact, results for black Caribbean pupils were rising at a faster rate than those for many other groups, but that does not mean that there is not a real and continuing problem, and my hon. Friend was right to highlight that.
My hon. Friend also spoke about the need for detailed data, and I appeal to the Minister that in his wish to unburden schools of bureaucracy, which is laudable, he does not fail to collect the data that are essential to tackle issues such as this. The Government are keen on having masses of data available in other areas, and that is good because it enables people to trawl through and analyse it, and to get to the root of a problem, but in this matter, less data are likely to be collected and that would be a significant mistake.
I have a few questions for the Minister before concluding and giving him time to respond. In tackling the problem, how will ending the ethnic minority achievement grant help? How will introducing a two-tier qualifications system, if that is indeed what he intends, help to improve black and ethnic minority attainment? How will not collecting proper statistics help? How will abandoning the approach of Every Child Matters help? Obviously, educational achievement is partially a case of good leadership in schools and so on, but it does involve wider issues, which many of these children may be bringing to school with them and which need to be tackled. How will a fragmented approach to exclusions help to tackle this problem? I would be grateful to hear the Minister’s response to those questions.
The Minister of State, Department for Education (Mr Nick Gibb)
I start by congratulating the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this debate on an issue of enormous importance—tackling the differences in attainment among certain groups of pupils.
The overarching objective of the Government’s education policy is to close the attainment gap between those from wealthier and poorer backgrounds, between girls and boys and between those from different ethnic minorities. As hon. Members have already argued, the gap in attainment between black and minority ethnic pupils and other pupils is too wide, and has been too wide for too long.
The hon. Member for Oldham East and Saddleworth pointed to the educational attainment gap between BME students and their peers. She pointed to the high levels of unemployment among black men. It is 55.5% in the 16-to-24 age group. She pointed to the fact that young Indian people are more likely to be unemployed than their white peers, despite being in one of the highest-performing ethnic groups educationally.
The hon. Lady pointed to the high degree of variation in the educational achievements of different ethnic groups. She pointed to the poor attainment levels of Gypsy, Roma and Traveller pupils. For example, in 2011, 25% of Gypsy, Roma and Traveller pupils achieved level 4 or above in English and maths at the end of primary education, compared with 74% of all pupils. That is one of the largest attainment gaps for any minority ethnic group. At key stage 4 in 2011, 12% of GRT pupils achieved five or more good GCSEs including English and maths, compared with 58.2 % of all pupils. We have established a ministerial working group on tackling the inequalities experienced by Gypsies and Travellers. We are taking action, including by piloting a virtual head teacher for GRT pupils, looking again at the impact of legislation with regard to not prosecuting families for non-attendance at school, and so on.
The hon. Member for Hackney South and Shoreditch (Meg Hillier) pointed to the attainment gap of 6% between Caribbean-heritage boys and the rest of the cohort at GCSE level. For girls, it was 5%. The hon. Member for Hackney North and Stoke Newington (Ms Abbott) pointed out that when black children enter primary school at the age of five, they are doing as well as, and in certain circumstances better than, their peers attending the same primary school, but by the age of 11, achievement starts to drop off, and by 16 there are real attainment gaps for that group of children. I agree with her that this does matter—it is a matter of social justice and fairness. She is right to have devoted so much of her life to trying to tackle these issues and raise awareness of them. I join the hon. Member for Cardiff West (Kevin Brennan) in paying tribute to her for the work that she has carried out over three decades in seeking to address the issue of higher educational standards for BME children in general, and black boys in particular.
The hon. Member for Hackney North and Stoke Newington is right to say that the focus must be on raising educational achievement for black children, and children from groups that historically have underperformed educationally. She is right to point to the importance of data and making the data available. That is something that we are doing. We have put increasing amounts of educational attainment data in the performance tables. Those are broken down by free school meals, by low prior attainment and by high prior attainment. The underlying data are also available. They break down achievement by different ethnic and minority groups. We intend to put ever more data on the website over time, so that they are available to the public, and to academics who want to drill down further than the general public.
Attainment gaps are a complex issue. BME pupils’ underperformance may be due to a combination of factors, including financial deprivation, low parental literacy levels and aspirations for children’s academic achievement, poor attendance and bullying.
Mr Gibb
I take the hon. Lady’s point. I am making a general point about the issue of underperforming groups in society. The range of causes is complex, and one of them can be—it is not always—literacy among parents generally.
Particular combinations of pupil characteristics can indicate that a child is especially vulnerable. Currently, white or black Caribbean boys eligible for free school meals are among those making the slowest progress. Gypsy, Roma and Traveller children significantly underperform. Many of the lowest-achieving free school meal pupils also have a special educational need, and therefore face an even steeper struggle to succeed.
Nationally, in 2011, 58.2% of pupils gained five or more GCSEs, including English and maths, but the attainment levels of black and minority ethnic groups were lower. Some 52.6% of children of Pakistani origin obtained five or more GCSEs at grades A* to C, including in English and maths, while 54.3% of black pupils, including those of African and Caribbean background, attained the same GCSE results. The figures show that some attainment gaps have narrowed in recent years, as hon. Members have mentioned. For example, attainment levels for pupils of Pakistani origin have improved at a greater rate, narrowing the gap from 12 to six percentage points since 2006.
Narrowing the gap between those from wealthier and poorer backgrounds is key to raising attainment levels among those black and minority ethnic groups with higher than average levels of deprivation. For example, 30% of key stage 4 students of Pakistani origin were eligible for free school meals in 2011, compared with 14% of all key stage 4 pupils.
Our policy is to improve reading in primary schools through systematic synthetic phonics and the new draft primary curriculum for English, with its focus on rigour and ensuring that children become fluent readers and develop a long-lasting love of reading, as well as being taught the rules of English grammar. That is key to closing the attainment gap, as are our other programmes of study for maths and science.
The academies and free schools programmes are designed to raise standards in schools throughout the system, particularly in areas of deprivation. Similarly, the new floor standards for primary and secondary schools and the new focused Ofsted inspection framework are designed to raise academic standards in the least well-performing schools. The pupil premium will direct £600 of extra school funding to each pupil eligible for free school meals, giving schools the resources to tackle all the challenges that they undoubtedly face in overcoming disadvantage.
The hon. Member for Hackney North and Stoke Newington is right that schools must not hide behind social difficulties as a reason for poor educational attainment. That is one reason for the pupil premium. It is a challenge: “Here are the resources to deliver high attainment, so there can be no reason for not delivering.” Total funding for the premium was £625 million last year. It will be £1.25 billion this year, rising to £2.5 billion a year by 2014-15. In 2012-13, coverage of the pupil premium is being extended to include pupils who have been eligible for free school meals at any point in the last six years, extending the premium from 1.2 million pupils to about 1.7 million. The Deputy Prime Minister also recently announced an additional £10 million for the education endowment fund to support projects aimed at transition and literacy catch-up for disadvantaged pupils who did not achieve level 4 at key stage 2 in English at the end of primary school.
The hon. Members for Oldham East and Saddleworth and for Cardiff West raised the issue of the ethnic minority achievement grant. Raising the attainment of children from minority ethnic communities remains a key priority for the coalition Government, but we believe that head teachers understand the particular needs of their schools and are best placed to decide for themselves how that money should be spent. That is why, as part of our school funding settlement for 2011-12, we decided to simplify the funding system by mainstreaming some grants, including the ethnic minority achievement grant, into the dedicated schools grant. Although the EMAG will not continue as a separate ring-fenced grant, we are maintaining last year’s funding levels during 2012-13 at just over £201 million. That means that schools still have funds to support underperforming minority ethnic pupils, and to contribute to the additional costs of supporting pupils with English as an additional language.
Debbie Abrahams
Does the Minister accept that as schools are under severe financial pressure at the moment, the funds might not be targeted specifically at reducing the inequalities in attainment for which they were originally intended?
Mr Gibb
I accept that that is always a risk, but our philosophy is to trust the professionals to make the decisions, and not have decisions always taken in Whitehall that direct head teachers, who are experienced professionals, on how to spend their budgets. The funding of £201 million is in the dedicated schools grant to address such issues.
This country performs poorly in helping young people to overcome their socio-economic backgrounds. The OECD recently reported that just 24% of disadvantaged students are able to overcome their backgrounds and achieve as well as their peers academically. That is compared with 76% in Shanghai, 72% in Hong Kong and 46% in Finland, which puts the UK 39th out of 65 OECD countries in terms of what it calls the “educational resilience” of children from poorer backgrounds.
In this country, however, there are many schools where pupils of all backgrounds succeed. In Challney high school for boys and community college in Luton, for example, 29% of pupils are in receipt of free school meals, and 61% are of Pakistani origin and 11% of Bangladeshi origin. It saw 77% of its students achieve five good GCSEs, including English and maths. The national attainment figure is 58.2%. In Valentines high school in Redbridge, 19% of pupils are in receipt of free school meals, and 24% are of Pakistani origin and 10% of Bangladeshi origin. It saw 76% of its students achieve five good GCSEs, including English and maths. The question we must ask is this: if such schools are able to achieve those results and that standard of education for their pupils, why not all schools?
As the hon. Member for Hackney North and Stoke Newington pointed out, black children sometimes have a culture of low expectation. When Sir Michael Wilshaw was head at St Bonaventure’s and at Mossbourne community academy, however, he transformed the educational achievement of the youngsters with a combination of high expectations and strong limits and boundaries on behaviour. The hon. Member for Hackney South and Shoreditch cited Mossbourne community academy and its very high academic achievement. It saw 84% of pupils achieve five or more GCSEs at A* to C and nine pupils offered places at Oxbridge last year, despite high levels of deprivation in that part of Hackney and a very high proportion of pupils with English as an additional language.
The hon. Lady pointed to City academy, and the high academic achievement of pupils who had low attainment prior to coming to the school. She said that good heads and good rigour are key, and I certainly agree. She also pointed to the exemplar behaviour policy at the Petchey academy in Hackney, which brings me to school attendance and how regular attendance is key to raising academic standards.
Absence rates for some BME groups are higher than the national average. The absence rate of children of Pakistani origin is 6.7%, but the national average is 5.8%. Nationally, over 54 million school days were lost in 2010-11 due to absence. A pupil missing about nine—
Rail-Air Connectivity (South-East)
(12 years, 5 months ago)
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Henry Smith (Crawley) (Con)
Once again, it is a pleasure to serve under your chairmanship, Mr Williams. I am grateful to have the opportunity to raise the issue of improving rail-air connectivity for London and the south-east. As a successful trading nation, we rely on aviation, and our commerce relies on connectivity. In the brief time that I have, I want to concentrate on the importance of air-rail connectivity for the world’s busiest two-terminal, one-runway airport.
The Government’s economic strategy rightly wants to see improved links with emerging markets. UK businesses trade 20 times as much with countries where there are daily flights than with those with less frequent or no direct services. Ministers correctly want to boost growth through increasing inward investment and boosting exports. Improved international connectivity is therefore critical. Gatwick airport’s recent investment programme has made it a credible competitor to London Heathrow airport.
My right hon. Friend the Prime Minister was quite correct when he recently said that, under new ownership, Gatwick is emerging as a business airport for London, competing with Heathrow. The airport has recently invested £1.2 billion in facilities. In April, it announced proposals to invest a further £1 billion from 2014 to 2019. All of the money is going into making Gatwick a better, not a bigger, airport. Today, Heathrow, the UK’s largest and major hub airport is effectively full. Whether further capacity should be provided is a debate for another day. However, Gatwick is not full. At times of peak demand, such as in August, there are constraints, but, averaged out over the year, Gatwick currently operates at approximately 78% of capacity. There is potential for a further 11 million passengers to use Gatwick every year—a 25% increase on today’s levels, and a new runway is not needed to accommodate such numbers.
If Gatwick has airport capacity that can be used, the question becomes how do we best utilise that. There is no doubt that Gatwick faces a competitive disadvantage in taking on Heathrow to deliver this connectivity. Gatwick is not a “hub” airport. In pure economic terms, “hub” airports are more attractive to airlines than point-to-point airports. Although, under current market and capacity conditions, Gatwick could not become a “hub”, it is competing, and it is serving routes that are traditionally the preserve of Heathrow. It is at best simplistic, and at worst fundamentally inaccurate, to suggest that because Heathrow is full, there is no alternative in terms of enhancing the UK’s international connectivity to emerging markets.
Surface transport links are key to airline choice and can encourage full use of existing capacity. At present, Gatwick is engaging directly with Governments and national carriers in emerging markets, and asking them what it will take for new routes to the UK to be established. They hear time and again that airlines want to come to London, and that their choice of airports rests on available capacity, suitable facilities and, crucially, the airports’ surface connectivity to London. If we want new international air links to the emerging markets, good rail access to the airports that can provide them is critical.
The UK national infrastructure plan rightly recognises the national role that London’s airports have in increasing economic output and in enabling business to access new and larger markets. Indeed the NIP has identified Gatwick’s current £1.2 billion capital investment programme as one of the country’s top 40 infrastructure projects. It also outlines that the Government will
“improve road and rail links to the UK’s international gateways to help maximise the efficiency and competitiveness of the whole transport network.”
A £53 million upgrade of Gatwick rail station is already under-way. It will deliver much-needed additional platform capacity, concourse improvements and local track and signal infrastructure.
The focus now is on the services that run in and out of Gatwick station. Gatwick is already the home of the busiest airport railway station in the UK with more than 10 million passengers every year, and proportionally more people travel by rail to and from the airport than any other major UK airport. There is already a substantial growth in forecast demand. Along with Gatwick’s substantive growth, the number of ordinary commuters who use the same rail links is forecast to grow by 29% by 2026. The Brighton main line, which is effectively Gatwick’s main rail artery, is near capacity, and peak services on the line were already at almost 80% back in 2009.
The new Thameslink project will help the airport. Already, it is quicker to get to the City of London from Gatwick than from Heathrow. The airport should see a doubling in train frequency from 2018 through Thameslink, and someone living in, for example, Peterborough or Cambridge will be able to go directly to Gatwick by rail for the first time. It is partly due to this Government’s decision to progress the Thameslink upgrade project that we will see clear improvements in north-south links to and from the airport. However, further improvements are necessary.
A consistent implication from Ministers has been that the welcome improvements that Thameslink will bring are sufficient to deliver the improved rail connectivity and capacity that Gatwick will need in future. In my view, a far more holistic approach to improvement needs to be taken and, in particular, one that takes into account just how central high-quality express services from Gatwick to London Victoria are to the airport’s growth.
Zac Goldsmith (Richmond Park) (Con)
I congratulate my hon. Friend on securing this important debate. Does he agree that many of his arguments relating to Gatwick also apply to airports such as Stansted, which have masses of spare capacity and many millions of unused passenger journeys, but which, like Gatwick, suffer from very poor transport links, and that, if they were improved, they would transform an unattractive airport into a very attractive one and a potential alternative business hub?
Henry Smith
I am grateful to my hon. Friend for his intervention. I apologise if my contribution seems a little parochial in its concentration on Gatwick, but the points relating to Gatwick are replicated for other airports, not just in London and the south-east, but around the country.
Over the past few years, Gatwick has lost direct links to Oxford, Birmingham, Manchester, Watford and Kent and, importantly, due to decisions taken by the previous Government, the Gatwick Express is now under threat. On-board ticketing has been discontinued, and 25-year-old carriages have replaced new ones.
Iain Stewart (Milton Keynes South) (Con)
I congratulate my hon. Friend on securing this important debate. He has highlighted the important point that the rolling stock that is now used on the Gatwick Express is inadequate for airport passengers because there is insufficient luggage space, and wheelchair access is difficult. The irony is that that stock has replaced purpose-built stock, which has been cascaded elsewhere on the network. I urge my hon. Friend to impress on the Government that when we argue for the Gatwick Express to be a dedicated franchise or part of a broader franchise, there should be flexibility to have appropriate rolling stock to make it an attractive airport link.
Henry Smith
My hon. Friend raises an erudite point. It is incredible that purpose-built rolling stock for the Gatwick express is now elsewhere on the network and that, as he rightly points out, unsuitable carriages are used. The matter is even worse because the Gatwick Express starts many of its journeys in Brighton, and by the time those carriages have reached Gatwick station, particularly at peak times, they are already full, and arriving air passengers cannot get a seat on what is supposed to be a dedicated service to London. Additionally, Network Rail is proposing a further stop for the Gatwick Express at Clapham Junction, which would be a retrograde step. It would threaten Gatwick's ability to compete with Heathrow, and because of that, reduce its potential for growth.
Passengers are noticing the trend. Already, the Gatwick Express ranks below its equivalents at Heathrow and Stansted, and is at the bottom of comparative league tables for other services, behind airports such as Heathrow, Hong Kong, Kuala Lumpur and Stockholm. Gatwick is not effectively connected to locations to the east and west of the airport either, with no direct rail service to and from Kent. Trains have to go via London, meaning that the 2 million passengers from Kent who use the airport every year cannot reach it directly.
The new Southern-Thameslink franchise must deliver improvements to the Gatwick Express. In December 2009, the Government announced that they were inviting tenders for new franchises for the south-east region from 2015. The new service will integrate those currently operated by First Capital Connect and Southern, including the Gatwick Express. From 2015, nearly all rail links in and out of Gatwick will be operated by one company, with the exception of a direct link to Reading. We currently have the unique opportunity to address many of the issues.
Preserving the Gatwick Express is a priority. It should be recreated as an all-day, dedicated service between Gatwick and London, to support Gatwick’s role as a key economic driver for London, the south-east and the UK economy as a whole. To guarantee its success, bidders for the franchise should be required to outline a vision of how both the quality of the journey and the range of direct routes to and from Gatwick can be improved. In addition to the invitation to tender for the new franchise including direct express rail services to London from the airport, there must also be a clear requirement for fit-for-purpose rolling stock that caters for the needs of air passengers—so ably pointed out by my hon. Friend the Member for Milton Keynes South (Iain Stewart)—as it is clear from Gatwick’s research that the current stock is not. Gatwick is particularly concerned about the installation of ticket gates at the airport railway station and the removal of on-board ticketing adversely affecting passenger experiences.
In the long term, the requirements in the recent rail Command Paper need to be implemented. The paper states that during the next regulatory cycle Network Rail and the broader rail industry should look at how best to improve surface access to major airports. Network Rail should, as part of its development of the south-east’s rail network, take advantage of the new capacity that the Thameslink programme will provide from 2018, to reorganise the way in which lines running though Gatwick are used. Gatwick’s plans for long-term infrastructure improvements deliver a win-win solution for commuters and air passengers alike. The line that supports Gatwick’s direct rail links into London is important for both air passengers and local commuters, and the airport is not suggesting that the needs of the airport outweigh those of the everyday user.
I note that the Office of Rail Regulation has projected that, independently of air travel, passenger numbers on the main line running in and out of Gatwick could grow by 29% by 2026. The office believes that Gatwick airport’s technical proposal would allow for the needs of both sets of users. This is not an either/or choice for the Government, but a solution for all.
The plans that Gatwick has published support the growth of the airport and help to ensure a better experience for the ordinary commuter using the same rail links. They provide adequate capacity for the projected growth of both sets of users, and help to deliver the connectivity that the national economy needs. In essence, they meet the needs of most user groups, and the interests that Ministers should consider.
There would be substantial benefit to the Treasury, too, because air-rail users pay a premium. Gatwick Express users reduce Government subsidies by £27 million every year, lessening the burden on the taxpayer. More users would mean less taxpayer money being spent on the network, and keeping the service as a non-stop one would allow a further £6 million to be saved by reducing journey times.
Direct rail links to Gatwick would help to improve the environment for inward investment in the south-east, because 51% of potential investors cite international transport links as an important factor in deciding where to locate. Easy rail access to airports means better links to key export markets. In the short term, Gatwick’s proposals would greatly assist the airport in marketing itself internationally to airlines operating from emerging markets, because a high-quality, dedicated rail link is key in their decision-making process. In that way, improved rail links would help efforts better to manage the capacity shortages that airports in the south-east face, and which have the potential to hamper our economy.
The Minister of State, Department for Transport (Mrs Theresa Villiers)
I congratulate my hon. Friend the Member for Crawley (Henry Smith) on securing a debate on such an important and interesting topic. He is a great advocate for his constituents, and I welcome his expertise in and understanding of aviation issues, which I am sure are of great importance to many of his constituents who work at Gatwick airport.
I fully appreciate all the points that my hon. Friend made about the importance of high-quality rail services to airports, and particularly to Gatwick, which is one of our biggest and most successful airports. I echo his praise of and congratulations to Gatwick on its investment programme, and I welcome the new services that it is attracting, including Air China’s new service from Gatwick to Beijing. Gatwick well deserved the praise that it received from the Prime Minister, to which my hon. Friend referred.
It is entirely correct to say that the debate about aviation connectivity in this country is not just about Heathrow. Heathrow is an extremely important airport, but we should not forget that London’s five successful airports together make us one of the best connected countries in the world, and Gatwick plays a very important role in that system.
High-quality surface access to our key airports is important for air passengers and for our international economic competitiveness, as my hon. Friend rightly highlighted. In addition, improving rail services to airports can provide important assistance in addressing local road congestion problems and, in certain places, in dealing with air quality problems. As he said, one of the Government’s strategic priorities for the nation’s rail network is improving rail links to major ports and airports.
A significant programme of rail infrastructure improvements is under way, and a number of the projects will benefit airports. If time permits, I shall deal with those later, but first it would be best for me to address some my hon. Friend’s points that were specific to Gatwick.
We have recently started consulting on the new combined Southern, Thameslink and Great Northern franchise. All the responses to that consultation will be shared with the five shortlisted bidders that will compete to become the next operator. The consultation is an important part of the decision-making process on what goes into the new franchise. This debate is therefore very timely, and I encourage my hon. Friend and his constituents to take part in the consultation.
The task that the bidders for the new franchise face in balancing the competing priorities of those who use the Brighton main line, which serves Gatwick, will not be easy—there is no getting away from that fact. Along with much of the nation’s rail network, the line is a tribute to the engineering excellence of our Victorian forebears. Driving tunnels through the downs and building a nine-track viaduct over the River Thames are the sort of engineering projects that we take for granted today, but they were a massive challenge when they were built more than 150 years ago, largely using only manual labour and sheer hard graft.
Brilliant as those Victorian engineers were, however, they bequeathed us a railway that had only 19 platforms at Victoria, and only five tracks south of East Croydon. Since Victorian times, commuting demand has increased dramatically. In a typical weekday morning, the Gatwick Express carries more than 2,000 passengers from Gatwick airport into London, but there are more than 35,000 Brighton mainline commuters, and approximately the same number again commuting into London on Southern’s services from the inner suburbs. Expanding our inherited railway network is neither low-cost nor easy, especially where it runs through our crowded cities, so we will expect the bidders to think hard about how they can make best use of the track capacity available to them in such a way that they can continue to provide a high-quality service to those travelling to and from Gatwick, without compromising their ability to meet the needs of the thousands of commuters who also use the line every year.
Against that background, there is certainly some pressure for more trains to call at Clapham Junction, which is one of the busiest stations on the route and arguably one of the busiest in the world. My hon. Friend will appreciate, however, that although that proposal was included by Network Rail in its south-east route utilisation strategy, that is not binding on the Government. No final decision has been made on it. When we make our decisions on the new franchise, we shall carefully weigh the needs of airport passengers and commuters, as well as taking into account wider strategic economic considerations of the sort to which my hon. Friend referred. This debate is useful for feeding into that decision-making process.
My hon. Friend has concerns about rolling stock. The Government are keen for such decisions to be made, when possible, by the people who run the railways rather than Whitehall. However, I agree that when making choices about rolling stock and its internal layout, the current and future franchisees will need to balance carefully the different needs and wants of railway users.
My hon. Friend the Member for Crawley also referred to decisions about on-train ticketing and the installation of ticket gates at Gatwick. I am aware of the concerns of the airport operator and I have held discussions with Gatwick on several occasions. However, the installation of gates is one of most effective ways to ensure that passengers pay the fares that are due. Protecting that revenue is an important element of delivering a more financially sustainable railway. I note that efforts were made to try to respond to the airport’s concerns, with a choice of wider gates to facilitate passengers with larger bags. I hope that that provides some mitigation to the concerns that my hon. Friend and the airport operator expressed.
I want to discuss the wider programme of activity that is under way to improve rail-to-air links in the south-east and elsewhere. A fleet of brand new trains built by Bombardier in Derby is now in use on the Stansted Express to improve the experience for passengers going to that airport. Network Rail, with the assistance and support of Gatwick Airport Ltd, is investing £53 million in upgrading the station, tracks and signalling at the airport, which includes new platforms and escalators, and a refurbished concourse. That will greatly improve the attractiveness of rail services to and from Gatwick, and I was delighted when the airport and Network Rail put together the funding to make it possible.
Through the regional growth fund, we have awarded £19.5 million to Luton borough council for junction enhancements that will improve access from the M1 to Luton. The RGF has also awarded £40 million to Kent county council for its Expansion East Kent programme, which includes rail improvements affecting journey times between Ashford and Ramsgate that could support the further development of Manston airport as a passenger airport. In the north of England, Manchester airport is getting linked up to Metrolink for the first time, and funding has been secured for a new airport link road connecting the M56 and the A6. Looking ahead, Manchester airport is also set to benefit from our programme of rail electrification in the north of England and from the work on elements of the northern hub that we are committed to delivering.
As my hon. Friend the Member for Crawley rightly pointed out, the Thameslink programme, which took some years to get started under the previous Government—they started out calling it Thameslink 2000, but for some reason dropped that title as delivery got later and later—is very much under way. It is a £6 billion programme that will benefit Gatwick and Luton airports through the operation of a brand new fleet of high-capacity trains running at greatly increased frequency. The trains serving the two airports will be able to stop at London Bridge at peak times, which is not possible at the moment. The Thameslink programme also means that, for the first time, Gatwick will get new direct services to destinations north of London, such as Cambridge, Stevenage and Welwyn.
Crossrail is finally under way, with tunnelling under London commencing at the beginning of May. Once it is completed, we expect Crossrail to provide new services linking Heathrow directly with the west end, the City of London and Canary Wharf. In the longer term, Heathrow will also benefit from the Piccadilly line upgrade, and High Speed 2 will connect to Birmingham airport and provide radically improved access to Heathrow from destinations in the midlands and the north of England. A great deal of work is under way to improve our links between rail and air in the south-east and elsewhere in the country. We shall be giving further thought to whether more can be done as part of our HLOS—high-level output specification—programme for the 2014-to-2019 railway control period.
Let me respond to the hon. Friend’s comments in the context of the overall debate about aviation. The coalition has been clear that it wants a successful and sustainable aviation sector that supports economic growth and addresses aviation’s environmental impacts. Our forthcoming consultation on a sustainable framework for UK aviation will be a further opportunity to consider surface access to airports and the kind of issues that my hon. Friend shared with the Chamber. For example, in response to the scoping document on aviation with which we began the policy development process last year, a number of people advocated the potential of new fast rail links between Heathrow and Gatwick as a way to deal with connectivity. Such ideas will be considered alongside the many other responses that I am sure we will receive in our consultation, in which I hope that hon. Members will participate.
The Government will continue to work with airport operators, the rail industry, local authorities, local enterprise partnerships and MPs on ideas to improve rail access to our key airports in the years to come. All the matters mentioned by my hon. Friend will be carefully taken into account when decisions are made on new franchises for the railways—we are about to embark on the biggest programme of refranchising since privatisation—and we will ensure that we consider the importance of good surface access to our key airports.
Zac Goldsmith
Will the Minister reconfirm that it is her view, and that of the Government, that the Government’s first priority is to find ways of making better use of existing capacity? Will she confirm that any thoughts of expansion in the south-east take a very clear second place, and that people will not be subjected to the horror of expansion unless it is an absolute last resort?
Mrs Villiers
I agree that whatever decisions are taken about long-term capacity needs in the south-east, it is essential that we do everything that we can right now to make our airports better and to ensure that we make the best use of existing capacity. Two separate things need to be done: to work out how we improve our airports today—we have initiatives on that important aspect under way, such as the operational freedoms trial at Heathrow and reforming how security is delivered—and, at the same time, to give serious, evidence-based consideration to what our future capacity needs might be.
On rail-to-air connectivity, we must be mindful of affordability constraints and value for money. When appropriate, we continue to look to the airports that will benefit from transport improvements to make a fair contribution to their funding. When there are decisions on how limited capacity is allocated between competing priorities, we will need to consider carefully the needs of all railway users—those who are travelling to the airport and those who are not, including commuters and freight operators. We need a successful and sustainable aviation sector that is supported by a railway that delivers reliable, high-quality services for all its users. That is what the Government are striving to achieve, and I am sure that our discussion today will provide useful input into forthcoming decisions on aviation and rail matters.
Mesothelioma (Legal Aid Reform)
(12 years, 5 months ago)
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Hywel Williams (in the Chair)
We now come to the debate on the effect of legal aid reform on mesothelioma victims. I call Bill Esterson—you may speak seated, if you find that helpful.
Bill Esterson (Sefton Central) (Lab)
Thank you very much, Mr Williams. I will stand, but it is kind of you to make the offer. It is a pleasure that the debate is being held under your chairmanship. It is an important debate, which I am sure that you and Members in all parts of the House appreciate—so far, it is mostly Opposition Members, but I know that Government Members have also indicated an interest in the subject.
I requested this debate because the Government have said that they will review the support given to victims of mesothelioma and their families following the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which includes industrial diseases along with personal injury in measures to end no win, no fee litigation in the courts. The Government say that they want to stop fraudulent claims, but I believe that there is no evidence of fraudulent claims by those suffering from mesothelioma. That is the basis of this debate.
The House of Lords tried to amend the Act to exclude victims of mesothelioma from the changes to no win, no fee legislation, but the amendments made by the Lords were rejected by the Government. Instead, the Government said that they would hold a review and consider how to support victims and their families. So far, Ministers have not said what that review will consist of or when it will be held. Victims and their families need to know. When the Minister responds, he should tell the House what will happen in the review so that those suffering from that terrible disease can know and compare their evidence, so as not to lose out as a result of the end of no win, no fee.
The Government decided to include industrial diseases along with road traffic accidents in stopping no win, no fee. The implication of the change is that mesothelioma claimants are part of the compensation culture. That may well affect some personal injury claims, including whiplash, but mesothelioma victims are clearly not making spurious claims. When my hon. Friend the Member for Warrington North (Helen Jones) put that point to the Minister on 17 April, she asked him to give one example of a spurious mesothelioma claim. The lack of an answer made the point that there are none.
Let us remind ourselves of what mesothelioma does. My hon. Friend the Member for Blaydon (Mr Anderson) said in the debate in April that
“one fibre could go into someone’s lung and lie dormant for many years, but when it becomes active there is no alternative—that person suffers horribly and then they die. There is no cure, no remission and no element of survival; they die…Everybody who gets mesothelioma will die an agonising death.”—[Official Report, 17 April 2012; Vol. 543, c. 279.]
The idea that those suffering from mesothelioma could be involved in fraudulent claims is absurd and disgraceful.
Mr David Anderson (Blaydon) (Lab)
I congratulate my hon. Friend on securing this timely debate. Does he agree that one of the big issues is how long we must wait before we get information about how the review will start? Since we had the debate in the main Chamber, some 200 people have died of mesothelioma.
Bill Esterson
My hon. Friend has a long and distinguished record of fighting for those suffering from many industrial diseases, especially mesothelioma. He has made the point well: 200 people have died since the last time the issue was debated. That demonstrates the urgent need for the Minister to indicate exactly when the review will be held and how quickly it will conclude.
Steve Rotheram (Liverpool, Walton) (Lab)
My hon. Friend will be aware, as I am, of constituents who have unfortunately contracted asbestos-related diseases such as mesothelioma. Why are people who have terrible diseases through no fault of their own being doubly punished by the Government? Is it a case of the law of unintended consequences, or does my hon. Friend believe that they are being targeted by this uncaring Government?
Bill Esterson
I thank my hon. Friend and neighbour for his question, and I hope that the Minister will answer it. We could all make our guesses as to the true motives. There are well-established financial links between the Government and the insurance industry, which might be at the heart of why things are being done in the way that they are.
It cannot be right that victims of asbestos-related diseases should be required to surrender a quarter of the damages that they have been awarded to pay for legal costs. Those damages are awarded to recognise and compensate men and women who have suffered terribly, if it is at all possible to compensate them for the pain, suffering and life-shortening that resulted from their work.
Mesothelioma has an extraordinarily long latency period of up to 60 years. As well as those 30,000 who have already died in the United Kingdom from mesothelioma, an estimated 60,000 more are yet to lose their lives due to past exposure, the vast majority of which occurred at work.
Nia Griffith (Llanelli) (Lab)
Does my hon. Friend agree that the coffers of the Government, in the shape of the Department for Work and Pensions, will also lose out? There has always been a payment back of benefits that have had to be paid up front early on because of people’s short life span once diagnosed with mesothelioma. Does he also agree that we should be making absolutely certain that no part of the compensation is taken out? The money should be used for the victims and their families and to repay the Government. Will my hon. Friend congratulate a colleague of mine in the Welsh Assembly, Mick Antoniw, who proposes to introduce a private Member’s Bill that would compensate the NHS for its expenditure on treating mesothelioma by recovering the money from liable companies?
Bill Esterson
I am happy to congratulate my hon. Friend’s colleague. She is right that it is the companies that cause this terrible pain and suffering, as well as their insurers, that should bear the financial costs, although there is no way of truly compensating the victims and their families for their suffering. It should be the private industry that caused the condition, and its insurers, that pays, not the public purse.
People were exposed to this terrible disease at work in situations which employers knew would ultimately kill the workers. However, as things stand under the legislation, those same people and their families will lose a quarter of the compensation that they absolutely should receive from the insurers of those companies.
The Government rejected a Lords amendment that would have exempted mesothelioma from the provision, but they have yet to say how sufferers and their families will be protected. In all the non-answers from Ministers, they have yet to justify to thousands of families why they did not exempt mesothelioma.
Mesothelioma is an exceptional case, because the problem was known about for more than a century. Asbestos was identified as a poisonous substance in 1892 and has been banned from use in this country for almost half a century, yet employers knowingly exposed their workers to it day in, day out. They knew the dangers and ignored them for decades. They were eventually held accountable, but ever since the first successful case against employers and insurers on asbestos-related diseases, they have kept coming back to the courts and the issue has kept coming back to this place.
Mesothelioma causes intractable pain and severe breathlessness, which means that more than half of all the very modest damages claimed are for pain and suffering. The Government’s proposals would have a disproportionate effect on mesothelioma sufferers, because victims receive a higher proportion of their damages for pain and suffering than those who claim for personal injury.
The legislation requires terminally ill asbestos victims who succeed in a claim for compensation against negligent, guilty employers to pay up to 25% of their damages for pain and suffering in legal costs. They are not part of the compensation culture, nor are they legally aided, so to include them in that provision is wholly wrong. Many sufferers are so defeated by their illness that they never make a claim under current circumstances. Victim support groups have been told by victims that the change proposed would be a significant further deterrent to them making a claim at all. That would represent a big saving for the insurance industry, which therefore has the financial interest hinted at by my hon. Friend the Member for Liverpool, Walton (Steve Rotheram).
Mr Dennis Skinner (Bolsover) (Lab)
I congratulate my hon. Friend on raising this issue for the umpteenth time. It is always possible to tell when an issue ought to be dealt with. We fought constantly for bronchitis and emphysema to be treated as industrial diseases, and did the same with vibration white finger. In 1999-2000, we managed to get the show on the road. Mesothelioma has been debated in this place ad nauseam, which is why we can tell that it ought to be dealt with at long last. I thank my hon. Friend for raising the matter once again.
Bill Esterson
My hon. Friend speaks with greater experience than anyone in this House on the subject and on the issue of protecting the rights of workers who have suffered, over many years, grave injustice through industrial diseases and industrial accidents. He brings that wealth of experience from his time as a miner, and he continues to campaign tirelessly, and I applaud him for that. He is absolutely right that we have a duty to the victims to ensure that the matter is dealt with properly and that this Government are held to account. We need to hear answers today as to what will happen in that review, and it needs to be done quickly.
KPMG estimates that the insurance industry was given a £1.6 billion windfall when the Government ended compensation for pleural plaques. Unless the Government change their mind on mesothelioma, a similar windfall may be made available to the insurers at the expense of victims of industrial disease.
In contrast to other diseases, mesothelioma has only one outcome—loss of life. It is not trivial, and victims need help not hindrance. Most doctors say that the average lifespan from diagnosis to death is around nine months to one year. As one victim explained:
“My life has been turned upside down, and I really didn’t want to think about anything except spending my last days with my family. I worked all my life and paid all my national insurance and taxes, so this seems unfair.”
Mesothelioma victims, who often have just months to live, should not be expected to devote their energies to finding the lawyer with the best deal, yet that is what the Government expect them to do. Asbestos-related disease is not an accident. It is the result of negligence and lack of duty of care.
The claims of dying asbestos victims are never frivolous or fraudulent, but they are lumped in with road traffic accident claims that make up more than 70% of personal injury claims, for which the Government and insurance industry suggest that conditional fee agreements have been exploited. Between 2007 and 2011, there was a 6.6% reduction in employer liability cases, of which most respiratory claims are a subset. During that same period, road traffic accidents increased by 43% to nearly 800,000 cases. It is expected that mesothelioma claims will peak in about 2015, as asbestos has been eliminated from the working environment. Unscrupulous claimants may be able to fake road traffic injuries, but not mesothelioma or asbestosis. Road traffic accident problems will not be solved by punishing asbestos victims.
Mesothelioma sufferers who make a claim mainly do so because they and their families will not be at risk in terms of legal costs, which, without no win, no fee agreements, would be prohibitive. A claim may be valued at between £5,000 and £10,000, which is of great importance to the individual concerned, but which could be eaten up in costs and premiums under the Government’s plans. Mesothelioma sufferers would lose the whole of their compensation simply by not taking any action, which, as we have heard, is increasingly likely if no changes are made. Their access to lawyers would be restricted by making success fees unrecoverable from defendants, putting them at risk of paying defendants’ costs if they lose. Victims are already reluctant to claim because they have so many problems dealing with their rapid deterioration in health and trying to survive. The risk that if they lose they will have to pay such costs would be a massive additional hurdle for some of our most vulnerable people, to whom a decent, civilised society should and would guarantee support.
We should not forget that compensation is already significantly reduced for many sufferers. They must not only provide evidence of heavy exposure dating decades back, but forgo that portion of compensation where insurers cannot be traced for employers that are no longer trading. As insurance companies fight mesothelioma cases to the end, often trying to elongate the case until the victim dies, the cost of after-the-event insurance can be huge. As that will also be unrecoverable under the Government’s plans, there is no prospect of claimants being able to afford the premiums. The Government’s one-size-fits-all approach in the legislation is wrong. It may work for some personal injury claims, but is not effective in the case of complex industrial disease cases such as those involving mesothelioma.
Paul Goggins (Wythenshawe and Sale East) (Lab)
My hon. Friend has given a graphic description of the pain and suffering faced and experienced by mesothelioma sufferers. He is describing the impact that the legislation would have on mesothelioma sufferers if, following a review, it was fully implemented for that group. He has mentioned several times the review that the Government have offered as part of the concession that they made while the Bill was passing through Parliament. Does he agree that it is essential that that review fully engages with mesothelioma sufferers and their families and especially the support groups, such as the Asbestos Victims Support Groups Forum UK, which has done so much to make the case on behalf of mesothelioma sufferers?
Bill Esterson
I thank my right hon. Friend for his intervention. I completely agree with him and will come shortly to what we need in the review.
For mesothelioma sufferers, unwarranted and fatal risks have been taken unknowingly, so the correct function of the legal system in such cases would be to restore victims to the position that they were in before diagnosis and to make provision for them and their families. Terminally ill and dying people will have other things on their mind than looking for a lawyer to give them a good rate, so there will not be greater competition, driving costs down, as the Minister claims. There is in fact no evidence that lawyers will reduce costs, as lawyers themselves will be less likely to take these cases because they risk not being able to recover costs if they lose or they face the dreadful prospect of having to recover those costs from their clients in a situation in which they have just lost in terrible circumstances.
Making changes to rules on compensation is no motivation or incentive for mesothelioma sufferers. One sufferer has said that
“no amount of compensation could ever compensate for my husband’s suffering and loss of life. To even contemplate this is wrong. My husband’s suffering has ended but still I have terrible images of his horrific suffering which I cannot erase…My husband was poisoned going to work. I hope this Government remembers that!”
At all stages of consideration of the legislation in this House and in the House of Lords, the fallacy of the Government’s position on industrial disease was pointed out. Twice the Lords voted on amendments to this effect:
“The changes made by sections 43, 45 and 46 of this Act do not apply in relation to proceedings which include a claim for damages for respiratory disease or illness (whether or not resulting in death) arising from industrial exposure to harmful substance.”
The Government were forced to reconsider their position and they agreed to an amendment, which brings us to the point of today’s debate. This is the amendment:
“Sections 43 and 45 and diffuse mesothelioma proceedings
(1) Sections 43 and 45 may not be brought into force in relation to proceedings relating to a claim for damages in respect of diffuse mesothelioma until the Lord Chancellor has—
a) carried out a review of the likely effect of those sections in relation to such proceedings, and
b) published a report of the conclusions of the review.”
Since then, the nature of the review, its timing, its terms of reference, how it is to be conducted and who is to be consulted have been raised several times. I have raised those matters myself with Ministers, as have the Labour Front-Bench team. When agreeing to the compromise, my right hon. Friend the Member for Tooting (Sadiq Khan) said:
“We need assurances it will be truly independent and not just a whitewash. We also need confidence there’ll be sufficient time allowed to see how the changes brought about impact on other successful claimants before rolling them out for mesothelioma sufferers.”
Given the Government’s conduct throughout, it is not surprising that we and those who represent mesothelioma sufferers, and the victims themselves, are sceptical about the Government’s promise. Today is an ideal opportunity, which I hope the Minister will take, to address the doubts of everyone who has concerns about mesothelioma. Anything less than a fully independent and thorough review of the potential effects of limiting claims will not be within the spirit or the letter of the amendments agreed to, which enabled the Government to get their legislation through. I hope that we will not hear generalities or evasions from the Minister. A clear commitment to do justice for the victims of this terrible disease is the least we can expect.
I therefore ask the Minister these questions. When will the review take place? Who will be part of the review body? What will its terms of reference be? No doubt it will include representatives of the insurance industry, but who will be the victims’ representatives? Will the review be truly independent, by which I mean independent of the insurance industry?
Concern remains that the change to no win, no fee will cut the number of people claiming and the amount being paid by insurance companies. The insurance industry has a clear financial interest in cutting down the amounts paid out. How will the Minister or his colleagues ensure that that interest is balanced by how the review is run? Will he consider an independent panel to examine mesothelioma and compensation for victims and their families? Will he and his colleagues consider the call for an employers’ liability insurance bureau following the pattern of the Motor Insurers Bureau? We must ask why there is such a facility for traffic accident victims but not for those suffering from mesothelioma or other industrial diseases.
Victims and their families want answers and protection. They have a right to that protection, given the suffering that they go through. It is time that Ministers gave answers about how that protection will be guaranteed, and soon, by this Government.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
I apologise for the absence of the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly), to whom this debate would normally fall, but he is serving on the Committee that is considering the Defamation Bill. I congratulate the hon. Member for Sefton Central (Bill Esterson) on securing this timely debate. He asked wholly appropriate questions and I hope to be able to give him some of the satisfaction that he seeks, and some guidance for claimants and their families on the circumstances that we are in.
I say gently to the hon. Gentleman that I slightly regretted the tone of his speech. To suggest that concern about the issue is located on one side of the House and not the other is a little wide—
Mr Blunt
I will not, if my hon. Friend will forgive me, because I need time to put on record all the things that I think are important for mesothelioma sufferers, for whom concern is, very properly, universal.
Mesothelioma is a terrible disease. We recognise its devastating impact on sufferers and their families, and we take extremely seriously the plight of sufferers and their right to claim compensation for negligently caused personal injury. As was clear from the way in which the hon. Member for Sefton Central spoke, this is an emotive subject. This debate highlights the importance of the issue, and the hon. Member for Bolsover (Mr Skinner) also made that clear.
I will deal briefly with three main issues: first, why our reforms to conditional fee arrangements are the right way forward; secondly, why we are taking an exceptional course in respect of mesothelioma claims, and the circumstances in which that exceptional course will be managed once we have improved the position for sufferers who cannot trace their employer’s insurer; and, thirdly, how some reforms have lowered the barriers for claimants in recent years.
On the rationale for conditional fee arrangement reform, it is important to make it clear that our current legal aid reforms do not affect mesothelioma cases, as legal aid is not generally available. The Access to Justice Act 1999 removed legal aid for the majority of personal injury cases, including mesothelioma cases, where alternative forms of funding such as conditional fee arrangements were available. As the hon. Member for Sefton Central will be aware, the Government are implementing the recommendations in Lord Justice Jackson’s review of civil litigation costs, and particularly a fundamental reform of no win, no fee CFAs. Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 implements those reforms.
Lord Justice Jackson concluded that the current arrangements, under which success fees and after-the-event insurance premiums are payable by the losing side, in addition to standard legal costs, are a major contributor to the high costs of civil litigation, and that it was right in principle to change the arrangements across the board. The truth is that the current system is indefensible. It has turned out to be a racket for lawyers, which is why it is changing. The new system will assist the execution of meritorious claims rather than supporting a claims-management industry.
The Government are committed to addressing disproportionate costs throughout the whole of civil litigation, and the provisions in part 2 of the Act will deal with the unfairness that currently exists in the system between claimants and defendants. These important reforms will ensure that meritorious claims can still be pursued, but at a more proportionate cost. As part of the reforms, earlier settlement will be encouraged and damages for non-pecuniary loss, such as pain suffered and loss of amenity, will be increased by 10%. In time, the reforms will apply to all areas of civil litigation—that was what Lord Justice Jackson recommended, and the Government agree.
The Government are certainly not suggesting that mesothelioma claims are brought inappropriately. Indeed, such claims are often among the easiest in which to establish base merit. I want to be absolutely clear, in response to the tone of the remarks made by the hon. Member for Sefton Central, that these claims are, of course, not part of the compensation culture—no one has suggested that they are. They are, however, part of a process of civil litigation that has to be reformed.
On the temporary exception from conditional fee arrangement reforms for mesothelioma claims, we announced that the relevant provisions in part 2 will come into force in April 2013. In particular, sections 44 and 46 abolish the recoverability of success fees and after-the-event insurance costs from the losing side in all categories of case in which they are currently used. We are, however, deferring implementation in relation to mesothelioma claims until we are satisfied on the way forward for those who are unable to trace their employer’s insurer. I am sure that the hon. Gentleman understands the crucial importance of that.
A number of reforms in recent years have improved the position of mesothelioma sufferers by lowering the barriers to bringing claims. In particular, the Employers’ Liability Tracing Office, which was introduced in April 2011, is designed to be a comprehensive online resource of current and historical employers’ liability policies, thus making it easier for claimants to find the relevant insurer. The database is updated with the results of any new traces, so its size and utility continue to increase. We recognise, however, that there remains a gap where sufferers cannot trace their employer’s insurer. The Department for Work and Pensions is therefore in discussions about the way forward for stakeholders. Primary legislation might be required, but I anticipate that my noble friend Lord Freud, who is working on the matter, will make a statement before the summer recess. If primary legislation is required, however, the hon. Member for Sefton Central and other hon. Members will understand that that will take a considerable period of time.
I can give a commitment that we will consider all the factors raised today when we come to set out the review’s terms of reference. I cannot, however, set out those terms of reference or a timetable, because any review may not happen until we have identified any primary legislation that might be required. Additionally—the hon. Gentleman made this point, and it has also been made by the right hon. Member for Tooting (Sadiq Khan)—that means that the review will occur against the backdrop of a substantially changed conditional fee arrangement market, so we will of course consider the effect of those changes as part of the review.
I have rather more to say, but I regret that I will not be able to do so, given that, understandably, the hon. Gentleman took interventions during his speech. Nevertheless, I have put on the record the substantive responses that he was seeking from the Government.
Neglected Tropical Diseases
(12 years, 5 months ago)
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Jeremy Lefroy (Stafford) (Con)
It is an honour, Mr Williams, to serve under your chairmanship.
I declare an interest as the chairman of the all-party group on neglected tropical diseases. NTDs are a group of diseases that affect more than 1 billion people around the world. They do not have the high profile of malaria, HIV/AIDS or TB—hence the word “neglected”—but they result in disability and death. Even for those who are less seriously affected, they bring chronic conditions that mean loss of income. Such diseases include worms or helminths, schistosomiasis or bilharzia, trachoma, lymphatic filariasis or elephantiasis, and leprosy.
Almost without exception, NTDs are diseases of the poor. They are also curable. The World Health Organisation’s 2010 report found that approximately 90% of their burden can be treated with medicines administered only once or twice a year, and that can sometimes be achieved for as little as 50 US cents. Treating and eradicating those diseases must be at the heart of any programme to tackle poverty. Yet as the title of the debate makes clear, they have been neglected for many years. Institutes such as the Liverpool and London Schools of Tropical Medicine, Imperial College London and the Antwerp Institute of Tropical Medicine, working with researchers and institutes in developing countries, have made great strides in the understanding and treatment of NTDs.
Chris White (Warwick and Leamington) (Con)
I congratulate my hon. Friend on securing this important debate, not least because his knowledge of the matter is well recognised. Does he agree that Members of Parliament have a role in highlighting neglected tropical diseases, making the public, the media and policy makers aware of them, and ensuring that we reduce them because they kill millions of people every year?
Jeremy Lefroy
I am most grateful to my hon. Friend for making that extremely important point. I will come to the reasons why it is important—particularly with regard to efficiency in the use of aid money, which is a major public policy question.
In recent years, Governments, principally in the UK and the USA, have begun seriously to fund work on NTDs. In the UK, this began under the previous Government with an allocation of £50 million. Earlier this year, the Department for International Development announced a further £240 million over four years, which will supply more than four treatments every second for people in the developing world. I pay tribute to the Secretary of State and his predecessor for recognising the importance of this work. We are especially fortunate because the Minister—I am delighted that he will respond to this debate—has been a champion in the fight against NTDs, both when he was chairman of the all-party group and subsequently as Minister.
Drug companies have also made a great contribution, working with bodies such as the Bill and Melinda Gates Foundation. On the day when the UK announced a fivefold increase in its funding commitment to tackle NTDs as part of a global partnership, all drug companies with NTD drug donation programmes pledged to sustain, extend or increase their programmes to the end of the decade.
For example, GlaxoSmithKline has already donated nearly 2 billion tablets of albendazole for lymphatic filariasis and will continue until elimination is achieved. It is also providing 400 million tablets a year free of charge until 2020 to de-worm school-age children in Africa. Johnson and Johnson is increasing its annual donation of mebendazole to 200 million tablets every year—again, to tackle worms. Novartis is continuing its commitment to providing multi-drug therapy against leprosy in a final push against the disease. Pfizer will continue its donation of drugs for blinding trachoma until at least 2020, as well as donating the drug and a placebo for a study on the reduction in mortality of children treated with that drug. Sanofi, Merck and various other companies are also providing major drug donations.
It is not only drugs that are important, but vaccines. The Sabin Vaccine Institute, in which I declare an interest as a trustee of its UK charitable body, is developing vaccines to treat NTDs around the world.
We have come a long way in tackling such diseases in the past decade. The number of new cases of leprosy reported to the WHO has fallen every year since 2002 from 620,000 to 249,000 in 2008. The number of new cases of human African trypanosomiasis reported to the WHO worldwide fell from 37,000 in 1998 to 10,000 in 2008. However, there is still much to do—and it can be done. Three things are essential. The first is to keep up funding. In the 1960s, malaria was on the retreat, but the world took its eye off the ball and it came back with a vengeance in the 1980s and 1990s. Malaria is now again being tackled, but at a cost of $5 billion to $6 billion a year and after millions of unnecessary deaths.
The lesson is that we need consistency and determination. The UK has rightly decided that eradicating NTDs is one of the best ways to tackle poverty, and we should make that part of our work each year until the work is done. I am not asking for more money. DFID has committed a substantial amount each year for the next four years. However, there should be no uncertainty about future funding. DFID should continue to be a reliable partner over several Parliaments.
At the same time, I should like DFID to encourage other countries to begin or increase support for the work. The USA has been a reliable funder, for which we are grateful. It would be most welcome if it, too, could commit to stable amounts over several years. Then there are donors who have yet to contribute to the work. Will the Minister report on what he is doing to encourage others into the fold?
Secondly, we need to support the countries in which NTDs are endemic, to strengthen their health systems. The most important thing I have learned in the past year as chairman of the all-party group is that it is only through effective grass-roots health systems with committed, trained staff, often backed by community volunteers, that the fight against NTDs is sustainable. One-off treatment campaigns can be effective, and are necessary where systems are weak or do not exist, but the effects will fade unless they are backed up by permanent staff and clinics.
The UK has considerable expertise in working with developing countries to strengthen their health systems, but it is vital that the countries themselves meet their commitments, under the Abuja declaration, to spend 15% of their total budget on health. Few are doing that. I would like the Minister to let hon. Members know what the Government are doing to encourage our partner Governments in those countries to keep to their commitment under the Abuja declaration.
Finally, we need to support research. I have been heartened, as chairman of the all-party group, to see both how closely involved and how generous several pharmaceutical companies have been in tackling NTDs in the way I have outlined. However, we need to work closely with them and the research institutes in the UK and elsewhere to ensure that there is a pipeline of effective drugs for all the relevant diseases. Developing drugs and vaccines and bringing them to market is costly; those who suffer from NTDs cannot afford prices that reflect the cost of the research and development. However, although the market may not justify the cost of R and D, common humanity does, and that is where the British people, through DFID, can make a huge contribution.
We often speak about DFID doing this or the British Government doing that, but it is not they but the British people who are making the work possible, by their commitment to international development. I know that the voices raised against are often loud, but in my constituency of Stafford I have met thousands of people who give up their time and money to support projects around the world—schoolchildren, scouts, guides, community groups, churches and others. When the British people see that it is their support, through donations and taxes, that is helping to improve the lives of millions suffering from NTDs, they should know that they are an essential part of that great endeavour.
Pauline Latham (Mid Derbyshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Williams. I want to pursue some things that my hon. Friend the Member for Stafford (Jeremy Lefroy) said, and to congratulate him on securing this debate on such an important subject. He dedicates a huge amount of his time to malaria and NTDs through his chairmanship of the all-party parliamentary group.
As vice-chairman of the all-party groups on HIV and AIDS and on malaria and neglected tropical diseases, I have been struck by the emerging evidence that patients suffering from some NTDs are more likely to contract HIV/AIDS or severe malaria. Dr Peter Hotez writes in his manuscript entitled “The neglected tropical diseases and the neglected infections of poverty: overview of their common features, global disease burden and distribution, new control tools, and prospects for disease elimination” that
“in the case of malaria there is a high degree of geographic overlap with hookworm infection…with evidence to show that co-infections of malaria and hookworm result in severe anemia…Similarly, urinary tract schistosomiasis, which occurs in more than 100 million people in Sub-Saharan Africa…commonly results in female genital schistosomiasis that is associated with a threefold increased susceptibility to HIV/AIDS”.
In other words, if we are effectively to tackle the killers—malaria and HIV/AIDS—we need to treat NTDs at the same time. Given that, will the Minister ask the Global Fund to Fight AIDS, Tuberculosis and Malaria to consider embracing NTDs as well? I appreciate that the fund currently faces financial difficulties, with the cancelation of round 11, but it would be a good start if it could acknowledge the importance of tackling NTDs in the fight against malaria and HIV/AIDS, and encourage its donors to support work on NTDs, just as the UK and the USA are doing.
I also emphasise that by tackling NTDs we are not only working with people to improve their health but helping them to pursue their livelihoods, to escape the very poverty that makes it much more likely that they will contract the diseases, which ensures that the millennium development goal of tackling poverty continues to elude many countries. Many NTDs, if untreated, result in chronic disability and, given that most people who suffer from them are likely to be involved in agriculture or manual labour, such disability severely affects their chances of earning a living.
In conclusion, I congratulate the Government on announcing a fivefold increase in UK support for the work in fighting NTDs. It meets DFID’s criterion for tackling poverty and, given the low cost of treatment and the 2 billion people affected in one way or another, it represents very good value for money.
The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien)
I congratulate my hon. Friend the Member for Stafford (Jeremy Lefroy) not only on securing this important debate but on his relentless and consistent commitment to the improvement and survival of all vulnerable people, and in particular children, in many parts of the planet. His commitment, both in his life before Parliament and since taking over the chairmanship of the all-party group on malaria and neglected tropical diseases, carries huge influence and is much appreciated by parliamentarians across the House.
This debate comes at an important moment. While being gracious enough to acknowledge his generous words, I hope that he will be the first to admit that the effort to tackle neglected tropical diseases is very much a combined and collective one. Many people have worked over many years to address this issue, which is one of the most tangible issues that our generation can get to grips with in the field of preventable, avoidable and treatable diseases. NTDs have struggled to compete against the three best-known diseases—HIV/AIDS, tuberculosis and malaria—because they often do not kill. Nevertheless, they impede and imperil the quality of life and well-being of many people in many parts of our planet.
I shall begin by setting the debate in a bit of context, from the coalition Government’s perspective, and I shall then seek to answer Members’ questions. When we came into office a couple of years ago, we made it clear that we wanted to build a different style of international development, one based on dynamic partnerships as well as on the relentless pursuit of results and value for money in the Department’s work. I think that it is accepted as common ground, both here and across the House, that the tackling of global disease, particularly tropical and not least neglected diseases, represents value for money. Our vision for controlling NTDs involved marshalling the evidence that NTD programmes deliver results, to justify increasing our investment considerably over the next few years. We were certainly encouraged and influenced by the very positive reports from across the NTD world, including from our pharmaceutical company partners, the World Health Organisation, the Bill and Melinda Gates Foundation, and indeed the United States Agency for International Development, which was rightly referred to by my hon. Friend.
The UK’s experienced and respected academic community has encouraged us to relentlessly do more. I well remember the many representations that I received when I occupied the chair of the all-party group on malaria and neglected tropical diseases, which my hon. Friend now occupies. The UK academic community’s conviction was, and remains, infectious and undiminished, and I found that their information was an enormously useful body of information to carry with me into office as a Minister.
The coalition Government’s determination to achieve the UN’s target for official development assistance spend of 0.7% of GNP, and to do that by demonstrating life-changing and transformative results to the British public, provided the bedrock for the decision that we have taken. Our conclusion was that a significant increase in the level and scope of our involvement was warranted to improve health outcomes and to reduce poverty, while ensuring value for money in achieving those results.
As my hon. Friend has already said, last October at a joint event with President Carter—whose own personal commitment in this sector has been undoubted throughout his post-presidential career—I pledged that the UK would increase its support to trying to achieve guinea worm eradication by 2015 if others stepped up and were able to help to close the financing gap. The challenge was met in January, when the Bill and Melinda Gates Foundation, His Highness Sheikh Khalifa bin Zayed Al Nahyan, who is the President of the United Arab Emirates, and the Children’s Investment Fund Foundation pledged enough money to close that financing gap.
That was important because, as my hon. Friend indicated, it is necessary to seek to encourage others. It is not just a question of seeking, as it were, to impose any kind of leadership or leverage; it is actually about how we get the best collective effort. That will be the most sustainable part of the process in the future, rather than continually having to renew funding.
That exercise in January was really helpful and it has given us great encouragement in this field. Although it is, of course, early days on the road to 2015, it is not so early that we do not need to make progress. So far this year, the results have indeed been impressive. Only in South Sudan has there been any reported cases of guinea worm this year. There have been 143 cases there, which represents a reduction of 62% compared with the same period last year. Of course that is good news, but we should remain aware of the considerable difficulties of operating in many of the affected countries as we aim to maintain the strong progress that has been achieved so far.
On 21 January, we announced increased support for NTD control measures. That increased support has strengthened the UK’s partnerships with the WHO, with foundations, with other donors and with pharmaceutical companies that make drug donations—donations that are much appreciated and hugely valuable—as well as with the endemic countries and indeed with NGOs. As well as guinea worm eradication, the UK’s NTD package comprises five distinct but integrated strands; I will repeat them, although they were accurately described by my hon. Friend.
We will increase support to fight the other diseases that we are already working to combat, which are lymphatic filariasis, onchocerciasis, schistosomiasis and soil-transmitted helminths.
We will conduct more research, which is absolutely critical. Research was one of the issues that my hon. Friend raised. That research will build on the back of a fantastic track record of research around the world, not least in this country, where we have global centres of excellence. I had the honour and the privilege to be the vice-chairman, in a voluntary capacity, of the Liverpool School of Tropical Medicine, where I saw such research for myself. The London School of Tropical Medicine, other London universities and colleges and many other institutions around the country also carry out research.
We have been seeking to strengthen the capacity of the WHO’s NTD department itself, and now we are able to do so. There are new programmes to control trachoma and visceral leishmaniasis, and an integrated programme approach to tackle a range of NTDs in two high-burden countries because, as my hon. Friend is well aware, there are quite a number of opportunities for synergies in tackling a number of diseases, where one can graft on to the back of some of the interventions for HIV/AIDS, and particularly for TB and malaria, not least because of the bed nets.
In many respects, referring to that issue is a way that I can answer the essential question put by the hon. Member for Mid Derbyshire (Pauline Latham); I am grateful to her for her contribution to the debate. She asked if the global health fund could be extended to tackle NTDs. It is fair to say that even in the current circumstances, which she acknowledged are an impediment, the fund’s focus is on HIV/AIDS, malaria and TB, and even if there were not the current financial readjustments, which we hope will give us a stronger position to go forward and sustain what the fund is best at doing and what it has been tremendously successful at doing in the last 10 years, a focus on NTDs could be a distraction and could start diluting the fund’s efforts, particularly through the country co-ordinating mechanisms, which are the essential mechanism through which delivery is made at country level. What will be important, however, is to look at whether we can give a greater sense of purpose and instruction to the way in which the country co-ordinating mechanisms work to see where those synergies can be captured. In that way, we get the consequential collateral benefit of addressing the NTDs through what is already taking place or could be easily and mechanistically expanded in an easy, practicable, community-based way at ground level up when dealing with HIV/AIDS, TB and malaria programmes. Building on that community health approach should in itself bring benefits to the NTDs. The NTDs themselves tend to be rather more specifically focused and are somewhat more geographically identified than some of those broader-range diseases. We need to be careful, therefore, not to force or to graft something on to them. I take the point seriously, and the answer is probably through synergies.
On 30 January this year, we had the London declaration, which took us a step further and set us the challenging 2020 deadline to demonstrate real progress. The meeting brought together some of the countries most heavily afflicted by NTDs—pharmaceutical companies, donors, academics, foundations and international financial institutions. Together we pledged to focus on 10 diseases, majoring on the five that preventive chemotherapy can control, such as schistosomiasis, and five that fall into the intensified disease management category, including guinea worm and visceral leishmaniasis, and to continue to support research. I hope my hon. Friend is pleased with this emphasis on research about which I am pretty obsessed. I had to give evidence myself yesterday to the Science and Technology Committee, which was not easy.
Jeremy Lefroy
I am delighted by the emphasis on research. As the Minister has already said in his speech, the UK is a world leader in research. I have visited the Liverpool school and was mightily impressed by what I saw there. We have also had huge contributions from the London school and Imperial college among others. I am delighted to hear that the Government place such great emphasis on research.
Mr O'Brien
As ever, one should back centres of excellence. We are all pleased to acknowledge that. I was pleased to see that the director of the Liverpool School of Tropical Medicine was awarded a CBE in the recent Queen’s honours list.
Essentially, the challenge is set for all of us to work together in a complementary fashion through an overall strategy that allows these diseases to be managed within a country’s primary health-care system—to the extent that there is capacity in the system to work with—and ultimately to be eliminated as a public health problem. National legislatures have an important role to play here in making the case to Health and Finance Ministers on behalf of their constituents.
The session in London was groundbreaking, but after the fine words, the question is how to put them into effect. The first point is that of course we are building on a number of existing partnerships that for years had sought additional resources to expand their range and coverage. The second point, which is an answer to one of my hon. Friend’s questions, is the positive response. In many ways, it also addresses the point made by my hon. Friend the Member for Warwick and Leamington (Chris White) who helpfully reminded us that we must continue with commitment to build awareness among the public. There must be a public buy-in and sense of ownership of this approach. There is the political will within the UK to sustain the support for these tremendous interventions that have such an effect and impact on the most vulnerable in the world. Getting that positive response and support from organisations such as the Children’s Investment Fund Foundation and Geneva Global was encouraging.
In late 2011, a number of institutions here launched the UK Coalition against NTDs as a collaborative partnership between UK organisations actively engaged in research, implementation and capacity building for NTD control at scale. Bringing considerable experience to bear on lymphatic filariasis, schistosomiasis, guinea worm and avoidable blindness are at the forefront of the push for integration, especially at the country level, with country and other developmental partners. Its aim is to expand the numbers of organisations and sectors committed to supporting NTD control.
What has happened over the past five months? The UK has agreed with WHO on how to strengthen its NTD department capacity. That is important, as the department plays the key role of convening and setting standards, as well as helping ensure that the donated drug supply matches and meets demand. My Department has made considerable progress in developing the new trachoma and visceral leishmaniasis programmes, as well as programmes for an integrated approach to tackling neglected tropical diseases in two countries.
Expanding programmes to tackle neglected tropical diseases is an international effort. We are working closely with colleagues, particularly in the United States Agency for International Development, the World Bank, WHO and the Bill and Melinda Gates Foundation, to ensure that we continue to seek effective mechanisms for tackling such diseases while working through health systems, for example by exploring mass drug administration through schools and the role of improved water and sanitation.
Working collaboratively in-country is high on the agenda, as is developing strategies for working in challenging countries with heavy NTD prevalence, such as Nigeria, the Democratic Republic of the Congo, which the Select Committee on International Development recently visited, and South Sudan, where I was recently. That will reinforce value for money and avoid duplication, which is vital to increasing impact.
Binding together all that work is our relentless focus on the achievement of results. Our bold decision to maintain development spend at 0.7% of gross national income at a time of UK spending austerity brings with it an obligation to demonstrate to our constituents as well as to those benefiting from our programmes that the money is being extremely well spent.
The results of our investment will be huge. By 2015, UK support will help to protect more than 140 million people from neglected tropical diseases and the suffering, disability and death that they may cause. To do so, we have increased our financial investment and cumulative spend from £50 million to £245 million by 2015. Our investment provides a platform for expanding our work with the NTD community. With them, we can build on partnerships for change among international agencies, Governments, academic institutions, non-governmental organisations, corporations, national Ministries of Health, and most of all with people who live where the road ends. Increasing Government commitment through increased domestic resource provision is the starting point for sustainability, including strengthening the systems that deliver health services.
I pay tribute to a vast range of academics, campaigners, NGOs and parliamentarians. Within just two years of the formation of the coalition Government, we have made a massive step up. There is cross-party recognition of a commitment to scale up over the past couple of years, I am pleased to say, in the context of our overall commitment to international development on behalf of the British people, whose broad generosity we are able to express through such innovative programmes.
We must recognise and accept that there is a risk of failure. Although we think that the interventions are well proven and their value for money will be great, as my hon. Friend the Member for Stafford said, there was a reverse on malaria in the past. I have just returned from the Sahel, where we were considering nutrition, a completely separate issue. Part of the challenge is that as we achieve success, the pictures will not be on our television screens. Being able to sustain it means committing continuing resources at the same if not greater levels. We must retain the political will to do the right thing through early interventions that work, making the political case all the tougher. Therefore, having champions such as my hon. Friend and the two colleagues who have joined him today is vital as part of the broad coalition of interest, which will ensure that we have the greatest impact in our generation for the most deliverable solutions for some of the greatest need in the world.
My hon. Friend the Member for Stafford asked about vaccine development, which he knows I support strongly, in many respects, for all diseases for which it is possible. We all wait with bated breath to hear whether the first vaccine for a parasite-borne disease, malaria, will become an effective element in the toolbox against that disease and for the control of its transmission. Our support for vaccine development, particularly for neglected tropical diseases, is given primarily through the drugs for neglected diseases initiative and through Tropical Diseases Research at the WHO. Working collaboratively through those institutions, we harness the greatest expertise. Of course, as with all vaccines, we need proof that it really works in adults and children effectively and efficaciously. It is rare to find a vaccine that is an absolute solution rather than just a tool in the box.
Written Ministerial Statements
(12 years, 5 months ago)
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McKay Commission
(12 years, 5 months ago)
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The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
Since the establishment of the Commission examining the consequences of devolution for the House of Commons, a significant programme of work has been commenced, including multiple thorough oral evidence Sessions. This has inevitably led to increased time commitment of the Commissioners.
Sir Geoffrey Bowman’s own personal time commitments mean that he has reluctantly decided to step down from his position as a member of the McKay Commission.
The Government believe that there is still a good range and balance of expertise among the remaining panel of five Commissioners. Therefore they have no plans to appoint another Commissioner in place of Sir Geoffrey Bowman, but will continue with the remaining Commissioners.
Genetics and Insurance
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Health (Anne Milton)
I am announcing the outcome of a planned review of the concordat and moratorium on genetics and insurance. The concordat is an agreement between the Government and the Association of British Insurers (ABI) which provides for insurers’ use of predictive genetic test results and includes a voluntary code restricting the use of predictive genetic tests in life, critical illness and income protection insurance up to specified financial limits.
The concordat now includes clearer compliance and monitoring arrangements and outlines arrangements for assessing new applications by insurers to use the results of predictive genetic tests.
The Government have heard concerns from consumers regarding the potential uncertainty for those who decide to take a predictive genetic test now—under the moratorium—but who may only wish to take out insurance at a later date and who fear they may be caught out if the moratorium should suddenly end.
Therefore, to reassure consumers, the Government and the ABI have agreed to strengthen the agreement. The moratorium has already been extended until November 2017. The next planned review of the concordat will be in 2014. As a result of the current review, the ABI will not end the agreement outside of the review process or before the end of the moratorium. In addition, future reviews will be at least three years before any extended end date of the moratorium. Consumers can therefore be reassured that they will always have at least three years to prepare.
With the above provisions in place, the Government believe that the concordat provides a proportionate and effective framework which will help to maintain consumer confidence in the agreement while also ensuring that insurers have access to relevant information. It is an effective and successful example of industry self-regulation.
A copy of the “Concordat and Moratorium on Genetics and Insurance” has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.
National Fraud Authority (Annual Report and Accounts)
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
The National Fraud Authority (NFA) annual report and accounts 2011-12 has been laid before the House today and copies will be available in the Vote Office. They will be published shortly on the NFA’s pages of the Home Office website.
Aviation Security
(12 years, 5 months ago)
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The Secretary of State for Transport (Justine Greening)
Today I am publishing a summary of responses to the Government’s consultation on better regulation for aviation security, and announcing the Government’s decision on taking forward the initiative.
The consultation document “Better Regulation for Aviation Security” (http://assets.dft.gov.uk/consultations/dft-2011-21/dft-2011-21-consultation.pdf) set out proposals to modernise the regulatory regime for aviation security to bring it into line with better regulation principles, promote innovation and efficiency and ensure the best possible passenger experience. It proposed a move to an outcome focused risk based (OFRB) approach which would give operators the flexibility and responsibility to design security processes that deliver specified security outcomes, perhaps more focused towards the needs of their passengers, rather than requiring them, as at present, to comply with prescriptive security requirements. It builds on the successful and similar approach that now applies in aviation safety regulation.
The move to an OFRB approach would be managed through the introduction of a security management system (SeMS) developed and operated by each responsible organisation. A SeMS is an organised, systematic approach to managing security which embeds security management into the day-to-day activities of the organisation.
We will begin with a series of SeMS pilots, starting at London City airport once the Olympics have finished, in which industry operators will develop the SeMS approach and in so doing enhance their internal security cultures. The pilot at London City airport will be concerned only with the organisation and governance of security at the airport, not with the security checks themselves, which will continue to be managed and delivered in the current way.
Once these pilots have been concluded, and we are satisfied that the SeMS process is sufficiently robust and will deliver its intended benefits, we shall look to roll it out generally across the industry. This will provide a sound basis for the development and piloting of the OFRB approach.
The consultation ran from 14 July until 7 November 2011. Some 116 responses were received, from a range of organisations and individuals in the aviation industry as well as from interested bodies. I am grateful to them for the time they took in responding and for their informed and constructive comments.
I am pleased to say that there was overwhelming support for the proposed new approach. In publishing the consultation the Government acknowledged that these are complex proposals which require further development. The responses have been helpful in clarifying some of the issues involved including, importantly, the proposed timetable.
The consultation proposed that the new arrangements should be phased in over three years starting in April 2013. The Civil Aviation Bill, which is currently before Parliament, provides for various aviation security functions that are currently performed by the Department for Transport to be conferred on the Civil Aviation Authority (CAA). Subject to the date of Royal Assent, we are preparing for the CAA to take on those functions from April 2014. The OFRB proposals would represent a significant change in the approach to the regulation of aviation security. We have therefore decided that development and roll-out of SeMS is the right first step to take towards the roll-out of the OFRB approach. The CAA has been consulted and supports this decision. The conferring of functions on the CAA does not depend on this development being completed.
The summary report, with further information about our plans for implementing the new approach, will be available in the Libraries of both Houses and on the Department’s website.
Cycle Safety
(12 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Transport (Norman Baker)
My colleague the Under-Secretary of State for Transport, the hon. Member for Hemel Hempstead (Mike Penning), and I are announcing today a £15 million fund to improve safety for cyclists in England (outside London). This is in addition to the £15 million support for cycle safety improvements within London announced by the Government in March.
This fund will provide capital support to improve safety at junctions identified as having a record of road incidents that have resulted in cyclists being killed or seriously injured.
The Department for Transport will now work in partnership with local authorities and the cycling stakeholder forum—which brings together cycling groups, safety experts, local authorities and other interested parties—to identify and prioritise junctions. This process will use Department for Transport analysis of official accident data to highlight potential targets.
Further identification on how the money will be allocated will be announced in the autumn.
Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Lord Colwyn)
My Lords, welcome to the first day of the Grand Committee’s consideration of the Groceries Code Adjudicator Bill. If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Groceries Code Adjudicator Bill [HL]
(12 years, 5 months ago)
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Lord Browne of Ladyton
Lord Browne of Ladyton
My Lords, I apologise that I was unable to contribute to the Second Reading debate on this important piece of legislation as I was unavailable on that date. I have paid considerable attention to this for one very good reason: for 14 years or thereabouts, I represented the greatest concentration of dairy farmers in any constituency in Scotland. For all that time, I watched them battle, with great frustration and an unequal contracting position, as their livelihoods were strained. I have significant sympathy with the objectives of the Bill and, indeed, of the groceries code.
I hope that this amendment will not detain the Committee for very long; it is not my intention for that to happen, but we all know what happens to the best-laid plans of mice and men. In responding to the Second Reading debate, the Minister said:
“The Bill is one of the pilot plain English Bills that are intended to be easier for everyone to understand”.—[Official Report, 22/5/12; col. 761.]
As a fan of plain English, I believe that to a degree that objective has been achieved in this Bill. Noble Lords will be relieved to know that it is not my intention in the course of the Bill’s consideration to go through every individual part of it in order to see whether they meet the test.
The Bill begins with a statement which, in my view, is a challenge to the objective of plain English. This is an opportunity for the Committee to explore the thinking behind some of the decisions that have been made in the way in which the Bill has been drafted. It cannot be the case in the future that plain English Bills will be presented to Parliament and that no consideration will be given to the way in which they are drafted.
In 1998, famously, the late Donald Dewar began the Second Reading debate of the Scotland Bill by saying that,
“there shall be a Scottish Parliament”. —[Official Report, Commons, 12/1/98; col. 25.]
In this case, the Government have chosen, in similar circumstances, to say:
“There is to be a Groceries Code Adjudicator”.
The purpose of the amendment is merely to explore the thinking behind the construction of the verb that is deployed here. Candidly, I know many people who speak plain English—some plainer than others. I know of nobody who uses this construction in ordinary conversation. I know many people who say, “There will be a bus along in a minute” but very few who say, “There is to be a bus along in a minute”. If we are to meet the objective of plain English—language which is understandable and not unnecessarily legalistic—it has to meet at least two objectives. It has to relate to the plain language that speakers speak and not be unnecessarily grandiose. Secondly, it needs to meet the test of consistency. As a lawyer, I can see that at some time in the future, there will be some money to be made for lawyers in saying that there is a difference between the words that have been deployed at the beginning of this particular Bill and the words that have been deployed at the beginning of others. There was a reason behind this. Let us explore that reason.
There is seriousness to this point. It would be helpful to know why the Government chose this particular construction. It may have been presented by a draftsman and accepted by the Executive. I understand that, and I have been in that position, but why is this construction preferable to, “There will be a Groceries Code Adjudicator”, or indeed, “There shall be a Groceries Code Adjudicator”?
The Earl of Sandwich
I hope the Minister and also the noble Lord, Lord Browne, will forgive my intervention in the early part of the Bill.
I want to make a slightly more general point, since we are close to the Title of the Bill. There is something missing in the early part of the Bill: that is, the link with the original Groceries Supply Code of Practice. I know that this will come up again, but I want to raise it right at the beginning. The Competition Commission uses the important phrase about stopping,
“the transfer of excessive risks and unexpected costs”,
by retailers on suppliers, and encouraging compliance. To make that point, I have put down an amendment to Clause 15. I apologise that I missed putting an amendment down to the Long Title. I hope the Minister will find a few minutes, or a few sentences, to answer that point somewhere in the course of the debate.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, we are off to a marvellous start. This is a great level to start at—whether we are doing something in plain English or not. I was in on the beginning of the Plain English Campaign, as, I think, was the Office of Fair Trading and the noble Lord, Lord Borrie. I was rather hoping we would get a crystal award for how we have written this Bill in plain English, but I can see I am going to have to work very hard during this Committee stage to reassure everyone that we are trying to be as clear as possible.
I fully appreciate the sentiment behind this amendment. The Government have committed to writing the Bill in plain English, and we strive to apply this principle to all communication as the Bill goes forward. However, in this case the amendment would change the meaning of the clause. “There will be” is a prediction, whereas “There is to be” indicates that the Bill establishes the Groceries Code Adjudicator. I hope that that clarifies the point for the noble Lord.
I will answer the second question when we come to the appropriate amendment, if that is okay. I thank the noble Earl for giving me notice.
Baroness Wilcox
It might. I wonder if the noble Lord, Lord Browne, would be kind enough to let me take this away and return. I ask him to withdraw his amendment.
Lord Browne of Ladyton
My Lords, I will be more than content to withdraw my amendment, and to go away and reflect on the response of the noble Baroness to my rather small point. I am surprised, I have to say, at the nature of the response, given that I know that at least one piece of legislation has been passed by this House which includes the phrase “there shall be” in its first sentence. I suspect that there are many others, but I shall have to go and do some research now. If it was a prediction that the legislation fulfilled, perhaps that is the proper construction; I am not entirely sure. However, we should not detain the Committee with this point, given that we all need to go away and reflect on it. I am happy to withdraw my amendment, but I give the noble Baroness notice that I am not entirely persuaded by the response she deployed. This is not the most important issue that the Committee will consider this afternoon, but it is important that there should be consistency in legislation. I beg leave to withdraw the amendment.
Viscount Eccles
“The Groceries (Supply Chain Practices) Market Investigation Order 2009
The Office of Fair Trading is to continue to monitor compliance with The Groceries (Supply Chain Practices) Market Investigation Order 2009.”
Viscount Eccles
My Lords, I start by thanking my noble friend for letters that have been deposited in the Library and for the dialogue that we have had. I start with two regrets. The House of Commons Business, Innovation and Skills Committee, which put a lot of work into the Bill, considered whether there should be a review of how the present regime was working. On balance—and it was only on balance—it decided not to ask for that review. That was a pity because a good deal of time has gone by since the Competition Commission started its inquiry in 2006, and the order that is to a large extent the subject of the Bill became effective on 4 February 2010.
My second regret is that we have not had a briefing from the Office of Fair Trading, although I asked for one. To be precise, I asked if it thought that the monitoring of the order was going okay and whether it had any concerns. It said that it had done—I think—nine out of 10 compliance reports but that it would take some time to analyse them. Those reports are on the second full year of operation of the order. There has now been more than 24 months of experience of how the GSCOP is working. Perhaps I might suggest to my noble friend that we should have a report from the OFT before Report. The OFT has had this responsibility for more than 24 months and we should know how it thinks the scheme is going.
That led me to believe that the case had not fully been made for the changes proposed in this unusual Bill. As I will explain, I am not against a lot of its intentions, but they are not being sensibly carried through. There is a case for leaving the present regime in place because, as far as I can tell, it is working. All that I will do from now on is probe to find out whether there is a case for what is proposed in the Bill. In so doing, I will explain that in this enormous group of amendments the only thing that really matters is the new clause. If that were to be accepted, Schedule 1 would fall away almost automatically. The rest of the amendments, on which the Public Bill Office kindly advised me, are technical in the sense that one has to replace “adjudicator” with “Office of Fair Trading” if the regime is to stay as it is. Of course, I shall have to be pretty prompt in saying, “Not moved” all the way through the proceedings. I hope that that will at least make sure that I am awake.
After the consequential point, I have to enter a caveat. I have not studied the OFT’s existing powers. Someone, probably my noble friend on advice from the Bill team, needs to say that, if we go down that road, we will not need this or that clause because the OFT already has those powers. An example is the collection of information. I am aware that if my scheme is accepted, there would be other consequential amendments.
At Second Reading I referred to the minority opinion in the commission’s report put forward by Professor Bruce Lyons. This is set out in detail in paragraph 11.347. He supported the finding of the adverse effect on competition and went on to support very strongly a strengthened code of practice. I am sure that the contents of the present code of practice will be entirely acceptable to Professor Lyons, who went on to say that the OFT was “well placed” to monitor adherence to it because competition was at the heart of its role and its history. I agree with that. If the passing on of excessive risk and unexpected costs is not stopped, it is perfectly sensible to come to the conclusion that there may be an adverse effect on competition. The strengthened code of practice in front of us is a sensible document and the OFT is well placed to monitor adherence to it.
Good progress has been made. Now that we are coming to the completion of the second round of compliance reports, it is clear that disputes are regularly being settled. I would like to be guided by someone if I am wrong, but I am not aware that any dispute has yet been referred to arbitration under the code. As we all know, there is a full description in paragraph 11 of Part 5 of the code of practice of how the dispute resolution procedure should lead to arbitration.
Lord Knight of Weymouth
I am most grateful to the noble Viscount for giving way. Has he seen the briefing that has been provided by the National Farmers’ Union, particularly the second point in the section on myths and misconceptions? It states:
“Suppliers do already have the right to independent arbitration under the code. However, this requires suppliers to make the details of their grievance known to the retailer they believe has breached the code. The Competition Commission explicitly referred to the climate of fear in this sector preventing small suppliers from complaining about unfair treatment. The current system of arbitration clearly makes no provision for this serious problem”.
Viscount Eccles
My Lords, I am grateful for that intervention, and no doubt we shall come on to discuss the climate of fear. The concern of the National Farmers’ Union is a pretty difficult issue because very few farmers are direct suppliers to supermarkets and so they are not covered by the code. Indeed, the detriments identified by Professor Lyons, to which I shall come in a moment, include the extended chain of supply to the supermarkets. Perhaps I should say at this point that I owned some cows for a while, but maybe it is not an interest I need to declare on this occasion. It is a difficult issue and we shall come on to it. I do not accept that the problem of indirect suppliers and the question of arbitration so torpedoes the present regime that it is necessary to change it. It may be necessary to do so and I am here to be persuaded, but at the moment I would not change it.
Of course, with regard to farmers, I think that we are going to talk primarily about milk and cheese production. Some 53% of milk finds its way into fresh milk, 27% into cheese and the remaining 20% into manufactured products. While I think we will be talking about that, I do not believe it quite lies within the remit of where Professor Lyons was finding detriments, except on the point of indirect supply.
The first detriment that Professor Lyons worried about was that he thought that the third-party intervention—however that was structured, but at the time the description was “ombudsman”—would be counterproductive. I suppose that was based on “two’s company and three’s a crowd”, or some such version of it. He thought that independent arbitration with the addition of monitoring by the Office of Fair Trading was a better option than the intervention of a third party for the interests of the industry.
Secondly, Professor Lyons worried very much about anonymity. He did not believe that it could be maintained and he cited the German experience. I have no doubt that we will discuss anonymity in more depth as we go along. Thirdly, he thought that justifiable investigations had a very limited potential because he did not see the third party intervening in disputes or discussions between supermarkets and suppliers about a particular contract. Her Majesty’s Government do not think that that is the way that the adjudicator should work. Professor Lyons thought that finding justifiable investigations would be quite difficult because of the length of the supply chain and the lack of ability to look into actual disputes. I am sure that we will want to discuss that more.
Next, Professor Lyons thought that any third party—an ombudsman or now an adjudicator—could be seen to be in support of suppliers, and of them throughout the supply chain. He thought that that itself could become anti-competitive. He saw difficultly in dealing with complaints from suppliers about buyers and at the same time achieving benefits for the public, particularly long-term ones. The successful outcome of intervening in a contract between suppliers and supermarkets would presumably be that the suppliers got better terms. It was difficult to link that to a benefit to the public—that link was pretty weak.
Professor Lyons also saw any third party intervening in this market as being subject to external pressures and to the almost inevitable regulatory creep. Regulatory creep has been a feature of our lives in recent years, as noble Lords have seen in the amendments to secondary legislation which have tended to make legislation more complicated and severe, not lighter or less severe. Finally, Professor Lyons said that this would be a much more expensive system than leaving things as they are.
Quite a lot of these points have been discussed but I submit that they have not really been properly dealt with and therefore, as I am probing and as we go through, I am sure that these subjects will recur. It will be interesting to see where the argument leads us. I very much agree with Professor Lyons. Sometimes, minorities can turn out to be right. His minority report was very good and absolutely on the ball. I am still left with the question: why have we got this Bill? I beg to move.
Lord Borrie
My Lords, perhaps I may intervene at this point. Most Members of the Committee know that I had a connection with the OFT—the Office of Fair Trading—but retired from it 20 years ago, after many years as its director. I no longer have any position of that kind and therefore do not have anything formally to declare.
However, references to the Office of Fair Trading by the noble Viscount led me to consider whether there was a great deal of point in establishing—for a fairly narrow field of anti-competitive complaints from farmers and others who complain about the power of supermarkets—a specially appointed new body created as a corporate sole, with all the debates, complications and so on that are involved in doing so. The subject of the Bill covers a fairly narrow sphere. It does not deal with all complaints against supermarkets, but only those connected with groceries. It does not even apply to all supermarkets, but only the 10 that are especially designated.
There are surely many reasons for thinking that there may not be an adequacy of work for the groceries adjudicator to justify the appointment of an adjudicator and, as one of the schedules states, a deputy adjudicator and all the paraphernalia of an office—although I admit that it is stated that back-office facilities may be provided by the Office of Fair Trading. If back-office facilities can be provided by the Office of Fair Trading, why are these powers not simply given to the OFT to monitor, to check, to listen to complaints and if necessary push those complaints further to the Competition Commission, and so on?
The points made by the noble Viscount are quite convincing but, as the phrase goes, we are where we are. We have given the Bill a Second Reading. We are now at the Committee stage. We can go backwards, of course, but there would then be an emptiness and nothing immediately to take its place because the Office of Fair Trading does not have all the different powers intended for the adjudicator under the Bill. I therefore return to the point that the Bill in front of us will set up a particular body—the groceries code adjudicator—and we have details in front of us to elaborate, consider and change, as a normal Committee does. In summary, it is not worth while continuing with the fundamental points made by the noble Viscount, although there is a lot of value and a lot of point in what he said. However, that would represent a backward step and we would, in effect, be replacing entirely the contents of the Bill with something else.
Lord Razzall
My Lords, perhaps I may respond to the remarks made by the noble Lord, Lord Borrie, by saying that I entirely agree with him. However, given the preliminary comments by noble Lords, one thing ought not to be forgotten—we are not starting here from scratch. This proposal emanated from the previous Government and has been heavily consulted on across all relevant parties. I know that your Lordships tend to take the view that what was in party manifestos does not necessarily bind your Lordships, but all three political parties included the creation of the adjudicator in their manifestos, and we should have that on the record before the debate goes a lot further.
Lord Curry of Kirkharle
My Lords, I very much support the Bill. I should like to pick up on a phrase used by the noble Viscount, Lord Eccles. He said that the current code appears to be working. I should declare that I am a farmer in Northumberland and I do not produce milk. I was also responsible for a report in 2002 in which we recommended that the OFT should monitor the recently introduced voluntary code, which later became the GSCOP.
The OFT has been monitoring the code and, as far as it is concerned, it may well be working because it has not identified any serious abuses of power that could not be resolved by negotiation. The problem is that there are many concerns about abuses of power by suppliers that have not been brought to the notice of the OFT. Many companies in the supply chain are fearful of the consequences of drawing attention to what they believe is a trading relationship which may be terminated if they are open and transparent about their concerns. From the OFT’s point of view, the code appears to be working. For many within the supply chain it is not working, which is why this Bill is so necessary.
Lord Knight of Weymouth
My Lords, I am sure that we are all extremely grateful to the noble Viscount, Lord Eccles, for giving us the opportunity to test at this early stage some of the principles behind establishing an adjudicator. He used the phrase, “As far as I can tell, it is working.”. The core of this debate is whether having just the rules of the game in place is enough or whether we need a referee alongside the rules at this stage.
My strong view is that we need a referee now in order to enforce the rules and to make sure that everyone who is a part of this market and supply chain understands that if they break the rules, there will be consequences. In preparing for Committee stage I have spoken to a number of suppliers to supermarkets and to people in the supermarket supply chain. The anecdotal evidence I have received is that there are still some considerable problems. If there is a belief that it is working, that may be correct technically in terms of the OFT’s analysis, as we have just heard from the noble Lord, Lord Curry, but the reality for people who are trying to operate within this market is that it is not.
As regards notice periods, in some aspects of this business there are no contracts. Thus, the supermarkets often give very short notice—for example, one week for the complete stopping of ordering goods. A minimum of three months’ notice should be given for changes. There are short-term changes to forecasts. The current system is that suppliers get the forecast from the retailer, which is not binding, and then receive the order generally on the day of dispatch. The supermarkets then charge a penalty for not supplying the volumes on the order—shorting—even if they are massively different from the forecast. For example, the sale of salads on a hot weekend can go up fourfold or the supermarket can choose to do a promotion and not tell the supplier. If the supplier fails to supply the larger volume, it could get a penalty charge.
On the flip side, if a supermarket decides to cut back its orders massively, the supplier can be left with big stocks to write off because, often, these goods are on the supermarket’s own label and cannot be sold elsewhere. Consequently, the supplier loses out. I see the noble Viscount, Lord Eccles, wants to intervene, which will be a pleasure.
Viscount Eccles
Perhaps I may ask the noble Lord a short question. What part does he think that the public plays in the salad sales on a hot weekend?
Lord Knight of Weymouth
I am grateful to the noble Viscount for his intervention. Clearly, the public are the consumers. I am certainly aware that not every supermarket is guilty of abusing its power. The competition between supermarkets generally has been very good for consumers but that does not mean that they should continue to be able to use that power to exploit their relationship with suppliers.
To give another example, I heard about a company which was developing an innovative low-sugar jam. It took the product to a very large supermarket because, having invested in developing this new product, it needed to get the volume of sales that could be achieved only by using one of the large supermarkets. The supermarket was very interested and said, “Leave it with us. We will give you a call.”. It gave the company a call and said, “Do come in. We want to talk to you about the low-sugar jam that you showed us.”. The supermarket called the company in just to put on the table its own product which it had developed in response to that company’s innovation. Therefore, that investment was a loss for that innovator. Similar stories of abuses of market power by some supermarkets—not all of them—are legion. I referred to the helpful briefing from the National Farmers’ Union. We have had similarly helpful briefings from the Country Land and Business Association and the Federation of Small Businesses. All were extremely supportive of the establishment of this adjudicator because they agree that we need a referee.
I know that we will go on to talk about some of these things throughout the proceedings of the Committee. In response to my intervention, the noble Viscount, Lord Eccles, said that not many farmers supply retailers directly. The NFU tells us that some do and, what is more, the Competition Commission has identified an adverse affect on competition whereby grocery retailers pass unexpected costs and excessive risks down the supply chain. Ultimately, those risks, in the form of extra costs, are passed on to producers, even when they do not deal directly with retailers.
Lord Howard of Rising
I must declare an interest as I have a tenant who is a direct supplier to a supermarket. The examples that the noble Lord, Lord Knight, gives us are all those of vested interests that would like to have better commercial arrangements. There is nothing whatever to stop any farmer saying to his supermarket, “I do not like your terms of trade and I will not supply you”.
Lord Knight of Weymouth
It is very helpful to have the contribution of the noble Lord, Lord Howard, because he has a particular view that we can leave this all to the market, which is operating perfectly. I disagree. I remember from my economics A-level that you can have perfect markets but you can also have imperfect ones and powerful players within markets who abuse their market position. I believe—as did the Competition Commission in its analysis—that that is the case here. That is where the noble Lord and I will differ as we debate these things. In the end, those suppliers will struggle to find another market. Often, they have worked with a supermarket and built up a relationship where they have been persuaded that it is worth investing in, for example, growing a product. That needs at least a 12-month timeline. The supplier or grower of that product takes on a huge risk because they have invested 12 months in advance but the contract will only give them at best three months’ notice of cancellation. They can just be cancelled on and that happens all the time. That is a difficult aspect of that market relationship.
I give another example: I know of an innovator of a new chocolate product using pomegranate dust from Afghanistan. That innovator had to invest significantly in developing the product. It is a fine product but the innovator has to recoup the cost of that investment and needs to get the product out in volumes that are only achievable using large supermarkets. The response from the supermarkets is, “Yes, we like the product. If you want us to stock it then you need to pay us to take it on. If you want a decent shelf position, you need to pay us some more money. If you want point-of-sale merchandising, you need to pay us for that as well”. That individual needs to acquire a huge amount of investment to be able to innovate. In the end, a healthy market allows new players to come into it, to innovate and introduce new supply. That is not happening very easily in this particular market because of that power relationship and the structure of how it is set up. I strongly urge the noble Viscount to withdraw his amendment and strongly urge the Committee to support proceeding with the establishment of the adjudicator.
Baroness Wilcox
My Lords, this group of amendments goes to the very heart of the Bill. It concerns whether or not there should even be a groceries code adjudicator, or whether oversight of the code should continue to rest with the Office of Fair Trading. It is therefore only fitting that we should debate it early on, and I thank the noble Viscount, Lord Eccles, for raising it. I also thank him for allowing us to discuss all these amendments in one go. I also thank the noble Lords, Lord Borrie, Lord Razzall, Lord Curry, Lord Knight and Lord Howard, for their contributions to this debate.
I will not repeat all that I said at Second Reading. I know that the majority of us here support this Bill. Suffice it to say that, in its 2008 report on the supply of groceries, the Competition Commission found that the buying power of large supermarkets was potentially a cause for concern. It found that retailers were transferring excessive risks or unexpected costs to their suppliers, a practice that was likely to lessen suppliers’ incentives to invest and innovate, and that this would operate to the long-term detriment of consumers.
The Competition Commission therefore made an order that required large retailers to incorporate the Groceries Supply Code of Practice into their contracts with suppliers. It also recommended that an independent groceries code adjudicator be established to enforce the code and ensure that it was effective.
The adverse effect on consumers is not something expected to follow immediately and directly from a specific action by a retailer. Rather, the transfer of excessive risk or unexpected costs lessens incentives for innovation and investment, and the reduction in innovation and investment is what causes consumers harm.
This is a long-term effect and not one that can easily be measured—and not one that we should stop to measure before we have even implemented the measures recommended by the Competition Commission. I ask noble Lords to note that in the pre-legislative scrutiny the BIS Select Committee explicitly considered whether another review should be carried out, but concluded that we should instead implement the recommendations of the Competition Commission as swiftly as possible.
On the point from the noble Viscount, Lord Eccles, about the report from the Office of Fair Trading, I will pass his concerns to the OFT. I remind noble Lords that the OFT operates independently of Ministers, but I will pass that on and see if we can get some result for the noble Viscount. He has referred to the fact that the members of the Competition Commission were not unanimous in their view that an independent adjudicator should be established. He cited passages from the report which set out that minority opinion. He is right that one member of the panel did not agree with the rest, and I recognise that not everyone thinks the adjudicator is necessary. However, five out of six of the members did consider that an independent adjudicator should be set up. They concluded that an adjudicator is essential for the effective monitoring and enforcement of the GSCOP. That is why the Government are committed to establishing an independent adjudicator.
The amendments in the name of the noble Viscount, Lord Eccles, would give the powers in this Bill to the Office of Fair Trading, not to an independent adjudicator. However, the Competition Commission recommended an independent adjudicator. There are clear advantages to establishing an independent, dedicated office with industry expertise, which can build working relationships with supplier trade associations and retailers, monitor compliance and promote best practice. The Office of Fair Trading has told us that it fully supports the argument that the GCA should be an independent body, separate from the OFT or any other organisation. Furthermore, on a practical point, it would not be appropriate to give these powers to the OFT while the broader competition regime is undergoing so much reform.
The Government believe that the best way to address the issues in the groceries market identified by the Competition Commission is to establish an independent groceries code adjudicator to enforce the groceries code, not to give more powers to the Office of Fair Trading. This is also the view of the BIS and EFRA Select Committees, of the Office of Fair Trading and of five out of the six panel members of the Competition Commission investigation.
I have listened to all the views that have been expressed and I thank in particular the noble Viscount, Lord Eccles, for taking the time and trouble to explain his differences so clearly. However, at this stage, I would ask him to withdraw his amendment.
Viscount Eccles
My Lords, I am grateful to my noble friend and to all noble Lords who have taken part in this short debate. My father wrote a book called Half-Way to Faith. The noble Lord, Lord Borrie, is halfway there, so we have plenty of time to persuade him to come the rest of the distance.
The climate of fear was mentioned just once by the Competition Commission in its report. If people can find it referred to more often, I would be grateful to know about it. It was not mentioned in the summary or in the findings. I am quite sceptical about it, but that is not really the point. The point is that if it is true, the adjudicator will make it worse. If the supermarkets have the power to create all this fear and they find out that a supplier has approached the adjudicator or that a trade association is doing so on behalf of a group of suppliers, I am afraid that the messages will be a lot sterner than they are supposed to be under a climate of fear. I am sceptical about it because I do not see any justification for a climate of fear for Waitrose, for goodness’ sake. Indeed, I do not see any justification for any of the leading quoted British supermarkets. Their shares are at the bottom of their 12-month spread and they are all in trouble with their shareholders. There is absolutely no reason why they would want to make their lives even more difficult. They will want to do the best they possibly can with their suppliers.
Lord Curry of Kirkharle
Perhaps I may intervene to say something I should have said earlier. I chair the Leckford Estate for Waitrose, so I have an interest in Waitrose which, uniquely, supports the code and is very much in favour of it. I have certainly never used the phrase, “a climate of fear”, and I would not do so. However, I am deeply concerned about trust and confidence within the food supply chain, and I believe that this is an important factor in creating more confidence.
Viscount Eccles
I am grateful to the noble Lord for his intervention, but I doubt whether a state-appointed sole corporation will generate more confidence.
There are all sorts of problems. I used to supply power steering pump casings to Delphi in Strasbourg on a schedule. One week it would be three container loads and the next week it would be one, then suddenly in the middle of the week it would be four, but the following week it would be none. That is the way that just-in-time supply works. There is no escape from it, and it does not matter whether it is the supply of lettuces or steering pump housings, where we were the only people who made them for Delphi.
Lord Knight of Weymouth
For how long did the noble Viscount’s steering pump parts last if he had to store them? What was their shelf life?
Viscount Eccles
We did not know how soon Delphi would change its designs because there was a range of power steering pumps. Let me assure the noble Lord that there was no question of storing them. Delphi wanted them to come in and be fitted straight on to the machines. For many years I was a supplier to Marks and Spencer. The schedules changed every two or three days. That is the way of the interaction between suppliers and the retail market, particularly for anything that has a short shelf life. The noble Lord is quite right, if it has a longer shelf life, one can be a little more relaxed.
I do not therefore see that the problems raised by the noble Lord will come at all easily within the purview of the adjudicator. We shall shortly consider the investigations clause, and I am not at all confident, even if they do come within the adjudicator’s purview, that any substantial progress will be made from the point of view of those who want the supplier’s life made easier and the returns made greater. I do not see it working.
My noble friend is quite right to say that the Competition Commission stated that if there was no satisfactory agreement with the supermarkets it would be necessary to introduce an ombudsman. We should note that we are actually proposing to introduce something quite different to an ombudsman, and we should not therefore pray in aid the Competition Commission without any qualification.
I should add that the decision was, I suppose, made in 2007—it takes quite a long time for these decisions to get into a final published report—which is almost five years ago and the circumstances are different. The high street is under tremendous pressure that is much greater than it was when the report was written. The shares on the London Stock Exchange of the four British-based supermarkets on the list are all languishing near the bottom of their 12-month range.
I therefore feel that anything we do to erode the highly successful competitive model of the supermarkets and their suppliers—including, I may say, Nestlé, Kellogg’s, and Unilever and its subsidiaries—is not going to serve the public well. However, at this stage, and I may come back to this matter—
Lord Razzall
Before the noble Viscount sits down, is he prepared to address my point that the proposal was in all three political parties’ manifestos? He obviously knows better than all three political parties.
Viscount Eccles
Luckily, I am just a vulnerable ancient Conservative Back-Bencher who does not feel in any way committed to the three parties’ manifestos. I should also point out that they were published in 2010 and we are now in 2012, and there is always time for amendment in life. I am just hoping that that still applies. In the mean time, I have much pleasure in withdrawing my amendment.
Lord Knight of Weymouth
“The Groceries Supply Order
(1) The Secretary of State must make an order to establish the Groceries Supply Order by statutory instrument.
(2) The Secretary of State shall commission a review into the effectiveness of the Groceries Code to report no later than two years following the commencement of this Act.
(3) An order may not be made under subsection (1) until a review under subsection (2) is completed.
(4) An order made under subsection (1) is subject to the approval of both Houses of Parliament.”
Lord Knight of Weymouth
My Lords, many of the debates we have had on the Bill, and will no doubt continue to have, are of limited relevance to the legislation before us because they have been about the market practices of the major retailers.
I am in many ways grateful that we have been able to have the debate initiated by the noble Viscount, Lord Eccles, to get some of those matters off our chest in a way that is relevant. However, those debates are on the groceries code itself, not the adjudicator’s role as referee to that code. Yet, despite sitting at the heart of the debate, the code has never been subject to any formal parliamentary scrutiny. If noble Lords wish to blame the previous Government who introduced the code for doing it that way, that is fair enough. However, in a slight echo of the noble Viscount, we are where we are and my job relates to 2012, rather than 2010.
It is worth referring the Committee to the Delegated Powers and Regulatory Reform Committee’s first report of this Session which considered the Bill. The first paragraph states:
“This is an unusual Bill, for its purpose is to provide for enforcement of a Code which no Act of Parliament requires to exist, and which may be altered or revoked without any Parliamentary involvement. The Groceries Code is a Code of Practice set out in Schedule 1 to the Groceries (Supply Chain Practices) Market Investigation Order 2009 which was made by the Competition Commission. The Order is not a statutory instrument and is not subject to a Parliamentary procedure”.
The committee goes on to say that that informed its consideration of the Bill.
The committee is right to point out that it is a bit odd that primary legislation is being used to set up a referee for something that does not exist in any kind of parliamentary statute. In part, what I seek to do with the new clause is to right that. The code is not a statutory instrument but a function, as we have heard, of the Competition Commission’s power under the Enterprise Act 2002. While the Act was thoroughly scrutinised by Parliament, the groceries code had no scrutiny by this House. We in the Lords take extremely seriously our responsibilities to scrutinise secondary legislation. While it is right that the Competition Commission has powers to correct the market, surely there is merit in allowing proper oversight and scrutiny of the remedy proposed. It is fundamentally odd that while Parliament is entitled to debate and scrutinise the function and powers of the referee, we are denied the opportunity to give the same scrutiny to the rulebook itself. Amendment 3 introduces a new clause to establish the code as a statutory instrument of Parliament.
I do not want in any way to delay the passing of the Bill and the establishment of the adjudicator. I do not propose that we pause the whole process in order to introduce a new statutory code and then set up an adjudicator because that would delay things considerably. The Committee should consider allowing the adjudicator to go ahead with the established code that came into effect in 2010, but at the same time requiring the Secretary of State to commission a review into the effectiveness of the existing code and the operation of the whole supply chain. When the Competition Commission was commissioned, it was asked to look only at direct supply into supermarkets; it was not asked to look at the operation of the whole supply chain. We now hear a lot of complaint about the operation of intermediaries. What I propose would allow a review to look at how that is working and to see whether any amendment of the code would then be helpful, which could then be introduced to Parliament for approval.
I am extremely grateful to the Minister for her letter of 19 June explaining the government amendments that we will discuss later. The main amendment is to Clause 15. I am also extremely grateful to the many Members of your Lordships’ House who thought that the letter had been misdirected to them and chose to send on their copy to me. I have many copies of this letter; clearly they did not see that it was being copied to all Peers. Never mind—it was all entertaining stuff. In the letter, the Minister clarifies that through the amendment the groceries supply order will provide that each designated retailer will ensure that its subsidiaries comply with the order. Therefore, subsidiaries that deal with suppliers should incorporate the code in their supply agreements and then comply with it. That is extremely helpful because it clarifies for us that the code as it is written—and as the adjudicator will then referee it—operates down the supply chain. That is certainly of comfort to those of us who are concerned about that.
Nevertheless, having a review at this point—two years in—that looks at the whole supply chain and makes a judgment about whether some improvement to the code can be made would be helpful so that we can then have a statutory code. That is the basis of the amendment. Placing it in statute is a good opportunity for parliamentary scrutiny and would provide a mechanism for it then to be updated and to remain a living instrument, which is something that the National Farmers Union, for example, is asking for. It would then be capable of responding to changing market forces and would be as durable as the adjudicator whom the Bill sets up in primary legislation to referee it. I beg to move.
Viscount Eccles
Very briefly, I am sure that the noble Lord recognises that in doing this he goes far beyond the recommendations of the Competition Commission. The one thing that the commission did not do was go up the supply chain, as I would call it, but never mind. It declined to do that. The code is between direct suppliers—although I recognise that the Bill includes something about indirect suppliers—and supermarkets. It is based on the supply agreements between the supermarkets and those suppliers. If we go down the road that the noble Lord indicated, we are in for regulatory creep, exactly as the professor predicted.
Lord Grantchester
I support my Front Bench colleague at this stage. As at Second Reading, I declare my interests as a dairy farmer in Cheshire and in having been involved in dairy supply-chains both with farmer co-ops and on behalf of the Royal Association of British Dairy Farmers over many years. In support of the comments made in response to the previous amendment of the noble Viscount, Lord Eccles, there is an extremely delicate relationship between a supplier and the supermarket, and it takes quite some managing. It is not necessarily a question of fear. I am often reminded of the words in the Bible that the lion will lie down with the lamb. When I was in with the supermarkets, I always wanted to make sure that I was a lion but I never quite achieved that status. It is an extremely delicate relationship.
The noble Viscount said that the groceries code has been in existence for two years. It is eminently sensible that we complete this legislation to get the adjudicator in place and then, two years after that, have the review that the noble Viscount looked for. That would be an excellent time to review whether the code should be extended further up the supply chain to the suppliers of suppliers: the consolidators and the processors that have that direct relationship. I am sure that we will then find that there are lots of parts that the code does not cover, to which my noble friend from the Front Bench has alluded already. For example, I point to the practice of offsetting invoices from the supermarkets to suppliers and the charges that they think are quite acceptable to deduct from the suppliers. Those lead to long, detailed arguments and a very awkward time between a supplier and the supermarket. I am sure that putting that review on a statutory basis would, in two years’ time, allow Parliament—it would be wider than just the Competition Commission—to be consulted on the reach of the GSCOP code.
Baroness Wilcox
The noble Lord, Lord Knight, has brought us an interesting amendment, supported by his colleague, the noble Lord, Lord Grantchester. It is perhaps not fully aligned with the subject of the Bill, which is the creation of a groceries code adjudicator. I reassure noble Lords that the groceries code, contained within the Groceries Supply Code of Practice Order 2010, already has full statutory force and the requirement to incorporate it in their supply agreements is binding upon all large supermarket retailers. There is therefore no need for the Secretary of State to establish it by statutory instrument.
Furthermore, the review of the groceries code is the responsibility of the Office of Fair Trading not the Secretary of State. If the OFT considers that a change in the code or the order is needed, it can advise the Competition Commission accordingly. As the code concerns the remedying of practices that are concerned with competition, it is right that oversight of the code rests with the independent competition authorities, which have the necessary expertise and can make decisions based on objective economic criteria.
The noble Lord, Lord Knight, also asked whether it is right that the Competition Commission can make such orders without recourse to Parliament. Noble Lords who wish to discuss the powers of the competition authorities will have to wait until the Enterprise and Regulatory Reform Bill enters this House. However, the Government consider it entirely appropriate for the Competition Commission to make remedies based on the findings of its investigations.
Lord Knight of Weymouth
I am grateful to the noble Baroness on that matter but I am struggling a little. Fundamental to the amendment is whether or not Parliament should have a role in scrutinising the Groceries Supply Code of Practice, which the adjudicator will referee. If the noble Baroness is saying that we will have to wait before we find out how Parliament will then scrutinise the code, we are in a difficult position to legislate. Have I misunderstood?
Baroness Wilcox
No, I do not suppose for one minute that the noble Lord has misunderstood, because I spoke quite slowly and clearly. As to whether it is a question I can answer now, I do not know. Obviously, the noble Lord may feel that the Bill is going to stop at this very moment if I do not answer that question, but perhaps I may have a conversation with him on this matter before we come back on Thursday. As I understand it, the powers of the competition authorities are going to be debated under the Enterprise and Regulatory Reform Bill when it enters this House. Perhaps I may leave it at that for the moment.
I move on to another question on whether the code will apply further up the supply chain. I should emphasise that government amendments that we will discuss later do not extend the code to intermediaries. The amendments ensure that only subsidiaries of the 10 retailers are covered, as they are in the code. I hope that that is clear when noble Lords read it tomorrow in Hansard. It might be a little more cogent. I have no more help from behind me, so perhaps I may ask the noble Lord to withdraw his amendment at this stage.
Lord Knight of Weymouth
I am kind of grateful to the Minister for that. The noble Viscount, Lord Eccles, was in many ways right to say that I sought to go beyond where the Competition Commission had reached and was looking for an opportunity to debate this issue. We are establishing the adjudicator who will referee the code. Plenty of people who have debated the Bill want to ensure that the code is a living code and is regularly reviewed so that changes in market conditions can be accounted for. There are concerns about intermediaries and we are looking for ways in which we might think about whether the code could be extended to cover them. That is worthy of consideration. In response to what the Minister said, I am sure that if the Secretary of State were to ask the Competition Commission or the Office of Fair Trading to have a look at the operation of the whole supply chain, they would do so. I am sure that if the Secretary of State were to then ask them, as a result of that review, to consider whether or not the code should be updated, they would be happy to do so. That is the way things work in government. If the Secretary of State asks these people to do things, there is a very good chance that they will give that serious consideration and try and meet the Minister’s wishes.
I understand what the noble Baroness was saying regarding the Enterprise and Regulatory Reform Bill. In the end, I understand that there is nothing technically wrong with the code as it is written. The powers that were used properly to set it up remain until they are changed, subject to Parliament, by the Enterprise and Regulatory Reform Bill. I understand that they are not going to know how that works. For now, I am content for this Bill to be debated in the context of the current environment rather than some speculative future environment that may or may not come about, subject to parliamentary process. We can probably park that convoluted little debate in which we managed to find ourselves.
The fundamental thing remains: if this is not the right mechanism for keeping the code as a living code and something that Parliament can scrutinise, I am relaxed about that but would love for the Government to come back with a way for this Committee and your Lordships’ House to amend the Bill so that we can keep it a living code and, at points, consider whether or not it is up to date. With that, I beg leave to withdraw the amendment.
Lord Browne of Ladyton
Lord Browne of Ladyton
My Lords, the purpose of this group of amendments is twofold. It is, first, to explore the nature of the office that is to be created by this legislation and, secondly, to make an important constitutional point about the appropriateness of appointing an individual to an office of this nature in the current constitutional environment as set out in the Bill.
I start my argument by referring to the comments some minutes ago of the noble Viscount, Lord Eccles, when he referred to the recommendation of the Competition Commission for the appointment of an ombudsman. He said that this post was something quite different from an ombudsman, and I respectfully agree with him. I hesitate to do this, but I point out to my noble friend Lord Knight that it is not helpful to refer to this office as the office of a referee. It is something quite different from a referee, too. In fact, when one researches and considers carefully the powers that are being vested in the office of the adjudicator of the groceries code—I direct noble Lords’ attention to the Second Reading debate of 22 May at column 275 of the Official Report, when the noble Baroness set out quite extensively the roles of the adjudicator—one finds that at the heart of the many roles that the adjudicator will have, over and above all those other roles, is the role of investigator, arbitrator and the imposer of penalties. I dare say that if I were to ask most people with experience of life, “In whom do we invest those roles?”, they would say, “We invest those roles in a judge”. That is probably why this particular office has been called the office of the adjudicator. Respectfully, this is, if not a judicial position, a quasi-judicial position. There is no doubt that we are vesting in an individual the sorts of powers that we would expect a judge or magistrate, somebody who investigated and adjudicated on conflicts, to have. In normal parlance, such a person exercises a judicial role.
Since 3 April 2006, as a consequence of the Constitutional Reform Act 2005, all persons appointed to judicial roles in England and Wales—all those listed in Schedule 14 to that Act—are selected for them, if not appointed to them, by the Judicial Appointments Commission. That is simply because Parliament took the view that in the modern world it was inappropriate for persons to be appointed to such roles unless it was done independently of the Executive.
Consequently, I have proposed amendments that deploy those resources. In response, noble Lords may say, “This is something quite different from those judicial appointments listed in Schedule 14 to the Act”. They would be partly right, but the Judicial Appointments Commission goes much beyond what we would traditionally refer to as a judge and selects people for roles in a very wide range of tribunals that cover social care to taxation and farming to employment. I do not intend to be exhaustive in my arguments, but those who wish to do so can look at Schedule 14 and see the extensive list of roles in which people make judgments where we now expect there to be an element of independence.
I am reinforced in this view because everything that I have read in preparation for the debates in Committee makes constant reference to the necessity for the adjudicator to be independent. In my view, it is crucial for a person who exercises these sorts of powers to be independent of the Executive, to the extent that there should be some significant independent element in the selection of the person who is suitable for that role. I would argue that that is the constitutional position in England and Wales and that it has been since 3 April 2006, as a result of the 2005 Act.
On the basis of that analysis, I have proposed amendments that would ensure that the appointment by the Secretary of State can only be on the recommendation of the Judicial Appointments Commission. In that way, the independence of the adjudicator will be reinforced, if not preserved. Consequently, the adjudicator and not the Secretary of State will appoint the deputy adjudicator. Given the nature of this role, the Secretary of State would not be able to dismiss the adjudicator or the deputy adjudicator without the consent of the Lord Chief Justice. Certainly, it would not be just in his or her own judgment. Finally, in order to make it clear that this role can be held only by a person who is above reproach, I have added to the requirements of the person who holds this role that he or she should not have been convicted of an offence.
I have very little to add to my argument. With respect, I think that it is clear that independence requires this in the modern world. If the Minister disagrees with that analysis, I invite her to explain why this role, with all these powers, is significantly different from that of a judge or a justice and why it is appropriate to reverse the trend of constitutional change in this country in this way and in this legislation.
Lord Borrie
My Lords, I am reluctant to disagree somewhat with my noble friend, who has argued so eloquently that this is a judicial appointment, but I do not think that it is. It may be close to it, and there is nothing unusual in certain positions being on the borderline of administrative and judicial. However, in examining the role of the adjudicator, we have heard the noble Viscount, Lord Eccles, and others mention that, when this was first introduced, the title given to the man or woman in charge was “ombudsman”. There seems to be general agreement that that was not suitable, so we came to “adjudicator”.
Because we have adopted—or the Government have adopted—“adjudicator”, I strongly sympathise with my noble friend Lord Browne, because “adjudicator” suggests that there are at least two sides and that this is a judicial role. However, one thing that I have noticed, looking at the detail of what the adjudicator can and cannot do, is that he cannot settle or determine or arbitrate on a civil claim made by a particular supplier and a particular supermarket. It is of course typical for a judge, or indeed an arbitrator, to determine civil disputes of that kind, yet the detail of this Bill tells us that this is something that cannot be done by the adjudicator. The word “adjudicator” may not be entirely appropriate and may have led the noble Lord, Lord Browne, along a false path.
Lord Browne of Ladyton
Will my noble friend do two things for me before he sits down? First, will he address with the same certainty the issue of whether this is a quasi-judicial role? With respect, it is not fatal to my argument that this role does not meet the high test for a judicial role that my noble friend has—arbitrarily, I may say—imposed on us. Secondly, will he also address the ability or potential ability of this adjudicator to impose financial penalties? Does that cause him to reflect on whether this is the sort of role that he is describing?
Lord Borrie
With respect to my noble friend, he has not, in his question to me, dealt with the fundamental point that I raised, which is that the adjudicator is unable to determine civil claims between suppliers and supermarkets. The adjudicator has to go to a separate civil claim in the civil courts, or through arbitration. That is fundamental in my argument that this is not a judicial appointment and that involvement of the Judicial Appointments Commission would be inappropriate.
“Quasi-judicial” is a fascinating phrase, and we heard it a lot in the Leveson inquiry. It is amazing how Ministers have got accustomed to defining and knowing what quasi-judicial is, even though they did not always pronounce it the same way. It was a quasi-judicial role that the Minister had in determining whether the bid by Mr Murdoch for BSkyB should go to the Competition Commission. That was determined by everybody who spoke at the Leveson inquiry to be quasi-judicial. In answer to the noble Lord, Lord Browne, I have already admitted that the job of the adjudicator in this Bill is close to being judicial and, if it is close to being judicial, it is certainly close to being quasi-judicial.
The noble Lord, Lord Browne will know that the Judicial Appointments Commission has nothing whatever to do with Ministers and others who have quasi-judicial functions. It does not have that role. The Government must have found it difficult to know whether to call this person an ombudsman, an adjudicator or something else. He or she will be a regulator with powers to fine, like other regulators that are set out in statute. That is what is intended here. Some of us are in favour of this being in the Bill, whereas the Government want it only to follow a new regulation. Be that as it may, the adjudicator is closer to being a regulator than a High Court judge.
Lord Browne of Ladyton
My noble friend set a test for me that he knew I must fail, because the adjudicator does not have the power to impose a decision on a civil dispute—and because I failed this entirely arbitrary test, which he imposed with his customary skill, my argument was apparently nullified. Perhaps I may engage him by referring to another area of life in which there is a separation of powers. We have settled health and safety legislation in this country. Where there is a prosecution for breach of health and safety regulation before a criminal court, the court does not have the power to impose civil compensation, because that is not its function. However, it is a judicial process. Of course, another court can impose a civil remedy by awarding compensation for breach of health and safety regulations as an indication of negligence where somebody is injured, but it cannot impose a criminal penalty, because that is not its function. However, both courts have judicial functions. The fact that one court cannot impose its will on the jurisdiction of another does not nullify the fact that they both have judicial functions. Why does that logic not serve me well in this argument?
Lord Borrie
The only thing that I can say is that it has been the deliberate intention of the Government through their drafting of the Bill to deprive the adjudicator and to deprive anybody else except civil courts—in a completely different process—of the ability to determine a civil claim or something like it. As the noble Lord, Lord Browne, has considered this matter very deeply and carefully, there cannot be a lot between us. We are talking about a matter of title or name. Whatever that is, it does not seem suitable for the Judicial Appointments Commission to be involved in the appointment of this individual in a narrow field of the grocery trade, with the fairly narrow role provided by the Bill.
Viscount Eccles
Perhaps I could ask the noble Lord, Lord Browne, whether we have any other adjudicators.
Lord Browne of Ladyton
The honest answer to the noble Viscount is that we have many adjudicators. We call them judges. However, I am not aware—although the Minister may be—of the use of this term in another set of circumstances that could be instructive to the Committee in analysing the process. I have no doubt that the noble Baroness will quickly leap on the alibi granted to her by the noble Lord, Lord Borrie, that the drafters of the Bill unfortunately came up with this unhelpful title. My argument is that, if it walks like a duck and quacks like a duck, it is a duck. When they created the position and wondered what to call it, they must have said, “It is an adjudicator, so let us call it that”, and they were right.
Lord Knight of Weymouth
Before my noble friend Lord Grantchester responds, I will say very briefly to the noble Viscount, Lord Eccles, that there is a schools admissions adjudicator who adjudicates the schools admissions code.
Lord Grantchester
I rise to propose Amendment 5. Far be it from me to come between my two noble friends on Amendment 4, but I reflect that although there may be very little between them, there is a slight implication for some of the processes in the Bill. I would be interested to hear the Minister’s response to this question.
In proposing Amendment 5, we have approached it from the—
The Deputy Chairman of Committees (Lord Geddes)
With great respect to the noble Lord, I think he means that he is speaking to Amendment 5, not proposing it.
Lord Grantchester
I thank the Deputy Chairman for clarifying that. We have approached it in a simple, straightforward way: that this is, in fact, the role of a regulator. As we have argued and discussed on previous amendments, the role of the regulator is a high-profile one at the moment, with a wide range of powers to effect change in the UK groceries market. It is only appropriate that the Secretary of State should consult with both the relevant Select Committees in the other place to reflect the standing that such a person will have in the business and parliamentary world, so that it is fully transparent to the supply chain that this has been well considered.
Baroness Wilcox
My Lords, these amendments concern the independence of the adjudicator and, in particular, how this may be safeguarded through the appointment and dismissal processes. I fully agree that the independence of the adjudicator is critically important to the successful operation of the role.
I have just been passed a note for the noble Lords, Lord Browne and Lord Borrie, on the name “adjudicator”, which I thought might be helpful. The term has been chosen because an ombudsman must deal with consumers rather than businesses. That is the answer to that one.
Before addressing the amendments, I first reassure noble Lords that the Bill provides the adjudicator with full operational independence. There is no question of the Secretary of State telling the adjudicator what to do, who to investigate or what the sanctions should be. It is, however, normal practice that public appointments should be made by Ministers, in accordance with the standard rules and procedures on public appointments. In addressing these amendments I intend to draw parallels with other public bodies in the field of competition.
On the amendments of the noble Lord, Lord Browne of Ladyton, the adjudicator will not be a judge and it is therefore not necessary to involve the Judicial Appointments Commission. Similarly, the panel members of the Competition Commission, who might also be considered to have a similar quasi-judicial role in their rulings on appeals from sectoral regulators, are not appointed or recommended by the Judicial Appointments Commission. It is similarly appropriate that the Secretary of State should appoint both the adjudicator and, if there is one, deputy adjudicator, as both are public appointments. In a similar way, the Secretary of State currently appoints both the chair and the chief executive of the Office of Fair Trading. The Office of Fair Trading can, of course, also impose financial penalties.
On dismissal, the Secretary of State may dismiss the adjudicator only if they are satisfied that he or she is unable, unwilling or unfit to perform his or her functions. This is not a judgment that would be made lightly and could be subject to judicial review if made incorrectly. Given these safeguards, I do not consider it necessary to require the Lord Chief Justice’s approval, nor to make specific provision for the circumstances of criminal conviction, which the Secretary of State could, in any case, take into account when judging whether the person was appropriate for the role.
Finally, on the amendment tabled by the noble Lords, Lord Knight of Weymouth and Lord Grantchester, I make two points. First, while the Government support the principle of suitable parliamentary oversight of public servants, they believe that pre-appointment hearings by Select Committees are only for those roles where it is vital that the post’s independence from government or its importance to the public is of the highest importance. It does not seem clear that the adjudicator, though very important to the groceries sector, would fall within this category.
Secondly, even were the post of adjudicator such a post, it is also not general practice for Select Committee oversight to be set out in primary legislation, but rather for it to be decided by the Secretary of State responsible. I hope that that is helpful and, therefore, ask the noble Lord to withdraw his amendment.
Lord Browne of Ladyton
I am grateful to the Minister for dealing so comprehensively with the constituent elements of my argument. I am not entirely persuaded by all her arguments. I read that the distinction between an ombudsman and an adjudicator is that an ombudsman deals with only consumers and therefore cannot regulate a set of circumstances in which consumers are not involved. I am not entirely sure whether that argument is sustainable but it has been deployed in earlier debates on this legislation for justifying the move from the recommendation for an ombudsman in relation to this role. When I read it in the past I was not convinced and, with respect to the noble Baroness, I am not convinced now. However, I realise that that is the Government’s position, which I respect.
I am grateful to my noble friend Lord Borrie for his intervention and I am enormously respectful of his vast experience in the area of consumer protection and competition. I thought that he got almost to the point where he agreed with me but could not break through the cigarette paper that was between us—which I have to say he put there. I am also grateful to him that he thought that there was something in my argument.
There is nothing implicit in any of these arguments that is in any sense critical of the way in which I expect the Secretary of State to behave. I expect the Secretary of State of whatever party is in government in this country to behave in an entirely appropriate way and not to make capricious decisions. I accept also that it may be possible to find other examples—as there were in the noble Baroness’s brief—of similar types of appointment that have not been considered to be judicial appointments or have required the intervention of the Judicial Appointments Commission in the past. However—I will research this as I cannot be certain about it—I suspect that none of those roles was created by statute since the creation of the Judicial Appointments Commission in 2005. In view of the roles held in the OFT in the post-2005 constitutionally changed environment, I would argue that it would be inappropriate to appoint someone with those sorts of powers without the element of independence that we imposed on the nature of these appointments by passing that legislation.
I am concerned that perhaps we treat constitutional change now as being of the moment and that we revert to type thereafter. But the 2005 Act was a significant step in creating an element of independence in the role of people who exercise these types of functions. We extended it well beyond what people would normally think of as judges, for instance into tribunals that cover a significant area of public life. I do not believe that competition should be immune from that restraint as regards the constitution. However, despite the fact that I believe quite strongly in this argument, at this stage I am content to withdraw the amendment—before I do so I will give way to my noble friend.
Lord Knight of Weymouth
Before my noble friend withdraws his amendment, I ask his indulgence so that I can come back to the Minister on what she said in respect of Select Committees being involved in a confirmation hearing. I refer her to the coalition agreement, which stated:
“We will strengthen the powers of select committees to scrutinise major public appointments”.
I turn to the Conservative Party manifesto for 2010, which stated that it would,
“give Select Committees the right to hold confirmation hearings for major public appointments, including the heads of quangos”.
The Liberal Democrat manifesto stated that the party would:
“Strengthen the House of Commons to increase accountability. We will increase Parliamentary scrutiny of the budget and of government appointments and give Parliament control over its own agenda so that all bills leaving the Commons have been fully debated”.
I now refer the noble Baroness to some of the appointments that have been subject to pre-appointment hearings. From her own department, hearings were held for the chair of the Gas and Electricity Markets Authority, the chair of Ofcom, the chair of the Competition Commission, the chair of the Office of Fair Trading and the chair of the Postal Services Commission. She may argue that those are more major appointments than that of the adjudicator, but we think that it is important, otherwise we would not be here. Does she think that the post of adjudicator is more important than the chair of Oftenant, which is a quango from the Department for Communities and Local Government? I might also mention the chair of the Agricultural Wages Board, the chair of the Gangmasters Licensing Authority and the chairs of the research councils. That is a list of quangos, some of which are now being abolished. However, these are equivalent appointments and it is clearly the policy of her party and the coalition to give Parliament more scrutiny of such appointments. I do not understand why there is a problem.
Lord Browne of Ladyton
I am grateful to my noble friend for expanding my peroration quite significantly. The only point I had left was to refer to the necessity for some element of independence in this appointment. At some stage in Committee we will consider the absence of independence with regard to the dismissal or abolition of this role, which is a wrong step for many reasons, not the least of which is the role of Parliament. It seems to me that as a society we were on a journey towards recognising the need for an element of independence in the appointment of people who exercise certain powers. With respect to my noble friend Lord Borrie, it is not the narrowness of the issue but the nature of the powers that is important. We should be very wary of giving powers of this sort to individuals to exercise in our society without going through the appropriate processes to ensure utter independence from the Executive. That means not just factual independence but independence in law, and we must be consistent so that people go through the same process of selection that has been imposed on others to ensure that they meet the criteria that have been created.
In the mean time, I will study what the noble Baroness said and research whether any of the examples she gave predate the 2005 Act, with the distinct possibility that I will return to this issue at a later stage. I beg leave to withdraw the amendment.
Lord Browne of Ladyton
“( ) the Scottish Government;( ) the Welsh Assembly Government;( ) the Northern Ireland Executive; and”
Lord Browne of Ladyton
My Lords, I do not seek to dominate the debates in this Committee and I hope that my amendments will soon give way to others. This is a simple but timeless point. In these amendments I seek to ensure that the devolved Executives are included in both the reporting of the accounting process and in the reporting process of this particular office or of the adjudicator.
I expect, and will anticipate in my argument, that the response to that would have been that this is not a devolved matter; it is a reserved matter and the proper accountabilities are therefore restricted to the organs of reserved, UK government. I probably would have deployed that argument when I was a Minister myself. However, only yesterday, those of us who believe in the union came together politically in a campaign called Better Together to persuade the people of Scotland that we are better together than separate. In my political life, this is the most important decision that the people of Scotland will make. Part of the reason why those who seek to divide us are confident that they will be able to persuade the people of Scotland is that they conduct the politics of grievance constantly. They seek issues on which Scotland is treated differently or with disrespect. They say that those who allowed Scotland, Wales and Northern Ireland a degree of devolution did so reluctantly for political convenience, did not actually mean it and operate the rules in a nit-picking fashion which does not respect our institutions or those which they have set up.
The Duke of Montrose
I support the noble Lord, Lord Browne of Ladyton. In particular, I will back up his arguments on several of the points, although I must declare some interests as a meat-producing farmer with a 30-month production delay.
The difficulty, as the noble Lord pointed out, is that the subject matter of the Bill is very certainly reserved. The items that it will deal with are heavily devolved, both in terms of agricultural support and meat inspection. Many elements of the supply side are devolved, so there is great concern for devolved Administrations in this whole matter. The noble Lord was making the point quite well that this is not something that will require what we describe as a Sewel motion. It was drummed into us when we were debating the Scotland Bill that there is a convention in place. It would be interesting to know from the Minister if the convention has meant that the subject matter of this Bill has been run before the Scotland Office or the Scottish Parliament—not that we necessarily need to await their approval. As the noble Lord says, if we include this element of receiving these reports, we would dilute any sense of particular prejudice against the Scots.
Baroness Randerson
My Lords, I thank the noble Lord for tabling these amendments and concur with the viewpoint of the noble Duke. I am speaking from a Welsh perspective, with experience of the Welsh situation. The noble Duke is correct to acknowledge the significant role of the devolved Administrations in relation to this topic. As has been said by both speakers so far, the devolved Administrations have power over key issues.
The Welsh Government obviously have considerable power over agriculture and agricultural issues. Indeed, that power has grown considerably in the 12 years since devolution. They make the key decisions on agriculture. Even on the economy, many levers are in the hands of the Welsh Government rather than the UK Government. It is really important that the adjudicator, once established, has a regular and close dialogue with the Governments—the Executives—of Scotland, Wales and Northern Ireland, because it is so important to their day-to-day decision-making on policy.
As a member of the Welsh Assembly for 12 years, I sat through more debates on the supermarket ombudsman, and more questions on when the supermarket ombudsman would be set up, than I could possibly recall and count. It is a topic that was very close to the hearts of Assembly Members in Wales, across the board. It would be right for them to be closely involved from now on.
Baroness Wilcox
My Lords, I fully recognise the interests of the devolved Administrations in this Bill: of the noble Duke, the Duke of Montrose, for Scotland and the noble Baroness, Lady Randerson, for Wales.
The Government have kept in close contact with the devolved Administrations through the development of both the policy and the legislation, and we are grateful for the strong support that they have given to this Bill. Officials in my department have discussed this with representatives of all the devolved Administrations on multiple occasions, and continue to do so. We would of course expect the adjudicator to informally interact with the devolved Administrations in the same way.
However, formally speaking, the groceries code is a non-devolved issue, as it is a matter of competition law. The adjudicator therefore has no formal responsibilities to the devolved Administrations. Given this fact, a statutory duty to report to such bodies would therefore be inappropriate, and could make the adjudicator’s role less clear. Additionally, it might suggest that the devolved Administrations had responsibility for oversight of the adjudicator, when in fact they do not have powers to control either the code or the adjudicator. However, as I have said, we have worked and will continue to work very closely with the devolved Administrations. It is in all our interests that we do so.
If I may, I will discuss the issue regarding the Competition and Markets Authority when we discuss the seventh group of amendments. I therefore ask the noble Lord to withdraw his amendment.
Lord Browne of Ladyton
My Lords, I confess to being disappointed. It would appear that we have resorted to type in relation to the legalities of these issues. I am utterly schooled in making the arguments for them. However, with respect to the noble Baroness, she reassures me to a significant degree when she recounts the degree of interaction and co-operation that there has been between the devolved Administrations and the UK Government. I am reassured by that and would expect nothing less. She suggested that informally the adjudicator will be encouraged to continue that level of co-operation. To that degree she reassured me.
However, the noble Baroness disappoints me because it would appear that in the structures of Whitehall we have not got beyond the strict legalities of these arguments and cannot see how damaging this strict approach is to relations across the union. We need to be much more mature in the way in which we approach these issues, and we need to be much more political in not creating opportunities for grievance or for discussions that are perceived to be beyond power but which create an argument for more power. For example, if the Welsh Assembly sensibly had a debate about the importance of a supermarket ombudsman, in Scotland that would lead almost inevitably to an argument that the Scottish Parliament should have had the power to appoint one because the UK Government were taking a long time to do it. We would then get into a confrontation about the constitution that would be utterly unnecessary if we had an officer who was instructed by the legislation that we passed to set up his office to report to those institutions.
I confidently predict that if the adjudicator role beds in, at some stage a committee of the Scottish Parliament, Welsh Assembly or Northern Ireland Assembly will say, “We are conducting an inquiry into the economic opportunities that relate to a particular part of our society or economy. This officer has a role to play in that. We would like him to come and give evidence to our committee”. I also confidently predict that the occupier of this role will go, that the constitution will not melt down and that no great affront will be done to the divisions between devolved and reserved powers. I hope that at some stage we can come off these platforms where we tell the people of the United Kingdom that we are better together and that we respect each other and the settlement that we have, and drive that attitude down through Whitehall so that departments do not define themselves by whether they have reserved or devolved powers.
This is a disappointing response to the issue. I understand why legally it is being done. I am sure that the noble Baroness is aware of the possibility that while she is still in her office, somebody will come to her and say, “This does not go far enough. There is insufficient power for Scotland and it is disrespectful to the Scottish people”. I hope that those who provided her with the argument to defeat my simple amendment can provide her with the argument to deal with that when she has to go to Edinburgh to make the argument. However, I accept the inevitable. We are where we are. In these circumstances, there is nothing else I can do but beg leave to withdraw the amendment.
Lord Browne of Ladyton
“(2) The Adjudicator may, in particular—
(a) enter into contracts;(b) with the consent of the Secretary of State borrow money;(c) acquire and dispose of land; and(d) obtain advice or assistance from any person.(3) The Adjudicator may remunerate any person from whom he or she obtains advice or assistance.”
Lord Browne of Ladyton
My Lords, this is a probing amendment. This adjudicator is a creature of statute. He can have only the powers that are given to him by statute. Paragraph 8 of Schedule 1 states:
“The Adjudicator may pay to or in respect of the person holding office as the Adjudicator or the Deputy Adjudicator … remuneration … allowances … sums by way of or in respect of pensions”.
It appears to me that in this statute he deliberately is not given certain other powers that one would expect, even if he is to have a “small, agile staff”, as the noble Baroness described his office at Second Reading. Are we to infer from the absence of those powers that others will exercise those necessary powers to create the small infrastructure around the adjudicator that will be necessary? Or are we to infer that there is an expectation that later provisions in this Bill will be enacted before it becomes necessary for the adjudicator to have these powers and that the office will no longer exist? Or is it the plan to embed this office in another existing administration or organisation? Has a decision been made as to what that organisation will be? If so, is the noble Baroness in a position to tell the Committee what organisation that will be and what powers it will have in order to support this person, bearing in mind that the adjudicator is required to carry out investigations?
The adjudicator may have to conduct arbitrations himself or herself. He or she may also have to appoint others to conduct arbitrations and, although we hope not, in the future may have to impose penalties, some of which may not be of a financial nature but some of which may be of a financial nature. He or she may have to account for such money and do all sorts of things—I do not need to go into the detail. Most noble Lords will have an idea of what these sorts of offices will look like, even if they are small and agile. I repeat that this adjudicator is a creature of statute. If he or she does not have these powers, they will not be able to do that. This amendment probes the intention of the Government in relation to the administration that will necessarily support the role of the adjudicator. I beg to move.
Baroness Wilcox
My Lords, I fully recognise the importance of ensuring that the adjudicator has the powers necessary to adequately carry out its functions. However, the powers listed in this amendment are already provided for in the Bill. I refer in particular to paragraph 16 of Schedule 1, which provides:
“The Adjudicator may do anything that is calculated to facilitate the carrying out of the Adjudicator’s functions or is conducive or incidental to the carrying out of those functions”.
It is clear that sub-paragraphs (a) and (d) of the amendment are covered by this. The adjudicator could, for example, use this to enter into contracts or to obtain and pay for legal advice. Similarly, it must be the case that the adjudicator has the power to enter into a lease, which is an interest in land. With regards to borrowing, I draw the noble Lord’s attention to, for example, provisions such as paragraph 20 of Schedule 2 to the Human Tissue Act 2004. That is exactly like our paragraph 16, except that it ends with the words,
“but may not borrow money”.
That implies that a general power includes a power to borrow unless it is specifically excluded. I hope that that is helpful.
Lord Knight of Weymouth
My noble friend raises an interesting point and I thought that I would wait to hear whether the noble Baroness prayed in aid paragraph 16. I worry about the very broad nature of the power that the adjudicator gets in paragraph 16 to do whatever he or she thinks is appropriate to perform the functions. It seems sensible enough, but I am mindful of what the large retailers are saying to us in respect of them having to pay a levy to fund the operation of the adjudicator and there being very little protection for them as to how much that would cost. Paragraph 16 as it stands seems to give a very wide power that leaves them vulnerable to some considerable costs. I wonder if the Minister needs to reflect on whether there is a way to give some protection to the levy payers to make sure that, were this interpreted by a frivolous adjudicator who thought there were some incidental things to the carrying out of functions, they could not go slightly berserk and incur quite a large cost on those levy payers.
Baroness Wilcox
The noble Lord, Lord Knight, will be pleased to know that we are ahead of him on this. The adjudicator will be able to carry out these acts only if it is to facilitate the carrying out of the adjudicator’s functions or if it is conducive or incidental to the carrying out of those functions. This will ensure that the adjudicator’s powers are used responsibly and are not abused. For example, it would not be possible for the adjudicator to make investments in land. I hope that that may be of some help. I was about to say that we might add things like, “should not go to Ascot” or this, that and the other, but I am being frivolous. I think that that is broad enough to cover any difficulties there.
Lord Knight of Weymouth
I am grateful to the noble Baroness. It is the “incidental” that would worry me the most were I a levy payer. I will leave it at that because I do not want to labour the point. We need to think about this a little. I know that we may have an amendment later that looks at whether the annual reports should explicitly include the cost of administration so that that is transparent and clear to levy payers as a way of ensuring that these “incidental” expenses are not excessive. I think that the point has been made.
Lord Browne of Ladyton
The noble Baroness asked whether I am reassured. I am. How could I not be, given her explanation that what lay behind “incidental” powers is now on the record and it has been made clear that the adjudicator will have the powers necessary to carry out the functions that will support the role?
I do not expect the noble Baroness to answer this question, but she may reflect upon it: if paragraph 16 is all-encompassing, what is the purpose of paragraph 8? Why is it necessary for paragraph 8 to be in this schedule at all to deal with the issue of the remuneration of the adjudicator and deputy adjudicator if incidental powers cover all those fundamental things? I was misled by the presence of paragraph 8, thinking that “incidental” meant, in plain English, what I would consider to be incidental.
The powers that I put in the amendment are pretty fundamental to the office of the adjudicator. Given that this is the money of those who will support the role and given that, as my noble friend Lord Knight articulated, there is an argument for spelling out in plain English the powers that the Government expect the adjudicator to operate or use, particularly if those powers are relevant to the spending of other people’s money, it would be more helpful to spell out the powers that an adjudicator has for spending money than to give an office of this nature incidental powers that are so all-encompassing against a provision such as paragraph 8.
That being said, the matter is now all on the record. It is very clear that there is some restriction on these incidental powers as well as on the exponential expansion of them. To that extent, I am grateful to the noble Baroness. In those circumstances and since the amendment is redundant, I can do nothing but beg leave to withdraw it.
Lord Browne of Ladyton
Lord Browne of Ladyton
My Lords, noble Lords will be pleased to hear that I will not be insisting on these amendments. They were tabled for a specific reason, but that has actually been addressed in debate thus far. The answer to them is clear, because they anticipate the Enterprise and Regulatory Reform Bill, which is of course not yet enacted. They are therefore deeply premature, but were intended to initiate another debate, exploring what powers and relationships the adjudicator will have with these offices, but we have already had that debate.
I am conscious, however, because I argued that my amendments should be grouped with others in order to minimise the time, that if I do not move it that will imperil the rest of the grouping. I do not intend to insist upon my amendments because I understand what the Minister’s argument would be. I beg to move.
Lord Knight of Weymouth
My Lords, I will speak to Amendments 12, 96, 124 in my name and that of my noble friend Lord Grantchester, which are about the powers to abolish the adjudicator. It is always a little worrying when a Government are thinking about the manner in which they will dispose of a new office before it is even established. Clearly, this is what the Government have done. Clause 16 provides both for the transfer of the adjudicator’s functions to another public body and the outright abolition of the adjudicator, something which one or two Members of this Committee would, I am sure, welcome.
The fact that the Government have made such specific provisions rather implies that they already have a good idea about what they expect to happen to the adjudicator after a couple of years. A more cynical person might infer from this that the Government have calculated that they can benefit from a few good headlines now in setting it up, and then quietly merge the office with the Office of Fair Trading, or the new Competition and Markets Authority a couple of years down the line. That would probably feel like a very efficient win-win to the Government; but this is obviously a highly cynical view. The Government could even quietly get rid of the thing altogether with a simple Motion in Parliament.
We have heard how this issue has exercised suppliers to supermarkets for some time. It has been the subject of campaigns for a number of years. I do not believe that the affirmative resolution is in this instance a high enough threshold for Parliament to allow the Secretary of State to abolish this public body so easily. The reason for this goes to the heart of what the adjudicator is there to achieve, and to the arguments on the powers which the adjudicator should have available. In a sense, if the adjudicator never initiates a single investigation or uses a single one of his or her powers, this could just as easily indicate success as it could do failure of their functions. The reason for both the code and the adjudicator is not to catch retailers out so much as to compel good behaviour and to make clear where the boundaries lie between competitive and anti-competitive practice. The presence of the adjudicator alone, especially an adjudicator with teeth, such as strong powers to fine, should, we hope, be enough of a deterrent to ensure that retailers never stray beyond the rules of good practice set out by the code. If a referee—or, if it pleases my noble friend Lord Browne of Ladyton, a quasi-referee—goes through an entire football match without giving a single booking, you would applaud it as a success. You do not question the future need for the referee.
It is therefore worrying that the Government have included a mechanism for the adjudicator’s abolition without giving any indication of how they intend to measure the continued value of an adjudicator. At the very least, the bar for abolition should be set higher than it currently is within the Bill. Our amendments 12, 96 and 124 would require the Government to follow exactly the same procedures as are set out in the Public Bodies Bill model of a super-affirmative order in order to abolish the office. Indeed, in proposing these amendments, we are seeking some consistency from the Government.
Baroness Wilcox
My Lords, on the amendments tabled by the noble Lord, Lord Browne of Ladyton, I recognise that in due course the references to the Competition Commission and the Office of Fair Trading will most likely need to be changed to refer to the Competition and Markets Authority. My ministerial colleagues in BIS are currently working hard to ensure that the Enterprise and Regulatory Reform Bill, which will bring about these changes, makes a successful passage through the other Chamber. However, the Government believe that it would be presumptuous of us to take the will of Parliament for granted by making a reference to the Competition and Markets Authority when the Enterprise and Regulatory Reform Bill has not yet received its Third Reading in the other place, so we propose to consider the amendments tabled by the noble Lord, Lord Browne of Ladyton, at a later stage of this Bill’s passage through Parliament—namely, when the other Bill is more advanced.
With regard to the amendments tabled by the noble Lords, Lord Knight of Weymouth and Lord Grantchester, we all agree that when granting delegated powers, the appropriate degree of parliamentary scrutiny should be provided. Too weak a procedure could lead to a lack of scrutiny and the weakening of parliamentary authority. However, too stringent a procedure would not only be cumbersome, wasting Parliament’s valuable time, but could act as a barrier to timely action. The noble Lord, Lord Knight, asked why there are abolition provisions in the Bill. Abolition and review provisions are included in accordance with the broader policy on sunset and review that we are pursuing. It does not indicate an intent to abolish the body or transfer its functions.
The Public Bodies Act has been mentioned as a precedent. However, there is a big difference between that Act and this measure. The Public Bodies Act confers powers to abolish, reform and modify a wide range of public bodies, and confers a range of ancillary powers such as the power to amend primary legislation. However, this Bill is a limited measure to establish a new adjudicator in a single, specific area of the economy, the grocery sector. It is quite a different thing.
I remind noble Lords that the Delegated Powers and Regulatory Reform Committee examined the Bill. Its report is available to any Member who wishes to read it. The committee carefully considered whether the procedures provided by the Bill were appropriate, and specifically considered whether some measures should be delegated at all. However, it concluded that the procedures were appropriate and did not recommend the replacement of the affirmative procedure with the super-affirmative procedure at any point.
Lord Knight of Weymouth
The noble Baroness is of course right to refer to the first report of the Delegated Powers and Regulatory Reform Committee. When it considered abolition, in paragraphs 6 and 7 of the report, and Clause 16(2), it stated:
“This provision illustrates the unusual nature of this Bill”.
It then goes back to its opening paragraph, which states:
“If the Competition Commission revoked the Order containing the groceries code, the Act would serve no purpose so it could be repealed. There would be no great point of principle involved in its repeal, for the Act is wholly dependent on the Order”.
The committee’s view was very much informed by the weirdness—which I referred to earlier—of setting up in primary legislation a quasi-referee to govern a code that Parliament has no power to scrutinise.
It is entirely appropriate and comparable with the Public Bodies Bill, which was about the bonfire of the quangos and the Government having the power in secondary legislation to get rid of quangos that they had set up in primary legislation. In this primary legislation we are setting up a quango. In Clause 16 the Government are seeking to use just the affirmative procedure if they want to abolish it. It is entirely consistent with the Public Bodies Act to argue for the super-affirmative procedure.
Baroness Wilcox
Perhaps if I go back and continue for two paragraphs, we might find something a bit more helpful. I will go back again to say that the Delegated Powers and Regulatory Reform Committee examined the Bill. It carefully considered whether the procedures provided by the Bill were appropriate, and explicitly considered whether some measures should be delegated at all. The committee concluded that the procedures were appropriate and did not recommend the replacement of the affirmative procedure with the super-affirmative procedure at any point.
On the abolition of the adjudicator, the committee stated:
“We considered whether this goes far enough and whether the policy and repeal of the Act in these circumstances should be effected by another Bill. But we are satisfied that the affirmative procedure is appropriate given the overall purpose of the Bill”.
On transfer of functions, the committee said:
“An order under clause 16(1) can transfer all or some of the Adjudicator’s functions to another public body (undefined). The power is balanced by the affirmative procedure; and the Adjudicator’s functions are specific under the Bill. We are satisfied with this approach”.
Abolition and transfer of functions are major steps that should be subject to the super-affirmative procedure. The Secretary of State can abolish the adjudicator only for being ineffective or unnecessary, under the clauses referred to by noble Lords, following one of the triennial reviews. These reviews require full consultation. Transfer of functions can be done only after consideration of whether it will increase efficiency, effectiveness and economy, while ensuring appropriate accountability to Ministers.
This Committee’s job is to carefully scrutinise delegated powers and to ensure that the appropriate procedures are chosen. If the committee had recommended changes to the Bill, we would have considered them extremely carefully, but it said that the procedures were satisfactory.
As I said at the beginning, one must ensure that the degree of scrutiny is proportionate to the powers involved. That is why it would be absolutely wrong, for example, for the negative procedure to be used in these cases. Equally, the super-affirmative procedure is a step too far. With that explanation, I invite the noble Lord to meet me after today and talk this through further. I would be delighted to do so, rather than taking up any more of the Committee’s time at this stage. Therefore I ask the noble Lord to withdraw his amendment.
Lord Browne of Ladyton
My Lords, I look forward to the Government’s amendments at a later stage of the Bill and, although I was slightly premature, the opportunity to claim credit for them. I have to say to the noble Baroness that I would trade that for better consideration of the earlier amendment on the devolved Administrations. If I may crave the indulgence of your Lordships, I realise that when I was responding to that debate I failed to recognise and pay due regard to the contributions of the noble Duke, the Duke of Montrose, and the noble Baroness, Lady Randerson, who graciously supported my amendments and made arguments that created a cross-party consensus on this issue, which the Government were unfortunately immune to. I am grateful to noble Lords for their support and contributions to the debate. I beg leave to withdraw the amendment.
Lord Browne of Ladyton
Lord Browne of Ladyton
My Lords, the other amendments in this group are consequential on the first, and challenge the perception that you can invest in one person so many powers without creating an inevitable conflict of interest. As we have already established in our deliberations, the Bill gives the adjudicator many powers in relation to disputes, including arbitrating, investigating and enforcing. It is axiomatic that the adjudicator must carry out these powers with independence and impartiality.
The Bill goes well beyond implying that investigation necessarily gives rise to conflict on the lack of impartiality in a later arbitration—indeed, it creates a mechanism for it. Although the Bill does not compel the adjudicator to appoint an arbitrator, it gives him or her a strong hint that that is what they should do. I know that in the Second Reading debate the noble Baroness was careful not to apply an imperative to that requirement, and suggested that the adjudicator would probably, in such circumstances, appoint someone else to arbitrate.
The reason for the amendment is that although I have some limited experience of arbitration, I cannot, from my research or my consideration of what this adjudicator would do, envisage any set of circumstances in which an arbitration would take place that did not require a prior investigation of some sort. I cannot believe that an adjudicator—particularly one who is expected to arbitrate in a limited number of cases in relation to the groceries code during the course of a year—would decide to use the powers that he or she is constrained to use sparingly, without some preliminary investigation and some conclusion that arbitration was necessary. I cannot conceive of any circumstances in which that argument of impartiality, or lack of it, could not be levelled at an adjudicator when a decision is made to arbitrate.
I am perfectly willing to defer to interventions or contributions to this debate from noble Lords in this Room—and there are many of them—who have much more experience of these sorts of circumstances than I had in my limited exposure to them during my legal career. I cannot think of the circumstances. As a consequence, and given the nature of this legislation, there is a strong implication that the arbitration function should be separate from the role of the adjudicator. Should arbitration be necessary, the adjudicator would be required to appoint a separate arbitrator. Otherwise, what is the point of all the provisions which say that investigations can give rise to the implication of a lack of impartiality? Where did they come from and why are they in the Bill at all, if that is not the logical conclusion?
Viscount Eccles
My Lords, I do not know if this will help or at least shorten what I need to say in the debate on whether Clause 2 should stand part of the Bill. I want to consider what the situation is and has been since 4 February 2010. The dispute resolution scheme is set out in the code in Part 5. Paragraph 11(5), of course, does not conform to the Bill. It states:
“The arbitration will be administered by the Ombudsman, if established. In the event that the Ombudsman is not established, or has a conflict of interest in relation to a particular Dispute, the arbitration will be administered by a single arbitrator appointed in accordance with the Rules of the Chartered Institute of Arbitrators in force for the time being.”
My understanding would be that it is a contractual obligation of the retailers that that is included in their contracts with their suppliers, exactly as I have read it out. It goes on in 11(6) to say:
“To the extent that they do not conflict with this Article 11, the arbitration will be conducted in accordance with the Rules of the Chartered Institute of Arbitrators in force for the time being”;
and in 11(9):
“Nothing in this Article will prevent a Designated Retailer including in a Supply Agreement a right for the Designated Retailer also to refer a Dispute to arbitration if the Dispute is not resolved … within 21 days”.
We need to know what the present situation is with the operation of the code. If the arrangements which have been set out with care by the Competition Commission, and included in the order are working perfectly well then I am bemused as to why the adjudicator would ever want to play any part in arbitration at all. I cannot see why it would be sensible for the adjudicator to play any part, because it is all there. Surely the adjudicator is to monitor whether these arrangements are working satisfactorily?
It may be, of course, that the further sophistication suggested by the noble Lord, Lord Browne, would also be a sensible thing to do. I have no view on that; I am not sufficiently expert. However, I cannot understand—and I need to be given some sort of comfort—why the adjudicator is involved in arbitration, as opposed to simply taking note of the fact that arbitration is taking place, and probably coming to a view as to whether, when it took place, it was a satisfactory procedure or not?
Baroness Wilcox
The noble Lord, Lord Browne of Ladyton, has raised an important question that it is well worth us examining closely. It is correct that the adjudicator will have two separate main roles. One will involve arbitration, as set out in Clauses 2 and 3 of the Bill. The other will involve investigations and is set out primarily in Clauses 4 to 10 of the Bill. Both roles will be carried out fairly and impartially. The two functions will be distinct from each other and it is important, as the noble Lord, Lord Browne said, that they remain so in order to prevent any conflict of interest.
The noble Lord, Lord Browne, asked whether the adjudicator would always be conflicted. Not necessarily. If arbitration is sought on a subject where the adjudicator has not carried out an investigation or given advice, it is likely that there would be no conflict of interest. We do not consider it inherent in the functions of the adjudicator that he or she will be conflicted in carrying out arbitrations.
It is important to remember that the adjudicator will carry out all their functions fairly and impartially. It is not the role of the adjudicator to act as an advocate for suppliers in carrying out investigations, but it is possible that conflicts will arise in particular cases, and the Bill provides the flexibility to deal with each situation as it arises. The Government consider that Clause 2(1)(b) in particular will help ensure that the distinction between the adjudicator’s arbitration and investigation functions is maintained and that any conflicts of interest are prevented. This clause allows the adjudicator to appoint another person to arbitrate a dispute. The Government envisage that this will be used in cases where a conflict of interest may exist, for example where the adjudicator has previously advised on, or investigated, an issue which is relevant to the dispute. To assist the noble Lord, Lord Browne, the powers to arbitrate are applied at the request of the supplier or retailer. No previous investigation is actually needed.
The adjudicator will be required to act responsibly and will refer any cases where a conflict may arise. However, in cases where there is no conflict of interest, the Government believe that it is sensible to allow the adjudicator to arbitrate. This was envisaged by the Competition Commission in its drafting of the groceries supply order. The adjudicator will, after all, probably be the single most experienced person in the workings of the code.
On the proposed procedure for appointing an arbitrator, I do not consider it necessary to set this out in the Bill. As the Explanatory Notes explain, in England and Wales and Northern Ireland, Section 94 of the Arbitration Act 1996 will broadly apply the provisions of Part 1 of that Act to any arbitrations carried out under the groceries supply order and this Bill. In Scotland, Section 16 of the Arbitration (Scotland) Act 2010 will broadly have a similar effect in applying the Scottish arbitration rules.
The arbitration legislation which will apply to arbitrations by the adjudicator or a person appointed by the adjudicator includes protections on fairness and impartiality, including an ability for parties to apply to the court to remove an arbitrator on those grounds. The adjudicator can of course be expected to satisfy himself or herself either that they can carry out an arbitration themselves fairly and impartially, or that the person they appoint will do so, but there is a safeguard in the arbitration legislation if, for some reason, that does not happen properly.
I wanted to respond to my noble friend Lord Eccles, and have now found the speaking note for that. The groceries supply order has already established a dispute resolution scheme for disputes arising between a particular retailer and a particular direct supplier under the groceries code. The order anticipates that the adjudicator, referred to there as the “ombudsman”, will arbitrate these disputes. This will both ensure that the disputes are arbitrated by an individual with a high level of expertise in the sector and will allow the adjudicator to gain a greater understanding of how the code is operating that will be helpful when carrying out his or her functions, such as providing advice or preparing the annual report. I hope that that is helpful.
I hope that these rather long but, we felt, necessary explanations have proved satisfactory to noble Lords. While I would of course be happy to speak further to the noble Lord, Lord Browne of Ladyton, about this matter, I ask him to withdraw his amendment at this stage.
Lord Browne of Ladyton
My Lords, I am grateful to the noble Viscount, Lord Eccles, for expanding into a potentially fruitful area my further deliberations on this. I had not thought to look at the terms of the code itself, but his drawing my attention to the detail of the provisions on arbitration points to an area at least worthy of consideration: the interaction between existing provisions and those that would be enacted by the Bill, which are less descriptive. It interests me that the Government have chosen to legislate in way that is less clear than the simple provisions in the code, which the noble Viscount read out, composed by the Competition Commission. I will take some time to deliberate on that, but it is an area worth exploring, perhaps at a later date.
I am grateful to the noble Baroness for giving these amendments such careful consideration, and for her words suggesting that they raise an important issue. It is an important issue and I remain to be convinced that it would be appropriate for the adjudicator to embark on arbitration without doing some prior investigation. I suppose that it depends on what one means by “prior investigation”. Given that it is expected that the adjudicator will arbitrate in a very small number of cases over the course of a year, I would expect that he or she would pay great attention to whether it was appropriate to deploy scarce resources on such a request, even if it came from a big retailer.
Viscount Eccles
I will try to be brief. I start by coming back to Professor Lyons, whose views were set out in paragraph 11.347 of the Competition Commission’s report:
“However, he believed that the Ombudsman would be counterproductive and strongly preferred rapid, independent arbitration of disputes, combined with OFT compliance”.
On the question of independent arbitration, I hope that we will investigate what is happening. It is very normal in conditions of supply and sale for there to be arbitration clauses. I suspect that if we were dealing with a large supermarket and somebody like Nestlé, Kellogg’s or Unilever, there would be arbitration clauses in the supply and purchase agreements. Are we saying that the adjudicator will override those clauses in some way because of the provisions of the Bill? That is one of my main reasons for suggesting that the adjudicator should play no part. That is why Clause 2 should come out of the Bill—and with it, under my Amendment 16, subsection (1) of the following clause. The adjudicator will not be at all well served by having the duty to administer arbitration or, if not being the arbitrator him or herself, to appoint another. That will override a lot of the existing and quite normal arrangements that are set out independently in contracts.
My noble friend said in different terms that the adjudicator will be neutral and fair between suppliers and retailers. I say with some regret that that is not the expectation. The expectation of the adjudicator, and those lobbying for the appointment of one, is that he or she will be in support of suppliers. I do not think that we should blink at that in this Committee. There has been no argument by the retailers of the kind that there has been by the suppliers. I quite accept that that is something to do with the gearing of perceived market power between the two sides, but if the adjudicator does not serve the interests of the suppliers, there will be a lot of disappointment.
Lord Knight of Weymouth
I am grateful to the noble Lord. As we have already heard, Waitrose, as one of the big retailers, is fully supportive of the establishment of not only the code but the adjudicator as well.
Viscount Eccles
I am grateful to the noble Lord, Lord Knight. I have looked at that with some care and he is quite right that the things said by Waitrose during these procedures have been more positive than some of the things said by other supermarkets. If you read the compliance reports in the supermarkets’ annual reports and accounts—those that are available—you will find that they are all complying, and doing so in cheerful and positive way. That is why I want the OFT, under paragraph 7 of the code—it gets all the reports and it has all the information—to give its assessment and judgment of the extent to which the supermarkets are complying in a cheerful and positive manner with this code. My belief is that they are complying. I have sought to find out the views of the supermarkets and all their responses have been 100% positive; not one has put up any kind of negative response. Their trade association’s response has been, “We are going to make this thing work. We are making this thing work. We do not really think that an adjudicator will help, but we may have to have one”. That is perhaps the attitude I am taking—if we have to have an adjudicator, we will get on with it. I do not think the argument that Waitrose stands out as an exception runs.
Lord Knight of Weymouth
Given that the noble Viscount had said that there were no suppliers, I merely wanted to offer the information to the Committee that clearly there was one.
Viscount Eccles
I am only talking about expectations. It is up to Members of the Committee to make up their minds as to where the expectations that might arise as a result of this Bill being enacted lie. We all make up our own minds. In conclusion, I would much prefer it, and I think that it would be much in the public interest, if Clause 2 did not stand part of the Bill.
Baroness Wilcox
My Lords, my noble friend Lord Eccles has already made clear that he believes that the adjudicator’s function should be given to the Office of Fair Trading. The Government disagree and consider that with arbitration, just as with investigations, there is merit in establishing a dedicated, independent office which can build up a high level of expertise in the groceries market. I have already discussed this issue in some depth in response to previous groupings and have set out why we have made the provisions for the adjudicator to arbitrate.
The groceries supply order has already established a dispute resolution scheme for disputes arising between a particular retailer and a particular direct supplier under the groceries code. The order anticipates that the adjudicator—referred to there as the “ombudsman”—will arbitrate these disputes. This will ensure that disputes are arbitrated by an individual with a high level of expertise in the sector and allow the adjudicator to gain a greater understanding of how the code is operating that will be helpful when carrying out his or her functions, such as providing advice or preparing the annual report.
In response to the question asked by my noble friend Lord Eccles on whether the Bill will override existing arbitration clauses, the order already gives a right to suppliers to arbitration in accordance with Article 2 of the order. The Bill simply allows the adjudicator to carry out that arbitration role where appropriate. Similarly, with regard to Amendment 16, the purpose of Clause 3(1) is to increase the expertise of the adjudicator—something that will benefit both retailers and suppliers. It is entirely reasonable that just because the adjudicator has not acted as an arbitrator he or she should continue to have access to the information from that dispute. This clause provides the adjudicator with the means of obtaining it. Therefore, with that explanation, although I know it will not please him, I hope that it will persuade him to allow Clause 2 to stand part of the Bill.
Viscount Eccles
I am grateful to my noble friend. Perhaps I may ask whether that last comment was on Part 2 of the code of practice, which does not seem to mention arbitration.
Baroness Wilcox
The order already gives the right to suppliers to arbitration, in accordance with Article 11. I am sorry, did I say Article 2?
Viscount Eccles
I thank my noble friend. I want to reiterate that I do not read anything in Article 11 that currently prevents a supermarket and a supplier entering into their own contractual arrangements about arbitration. Perhaps we could deal with that matter. I am sticking to my point that I would like an answer to the question: do the arrangements proposed in the Bill override normal contractual arrangements that exist between many suppliers and their customers in many markets?
I would also welcome—because I would like to come back to this at the next stage—some reflection on this matter of arbitration and its independence. I think that I am supporting the noble Lord, Lord Browne, because I remain of the opinion that it is almost inconceivable that the adjudicator will not have some perceived conflict of interest. Therefore, once it is perceived, the adjudicator will say, “I think that I had better back out of this and let it be done another way”. Meanwhile, I withdraw my opposition to the Question that the clause stand part of the Bill.
Lord Browne of Ladyton
“( ) The power conferred by this section is not exercisable in relation to information or documents in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.”
Lord Browne of Ladyton
My Lords, I shall not detain the Committee long with my amendments in this group. They are designed to protect legal professional privilege and confidentiality of communications in Scotland.
I am certain that the noble Baroness will say that legal professional privilege is recognised by common law and is therefore protected by it; that it is not therefore necessary to make legislation to protect it; and that the same applies in Scotland. My question to her, although she may not be able to answer it, is: why do we protect legal professional privilege in some legislation but not in other legislation? For example, in the Counter-Terrorism Act 2008, at paragraph 12 in Part 3 of Schedule 7, we enacted exactly the provision I have sought to include in the Bill. That is only one example and I can find others. I apologise to the noble Baroness for bowling her a bit of googly, even if I am a Scotsman—and we normally cannot play cricket at all, unless we captain the English team. Why on some occasions do we legislate to protect legal professional privilege and on others we do not? If she can answer that at some stage, I will be pleased. I do not intend to press this matter to a Division. I beg to move.
Baroness Wilcox
This is an important issue. It is clearly important that documents subject to legal professional privilege should not be subject to the information-gathering powers that are granted here. I thank the noble Lord, Lord Browne, for raising this point and reassure him that the Bill already gives protection to documents that are subject to legal professional privilege, on the basis of the general rule about legal professional privilege in civil proceedings. Because the enforcement mechanism in Schedule 2 and Clause 3 is via civil proceedings, the outcome is that legal professional privilege cannot be overridden.
I can say that confidently because legal professional privilege can be overridden only by express words or necessary implication. That is precisely what the House of Lords decided in the case of R (Morgan Grenfell & Co Ltd) v Special Tax Commissioner 2003. There are no express words of override here, nor is there anything that can be thought of as giving rise to unnecessary implication. In the mean time, I have been given an answer to the question put to me by the noble Lord. It is difficult to talk about other legislation, but we are clear that the intent is to protect legal professional privilege here.
As a result of the precedent to which I have just referred, the Bill has the effect desired by the noble Lord, Lord Browne of Ladyton, and I would therefore ask him to withdraw his amendment.
Lord Browne of Ladyton
Lord Browne of Ladyton
My Lords, the purpose of this amendment is to give the adjudicator a basis for investigating an alleged breach of the groceries code. Perhaps I may say at the outset that, if it is of concern to the noble Baroness or the Government, I do not intend to undermine in any sense the requirement for reasonable grounds of suspecting a breach of the code before an investigation can take place. Clause 4 enables the adjudicator to investigate in those circumstances, and I think that that is the appropriate test. However, we will have a debate about whether it is the appropriate test in response to other amendments before the Committee.
There is a perception that proaction on the part of the adjudicator and reasonable grounds are inconsistent with each other. I do not believe they are, and this amendment makes that clear. There is no provision in the Bill that allows the adjudicator to form the reasonable grounds for an investigation, so providing a route for complaints to the investigator is the best way to achieve reasonable grounds. This amendment provides in a simple way for the adjudicator to take his own initiative, on receiving a third party complaint, to begin an investigation. That is straightforward, and if we are legislating in plain language to indicate what we intend, we should spell that out. I beg to move.
Lord Teverson
My Lords, I should like to speak to my own amendment in this group, Amendment 26. Something that particularly interested me in the speech made by my noble friend the Minister at Second Reading was that, following the considerable work carried out on this Bill in its preparation stages, the provision allowing bodies to make a complaint was widened. In her opening statement, the Minister set out a list of bodies that could bring complaints before the adjudicator. The major change was that instead of only suppliers themselves being able to complain, the Bill specifically opens up the ability to do so to trade associations and third parties. I want to use the amendment moved by the noble Lord, Lord Browne, to ask whether that is absolutely the case.
I note that Clause 4(1) states:
“The Adjudicator may investigate whether a large retailer has broken the Groceries Code if the Adjudicator has reasonable grounds to suspect that”.
While I do not have the depth of knowledge of the noble Lord, Lord Browne, on these issues, which he has demonstrated so well, I want to be clear that what it means is that whoever reports a reasonable suspicion that there has been an abuse, the adjudicator can get involved. In fact, I was slightly concerned by his Amendment 23 as it seems restrictive, although I am not sure that that was his intention. It refers to,
“either at the Adjudicator’s own initiative or following a complaint by a third party with an interest”.
To me that almost excludes a farmer or a supplier, which I would say is the second party. It seems confusing, but perhaps I do not understand it completely.
I am also aware that Amendment 27, which is in this group although the noble Lord, Lord Howard, has not spoken to it yet, seems to be even more restrictive. The Minister’s assertion that we should be as broad as possible in terms of the adjudicator is very important, not only in his being able to take evidence—which is my own amendment—but also in his being able to have a wide range of people reporting problems to him. That is fundamental to the proper working of this Bill.
As regards my Amendment 26, it is important to emphasise that the adjudicator can consider any information that it seems appropriate to consider. I am not certain but that may well be covered by default by the Bill. I would like to test that and to ask the Minister to respond on whether that will exist within the wording of the Bill.
Lord Borrie
I join in the query of the noble Lord, Lord Teverson, to the Minister, which I hope she can answer, to make sure that those who can make complaints are not only individual farmers, producers or whatever but also trade associations such as the National Farmers’ Union or the British Retail Consortium.
I hope that my noble friend Lord Browne does not think I am going for him today in the various matters on which we disagree, but I am slightly worried—as I think the noble Lord, Lord Teverson, was—by the phrase in Amendment 23,
“complaint by a third party with an interest”.
If the third party is a trade association, then I suppose that parties one and two are the supplier on the one hand and the supermarket on the other. But then, what does “third party with an interest” mean? If that is the trade association, does that mean that it has to have some interest other than the fact that the supplier, who has got a real complaint, is a member of it? Is that what “interest” is meant to mean, or must it be wider than that? That is the query I put to my noble friend Lord Browne but there is also a general point about where complaints can come from. I hope that it is from as widely as possible.
Lord Howard of Rising
My Lords, I feel I should first finish declaring my interests: I am a farmer as well. I find it rather gripping to find the noble Lord on the other side defending the farming industry so strongly during this debate.
My Amendment 27 reflects the wording which was included in the draft Bill and limits those who can complain to parties to the transaction. If anybody else can come and stick their oar in, it is a source of endless trouble. For example—you may find this a little extreme but I am certain it would happen—if I am supplying a supermarket, my competitor thinks that I am doing well and would like to have my contract, he could put in a complaint—anonymously, of course. The supermarket would say, “Oh,” and the whole process would start. While the process was going on, my competitor could leak that it was me who complained—although of course I never did—and the result would be that when my contract came to an end there would be little incentive for the supermarket to continue with me. My competitor might do rather well, at that stage. I just give you that as an example of the sort of thing that would happen if anyone, all and sundry, could make a complaint which had to be listened to.
I ask the Minister one question. In the notes for the draft Bill, there was a comment that the adjudicator has no power to require people to provide information for the purpose of deciding whether to commence an investigation. I would like confirmation that this is still the case in the Bill as it has been presented to the Committee.
Baroness Byford
My Lords, I declare a past interest. We are still farmers, but we do not supply supermarkets any longer. In fact, we used to have a contract with Waitrose to supply pigs. I reiterate what the noble Lord, Lord Knight, said earlier: Waitrose offer a very good example and a steer to a lot of the other retailers that we are talking about.
I will comment on my noble friend Lord Howard of Rising’s point. I would be anxious if we went back down the route that he suggests. I also seek clarification from the Minister, or from himself, on how you classify what is “publicly available”. Obviously, a lot of information is hearsay and is not publicly available. I would be really quite concerned about that.
On the earlier comments about third parties being able to give evidence to the adjudicator, this morning I asked the National Farmers’ Union, which has sent a briefing to all of us—and of which I declare myself a member—whether it would only do that on behalf of its members. It seemed a logical question to ask. Otherwise, there may be many other people who would be affected if they were willing to take it up on everybody’s behalf. I think that the answer I got to that was that, generally, it would probably be instigated by a member, but that other evidence and considerations would obviously be taken into account. I am quite happy with what is in the Bill, and would be quite concerned if we started narrowing it back just to information provided by a supplier. We have been down that route before. That would identify the supplier to the supermarket very quickly, which the Bill is not trying to do. The acceptance that third parties can give evidence and bring things forward to the adjudicator is hugely important.
My noble friend Lord Howard of Rising is right that the balance lies where mischievousness creeps into it. Clearly, all Members of this Committee would be horrified about that. My reading of the Bill is that I am reasonably comfortable with it, and am not particularly concerned about that. The detail in the Bill does not totally stop it happening, but it certainly discourages it. These instigations of investigations should only happen on good grounds.
Baroness Randerson
My Lords, I wish to state clearly that I do not agree with the arguments of my noble friend Lord Howard of Rising. If there had been a robbery, would we ever argue that a witness to that robbery could not give evidence to the police and that the only people who could do so would be either the robber or the victim? We have to open this out so that the general principles on which we base so many issues of this nature in society apply, so that other people are allowed to make complaints. I give one example: there are plenty of organisations in civic society that might wish to make a complaint on behalf of a supplier in this case. I remind noble Lords that other aspects of the Bill ensure that it is not in your interest to make vexatious complaints. The adjudicator can, at his or her discretion, apply costs against those who do so. I am absolutely sure that a supplier who sought an advantage against another supplier in the way that has been suggested would be the subject of that kind of cost.
The Earl of Sandwich
The noble Baroness, Lady Byford, and others said exactly what I would have. I am an NFU member. I know how much the Government have steered a course in this to accept third parties. I do not know what the noble Lord, Lord Howard, meant by “all and sundry” but it is a rather sinister phrase. It presumably means mischief and none of us wants that. I hope that the Government keep the wording as it stands.
Lord Grantchester
Picking up on quite wide-ranging amendments, I think that on this side we are content that included in the drafting of the clause is the fact that third parties can be party to the complainant. That is perhaps the easiest way to put it. Yet we appreciate what has been said and would like the Minister to underline and put on the record that that is indeed the case. On this side, we think that third parties will act as a responsible check and balance to the process in that they will pick up widespread experience of the supply chain, including from other suppliers who may come forward with information. I am sure that they will act as a steadying hand on any vexatious claims that individual suppliers might feel they have under their own individual circumstances. I will also reply to the noble Lord, Lord Howard. Of course, on this side we are very concerned that fair and best practice should be everyday experience for all businesses, whether they supply supermarkets or not.
Baroness Wilcox
I thank all noble Lords. We are considering three amendments in this group—two intended to make it easier for the adjudicator to begin investigations and one to make it harder.
I assure noble Lords that the Government are in complete sympathy with the aims of the amendments tabled by my noble friends Lord Razzall and Lord Teverson, and by the noble Lord, Lord Browne. We firmly believe that the adjudicator should be able to consider information from any source when deciding whether to start an investigation, whether or not this is provided by way of complaint. However, it is unnecessary to make explicit provision for the breadth of information that can be considered. I assure noble Lords that in this respect Clause 4 is written broadly and places no limits on who can complain to the adjudicator or what evidence the adjudicator can consider as reasonable grounds for suspicion. My officials have discussed this clause with trade associations and representatives of suppliers, including the National Farmers’ Union and the Food and Drink Federation, and they have raised no concerns over the wording of Clause 4.
The amendment of my noble friend Lord Howard of Rising would return the Bill to the draft that was originally published for pre-legislative scrutiny last year by restricting the sources of information that the adjudicator could consider to information from suppliers and information in the public domain. I remind noble Lords that this issue was considered carefully by the BIS and EFRA Select Committees, both of which explicitly rejected the version of the clause that is now being proposed. They concluded that third parties, including trade associations and whistleblowers, could have a valuable role to play. After discussion with both suppliers and retailers, the Government decided that that was right. Trade associations, for example, may have a better overall picture of practices in a sector, which could reveal systematic breaches of the code. The Government therefore consider that it is right that the adjudicator should be able to consider any relevant information when making decisions to investigate. However, I reassure my noble friend Lord Howard of Rising that we have also introduced Clause 15(10) to enable the Secretary of State to restrict the possible sources, if it turns out that third parties do act irresponsibly.
I say to my noble friends Lady Byford, Lady Randerson and Lord Howard that there is protection in the Bill against malicious complaints, in that costs can be awarded against a complainant who makes a vexatious complaint or one that is wholly without merit. If those answers are seen as good and fair, I will ask the noble Lord, Lord Browne, to withdraw his amendment.
Lord Browne of Ladyton
My Lords, at Second Reading the Minister said that there would be no restrictions on who could complain to the adjudicator and she has confirmed that that is the position, which I am satisfied with. I am grateful to all noble Lords who have spoken in this debate for their support of that position, which was overwhelming, with one notable exception.
The noble Lords, Lord Teverson and Lord Borrie, raised the issue of my reference to the phrase “with an interest” as perhaps restricting those who can complain. I may, in including it, have been guilty of what I have been trying to avoid and want the Government to avoid: attaching legalese when it is unnecessary. The concept of “with an interest” is well recognised by lawyers. It was intended not to restrict but to indicate that there ought to be a bar against frivolous or vexatious complaints. The idea of title and interest is a concept with which I am entirely comfortable, but I understand that many other people may not be and may think that it would be restrictive. It would not prevent any of those identified groups that noble Lords want to be able to complain to the adjudicator from doing just that. In any event, I would think that the adjudicator would be experienced and able enough to indentify frivolous or vexatious complaints and see them off rather than have to wait until the end to deal with them by the imposition of expenses, as it were.
I cannot conclude without expressing a degree of regret at the tone of the preamble to the contribution of the noble Lord, Lord Howard of Rising, to which I listened with interest. I have some sympathy with it, which he will have gathered from my contribution. I am not interested in creating some monster which runs away in terms of regulation.
Baroness Wilcox
Before the noble Lord sits down, I realise that I omitted a response to my noble friend Lord Howard on a question that he asked. It was central to what he was saying, so I hope that the noble Lord, Lord Browne, does not mind if I intrude. My noble friend Lord Howard asked whether it was right that the adjudicator will have no power to require information before an investigation is started. The answer is yes. The adjudicator will have no such power; this is in paragraph 35 of the Explanatory Notes. The only exception to that is the monitoring of recommendations. I thank the noble Lord, Lord Browne.
Lord Browne of Ladyton
I will finish what I had to say. I was pleased that the nature of our debate in Committee this afternoon was devoid of partisanship. I know that the noble Lord, Lord Howard, was perhaps just tweaking our tail a little and was not making too serious a point, However, I represented a group of farmers in my constituency, which was both urban and rural, for 13 years. I established a good relationship with them, and some of them became my very good friends, although I did not know them before I became a Member of Parliament. I say to the noble Lord, Lord Howard, that before he categorises people as manifestations of irony, perhaps he should make some inquiries. I am confident that, were he to interrogate members of the National Farmers’ Union in Scotland whom I represented for 13 years about whether they thought it ironic that I should be party to a process that is designed to protect their livelihoods and those of others, he would be surprised. Clearly he would be surprised, because he has a preconception about where I am coming from. The same could be said of my noble friends on the Front Bench. I understand that one of them farms, and so is well qualified to speak for farmers. Therefore, it might be better if we avoided such implications for the rest of our deliberations. I beg leave to withdraw the amendment.
Viscount Eccles
Viscount Eccles
My Lords, I will read out a sentence that is relevant to my amendment and also to the one we have just discussed. The Minister stated:
“After careful consideration, the Government have decided not to restrict the information that the adjudicator can consider”.—[Official Report, 22/5/2012; col. 726.]
That is entirely right. It is a free country, with free speech and so on. However, at the other end of the story, if we were to get into a situation where it was found that something had been brought forward that turned out to be vexatious, it would represent a failure and would be proof that the Bill was not working as well as it should.
I am mindful of the warning of Professor Lyons that he was not at all sure that the investigation potential was all that large, because of the length of the supply chain and because the adjudicator may investigate whether a large retailer has broken the groceries code. That is quite a narrow ground on which to mount an investigation.
In my amendment I put forward the argument that we should take out “suspect” and put in “believe”. There is a lot of hearsay and suspicion in the world, and in the way in which people think about the way supermarkets behave. When considering several Bills recently the House had no problem accepting that “suspect” was too weak and that we should “believe” before we start engaging in the expenditure of public money. I also think that it would be a protection for the adjudicator. This business of investigation is delicate and the adjudicator will have quite a hard time with it.
It is not an answer to say that Amendment 24 is irrelevant, because I think that the Office of Fair Trading should persist. That is my preference but of course I am capable of accepting that we should debate this on the basis that there will be an adjudicator, even though I want to see the continuation of the OFT. The adjudicator would welcome the protection of having to say that he or she “believed” that they had reasonable grounds rather than just “suspected”. I beg to move.
Baroness Wilcox
My Lords, the amendment would alter the criterion for starting an investigation so that the adjudicator would have to have reasonable grounds to believe that there had been a breach of the code, rather than reasonable grounds to suspect, before beginning an investigation. The decision on what threshold is needed is always difficult. However, we should consider what is being decided here. It is not guilt, liability or a sanction of any kind. All that is being decided is whether the adjudicator should begin an investigation that will allow him or her to decide, based on the results of the investigation, whether there has been a breach of the code. At this early stage of the process, the term “suspect” rather than “believe” has to be correct, particularly as the adjudicator generally will not benefit from the information powers set out in Schedule 2 until an investigation has started, and so may not be able to establish grounds for belief.
With that explanation, I hope that the noble Lord will see fit to withdraw his amendment.
Viscount Eccles
My Lords, I thank my noble friend, although I will come back to the matter because I am not satisfied. I should like to point out that the minute an investigation begins, it threatens a supermarket with an unexpected cost. Starting an investigation is quite a serious matter and is not to be undertaken lightly. The word “believe” should be included in the prelude to an investigation. I also think, given the amount of information that would already be available and will become available to the adjudicator, it should not be too much of a problem to ensure that there is some certainty that the matter is worth investigating. I beg leave to withdraw the amendment.
Baroness Byford
Baroness Byford
My Lords, we have moved on to looking at investigations. My amendment seeks to amend Schedule 2(6). The Explanatory Notes refer in line 3 on page 11 to the adjudicator considering information supplied by whistleblowers. The rule in the Bill that allows the payment of expenses only to someone who has to undertake a journey of “more than 10 miles” could exclude—I do not say that it will do so—people who live in the countryside. As we know, if they do not have a car, public transport can be quite a problem. Does the choice of a distance of 10 miles follow what has been provided for in previous legislation or does it relate only to this Bill? A distance of 10 miles in urban areas with plenty of transport options is one matter, but in rural areas where buses sometimes run only three times a week, it is another. Is it necessary to restrict this provision to that distance? It could well be that someone has to make a six-mile journey and cannot manage it easily. As the Bill stands, they would not be entitled to any financial help to get to the adjudicator and give their evidence.
Earlier today, we had a meeting of the All-Party Parliamentary Group on Rural Services. One of the things we talked about was the provision of rural bus and rail services. I have to say that it is an increasingly difficult problem. For those who own cars, it is not something that needs to be thought about, but for those who do not own cars, it is. If someone happened to be a whistleblower, which is what we are talking about here, and had lost their job, they might find themselves in difficulties. I have therefore tabled the amendment to seek clarification. I beg to move.
Lord Knight of Weymouth
My Lords, I am interested in the noble Baroness’s amendment. I shall not comment on it at length, but I understand the problem she raises here. I want only to ask the Minister whether, under paragraph 16 of Schedule 1, which we discussed earlier in respect of incidental powers, it would be better to offer the adjudicator some flexibility under this wonderful paragraph and thus allow him to use his judgment on what would be a reasonable level of travel expenses.
Baroness Wilcox
My Lords, I can understand why my noble friend is asking this question because she lives in the countryside. I live in Cornwall and I know about buses in rural areas, and can understand the principle behind the amendment. From a practical point of view, a simple distance criterion will be much easier for the adjudicator to apply than one based on the time taken to use public transport. It says here that it is more straightforward and harder to dispute to decide whether someone has travelled more than 10 miles than to calculate whether it would have been possible to make that journey within half an hour on public transport.
However, my instinct is similar to that of the noble Lord, Lord Knight, and I feel that somehow or other the adjudicator should at least be able to have some thoughts on this matter. Although I shall ask my noble friend to withdraw the amendment, I can say that we will go back and look at this issue to see what the answer may be. I do not know whether there can be some discretion, and I may be treading on all sorts of impossible ground, but when we discussed this matter previously, and my team asked why we should consider this, I said, “I think you will find that this is a rural question”. There is obviously sympathy in the Committee for my noble friend’s question. I therefore ask her to withdraw her amendment. However, I will take it away and see if there is anything else that we can come back with.
Baroness Byford
I thank my noble friend for that response. I am not wedded to the half-hour period suggested in the amendment, but I wanted a debate about the need for rural accessibility. I am grateful to the noble Lord, Lord Knight of Weymouth. We all appreciate some of the real difficulties that people face. I am grateful to the Minister, and it gives me great pleasure to withdraw my amendment in the hope that we will come back with something at the next stage. I beg leave to withdraw the amendment.
Lord Browne of Ladyton
(c) the reasons for the decisions reached”
Lord Browne of Ladyton
My Lords, the purpose of the amendment is to require the adjudicator to give reasons for his or her decisions under Clause 5, for the very obvious reason that such decisions can lead to the consequences described in Clause 6 on forms of enforcement. The Minister will agree, as will the Government, that the adjudicator is expected to comply with the rule of law. It is important that the adjudicator’s decisions are lawful and reasonable, following investigation.
This simple amendment places the adjudicator under an obligation to provide reasons for his or her decisions to use enforcement powers under the Bill. It would be an eminently appropriate provision to have in the Bill. There will be an expectation on the part of the Government that the adjudicator will give such reasons, but ensuring that an expectation that reasons will be supplied would reassure those who may feel in any sense threatened by this legislation or believe that it will create an environment in which unreasonable demands may be made of them. In my experience, a requirement to provide reasons obliges those who make decisions to comply with the law and avoid successful challenge on grounds of human rights or judicial review.
However, much more importantly, providing reasons often means that judgments are accepted. In my experience of processes of this nature, if reasons are given people can then be satisfied that there is no point in taking the matter further by any form of appeal. In the absence of reasons, appeals or further proceedings are taken just to find out the reasons, which is why so many processes stop at the door of the appellate court or there are further proceedings. It is only at that point that parties can understand exactly the reasons for the decision in the first place.
I commend the amendment. I have not been successful thus far in my many attempts to try to improve the Bill. I hope that this simple amendment will not be considered offensive and that the Government can be generous enough to say that the Bill can be improved, even if the proposal for improvement comes from the traditional opposition Benches. I beg to move.
Viscount Eccles
My Lords, I have an amendment in this group. I am in full support of the noble Lord, Lord Browne. My amendments dovetail entirely with what he has just said. I want to drop subsections (3) and (4) of Clause 5 because, in this media age, the idea that an investigation report will be published and that the identity of the retailer will not come out is not workable. Again, it feeds the whole world of suspicion, innuendo and investigation of another kind. On subsection (4), if a retailer’s name is given, apart from the reasons for the decision having been given, the retailer would have been given an opportunity to make a comment and to know which way the report was going, as is normal in order that it could be agreed by one and all to be a well balanced and fair report.
Baroness Byford
I will speak to my Amendment 34 in this group. It is a simple, probing amendment to ask whether the wording implies that a supplier will never be mentioned and that, if a supplier is mentioned, he or she does not need or deserve a second chance to comment. For example, if a retailer is mentioned in the draft, it can see the copy and comment on it. As a result, the draft may be changed. Should it not be open to all parties involved in the investigation to know both the original wording and the comments made?
Lord Borrie
I cannot see how the Minister can possibly have a good reason for rejecting the perfectly straightforward amendment of by my noble friend.
Baroness Wilcox
My Lords, the reports that the adjudicator must publish at the end of each investigation are a vital part of his or her accountability and an important way of keeping retailers, suppliers and consumers informed of his or her work. It is therefore right that we should carefully examine what is contained within them. To take each of the amendments in turn, I find the amendment in the name of the noble Lord, Lord Browne of Ladyton, interesting and he has made his case eloquently. It is indeed reasonable that the report should give the reasons for the decisions reached, as well as the decisions themselves. I would be happy to speak with him further about this amendment before the next stage of the Bill.
I am less sure of Amendment 33, which is proposed by my noble friend Lord Eccles. I think that it is reasonable to say that the adjudicator’s report need not always identify the retailer concerned. This is because there may be cases where the adjudicator considers that the matter can more appropriately be dealt with privately. For example, if there were no breach of the code, the adjudicator might conclude that it would be unfair to name the retailer that had been investigated, due to the possible reputational damage.
Lord Knight of Weymouth
I am most grateful to the noble Baroness for giving way. In what way will the Freedom of Information Act apply to the adjudicator? If a report was published that did not identify a retailer and someone wanted to find out who the retailer was, would it apply? I think that that is pertinent to the noble Viscount’s amendment.
Baroness Wilcox
Will scrutiny from freedom of information or the parliamentary commissioner not undermine the principle of confidentiality? The duty to maintain confidentiality is very strong and the Bill is explicit that it can only be overruled in certain defined circumstances. Those would not include a freedom of information request and that position is a result of Section 44 of the Freedom of Information Act, which is engaged by Clause 18. Generally, freedom of information will apply to the adjudicator with the exception of Clause 18 overriding it. I am sorry that that was a slightly disjointed answer. Was it of help?
Lord Knight of Weymouth
I am grateful to the Minister for giving me another chance to seek clarification. It seemed clear and then the second piece of in-flight refuelling to the Minister made it less so. She essentially said that there is a confidentiality get-out on FOI for the adjudicator. Normally, freedom of information would apply to the work of the adjudicator unless there were good reasons for confidentiality such as protecting the interests of a retailer who would otherwise be damaged. Is that the case? If the Minister or her in-flight refuelling were able to give us some examples, that would be quite helpful.
Baroness Wilcox
My view—and that of the advisers behind me—is that at this stage I need say only one thing: I will write to the noble Lord. That will be easier and fairer. We will make sure that everyone else receives a copy of that, too. I apologise for not being able to be clearer at this stage. Maybe it is getting late. Furthermore, regarding the deletion of subsection (4), it is only fair that if a retailer is identified in a report they are given a reasonable opportunity to comment on a draft of that report before publication.
That brings us on to my noble friend Lady Byford’s amendment, which would require the retailer’s comments to be published as an annex to the report. Although I understand the thinking behind that, on balance it is unnecessary. Although the retailer may comment, the adjudicator is not obliged to include any of these comments and the final report is fully the adjudicator’s. Furthermore, if a retailer knew that any comments they made would be published, it could impair free and frank discussions. I hope that that clarifies the position a little. Apart from the fact that I will write to everyone to clarify the point about freedom of information, I ask noble Lords to withdraw their amendments.
Baroness Byford
I am slightly mystified by the Minister’s response to my question. I would be grateful if she would take it away and think about it because it was a surprise.
Lord Browne of Ladyton
Despite the lateness of the hour, I am significantly perked up by the noble Baroness’s response. I have no doubt that what tipped the balance in my favour was the support that I received from the noble Viscount, Lord Eccles, but more importantly that I managed at last to persuade my noble friend Lord Borrie that there was some merit in one of my amendments. I am extremely grateful to him. He has almost rehabilitated his relationship with me with that intervention. I am delighted that the noble Baroness is willing to take this away. I would of course say this but, with respect, it enhances this part of the Bill. It will have the consequence of reducing the amount of contention that follows decisions if it is clear that people can expect that there will be reasons given for them.
I listened carefully to the amendment by the noble Viscount, Lord Eccles, and I have some sympathy. Coupled with the contribution of the noble Baroness, Lady Byford, there is an issue here that requires further exploration. I think that—with respect—there was a cross-purposes discussion that took place between the proposal of the noble Baroness for comments to be published, and the response from the Minister that that would in some way impede the process of investigation. I understood the noble Baroness to be saying that the comments and response deserve to be published. As these will be published in any event, it would be a much more coherent and comprehensive process that would command the support of parties if they thought that, even when there was a finding against them, the response would be published by the process rather than independently of it.
I hope that I have done credit to the amendment from the noble Baroness. In any case, conversations are about to take place and I hope that, when we all come back to this, there will be even bigger smiles on their faces, metaphorically, than I have at the moment, having managed to achieve even this minor victory. In the mean time, I beg leave to withdraw the amendment.
Earl Attlee
My Lords, I think this may be a convenient moment to adjourn the Committee until Thursday at 2pm.
House of Lords
Introduction: Baroness Kidron
NHS: Dental Care
(12 years, 5 months ago)
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Baroness Gardner of Parkes
To ask Her Majesty’s Government how many dentists are now providing NHS dental care under the general dental services contract introduced in 2006; and what is the annual cost of the care provided and the amount generated in patient charge revenues towards funding this care.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, the latest figures published by the NHS information centre show that 22,799 dentists provided NHS primary dental care in 2010-11. The net allocation for primary dental care in 2010-11, the latest year for which figures are available, was £2,200 million. Patient charge revenue for 2010-11 was £617 million.
Baroness Gardner of Parkes
It is good to have the updated figures, but is the Minister aware that the two major concerns for patients now are transparency and availability? Availability is something that we look to the health service to provide. However, the transparency issue has become very important, not only to patients but to other dentists, who are very dissatisfied that dentists are able to put up notices saying, “National Health Service treatment available”, yet after a patient goes to them it emerges that the treatment is very limited. Does the Minister not think that, in the interests of warning the consumer, the present NHS fee charts should show that conditions may apply?
Earl Howe
My Lords, I absolutely agree with my noble friend about the importance of transparency of information for NHS patients. NHS Choices, which is the department’s public-facing website, already displays a lot of information about fees, the treatment that should be received and how to make a complaint about NHS dentistry, but more work is being done in this area to improve information on patients’ ratings of different practices, and we are updating the patient leaflet as well. What a dentist should not do is mislead a patient or induce a patient to access the surgery and then not provide the treatment that the patient thought they were going to get. If they cannot provide NHS treatment for whatever reason, they should point the patient in the direction of a practice that can, or else refer him or her to the primary care trust helpline.
Lord Hunt of Kings Heath
My Lords, I refer the House to my health interests in the register. Following on from the noble Baroness’s Question, can the Minister refer specifically to the OFT report, which showed that thousands of patients, after being told by their dentist that they could not have a certain treatment on the NHS, were persuaded to go private? That is and was inaccurate information. Are the Government going to take action in this area?
Earl Howe
My Lords, the OFT report on the dental market was published last month and we very much welcome that study. We note that it found that the vast majority of patients were happy with their dental treatment and that the vast majority of dentists behave ethically. There should be, and are, clear penalties for the small minority who mislead patients, but the noble Lord is right to draw attention to that aspect of the OFT report. It is an area that we are taking extremely seriously and we are looking at what more we can do.
Lord Colwyn
In view of the Minister’s comments on patient charge revenues and the fact that NHS dentists are not allowed to do competitive pricing, has he any idea why the recent OFT report to which he has just referred revealed that 1% of regular NHS patients chose their dentist because, they said, the practice had competitive prices? Why do his colleagues at the department still refer to the NHS as being free at the point of delivery?
Earl Howe
My Lords, my noble friend is correct. Treatment provided on the NHS carries only one pricing tariff, which cannot be varied. The OFT report found that only 1% of NHS patients and 2% of private patients chose a dentist on the basis of price. I stand to be corrected, but I do not believe that it made any suggestion that NHS charges were uncompetitive; they are, and always have been, a subsidised contribution to NHS costs—they are not a market price. Therefore, I imagine that the OFT report reflected the fact that patients were comparing private charges with NHS charges. Of course, the NHS is in general free at the point of use, but my noble friend is right. It is important that we are clear that some charges exist, as they have in dentistry for 60 years.
Baroness Jolly
My Lords, some may avoid the dentist because they cannot find one, others for fear of high costs, and others just for fear. Have the Government carried out any work to determine what proportion of the population does not attend a dentist, and the reason why?
Earl Howe
I am pleased to tell my noble friend that since May 2010 over 1.1 million more patients have been seen by an NHS dentist, which is very good news. Nevertheless, we are clear that access is a priority—56.6% of the population has seen an NHS dentist within the past two years. We wish to design the new dental contract, which is currently being piloted, in a way that encourages access.
Baroness Knight of Collingtree
My Lords, does my noble friend recall that last month he told the House that he was giving attention to the possibility of access online to dental prices. Has he anything to report since he said that?
Earl Howe
My Lords, I referred earlier to NHS Choices, the website that patients and the public can access. It contains the most up-to-date information on dental treatment costs and entitlements. The dental section of NHS Choices was updated at the end of February following suggestions and comments submitted by the public through the website itself and these changes include new pages that clearly explain dental charges and exemptions and inform patients how to get help with dental costs.
The Countess of Mar
My Lords, am I right in my understanding that children and young people get all NHS dental treatment free of charge? If so, what improvements have there been in dental health among this group?
Earl Howe
The noble Countess is quite right. The oral health of children, particularly those from disadvantaged families, is one of the biggest challenges we have and one of the main priorities in this policy area. While two-thirds of five year-olds are now caries free, the remaining one-third have an average of 3.45 decayed, missing or filled teeth. We are piloting new ways of supporting dentists to identify children at risk of tooth decay to get them the care and preventive advice they need, including engagement through schools, the wider community and local authorities.
Rio+20 Conference
(12 years, 5 months ago)
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Lord Stern of Brentford
To ask Her Majesty’s Government what assessment they have made of the outcomes at the recent Rio+20 conference and the contribution made by the United Kingdom Government.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Taylor of Holbeach)
My Lords, the Rio+20 conference made clear that the green economy is essential for poverty eradication and sustainable development. It sets out a green economy vision and has agreed some specific steps that countries can take to implement this. These include agreement to develop sustainable development goals and indicators to complement GDP, and to advance corporate sustainability reporting. We approached Rio+20 with ambition and engaged constructively with our international partners, and we will continue to do this as we focus on implementation.
Lord Stern of Brentford
I thank the Minister for his Answer. I certainly welcome the Rio commitment to develop sustainable development goals and the Prime Minister’s involvement in that work. However, does the Minister agree that the facts indicate that now is the time for strong action if we are to avoid severe threats to the lives and livelihoods of future generations, particularly of the poorest among them? Does he also agree that the paucity of specific commitments, credible action plans and funding make Rio+20 deeply disappointing? Will he therefore agree that now is the time to change the debate by providing clear and strong examples of action to achieve results and that of particular importance is the implementation of sustainable energy for all by bringing sustainable power to the approximately 1.5 billion people with no access to electricity? Will the UK Government therefore work directly and strongly to support countries with viable plans for the delivery of sustainable energy for all?
Lord Taylor of Holbeach
The noble Lord has a great deal of knowledge in this area and I am very sorry that his indisposition meant that he could not chair one of the key committees at the conference. I agree that some of the outcomes are not as strong as we might have hoped. However, we must view this agreement in context. More than 190 countries have signed up to a political declaration and it is on the foundation of that declaration that the detailed work will then go forward. This country went to Rio+20 with a number of proposals that were welcomed by that conference.
Lord Clark of Windermere
My Lords, in view of the fact that one of the greatest single sources of global emissions is deforestation, and yet timber is one of the few tangible assets of some poor countries, will the Minister tell the House what specific agreement we made at Rio to try to tackle this very important issue?
Lord Taylor of Holbeach
I agree with the noble Lord that this is important. We wanted to impress on the conference that GDP was a rather inadequate measure of the resources of a country, and that we want to develop indicators of natural and social capital to complement GDP and agreement to incorporate these into national accounts. All nations at Rio+20 recognise the importance of a broader measure of progress to complement GDP in order to inform decision-making. Forestry is a key element of natural capital, and the UN Statistical Commission will take this work forward.
Lord Teverson
My Lords, corporate business is more and more important to the way the world develops. One of my right honourable friend the Deputy Prime Minister’s targets was to get corporates to report much more on carbon emissions and wider environmental issues. I congratulate the Government on deciding to do that here in the UK, but what other nations are following our lead and how does the Minister see this developing in the future?
Lord Taylor of Holbeach
I am delighted that the Deputy Prime Minister was able to make this declaration on greenhouse gas reporting at Rio. I can report back that the UK was key in this particular area and that this particular development was widely welcomed. Indeed, the decision was cheered by the conference. At Rio, we talked to Aviva and Unilever—companies that have developed exactly this sort of approach to corporate responsibility—and hope that this model will be taken up by other companies.
Lord Judd
My Lords, will the Minister take time to reflect on the answer he has given? I suggest, if I may, that he will find it very complacent. Climate change is the largest threat to the global community, notwithstanding our financial difficulties, which are obviously acute. Does the Minister agree that we must take urgent action on migration, world poverty and food availability for the world population? What happened at Rio is a disgrace. We should learn from the financial crisis that we suffer grievously if we do not take action in time. Why have we not taken and agreed specific action at Rio?
Lord Taylor of Holbeach
The noble Lord makes a passionate contribution to the discussion. Underlying it, of course, is the question of Britain’s role. This is a gathering of the world’s nations, with a huge disparity between the wealth and economic activity of the participating countries. Getting a single agreement is bound to be difficult. It is important that we have laid the foundations for discussions in the future that can lead to exactly the sort of outcomes that the noble Lord seeks, but it would be presumptive of this country or Parliament to go to an international conference and insist that it had the solutions to the world’s problems. We are part and parcel of a global solution, and that is what we seek to maintain.
Lord Knight of Weymouth
My Lords, the Rio agreement 20 years ago was a landmark agreement. As a result, we had Local Agenda 21, and “thinking global, acting local” entered our consciousness. By contrast, this agreement is a let-down. What does the Minister think this treaty will be remembered for in a month’s time, let alone in 20 years’ time? Given that the Prime Minister is co-chairing a process for following up the millennium development goals, in the light of a lack of progress at Rio what hope does the Minister have for the Prime Minister’s success?
Lord Taylor of Holbeach
I certainly have a great deal more hope than is evidenced by the noble Lord’s question. I do not see this as a failure. As I said right at the beginning in my Answer to the noble Lord, Lord Stern, this has the potential to build the foundations for a durable and sustainable global green economy. The Prime Minister is, through the United Nations, chairing his committee and working in parallel with the millennium development goals, and I am satisfied that he will achieve the outcome that he desires.
Child Poverty
(12 years, 5 months ago)
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Baroness Massey of Darwen
To ask Her Majesty’s Government how they will respond to UNICEF’s recent report on international comparable data on child deprivation and relative child poverty.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, we welcome this contribution to the debate on child poverty. As UNICEF notes, although income matters, eradicating child poverty is about more than income. This Government are investing to tackle the root causes of poverty. In particular, we are improving early intervention, reforming education and, through the universal credit, making work pay. This approach is fundamental to our strategy for tackling child poverty, and we are pleased that UNICEF’s conclusions support this.
Baroness Massey of Darwen
I thank the Minister for that reply. However, first, will he acknowledge that since 1990 a great deal has been achieved in addressing child poverty and deprivation; secondly, can he guarantee that these trends will continue, given the Government’s policies on welfare; and, thirdly, will he support regular reporting back to Parliament on this important issue?
Lord Freud
My Lords, the level of child poverty has come down since 1998 but the cost has been very high. More worryingly, we are now the second-highest spender on transfers to children and families, spending 3.6% of GNP on it—the figure for France being 3.8%—but we simply do not get enough for our money. We are way down the ranking and that is why we need a new approach. I cannot think of a single reason why quarterly reporting would help that but we are clearly committed to reducing child poverty. We are committed to the targets for 2020 and we need to find new ways of achieving them.
Lord Chidgey
As a prelude to the Minister’s consultation with UNICEF, which I think is planned for the autumn, how will the Government explain their plans to address the multidimensional nature of child poverty?
Lord Freud
My Lords, one thing on which there has not been enough focus is the importance of behavioural impacts. Income transfers have their place in tackling poverty but they are simply not enough. Behavioural changes are required, and one thing about universal credit is that it brings a change in work incentives, as well as some very precisely targeted income transfers. Vocational education and apprenticeships in this country have just not been adequate, and we have not looked after vulnerable groups—I am thinking of those leaving care and prisoners leaving prison. We need a large number of strategies to tackle this very difficult problem.
The Earl of Listowel
Education is the key route out of poverty. Will the Minister encourage his colleagues to look still more closely at the Finnish education system, where 20 candidates compete for each teacher training place, where every teacher, whether in primary or secondary school, has a masters qualification and where excellent results are achieved in numeracy, literacy and science? With regard to young people in care, will he consider again looking at the continent, where he will see how much more qualified the staff in children’s homes are compared with those in our country? Surely these are the children most at risk of poverty. Their carers and the people around them should have a high level of qualifications—ones that they can aspire to themselves.
Lord Freud
Yes, my Lords, this is an important point. We have a different approach from many of our continental peers. Looking at the figures, we do not seem to be doing well enough in some of these areas. When there are people who need real support, we need to look more closely at the education of the workforce.
Baroness Sherlock
If the UK is second in transferring money to help children, I personally am rather proud of that. If the Minister does not want to focus on income transfers, will he take this opportunity to reassure the House that when his universal credit comes in he will carry on supplying free school meals to children?
Lord Freud
Let me make clear why I do not think it is good enough. We are second as regards the number of income transfers—that comes out in the UNICEF report—but we are 22nd out of 35 countries as regards relative child poverty. That shows that we are just not getting value for our money. I can say that we are making arrangements to ensure that school meals continue in basically the same way, although longer term I am looking to try to incorporate that in the universal credit even more tightly and to make some improvements.
Baroness Deech
My Lords, is the Minister aware that there is widespread scepticism about relative poverty tables because no matter how much money is transferred to children, relatively there will always be others who have less? It is widely thought that one of the safeguards against poverty is having two parents who stay together, preferably with one of them in work.
Lord Freud
My Lords, there is a lot of debate about how to measure poverty. I believe that relative income measures have an important place, as do absolute measures, but it is quite true that we need to have strategies that go to the fundamentals that create poverty rather than worrying about trying to ameliorate those by income transfers. It is more important to have a balanced strategy.
Lord Avebury
My Lords, why do the Government refuse to extend the pupil premium to Gypsy, Roma and Traveller children who are the worst achievers in all sectors of education, whether measured by achievement, attendance or exclusions? Surely that group qualifies as being the most deprived of all in our schools.
Lord Freud
My Lords, I will pass that view on to the Department of Education.
Lord McKenzie of Luton
My Lords, as we have heard from the Minister, universal credit was supposed to be the last word in welfare reform and the route to tackling worklessness and child poverty. It is clear from recent information that it seems to be behind schedule and heading for being overbudget. Is that the reason for the Prime Minister’s latest foray into welfare reform? There are 17 ideas, which are apparently his and some of which he said could be implemented before the next election if he gained the support of his Liberal Democrat coalition partners. On which of the 17 ideas in particular is he trying to get the agreement of his coalition partners? Do they include removing access to housing benefit and the change in the link with inflation?
Lord Freud
I am really pleased to take this opportunity to reply and to tell noble Lords that universal credit is on time and on budget. The Prime Minister is looking at how to pull the welfare system into the future by asking some fundamental questions that we all need to think about.
Afghanistan: Women’s Rights and the Education of Girls
(12 years, 5 months ago)
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Baroness Williams of Crosby
To ask Her Majesty’s Government whether they will propose at the forthcoming Tokyo conference on support for Afghanistan that at least 25% of aid should be directed to the support of women’s rights and the education of girls.
Baroness Northover
My Lords, at the Tokyo conference in July we will be working to ensure that Afghanistan and its international partners reaffirm their commitments to the rights of Afghan women and children, as enshrined in the Afghan constitution. We wish to see long-term financial commitments from the international community in Tokyo matched by promises from the Afghan Government to deliver key services and policy reforms, including in the areas of human rights and equal status and opportunity for women. The Tokyo conference is not, however, the forum for detailed spending priorities.
Baroness Williams of Crosby
I thank my noble friend for that Answer. The Tokyo conference is the last occasion, and the best occasion, to try to change the attitude of the Afghan Government towards their handling of what is called the transformational period, the period that follows the removal of ISAF from Afghanistan next year. In the past few weeks we have had very troubling evidence of backsliding on women’s rights, including the poisoning of 120 schoolgirls for daring to attend school. All 120 of them are now in hospital.
Given all that, I ask the Government for two promises. First, will they insist that some part of the aid provided by this country—the $110 million we have committed to Afghanistan—should be devoted to the education, training and advancement of women as a condition of our aid being supplied? Secondly, there should be a transparent account of how that money is spent so that the Afghan Government cannot again escape their responsibilities in the way that, frankly, they have done all too often over the past couple of years.
Baroness Northover
My Lords, my noble friend is quite right that the position of women in Afghanistan is not at all as we would wish it to be. They have made a lot of progress, and we must make sure that we secure that progress and continue to make progress. As far as the UK Government are concerned, the way that DfID approaches its support for Afghanistan is underpinned by human rights, and women’s rights are part of human rights. That will continue to be the case into the future. As we look at the transformational decade that my noble friend referred to, that approach will continue as far as international donors are concerned. The protection of women’s rights is written into the Afghan constitution, and that is what is going to be expected of the Afghan Government.
Baroness Kinnock of Holyhead
My Lords, does the noble Baroness recall that 10 years ago it was, in fact, the plight of women in Afghanistan that captured our attention and our support? Is she aware that religious leaders, with tacit agreement from President Karzai, are now justifying certain types of domestic violence? They are proposing limits on women’s education and employment and calling for the compulsory wearing of the hijab. Against this background, will the United Kingdom Government undertake to ensure that any peace settlement contains specific and unconditional provision for protecting and promoting the rights and freedoms of women and girls in Afghanistan?
Baroness Northover
This Parliament, like many others, has done a huge amount to highlight the position of women in Afghanistan, and the noble Baroness is quite right that over the past decade or so that has been a focus here. That will continue to be the case. As the noble Baroness knows, Afghanistan is an extremely poor country— it is one of the poorest in the world—and it will continue to rely on donor support. That donor support insists on the adherence to the principles of Bonn, Chicago and Tokyo in commitment to human rights, and women’s rights are part of that.
Baroness Afshar
Would it be possible to ask the Afghan Government to act according to their Islamic teaching, which demands, as a matter of duty, the provision of education for women, so that they cannot get away with that under the pretence of it being Islamic?
Baroness Northover
I point out to the noble Baroness that 39% of the children attending school at the moment are girls, and that figure is up from virtually none in 2001. The donor commitment to Afghanistan will continue, and it is contingent upon recognition and respect for human rights and the rights of women.
Baroness Symons of Vernham Dean
The Minister spoke about the underpinning of the British Government’s commitment to the rights of girls and women in Afghanistan but the noble Baroness, Lady Williams of Crosby, asked a much more specific question about aid. It is not a matter of detail, as the noble Baroness implied in her first Answer. Will the Government undertake to ensure that 25% of our aid is earmarked for the rights of women and the education of girls? I thought that the point raised by the noble Baroness was not really answered by the Minister, and I hope she will now address that very specific point.
Baroness Northover
As I said before, the Tokyo conference is about the principles of taking this forward. The principles include respect for human rights, which includes education and the rights of women and girls. DfID mainstreams that through what it does. It therefore follows that the aid that DfID gives has that element built in. The specific request from my noble friend Lady Williams about ring-fencing a particular part is not necessary when you consider the principles and the fact that they are underpinned by a commitment to human rights, education and so on. I think that answers the noble Baroness’s question. The details of how that is done will be addressed down the line once the principles are established. The principles are key in the first instance.
Social Care Portability Bill [HL]
Administration and Works Committee
The Chairman of Committees
That Lord McAvoy be appointed a member of the Select Committee in place of Lord Bassam of Brighton, resigned.
Public Bodies (Child Maintenance and Enforcement Commission: Abolition and Transfer of Functions) Order 2012
(12 years, 5 months ago)
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Lord Freud
That the draft order and regulations be referred to a Grand Committee.
Financial Services Bill
(12 years, 5 months ago)
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Lord Peston
My Lords, I notice that the Chief Whip is in her place, so when will we who propose to spend quite a lot of time on the Bill and make serious contributions be told of the days on which we will be sitting, and how many days we will be sitting, before the House rises? It would enable some of us at least to get something resembling a life.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the Forthcoming Business will be issued in the normal manner following discussions through the usual channels.
Lord Eatwell
“Supervisory Board
In section 1 of the Bank of England Act 1998 (court of directors), for subsection (1) substitute—“(1) The court of directors of the Bank shall be replaced with a Supervisory Board.””
Lord Eatwell
My Lords, I shall speak also to Amendments 2 and 201. Before addressing the amendments, I crave the indulgence of the Committee in making a few general comments on the Bill and our procedures.
This is a very important Bill. Yet, as we know, it is a dog’s breakfast of amendments to earlier legislation and is, accordingly, extraordinarily and disproportionately difficult for the House to assess properly. The Treasury Committee of the other place has objected to the current construction and argues that there should be a new Bill to replace earlier legislation. Only then can that committee and, indeed, the regulated community gain a proper overview of the full import of the measures before us.
Most importantly, the Bill as currently drafted severely limits effective scrutiny by this Committee. Not only is there the question of excessive complexity in drafting but many of the most important debates on Bills take place on the Motion that Clause “X” stand part of the Bill. As this Bill is constructed, this is just about impossible, as failure to agree, say, that Clause 3 or Clause 5 stand part would not only wreck the entire Bill but render it completely meaningless by taking about 40 pages out of it. The drafting is a mess.
Secondly, there are fundamental problems with the overall structure of the Bill, identified by the Joint Committee and the Treasury Committee, which could better be addressed by proper redrafting rather than by piecemeal amendment.
Lord Phillips of Sudbury
I apologise to the noble Lord, Lord Eatwell, for interrupting at this early stage. I am sympathetic to the point that he has just made, but is not the problem one of standing orders rather than the drafting of the Bill?
Lord Eatwell
I think the answer is no. The issue is the straightforward drafting of the Bill. The problems, as I said, could be better addressed by proper redrafting rather than by piecemeal amendment. For example, the appropriate structure of the governance of the Bank of England in the 21st century, a matter to which the Treasury Committee paid particular interest, should be dealt with by a full rewrite of the Bank of England Act 1998 rather than by the cumbersome and opaque clauses before us.
Thirdly and most importantly, the Treasury Committee of the other place has raised a number of major objections to the content of the Bill with respect not only to Bank of England governance but to a number of other crucial issues of economic management, especially at times of crisis. Before today, few of these had been taken on board by the Government, although we will consider their proposal of an oversight committee later today.
I was delighted to read in the Financial Times yesterday that amendments derived directly from the Treasury Committee’s report of 24 May have been tabled by my noble friend Lord McFall, a distinguished former chair of the Treasury Committee, and by the noble Baroness, Lady Noakes, perhaps the most tenacious opposition speaker on Treasury affairs for many a long year—my noble friend Lord Myners has the scars to prove it. Your Lordships’ House has a fundamental responsibility to pass those amendments so that the other place has the opportunity to consider amendments proposed by its own committee. This is a valuable constitutional innovation.
I recognise that a fundamental rewrite of the Bill would take some time, but the Treasury Committee has faced up to this issue, too, arguing that the legislation is proceeding with undue haste. I agree. I recognise that the planning blight that hangs over the FSA is causing problems, but the performance of the shadow committees and authorities has already been such as to give us confidence that delay will not be disproportionately damaging.
All this adds up to the fact that the Bill as drafted is a barrier, not an aid, to effective macroprudential regulation. This is not a party political issue. I say with all due respect that the noble Lord, Lord McFall, and the noble Baroness, Lady Noakes, are not natural political allies. This is about getting the legislation right, which is what we on this side will endeavour to do.
The noble Lord, Lord Sassoon, and I worked well together to improve the Bill that established the Office for Budgetary Responsibility, and I hope that we can work well together to improve this Bill, although I would not start from here. When the Minister first speaks, I think he owes the Committee an explanation as to why the Government have consistently ignored the advice of the Joint Committee and the Treasury Committee on the structure of this legislation.
I turn—to the relief of the Committee, I am sure—to the amendments in this first group. Their fundamental objective is, I hope, clear: to set in train a wide-ranging restructuring of the governance of the Bank of England. The Bill gives the Bank remarkable new powers in macroprudential and microprudential regulation and in the assessment and management of financial crises. The structure of governance and levels of accountability should be appropriate to these new powers.
A key element in the structure of governance of the Bank is the court. As many commentators have noted, the current constitution of the court, its powers and resources are simply not up to the job. The Treasury Committee has paid particular attention to the role of the court, which is currently responsible for managing the Bank of England’s affairs other than monetary policy. The committee’s evidence sessions have exposed doubts, expressed by many witnesses, as to the court’s fitness for purpose as presently structured. A distinguished former member of the Monetary Policy Committee, in evidence to the Treasury Committee, described the court as,
“an historical legacy institution that now serves no useful purpose and creates the appearance or illusion of accountability or oversight where none exist”.
These concerns are especially important because of the role that the Financial Services Bill, as currently drafted, envisages for the court with respect to determining the UK’s financial stability strategy. In the context of monetary policy, where the Bank of England’s objective is to maintain price stability HM Treasury is required to write to the Monetary Policy Committee at least once a year to specify price stability and the Government’s economic policy. The annual Treasury remit letter fleshes out the concept of price stability in practical operational terms while avoiding undue rigidity. It strikes a balance between operational independence and democratic accountability.
A quite different model is proposed for financial stability. It is envisaged that the primary responsibility for determining and keeping under review the strategy for achieving the financial stability objective will reside with the court, although the court will be required to consult the Financial Policy Committee and the Treasury, and the Financial Policy Committee can, at times, make recommendations.
However, here we have a crucial difference in views—given the court’s role in determining the financial stability objective—on whether the court is up to the job. The view that the court should be abolished and replaced by a supervisory board was advanced by the Treasury Committee. In the face of the powerful arguments advanced by the Treasury Committee, the Government replied that they were not,
“at this time, minded to pursue the more radical changes to Bank of England governance recommended by the TSC, including the replacement of Court with a supervisory board. In general, the Government considers that the governance of the Bank should primarily be a matter for the Bank itself”.
This is astonishing. Indeed, it is nonsensical. As the Treasury Committee points out, the Government are the sole shareholder of the Bank, and many of the Bank’s responsibilities, functions and powers are defined by legislation. The Government do not regard the governance of private sector companies as a matter just for those companies. They really cannot wash their hands of this central issue.
Finally, the Bill grants major new powers to the person of the governor. It is important that the governor is backed up by a powerful supervisory committee to which he is accountable and is not an individual exposed on his or her own, so why a supervisory board? What is in a name? The whole point of this proposal is to recognise this necessary break with the past if we are to have a modern, effective structure of governance at the Bank of England. In the convoluted context of amendments to this Bill, we have been able to present only a sketch of what we on this side of the House have in mind, but we shall return to the matter on Report.
By accepting this amendment, the Government would acknowledge that the new Bank, with its new powers, would have a board to whom the executive is responsible and that is capable of performing an effective supervisory function. That should be its job: to supervise, to set strategy, to advise and review, not to run the Bank on a day-to-day basis and certainly not in the context of a crisis. These amendments are a signpost towards the new Bank with a new regulatory structure, and hence towards a truly effective regulatory system. I beg to move.
Lord Peston
I rise to support my noble friend. This is an immensely complicated Bill, and I certainly find it virtually impossible to follow. I cannot tell you how many hours I have put in trying to find out what almost any sentence actually refers to when it refers to some other sentence in the Bill. It contains clauses, subsections, paragraphs—I think I could find an infinite regress in there somewhere that went on for ever.
Lord Flight
My Lords, I am unclear as to what are the Government’s proposals, the Opposition’s proposals and even the Treasury Select Committee’s proposals. It strikes me that a great deal of complexity is made out of a situation which should be extremely straightforward. The Bank of England should have a board of directors—you can call it the court, if you like—composed of proper individuals independent of the Bank of England who have substantial experience in the financial services industry and who have all the powers of a board.
I am a commissioner of a minor regulator, the Guernsey Financial Services Commission, and we operate as a board controlled by non-executives to which the executive regulator is accountable and where the board has the power to fire the chief executive and the requirement to understand and be on top of every regulatory issue that is in the course of being addressed. I cannot see why the Bank of England should not have a board of that nature. Indeed, the court has a lot of the powers required to exercise that role. It is just that it has not done so for many years and has been an ornament.
We then have the question of what the FPC should do. Some have said that it will take over as the board that runs the Bank of England. However, it seems to me that the FPC should be a specialist body which focuses on the fundamental issue of what is going on in the banking industry and advises the board on financial stability; it should not be a substitute for or take over from a proper board of the Bank of England which covers all the issues. However, if there is a specialist body and a proper board in this structure, I cannot see what is wrong with it.
I also have to agree that, certainly between 2007 and 2008, the Bank of England did not exactly do very well. Much to my chagrin, it was really the ECB that managed to keep the banks and the City of London afloat, since the Bank of England, extraordinarily, did not recognise a major run on the banking system that was far greater than the one in 1974, which I also lived through. My reply on that point is that these bodies need to contain a majority of independent people. If the board or the FPC is not controlled by independents, then they will be in the control of the governor. Both bodies need independent people who can stand up to the establishment of the Bank of England.
I look forward to learning from the Minister precisely what the amendments mean. Solving the situation should not be particularly difficult but is actually a matter of common sense.
Viscount Trenchard
My Lords, I, too, share the nervousness of the noble Lord, Lord Eatwell, about the governance of the Bank of England, and I agree that the Bill is extremely complicated. I take my hat off to those who have worked hard on the Joint Committee. Their task was very much harder than the one that the noble Lord and I had—under the chairmanship of the noble Lord, Lord Burns, who is in his place—when we scrutinised the then Financial Services and Markets Bill some 12 or 13 years ago. This task is clearly much more difficult given that it does not attempt a total rewrite of that legislation. Although I am not sure whether the PRA or the FCA will be the continuing entity of the FSA, as I understand that two-thirds of the FSA personnel will be moving to the FCA, I believe that for most purposes the PRA will nevertheless be the continuing entity.
Although I understand why the noble Lord, Lord Eatwell, has moved his amendment, I am afraid that I am unable to support it. Like my noble friend Lord Flight, I believe that the situation is quite simple: the Bank of England has a perfectly good Court of Directors—a term which I think sounds rather good. Some of your Lordships may think that it sounds arcane and fusty but, on the other hand, it has a certain amount of gravitas. To change it to “supervisory board” would be very un-British. In my business life, I have come across many supervisory boards, in Holland and in Germany. In many cases, I find them semi-detached, rather remote and rather nervous to exercise their powers. If we were to adopt the term “supervisory board” it would give a weak impression—much weaker than the rather heavy-sounding Court of Directors gives. I do not think that there is no problem with the court’s name. However, I agree that its accountability needs to be strengthened, given the additional powers that the Bank will receive. Certainly, some changes need to be made to the governance of the Court of the Bank of England.
The noble Lord also referred to the asymmetry between the Monetary Policy Committee and the proposed Financial Stability Committee, in that the first is independent of the court, whereas the new Financial Stability Committee would be subordinate to the court. I do not think it necessary, in this connection, to strive for total symmetry, because the Monetary Policy Committee has a very specific responsibility, to set interest rates, which is a technical matter. It is essential that it continues to conduct its business in a transparent and independent way and to be composed of persons who are able to provide technical expertise in determining interest rates. The Financial Stability Committee will have a much broader remit. Regarding the oversight of our prudential regulation, both macro and micro, I do not quite understand why it is necessary that the two be so separated; it makes the structure more complicated than it need be. So I have sympathy with the noble Lord’s purpose, but I cannot agree that to replace the court with a supervisory board would be the right way to go.
Lord Barnett
My Lords, what we have heard so far exposes to me why, as I have said before, this is a non-party political Bill. I agree with everything that has been said so far. The noble Lord, Lord Flight, was very good. The way that this Bill is being managed is not the Minister’s fault—we should not have had a Bill in the first place. What an amount of paperwork; we are supposed to be becoming a world without paper, but I have left huge volumes of advisory papers behind in the office. I also have with me the Bill itself, of course, and various other documents. The management of this, as my noble friend said, has been outrageous. A few days ago we had four pages—as if the Bill and the amendments were not enough to read—of government amendments. Those were, I think, on page 3 of the paper. We have to read those as well as find out what all the committees, sub-committees, courts and directors, and God knows what else, are going to do. They are all going to be responsible for matters which, at the end of the day, the Chancellor will never give up. Indeed, we are told that the Treasury will be very involved with the various committees. We will come to that later.
For the moment, however, I would like the noble Lord, Lord Sassoon, to tell us why we removed the FSA. My understanding at the time of the Bank of England Bill was that Gordon Brown took away the FSA from the Bank of England precisely because he did not want to make the Bank as powerful as this legislation now proposes making it. Those powers are now much wider—the court of the Bank is being given much greater powers as well as various committees and sub-committees. The Bill proposes all sorts of things that we are supposed to understand. Frankly, I do not understand them. Will the noble Lord, Lord Sassoon, be able to explain the Bill rather than just read out his briefs? Perhaps he should send his briefs to us; that might be easier than listening to what they say. The whole thing is so complex. The powers of the Bank of England are now so huge that I assume that the Treasury and the Chancellor will never allow them to be used. Members of the Treasury itself are on various committees of the Bank. I do not know who is going to be responsible anywhere.
Lord Phillips of Sudbury
My Lords, I would like to make one comment on the amendment moved by the noble Lord, Lord Eatwell, and then make some comments on the remarks of the noble Lord, Lord Peston. On the way in which the amendment is drafted, I am not at all clear about how the notion of a supervisory committee fits with the language of new Section 9B of the Bank of England Act 1998 in Clause 3(1), which talks about the Financial Policy Committee being,
“a sub-committee of the court of directors of the Bank”.
I am a very long-in-the-tooth lawyer, and the normal language of sub-committees is to make them clearly subsidiary and subject to not just the oversight but the decision-making of the body of which they are a sub-committee. I put that to the Minister because we have enough confusion in the Bill already and, as has been mentioned, the name “supervisory committee” has many connotations from other jurisdictions that frustrate his desire to make this clearer.
Given that the issue of clarity and comprehensibility has been raised by the noble Lord, Lord Peston, and others, this is probably the only chance I have to add to that and ask my noble friend if he will take profoundly seriously the way in which the Bill is being put to us. I venture to suggest that not one Peer in 50, however learned or experienced they are, will be able to get their head around these 168 pages. It is not just those pages, of course, since they cross-refer to hundreds and hundreds of other pieces of statutory legislation and instruments.
I hope that my noble friend will take back the undertaking that I thought I got two years ago to the effect that where we had a Bill of this nature with, as I say, constant cross-references, those of us who wanted to get our heads around it would be given the legislation that was amended by the Bill, with the amendments shown on the face of that legislation so that we could relatively quickly—I use the word “relatively” advisedly—get our head around it. I have to tell noble Lords that if they go to the Library and pull down the 1998 statute, they will find that subsequent amendments have not been incorporated into it and they will have to go off elsewhere to find them. The whole thing is totally counterproductive to the work of this House. Most of us have neither secretaries nor research assistants of any sort. It really is scandalous—I use that word—that as legislators we are not assisted as far as possible to do our job effectively.
If the Minister is having sleepless nights, I urge him to look at subsections (1), (4) and (5) in new Section 9B, where the language is so—I nearly used an Anglo-Saxon expression, which would have been much more colourful—hyper-complicated. New Section 9B(1) says that this particular sub-committee is to be called,
“the ‘Financial Policy Committee’”.
However, new Section 9B(4) says,
“The court of directors must keep the procedures followed by the Committee under review”.
Given that the Bill has just said that the way to describe the new sub-committee is as the “Financial Policy Committee”, which committee is meant in subsection (4)? Then new Section 9B(5) says that:
“The court’s function under subsection (4) is to stand delegated to the sub-committee”,
which is not supposed to be referred to as that at all, so perhaps that is another sub-committee that we have not heard of and which is defined 63 pages later. And so it goes on. I do not know about anyone else, but I think that I have spent eight hours so far in trying to understand Clauses 5 and 6. I may be becoming an old f—no, I may be losing my sharpness, but I urge the Minister, not only with this Bill but with so many other Bills that we are called upon to deal with, to make the task for us legislators as readily accessible and easy as possibly can be.
Baroness Liddell of Coatdyke
My Lords, I am delighted that cleverer people than me have found this Bill incomprehensible, because I have real fears that we will get very lost in the detail of this Bill, and we will certainly get lost in the alphabet soup of acronyms contained within the Bill. However, I will return to the substantive issue.
The Bank of England is to be the pre-eminent financial services regulator. A regulator has to be transparent, consistent, and readily understood internationally. I would be delighted if, when the Minister replies, he will explain to us why it is necessary to vest such untrammelled power in the Governor of the Bank of England. The governor becomes much more powerful than the Prime Minister, who is, after all, only primus inter pares. The governor becomes completely unchallengeable. That is why the idea of a supervisory board in the amendment proposed by my noble friend is sensible.
I will not get tied up on titles. The court concept is anachronistic, and it is not readily understood by our main competitors. I am much more interested in the substance of supervision. One of the key elements of the work of the Bank of England as financial regulator will be to insist upon the best kind of corporate governance that we can get in our financial institutions. It should, therefore, be an example in itself in how it is governed. I have no confidence that that level of modern, transparent, corporate governance is in the model that is outlined in this Bill, as I understand it.
If people are tied up with the history of the Bank, which is long and distinguished, we can still have chaps running around in pink coats, and we can still have a wonderful collection of silver. However, at the end of the day, if we, as a nation, are to remain a leader in the financial services industry, we have to have a system of governance of our financial regulator that stands up to very tight scrutiny. I therefore urge the Minister, when he replies to this amendment, to give us some explanation as to why the Government have not come up with a model of corporate governance that gives that kind of confidence.
We will come to other elements when we talk about the role of the governor. I am extremely concerned about a repetition of what happened in the run-up to the run on Northern Rock. Some ill advised, perhaps unintentional, comments by the governor contributed to the run on that bank. We cannot allow ourselves to get into a situation where something like that could happen again.
Lord Stewartby
My Lords, I do not want at any length to add to what many noble Lords have said, except to record that this is one of the most incomprehensible Bills that I have had business with. Several times I started on what I thought was a trail of decisions, and at the end of it I could not work out who did what and how they knew what they should do.
I have one small technical question for my noble friend that is along those lines. I know that “macro” means “long” in Greek. I do not know what is meant by “micro”—which means small—so far as it is applicable to prudential regulation. Is the micro bit about the size of the body being investigated or about the scale of the activities of the regulator? I am not at all clear about this. Having come across these terms “macro” and “micro” regulation, I found myself unable to work out what quite a lot of these fundamental things mean.
Unfortunately, under the old regime there was a lack of clarity about who did what and who was responsible. However, I am not sure that we are getting away from that, as we ought to. It is a difficulty, and I hope that my noble friend can shed a little light on it. Many who have spoken in this short debate have pointed out that the Bill is not very easy to follow, to put it mildly. I would strongly welcome anything that would make it easier.
Lord McFall of Alcluith
My Lords, this is the most important Bill to have come from the coalition. We are expected to right the wrongs of the financial service and have that in place for the next 20, 30 or 40 years. This Bill has been tacked on to the Financial Services and Markets Act, which is why there is such complexity and why it is wrong. The Governor of the Bank of England himself said in June 2011:
“We are losing the simplicity and the ability to have a cleaner debate about the new framework. Certainly the Government rejected our”—
the Bank of England’s—
“request to have a new Bill and the argument that they gave, understandably, was that at the cost of some complexity we could ensure that all the provisions that were appropriate could be put into an amended FSMA and it would be a faster way of doing it”.
He went on, with some understatement:
“I think we have seen the complexity”.
If the comments of noble Lords today are anything to go by, we have not seen anything yet as a result of that. The governor went on:
“I am not quite sure whether we have avoided delay”.
Going back to the crisis of 2007 and 2008, the main issues were complexity, the question of who was in charge and transparency. We are making them worse, rather than better. We are moving from a tripartite system to a quadripartite system. When we ask exactly who is in charge—the deadly question that no one could answer at the time of the financial crisis—it will be equally hard to give a decent answer as a result of this Bill.
That is what is wrong with the Bill. It needs the utmost scrutiny in this Chamber. The other Chamber debated the Bill for 43 hours and 28 minutes. However, the Financial Services and Markets Act was debated for 89 hours and 59 minutes—more than double the time. As a result, the Treasury Committee says, in its frustration, in the first paragraph of its report, that it is now over to the House of Lords to change the Bill. Why does it say that? It says so because Clauses 80 to 103 and Schedules 17 to 21 were not debated due to a lack of time for the programme Motion. We need time for, and simplicity in, the Bill but we are getting complexity. That is the issue that has brought the noble Baroness, Lady Noakes, and me together. We are very clear: give us that simplicity, not complexity. The audience that is looking at this from outside may then understand that we have the best interests of the financial services and the country at heart, and we may get a decent Bill out of this.
Lord Peston
My Lords, I told the Minister that I would ask him a question but I forgot to ask it. I hope I will be allowed to ask it before he replies. Its origin is in my getting lost in the Bill. I was in the Public Bill Office and pointed to something on the page—a number, a letter and another number—and said, “I cannot find it”. They flicked the pages over and said to me, “What you need is a Keeling schedule”. I had never heard of a Keeling schedule so I rang the Treasury and asked one of the noble Lord’s assistants what it was. I gather from talking to the Minister earlier that he now knows what it is. I should like him to tell your Lordships’ House what it is and where we can get one, since I gather that it will enable us to find things.
Lord Burns
My Lords, I agree with the noble Baroness, Lady Liddell, that the Bank of England needs a modern and transparent form of governance, the best governance that it can have. I also agree with the noble Lord, Lord Flight, that the form of governance that is best known in this country and is best practice is a unitary board—a board that consists of a majority of non-executive directors. It also consists of executive directors with a non-executive chairman. The present structure of the court seems to me very close to that. We may not like its name, but in terms of structure, it seems it could very easily be turned into such a body. The issue is not what its name is or even the composition of it; it is to do with the powers that the court has.
It has been mentioned that the court has many of the powers that a normal board would be expected to have. Some of those powers that it does not practise at present are contained in the amendment that the noble Lord, Lord Sassoon, will move later today to do with dealing with issues of oversight of policy in the past and the extent to which that should be done.
I would hope that we could retain the present structure of the court. As I said, whether the name should be changed is a matter of taste, but we should concentrate on the powers of that court and the extent to which the powers that it needs to operate as a normal board are contained in some of the other amendments being put forward. Certainly, as I interpret some of those that we have seen already, it begins to come quite close to what I would expect to be a modern, transparent and very good form of governance.
Lord Sassoon
My Lords, it has been an interesting 45 minutes. I really thought that this group of amendments was going to be, in cricketing terms, a loosener from the opening fast bowler from the Opposition Benches, instead of which I have been faced with a number of bouncers and, I dare say, a couple of wide balls on the way through.
I will not respond to all of what I might term the Second Reading points that have been reiterated. I answered all the substantive points at Second Reading and would refer noble Lords back to those debates. I also will not be tempted into discussing clauses yet to come. In answer to my noble friend Lord Eccles about what “micro” means—
Lord Sassoon
I beg my noble friend’s pardon. I think I was looking at the Annunciator, which was misleading at the time. I rather wished we were already where my noble friend Lord Phillips of Sudbury was, on Clause 9, but sadly I looked down and we were still on Clause 1. We will come to all these points in due course.
I will respond to the comments on the form in which the Bill is presented. Although I explained at Second Reading why we are amending FiSMA rather than giving a wholesale rewrite, it is clearly of some concern to noble Lords and I should address the points as I did at Second Reading. Our approach was widely supported by consultation respondents. It will minimise the extent to which regulated firms and other users of FiSMA have to deal with legislative change. I appreciate that there might have been forms that would have made it easier at the margin for your Lordships’ House, but I think the substantive point here is that we are asking a major UK industry to absorb significant and necessary change and it is certainly the watchword of this Government in all that we do to minimise regulatory and administrative burdens; and we listened to what the industry had to say in response to the consultation.
I also believe that the way in which the board is constructed will allow for more focused parliamentary and stakeholder scrutiny of the key changes to the regime rather than open up a full discussion of everything again. The Government recognise that it is difficult. We have well over 300 pages of the Bill before us, which is precisely why we published a consolidated version of the Financial Services and Markets Act, which at some 650 pages was a huge exercise by Treasury officials. It took an enormous amount of time and is available on the Treasury website. I drew noble Lords’ attention to it at Second Reading. A comprehensive amended version, as it would be amended if this Bill goes through, is available for scrutiny on the Treasury website.
Lord Eatwell
The Minister is quite right—it is 658 pages, actually, and extremely difficult to read on a computer screen. Will the Treasury undertake to print a copy and provide it to every Member who has taken part in this short debate?
Lord Sassoon
My Lords, different noble Lords will want to digest the material in different ways. Some of us may find it much easier to focus on what we are interested in on a computer screen. I am certainly conscious of the wasteful expenditure of resources and taxpayers’ money when people do not want printed copies. I will investigate, but it may be that copies are available through the Library. I do not know—let me have a look at that. But it is certainly on the website. I suggest that noble Lords may not want to download all 600 pages but will be interested in particular sections. I underline the fact that a huge effort was gone into that far exceeds anything that would normally go into a Keeling schedule.
The noble Lord, Lord Peston, asked about Keeling schedules. When he asked about them a couple of days ago, I had no idea what they were. So I asked for somebody to have a look on the internet, where there is a very interesting debate. It starts by questioning whether these schedules were named after the stunt woman, Liise Keeling, or the distinguished former Member of Parliament for Twickenham, Mr E H Keeling, later Sir Edward. It was the latter who did it in conjunction with Mr R P Croom-Johnson, later Mr Justice Croom-Johnson. So there was, indeed, a Keeling schedule, but it is something that has fallen out of common use over the past decade and more. I suggest that we have gone rather further than a Keeling schedule in producing a fully amended version of FSMA on the Treasury website. There is not, before I am challenged, an amended version of the Bank of England Act, because the changes that we propose to that Act are relatively straightforward. The major innovations in the Bill, such as Clauses 3 and 5, which we will get to in due course, are drafted as entire new clauses, and may be read and scrutinised very straightforwardly as self-standing provisions.
Lord Peston
This reminds me of the Marx Brothers stuff and the great joke about whether we have an insanity clause. Am I to understand that there is no such thing as a Keeling schedule and that it does not exist? Is that the answer to my question?
Lord Sassoon
It is something that used to exist and the concept is still out there in the ether, but it has fallen out of common use over the past 20 years. For this Bill, there is no Keeling schedule but there is the 658-page, fully amended version of FSMA, which is accessible on the Treasury website. It serves the purpose of a Keeling schedule and does more than that.
Lord Phillips of Sudbury
I am reluctant to intervene on the Minister again, but it is important that even if he does not provide a print-off of this labour of love, hard copies of this mammoth work should at least be available in the Library. Some of us find that the time that it takes to run off 658 pages on our clapped-out machines is itself unnecessary.
Finally, the Minister may find that a Keeling schedule is exactly what has been done by the Treasury in this regard. That is my understanding of a Keeling schedule.
Lord Sassoon
My Lords, it may be the largest Keeling schedule ever known to this House. I will certainly make sure that the Library is aware of where to find the amended version of FiSMA, and I am sure that it will print copies off on request in the normal way.
I turn now to the substance of this clause. The amendments put forward by the noble Lord, Lord Eatwell, seek to convert the court of directors into a supervisory board. We will discuss in detail later—as has already been identified by the noble Lord, Lord Burns, and others—government Amendment 13 and related amendments which, I suggest, address all the points of substance behind the amendments of the noble Lord, Lord Eatwell, by creating a statutory oversight committee. I will have a lot more to say about that when we get to Amendment 13.
The only substantive difference, as the noble Lord, Lord Eatwell, has said, between the Government’s amendments and those in his name appears to be in the name of the Bank’s governing body. The noble Lord’s amendments do not seek to change the structure or membership of the court; it is simply, as he identified, that he does not like the term “court”. I agree with other members of the Committee that simply changing the name is not what we should be focusing on. The name of the Bank’s governing body is largely irrelevant. It is important that it is a body that is fully equipped and prepared to fulfil its role in the new structure effectively and that the non-executives on the court have a clear and explicit remit to oversee the Bank’s performance, both in policy terms and operationally. We will come on to why the Government believe the amendments to the Bill that we have put down are needed.
In answer to the questions about why we put the amendments down when we did, I listened very carefully to all the points on governance and other issues that were made at Second Reading and have come forward, at the earliest practicable date, with amendments ahead of discussion in Committee rather than after it, both in relation to oversight and growth. I make no apology, but your Lordships will appreciate that there was not much time between Second Reading and today to get some important amendments sorted out in detail. I hope that explains what we have done.
Lord Eatwell
My Lords, on that point, it is my understanding that Mr Hoban made the commitment to produce this committee at Third Reading in the other place. It does not seem to me that the noble Lord had to wait until after Second Reading here to formulate his amendment.
Lord Sassoon
My Lords, as I said at Second Reading, I wanted to take full account of the wisdom of this House before we finalised and tabled the amendments. That is exactly what we have done and, as I will explain later, I believe that they meet the concerns of many noble Lords who spoke at Second Reading. The new oversight committee achieves the substance of what is required.
However, as has been said by a number of noble Lords in this debate, if we were to change “court” to “supervisory board”, as suggested by the noble Lord, Lord Eatwell, it would be grossly misleading. What many people, maybe most people, would understand by a supervisory board is that it would be a board of non-executives exercising independent oversight. Actually, as the Committee should be aware, merely changing the name “court” to “supervisory board” would means that it would still be a body made up of executive and non-executive directors, and therefore it would not have the effect that most people would understand by the term “supervisory board”, unlike the oversight committee which the Government are proposing and which we will come on to. I understand the point that the noble Baroness, Lady Liddell of Coatdyke, makes. We want proper, independent oversight, but changing the name of the court is not the way to do it. This has been an interesting debate but, on the basis of that explanation, I ask the noble Lord to withdraw his amendment.
Lord Eatwell
Will the noble Lord give his view of the amendments that we could call the Treasury Committee amendments, which are going to come before us and have been tabled by my noble friend Lord McFall and the noble Baroness, Lady Noakes?
Lord Sassoon
My Lords, when we come to those amendments I will give my view and the view of the Government, but in this group we are talking about the noble Lord’s amendments only.
Lord Eatwell
I mean generically. I raised the question in my opening remarks as to whether it would be appropriate for this House to give the other place the opportunity to discuss the amendments tabled by its own committee. Does the noble Lord think that is appropriate?
Lord Sassoon
My Lords, we have a series of amendments down in the name of my noble friend Lady Noakes and the noble Lord, Lord McFall of Alcluith. The best thing to do is to discuss them when they come up and take them one by one on their merits. If the noble Lord had wanted to discuss all these matters together, he could have grouped a number of amendments together but he, or the usual channels on his behalf, chose not to do so. We had better proceed as per the groupings list.
Lord Eatwell
My Lords, the noble Lord is not answering the question about what he considers to be the generic nature of that set of amendments derived from the Treasury Committee report.
I am very grateful to noble Lords who have taken part in this short debate. As I understand it, the discussion broke into two parts. Many noble Lords were disturbed by the complexity of the legislation before us and felt that this complexity was preventing a satisfactory consideration of the overall implications of the legislation. Having worked on this for some time, I have some sympathy with them. The noble Lord referred to the many hours that Treasury staff had to devote to creating the unified Bill—the Keeling schedule. Similar hours will no doubt have to be devoted to deriving a full understanding of the implications.
Leaving aside the issue of complexity, I turn to the issue of governance, which lies behind the first amendments that I have proposed and which will be before the Committee as we roll through a number of other amendments. Every noble Lord who spoke, with the exception, to a certain extent, of the noble Lord, Lord Burns, felt that there were important issues to be addressed with respect to the governance of the Bank of England and that the court as currently formulated is not fit for purpose. Some of this will be discussed later, in the context of my Amendment 8 and of Amendment 13, which establishes the oversight committee. There are some major questions to be raised about the oversight committee, which we shall deal with at that point. It does not achieve an effective system of clear, transparent governance in the way that one would expect of a major public institution.
With respect to the name, being a bit of a traditionalist myself, I have some sympathy with the noble Lords, Lord Flight and Lord Burns, who felt that the court might as well be called the court. However, when the noble Lord says that the term “supervisory board” is misleading, do we think that the term “court” is not misleading? Whatever does that mean to anybody not steeped in the history of the Bank of England? The Minister has failed to address the generic question about the amendments derived from the Treasury Committee in another place.
This is a significant constitutional development which I think is very valuable, but the noble Lord seems not to want to discuss it. We will return at several points—
Lord Sassoon
My Lords, is the noble Lord, Lord Eatwell, aware that what he describes as the Treasury Committee amendments were debated on Report in another place? Does he accept that, perhaps contrary to the impression which he may not have meant to give, they were indeed debated on Report in another place?
Lord Eatwell
I think that the noble Lord will find that not all the amendments were debated. Indeed, the key amendments relating to the governance of the Bank of England were withdrawn on the basis of Mr Hoban’s assertion that he was going to bring forward some new arrangements. Therefore, the issue before us is whether those new arrangements measure up to the issues raised by the Treasury Committee—a matter that we will discuss in a moment.
Given the nature of our discussion, which I think has got us under way and raised a number of important issues that are yet to be resolved, for the moment I beg leave to withdraw the amendment.
Lord Barnett
Lord Barnett
My Lords, if anyone troubles to read the amendment, which stands in my name and that of my noble friend Lord Peston, they will see that I am asking why we need two more deputy governors. I do not know whether that means that they get higher salaries. Perhaps the noble Lord can tell us the salaries of the members of the Court of Directors. It is not clear to me just who is responsible for financial strategy. The Bill proposes the introduction of one deputy governor for financial stability and one for monetary policy. I do not know how many people are responsible for this. As has been said, there are supervisory committees, boards, a Court of Directors, the Financial Policy Committee, the Monetary Policy Committee and the Treasury, and I assume that ultimately the Chancellor might take a slight interest in financial stability and so on.
Why do we need two new deputy directors? They could be called deputy chairmen, or anything you like, but the point is that we should just let them chair the committees. I assume that the work they will do will be repeated elsewhere many times. I do not even know whether the Court of Directors will have the final word. To my knowledge, the Court of Directors has never made the final decisions in the past. The noble Lord, Lord Sassoon, once told me that when he was a senior official at the Treasury he attended the Monetary Policy Committee as the Treasury spokesman. I have never been able to find out, either from him or from anyone else, just what the Treasury spokesman spoke about at the Monetary Policy Committee. Clearly, he had some important things to tell that committee before it came to its conclusions.
I suppose that the question underlying our two amendments in this group is: who is ultimately responsible for these major issues? Is it the Court of Directors of the Bank of England, the Financial Policy Committee or the Treasury, and why do we need two new “deputy governors” rather than just “members of the court”? I beg to move.
Lord O'Donnell
Perhaps I may respond to the noble Lord’s comments about the Monetary Policy Committee and the Treasury person on it, having been that Treasury person at a very large number of MPC meetings. That person is referred to as the Treasury representative. In the early stages of the meetings, they would explain what was going on in fiscal policy to allow fiscal monetary co-ordination to take place. However, the convention was that the Treasury representative did not get involved in the committee’s discussion about a decision on interest rates.
The Lord Bishop of Durham
I shall speak to the amendment in my name, which is in this group. The noble Lord, Lord Eatwell, and others, have commented that the governor’s powers under this Bill are extraordinary. In fact, in the internal running of the Bank the governor will become totally dominant and virtually unchallengeable, as it will the governor who sits on all the relevant key committees. By virtue not only of sitting on them but of chairing them, the governor will have power over the agendas and the conduct of business. That will enable the governor essentially to control the direction of the PRA, the MPC and the FPC completely.
The purpose of the amendment is to pick up some of the points that the noble Lord, Lord Barnett, made so well a few moments ago and which had been made earlier. It seeks to balance the powers in the committees so that the deputy governors have control of their own special areas and are capable of ensuring that the committees focus on the areas that they know well. Noble Lords are aware that in the crisis of 2008, part of the problem, which has been brought out in subsequent inquiries, was that the governor’s focus was inevitably on one area and that others were overlooked because they were not the governor’s principal concern at the time. It is therefore necessary to try to balance the internal powers to create a robust and demanding internal discussion within the Bank long before it comes to the oversight or review of what might have gone wrong in the past—in other words, to stop things happening before they happen rather than afterwards.
Government Amendment 13, which is a fascinating, interesting and useful amendment that will be discussed later, seems, with respect to the noble Lord, to be retrospective rather than prospective. There is quite a lot of closing the stable doors after the horses have left. We do not want another run on the banking system; we want people to stop one. It is the old pink elephant problem: how do you prove that the system has stopped pink elephants being around because you never see one? We will be looking backwards, not forwards, with Amendment 13. It is useful in helping us to understand what has gone wrong but not what happened at the time.
My other concern in trying to balance out these major three committees, two being chaired by a deputy governor, is to try to make the FCA slightly less of the runt of the litter. At the moment, with one person having so much control, the FCA, which is the only committee of the big four that the governor does not chair, ends up being overlooked, I fear. Will the Minister comment on whether he agrees with the point made forcefully earlier that the most rigorous models of governance today should be those that are modelled on the Bank, which include ways of ensuring that it is a learning organisation before rather than after disasters happen. What further action can he suggest to ensure that the FCA’s voice is heard clearly, given its widespread impact on consumer finance across the whole nation and not only in the major financial institutions in the City of London?
Lord Sharkey
My Lords, I support Amendment 9, to which the right reverend Prelate the Bishop of Durham spoke. On Second Reading, several noble Lords commented on the powers that the Bill gives to the Governor of the Bank of England. The noble Baroness, Lady Liddell, made the same point half an hour or so ago. It is clear that such a concentration of power calls for robust checks and balances. To an extent, the Bill recognises this, and some of the government amendments recognise it even more. Perhaps necessarily all the proposed checks and balances are formal and procedural, and many are backward-looking. This is necessary but not sufficient.
Viscount Trenchard
My Lords, I had considerable sympathy with the amendment of the right reverend Prelate, which I found rather clearer and easier to understand than I did the explanation of the noble Lord, Lord Barnett. I am not convinced that appointing an additional two deputy governors is necessary because I believe these three sub-divisions of the Bank could be rationalised. However, appointing deputy governors will tend to make the governance of the Bank of England more rather than less level in that if you have a governor and one deputy, only one person comes close to challenging the governor’s authority. As proposed in the Bill, there will be three deputy governors, which will mean that the perception of the balance of power will be more level than before.
It is completely unnecessary for the governor to chair the Financial Stability Committee, because the governor chairs the court and the Financial Stability Committee is a sub-committee of the court. It is not right that the chairman of the court—that is, the governor—should also chair one of its own committees. That is highly illogical.
Lord Turnbull
I do not think that the governor chairs the court any longer.
Viscount Trenchard
I apologise to the noble Lord and I stand corrected. Perhaps the governor should chair the court. However, where possible, the deputy governors rather than the governor should chair the sub-committees.
Lord Turnbull
My Lords, I am not in favour of the amendments. First, there is the post of the deputy governor for prudential regulation. This is the old head of the FSA, in so far as it deals with macroprudential regulation, who is given the status of deputy governor in order to bring him into the councils of the bank. No extra posts or salaries are being created here. One might have been created by the creation of the FSA, but that is not here.
Secondly, as to the checks and balances on the governor, I do not think that a committee as important as either the NPC or the FPC being chaired by his deputy is a good way of exerting supervision of the governor. You cannot work for someone and supervise them at the same time.
At the moment, the governor chairs these committees and brings their thinking together; and, as we discussed earlier, there are other mechanisms around the court or the oversight committee—whatever it is called—that check the over-mighty power of the governor. Using one of his deputies to do this does not make sense.
Lord Peston
My Lords, I shall not talk about the Treasury representatives because we have an amendment relating to them later in the list and I shall save my vitriol for then.
I did not understand Amendment 9 until the right reverend Prelate the Bishop of Durham spoke. I am grateful to him because I now understand it. In essence, he is saying that three different people ought to chair the three different committees, which makes perfectly good sense. Chairing a committee is an important task and would involve a great deal of work, and I am sympathetic to the amendment.
However, going back to my and my noble friend Lord Barnett’s amendment, these appointments are only titular. It is not for your Lordships’ House to decry those who like titles. In other words, if there are three people, men or women—although I am afraid that these days it seems to be all men in the Bank of England—who want to be called deputy governor, it is no big deal. If it turns them on, and if a wife refers to her husband as the deputy governor and that cheers her up, why not? However, I am concerned as to whether it is more than that in two ways. First, do you get paid more for being a deputy governor? The Minister keeps telling us that we have to be economical, so we have to ask whether this is the correct way to spend money.
More specifically, the amendment is also about the following. First, can we have a full job description in each case? Does a full job description for these three posts exist, and if so can we see it? Secondly, how are the three of them appointed? For example, are the three jobs advertised, and can someone from outside apply to be a deputy governor with appropriate references, experience and so on? Thirdly, who appoints to this post? Those are the questions that I wanted answering. In the transparent, modern world in which we live, the answers should be that anyone can apply for these jobs, that the jobs should be advertised, and that there should be a precise job description and a proper appointing panel. That is the world in which we live, so I hope that the answer to all my questions is yes.
Baroness Kramer
My Lords, perhaps I may comment quickly on Amendment 9. The noble Lord, Lord Turnbull, presented what I suspect will be the Government’s argument, which is that having the Governor of the Bank of England in all these roles provides co-ordination. At Second Reading, I described the twin-peaks strategy as a small mountain range, so your Lordships will understand that I appreciate the need for co-ordination, but to use as the co-ordinating mechanism the single person of the Governor of the Bank of England strikes me as exceedingly inadvisable. The challenge is huge. It is a mechanism for co-ordination that is likely to suffocate, challenge and encourage group-think, but, frankly, no matter how much of a superman the individual who is appointed to that post is, I cannot see that they could possibly have shoulders broad enough to carry all those roles in the demanding way which this legislation and the economy require. Co-ordination strikes me as not the appropriate argument. If the argument is to be made, it must be on other grounds and not to make up for other weaknesses in the Bill.
Lord Eatwell
My Lords, the essence of the debate on these amendments comes down to a lack of a clear governance structure in the Bank. If there were a clear governance structure, with the roles which exist in modern corporations—described clearly by the noble Lord, Lord Sharkey—being performed, we could understand how the co-ordinating activities referred to by the noble Baroness, Lady Kramer, might be carried out. In general, any organisation would be expected to review its internal operations and create an efficient internal management structure, but there is no evidence that the Bank of England is capable of doing this. Given the significant powers that are to be bestowed on the Bank, surely the Government cannot sit idly by. This may be unfortunate, and primary legislation is probably too rigid for the goals that the noble Lord, Lord Sharkey, seeks, but we cannot accept a dictatorship at the Bank or even a belief elsewhere that such a dictatorship exists.
Generally, I am in favour of developing the roles of the deputy governors, particularly in the three major areas of financial stability, monetary policy and prudential regulation. That could provide a framework within which a more collegiate structure of decision-making was developed in the Bank. As I noted at Second Reading, given the differing roles of the MPC, the FPC and the PRA, it is likely that they will put forward contradictory proposals. If one person is supposed to chair all those committees, he or she will either be driven mad or will concentrate on one area to the neglect of others, as we saw the Bank do in the run-up to the crisis. Therefore it seems to me that the right reverend Prelate’s idea of having the deputy governors chair the committees is a good one. Then the Bank could presumably develop a proper management structure in which it was the role of the governor of the Bank to gather together the views of the committees and develop a coherent policy structure from their differing perspectives.
The right reverend Prelate is on to a very important development. It is unfortunate that these procedures do not seem to be developing within the Bank itself and that we do not have a clear governance structure for a Bank which is going to be placed, as the Government say, at the centre of UK financial regulation, and therefore I am very sympathetic to the ideas that the right reverend Prelate has developed.
Lord Flight
My Lords, these committees seem to me to be very different bodies. The MPC and the FPC are, in essence, intellectual bodies reviewing policy, one in the monetary area and the other in the stability of the system. They are not bodies employing hordes of people carrying out an executive function. This is in contrast to the PRA, which will be an organisation employing lots of people doing a detailed regulatory task, and the court itself, the board that runs the Bank of England which does all the banking and other things. They are very different entities, and the PRA and the court actually need chief executives. I think it very reasonable that the chief executive of the PRA—you can call him the deputy governor, that is fine—and the chief executive of the Bank of England should be the governor himself. Thus the governor should not be chairman of the court, which should have an independent chairman. When it comes to the MPC and the FPC, the chairman is actually the person who is hosting the taking of the decisions, and so I do not think it is inappropriate for the governor to be chairman of both or at least chairman of one.
Lord O'Donnell
I support the noble Lord, Lord Flight, in that and pick up on what the noble Lord, Lord Eatwell, was saying about this issue. I completely agree that the problem is whether the governor concentrates on one area to the exclusion of the other. You risk making things worse if you make the governor chair of one of these committees and not the other. I would say that you cannot have a Governor of the Bank of England who is not sitting on the Monetary Policy Committee. I just cannot see how you would have a governor who does not have a vote on the interest rate for this country. It does not seem to make any sense whatever. The Financial Policy Committee is going to take decisions on instruments such as loan-to-value ratios which will have quite an important bearing on macroeconomic issues which also matter to the MPC. I completely accept the issues about concentration of power. They are very important and should be handled through the accountability relationships that we set up. I also agree that the third body is very different and therefore the governor should not chair it, but the MPC and the FPC overlap so much that I do not think it is feasible not to have one person chairing both. If you were governor, and sent your deputy to chair one of these meetings, can you imagine how much time would be spent instructing them on what you thought they should do and getting feedback? It is far more transparent and open that one person chairs both.
Lord Sassoon
My Lords, this has been a very interesting discussion. Let me first deal with Amendments 3 and 4 in the names of the noble Lords, Lord Barnett and Lord Peston, and remind the House of one or two background issues with the deputy governors. First, we are not creating any new positions here. We are talking about two deputy governors who were created in the Bank of England by the Bank of England Act 1998. For the avoidance of doubt, we are not talking about anything new, but about existing deputy governors. Of course, the details of their pay and that of all other members of the Bank’s senior management are set out in the annual report and accounts. If it helps the noble Lord, Lord Barnett, page 41 of the 2011 accounts sets it all out in full detail. We are not talking about something new here.
As to the question of the noble Lord, Lord Peston, about job descriptions, when the role is advertised for a new appointment, a full job spec of the sort that he would expect is indeed produced. If he will forgive me, we will come on to questions of appointment in a further grouping, when no doubt we can come back to that point.
The two amendments open up a discussion about why we have deputy governors and what is their role, so I should say a word or two on that. I suggest that the role of the deputy governors is crucial. It would be enormously challenging for the governor to handle the breadth of policy and operational responsibilities of the Bank without support from the two specialist deputy governors. Each of the existing deputies is responsible for the Bank’s activities relating to one of its two statutory objectives: monetary policy and financial stability. That in itself goes 90% of the way to explaining the job description in very clear terms. The deputy governors run those areas on a day-to-day basis; they take the lead in many cases in international negotiations in those areas; they communicate with the public; and they have a major role in the relationship with the Government and Parliament in their respective areas.
Particularly given the enhanced responsibilities that the Bill will give to the Bank, I see absolutely no reason why we would want to weaken the Bank’s senior executive team by removing the deputy governors. I hope that that is not what the noble Lords who tabled the amendment would want, although that would be its effect. Rather the reverse: the capacity of the Bank’s senior team must be strengthened to equip it for its new responsibilities, which is precisely why Clause 1 creates a new deputy governor post. The third deputy governor will be the chief executive of the PRA and will be responsible for prudential regulation within the Bank. This has been a useful teasing out of what the deputy governors do, and I hope that that explanation has proved useful.
I turn to Amendment 9 in the name of the right reverend Prelate the Bishop of Durham, which would require the court to remove responsibilities from the governor. It will be no surprise to the Committee when I say at the outset that I do not believe that that is appropriate. The governor is the most senior executive in the Bank and is ultimately accountable for all the Bank’s decisions and actions. Of course, a great deal of Bank policy-making is delegated by statute to policy committees, including the MPC and the FPC. Indeed, it could be argued that most of the Bank’s most vital decisions are taken by the FPC and the MPC—and, in future, also by the PRA board.
I largely agree with the three noble Lords who are very distinguished former Permanent Secretaries to the Treasury. The Committee should be very grateful that they are here and able to illuminate this debate with such clarity. However, having heard the noble Lord, Lord Turnbull, in particular, at Second Reading, I suspect that there may be moments later down the track when we may not be in complete agreement. The interventions of the noble Lords, Lord Turnbull and Lord O’Donnell, on the amendment have been illuminating. The noble Lord, Lord O’Donnell, quite rightly highlighted the co-ordinating role and the need for balance and the noble Lord, Lord Turnbull, rightfully made the point about where the buck stops. I suggest that it is right that the governor, as the head of the Bank and being fully accountable for the decisions taken by the Bank’s policy-making bodies, should chair these committees.
I will come on to some rightful concerns about that position in a moment but I add, in parenthesis, that I am also grateful to the noble Lord, Lord O’Donnell, for answering the question that I have had on a number of occasions from the noble Lords, Lord Barnett and Lord Peston, about what the Treasury representative does on the MPC. I was privileged to be there on one occasion; even the Permanent Secretary to the Treasury needs a holiday in August occasionally, so I deputised. I hope that the very clear explanation from the noble Lord, Lord O’Donnell, will mean that we do not get the question quite as often in the next two years, so I am grateful for that.
The substantive concern underlining Amendment 9, about the concentration of power in the Bank and in the governor as an individual, is an important issue. I was not going to argue for one minute, and will not argue, that the oversight committee is the answer to that point. No doubt we will come on to talk at length about the oversight committee which, among other things, responds to the Treasury Committee’s specific recommendation that reviews be retrospective in order to allow enough time to pass to learn the lessons effectively from decisions and actions that are taken by the Bank. We will come on to that but it does not address the issues we have here.
Let me suggest, in answer to the point in Amendment 9, that there are some effective checks and balances in the system. To start with, in each of the governor’s roles—as chair of the MPC, the FPC and the PRA, and as head of the Bank itself—he or she will be both supported and challenged by a group of experts. Those experts will include internal Bank executives such as the specialist deputy governors, who we have talked about; the executive directors and the non-executives of the two governing bodies, the court and the PRA board; and external members of the policy committees, the FPC and the MPC. I certainly agree with my noble friend Lord Sharkey that that challenge is important. It is already there and it will continue in the new construct so that in each area of the governor’s areas of responsibility, he or she will not be responsible for taking decisions alone. In the MPC and FPC, policy decisions are taken collectively, with each member having a voice and a vote.
On the specific issues raised by my noble friend Lord Sharkey, those votes do not always go the governor’s way. Members of the Committee may be aware that the governor has found himself on the losing side of the MPC vote on a number of occasions, most recently in the June MPC meeting. I suggest, first, that there is the right construct of individuals to challenge and that, secondly, we have evidence that challenge takes place and is effective. Equally, on the governing bodies of the Bank and the PRA, decisions will be taken collectively, with non-executive members being in the majority on both bodies. As chair of the PRA board, the governor will ensure strategic co-ordination between the PRA and the rest of the Bank group; that aspect of co-ordination is also important. That will help to ensure an effective and joined-up response to emerging threats to financial stability.
However, the governor will not play a hands-on role in the day-to-day running of the PRA. That will be the job of the deputy governor for prudential regulation in his or her role as chief executive. The governor will therefore be fully supported in all the different roles and will receive effective challenge from both Bank insiders and external members. It is entirely right that the responsibilities of the governor and the arrangements to ensure that he or she is both supported and held properly accountable should be determined and set by Parliament through the legislation we are scrutinising today, rather than delegated to the discretion of the Court of Directors of the Bank. For all those reasons, therefore, I cannot support the amendments in this group. I would ask the noble Lord, Lord Barnett, and the right reverend Prelate to withdraw their respective amendments.
Lord Peston
Before the Minister finishes what he is saying, could I ask him a question which is a sort of question of economics? I entirely agree with the noble Lord, Lord O’Donnell, that it would seem very strange indeed if the Governor of the Bank of England did not chair both the FPC and the Monetary Policy Committee. But then I ask myself, “Does that mean that there is a vast amount of spare capacity in the governor; that he has been twiddling his thumbs looking for other things to do, and this is a way of making use of his skills?”. This is a very serious question. I remember that when I chaired the Economic Affairs Committee—or rather, its predecessor—the previous governor chaired the committee in a way completely different from the way that the present governor chairs the MPC. I could enlarge on that, if the Committee liked. I was given a complete set of papers for the MPC, a vast amount, which I found fascinating. On the basis of those papers, I would have found it a full-time job just to chair that committee. I am therefore at somewhat of a loss as to where the spare capacity comes from. What is the governor not now going to do in order to chair the FPC? That is a very serious question indeed. This would not have been a problem for the previous governor, because he regarded his role as chairman as just chairman. He did not intervene; for example, he always voted last. He was never defeated, and when he used to give me lunch regularly I would say to him, “There is no big deal in being on the losing side”. He said, “It is impossible for me as Governor of the Bank of England ever to be defeated in the MPC. It would be quite out of the question”. I was very impressed with the present governor being willing to be defeated. I am often defeated, but I never think I am wrong; I just shrug and walk away.
Could the Minister therefore tell me where the spare capacity in the governor is to be found, so that he can chair both these committees entirely satisfactorily, in the way the present governor does it?
Lord Sassoon
My Lords, first of all, I am not going to respond to the challenge of how different governors have handled committee chairing. As I have explained, I have sat in on one meeting of the MPC. We have other noble Lords, or at least one, who have sat in on a lot of meetings. I am not sure where the noble Lord, Lord Peston, gets his first-hand experience from, but let us put that aside. I hear now that he has no first-hand experience. Well, I am glad to hear that, but let us put that on one side.
I appreciate that in this Bill, and under the present arrangements, the Governor of the Bank of England has a very challenging job. The essence of what we are putting back into the Bank of England is, of course, leadership in financial supervision, which was part of the historical role of the Bank, except for the last 15 years or so. The Bank has essentially had these responsibilities in the past. The governor is and will be very well supported, partly by the deputy governors, as I have explained, but also, of course, by the whole Bank and PRA executive. This whole construct has been discussed in detail with the present governor, so I am fully confident, without being able to go through the governor’s time and analyse it, that this has been carefully thought about and the new proposed role of the governor is entirely manageable with the support that the governor has and will have.
Lord O'Donnell
Having sat through large numbers of meetings of the Monetary Policy Committee chaired by Eddie George and Mervyn King, I know that the reality is that the chairman has one vote, although they have a casting vote. That dominates the style of the meetings; they are not so much dominated by the style of the individual who is chairing them. Having sat through all those, I do not think that the contrast is as great as the noble Lord, Lord Peston, makes out. It is certainly true that I remember one occasion when the vote was coming round to Eddie George and he was 4-3 down, and he chose to use his vote to make it 4-4 and then used his casting vote to make it 5-4. That was an interesting use of the chair’s power. It is important, though, that the chair has only one vote and that therefore, of the nine, they can be outvoted; indeed, that is a good thing.
As laid down in the previous Act, the governor has always had responsibility for financial stability, so it is a question of how they choose to use it. Like the noble Lord, Lord Peston, I worry about the sheer weight of meetings because it is not just these meetings but the international ones as well. That is an issue, and it may be that one of the things that we got wrong with the Bank of England Act was specifying precisely how many meetings there should be. On occasion, it would be nice if you could go through a period of longed-for financial and economic stability when you might be able to pass on one or two of these meetings and not be forced to have them quite so often when actually there was not that much to do. However, that is a nirvana that we are not that close to at the moment.
Lord Barnett
My noble friend and I put down the amendment not because we care too much about whether someone is called a deputy governor but to discuss the underlying problem here. The Minister might be saved a lot of work in future; as we have heard, we are very fortunate in this House as it is, without reform, in having three noble Lords who can answer our debates, and the Minister need not bother. I am grateful to them, and we are fortunate to have them here. I know that one of them is even worrying about the job of the governor and whether he can cope with it—I see the noble Lord nodding—and he may find at the end of our debates on this Bill that he would rather not bother.
The Minister has not replied to my questions, but of course I did not expect him to. He did not tell us what the salaries were or whether someone gets more of a salary as a deputy than as an ordinary member. He told us that the job was advertised and anyone could apply. I wish I had known that years ago; I might have thought of applying. I do not know who was on the committee then; it may have been those three noble Lords on the Cross Benches who decided on the candidates. Whoever it was, we have had an interesting debate. However, what we have not yet discussed, although no doubt we will have other opportunities to do so, is the job of,
“a Deputy Governor for financial stability”,
and “for monetary policy”.
After all this, I am still not clear what the Monetary Policy Committee does, what the Financial Policy Committee does, what these deputy governors and their committee do, what the governor is going to do, what the Chancellor is going to do and who the hell is doing what. I am sure that in our later debates the noble Lord, Lord O’Donnell, will be interested to know. As I have no intention of applying for any of these jobs, I would like to know how they are decided and who applies. Incidentally, as my noble friend Lord Peston said, it is interesting that there is never a woman anywhere in the Bank. There may be some lower down in some menial jobs.
Lord Barnett
Name one. Anyway, I do not wish to delay the Committee much longer, and I will withdraw the amendment.
Lord Sassoon
Before the noble Lord sits down, I would point out that very recently Rachel Lomax was a very distinguished deputy governor of the Bank, to name but one, and there are now some very able senior female members in the banking sector, to avoid any doubt on that matter.
Lord Peston
Women comprise half the population of the country, do they not? If we look at ratios, there is not a lot to boast about.
Lord McFall of Alcluith
“(2A) Any person appointed under subsection (2)(a) shall be appointed with the consent of the Treasury Committee of the House of Commons.”
Lord McFall of Alcluith
My Lords, on behalf of the noble Baroness, Lady Noakes, I am moving Amendment 5 and speaking to Amendment 10, which is consequential on Amendment 5.
As the noble Lords, Lord O’Donnell and Lord Sharkey, said, this is about the concentration of power in and the accountability of the governor in the new financial system. In fact, Alistair Darling, when he appeared before the Joint Committee on the draft Financial Services Bill, called the governor the “Sun King”. I would suggest that we are giving the governor an impossible job. The MPC and FPC require an academic economist of the highest calibre, and we have that in the present governor. However, the Bank of England, as it is comprised now—with the PRA and the FCA and so on—is the equivalent of a multinational enterprise. It requires a chief executive and skills that are separate from those required on the Monetary Policy Committee and the Financial Policy Committee. We make a mistake by not realising that particular point.
I have invited the governor to come here so that all Peers could listen to him, in the hope of understanding and inquiring how he sees the position. He will be departing in 2013, so we are legislating for the future in this respect. Perhaps I may give my own view on the debate taking place at the moment about deputy governors, and so on, as a former chairman of the Treasury Committee and someone who had an intimate association with the governor and others especially during the financial crisis. I believe that the words “deputy governor” relegate the authority of the position. We have a vertical accountability here but we do not have a horizontal accountability. That is what we should be looking at on this issue—how do we get that horizontal accountability?
The noble Lord, Lord Sharkey, was correct about the concept of culture and ethics. I raised the issue of culture and ethics when the Northern Rock problems arose and it was a foreign language to the financial services industry of the time. The people involved thought that we were talking about Moses bringing the tablets down from the hill. However, culture is about behaviour, and ethics is about how you resolve conflicts of interest. It is as simple as that. I was delighted to see that the FSA, after being pressed for many years, has taken on that view. In his last speech before departing, Hector Sants spoke exclusively about the issue of culture. The issue of culture and behaviour is extremely important. If we concentrate on titles, then we will miss the main point. That is the issue that I would like to get across now. We need checks and balances.
My experience with the financial crisis also showed that when the crisis hit, both the Treasury and the Bank of England were found wanting. The Treasury had diminished its financial expertise. I knew the people in the Treasury who had the financial expertise—two of them have left by now, but at the time there were three. That was the situation we were in. If we wanted a response to the financial crisis from the Government we could not get one because they did not have the skills and understanding. The Treasury therefore invited people in from the City to advise it, which is where the problem started in the first place. That is the paucity of the situation at the moment.
Parliament therefore has a very important role to play in terms of the checks and balances. It was acknowledged by the governor and others that the Treasury Committee played an important role in Northern Rock, particularly in the legislation that was put through on “lender of last resort” resolution regimes and so on.
Lord Turnbull
My Lords, the amendment raises a very important question, largely unresolved, about what responsibility the Executive and the legislature have for public appointments. The truth is that we have not found a definitive solution to it.
There is a case for the status quo, which involves the candidate being interviewed by the Treasury Select Committee and, if the Minister ultimately decides that he wishes to go ahead with an appointment, the Minister being free to make the appointment. However, the bar has been raised and it has been made more difficult to bring forward a candidate of poor merit. There are also advantages to the candidate of the kind that the noble Lord, Lord McFall, has just mentioned.
The second option is for the candidate to be interviewed but for the committee to have a veto. At the moment we are still talking about appointments, and that is what we have with the OBR.
The third option is the scheme that was the subject of a report by the Institute for Government, under the chairmanship of a much beloved Member of this House, the noble Lord, Lord Adonis. It suggests dividing candidates into two tiers. These are unambiguously tier-1 appointments. The Chancellor of the Exchequer or the Government propose someone and the candidate is then interviewed. If the committee is dissatisfied, it then summons the Minister to defend their case. If there is still no resolution, the matter goes to the whole House; it does not simply go back to the Select Committee. The OBR case, which I may have voted for at the time, is a bit of an anomaly. You either stay where you are or go for the wider power. If there is a serious disagreement, the whole House should be involved.
As for dismissal, this is in some ways even more important. If the Government are to remove the Governor of the Bank of England, the issue is so big that it should go beyond the Treasury Select Committee and be a matter for the whole House. However, there is one caveat. Did he jump or was he pushed? I can think of many instances, including that of the Commissioner of the Metropolitan Police, where someone might resign because their position has been made untenable. The Minister may say, “I did not sack him. It had nothing to do with me. He decided to go”, yet all the time he has been pushing away, undermining his position. We do not really have very much control over that as that has to be a question of conduct. I have some sympathy with the principle that this post, particularly if it comes to a dismissal, needs some very powerful protection. However, if it is that important it should be referred to the whole House and not simply to the committee.
Baroness Wheatcroft
My Lords, I speak in favour of Amendment 6. The amendment concerns the corporate governance of the Bank, and we have heard much this afternoon about perceived gaps in that. I understand the desire to strengthen the court, but I think that this can be achieved without drastic changes either of name—as the noble Lord, Lord Eatwell, said, “What is in a name?”—or in structure. In particular, I have qualms about giving strong new powers to the Treasury Select Committee. Having heard my noble friend Lord Turnbull, I think that if we go in that direction, perhaps it should be the whole House that gets to answer the question of who should be the future governor.
However, we need not do anything quite so drastic yet. If we wish to strengthen the governance of the Bank, it seems to me more appropriate to do so by giving the court—or supervisory board, if you want to call it that—an enhanced role. The government amendments that will be moved later this afternoon go some way towards doing that with the formation of the oversight committee. It certainly enhances the remit of the non-executives from where it is currently perceived to be. It may be retrospective, but the power of being held to account retrospectively is quite a powerful force with regard to current behaviour.
Nevertheless, the court already has significant powers. The Bank of England Act 1998 stipulates:
“The court … shall manage the Bank’s affairs, other than the formulation of monetary policy”.
Some have interpreted that as being little more than looking after the housekeeping, and it has sometimes appeared that way. However, the Act goes on to say that,
“the court’s functions … include determining the Bank’s objectives (including objectives for its financial management) and strategy”.
Surely the ability to determine strategy is a pretty powerful one.
The noble Lord, Lord Burns, has pointed out that within the court there is pretty much the structure of a corporate board. Perhaps it has not always seemed that way, but we need the court to feel empowered to use the powers that it has. Much will depend on the ability and willingness of the members of the court to take a tough and challenging line; and there is no reason why they should not if they are well qualified and strong.
We have heard about the need for challenge; the court should be providing it. However, I believe that the Government need to send a firm signal about how important they believe the role of the court to be. In a normal company, the crucial role of the chairman is to ensure that the company has the best and most effective chief executive. Companies thrive best when the chairman and the chief executive have a constructive relationship and mutual regard. Is it not therefore imperative that, even though the Bank is no ordinary company, the chairman should at least have some involvement in the appointment of the chief executive?
This amendment does not call for drastic change, but in demanding that the Chancellor should consult with the chairman of the court—or the supervisory body, should that be preferred—it would underline the importance of the court and the notice that the Government want to take of it. It would encourage the court to be brave, perhaps braver than it has been in the past. Formal discussions may go on now between the Chancellor and the chairman of the court, but there is no mistaking what a low-profile role the chairman has had—indeed, some thought that the governor was the chairman of the court. I think that we need the chairman of the court to have a rather more effective, higher-profile role. That could start with a formal requirement that the Chancellor should negotiate and discuss the future governor.
Lord Peston
My Lords, I shall speak to Amendment 8A in my name and that of the noble Lord, Lord Barnett. In doing so, I shall not comment on Amendment 6 in the name of the noble Baronesses, Lady Kramer and Lady Wheatcroft, simply on the grounds that the subject is totally beyond me. I am no expert on governance whatever, and I could not tell good from bad governance if it hit me over the head. However, what the noble Baroness said sounded very persuasive, and I am sure that she is right.
I also apologise to my noble friend Lord McFall. I just did not notice his Amendment 10. If I had done so, I would have tabled an Amendment 10A as I have tabled Amendment 8A.
I take noble Lords back to the Bank of England Bill, which the noble Lord, Lord Barnett, and I played a full part in debating. Indeed, one thing that I still remember with enormous pleasure and some amusement is the fact that, while the noble Lord and I were enthusiastically in favour of the Bill and said so, Conservative noble Lords who were then on the opposition Benches were doubtful. One of my tasks was to try to persuade many Conservative Peers that what Gordon Brown was doing was not only the right thing but that it was a very strong move in a Conservative direction to give independence to the Bank of England for monetary policy. I still give the odd lecture, and I sometimes boast that I was once involved in educating the Conservative Party in the correct way in which to run monetary policy.
In the course of debating the Bank of England Bill, all references to feeding back were to the House of Commons. The noble Lord, Lord Barnett, and I put down an amendment—I think that it was the only one that was accepted from us—to say that wherever the word “House of Commons” appeared it should be deleted and replaced with “Parliament”, and the Bill was changed so that Parliament became the body, meaning that it included the House of Lords. That established the fact, on which Lord Williams of Mostyn got a definitive opinion from the Clerk of the Parliaments, that the House of Lords is fully entitled to look at any matters of this kind and to be consulted on them. The Commons does not have to take any notice of us on these matters, but we can certainly exercise our rights. That is why I object very much to the form of Amendment 10 in my noble friend’s name and feel that the correct wording should be, “Treasury Committee of the House of Commons and the Economic Affairs Committee of the House of Lords”. This is a matter of principle for your Lordships’ House. I am personally not persuaded by any of what might then happen, but that is another story. If it is going to be done, I feel very strongly that both Houses should have access.
That was all about appointment, which comes up several times later on other things, but I shall make one speech do for all the other times it comes up. In my total naivety, it never occurred to me that there was any question of removal from office being a serious matter. That is another reason why I apologise to my noble friend. I would probably emigrate if we got to a state in our society where we were dealing with the removal from office of the Governor of the Bank of England. I hope that that was what the noble Lord, Lord Turnbull, was saying as well. We are all very keen on science fiction, but I think that we can go a little too far.
Baroness Kramer
My Lords, I have attached my name to Amendments 5, 6 and 10, so I think I will by definition be hated by any future Governor of the Bank of England.
I want to speak for a moment on Amendment 6, which was spoken to by the noble Baroness, Lady Wheatcroft. The 2009 report by Sir David Walker, on behalf of the Government, which took a detailed look at corporate governance in the UK banking industry, is very relevant. Your Lordships will remember his recommendation that:
“Balance also needs to be found between the role of executives and non-executives on a well-functioning bank board”.
Amendment 6 goes a significant way towards achieving that and establishing that real relationship between a non-executive chair and the Governor of the Bank of England as the chief executive. That distinction is also important for the purposes of accountability which others, including the Minister, have described as significant and important.
Lord Burns
My Lords, I support Amendment 6 tabled by the noble Baroness, Lady Wheatcroft. As she said, in terms of strengthening the power of the court or the board of directors, whatever we are going to call it, giving the appropriate powers, respect and position to the non-executive chairman of that court would be a very important part of making it an effective functioning body.
I was Permanent Secretary at the Treasury in 1993 when Eddie George was appointed governor and Rupert Pennant-Rea deputy governor without any warning being given to any of the members of the Court of the Bank of England. It caused a great deal of upset among members of the court who felt that they had been undermined by the lack of warning. In a world where we are trying to build some good corporate, modern, transparent governance, as we have heard today, giving a role to the chairman of the court, at least in terms of informing him or consulting him, would be an important part of it.
With respect to the amendments covering the powers of the Treasury Select Committee, my noble friend Lord Turnbull has set out the analysis of that position. It would be wrong to underestimate the power of the Treasury Committee simply in terms of its ability to summon people and to question them. I regard the Treasury Committee—I have watched it for many years and I appeared before it many times—as a very skilled body in terms of oversight. It fulfilled its role in terms of challenge, questioning and advice. I would rather it did the job that way rather than by seeking to have vetoes over positions. It can make a huge impact simply by the way it brings people in, talks to them, summarises its opinions and then leaves it in the hands of Ministers to decide how far they wish to take account of those views and whether they really want to push it. At the point at which they want to push it, the points made by the noble Lord, Lord Turnbull, probably come into play.
I particularly agree with the noble Lord, Lord Peston. I cannot remember an occasion when the term of a Governor of the Bank of England was shortened other than by his own will. I would have thought that it would be an issue of some significance that would require not just the House of Commons but, as the noble Lord, Lord Peston, said, Parliament in general to agree it.
Lord Flight
My Lords, I also support the amendment tabled by the noble Baroness, Lady Wheatcroft, for essentially the reasons given by the noble Lord, Lord Burns, and as part of the process of restoring the court to being a proper board.
I want to comment on Amendment 5. I have mixed views, but I think it is quite healthy that someone being appointed to such an important role should be subject to vetting in the same sort of way that occurs typically in the United States and that it probably is the Treasury Select Committee that is equipped to handle that vetting.
If I may digress, the present Governor of the Bank of England studied economics at the same university as me at the same time, and anyone that knew that knew that the teaching of economics at that time at that university was appallingly bad. That illustrates that it takes some effort to assess the sort of mind that someone being appointed to that job has got. The absence of any form of politically accountable examination is probably wrong in today’s world. Therefore Amendment 5 is worthy of serious consideration.
Lord Northbrook
My Lords, I disagree with Amendment 5. It gives the Treasury Select Committee too much power. As I understand it, the Treasury Select Committee already holds pre-commencement hearings with those who have been selected to become governors and deputy governors. Furthermore, as I understand it, the Government have no powers to remove a Governor of the Bank of England; rather the Treasury must give its consent if the Bank decides the governor has met the criteria for removal. It is the Bank’s decision to make. The pre-commencement hearings provide the right balance between giving Parliament an opportunity to question the new appointee on their views and qualifications without bringing into question or placing doubts over the appointment itself.
Lord Tugendhat
My Lords, I was unable to participate in the early stages of the debate this afternoon because I was at a Select Committee, but now that I am here I should like, on the basis of experience, to support the proposition of my noble friend Lady Wheatcroft—not experience of the court of the Bank of England, I hasten to add, but of the European Commission. The President of the European Commission is appointed quite separately from the other members of the Commission and he has no particular power over who else is going to become a member. The way it is done leaves him at the mercy of Governments. My experience under a very strong and good president in the case of Roy Jenkins and under a much weaker and less effective president in Gaston Thorn is that if the chairman or president, whatever he is called, of a body has no influence over the appointment of his colleagues or over whether they stay or go, it seriously diminishes the significance of the person in charge.
As the noble Lord, Lord Burns, said earlier, we are trying to put together something that has a governance structure in keeping with the modern age and which sets an example, inasmuch as that is possible in a body such as the Bank of England which is quite separate from the corporate sector, to the rest of the country. If the chairman is to be taken seriously by the governor and, indeed, by the entire Bank of England beneath the governor, it is essential that he should be seen to be somebody who has played a significant role in the appointment. It would be quite unacceptable if a governor were appointed in whom the chairman did not have confidence. It would be quite unacceptable if the governor felt that the chairman did not have confidence in him, just as it would be unacceptable if the chairman felt that the governor did not have confidence in the chairman.
The noble Baroness, Lady Wheatcroft, has put forward a very sensible and practical proposition. As I say, I speak with experience of having served in a body where the chairman did not have the powers that the noble Baroness suggests. My experience is that that was not a very good way of doing things.
Lord Eatwell
My Lords, these amendments raise some interesting and important issues with respect to the person of the governor. Despite the warm words of the noble Lord, Lord Sassoon, about degrees of consultation, balance and so on, the idea remains that the person will be endowed, under this legislation, with quite extraordinary powers and therefore the process of appointment should be more transparent and subject to consideration by democratically elected Members. If we are to accept an unelected individual having these powers, at the very least the appointment process should be transparent.
The idea that the Treasury Select Committee should express its views is a very good one, but I am not sure about this notion of a veto. That goes a little too far. We do not want to politicise appointments to the extent that has occurred in the United States, which makes me nervous about the suggestion by the noble Lord, Lord Turnbull, that appointments might end up being considered by the whole House, which would inevitably be whipped and become very political indeed. The Treasury Select Committee, although it may sometimes be eccentric, is not party political in quite that sense. It is a good idea that the Treasury Select Committee is consulted about an appointment and it would be a bold Chancellor who would ignore the committee’s views. Since the committee does not have a veto, it is less likely to have the propensity to develop into an overly politicised hanging court. That covers Amendment 5, which is one of the amendments from the Treasury Select Committee in another place put forward by my noble friend Lord McFall and the noble Baroness, Lady Noakes.
I am sympathetic to the idea expressed in the amendment from the noble Baroness, Lady Wheatcroft, and found the arguments put forward by the noble Lords, Lord Burns and Lord Tugendhat, convincing. The notion that the chairman should be consulted and that the degree of confidence in the relationship between the chairman and the governor should thereby be established seems to have the ring of good sense about it. The Government should take this matter under serious consideration.
My noble friend Lord Peston referred to the role of the House of Lords. Although the expertise in your Lordships’ House often comes to bear most effectively and positively on Treasury issues, in the context of an appointment of this seriousness and magnitude, one really has to turn to elected Members. If the constitution of your Lordships’ House changes in the future, then perhaps the House of Lords could have a role in this respect. However, for the moment, the Treasury Select Committee should be the focus of consultation—
Lord Peston
The noble Lord has rather lost me. Is he saying that he agrees that the Commons should have a veto but the Lords should not, or that neither should have a veto?
Lord Eatwell
I hoped that I had made clear that I was not in favour of a veto for the Treasury Select Committee, but was very much in favour of it being consulted.
Lord Peston
In that case, I really cannot see the noble Lord’s argument at all. I hate to disagree with anybody sitting on my own Front Bench, but if this is a matter of consultation, it is a matter of great significance that your Lordships’ House is treated as an equal House. This principle has been established beyond any doubt whatever, and I therefore find it quite unacceptable that whoever is speaking from our Front Bench would not take that view on this subject. I am sorry to say that.
Lord Eatwell
The noble Lord and I are both professional economists and therefore we have disagreement built into our DNA. The role of the Treasury Select Committee in another place is special in this case.
I move on from the amendment tabled by the noble Baroness, Lady Wheatcroft, to Amendment 10, which raises some very difficult issues. Given the new, complex set of conflicting goals that the governor will necessarily need to navigate, the idea that his or her removal from office should be subject to some form of special scrutiny is entirely appropriate. I am not sure whether this is the right form of special scrutiny, but I am certainly going to take this away and think about it and may return to it on Report.
To sum up, Amendment 5 goes a little too far. Consultation is the key in the appointment process. The noble Baroness, Lady Wheatcroft, has identified something very valuable indeed, and we should be grateful to her, as should the Government, who should say so and accept her amendment. A number of very difficult issues have been raised with respect to Amendment 10, which I need to take away and think about at greater length before we come to Report.
Lord Sassoon
My Lords, first, of course the Government place great importance on the suitability and independence of the Governor of the Bank of England. We are all clear that the governor’s role is already a challenging one and that future holders of this post will need to possess an even broader range of skills, experience and expertise. We do not in any way seek to deny that. However, although I fully recognise the great importance of this appointment, I am very confident that there are already robust arrangements in place, which I will go through in a minute.
It is good that we are now focusing in this debate for the first time very directly on the amendments that we are discussing, which makes for a much more productive 35 minutes than we have had on this. In the debate, which has been instructive and interesting, I have heard some voices speaking up for some form of parliamentary veto, some arguing for consultation, some arguing that it should be the Treasury Committee in another place and some suggesting that it should be that committee and/or—I am not quite sure which—the Economic Affairs Committee of this House. Although it is not the subject of an amendment, I heard at least one suggestion that if we were going to change anything, we should go rather more radical and make it subject to a vote of the whole House in another place. That is a rather broad menu. There are many ways to skin this particular cat but I suggest that there are already robust arrangements in place
The governor and the deputy governors of the Bank are appointed by Her Majesty the Queen on the recommendation of the Chancellor and the Prime Minister. Since 2009, this Government and the previous Government have agreed that in principle these appointments will be subject to open public competition. That is what happened with the most recent example of Paul Tucker, who was appointment deputy governor in 2009, and that practice will continue. The Treasury Committee already holds pre-commencement hearings with those who have been selected to become governors and deputy governors. Therefore, I do not believe that Amendment 5 is necessary.
To be absolutely clear regarding something that I think I heard the noble Lord, Lord McFall, say, I certainly agree that Amendment 10 is connected with Amendment 5 but, to be technically right, I would not accept that Amendment 10 is consequential on it. I just wish to be clear on that technical point.
Having been appointed, the governor certainly cannot be removed on a whim. Indeed, the Government have no powers to remove a Governor of the Bank of England. Rather, the Treasury must give its consent if the Bank decides that the governor has met the criteria for removal. However, it is the Bank’s decision to make. The legislation is clear that the governor, a deputy governor or a director of the Bank can be removed only with cause—that is, if the Bank is satisfied that he or she has been absent from meetings of the court for more than three months without the consent of the court, that he or she has become bankrupt, or that he or she is unable or unfit to discharge their functions as a member. That is very clear.
Some commentators have suggested that the fact that the appointments of the chair and independent members of the Office for Budget Responsibility are subject to a Treasury Select Committee veto sets a precedent and that governor appointments should also be subject to a parliamentary veto. However, I agree with the noble Lord, Lord Turnbull, who suggested that these cases are rather different. The role of the governor and the members of the OBR are both characterised by the need for especially talented and independent candidates, but that is where the similarities end. The OBR performs an important function in providing an independent and unbiased forecast on which government policy can be based, whereas the governor carries out executive functions on behalf of the state.
More than that, and more broadly relevant to the amendments, this policy-making role makes the appointment of a prospective governor extremely market-sensitive in a way that appointments to the OBR and many other appointments simply are not. The uncertainty created by a public pre-appointment approval process could, depending on the market conditions at the time, be significantly damaging. The noble Lord, Lord Eatwell, may not like this analysis but I suggest that the person performing the role of governor attracts significant market interest. A huge amount of time and effort is spent examining every scrap of information relating to members of the Bank’s policy committees in order to gain insight into their thinking and determine likely future policy responses, and that will very much be the case with candidates for the post of governor.
Once the candidate is announced, his or her particular leanings can be factored into asset prices. The Treasury Select Committee will then be able to conduct pre-commencement hearings, providing a useful insight into the professional competence and personal independence of the appointee. However, I suggest that pre-appointment hearings of the sort suggested and necessitated by the amendments in this group would exacerbate the uncertainty of markets about who will be appointed, and that would be inappropriate.
I am also sure, and I do not need to point out, that I could apply similar arguments regarding the dismissal of a governor. The uncertainty around any such dismissal would be just as damaging. In addition, I cannot see how the position of a governor whom the Bank had sought to remove for reasons of unfitness for the post could be anything other than untenable if the Treasury Committee reversed the decision, so I simply do not understand how that would work in practice.
I believe that the current arrangement of pre-commencement, rather than pre-appointment, hearings provides the right balance. It gives Parliament an opportunity to question the new appointee on their views and qualifications without bringing into question, or placing doubts over, the appointment itself. A parliamentary veto on appointments and dismissals would introduce uncertainty into these processes, and that would apply whether the veto was given to the Treasury Committee in the other place or to your Lordships own Economic Affairs Committee. For these reasons, I believe it is inappropriate for the Bill to provide that a parliamentary committee must approve governor appointments or dismissals.
Lord Peston
Before the noble Lord moves on to his next point, can he, for my education, explain one aspect of the drafting of the Bill? With regard to what we are discussing, can he tell me whether there is any significance in lines 8, 9, 10 and 11 on page 1, which refer to “a Governor” and “a Deputy Governor”, and line 15, et cetera, where the references are to “the Governor” and “the Deputy Governor”? Is this a fundamental matter of parliamentary draftsmanship, which is beyond me, or is it simply a grammatical error?
Lord Sassoon
My Lords, it relates to the former. I do not think it is fundamental; it just fits in with the construct of the legislation that we are talking about. There is no mystery behind it; it is purely a case of the grammar that the draftsmen have thought appropriate to use in the different lines.
Baroness Kramer
My Lords, the Minister has just put forward an argument for retaining the current process, which excludes the Treasury Select Committee from participating in the appointment of the governor. However, has he ever looked at the idea of allowing the Treasury Select Committee to question pre-appointment, even if there is no veto? I think we can all see a potential scenario—one that we hope never to have—where an appointee who is already in position, although they may not have commenced the role, comes before the Treasury Select Committee and does not win the confidence of the committee or the confidence of Parliament. That would leave us in a particularly dire situation and it is one that I think most of us would wish to avoid.
Lord Sassoon
I attempted to address the pre-appointment versus pre-commencement issue and I shall not repeat my remarks, other than to say that I believe that, for the market reasons I have given, among other reasons, it would be damaging if there were significant doubt over the clarity of the appointment of a particular individual as governor. One can very easily see how such a situation would be damaging and dangerous in present market conditions. Therefore, I repeat that I believe there is a distinction—
Lord Sassoon
Perhaps I may complete the answer to my noble friend Lady Kramer, then I will give way. As I pointed out, I believe that there is a great distinction between pre-appointment and pre-commencement, that we have the balance right, and that with any appointment put forward to the Queen on the recommendation of the Chancellor and the Prime Minister there will be a very high degree of likelihood, approaching certainty, that the figure appointed will have the confidence of the Treasury Committee.
Lord Eatwell
My Lords, following on from the point made by the noble Baroness, Lady Kramer, while I agree with the noble Lord that a veto by the Treasury Committee is not a good idea, I really do not understand his arguments about pre-appointment consultation, whereby a prospective candidate appears before the Treasury Select Committee prior to his or her appointment being confirmed.
The argument about market sensitivity entirely contradicts what the noble Lord told us about the collective decision-making process in the Bank. If there are all these collective procedures in which the governor is challenged and supported by deputy governors, technical staff, and so on, the idea that a new governor arriving would dramatically change the nature of monetary or stability policy seems to be ridiculous. There may be a change of tone or style, but the idea that the governor will somehow be the sole factor who can move markets by the very nature of his character would seem to reinforce all the fears of those who believe that we are appointing a sun king. The noble Lord argued persuasively that there existed a degree of collegiality in the Bank, which some of us were quite surprised to hear, but none the less we understand what he says. However, he cannot argue that and at the same time deny the possibility of pre-appointment consultation because it is market sensitive.
Lord Sassoon
My Lords, the noble Lord, Lord Eatwell, always applies impeccable logic but the way in which the markets look at these things is rather different and not necessarily logical. While I entirely accept at one level the logic of the noble Lord’s argument, it is not the way in which the markets seek to interpret what they can read into every tea leaf, let alone something as important as the appointment and the person of a new governor. I certainly do not accept that my two arguments are in any way at odds with one another.
Lord Eatwell
My Lords, if the markets are so irrational, as the noble Lord says, why will we have our appointment process distorted by these irrational forces? Surely, if they are so irrational we should simply leave them to their own devices and develop a sensible, coherent appointment process that fits the needs for the appointment of this very important figure.
Lord Sassoon
My Lords, I was not going to bring this up, but I am not sure about the logic of the position of the noble Lord, Lord Eatwell. I understand that he was arguing for consultation but not a veto by the Treasury Committee. I am not at all clear why, if he is asking for consultation but not a veto, he is so hung up on whether it be pre-appointment or pre-commencement. Pre-appointment seems to imply some form of effective veto that goes with it. I am genuinely rather confused.
Lord Eatwell
I thought that I had made that clear in my opening remarks on the amendments. An individual who is being proposed by the Government to Her Majesty for appointment may be found by the Treasury Select Committee to be unsatisfactory in various aspects of his skill set or whatever, but while the Government may ignore that, they would at least have to take it into account and justify the appointment. Indeed, in doing so, that would perhaps strengthen the position of the governor thereafter.
Lord Sassoon
My Lords, I have dealt as fully as I can with the arguments. All I would suggest is that it further points out that this is not an easy area. As the noble Lord, Lord Turnbull, said, there are lots of possible solutions. If he were to change it at all, he would go to a solution that is not one of the number on the table at the moment. The Government’s position remains that we have an appropriate balance in all of this.
In answer more specifically to the noble Lord, Lord Peston, since I had the time during that little exchange to do a bit more research into “a”s and “the”s, the point is simple. The first reference is to the creation of “a Governor” and the subsequent reference is to “the Governor” who is at that point in the flow of the legislation being created. I hope that that helps to explain what is going on.
Lord Peston
My concern was with the correct use of English. It does not help but I cannot believe that it matters at all.
Lord Sassoon
Even if it does not matter, I try. I do my best to answer these points, even if it causes more confusion. Sometimes the “a”s and the “the”s could be very important.
I move on to Amendment 6 tabled by my noble friend Lady Wheatcroft, on which, no surprise, I will not be much more accommodating, but it is an important point that should be discussed. As I said, it is vital that the post be filled by the best possible candidate and taken from candidates who have expertise and skills to fulfil the role effectively. The legislation as it stands does not prohibit the Chancellor consulting widely before recommending that a candidate be appointed as governor. In practice, the Treasury and the Bank work together closely to recruit for key Bank of England posts. I am sure that my right honourable friend the Chancellor of the Exchequer will engage with key individuals as appropriate during the process to identify the next Governor of the Bank of England. Indeed, well ahead of the formal process kicking off, the chairman of court, Sir David Lees, and the Chancellor are already in touch on this matter.
However, I suggest that we should keep in mind that the appointment is ultimately for the Queen to make on the advice of the Prime Minister and Chancellor. Many people may be consulted as part of the process to appoint a new governor, but it would be impractical to attempt to define them prescriptively in the Bill. By leaving the legislation broad in this way, the Chancellor will be able to consult whoever he or she feels will add value to the advice. The people consulted may well change depending on the circumstances of the appointment. I suggest that that is how to leave the legislation but I hope that I have given the Committee some perspective on how these things will be handled. I hope that the noble Lord will feel able to withdraw the amendment.
Lord McFall of Alcluith
My Lords, the aim of the exercise is contained in the Treasury Committee report, which said that an amendment was tabled on Report in the other place but that because of “insufficient time” the Minister did not give an answer. This amendment is to elicit an answer. I suggest that the Minister should think again on this issue.
The noble Baroness, Lady Kramer, said that there is a role for Parliament. If Parliament feels excluded, that does not augur well for the stability of the system. I understand that giving a veto to a parliamentary committee is a bold measure, so I understand the concerns being expressed. The noble Lord, Lord Turnbull, made the point that the Treasury Committee could make a recommendation and the House could look at it. There has to be either a formal or an informal way of including Parliament in this. My noble friend Lord Peston said that if the Governor of the Bank of England left, he would leave the country.
Lord McFall of Alcluith
If he was fired, that would happen. I bring not an exact parallel to the Committee’s attention. A number of months ago, comments were made by members of the present Treasury Committee about the chief executive of the Financial Services Authority. They felt that he was responsible for the demise of the Royal Bank of Scotland. A few weeks later the chief executive, Hector Sands, left. I do not know whether there was a causal relationship. I pointed out to Members of the Committee that if the environment in the other place is charged, it can have unforeseen consequences. Parliament therefore has to be considered.
Lord Peston
My Lords, perhaps I may interrupt as I misunderstood. In my judgment as an economist, the chairman of the Monetary Policy Committee is quite capable of doing some things via that committee that could destroy the whole economy of this country. However, as far as I can see, the rules are that he cannot be fired for that. He can be fired for going bankrupt and one or two other things, but there is no way he can be fired for making a mess of economic policy. I am pretty sure the Bank of England Act does not allow him to be fired for the reasons that my noble friend is raising. If we were asked if we could get him fired for a wrong policy, fine, but it is my understanding that the rules for firing a governor do not include a wrong policy. You may say that is a bit irrational but I am pretty sure that I am right.
Lord McFall of Alcluith
The rules do not include wrong policy and I never suggested that they did, but what I am saying is if there is a charged atmosphere in Parliament and there could be a scapegoat, perhaps the governor or a future governor would leave as a result of that. We must be mindful of that situation and I gave a parallel, if not an exact one, of what happened a few weeks ago on that particular issue. We also have the governor now being appointed for eight years. That was adopted after being suggested by the Treasury Committee and no one has commented on it in this Chamber. I think it is something which needs much more reflection from the Government.
The noble Lord, Lord Burns, spoke about the chairmanship of the court. I would suggest to the noble Baroness, Lady Wheatcroft, that this is a big challenge to the Bank of England, which at the moment is not perceived to have that challenge. That aspect of challenge is really important. I could give noble Lords an example from my time on the Treasury Committee. No names, but I was approached by the representatives of a number of non-executives during the financial crisis and asked if I would see them. They wanted to tell me about the situation on the board of their company and explain why no change was affected by them; my answer was, “Absolutely not. You’re on your own. If you’re a non-executive and you cannot challenge, you should not be on the board. You should leave the board as a result of that”. The aspect of challenge still resonates and we need that. It is the issue that the noble Baroness, Lady Kramer, was pointing to and the Minister needs to reflect on it.
The noble Lord, Lord Flight—if I can wake him up, no, I do not think I can—made the point about Mervyn King and economics teaching. He made the distinction that it was the economics teaching that was bad and not the present governor’s teaching—
Lord McFall of Alcluith
Yes, the former, exactly. Economics has lost its way on this issue. I would point the noble Lords to a good letter in the Financial Times yesterday that said economists are there for the well-being of society and that they forgot that. There needs to be a fundamental rethink of the economics curriculum. When Alan Greenspan appeared before the Senate, he said the intellectual edifice that was built up has now crumbled as a result of that.
Other noble Lords have made the point that Amendment 5 is going too far, but we need reflection on it and I can understand where people are coming from. The noble Baroness, Lady Kramer, raised the issue of Parliament’s involvement and pre-appointment consultation. I think the Government can do something in terms of pre-appointment consultation, whether it is overt or covert. I would suggest that if they do not want any further annoyance at the other end of this building, they should reflect on that issue and come back with something in terms of pre-appointment. It can be done, it is feasible.
Lord Sassoon
My Lords, just before the noble Lord, Lord McFall, sits down it may be worth being clear for the record that when I said the governor can be fired if he or she proves to be unfit to perform the role, that was completely right. In answer to the question from the noble Lord, Lord Peston, about whether the governor can be fired for wrecking the economy, I would suggest that at that point the Bank would probably decide that the governor was unfit. Without getting into a long debate about where unfitness comes into it, it is worth saying that at that point, unlikely though the scenario might be, wrecking the economy might lead the Bank to decide that the fitness test would apply.
Baroness Wheatcroft
I thank my noble friend the Minister for his reply; I confess I found it disappointing and I thank those noble Lords who spoke in support of my amendment. I was trying to find a simple means of showing that the court was held in some esteem and had powers to exercise. I do not doubt that informal conversations go on but I am slightly reluctant to rely on informal arrangements when we are trying to strengthen the corporate governance of the Bank. Not just to strengthen the corporate governance but to strengthen the perception of that corporate governance. I would ask my noble friend to think about this matter and maybe other ways in which he might strengthen perceptions of the corporate governance of the Bank. However, I shall not move my amendment.
Lord McFall of Alcluith
With a request to think again, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Lord Brougham and Vaux)
Is it your Lordships’ pleasure that the amendment be withdrawn?
The Deputy Chairman of Committees
The question is that Amendment 5 be agreed to?
Lord Eatwell
“(2A) The Chancellor of Exchequer shall only appoint a person under subsection (2)(e) if he is satisfied that the person has knowledge or experience which is likely to be relevant to the Court’s functions and would enhance the diversity of the composition of the Court.”
Lord Eatwell
My Lords, I beg to move Amendment 7, which as noble Lords will see from the Marshalled List refers to the experience and knowledge of individuals appointed to the court; that the Chancellor should be satisfied that they have appropriate experience and knowledge; and that their presence would enhance the diversity of the composition of the court.
The immediate reaction to this amendment might be yes, of course, it is unnecessary; anyone who makes sensible appointments would do that sort of thing. However, if it is accepted, a statutory responsibility to ensure that the supervisory board or the court, whichever we have, has a diverse range of appropriate talents will be a crucial guideline that Chancellors must follow and when necessary justify.
The importance of this amendment lies in its combination of expertise and diversity. The crisis should have taught us all of the dangers of conventional wisdom. Conventional wisdom underpinned the decision-making in central banks and treasury departments throughout the world and Mr Greenspan’s confession of the way in which his decisions were distorted by a conventional view of risk analysis has already been cited by my noble friend Lord McFall. In building a successful court or supervisory board, we need the contrary, the awkward and the different to be part of the debate. This will not guarantee that we get it right but at least we will be more likely to than if we appoint a committee of well intentioned sound thinkers who all think the same way.
Diversity here is a reference to diversity of view of analysis and of opinion. There is no doubt that often diversity of view is correlated with other aspects of diversity, maybe of gender or of ethnicity. This is not what I am trying to get at here, it is diversity of view that I would like to suggest. It would be pointless, for example, to appoint a racially diverse, gender-diverse board, all of whose members happened to share the same analysis and views. The degree to which diversities are correlated will perhaps provide some guidance and inspiration for a Chancellor. This amendment is designed to be a permanent challenge to the Chancellor in the very important task that he or she has of deciding on the composition of the court and particularly the non-executive members of the court.
Baroness Liddell of Coatdyke
My Lords, I support Amendment 7. Looking at this amendment the casual observer might wonder why it is necessary. It makes perfect sense that you would not leave governance of the Bank of England—and therefore governance of the economy and our financial institutions—to a bunch of interested amateurs. Frankly, however, we have occasionally seen that happen with some of our financial institutions—we need only look at the trails of chaos over the years from banks such as Barings and onwards to the catastrophe of Lehman Brothers. If noble Lords wish to read a horror story they should read Michael Lewis’s The Big Short. I confess that I did not understand some of the complex derivatives being talked about until I read The Big Short, and I have spent most of my life in and around the world of economics.
It is critically important that there is a balance of knowledge, experience and expertise on the supervisory board, or whatever we choose to call it. It will need people with a wide range of competence, with experience ranging from macroeconomics to prudential regulation. It is a wide mix to put together.
The other side of the coin—a matter to which my noble friend referred—is diversity of opinion. In this case, as he pointed out, we are not talking about gender or ethnic diversity, although that would be very good to have. We heard an exchange within the past hour between two distinguished economists—my noble friends Lord Peston and Lord Eatwell—and there will undoubtedly be differences of view among any number of economists. I would love to throw behaviouralists into the mix of any supervisory board of the Bank of England. Quite apart from behavioural economics, it is how people react that can bring economic chaos.
The amendment may seem unnecessary because it is a no-brainer that you would seek to do this anyway. We have learnt along the way, however, that it is better to get such things written down. Then you will have a wee bit more of a chance of achieving them. I therefore support Amendment 7.
Lord Phillips of Sudbury
My Lords, I am afraid to say that I agree with the final remarks of the noble Baroness—it is a no-brainer.
I speak as a weary lawyer who is tired unto death of our legislation getting more and more prescriptive and complex as well as longer. If we cannot trust the Chancellor of the Exchequer to exercise sensible judgment in a matter of this kind then, frankly, he or she should not be Chancellor of the Exchequer. If, as it says in the amendment, the member has to add to diversity, what about integrity and independence? You could go on and on adding to and subtracting from the characteristics. I know that that is reflected in other parts of the 1998 Act but the amendment, for all its good intentions, is unnecessary and potentially disruptive.
If you want to play legalistics with this, you might ask what will happen if you have a full diversity of opinion on your board or court. Do you still have to add further diversity when you have got a full hand of diversity? As the provision is drafted here, you would. It is unpoliceable. For all those reasons, and despite its excellent intentions, I am against the amendment.
Lord Turnbull
My Lords, I direct this question to the noble Lord, Lord Eatwell. Does he regard Amendments 122 and 123—which were tabled by the noble Lord, Lord McFall, and refer to persons representing the constituent parts of the United Kingdom —as helpful or unhelpful to his cause? Are they helpful because they may add to diversity, or unhelpful because you would be choosing people on the basis of their geographical representation rather than their professional expertise?
Lord Sassoon
I hesitate in replying because the noble Lord, Lord Eatwell, might want to answer that excellent question. However, it is up to the noble Lord.
Lord Eatwell
If it is of convenience to the Committee I am quite happy to do that. The noble Lord—indeed, my old pal—Lord Andrew Turnbull, has put me on the spot here by placing me in opposition to some propositions put forward by my noble friend. I was very clear that I was seeking diversity of view. Where someone lives does not seem a basis for that.
Lord Sassoon
My Lords, that illustrates one thing about the amendment—that the ways in which people interpret its words are rather different, which in itself is not ideal.
The noble Baroness, Lady Liddell of Coatdyke, got it right when she said that it is a no-brainer, and we do not believe that it is necessary to make legislative provision for it. My noble friend Lord Phillips of Sudbury said so in vigorous and direct terms which I can only echo. On one level, I feel that I should say no more and sit down. Nevertheless, I should explain to the Committee exactly what is going on.
As the Committee may be aware, the Treasury’s Select Committee report into the accountability of the Bank of England concluded:
“The new responsibilities of the Bank will require its governing body to have an enhanced mix of skills”.—[Official Report, Commons, Financial Services Bill Committee, 21/2/12; col. 21.]
The Government agree with this conclusion and in their response to the Treasury Committee they committed to take it into consideration in relation to future appointments. We understand the concern underlying the amendment and have already taken it into consideration, including in the latest appointments to the court. For example, both Tim Frost and Bradley Fried bring extensive experience of financial services as practitioners to the court. However, I do not believe that it is necessary to make legislative provision for this.
I can assure the Committee that the appointments of non-executive directors to the court are fully regulated by the Office of the Commissioner for Public Appointments, OCPA, which ensures a fair, transparent and competitive process. The practical elements of the appointments process are run by the Treasury, with the most recent interview panel consisting of senior Treasury officials, the chair of court and an independent assessor. The Treasury seeks to find the best candidates for these roles. This means people with a deep and diverse range of experience in relevant sectors. This can be, will be and is achieved without a prescriptive legislative obligation.
Court appointments are advertised openly. Applications are sought from candidates with diverse experience and from a variety of backgrounds. For example, the role profile for the last NED vacancy sought people with substantial experience as board members or heads of functions in a major financial services organisation; and/or someone who had built up a successful enterprise of a significant size; and/or someone who had played a prominent role in a relevant area of public policy, the voluntary sector or a trade union.
I can assure the Committee that the decision is taken with full consideration of the impact on the broader composition of the court and the fit of each candidate within the make-up of the court as a whole. I hope the noble Lord feels that he can withdraw his amendment.
Lord Eatwell
My Lords, I am grateful to all noble Lords—except the noble Lord, Lord Turnbull, who ambushed me—who have commented on the amendment.
As to the other issues raised by the noble Lord, Lord Phillips, most issues of integrity and so on are covered by the committee on appointments in public life, to which the noble Lord, Lord Sassoon, referred. All those elements have to be taken into account. However, the issue that does not necessarily have to be taken into account is diversity of view, which I am particularly emphasising at this point. The noble Lord may feel it inappropriate to consider all these matters but, other than diversity of view, they already have to be considered under legislative structures.
Lord Eatwell
“( ) In section 2 of the Bank of England Act 1998 (functions of the court of directors) for subsections (1) and (2) substitute—
“(1) The Supervisory Board will be responsible for overseeing the development and execution of the objectives and strategic policies of the Bank of England, including monetary policy and stability policy, subject to instructions from the Treasury.
(2) There will be a Supervisory Board Secretariat, charged with providing economic, legal and monetary advice and research support to the Supervisory Board.””
Lord Eatwell
My Lords, the amendment stands in my name and that of my noble friend Lady Hayter of Kentish Town. It takes us back, because of the way in which the Bill is constructed, to the court or supervisory board of the Bank of England. The amendment lays out the roles of the court to specify more clearly than current legislation does the role of the supervisory board or court—let us leave that argument aside and concentrate on the body—which the amendment states,
“will be responsible for overseeing the development and execution of the objectives and strategic policies of the Bank”.
It relates, therefore, to the development of strategic policies, as is laid down with respect to the Financial Policy Committee, as well as to the objectives and strategic policies. They are subject always to instructions from the Treasury, which are defined in statute, as are particular responsibilities of the Monetary Policy Committee. The idea is to ensure that the board has the status that I think everyone who has spoken today feels that it should have. That is the first part of Amendment 8; the supervisory board or court would have that appropriate status.
The second part of the amendment—which proposes that the supervisory board should have its own secretariat,
“charged with providing economic, legal and monetary advice and research support to the Supervisory Board”—
arises because, I regret to say, the Bank of England has form in this area. In the early days of the Monetary Policy Committee, its independent members were denied access to satisfactory technical support. The Governor of the Bank of England at the time declared that if they should have suitable support, it would undermine the status of the Bank. It was only after a public outcry once the governor’s position was made clear that suitable economic and secretarial support was given to the independent members of the Monetary Policy Committee to enable them to do their job. The governor had prevented them having that support until there was a public outcry.
Members of your Lordships' House who have been non-executive directors of boards will know how important it is for the non-executive directors to be able to access independent advice at times in order for them to fulfil their proper fiduciary role. Having access to advice—whether it be legal or, in the case of the court of the Bank, economic and monetary—is a crucial part of the independent directors being able to do their job.
If the Bank had not behaved in this way in the past, I would not feel that the amendment was necessary, because one would say, “Well, of course, they should have appropriate support”. Unfortunately, however, important independent members operating within the structure of the Bank have not in the past been given the support that they needed to do their job. It is therefore important that independent members of the court should have access to the advice and research support that can make them effective non-executive directors. I beg to move.
Lord Tugendhat
My Lords, I support the amendment of the noble Lord, Lord Eatwell. He draws the lesson from what happened to the outside directors of the Monetary Policy Committee. It might be said that the Bank has learnt its lesson on that and that the situation will not arise in the future, but as I pointed out at Second Reading, the Bank has behaved unacceptably in relation to having an inquiry into its performance during the financial crisis. Whereas the FSA had an inquiry and the results were published, the Bank of England rather stuck to Montagu Norman’s axiom, “Never explain, never excuse”. The Bank of England is a fine and venerable institution, but it finds it difficult to change. Unless there is some provision of the sort that the noble Lord, Lord Eatwell, suggests, one cannot be sure that the supervisory board—or whatever it is going to be called—will necessarily have the economic, legal and monetary advice and so forth that is required. The role that it is taking on is complex. It will deal with highly competent officials in the Bank. It is essential that the non-executives on the supervisory board have absolute certainty that they have all the back-up they require.
When one looks at the demands being placed on non-executive directors of more normal financial institutions, it is clear that, if they are going to fulfil their functions, they will need much more back-up than non-executive directors were accustomed to in the past. Their responsibilities and accountabilities are greater and they will need absolute certainty and right of access. That applies to the Bank of England and I hope that the Government will take into account that, if we are to have proper governance, it requires proper support.
Lord Sassoon
My Lords, we debated earlier amendments tabled by the noble Lord, Lord Eatwell, which sought to convert the Court of Directors into a supervisory board. Following on from those amendments, Amendment 8 sets out some of the functions of that board. There is little between the noble Lord and the Government on the substance of the amendment, but my key argument is that the amendment is not needed because its most important parts are addressed by government Amendment 13.
Government Amendment 13, which I will talk to at much greater length when we get to it, will give the new oversight committee responsibility for overseeing the Bank’s performance against its objectives and strategy—precisely what the first part of Amendment 8 seeks to achieve. As for the second part of Amendment 8, I appreciate that in the past the Bank was slow to realise that the MPC members needed their own dedicated support. That lesson was learnt a considerable number of years ago, and both MPC and FPC external members now have access to appropriate resources. The point about the FPC is important and relevant because that has been created in shadow form only very recently.
We can see the considerable output that the FPC is already producing, which it could not possibly do without that support. I am wholly confident that the oversight committee will have sufficient support once it comes into being, and I do not believe that it is necessary to put it into the Bill. I ask the noble Lord to consider withdrawing his amendment.
Lord Eatwell
I apologise that I was temporarily distracted by other channels. I am heartened to hear that the Government feel that the Bank has learnt its lesson on the provision of resources. I still feel that it would be appropriate to provide that insurance, particularly legal advice, for independent members. Legal advice is crucial for non-executive or independent directors in any environment because they can so easily be outgunned by the executive in a way that ultimately is not beneficial for the institution as a whole.
By the way, I am heartened by what the Minister had to say about the definitions of the supervisory board’s roles, but we will come on to that issue in our detailed consideration of his Amendment 13.
I am sorry to be so roundabout in this respect, but going back to the issue of resources, I will consider what the Minister has said and decide what I will do on Report. In the meantime, I beg leave to withdraw.
Lord McFall of Alcluith
“Retrospective reviews of Bank performance by the court of directors
(1) Section 2 of the Bank of England Act 1998 (functions of court of directors) is amended as follows.
(2) After subsection (5) insert—
“(6) The court shall conduct retrospective reviews of the performance of the Bank with respect to its functions and objectives.
(7) The court shall determine the particular matters to be reviewed under subsection (6).
(8) The court must publish a report on each review carried out under subsections (6) and (7) unless the court decides that all or part of such a report should not be published for reasons of confidentiality or because it would endanger financial stability.
(9) When all or part of a report of a review is not published under the provisions of subsection (8), the court must—
(a) publish as much as possible of the report,(b) send a copy of the full report to the Chairman of the Treasury Committee of the House of Commons or, in exceptional circumstances, inform the Chairman of the Treasury Committee of the reasons for not sending it, and(c) publish the report or part of the report as soon as possible after the court decides that the considerations in subsection (8) no longer apply.””
Lord McFall of Alcluith
This amendment is about corporate governance and the best practices in corporate governance. The Treasury Committee has concluded that the corporate governance in the Bank of England is well short of that in the best public and private institutions. Given the concentration of the regulatory responsibility in the Bank of England, there need to be checks and balances.
The Treasury Committee has recommended a supervisory board, using the term “supervisory” rather than the term “court”. We had a debate about this earlier so I do not want to go over old ground, but this is not really about nomenclature but about powers and responsibilities. Frustration has been expressed over many years, by both parliamentarians and by people who have sat in the court, that the court is toothless. We need to make this an efficient body, so whether we call it an oversight committee or a supervisory committee is immaterial. It is about powers, accountability, best practice and corporate governance. That is the essence of the view in this amendment.
The supervisory court, as the Treasury Committee has recommended, should take an explicit view on the Bank of England’s budget, both in the level of changes to the allocation of resources and in prudential and monetary areas. The inclusion of experts on prudential policy, particularly for the chair of the board, is essential. The board currently comprises 12 members. It is a good suggestion to reduce that number to eight, because the best boards have smaller numbers, and 12 is rather unwieldy.
Lord Sassoon
My Lords, it may be helpful if I speak early in this group because there are substantial government amendments here. The Treasury Committee’s report last November concluded that the increased responsibilities given by this Bill to the Bank of England warranted another look at the Bank’s governance arrangements. The Bank’s Court of Directors has been statutorily responsible for managing the Bank’s affairs since nationalisation in 1946, albeit with some modernising changes brought in by the Bank of England Act 1998 and the Banking Act 2009. I expect the court, as it has done over the decades, to adapt and evolve to the Bank’s changing role, which was brought in by this Bill to enable it to continue to operate as an effective governing body.
However, we should not—and I am already clear from our Second Reading debate that we do not as a House—underestimate the court’s task. It must effectively oversee the transition to the new arrangements, ensure that the Bank is adequately resourced to meet its new responsibilities, and at the same time provide a vital link of accountability to Parliament.
Recognising this challenge, in January the court published its response to the Treasury Committee’s recommendations, proposing the creation of a new oversight committee made up of the court’s non-executive directors. The court accepted the Treasury Committee’s recommendation for retrospective reviews of policy, proposing that the oversight committee commission these reviews from expert external bodies. The court also accepted that an ex-post review or reviews be published, subject to the need to maintain appropriate confidentiality. In line with the Treasury Committee’s proposals, the court proposed to give the oversight committee the papers from the meetings of the MPC and FPC.
Some hours ago, the noble Lord, Lord Eatwell, somewhat mischaracterised the Government’s approach to governance. The Government’s position has been that governance is in the first instance for the Bank itself, but we have not sought to distance ourselves. We listened to the Treasury Committee’s and then to the Bank’s response and have come forward, in the light of those responses and the Second Reading debate, with these amendments.
Subsequent to both the Treasury Committee’s and the court’s response, the Chancellor agreed with the governor and the chairman of court that the oversight committee’s remit would be extended to encompass the commissioning of internal reviews of the Bank’s policy performance. Finally, as part of our response to the Treasury Committee and the Joint Committee that scrutinised the Bill in draft, the Government committed to considering further whether the proposed reforms ought to placed on a statutory basis.
My honourable friend the Financial Secretary to the Treasury restated this position in another place. As I said during Second Reading, the Government have now determined that that should be done, and we are tabling these amendments.
Amendment 13 writes the new oversight committee into the Bill, simplifying the governance structure of the Bank by subsuming the role and responsibilities of the existing committee of non-executive directors—the so-called NedCo—into the new oversight committee.
Subsection (2)(a) of new Section 3A provides that the oversight committee will be responsible for keeping under review the Bank’s performance in relation to its objectives and strategy. This includes both monetary policy and financial stability, including the responsibilities of the MPC and the FPC.
Subsections (2)(b) and (c) give the oversight committee responsibility for overseeing the Bank’s financial management and internal financial controls, and subsection (4) lists a number of additional responsibilities in relation to the procedures of the MPC and the FPC and the terms and conditions and remuneration of key posts within the Bank. I hope that when we hear from the noble Lord, Lord Eatwell, he will accept that that provision fulfils the purpose behind his Amendment 29, which would make the non-executive committee of court responsible for overseeing the activities as well as the procedures of the FPC.
The oversight committee will be made up of all the non-executive directors of court, but in some cases it may be inappropriate for particular directors to have an active role in certain of the oversight committee’s functions. For example, a director of court who is also an external member of the FPC—as is the case with Michael Cohrs at present—should not have a role in directly overseeing the FPC’s performance. Subsection (4) of new Section 3B therefore allows the oversight committee to delegate any of its functions to two or more of its members.
New Sections 3C and 3D give the oversight committee an express power to commission and publish external and internal performance reviews. I hope that that satisfies the noble Lord, Lord McFall of Alcluith, whose Amendment 11 is also intended to implement the Treasury Committee’s recommendation for retrospective reviews of the Bank. In fact, in a number of respects, government Amendment 13 in the names of the noble Lord and my noble friend Lady Noakes goes further than that. Amendment 11 relates only to reviews carried out by the court itself; whereas Amendment 13 provides for reviews to be commissioned from an external person, such as an academic or independent expert, or from an officer or employee of the Bank itself.
I also note that Amendment 11 is limited to reviews of past conduct; whereas government Amendment 13 allows reviews of current practice to be carried out that may be appropriate to the functions of the oversight committee in the financial management and internal financial controls of the Bank.
Consistent with the Treasury Committee’s recommendations, subsection (5) requires the oversight committee to ensure that sufficient time has elapsed before commissioning any review, to allow it to be effective and to avoid impeding the ability of the Bank to continue to operate effectively while the review takes place.
In line with the Treasury Committee’s recommendation and the amendment tabled by the noble Lord, Lord McFall of Alcluith, new Section 3D would require the oversight committee to publish its reviews, unless publication would be against the public interest. Published reviews will also be laid before Parliament. Where publication of all or part of a review is delayed, the oversight committee must keep that decision under review and publish that material as soon as the sensitivity has reduced.
New Section 3E requires the oversight committee to monitor the Bank’s response to the report and ensure that it fully implements recommendations that it accepts. That gives the oversight committee an explicit role in ensuring that reviews translate into real action, and that the Bank fully takes on board the lessons learnt.
The Treasury Committee recommended that non-executives have access to all papers considered by the MPC and the FPC. New Section 3F implements that recommendation and goes even further by allowing members of the oversight committee to attend all MPC and FPC meetings in order to observe their discussions.
The remainder of the new clause and government Amendments 28, 30, 33, 91 to 96, 98, 99 to 101 and 145 to 147 make consequential amendments to implement the new oversight committee, and I do not intend to take up the Committee’s time by making any further reference to them.
In conclusion, the Government fully recognise the importance of strong lines of accountability for the Bank, given its expanded responsibility and powers. The amendments represent the most significant legislative reform of the governance arrangements of the Bank of England since nationalisation, and on that basis I hope that the Committee will support them.
Lord Phillips of Sudbury
My Lords, in the provisions setting up the oversight committee, which obviously has a hugely important and wide-ranging job to do, my noble friend mentioned the right of delegation in new Section 3B, but that is limited to two or more of its members. He mentioned under new Section 3C the right of delegation of a review to a person whom the committee can appoint. May there be wisdom in having a slightly wider power of delegation, so that one could under new Section 3B have an outside person or persons as part of that sub-committee and, in new Section 3C, more than one delegated reviewer? There may be occasions when that would be helpful.
Lord Sassoon
My Lords, I think I have covered the point but perhaps I can reflect on that and respond to it, because I suspect that the Committee might want me to respond to other points after we have heard the debate.
Lord Flight
My Lords, I welcome both the amendment tabled by the noble Lord, Lord Sassoon, on behalf of the Government and Amendment 11, in providing for reviews of the conduct of the Bank of England. A review covering mid-2007 to date is well overdue. However, I note, quite correctly, that the amendments come with the caveat that anything that would be against the national interest if it were published may not be made generally available. The one issue that I do not really understand is the need for yet another committee. Why cannot the board of the Bank of England discharge the roles of the oversight committee? The board of a regulator would normally do that, in my experience, so adding yet another body seems slightly unnecessary. I noted the point that there may be some people on the court of the Bank who cannot review themselves, but I do not really see that as a problem. If somebody on the court was, for various reasons, prejudiced against doing some review or other, that is fine and they would not participate. I am nervous about proliferating committees, and I would welcome the Minister’s explanation as to why this cannot be a duty of the court.
Lord Hodgson of Astley Abbotts
My Lords, I found this amendment attractive because it seemed to be very direct and to provide a very important check. Having served on the boards of companies, it is extraordinary how often you find in the post-investment assessment report, which is what we are talking about here, that you have not quite landed up where you thought you were going when you set the policy and made the decision in the first place. That is a very important issue. As my noble friend Lord Flight has just said, the court is the body responsible, and it is perfectly possible when dealing with a matter that may be sensitive, such as individual directors’ conduct, for appropriate arrangements to be made to avoid that. I am not entirely convinced of the need for an oversight committee, and I am not sure that it cannot be carried out within the arrangements of the court as it stands.
I am very grateful to my noble friend for the extensive answer that he gave. Perhaps I might raise one point about proposed new Section 3D, on publication. Subsection (1) of the proposed new section says:
“The Bank must give the Treasury a copy”.
I do not want to sound cynical, but one wants to be able to ensure that this can come out unimpeded. One does not want to find that the hidden hand will be able to say, “Actually, it’s most inconvenient if you say this. We’d like this to be doctored, monitored, removed or dealt with in one way or the other”. The “public interest” referred to in proposed new Section 3D(3) is always a useful cosh to avoid things that are not necessarily against the public interest but may be simply embarrassing at the time. When he comes to speak further, can my noble friend give an assurance that my cynicism is unfounded and can he address the point made by my noble friend Lord Flight about the proliferation of committees?
Baroness Kramer
My Lords, I join with the comments made by the noble Lord, Lord McFall, and I have a couple of quick comments to make on this very substantial proposed new section. I have two queries on it, which I wonder whether the Minister can clarify. The oversight committee, as he conceives it, is to be chaired by the chair of the court. Am I correct in understanding that he expects this to be a non-executive chair? Although there is currently a non-executive chair of the court, the Minister will know that I have concerns about the Banking Act 2009. In Part 7 of that Act, Section 241 seems to be quite ambiguous about whether that is a requirement or merely in the gift of the Chancellor. If I am right, I hope that that can be corrected at some later stage of the Committee.
My second set of comments concern proposed new Section 3C(5), on performance reviews. When the cynics among us—I am afraid that I confess to being one—read a phrase that says:
“In the case of a performance review, the Committee must have regard to the desirability of ensuring that sufficient time has elapsed … for the review to be effective”,
the Minister will understand that there is an element of thought that that could mean the long grass, if we are not careful. Paragraph (b) of that proposed new subsection,
“to avoid the review having a material adverse effect on the exercise by the Bank of its functions”,
could be read as “no serious criticism required”. I would like some assurances from the Minister that that is not a possible reading.
The Minister will understand that some of those concerns are reinforced by widespread criticism of the delay, under the current banking structure, of the three reviews that were started in May this year. Seeing those reviews now in place, it seems an awfully long time since the financial crisis. There are also real questions about the scope of the reviews, particularly the review looking at the provision of emergency liquidity assistance in 2008-09. Many of us would have asked, “Why did this not start in 2007?”. Notwithstanding the fact that the Treasury Select Committee has looked at that, it is surely not a substitute for the Bank of England or the court doing the work itself. There are concerns in that area, and I look for reassurances from the Minister.
Baroness Drake
My Lords, perhaps I might ask the Minister a very brief question. Proposed new Section 3E(2) says:
“The Oversight Committee must … if or to the extent that the Bank accepts the recommendations, monitor the implementation of the recommendations”.
My question is very simple. If the Bank does not accept the recommendations, what then happens?
Lord Burns
My Lords, I, too, support the burden of this amendment. It is a subject that a lot of us spoke about during Second Reading, and this is an important part of strengthening the governance of the Bank of England, which we have been speaking about for much of the afternoon. The things set out here have the ability, over time, to change quite substantially the relationship between the non-executives and the executives at the Bank. I think we all agree that that will provide a better balance, given the wide-ranging powers that the Bank of England will have. The proposed new section sets out some of the important issues about making reviews of policy performance, which lie at the heart of this, and the engagement of the non-executive directors in what has been happening from a policy perspective within the Bank. The suggestions about publication and handling recommendations would also be extremely helpful.
The very same question raised by the noble Lords, Lord Flight and Lord Hodgson, also came to my mind. Why does one need a separate oversight committee for this, rather than handling it within the board itself? I have sat on a lot of boards by now and I have never found a problem with engaging with this kind of activity. Within a unitary board, people know the occasions when they must remain silent or absent themselves and who is in a position to do that. It is very much about commissioning reviews, as set out here. It is not as if one is suggesting that the directors themselves would be conducting the reviews, but they are going to be commissioning them, either from inside or outside the Bank.
It seems to me that the only argument arises from the scepticism that we have heard from many noble Lords about the entrenched position of the executives relative to the non-executives of today. Therefore I understand why the Government might think that this is a way of bringing confidence to this process. However, over the long term, I hope that it could be done within the remit of the board as a whole, because that gives confidence within a unitary board; confidence between the executives and non-executives that, together, they can review what has happened in the past and can learn the lessons of the past so that an attitude of confrontation does not develop between one set of people reviewing the performance of another set. However, I understand why it might be right at this point.
Lord Phillips of Sudbury
Is the noble Lord not assuaged in his point about the unitary board by the fact that it explicitly says here that the oversight committee is a sub-committee of the court?
Lord Burns
The committee consists only of the non-executive directors; the executive directors will be there, in a sense, only in attendance. It can work. Normally within a board, if it was doing this kind of review, it would be the non-executive directors who were in the lead and making the running. I have found from experience that one should do everything one can to keep the executive and non-executive directors together when one is handling these kinds of issues and trying to learn lessons from the past. We do not want a situation where one part of the board feels that it is being picked on by another. However, given the level of distrust that we have heard this afternoon from many noble Lords about this, I can understand the concerns that, if the Government had brought forward the proposal in the sense that a number of us suggested, they would have come up against the pressure of saying, “Well, it will simply be controlled by the executive directors, in the end, if it is done that way”. Over time, however, a well functioning board should be able to handle these kinds of policy reviews within the whole of the board. That is the best way of learning longer term lessons from these experiences.
Lord Tugendhat
My Lords, I agree with what the noble Lord, Lord Burns, has just said. This is an admirable amendment, and I agree with almost all of it. There is one point I am going to raise in a moment, but I do not see why it cannot be done by the court. The fact that the Government have gone to all this trouble to set up a committee instead of leaving it in the court means that one wonders what lies behind it. It seems to be diminishing the authority of the court in some peculiar way. I do not understand the purpose; if the court consists of the directors of the Bank, it seems very odd. That is one point. Otherwise, however, I agree with the thrust of this amendment.
I would like to point out to the Minister an inconsistency in his approach. In a couple of the previous amendments that we have discussed, he told us that what is being suggested is unnecessary, because, of course, the Government would behave in a proper fashion. They would consult everybody, including the chairman. There is no need to be specific in saying that the chairman should be consulted on the appointment of the governor. There was another occasion when the Minister said that there was no need to be specific. Yet here the Government say,
“If the person to be appointed to conduct a performance review is an officer or employee of the Bank, the appointment requires the consent of the Governor of the Bank”.
Lord Turnbull
My Lords, we have a great deal of common interest here that would advance the position of the court. We have two rival schemes, one in Amendment 11 in this group, the other tabled by the Government. We can mix and match here. The sense is that we prefer the Amendment 11 reference to the court, but we prefer the amendments in the government group, particularly about whether these amendments are made using internal or external resources, or whatever. If we put these two things together, we have a rather good scheme.
Lord Phillips of Sudbury
My Lords, I want to enlarge on the question I asked my noble friend just before he sat down. The point has been made from different quarters of the House about the desirability or otherwise of having yet another committee. However, whichever way that argument goes—and I note the rather odd situation that this oversight committee is to be a sub-committee of the court, and the composition of the court and the composition of the oversight committee are precisely the same—
Lord Phillips of Sudbury
I see:
“There is to be a sub-committee of the court of directors … consisting of the directors of the Bank”.
It is not all the directors, some of the directors. I have got you.
Lord Sassoon
I have been restraining myself from clarifying a number of other points, but I think that there is perhaps a point that will help the Committee. A director, as defined, is a non-executive director, so the executive members—the governor and the deputy governors—do not, under the definitions here, count as directors. It is only the non-executive directors, which may help my noble friend.
Lord Phillips of Sudbury
I am grateful for that, and I apologise for the error. However, I want to reinforce the importance of extending the power of delegation under new Section 3B. That could be very important to the work of the committee and strengthen it because it would bring in outside voices and give strength to its deliberations. I hope, therefore, that the Government may review this and decide to extend the power of delegation, not just to members but to outsiders as well. Subsection (3) already provides that outsiders can attend and speak at meetings of the committee, but to be members of a delegated body is crucial, as, indeed, in the review structure under new Section 3C, it would be helpful on occasions to have more than a single person appointed to conduct a review. If it is a complex review, there could be a lot of point in having a small team of three. At the moment that is not permitted by the wording of new Section 3C.
Lord Eatwell
My Lords, I welcome Amendment 11, which is the Treasury Select Committee amendment, put down by my noble friend Lord McFall and the noble Baroness, Lady Noakes. I also welcome the government amendment, which is taking us forward on this vexed issue of the governance of the Bank of England. I regard that as a general welcome, notwithstanding any criticisms or questions I may later have about some particulars of the amendment.
However, before getting into the discussion of Amendments 11 and 13, I reiterate the question raised by the noble Baroness, Lady Kramer, with respect to Section 241 of the Banking Act 2009, where it appears that the chair of the court is in the gift of the Chancellor of the Exchequer. There is nothing in that clause to suggest that the chair must be one of the non-executive members.
Baroness Kramer
I have tabled Amendment 98A, which I think fixes the problem, although it may be fixed by the Government before we get to that point.
Lord Eatwell
Let us hope that it is fixed by the Government, to general approbation.
I turn to Amendments 11 and 13. The noble Lord, Lord Turnbull, perhaps hit the right note when he said that there are elements of each of the two amendments that, if combined, could be turned into a truly satisfactory structure for this activity. As far as I can see, there are three crucial differences between the amendment proposed by my noble friend Lord McFall and that put forward by the Government. The first, as several noble Lords have pointed out, is that my noble friend’s amendment refers to the Court as a whole. Secondly, the Government’s approach would not allow the proposed oversight committee to consider the merits of the policy pursued by the Bank, a point that could be considered under Amendment 11. Furthermore, there is a third point: the Government’s approach does not commit anyone other than those internal to the Bank to know if a report is lying somewhere gathering dust, unpublished because of some concern about the public interest. Surely this is not the best way to grow confidence in the procedure, and the suggestions made in Amendment 11 would give some confidence that if reports were not published, at least there was some outside overview of the report and the reasons why it would not be published.
Given the detailed scope of the Government’s amendment, I am going to concentrate on its provisions. This represents a major concession, finally forced out of the Bank through gritted teeth by the criticisms of the Treasury Committee and the Joint Committee, to some sort of oversight of its actions. As the Committee will be well aware, the Bank has severely damaged its own reputation, as several noble Lords have said, by its persistent refusal to conduct a proper, wide-ranging review of its conduct in the run-up to the financial crisis. There was the downsizing of the financial stability department, for example; its obsession with moral hazard during the crisis when what was urgently needed was a recapitalisation of the banks; and indeed since the crisis the governor and others have persistently suggested that they knew what was going on but either did not have the tools to respond or were not loud enough in their protestations. I must say that that seems to be a derogation of duty.
So the Bank has form that has been damaging both to itself and to the effective development of stability policy and the British economy. It would greatly help the Committee if the Minister would specify precisely in what ways the proposal for an oversight committee now before us differs from the proposals first advanced by the Bank in January. Has the Treasury added to or subtracted from the bank’s suggestions, and what are the implications of the Treasury’s modifications? Can we now have confidence that the Bank will not only learn from its mistakes but have sufficiently critical procedures in place that it learns before making them?
I am afraid that my confidence in these proposals was severely undermined by the Bank’s own commentary on the proposed oversight committee:
“It is vital that the Oversight Committee does not seek to second guess the decisions of policymakers themselves. The passing of such judgements could threaten the relationship of trust that is necessary between policymakers and the Oversight Committee. Were the Oversight Committee to be seen to ‘take sides’ in the policy debate, those policymakers from whom it differed would be less likely to trust as independent its judgement of whether proper processes were followed”.
I think that that is nonsense. I really had no idea that policymakers in the Bank were such delicate flowers that they could not withstand a little robust assessment of their decisions.
On several occasions today, Members including myself have quoted from the evidence of Mr Greenspan before the US House of Representatives, when he said:
“This modern risk management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year”.
At least Mr Greenspan had the guts to stand up and admit what was true for every central banker: that this was an intellectual failing, and analysis and judgments were wrong. That is why it is imperative that the oversight committee has the powers to penetrate groupthink at the Bank, to assess and evaluate analysis and judgments and to create a framework in which the institution can learn and adapt in the rapidly changing environment of financial markets. As the Treasury Committee itself said:
“It is unrealistic to suppose that an oversight body could plausibly be expected to commission an external review of a policy decision without assessing the substance”,
of that decision.
What is the full significance of the phrase,
“keeping under review the Bank’s performance”,
in new Section 3A(2)? Will it enable the oversight committee to review the judgments of the Financial Policy Committee as defined in proposed new Section 9C and the Monetary Policy Committee as defined elsewhere? For example, does the expression “duty of the FPC” include the tasks set out in new Section 9C(2)? Does the review of strategy include the right to criticise the intellectual framework used by the Bank in pursuit of its responsibilities under new Section 9C and the proposal of alternative frameworks? In other words, can the oversight committee do exactly what the Bank said it did not want the committee to do when it reviewed the proposal?
Then there are the phrases that the noble Lord, Lord Tugendhat, has referred to in respect of an office or employee of the Bank who could conduct the review but who has to be approved by the governor. I find that rather disturbing; surely if there is an employee who is truly competent and is chosen by the court and/or the oversight committee, and that employee may end up criticising some judgments of the governor, it is not appropriate that the governor should be able to approve that person.
As my noble friend Lady Drake pointed out, under new Section 3E(2) the oversight committee must monitor the Bank’s response and, to the extent that the Bank accepts the recommendations, monitor their implementation. As she pointed out, it is not at all clear what is going to happen if the Bank rejects the committee’s report. What is the committee supposed to do, slink away with its tail between its legs? What is supposed to happen in this case? What of the oxygen of publicity? As I have already commented, new Section 3D makes clear that the Bank may choose not to publish a report. That is entirely understandable in particular circumstances, but surely an outside eye needs to be cast over that decision, as my noble friend Lord McFall and the noble Baroness, Lady Noakes, have suggested.
I shall briefly address Amendment 29 in this group, which is in my name and that of my noble friend. Given what I have said already, the point of the amendment should be clear. As the Bill is presently drafted, the oversight committee would be able to keep only the procedures of the Financial Policy Committee under review. If that clause is inappropriate, as the Minister suggested in his introductory remarks, surely it should not be there or it should be appropriately amended. Proper oversight should be able to keep all the activities of the Financial Policy Committee under review. Once again, the Treasury seems to be unreasonably constraining the scope of oversight. The Minister shakes his head; I am delighted, but then why is the clause not amended?
I should refer to Amendment 31, which was put down in my name and that of my noble friend, and I was delighted to see that the noble Lord, Lord Sassoon, added his name to it. I regret that I have had to express such caveats regarding the Bank’s and indeed the Treasury’s motives in the design of the oversight committee but, as I said earlier, this is really because the Bank has let itself down and done itself significant reputational damage in failing to be open about its own failings in the crisis. A way of repairing that damage would be to develop an effective supervisory board, the court, with a proper strategic role including the oversight function, which I commend the Government for proposing.
I have raised these issues for clarification. I want to be clear that we have not been stuck with the proposals that the Bank itself put forward in January, and that the issue of oversight really would be as comprehensive as the noble Lord suggested. I hope that the Government consider the proposition put forward by the noble Lord, Lord Turnbull, and see that there are merits in both these amendments, and that by combining them later on in the development of the Bill a truly satisfactory structure could be attained.
Lord Sassoon
My Lords, in most senses I am very grateful for the number of questions. I am also grateful for the general welcome that there has been for the Government bringing forward this very important series of amendments to the way that the oversight and governance of the Bank operate. We are coming to one of the key parts of this Bill. I am grateful, therefore, for the general support from around the Committee for what we are trying to achieve here. Let me reassure noble Lords that a lot of their concerns have been thought about and are adequately dealt with, although there are one or two things on which we have consciously taken a particular course, which not all members of the Committee would agree with.
Let me start by reassuring my noble friends Lord Flight, Lord Hodgson and Lord Tugendhat, and others, that we are certainly not creating any new body here. The committee of non-executive directors of the court, the so-called NedCo, already exists; we are folding that committee’s responsibilities into the new oversight committee, so we are not proliferating committees.
I have considerable sympathy with the position of the noble Lord, Lord Burns. To summarise his position, it is that in fact a mature board can do all of this without effectively throwing the executives out of the room. There is, however, a long tradition within the governance of the Bank of this critical role of NedCo, which has been accepted and not seriously challenged over the years, combined with calls from all sorts of quarters, including the Treasury Committee, to do it in the way that we are doing it. We have had calls for a supervisory board from the noble Lord, Lord Eatwell, and others, which have a similar end. Many, therefore, both in this House and in another place, have been calling for this separation.
Yes, I understand that in the best of all worlds it should not be necessary, but the Government have responded to the calls for this separation between the executives and the non-executives to carry out the oversight role. We believe that we have done it in the most efficient and effective way here by not creating new committees and additional complexity. Neither have we chosen to do it in what I would suggest would be another inappropriate way—namely, to have a supervisory board, which is itself composed only of non-executives. All these considerations, therefore, have been factored into the basic construction here.
In terms of the basic construct, my noble friend Lady Kramer asked whether the Chair of Court would be executive or non-executive. It will be non-executive. I am aware that my noble friend has identified a possible lack of clarity by reviewing the existing legislation, and I know that she has tabled an amendment on this that we will debate later. However, the intention is very clearly that the chair will be non-executive.
I will take some of the other key points. My noble friend Lady Kramer asked whether new Section 3C(5) would mean that the committee should avoid criticising the Bank. That is absolutely not the case. The section only relates to the timing of reviews, and it is sensible to provide that, in deciding when to carry out a review, the committee should consider whether having a review at that time would disrupt the ability of the Bank to do its job properly. My noble friend also went back to questions about why the Bank had been so tardy, and about the scope of the reviews it recently commissioned. I would suggest that that illustrates why this amendment is appropriate and will make the whole position much clearer and different with this remit on the oversight committee. Without debating the rights and wrongs of the timing and the scope of reviews that have recently been commissioned, this amendment very much deals with that concern.
The noble Lord, Lord Eatwell, raised a concern about the scope of the work here, and what is kept under review. As he helpfully clarified, Amendment 29 seeks to require the non-executive committee to oversee the activities of the FPC. That is precisely what the Government believe Amendment 13 achieves as it makes the oversight committee responsible for overseeing the Bank’s performance against its objectives, including the FPC’s pursuit of its objectives. I believe, therefore, that in drafting its scope, that concern is taken fully on board.
My noble friend Lord Phillips of Sudbury asked questions on the ability of the committee to delegate, and on the interaction of new Sections 3B and 3C. These are different points, and therefore the construction here works as it was intended. New Section 3B allows the committee to delegate its own functions to two or more members of the committee. That is a different point from that in new Section 3C, which allows the committee to appoint, not to delegate, others—either an individual or a group—to undertake reviews of Bank performance. Therefore, the drafting works on that point and deals appropriately with the concerns that my noble friend expressed.
As regards the concerns around these processes, a number of points have been raised about possible redaction or disagreement with recommendations and so forth. The noble Baroness, Lady Drake, asked what would happen if the Bank did not accept recommendations that had been made. If that were the case, it would certainly be made public that the Bank had rejected a recommendation. I would expect that any such decision would therefore be subject to very close scrutiny, including appropriate parliamentary scrutiny. That would work in a very similar way to the scrutiny that surrounds government responses to independent and other reviews. There is no way that the Bank could walk away from proper challenge in such circumstances.
Baroness Drake
On that point, I am sure that it would leak or become obvious but what is laid before Parliament is not the report that the Treasury receives but the report that the Bank publishes. This provision allows for the Bank not to publish on the grounds of its view of a public interest issue.
Lord Sassoon
My Lords, it is generally accepted that carve-outs are needed, particularly in relation to the time-sensitivity of reports. As I have explained, this is very tightly circumscribed and the question of when it is appropriate to publish must be kept under review. The publication of the report, or any delay to that publication, can be achieved by the Bank only in those very circumscribed circumstances. They must keep publication under review. Therefore, there will be publication and appropriate challenge at the earliest appropriate time. It is difficult to see what the circumstances might be in which the Bank’s not agreeing with a recommendation would justify non-publication. There is proper but not excessive protection of the position here.
There was also a question from my noble friend Lord Hodgson about the Treasury’s possible ability to step in and in some way redact or hold back reports. The Treasury has no powers here. It merely receives a report. It is up to the Bank, again on public interest grounds, to hold back parts or the whole of a report. I should not say that I quite understand my noble friend’s cynicism about references to the Treasury because I certainly do not. However, I understand why he has properly raised the question.
I think I have already touched on this point but the noble Lord, Lord Eatwell, specifically referred to proposed new Section 3A and whether the government amendment allows the committee to consider the merits of the Bank’s action. Proposed new Section 3A provides that the committee is to keep,
“under review the Bank’s performance in relation to … the Bank’s objectives”.
I reiterate that the main concern here has been addressed.
On the broader question of what the Government have done not only in relation to the Treasury Committee but about the recommendations that the Bank made in January, there is nothing that I can add to what I said in my opening remarks, in which I attempted to be very clear on that point.
Lord Eatwell
Perhaps I can clarify the question for the noble Lord. The question is really about whether the oversight committee could pass judgment on the decisions of policy-makers. As the Treasury Committee put it:
“It is unrealistic to suppose that an oversight body could plausibly be expected to commission an external review of a policy decision without assessing the substance”.
This is what the Bank objected to in the initial form of the oversight committee. Has the Treasury put aside the Bank’s objections, and can the oversight committee now refer to make its assessment of the substance of policy decisions?
Lord Sassoon
Let me address this very directly. The requirement for the oversight committee to ensure that sufficient time has passed before commissioning a review is there precisely to ensure that it does not put itself in the position of second-guessing the Bank’s decisions when those decisions are still playing out. After that point, it will be appropriate to assess the effect of those decisions, but while they are playing out it will not be possible effectively to estimate how they are playing out and it would be inappropriate to do so. The way that the amendment is drafted is precisely consistent with the Treasury Committee’s recommendation that the reviews be retrospective, rather than in any sense contemporaneous.
I hear clearly what the noble Lord says: there is a difficult balancing act here, between allowing the oversight committee the ability to question everything and not boxing it into questioning the judgments that have been made on policy decisions. Yes, it can challenge and review judgments on policy decisions but it should not be boxed into doing so while the consequences of those decisions are playing out. In substance, that is what the Treasury Committee recommended.
Lord Eatwell
Let us focus this by taking a concrete example. It is now generally accepted by everybody except the Bank that the Bank made some calamitous decisions shortly before, or in the process of, the collapse of Northern Rock. Various statements were made by the governor that accelerated the run on the bank. The continuous reference to issues of moral hazard when the bank needed recapitalising did significant damage in that case, and that damage reverberates to this very day.
Now that significant time has passed, suppose we were to commission a review of the Bank’s activities at that time. Would it be permissible for the oversight committee to say, “Look, this decision was made on the wrong analytical grounds and was a serious mistake. The Bank should readjust its perspective to think in a different way. Perhaps it should introduce some other analytical tools so that that mistake is not made again”? Would that be appropriate?
Lord Sassoon
My Lords, without wanting to endorse the conclusions of the noble Lord, Lord Eatwell, from the experience in 2007, yes, of course it would be possible and appropriate for the oversight committee to conduct or commission that kind of review. Without detaining the Committee for much longer, I will address a couple of other points.
Lord McFall of Alcluith
Could the Minister point to where his amendment says that that would be allowed? Looking at proposed new Section 3A(2), I can imagine a very sterile debate between the oversight committee and the Bank or the governor. The function of the oversight committee is to keep,
“under review the Bank’s performance in relation to … the Bank’s objectives”.
If it asked, “Did you stick by your objectives?”, the Bank answered, “Yes”, and the committee said, “We don’t think you did stick by your objectives”, where would it go on that issue? The committee could ask, “Did the Financial Policy Committee do its duty under Section 9C?”. The answer could be, “Yes, it has”, or, “No, it hasn’t”. The Minister needs to point to areas that would allow for the questions that my noble friend Lord Eatwell has asked.
Lord Sassoon
My Lords, I think the critical point here is that the noble Lord, Lord McFall of Alcluith, posited a situation in which this would be, in his words, a sterile debate with the governor. It goes perhaps to the heart of the question that I started with as to why the oversight committee is a committee of the non-executives. It means that it is the oversight committee without the governor or any of the executives of the Bank being members of that committee that takes the decision, under this provision in Amendment 13, to commission reports over a very wide area. So there is no question at the front end of a negotiation with the governor and the executive about whether they would commission a report in those circumstances. That is for the oversight committee to do. We have discussed the timing issue. The report is made and, subject to the issues that we have already discussed, the report is published. I can assure the noble Lord, Lord McFall, that there is no negotiation to be had at that front end. The non-executive oversight committee of the court of the Bank will have a very clear statutory function to take precisely what is proposed in new Section 3A, and it will be untrammelled by any possibility of the sort of sterile debate that the noble Lord suggests might happen. I hope that that reassures him.
I want to address a couple of other points, largely people issues of two kinds here. My noble friend Lord Tugendhat and the noble Lord, Lord Eatwell, questioned the need for the governor to consent to the appointment of an internal reviewer. This is intended to be a perfectly straightforward and practical measure. In practical terms, if the person selected is on the verge of leaving the Bank for another post, going on sabbatical or maternity leave, or whatever, the non-executive directors on the court may not necessarily be aware of this, and it is a practical way of ensuring that the appointment works. It also provides the governor, as the person ultimately responsible for the staff who work for him or her, with the opportunity to determine whether the person selected has the capacity to undertake the review in the timescale envisaged without impacting their other responsibilities. There is no more to it than that.
Lastly, I go back to a point which I believe the noble Lord, Lord McFall of Alcluith, made at the beginning about the size of the court. It is not directly the subject of this amendment, but I think that it is worth answering that point. Given that there will be four executive members—the governor and three deputy governors—if the court were reduced to eight, it would not allow for a non-executive majority because we have four insiders on the court. More generally, if there were such a small number of non-executives, it would be difficult to have sufficient diversity of experience and views, which was a point that we discussed earlier and which I completely agree with. If we had a reduction in size, it would be impossible effectively to have a non-executive majority or indeed, as I say, sufficient diversity.
I hope that I have been able to deal with the very understandable and important questions and concerns on this issue so that the noble Lord, Lord McFall, might see his way to withdrawing his amendment and the Committee will support the Government’s amendments.
Lord Eatwell
My Lords, is the Minister accepting my Amendment 29? He seemed to say that it was referring to the right sort of thing. If he is not accepting it, why is proposed new Section 9B(4) left in the form that it is, referring only to procedures? I have another question, but would he answer that one?
Lord Tugendhat
May I add a question so that the Minister can answer both together? The Minister is dealing with these matters with such grace and elegance that I feel very bad in questioning his or the Government’s motives in any way. Nevertheless, when we were dealing with the question of whether the chairman should be consulted on the appointment of the governor, basically what the Minister said was that reasonable people will behave in a reasonable fashion and there is no need to spell all this out, because it will be done in the normal course of events. Here he is insisting on absolutely spelling it out so that in practice the governor has a block. Of course I agree that in a properly run organisation, as I am sure the Bank would be, an employee would not be appointed contrary to the wishes of the governor; the relationship between the chairman and the governor would overcome that. None the less, to give the governor an absolute block is a sort of belt and braces that is completely at odds with what the Minister said in an earlier discussion. That means that one does look with some suspicion as to why, as I said earlier, there is one sauce for the goose and another for the gander. If he wants to spell it out here, why could he not spell it out earlier?
Lord Sassoon
My Lords, in legislation we come back regularly to this question of what needs to be spelled out and what does not. Elegantly or otherwise, I am not sure what more I can say other than that we have to take each case on its merits. Sometimes there are good arguments for spelling things out and at other times there are not. I know that I will disappoint my noble friend and it is a perfectly fair question, but I am not sure that there is much more that I can usefully add.
On the question from the noble Lord, Lord Eatwell, about Amendment 29, I will be clear. I do not accept Amendment 29 because I do not believe that it is necessary. I believe that Amendment 13, which I thought was helpfully clarified during this debate, more than covers the ground. I refer the noble Lord in particular to proposed new Section 3A(2)(a), which I would suggest makes it clear right at the beginning of the Government’s amendment that the function of the oversight committee and its ability to review performance is very widely drawn in relation to the objectives of the Bank and of the FPC. I believe that new Section 3A enables the oversight committee explicitly to review the activities of the FPC, which are there right at the beginning of this amendment.
Clearly I am having difficulty understanding the noble Lord’s concerns but I am absolutely clear that the substance as he has explained it and the specific example that he gave are completely within the ambit of what is being put in the Bill as the function of the oversight committee.
Lord Eatwell
My Lords, if new Section 3A covers the point, and we want to avoid ambiguity, why not simply delete subsection (4) of proposed new Section 9B? What does it do?
Lord Turnberg
This amendment has been put in the wrong group. New Clause 9B(4) is about the Financial Policy Committee, not the oversight committee.
Lord Eatwell
The point is that the oversight committee is supposed to keep the activities of the Financial Policy Committee under review. There is an amendment among the amendments tabled by the noble Lord, Lord Sassoon, that changes “court of directors” in new Section 9B(4) to the “oversight committee”. So if we accepted his amendment, it would read that the oversight committee,
“must keep the procedures followed by the Committee under review”.
Why do we have that when we have new Section 3A doing all the work for us?
Lord Sassoon
I think that is wrong. It is not the Court of Directors that becomes the oversight committee; the Court of Directors remains the Court of Directors. It is effectively the committee of non-executive directors, or NEDCo, of the Bank, which becomes the oversight committee. The court remains the court. So there may be some misunderstanding of who is doing what here, but the Court of Directors must indeed keep the procedures of the FPC under review, which will be principally done through the oversight committee, which is a committee of the court.
Lord Burns
The references here to the Court of Directors of the Bank in new Section 9B(1) says:
“There is to be a sub-committee of the court of directors of the Bank”.
When it says Court of Directors in that case does it mean the whole court? Earlier we were being told that “directors” simply means the non-executive directors and that the governors are not counted as being directors of the court. That seems to be part of the problem that is causing this ambiguity.
Lord Sassoon
Let me try again. The court of the Bank, which is the executives and non-executives, must keep the procedures under review. The non-executives through the oversight committee have a remit and function that includes procedures but goes wider and is able to review the performance of the Bank and the FPC against its objectives in the full wide way that I believe the noble Lord, Lord Eatwell, is asking for it to do—and I am confirming that it does.
Lord Burns
For clarification, when it says the Court of Directors, does that mean the whole court or does it mean only the non-executives?
Lord Sassoon
Court means the whole court, and that is in relation to the procedures. The oversight committee has the function and ability to look not only at the procedures but also at the question of whether the objectives of the Bank and the FPC are being met.
Lord Eatwell
I am afraid that this does not help, because the amendment tabled by the noble Lord, Lord Sassoon, Amendment 28, says on,
“page 3, line 28, leave out “court of directors” and insert “Oversight Committee”.
So this should actually read, “the oversight committee must keep the procedures followed by the Committee under review”. Why is that there when new Section 3A covers it, we are told? But I shall not pursue this—I shall leave it with the Minister. Either we have just got in a muddle or there is a drafting error.
Lord Sassoon
I think that it is me that has got in a muddle. It is kind to say that we have got in a muddle or that there is a drafting error. I apologise to the Committee, as I am the only person who has got into a muddle on this, as I track through amendments and consequential amendments. New Clause 9B(4) is being amended by government Amendment 28 so that it no longer says “court” but says “oversight committee”. I apologise for my confusion on this, but we may have finally got to what it is intended to say. The two things will be consistent so that the oversight committee, to the substance of the point, will be able to deal with both procedures as envisaged under new Clause 9B(4) as amended and as explained in Amendment 13. So I hope that we are getting there.
Lord Eatwell
We are getting somewhere. What we have here is redundancy. New Clause 9B(4) is redundant, given the Minister’s explanation of new Section 3A.
I apologise to the Minister for raising a quite different question, which I shall just leave on the table. In my earlier remarks, I did not refer to the schedule. In the enthusiasm to replace “court” or “Bank” with “oversight committee”, the Government have gone a bit too far. Perhaps the Minister could check on this later, because the terms and conditions of non-executive members of the Financial Policy Committee are now amended to be determined by the oversight committee. That must be a mistake—it must be the court as a whole. That is in government Amendment 91. In government Amendment 93, the oversight committee can remove appointed members of the Financial Policy Committee. Surely that must be a mistake as well—it must be the overall court. So I think that there has been a great enthusiasm for replacing “court” with “oversight committee” and somebody has got rather carried away. But I am not going to press this issue now. I shall just leave it on the table for the noble Lord and his officials to consider and bring back to us later.
Lord Sassoon
I am grateful to the noble Lord because I think that we are getting into very detailed drafting points. I will certainly have a look at those points and write to the noble Lord and copy the letter to others who have spoken in this debate, just to check that nothing has gone astray in the drafting here. We will take that on board.
Lord Phillips of Sudbury
I hope that my noble friend agrees that the noble Lord, Lord Burns, had quite a point. It harks back to earlier discussions about the complexity of drafting. It is the fact, as I hope my noble friend will confirm, that the definition of Court of Directors in Clause 1 of the Bill includes the four executive directors and “not more than 9” non-executive directors—which makes 13. The interplay of the phrase Court of Directors and the new body that is the subject of the government amendment makes for extraordinary complexity in understanding. One thing that my noble friend might consider for the next stage is that when the Bill and his amendment refer to non-executive directors they say non-executive directors, because there are four executive directors—the governor and three deputy governors. They are directors too.
Lord McFall of Alcluith
I thank noble Lords for their contributions. It has been a very interesting debate. I had more of an idea what things are about at the beginning of my speech than I did at the end and whether it is the oversight committee or the court. Perhaps the Minister could just clarify whether the chair of the court will chair the oversight committee and whether the oversight committee will be composed of non-executives, with no officer of the Bank on the oversight committee. I cannot see that detailed in the Bill.
I agree with noble Lords in asking why we need another committee. The reason why I asked the Minister questions earlier was that the Treasury Committee in another place is very firm that this proposal does not plug the gap. In the light of the debate, there needs to be a review from the Government and they need to come back to us on Report so that we can get some clarity when it goes back to the other House. The core of this is corporate governance. If we get good corporate governance on the court, there will be no need for the oversight committee at all.
The noble Lord, Lord Turnbull, had a very good suggestion. Why do we not combine my amendment with the Government’s amendment and then we can come back to this matter, look at it and, I hope, all agree? I beg leave to withdraw my amendment.
Lord McFall of Alcluith
“Publication of court minutes
(1) Section 2 of the Bank of England Act 1998 (functions of court of directors) is amended as follows.
(2) After subsection (5) insert—
“(6) After each meeting of the court, the Bank shall publish minutes of the meeting before the end of the period of two weeks beginning with the day of the meeting.
(7) Subsection (6) shall not apply to minutes of any proceedings where the court has decided that publication should be delayed for reasons of confidentiality or because publication would endanger financial stability.
(8) Where any part of the court’s minutes is not published under the provisions of subsection (7), the Chairman of the court shall inform the Chairman of the Treasury Committee of the House of Commons of the reasons.
(9) Any part of the minutes of a meeting of the court must be published as soon as the court has decided that the considerations in subsection (7) no longer apply.””
Lord McFall of Alcluith
My Lords, the MPC is obliged to publish minutes of its meetings, but the Financial Policy Committee has just been asked for a record. In the other place, Mark Hoban, the Minister, pointed out that,
“the FPC also produces what it calls a record of its meetings, which is a very full account of the debates that go on in the FPC, and we will expect a similar process to be undertaken for the court’s meetings”.
What is good for the MPC should be good for the FPC as well.
As a veteran of Labour Party constituency meetings during the 1970s and 1980s, I really know the difference between the record of a meeting and the minutes. There can be many battles behind the scenes on that. This is not as arcane debate as we think it is.
When the Minister replied in the other place during the passage of the Bill, Chris Leslie, the opposition spokesperson, said:
“I just want to be clear about what the Minister is saying. Is he saying that when the Bill comes before the other place for consideration he will accept retrospective reviews and publication of minutes or that he will simply consider it?”.
The Minister replied:
“We are clear that we want to see the court’s minutes published”.
The chairman of the Treasury Committee, Andrew Tyrie, then asked a further question:
“when he says that he is committed to the publication of the court’s minutes, does he mean the publication of the full minutes or only a summary record of them, which it appears is what was proposed before”.—[Official Report, Commons, 23/4/12; col. 766.]
That question has still to be answered. This amendment is put down for the sole purpose of eliciting that information.
Baroness Hayter of Kentish Town
My Lords, I will speak to the amendment standing in the name of my noble friend Lord Eatwell and myself while supporting Amendment 12, moved by the noble Lord, Lord McFall. I am sorry to do so in his absence, but I particularly welcome Amendment 144, in the name of the noble Lord, Lord Sassoon, to which I very happily added my name. The Government responded speedily to a request for the FCA’s minutes to be published, following, I am sure, my intervention at Second Reading and for no other reason. I am pleased about that because it was as late as February that the Government saw the publication of board minutes as a matter for the FCA board rather than for legislation. However, we believe that publication is particularly important when considering the difficulty faced by those seeking to represent the long-term interest of consumers, be they savers, borrowers or debtors, as they follow every twist and turn of a regulator’s wide remit. The minutes are invaluable to lay out the narrative of the FCA’s focus.
The regular publication of minutes is undoubtedly a matter for public policy and therefore correctly in the Bill rather than being for the board itself to decide. After all, it is its work that will be scrutinised by this openness. I know that the Government’s move will be welcomed by Which? and the Financial Services Consumer Panel, as well as by the wholesale market players, for whom the FCA is of particular importance.
However, consumers’ interests go further than the FCA, important though that is. The vital work and the decisions undertaken by the Bank, the FPC and the governor can only benefit from greater debate by, and input from, a range of commentators, be they the press, academics, market participants, representative organisations, other regulators or indeed users. Publication both improves the internal thinking through the debate that it generates and has an important role in accountability. The Government have described the FPC as,
“a powerful new authority sitting at the apex of the regulatory architecture”.
It is therefore beholden on us to ensure that the mechanisms to ensure the FPC’s democratic accountability are commensurate with the strength of its powers. This starts with transparency and the beginning of a new culture of democratic dialogue.
The Treasury Select Committee report of 19 October is already familiar to us and will become more familiar. It argued for the need for clear transparency both in the publication of the remit and in the FPC’s responses. It said:
“There should be the presumption that ex-post reviews would be published, except where confidentiality needed to be maintained”,
in which case a redacted version could be published or publication delayed. It also said that,
“the Chairman of the Treasury Committee should be shown an unredacted version of the findings with an explanation of the reasons for non-publication”.
We endorse that recommendation. The committee also stressed that,
“The date of publication should then”—
in other words, if it has been withheld—
“be reviewed periodically until such a time as full publication would not endanger confidentiality or financial stability”.
I turn to the issues mentioned by my noble friend Lord McFall. Mark Hoban in the other place agreed that there was,
“a clear need for the Bank’s accountability arrangements to be strengthened through the publication of the court’s minutes”.
He agreed that the Government would consider this further when the Bill came to this House for its scrutiny. However, he made it clear that he wanted to see the court’s minutes published, as well as retrospective reviews,
“so that Parliament and stakeholders can hold the Bank to account for the way in which it has used its powers not just when it comes to the Financial Policy Committee”,—[Official Report, Commons, 23/4/12; col. 766-67.]
but more widely. We welcome those sentiments and hope that the Minister will now be able to signify his support for the amendments, which I think are in line with the recommendation of the Minister in the other House.
Lord Northbrook
My Lords, I support the amendment of the noble Lord, Lord McFall. I noted that in the Treasury Committee’s first report on the Financial Services Bill of 23 May, Mark Hoban was quoted as having spoken in the other place as follows. I hope that the Committee does not mind me repeating it, because it is quite important:
“My hon. Friend the Member for Chichester also mentioned publication of the court’s minutes. The Bank has committed to publishing what it terms a record of future court meetings. It is worth pointing out that the FPC also produces what it calls a record of its meetings, which is a very full account of the debates that go on in the FPC, and we will expect a similar process to be undertaken for the court’s meetings. Let me be clear: I believe that there is a clear need for the Bank’s accountability arrangements to be strengthened through the publication of the court’s minutes and the enhanced scrutiny of the court’s work, although I believe that the changes announced by the Bank help address the concerns raised by my hon. Friend and the Treasury Committee. He made some powerful arguments that have been echoed by other members of the Committee, and we will consider further whether these arrangements should be put in the Bill. We will reflect on these matters and reconsider them when the Bill goes to the other place. I hope that that helps to reassure the House on how seriously we take these matters and our willingness to listen and respond to the concerns raised by Members during the debate”.—[Official Report, Commons, 23/4/12; col. 766.]
I ask the Minister to consider those comments by Mr Hoban in the other place.
Lord De Mauley
My Lords, in its report on Bank of England accountability, the Treasury Select Committee indeed recommended that the court publish minutes of its meetings. In its response to the Treasury Select Committee, the court accepted this recommendation in principle and agreed to begin to publish a record of its meetings once the new structure was in place. By putting this requirement into the Bill, as we propose to do through government Amendment 97, we ensure that this important transparency mechanism will remain in place.
As the Treasury Committee itself recognised, the court is likely to discuss extremely sensitive matters that are unsuitable for publication—for example, the provision of emergency liquidity assistance to an ailing bank. Therefore sub-paragraph (3) of new paragraph 12A establishes that the record must not contain any information whose publication would be against the public interest. I am pleased to see that Amendment 12, tabled by the noble Lord, Lord McFall, contains a similar provision. However, in a divergence of opinion, perhaps similar to that discussed by my noble friend Lord Sassoon in the previous group, the Government do not agree that the court should be required in all cases to notify the Treasury Select Committee of the reasons why information might have been withheld for public interest reasons from publication.
When the Bank takes actions that involve risk to taxpayer money, such as liquidity operations indemnified by the Treasury, it is the responsibility of the Treasury rather than the court to ensure that the relevant parliamentary committees are informed, on a confidential basis if necessary. There are already formal and informal mechanisms in place for this to happen, including in the new crisis management MoU. When a court discusses sensitive matters that are not related to public money, I do not see the value in creating a bureaucratic requirement for the court to notify the TSC, or to keep under review material that it excludes from meeting records, with a view to publishing it at a later date. Of course, the court may publish information on discussions that were originally excluded from the record at a later date if it believes it appropriate to do so.
The same arguments apply to Amendments 72 and 86 in the name of the noble Lord, Lord Eatwell, in relation to material excluded from the records of FPC meetings and meetings between the Chancellor and the governor. There is also widespread agreement that the Financial Conduct Authority should publish a record of its board meetings. The future leadership of the FCA has agreed to this. We have therefore brought forward Amendment 144, which makes similar provision for the FCA. Indeed, the FSA will publish in early August a record of its June board meeting, consistent with the provisions proposed.
Amendments 70 and 80, tabled by the noble Baroness, Lady Hayter, attempt to include the word “minutes” in other places in Clause 3 where the word “record” is used. That goes to the point made by the noble Lord, Lord McFall. The specific word used is not important. I hope we can agree that what is vital is ensuring that the record provides a clear public account of decisions taken by the court, the FPC and the FCA, and of the rationale and arguments that were put forward by members in favour of and against each decision. Sub-paragraph (2) of proposed new paragraph 12A, which sets out what the record must contain, ensures that that will be achieved for the court. Identical new provisions cover the FCA under Amendment 144. New Section 9R(2) similarly sets out precisely what the FPC’s meeting record must contain.
I move on to Amendment 85, which was also tabled by the noble Lord, Lord Eatwell, and the noble Baroness, Lady Hayter. Subsection (5) of new Section 9U requires the Treasury to consult the Bank before publishing the record of the meeting between the governor and the Chancellor. That will ensure that the Bank’s views about whether material is suitable for publication will be taken fully into account. The noble Baroness can be assured that the Treasury would not publish any material which the Bank believed was sensitive.
Amendments 20, 59, 60, 71, 77, 78, 83, 84 and 85 are generally speaking to do with websites. Transparency and openness are a critical part of any regulatory system. Transparency of decision-making is a vital aid to the public understanding of regulatory actions. In all cases where the Bill provides for certain documents to be made public, including those affected by amendments in this group, I would of course expect the publications to be made available on the relevant website. That is because the internet is at present the primary method for the public to access this type of material. However, I ask noble Lords to accept that technology advances at a tremendous pace. Fifty years ago, neither the internet nor websites existed. It is impossible to foresee how far digital communication will have advanced in the next five years, let alone 50.
As well as publishing documents on their websites, the Bank, the Treasury and the FSA already make use of Twitter, Flickr, YouTube and RSS to communicate with the public. Any one of these, or some other new form of media, may become the most widespread way to communicate with the public in the future. That is why we should not make provision in the Bill for specific types of communications media that may be superseded sooner or later. That is in line with the long-standing principle of future-proofing new legislation. While I think we agree on the principle of transparency and openness, I hope that the noble Lord will be persuaded to withdraw the amendment.
Let me reassure noble Lords that this should not be taken to imply that the new authorities will not make use of the internet to promote transparency and openness. The interim Financial Policy Committee has already published two financial stability reports and a record for each of its five meetings on the Bank’s website, with the latest record to be published on 6 July. In addition, last year the Bank published on its website a public consultation on macroprudential tools. I have no doubt that this will continue, but in general I contend that it is sensible to allow the publishing authority to decide in what manner to reach interested parties most effectively, which is why I hope noble Lords will understand why I cannot support Amendment 82, which seeks specifically to remove this discretion from the Treasury. I hope that noble Lords will accept government Amendments 97 and 144 and be prepared not to press their own.
Baroness Hayter of Kentish Town
Did the Minister mean to refer only to the Treasury Select Committee? Our amendment related to the decision taken not to publish and whether only the chair of the Treasury Select Committee would be informed of the reasons. He did not actually comment on this.
Lord De Mauley
I think I have an answer. The point is that the principle is as I outlined, whether it is an individual or the committee.
Lord McFall of Alcluith
I apologise to the House; I am away in another world. I still believe that there is quite a difference between a minute and a record. However, given that the Government have come forward with a number of proposals, I withdraw the amendment.
Lord Sassoon
“Oversight Committee
(1) The Bank of England Act 1998 is amended as follows.
(2) For section 3 substitute—
“3A Oversight Committee
(1) There is to be a sub-committee of the court of directors of the Bank (“the Oversight Committee”) consisting of the directors of the Bank.
(2) The functions of the Oversight Committee are—
(a) keeping under review the Bank’s performance in relation to—(i) the Bank’s objectives (that is, the objectives specified in relation to it in this Act and the other objectives for the time being determined by the court of directors of the Bank),(ii) the duty of the Financial Policy Committee under section 9C, and(iii) the Bank’s strategy as for the time being determined by the court of directors of the Bank (including its financial stability strategy);(b) monitoring the extent to which the objectives set by the court of directors of the Bank in relation to the Bank’s financial management have been met;(c) keeping under review the internal financial controls of the Bank with a view to securing the proper conduct of its financial affairs;(d) the functions conferred on the Oversight Committee by the provisions listed in subsection (4).(3) The Bank may arrange for specified functions of the Bank to be discharged by the Oversight Committee.
(4) The provisions referred to in subsection (2)(d) are—
(a) section 9B (review of procedures followed by Financial Policy Committee);(b) section 16 (review of procedures followed by Monetary Policy Committee);(c) paragraph 14 of Schedule 1 (remuneration of Governor and Deputy Governors);(d) paragraph 5 of Schedule 2A (terms and conditions of office of members of Financial Policy Committee appointed under section 9B(1)(e));(e) paragraph 9 of that Schedule (removal of members of Financial Policy Committee appointed under section 9B(1)(e));(f) paragraph 4(2) of Schedule 3 (terms and conditions of office of members of Monetary Policy Committee appointed under section 13(2)(c));(g) paragraph 9 of that Schedule (removal of members of Monetary Policy Committee appointed under section 13(2)(c));(h) paragraph 15 of Schedule 1ZB to the Financial Services and Markets Act 2000 (terms of service and remuneration of members of the governing body of the Prudential Regulation Authority).3B Oversight Committee: procedure
(1) The chair of the court (designated under paragraph 13 of Schedule 1) is to chair meetings of the Oversight Committee (when present).
(2) The Committee is to determine its own procedure, but this is subject to subsection (1) and subsection (5).
(3) The Committee may invite other persons to attend, or to attend and speak at, any meeting of the Committee.
(4) The Committee may delegate any of its functions to two or more of its members.
(5) If a member of the Committee (“M”) has any direct or indirect interest (including any reasonably likely future interest) in any dealing or business which falls to be considered by the Committee—
(a) M must disclose that interest to the Committee when it considers that dealing or business, and (b) the Committee must decide whether M is to be permitted to participate in any proceedings of the Committee relating to any question arising from its consideration of the dealing or business, and if so to what extent and subject to what conditions (if any).3C Reviews
(1) In the discharge of any of its functions, the Oversight Committee may arrange—
(a) for a review to be conducted under this section in relation to any matter by a person appointed by the Committee, and(b) for the person conducting the review to make one or more reports to the Committee.(2) The persons who may be appointed to conduct a review include an officer or employee of the Bank.
(3) A review under this section is a “performance review” if it—
(a) is arranged by the Committee in the discharge of any of its functions under section 3A(2)(a) and (b), and(b) relates to past events.(4) If the person to be appointed to conduct a performance review is an officer or employee of the Bank, the appointment requires the consent of the Governor of the Bank.
(5) In the case of a performance review, the Committee must have regard to the desirability of ensuring that sufficient time has elapsed—
(a) for the review to be effective, and(b) to avoid the review having a material adverse effect on the exercise by the Bank of its functions.3D Publication of reports of performance reviews
(1) The Bank must give the Treasury a copy of any report made to the Oversight Committee by a person appointed under section 3C to conduct a performance review (as defined by subsection (3) of that section).
(2) Subject to subsection (3), the Bank must also publish the report.
(3) Subsection (2) does not require the publication of information whose publication at the time when the report is made would in the opinion of the Bank be against the public interest.
(4) Where the Bank decides under subsection (3) that publication of information at the time when the report is made would be against the public interest, it must keep under consideration the question of whether publication of the information would still be against the public interest.
(5) Where the Bank decides that publication of any information is no longer against the public interest, it must publish the information.
(6) The Treasury must lay before Parliament a copy of any report or other information published by the Bank under this section.
3E Recommendations resulting from review
(1) This section applies where a report made by a person appointed under section 3C to conduct a review makes recommendations to the Bank as to steps to be taken by it.
(2) The Oversight Committee must—
(a) monitor the Bank’s response to the report, and(b) if or to the extent that the Bank accepts the recommendations, monitor the implementation of the recommendations.3F Oversight Committee: further provisions
(1) The documents to which the Oversight Committee is to have access in the discharge of its functions include documents considered, or to be considered, by the Financial Policy Committee or the Monetary Policy Committee.
(2) One or two members of the Oversight Committee may attend any meeting of the Financial Policy Committee or the Monetary Policy Committee, but a person attending by virtue of this subsection may not speak unless invited to do so by the person chairing the meeting.
(3) Subsection (2) does not affect—
(a) anything done in relation to the Financial Policy Committee by a member of that Committee who is also a member of the Oversight Committee,(b) the powers of the Financial Policy Committee under paragraph 13 of Schedule 2A, or(c) the powers of the Monetary Policy Committee under paragraph 13A of Schedule 3.”(3) In section 4 (annual report by the Bank), in subsection (2), for paragraph (a) substitute—
“(a) a report by the Oversight Committee on the matters for which it is responsible, and”.(4) In section 16 (functions of court of directors)—
(a) in subsection (1), for “court of directors of the Bank” substitute “Oversight Committee”,(b) in subsection (2)—(i) for “the court’s function” substitute “the function of the Oversight Committee”,(ii) for “the Committee” substitute “the Monetary Policy Committee”,(c) omit subsection (3), and(d) accordingly, in the heading, for “court of directors” substitute “Oversight Committee”.”
Lord Eatwell
( ) the public”
Lord Eatwell
My Lords, I rise to move Amendment 16. The issue here is simply that with respect to the financial stability strategy we believe that consultation should be as widespread as possible. The main reason for stressing this is that the area of financial stability is at present unformed. There is as yet no clear analytical framework to which everyone can appeal, as is the case with monetary policy, and a number of ideas and empirical observations are, if you like, the grist to the mill, but what comes out of the mill is not necessarily consistent or widely accepted. Therefore consultation and ideas from a wide range of sources, particularly within the financial services industry, are immensely valuable as the financial stability strategy is developed.
Lord Northbrook
My Lords, when I first saw the amendment and the reference to the public I thought it could mean consulting someone on the Clapham omnibus about the Bank’s financial stability strategy. However, the noble Lord said that he meant financial institutions and those with a financial interest rather than a broad definition of the public.
Lord Eatwell
Perhaps I may clarify that point. It is a term of art to say that you consult the public. When an institution such as the Bank of England or the Financial Services Authority initiates a general consultation and publishes a consultation document, they consult the public. In fact, it tends to be the financial services industry and other immediately interested parties who are consulted, not the gentleman on the Clapham omnibus.
Lord De Mauley
My Lords, as I said in the debate on the last group of amendments, the Government recognise the need for transparency and accountability in financial regulation. The Bank also places great value on transparency and openness. It uses a variety of methods to engage with the public on issues of policy, including FPC and MPC meeting records, financial stability and inflation reports, public speeches, policy papers, consultations, regional agencies and various forms of social media. The Bank and the FPC further demonstrated their commitment to transparency in their work on macroprudential tools by publishing a discussion document in December that invited public opinion.
The Bank’s court will be responsible for setting the Bank’s strategy in relation to its financial stability objective. The Bill requires that the court consults the Treasury and the Financial Policy Committee about a draft of the strategy before determining or revising it. The Bill does not prohibit the court seeking the opinions of others. For example, the court might wish to consult the European Systemic Risk Board to get is opinion on the outlook for financial stability in the European Union; it might wish to consult the International Monetary Fund or the Financial Reporting Council, as the noble Lord, Lord Eatwell, mentioned; it would almost certainly want to consult the PRA board and perhaps the FCA too. The list goes on. The Bill is drafted in a flexible way which allows the court to consult anyone on its strategy.
As to Amendment 16 specifically, the current drafting of the Bill already allows the court to consult the public on its financial stability strategy. The Bank’s financial stability strategy is currently published annually in the Bank’s annual report and is available on the Bank’s website. It is open to any organisation or member of the public to send the Bank comments on its financial stability strategy if they wish. I would expect the Bank to take seriously any contributions from the public and, where appropriate, to take them into account when revising the strategy. Given that revisions to the financial stability strategy will be less frequent—every three years—the court may well choose to undertake a public consultation process in advance of revising its strategy, particularly if the Bank were considering making any significant changes to it.
Such a public consultation process may not be necessary or even possible on every occasion. For example, the changes being made might be minor and technical and so not warrant a public consultation. In other cases, the changes to the strategy may be urgent and so there may be inadequate time for public consultation.
While I entirely support the sentiment behind the amendment, I do not think that it would be appropriate to put in the legislation a prescriptive requirement for public consultation in all cases. On that basis, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Eatwell
My Lords, I was very struck by the Minister’s speech because it was rather better than mine in support of my amendment. He said that the public would typically be consulted. The only slightly off-base comment that he made was that the financial stability strategy would be revised every three years. That is not according to the Bill, which says,
“complete a review … before the end of each relevant period”.
“Before the end” could be one month, six months, two years, 11 months or 30 days, whichever is relevant. The notion that revisions will take place irregularly—in fact, on a three-yearly basis—is not what is in the Bill.
The Minister then shot his fox by saying that urgent revisions might have to be made. In that case, given that revisions can take place at differing intervals depending on the exigencies of the time—let us remember that financial markets can change their character and behaviour quite rapidly and unexpectedly—and if this impinges on strategy, it should be appropriate that consultation takes place. My amendment provides that variations in strategy be widely consulted on, including among the public. A public consultation would take place, and the relevant authorities listed so accurately by the Minister would no doubt participate.
I do not understand the Minister’s rejection of what I would think is an extremely helpful amendment given what he had to say. However, we will come back to this matter on Report. In the mean time, I beg leave to withdraw the amendment.
Lord Eatwell
Lord Eatwell
The amendment relates to what I think is a mistake in drafting because there is failure in symmetry between the two new subsections. We have just discussed new Section 9A(2), which states that the Court of Directors must consult the Financial Policy Committee and the Treasury. New Section 9A(3) states:
“The Financial Policy Committee may at any time make recommendations to the court of directors as to the provisions”.
Why is the Treasury included in subsection (2) but not in (3)? Surely, if the Court of Directors must consult the Financial Policy Committee and the Treasury about a draft of the strategy, then if, from time to time, the Financial Policy Committee or the Treasury wishes to make recommendations to the court, the Treasury should be able to do so on the same terms.
I think that there is just a mistake in drafting here. If subsections (2) and (3) are to be symmetrical, my amendment should be accepted. I beg to move.
Lord De Mauley
My Lords, there are already a number of measures in the Bill relating to the Treasury’s involvement with the setting and revision of the Bank’s financial stability strategy. The court must, for example, consult the Treasury before setting or revising the strategy. In addition there is nothing to stop the Treasury making proactive recommendations to the court on the content of the strategy on a non-statutory basis. I believe that these arrangements strike the right balance between insulating the Bank from political pressure while ensuring that the Treasury’s voice will be heard.
I am not sure that this goes entirely to address the specific question from the noble Lord, Lord Eatwell, but the Treasury can at any time, if it wants to, make recommendations to the court as to its strategy. Express provision is needed for the FPC to make such recommendations since the FPC is a creation of statute and its functions need to be set out in statute. The Treasury is not a creation of statute and has the ability under common law to provide advice to anyone. I ask the noble Lord to withdraw his amendment.
Lord Eatwell
I am sorry—once again, I really do not understand. New Section 9A(2) is absolutely clear that the Court of Directors must consult the FPC and the Treasury in developing a proper financial stability strategy. That is good—after all, this particular strategy is a very complex thing and it is going to involve direct intervention in the growth, or limitations of the growth, of credit in the economy. New Section 9A(3) states that the Financial Policy Committee may at any time make a recommendation, which is perfectly reasonable. It is doing its research, it comes up with an idea, it finds that something has been left out that is terribly important, and so it goes along to the Court of Directors to say that it really needs to consider it.
Surely the Treasury should have the symmetric right as from new Section 9A(2) to new Section 9A(3). Unless the noble Lord can point to somewhere else in the Bill where this right is available to the Treasury, then this is the point at which to include the Treasury’s ability to make a recommendation on its observations on changing circumstances. After all, it has the widest observation of changes in economic circumstances, both domestic and international. If the noble Lord can point to another part in the Bill which I am overlooking then I will certainly withdraw my amendment. At present, I am not convinced. I would be grateful if he could enlighten me.
Lord De Mauley
I understand the question from the noble Lord, Lord Eatwell, but I do not have an answer for him now. It is an important question so perhaps I may look into it and write to him.
Lord Eatwell
It would be churlish to say no. On that basis, I shall leave the question on the table and, for the moment, beg leave to withdraw the amendment.
Lord Eatwell
Lord Eatwell
All right, here we go again. I shall speak also to Amendment 19, which is in my name and that of my noble friend Lady Hayter. The important point here is that the requirement for the relevant period at which there is to be a review of the financial stability strategy is defined as three years. I would remind noble Lords that it is just three and a half years since the collapse of Lehman Brothers. Given everything that has happened and the way that the financial world has changed dramatically year by year in the past three and a half years, it seems quite unreasonable that the relevant period should be deemed to be three years. That is really much too long. Surely there should be an appropriate annual review of the strategy. That would provide an opportunity for the sort of consultation on the financial stability strategy that the noble Lord tells us that the Government are seeking, and on that annual basis we could really have a rolling, learning process.
Three years as the defined relevant period is surely much too lengthy. After all, companies are required to produce annual reports and to deposit them with Companies House. The purpose of that is to keep a continuous, rolling review of the company’s strategy and performance. It is an important part of transparency in a market system and of conveying information. Similarly, discussion of the development of the financial stability strategy should be done annually to enable appropriate consultation and an appropriate learning experience both for the Financial Policy Committee as it deals with these extremely difficult and changing circumstances and for the regulated community. I beg to move.
Lord Northbrook
My Lords, as a historian, although I have some sympathy with the amendment of the noble Lord, Lord Eatwell, I feel that sometimes you need a little more perspective on these problems. Sometimes a gap of time can be useful, particularly when a crisis has had such complicated origins and effects which keep continuing. I would rather keep the three years as in the Bill.
Lord De Mauley
My Lords, Amendments 18 and 19 would require the court to review the Bank’s stability strategy annually. The extant legislation, the Bank of England Act, requires the court to determine and review the bank’s strategy in relation to the financial stability objective. That legislation does not set out how regularly the strategy should be reviewed. In practice, the court has recently revised the financial stability strategy annually. That is understandable given the sheer volume of legislative and other changes to the system of financial regulation in the past three or so years.
However, a strategy ought to be something for the long term. If the strategy is revised annually—ad infinitum, I contend—there is a risk that the short timeframe would lead to focus on short-term issues, reading more like what one might call a business plan than a genuine strategy. That is why new Section 9A will require the court in future to revise the Bank’s stability strategy at least every three years—more in line, I suggest, with a long-term strategy. Of course, if circumstances mean that the strategy must be changed in a shorter timeframe, new Section 9A allows the court the flexibility to revise the strategy earlier, as the noble Lord, Lord Eatwell, pointed out in an earlier debate.
We believe that a long-term financial strategy should provide vision, purpose and certainty for the Bank, its staff and the industry alike. That is why I believe that a three-year timeframe for a strategy is appropriate, so I ask the noble Lord to withdraw his Amendment 18.
Lord Eatwell
My Lords, once again, I thought that the noble Lord was making a better speech than me in support of the amendment. As he pointed out, the significant changes which have taken place over the past three years have required annual revision. Once one gets into a sequence of annual revisions, some of which can be looking back quite a long way—there is no reason why they should focus on the short-term—that creates an environment in which the regulated community knows what to expect every year, can consider the report, and if it says that the strategy is unchanged, that provides a great deal of comfort to the regulated community.
If there is no report, the regulated community is left hanging in the air, thinking, “Yes, it is all the same, but is something going on that is not quite so important but that they do not want to reveal to us?”. Surely, if there is a regular annual report, that provides a decision-making environment optimal for the financial services industry. Once one goes to three years and then is forced to do things once a year because so much is changing, think of the pessimism that one creates, think of the loss of certainty created in such circumstances. The industry wonders, “Why are they changing their three-year cycle? Why are they moving to one year? There must be something going on that we do not really know about. Perhaps something really bad is happening”.
If one sticks to a steady one-year cycle, apart from emergencies—to which the noble Lord referred, and on which I entirely agree—that creates the comfort and certainty which the financial services industry really needs with respect to, let us remember, the utilisation of instruments, such as leverage collars and countercyclical provisioning, which will have a major impact on business plans and performance of the whole financial services industry.
I really would press the Government to take this under advisement and to think carefully about it. We will return to this on Report because leaving the period at three years is not the way to effectively manage confidence and expectations in an industry in which confidence and expectations are paramount in decision-making. In the mean time, I hope that the Government will take it away and think about it, and I beg leave to withdraw the amendment.
Lord McFall of Alcluith
Lord McFall of Alcluith
My Lords, I beg to move this amendment in the name of the noble Baroness, Lady Noakes, and myself. It is quite a simple amendment. The principle behind it is that the external members of both the Monetary Policy Committee and the Financial Policy Committee should be in the majority, to counter groupthink within the Bank itself. The Treasury Select Committee had taken evidence on this and was very clear on it, as was the Joint Committee on the draft Bill, which recommended that there should be a majority of non-executives on the MPC. Both the Government and the Bank of England disagreed. The Bank of England said very clearly,
“Decisions about the relative numbers of internal and external members of the MPC and FPC are ultimately for Parliament.”.
If those decisions are for Parliament and there is a cross-party consensus on that, Parliament’s will should be observed in this case. The Bank made the point that,
“diluting internal membership to the point where the Committees could not be presented as distinctively Bank Committees would undermine the Government's purpose of asking the Bank to undertake these activities in the first place”.
If the Government feel, as they have said, that increasing the number of external members on the Monetary Policy Committee would make it unwieldy, given that that would take the number to 11, there is a simpler way of doing that. That is to ensure that there are two fewer members of the internal executive on the committee, which would result in the MPC’s internal members numbering four and its external members numbering five. When we talk about external members, I am very much aware of the experience that I had and that you can get groupthink with external members as well.
The concept of diversity is really important and, as was mentioned in other debates in the Chamber today, we should be ensuring that there is representation of women on the committee. The MPC and the FPC have exclusively all-male boards. There are women who were at senior level at the Financial Services Authority and who have now left—for example, Margaret Cole, who was the managing director of its conduct business unit. She made a great contribution in ensuring that the industry listened to the Financial Services Authority, and she made a lot of real improvements on insider dealing. Sally Dewar left the authority too. These women have left, so that needs to be taken into consideration here as well.
One concept that has not been addressed in the financial services industry overall has been the consumer. I battled for years to get a consumer representative on the Financial Services Authority, and we eventually got one on it. Let us think on a wider front and keep in mind the words of the former Monetary Policy Committee member Professor Charles Goodhart, who said, as someone echoed today, that if you are excluding 50% of the population then you do not have the best talent pool. Let us have external members, eliminate groupthink and let the will of Parliament prevail.
Lord Flight
My Lords, my two amendments follow those in the name of the noble Lord, Lord McFall, and are essentially probing. They up the stakes from having six members appointed by the Chancellor of the Exchequer to having eight and require that all members of the FPC are,
“sufficiently independent of the Bank of England”.
To me, the issue is this: the FPC will be crucial. Its job is to detect things going wrong in the financial system and to direct institutions to put things right if they are in trouble. My view is that if the FPC is just part of the Bank of England, it runs the risk of being overdominated by what I will call the Bank of England establishment. It is important that FPC members are independent and, if they can be persuaded, may be people with central bank experience from other economies, who are the sort of people who will be good at the job for which they are chosen.
That gives rise to another issue which I have only just appreciated. The wording is slightly ambiguous. The implication is that members of the FPC must be directors of the Bank of England, members of the court. That seems to be slightly questionable. I am not sure that all members of the Monetary Policy Committee are members of the court. The FPC is parallel to the MPC in its role, and it would not be satisfactory if the Court of the Bank of England got to such a size that it was unwieldy. I question, therefore, and think it might be worth considering, whether there should be the requirement that FPC members are directors of the Bank of England. That does not seem to add anything.
However, the main point is to achieve a body of people that delivers the job it is there to do. It is not directly relevant, but I am mindful that the one banking system that entirely escaped all the troubles of 2007-09 was that of the Lebanon. The governor of the Central Bank of Lebanon, who is a very wise old bird and has seen many things before, spotted the trouble coming in terms of mortgage instruments and kept the banks of the Lebanon out of it all in good time. We want an FPC that, whatever the next problem is that faces us, will be capable of steering in that sort of direction. The wider the experience it has, the better.
Lord Hodgson of Astley Abbotts
My Lords, I do not wish to upset the noble Lord, Lord McFall, or my noble friend Lord Flight, but I urge my noble friend to resist these amendments. If we look at the objectives of the Financial Policy Committee, it needs to be a pretty focused, pretty small body. Having 14 people, or 12 people, depending on which of those amendments one is addressing, seems not to lead to the operational focus and directness that this particular policy committee will need. Having four external members will give a perfectly adequate external perspective; more would be more likely to confuse than to illuminate.
Lord Burns
I argued at Second Reading that it would be very useful if we were able to get some balance between the way the MPC is formed and behaves and the way that this new FPC works. The MPC has existed on the basis of four internal members, four external members and the governor, which is a total of nine. The other important principle that has always been emphasised is that each member of the committee had to act as an individual. They were not there to behave as a collective body; indeed, we have often seen, in the case of the internal members of the Bank of England, that they have voted in different ways. I would see great merit in carrying over the principles of the MPC into the FPC, which is that there should be a governor plus equal members, excluding the governor, from inside the Bank and outside the Bank.
I have two questions to add. The first is, does the Minister understand that the arrangement will be the same as for the MPC, which is that the members of this committee are being asked to behave as individuals, and to have individual, rather than collective, responsibility? That is important. The second question is that, as I read this, there is scope for all three deputy governors to be on this committee. Will all three deputy governors be on the MPC? I cannot remember what happens. If that were the case, it would change the balance of the Monetary Policy Committee. The membership includes the chief executive of the FCA. I can quite see that he would wish to be present at the meeting, but it does not seem to me that he needs to be a voting member of the FPC, given that his responsibilities are somewhat distant from the FPC’s main tasks.
My main point is about individual accountability as far as the people are concerned, not an expectation that the internal members would be acting as a group. As far as possible, we should hold some kind of symmetry between how the MPC and the FPC are set up, otherwise I can see that, over time, there would be constant pressure, with one saying, “Well, the other one is set up in a different way—shouldn’t we move to that?”.
Baroness Hayter of Kentish Town
My Lords, we support Amendment 21, moved by my noble friend Lord McFall, and his comments on women’s representation. It was within this century that I joined the Board for Actuarial Standards, and I was the only woman there. It is extraordinary for some of us to find that we are still fighting for that goal. Not only did they put lots of women on the board after me, which I think was a good thing, but the new chair who took over yesterday is also a woman.
I shall speak particularly to the three amendments standing in the name of my noble friend Lord Eatwell and myself, which cover two particular issues: one is to correct the composition of the FPC itself and the other is to deal with pre-appointment hearings. On the composition of the FPC, we should first recall that the FPC’s work will impact throughout the economy, on the financial sector itself but also on businesses large and small, and on consumers. The latter categories need to have confidence that there is someone on the FPC who understands their interests and is speaking up for them. As Mark Hoban said in the other place, we need,
“more challenging voices in the board room, not fewer”,
and that must be equally the case with the FPC. So merit is a clear necessity but, as we said on an earlier amendment, so is a range of backgrounds, experience, interest and knowledge, whether from the wholesale markets, insurance, deposit-takers or others. So too, as was mentioned by my noble friend Lord McFall, is the voice of consumers, be they SMEs, businesses or indeed individual consumers. The FPC may have a role in loan-to-value decisions, for example, but the consideration of the FPC of this has to have input from those who are further down the food chain who will feel the impact of any change in policy.
On the question of pre-appointment hearings by the Treasury Select Committee, I argue that there is less market sensitivity over these than could possibly be the case even if we accept it in the case of the governor. There would be much less for these appointments. Indeed, when challenged on this very issue in the other place by Chris Leslie, Mr Hoban was quite unable to give any examples of where this might be an issue. Mr Tyrie made the point in the other place in April that as the Treasury Select Committee intends to hold hearings anyway, and if the person failed to find favour with the Treasury Select Committee, it would probably be pretty untenable for that person then to take up their appointment, because without the confidence of Parliament it is hard to see how they could do their job. It would therefore be sensible to engage with the Treasury Select Committee earlier in the appointment process.
The FPC has a vital public role to play. It acts on behalf of the nation—including Scotland, for the moment, so maybe we could have it there so long as it chooses to stay in the United Kingdom—so it needs the confidence of people’s elected representatives, which the Treasury Select Committee pre-appointment can of course help.
Lord Sassoon
I need every cheer I can get at this hour of the evening—I am very grateful to my noble friend. Let me press on. This group deals with various aspects of FPC membership, and I will address in turn each of the amendments that have been moved.
Amendments 21 and 21A would fundamentally alter the balance of membership of the FPC by adding either two or four additional external members. Following the advice of my noble friend Lord Hodgson, I disagree with these amendments for three reasons. First, the ratio of the FPC between Bank executives and non-Bank members is six to five, which closely mirrors the MPC, where the ratio is five to four. In answer to the noble Lord, Lord Burns, I can confirm that as with the MPC, the FPC members will act as individuals, and that no change to the membership of the MPC is proposed in this. The MPC model has worked well, and is much admired around the world, and we should not fix something that is not broken.
Lord Flight
I thank the Minister for giving way. Is it six or seven members? By my account there are the governor and the two deputy governors, the chief executive and the two members appointed. That makes seven. The whole point of my private amendment, which suggested that there should be eight members, was to give a majority. Are all three deputy governors to be members?
Lord Sassoon
The three deputy governors are to be members—I count that up as a six to five ratio. It is not correct that the Bank has seven insiders. The Financial Conduct Authority is an independent regulator, which is emphatically not one of the Bank members. I doubted whether I could count to six at this hour, but it is six. However, I am grateful to my noble friend for getting that clarification.
Lord McFall of Alcluith
Would the Minister expand on that clarification? At present, the MPC contains two deputy governors, Charlie Bean and Paul Tucker, and there will be a third one, who will take the membership up to six. However, there are only four external members of the MPC at the moment: Ben Broadbent, David Miles, Adam Posen and Martin Weale.
Lord Sassoon
My Lords, no change is being proposed to the membership of the MPC, which will remain with five internal and four external members. The third—the new deputy governor—will not join the membership of the MPC. Let me press on.
Baroness Hayter of Kentish Town
I will not hold the Minister for too long. He has stressed, and it was stressed in the other House, the independence of the Financial Conduct Authority, but of course there is a veto—the financial regulator is able to override the Financial Conduct Authority. It is, therefore, independence up to a point.
Lord Sassoon
My Lords, I am sure that we will come back to that point later on in our discussions. I would, however, absolutely refute any idea that the FCA will not be independent of the Bank of England. It will be completely separately constituted; there will be a number of links, of which the noble Baroness mentions one, but I would not characterise that as in any way impinging on the independence of the FCA.
That was the first reason for rejecting these amendments. The second reason is that the change suggested would create a committee of 13 members, a committee so large that it could prove to be unwieldy, which could obstruct effective discussion and decision-making. There is a genuine risk that having too many external members without sufficient time or space within the meetings to put their points across effectively could undermine their ability to provide an external viewpoint and challenge, which I know the Committee wishes to see. In addition, of course, these points are even more relevant to the amendment proposed by my noble friend Lord Flight, which would increase the size of the FPC to 15 members, or 16, if one includes the Treasury representative.
Thirdly, I do not agree that the Bank executives on the FPC should be in a minority. Ultimately, both the MPC and the FPC must be Bank committees if we are to hold the Bank to account for the decisions that they make.
On the amendments that relate to the experience, knowledge and potential interests of external FPC members, I assure your Lordships’ House that the Chancellor will take great care to ensure that the independent members of the FPC are sufficiently qualified and experienced to provide diverse and effective expertise and challenge to the FPC’s decision-making. Finding strong candidates with breadth as well as depth of experience will clearly aid the committee in achieving its objectives.
Specifically on Amendment 24, the Government recognise the importance of the contribution of the different constituent parts of the UK to the financial services sector. The sector is often wrongly characterised as being confined to the City of London. This is plainly wrong. Regional issues and intelligence already form an important part of the Bank’s policy-making process. The Bank has 12 agencies in a national network across the United Kingdom that assess economic conditions in their regions. This feeds into the policy-making process.
On appointments to the FPC, the Bill already requires the Chancellor to be satisfied that the candidate has knowledge or experience that is likely to be relevant to the committee’s functions. This will include relevant experience within the financial services and regulatory sectors, not only within the constituent parts of the UK but internationally. All four of the current independent members of the interim FPC have experience in financial services as a practitioner or a regulator.
I should add that while we have been having this discussion, my Front Bench has had a ratio of two women to every man. Therefore, I certainly appreciate, as do the Government, the importance of appointments that recognise gender diversity. It will be an important consideration when deciding on external members of the FPC. The Government believe that there are certainly many credible and expert female candidates out there for permanent FPC appointments. We will continue to encourage women to apply for future vacancies on the FPC.
The noble Lord mentioned the importance of having consumer views on the FPC. I agree that it will be vital. I accept that it took a long time with the FSA. It is fully recognised that we must have a broad spectrum of views, experiences and relevant knowledge if the FPC is to deliberate in an even-handed way. However, consistent with arguments over the size of the FPC, it will never be possible to ensure that all interested groups are represented on it at all times. We need to be clear about that.
On Amendment 27A, I reassure my noble friend Lord Flight that, in appointing external members, the Chancellor will be very mindful of the need for those people to offer a genuinely external and independent perspective. However, some familiarity with the workings of the central bank may well prove useful for external members, so I would not want completely to rule out individuals with some experience of working for the Bank becoming members of the FPC. For the sake of clarity, I add that there is no requirement for the FPC’s external members to be members of the court. One current member, Michael Cohrs, was subsequently appointed to the court, but there is no requirement for that to be the case. Nor is it the general case at the moment.
Amendments 26 and 27 deal with the role of the Treasury Committee in appointments to the FPC. As I have said at some length today—I will not labour the point—the Government strongly support the Treasury Committee’s role in holding hearings with individuals who have been appointed as members of the MPC, and now the FPC, before they take up their appointment. However, for the reasons that I gave earlier, those hearings should not take place before the appointment. In one case, just as with the appointment of the governor, the decision is that of Her Majesty on the advice of the Prime Minister and the Chancellor. In the case of the FPC and the MPC, it is rightly a decision for the Chancellor to take. There are risks in the rather febrile environment that we have had for a number of years now—risks that arise from market speculation about the balance of the committee and where the candidates may be coming from. So, yes, there should be pre-commencement hearings, but pre-appointment hearings would create the potential for danger and damage, which we should not entertain.
The Government place paramount importance on finding strong candidates for the FPC. I can reassure the Committee that future appointments of new independent members to the FPC will follow a process similar to that used to appoint MPC members, including an open, public competition. This, in addition to the pre-commencement hearings held by the Treasury Committee, will ensure that qualified and experienced candidates are appointed to the FPC, while avoiding the uncertainty that could arise from holding those hearings before the appointment is finalised.
On the basis of that short and focused debate, I ask the noble Lord, Lord McFall of Alcluith, to withdraw his amendment.
Lord McFall of Alcluith
It may please the House to hear that I withdraw my amendment.
Lord Sassoon
Lord Eatwell
My Lords, I think the noble Lord said that he was going to take Amendment 28 away to consider it with Amendment 29. Surely he is not moving it now.
Lord Sassoon
My Lords, I have no recollection of saying that. I would like to move it formally.
Lord Eatwell
Lord Eatwell
In those circumstances, I think that I should reconsider. The noble Lord did say that he was going to take Amendment 28 away to consider the relationship between Amendments 28 and 29. I do not quite understand why he has now moved Amendment 28.
Lord Sassoon
What I said earlier was that of course I would consider whether there were any consistencies in drafting. I think that the noble Lord asked about a number of areas, and I said that I would look at them, but I certainly did not say that I would withdraw the amendment. I said that I would make sure that there was nothing that he had identified that created any difficulty through oversight in the drafting. Of course I will do that, and if we find anything wrong it can be corrected at a later stage. I certainly did not agree to take away Amendment 28.
Lord Sassoon
Baroness Anelay of St Johns
My Lords, it may be convenient at this point if I explain why the House is resuming and will adjourn before we have reached the agreed target, which was agreed in the usual channels this morning, of Amendment 32. It has been agreed after constructive discussions in the usual channels this evening that we should finish as close to 10 o’clock as possible, even if, as I understand from my noble friend the Minister, the next group of amendments might take only a matter of a few minutes. But we came to an agreement, and I stick by my agreements, as I know that the noble Lord, Lord Eatwell, sticks by his—and that is valued.
The understanding between the usual channels is that, after two days in Committee, the opposition Chief Whip’s office will sit down and work with the Bill team to provide accurate guidance for Back-Benchers as to which subjects will be dealt with in the remaining days in Committee. Overall, all of us have a care to ensure that those on the Back Benches, who are playing an important part in this Bill, know which amendments may be taken on which days and roughly at what time of day, because that is how the House works well. I am aware from what my noble friends have said today that those who have worked in Committee today have taken care to give proper scrutiny to the Bill. I am sure that the discussions that we have had in the usual channels tonight will enable that to take place again in future days.