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To be considered on Wednesday 11 July at 4 o’clock.
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 Chairman of Ways and Means.)
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To be considered on Wednesday 11 July at 4 o’clock.
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 Chairman of Ways and Means.)
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To be considered on Wednesday 11 July at 4 o’clock.
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 Chairman of Ways and Means.)
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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 Chairman of Ways and Means.)
Hon. Members
Object.
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City of London (Various Powers) Bill [Lords]
Lords message (21 May) relating to the Bill considered.
Resolved,
That this House concurs with the Lords in their Resolution.—(The Chairman of Ways and Means.)
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 Chairman of Ways and Means.)
Oral Answers to Questions
(12 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Peter Aldous (Waveney) (Con)
1. What discussions he has had with the Secretary of State for Business, Innovation and Skills on improving training and skills of adult prisoners to improve their employment chances after the end of their sentence and reduce the risk of reoffending.
Paul Maynard (Blackpool North and Cleveleys) (Con)
18. What discussions he has had with the Secretary of State for Business, Innovation and Skills on improving training and skills of adult prisoners to improve their employment chances after the end of their sentence and reduce the risk of reoffending.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
I worked closely with the Minister for Further Education, Skills and Lifelong Learning during the preparation of the new offender learning strategy published last year, and officials from both Departments have worked closely on implementation. I fully recognise the importance of learning and training in making prisoners more employable, and my officials and I are working with the Department for Work and Pensions to provide enhanced employment support via the Work programme.
Peter Aldous
I am grateful to the Minister for that answer. HMP Blundeston in my constituency is doing excellent work to provide prisoners with employment skills. It is seeking to bring in work, but faces a dilemma in that it does not wish to take contracts away from local employers. Will the Minister visit Blundeston to see that work and to discuss with the governor and staff what can be done to meet that particular challenge?
Mr Blunt
I wish to visit Blundeston to see a number of examples of good practice, not just those to do with work in prisons. We have developed a code of practice to demonstrate how we will work fairly to address concerns about unfair competition and protecting local jobs. It is vital that the growth in prison work add to the UK supply chain and increase rather than reduce employment opportunities for law-abiding citizens while aiding the rehabilitation of offenders.
Paul Maynard
Many education providers these days use online platforms and tools to provide education in prison and would like to do so more often using both better internet connections and better wi-fi internet connection. Obviously, there are security concerns about making such connections available. Will the Minister explain a little further what he could do to encourage such provision to enhance rehabilitation opportunities?
Mr Blunt
I am grateful to my hon. Friend because, as he says, it is essential to maintain security while enabling learning and skills to be relevant in prisons. Prisoners’ educational internet access will now be via the virtual campus that is being installed where it is technically possible to do so in all adult prisons in England. It offers very secure access to online tools and resources that have been through thorough quality assurance and rigorous security checks, and has the potential to be developed so that prisoners’ in-cell time as well as their out-of-cell time could be much more productive than it is today.
Lindsay Roy (Glenrothes) (Lab)
Is it not the case that despite good intentions, the Government are no closer to making work in prisons the norm than they were two years ago?
Mr Blunt
That is complete nonsense. There has been a culture change across the whole of the prison system, and prison governors are stepping up to the plate and driving the agenda forward. At the same time, we have taken an enormous amount of trouble to put in place a code of practice and the necessary policy underpinnings so that we can take work in prisons to the maximum level that we can achieve. There is a profound change under way involving substantial and substantive work and I hope that the hon. Gentleman will support us in that endeavour.
Tony Lloyd (Manchester Central) (Lab)
The Minister will also recognise that issues such as drug and alcohol abuse, as well as mental health, have a huge impact on employability. How far is the Ministry of Justice prepared to work with—perhaps I should declare an interest, or at least a potential interest—the future police and crime commissioners to make sure that there is proper co-ordination of all the services necessary to get people back into work?
Mr Blunt
The hon. Gentleman will be aware of the integrated offender management that already happens in the case of prolific offenders, who tend to be drug addicted. Their support or treatment will be related, to a degree, to how they engage with their offender managers and their drug treatment providers in the community, which involves police, probation, health and local authority services all working together. That rather obvious, sensible example of integrated offender management is getting much wider traction across the whole offender management system. The hon. Gentleman is quite right: it is the way forward when all those agencies operate together. That is the purpose of all the work that we are doing with other Government Departments to advance that agenda.
Mr David Ruffley (Bury St Edmunds) (Con)
2. What recent representations he has received on the implementation of decisions of the European Court of Human Rights.
Mr Ruffley
I am very grateful to my right hon. and learned Friend for that detailed reply. He will know that there is concern, certainly on the Government Benches, that the European Court of Human Rights gives insufficient weight to the decisions of national courts, and that in addition, given the backlog of more than 150,000 cases, the Court is not devoting its entire time and attention to truly serious abuses of human rights. In that context, what are the Government doing to ensure that votes of national Parliaments and decisions by national courts are better taken into account by the European Court?
Mr Clarke
I agree entirely with my hon. Friend. We addressed that during our chairmanship of the Council of Europe. We had a conference at Brighton of all 47 member states and produced the Brighton declaration. Our considerable achievement there was not very widely reported because, not surprisingly, the media regarded it as a footnote to the Abu Qatada case which was in the newspapers at the time. Forty-seven countries agreed that we should have a greater margin of appreciation, to use the jargon, and that more regard should be paid to those decisions of the courts of nation states which had obviously addressed their obligations under the convention. That will have a considerable impact on future cases.
Dr William McCrea (South Antrim) (DUP)
Is it not long overdue that the Government move to ensure that the courts of the United Kingdom, rather than the European Court, have supremacy in the area of human rights, including protection of Christian liberties and freedoms?
Mr Clarke
We are taken to the Court much less than other members and we lose only about 2%. Sometimes that 2% includes cases where there is widespread support here for the decision, such as the holding of DNA and other information belonging to people who have never been convicted of a criminal offence, which was a recent judgment. The convention still has a very important role to play across Europe. It is hugely significant in the 47 member states and it enables standards to be applied in places all the way from Russia, Turkey and Azerbaijan across to us and Iceland. We have always been subject to the rule of law. We have always bound ourselves under the convention to accept the judgments. These are the standards that we all agreed upon after the second world war, which were not challenged in this country till 10 or 15 years ago, when some judgments here began to annoy sections of the media.
Mr Christopher Chope (Christchurch) (Con)
Will my right hon. and learned Friend take this opportunity to congratulate Mr Paul Mahoney on his election as the UK judge to the European Court of Human Rights, and does he share my satisfaction that the new judge is committed to ensuring that the principles of subsidiarity are held high in the Court—for example, in relation to the right of individual countries to decide issues relating to national religion?
Mr Clarke
I personally disapprove of a parliamentary vote on the appointment of judges, but that is the system that has prevailed there since 1947. Fortunately, the British put forward three excellently qualified candidates for the judgeship, so I congratulate Mr Mahoney on his election and I am sure he will make a very considerable contribution.
Sadiq Khan (Tooting) (Lab)
I am sure the Justice Secretary will agree that it would be inappropriate for him as a member of the Executive or me as a Member of the legislature to interfere with the appointment of judges in the UK. In the light of that and of his last answer, what are his views not on the vote but on the political interference that appears to have taken place with the appointment of the UK representative to the European Court of Human Rights?
Mr Clarke
The Council of Europe works on the basis that the Parliamentary Assembly votes from a shortlist of three people provided by the member state, and now steps are taken to ensure that all three come up to certain standards, which I am glad to say the British nominees quite easily did. It sounds as though the right hon. Gentleman and I would not start from here, and I agree that normally politicians should not vote on which judge ought to be appointed to any judicial post, but they did and Mr Mahoney, I am sure, will prove an excellent choice.
Rebecca Harris (Castle Point) (Con)
3. What recent assessment he has made of arrangements for handling sensitive information from the intelligence services in court proceedings.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
The Government have introduced the Justice and Security Bill to introduce a process by which such material may be considered by the courts in civil cases in future. The Bill is currently being considered and scrutinised in the House of Lords.
Rebecca Harris
I thank the Secretary of State for his reply. Does he agree that if we do not make reforms in this area we run the risk of allowing a substantial industry to develop in expensive legal claims, which we are forced to pay out of court because the Government are unable to defend themselves in open court?
Mr Clarke
The Bill stems from our recent experience in the so-called Guantanamo Bay cases, when a very large sum of money was paid out to satisfy claims and legal costs when the security and intelligence services insisted that they had an adequate defence. An increasing number of those cases are coming along, and it is not for me to pre-judge any of them, but I should like the judge to be able to hear all the evidence in the circumstances that are possible—closed material proceedings—so that we as citizens obtain some judgment in the end about the merits or otherwise of the complaint. We certainly must not encourage people to go along for both the political publicity and the potential funds that might flow from bringing a claim that they know cannot be defended.
Paul Goggins (Wythenshawe and Sale East) (Lab)
On what basis has the Justice Secretary decided not to allow closed material proceedings at inquests? Surely if there is a highly sensitive piece of intelligence that would help to explain the cause of someone’s death, the coroner should be able to see that information, albeit on a protected basis.
Mr Clarke
We canvassed that proposal in the consultation, and I have considerable sympathy with the right hon. Gentleman’s view, but we have responded to the consultation, in which there were strong feelings against the procedure being applied to inquests—despite the support that we had from coroners’ associations.
The argument is that the coroner cannot consider such material in closed material proceedings because it means that the family, the press and other interested parties will not be able to hear what the spies have to say, and that is the basis on which we have introduced the Bill—we are a listening Government. But I did canvass the measure that the right hon. Gentleman proposes.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
4. What discussions he has had with the Secretary of State for the Home Department on providing high-quality services for women within the criminal justice system following the election of police and crime commissioners.
The Minister for Policing and Criminal Justice (Nick Herbert)
The Ministry of Justice has been working with the Home Office to ensure that local areas are prepared for the introduction of police and crime commissioners, who will have duties to work with local criminal justice bodies, including in relation to the provision of women’s services.
Bridget Phillipson
I am grateful to the Minister for that answer, but the proposal to devolve some victims’ services to police and crime commissioners is not without risk. What will he do to ensure a minimum standard of provision throughout the country, regardless of the area in which the victim lives?
Nick Herbert
First, it is important to point out that some specialist services, such as the homicide service, rape crisis centres and so on, will continue to be commissioned nationally, but we think it right in principle that elected police and crime commissioners should commission victims’ services locally. It will mean that there is a champion for victims in every single area; it will ensure the greater integration of such services with the police, who have a very important duty in relation to victims; and it will be for elected police and crime commissioners, accountable to the public, to ensure that they provide a high-quality service to victims.
Tom Brake (Carshalton and Wallington) (LD)
In March, in recognition of the specific problems that women experience in prison, the Government committed to deliver a document setting out the strategic priorities for women in the criminal justice system. When will it be published, and how will it link with the work that Louise Casey is doing on troubled families and, of course, the work of elected police and crime commissioners?
Nick Herbert
The stock answer to all such questions is “in due course”, but my right hon. Friend is right that we need to ensure that such services are integrated. There is important work going on in the local criminal justice system in relation to women’s offending. Police and crime commissioners will have a role, in liaison with the local criminal justice agencies. The troubled families work being led by Louise Casey is very important in efforts to prevent crime. I believe that police and crime commissioners will be in a strong position to ensure local coherence in work to divert people from the criminal justice system and from crime.
Jenny Chapman (Darlington) (Lab)
In his answer to my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), who has considerable experience in providing victims services, the Minister confirmed that there will be no minimum standards for victims. To give just one example, two thirds of victims of stalking said that the police and the Crown Prosecution Service did not take their complaint seriously, and offenders are not charged in almost nine in every 10 cases. There is a risk of specialist services falling between the cracks—looking after the detail makes a difference—and such services are not likely to win PCC votes. Will the Minister consider intervening if the loss of specialist services for women continues after the election of PCCs?
Nick Herbert
But the whole point of the change is to ensure that there will be accountability for the provision of victims services, which will lie at local level with people who are already responsible for the police and who will be champions for victims. The cross-party Association of Police and Crime Commissioners has already welcomed the proposal, and the youth charity Catch22 says it believes that police and crime commissioners generally have the potential to bring real coherence at the local level to the planning and commissioning of services designed to reduce and prevent crime and support victims. I am sorry that Opposition Front Benchers do not support what I believe is a very good idea that will strength victims services at the local level.
Mrs Helen Grant (Maidstone and The Weald) (Con)
Does my right hon. Friend agree that community women offender facilities, in which this Government have invested substantially, provide a real alternative to custody for many women in the criminal justice system?
Nick Herbert
I agree with my hon. Friend. The number of women in custody has been declining, in contrast with the number of men. We have been developing intensive treatment-based alternatives to custody for offenders with drug or mental health problems, including four women-only services in Wirral, Bristol, Birmingham and Tyneside. They are an important part of our strategy to ensure that offending by women is dealt with as effectively and appropriately as possible.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
5. What assessment he has made of the potential effect on public safety of the abolition of sentences of imprisonment for public protection.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
As the published impact assessment for the Legal Aid, Sentencing and Punishment of Offenders Act 2012 makes clear, the continuing regime of life sentences and a new mandatory life sentence for a second very serious offence, as well as longer custodial periods and extended licence periods, all supported by compulsory sentence plans and multi-agency public protection arrangements—MAPPA—supervision, will ensure that there are sufficient measures to manage risk and uphold public protection.
Tom Blenkinsop
I thank the Minister for his response, but the Justice Secretary is on record saying that the number of those currently in prison who have served beyond their minimum tariff on an IPP sentence is a scandal. What proposals does the Minister of State intend to make on the release test for those on IPP sentences?
Mr Blunt
There are no immediate proposals to change the release test. In March, there were 3,500 IPP prisoners serving beyond their tariff, a result of the administrative chaos that followed the unwise introduction of the sentence, with wholly unforeseen numbers being given such a sentence. I draw the hon. Gentleman’s attention to the fact that, in addition to the measures I have outlined, violent offender orders and sex offending prevention orders will be available to the courts to use for public protection.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Does my hon. Friend agree that the use of indeterminate sentences for prisoners who would otherwise have received relatively short sentences, far from enhancing public safety consumes resources in the prison system that are desperately needed for effective rehabilitation and stopping reoffending?
Mr Blunt
My right hon. Friend is absolutely right: such sentences consume substantial resources, not just in the offender management system but in the Parole Board and elsewhere. The prison system was having to manage a potential future disaster in the ever-increasing number of indeterminate sentence prisoners. We have finally got a grip on the problem and are now addressing it.
Mr Andy Slaughter (Hammersmith) (Lab)
In trying to save money, the Minister misses the point. Without indeterminate sentences, some of the most violent and dangerous criminals—rapists, armed robbers and those who prey on the weakest and most vulnerable—will be released from custody against the professional advice of the probation service and others. Will that make the public more or less safe?
Andrew Bridgen (North West Leicestershire) (Con)
In 2010, 1,019 individuals were given indeterminate sentences. Will the Minister assess the rehabilitation strategies for those currently serving indeterminate sentences?
Mr Blunt
My hon. Friend is right. We inherited a serious administrative problem in that the capacity of the offender management system was being overwhelmed by the number of people with indeterminate sentences—[Interruption.] It is absolutely not the judge’s fault; it is the fault of the previous Administration, who failed to put in place the resources to deal with the sentences that they then passed in the House. That is one of the many problems that we are having to address. IPPs are a classic example of the shambles that we have—
Mr Speaker
Order. The Minister should calm himself. The shadow Justice Secretary is a man of very great distinction. He would not behave like that in court; he would probably be turfed out or struck off. I cannot imagine it—very out of character.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
6. What progress he has made on his proposals to reform the probation system.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
On 27 March, in the consultation document “Punishment and Reform: Effective Probation Services”, the Government published proposals to deliver more effective and efficient probation services. Alongside that, we published proposals to deliver more credible and effective community sentences. We are currently considering the responses to the consultation, which closed on 22 June. We intend to publish the Government response later in the year.
Luciana Berger
I thank the Secretary of State for his response. Under a marketisation of the probation service, how can he assure the House that fragmentation of the service will not put the public at risk? What safeguards are in place to ensure that cherry-picking by private sector providers of individuals on probation does not occur?
Mr Clarke
I am somewhat astonished by the reaction of some Opposition Members. We are following the policy first laid out in the Offender Management Act 2007. The probation trusts have now all been set up and we are introducing principles to bring some competition and diversity of provider. There are very good people who can provide some aspects of the probation service. We believe that that will both enhance the quality of the service and achieve better value for money and better outcomes. Plenty of people in the probation service welcome our proposals; indeed, some are surprised by their modesty.
Philip Davies (Shipley) (Con)
At a recent multi-agency public protection arrangements, or MAPPA, meeting that I sat in on, a probation officer reported that his client was having problems meeting a curfew of 7 o’clock at night. When the officer was asked what he was doing to deal with the curfew’s being breached, he said that he had changed the curfew to 9 o’clock to aid compliance. Will the Secretary of State tell me what he is going to do to stop such outrages, which make a complete mockery of the probation system and the criminal justice system?
Mr Clarke
I cannot comment on an individual case, although I am sure that my hon. Friend did when he had the pleasure of listening to that exchange. We are seeking to make both the probation service and community sentences more effective, by which I mean more punitive when necessary but also more effective in controlling the behaviour of the offender.
We have taken powers to extend the hours of curfew. We intend to make more use of tagging to enforce curfews, among other things. We are testing more effective equipment and consulting on how best to use tags and modern technology effectively.
Mr Speaker
I am now looking for stunning succinctness. I call Mr Elfyn Llwyd.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
I shall try to stun you, Mr Speaker.
The Secretary of State knows that the relationship between probation officer and offender is crucial to the rehabilitation process. How will he assure the House that opening up to the private sector will not undermine that crucial relationship?
Mr Clarke
In all these things, I take the view that the status of the person involved—whether they are classified as public sector or private sector, or who exactly they work for or which union they belong to—is a slightly subordinate issue. This is a rather sterile debate of a few decades ago about whether there should be private sector or public sector provision. What matters is the quality of what is done, the quality of the person, the relationships they develop, and what is available to them to make a community sentence more effective.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
7. What recent assessment he has made of the effectiveness of the system for recovery of criminal fines.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
In the financial year 2011-12, Her Majesty’s Courts and Tribunals Service collected £279 million in respect of criminal fines, further reducing the cost of enforcement and achieving the best ever performance against the payment rate measure. But now we want to do better, so we have developed better-quality performance indicators for publication and are exploring the potential for creating a partnership with a commercial company to build on the improvements we have already made in fines collection.
Tristram Hunt
What the Minister did not reveal is that over £600 million in outstanding fines is owed by criminals, of which £10 million relates to Staffordshire, and a further £5.5 million of unrecovered debts have already been written off. When faced with falling living standards and the effects of ill-planned spending cuts, my constituents want to know why this Government are allowing criminals to think that crime does pay.
Mr Djanogly
The hon. Gentleman mentions the collection backlog, and thereby raises the collection inadequacies of the previous Administration which we are now having to sort out. In 2011-12, the payment rate was 106%, and last year, for the first time since 2003-04, the outstanding balance was reduced by £16 million—that is, 3%.
Mr David Burrowes (Enfield, Southgate) (Con)
Given the new statutory presumption that victims of crime will be compensated, can we ensure that whatever the means of offenders, they will all have to make amends to their victims?
Mr Djanogly
Absolutely, and if that is by way of a fine, we intend to collect it.
Steve Brine (Winchester) (Con)
9. What recent steps he has taken to reduce reoffending by young offenders.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
14. What recent steps he has taken to reduce reoffending by young offenders.
Stephen Mosley (City of Chester) (Con)
19. What recent steps he has taken to reduce reoffending by young offenders.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
Reducing reoffending is a key priority for this Government, and the challenge is most acute with young offenders. Recent steps that will specifically apply to under-18s include youth custody pathfinders, the troubled families programme, the programme on gangs and youth violence, restorative justice, new out-of-court disposals, increased curfews, more severe breach penalties, minimum mandatory custodial sentences for aggravated knife crime, and integrated resettlement support. These measures complement the already very substantial number of further measures and programmes that are aimed at dealing with all age groups who reoffend, not least young adults.
Steve Brine
I thank the Minister for his breathless list. He will know of the charity User Voice, which engages those who have experience of the criminal justice system in bringing about reform and reducing reoffending. A group of young people from the organisation recently came to give evidence to the Justice Committee for its youth justice inquiry. It was striking to hear them say that having respect for the status and position of a youth offending team worker is not the same thing as connecting with them and having them make a reasonable difference to their lives. Does the Minister agree that there has to be a much greater role for offenders and ex-offenders in steering young people away from the spiral of offending and constant reoffending?
Mr Blunt
I have met people from User Voice several times, and I agree with my hon. Friend about the value of their work. I also agree that ex-offenders are uniquely placed to offer support to offenders, along with other professional services, and can connect with them in a way that many other agencies cannot. Peer-mentoring services using ex-offenders are being developed at Ashfield and Cookham Wood young offenders institutions, working with the Prince’s Trust.
Eric Ollerenshaw
What particular support will there be for young offenders institutions such as Lancaster Farms in my constituency, particularly in dealing with young offenders on short-term sentences?
Mr Blunt
I am grateful for my hon. Friend’s support for the work of Lancashire Farms, which is a young offenders institute for young adults. There are a range of initiatives. The piloting of drug recovery wings will apply to those with short sentences. We are reforming the way in which education and training are delivered and linking them directly to the demands of the labour market on release. Prisoners who are assessed for jobseeker’s allowance before their release will be mandated to the Work programme on the first day of their release, and that will be an important way of joining up Government and involving the Department for Work and Pensions.
Stephen Mosley (City of Chester) (Con)
The lack of work opportunities is one reason young offenders go on to reoffend. Has my hon. Friend made an assessment of the link between youth unemployment and reoffending, and what steps is he taking to help young offenders find work?
Mr Blunt
We know that it is important to tackle youth unemployment. The £1 billion youth contract will encourage employers to give young jobless people a chance, the Youth Justice Board has developed an employing ex-offenders action plan, and resettlement consortia have achieved success in helping many young people to find employment on release from custody.
John Healey (Wentworth and Dearne) (Lab)
Does the Minister agree that the best efforts to reduce reoffending are often based on local courts with good local knowledge, working closely with local agencies? We have a very good magistrates court in Rotherham for Rotherham, and a very good one in Barnsley for Barnsley. Will he rule out any further magistrates court closures, which might put local justice in jeopardy?
Mr Blunt
The right hon. Gentleman knows perfectly well that I cannot do that. We have to deliver the whole justice system as efficiently as possible. Because of the financial catastrophe that overtook the country under the last Administration, in which he played a prominent part in the Treasury, the provision of all court and prison infrastructure has to be examined so that we can deliver offender management considerably more effectively than the last Administration.
Keith Vaz (Leicester East) (Lab)
I welcome the new drug-free wing at Pentonville prison, which aims to cut reoffending. May I put to the Minister what I put to the Lord Chancellor when he gave evidence to the Home Affairs Committee this morning? The key to ending reoffending is to help prisoners once they leave prison. That support is vital.
Mr Speaker
Order. We are grateful to the Minister. I do not wish to be unkind, but the answers are simply too long. Progress is too slow and it needs to be speeded up.
Bill Esterson (Sefton Central) (Lab)
The double-dip recession created by the Government has made it much harder for young people in general and young offenders in particular to find work. What conversations is the Minister having with his colleagues to encourage growth in the economy and to solve the problem of youth unemployment in general and young offenders in particular?
Mr Blunt
The last time I looked, Spain’s interest rates were about 4% higher than ours. If we had those interest rates, it would cost the country £40 billion a year to borrow the amount of money necessary, which would certainly put paid to all the employment programmes that the hon. Gentleman is suggesting.
Jesse Norman (Hereford and South Herefordshire) (Con)
10. What plans he has to protect and enhance the powers of the magistracy.
The Minister for Policing and Criminal Justice (Nick Herbert)
The Government will shortly publish plans on improving the criminal justice system, including by reinforcing the important role of magistrates.
Jesse Norman
The magistracy is one of the great glories of the English legal system, and Hereford magistrates court is a case in point. Will the Minister give some reassurance that there are no plans to change the services at Hereford magistrates court or to close it?
Nick Herbert
I agree with my hon. Friend about the value of magistrates. They are lay people who give of their time, and the community justice that they dispense is an important feature of our criminal justice system. That is too little acknowledged. As the Under-Secretary of State for Justice, my hon. Friend the Member for Reigate (Mr Blunt) said, we continually review the estate to ensure that it is well utilised, but we have no current plans to close Hereford magistrates court.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Is the Minister aware that over many years and under many Governments the magistracy has been run down? It has been run down because so many local courts have been closed. Once the link between being a magistrate and the local community is broken, it no longer works. What is he going to do about that?
Nick Herbert
The hon. Gentleman should reflect on the fact that one of the issues that magistrates are most concerned about is the growth of out-of-court disposals, which soared under the last Government in response to the target culture. We continue to have concerns about the inappropriate use of such disposals. He should reflect on the role of the previous Government in undermining the magistracy.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
11. What progress he has made with his proposals on regulation of bailiff services.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
Following the publication of updated national standards for enforcement agents in January, the Government launched a full public consultation on transforming bailiff action in February. The consultation closed on 14 May, and we are now carefully considering the 250 responses with a view to publishing our response in the autumn.
Mr Raynsford
I am not sure whether any of those responses referred to the Government’s proposed cut of £500 million in council tax benefits next April, which is widely expected to prompt a surge in cases being referred to bailiffs for the recovery of council tax debts. What are the Government doing to prevent an escalation of intrusive, expensive interventions against low-income households?
Mr Djanogly
If there are debts to be collected, bailiffs have to go and collect them; otherwise, the system would break down. However, the Government are clear that aggressive bailiff activity is unacceptable, and we are committed to introducing effective proposals that protect the public and ensure that bailiff action is proportionate.
Duncan Hames (Chippenham) (LD)
I hear the Minister’s answer, but does he not agree that when public bodies such as councils procure bailiff services, they should take some responsibility for the methods they sanction?
Mr Djanogly
They should indeed, and they do. The new guidelines are there to ensure that minimum standards of behaviour are adhered to. We have introduced the guidelines before legislating.
Robert Flello (Stoke-on-Trent South) (Lab)
The Tribunals, Courts and Enforcement Act 2007 contains detailed provisions on the regulation of bailiffs, and in May 2010 the coalition agreement stated that action would be taken. Here we are in summer 2012, and no Government response to the consultation is expected until the end of the year and the Government are hitting households from every side, forcing them into more and more debt every day. With a catalogue of appalling behaviour by bad bailiffs, and even reputable bailiffs saying that they need regulation urgently, when will the Government finally stop delaying and get on with it?
Mr Djanogly
Any delay arises from the non-implementation of part 3 of the 2007 Act, and the cause of our delay is the same reason why the Labour Government delayed—their legislation does not work. We have acted in the interim by putting guidelines in place, and we are now consulting on upgrading legislation in a measured and balanced way. We will consider the many interests that exist and the balance that we have to achieve.
Stephen Timms (East Ham) (Lab)
12. What assessment he has made of the availability of legal advice to people on low incomes who will be affected by the Government’s proposed welfare reforms.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
During the development of the legal aid reforms, the Ministry of Justice conducted detailed assessments of the availability of legal advice funded by legal aid or provided by the not-for-profit advice sector. With regard to welfare reform, the Department for Work and Pensions is developing a strategy for working with the voluntary sector, including welfare advice services, to ensure that people on low incomes have access to the support that they need to understand their rights and entitlements following the move to universal credit.
Stephen Timms
During ping-pong on the Legal Aid, Sentencing and Punishment of Offenders Bill, Ministers accepted that legal aid should still be available for an appeal to the first-tier tribunal if a point of law is at stake. How will someone establish whether a point of law is at stake, and when will the provision take effect?
Mr Djanogly
I confirm that we are giving serious thought to the issue and considering the exact scope of the concession, as well as how such work will be delivered in future, because the operational aspects are just as important. Once we have considered that in full, we will make an announcement.
Robert Halfon (Harlow) (Con)
13. What recent assessment he has made of the value for money and effectiveness of the Office of the Information Commissioner.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
The Ministry of Justice and the Information Commissioner’s Office meet regularly to ensure that the office operates effectively and secures the best possible value from the resources available to it. The ICO’s next annual report is due out on Thursday.
Robert Halfon
As I told the Minister when I wrote to him a few weeks ago, it took a long campaign in Parliament in 2010 before the Information Commissioner was prepared to admit that Google Street View had broken the Data Protection Act on an industrial scale. It has now taken an investigation by The Sunday Times and action in America for the ICO to actually act and pursue Google further. Surely the ICO should be accountable to Ministers, and therefore to the British people, so that when there are such problems someone can take charge.
Mr Djanogly
The Information Commissioner is of course accountable to the public via Parliament. His annual reports are laid before Parliament, and he could be questioned on his reports by, for instance, the Justice Committee. It would be wrong for me to comment on the ICO’s handling of any particular case. That said, I understand that the ICO has reopened its investigation into Google Street View because it has received some new information about Google’s capture of data from wi-fi networks in the USA. The investigation is ongoing.
Mark Pawsey (Rugby) (Con)
15. What recent assessment he has made of the operation of community payback; and if he will make a statement.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
The Green Paper “Breaking the Cycle” contained proposals relating to community payback that have been confirmed by the Government. Plans are in place to implement these changes, and the results of the first competition to administer community payback in London will be announced shortly. My assessment is that this competition and the preparation for competitions in all other trusts have substantially improved all elements of operational delivery.
Mark Pawsey
In Warwickshire, more than 63,000 hours of community payback are completed each year by offenders on a community sentence. They carry out projects such as litter removal, clearing undergrowth and removing graffiti—labour worth about £360,000. Does the Minister agree that in certain cases this is a worthwhile way for offenders to make a contribution to the society that they have harmed?
Mr Blunt
I agree with my hon. Friend. I understand that 179 organisations in Warwickshire benefited from community payback last year. Not only is there an opportunity to link with members of the public through the ability to nominate community payback schemes, but these nominations are now running at more than 1,000 a month.
Simon Hughes (Bermondsey and Old Southwark) (LD)
16. What steps his Department is taking to implement the recommendations of the final report of the riots communities and victims panel.
The Minister for Policing and Criminal Justice (Nick Herbert)
The Government welcome the final report from the independent riots communities and victims panel and will publish a formal response in due course.
Simon Hughes
This very good report made some very good recommendations to the Ministry of Justice, including for more effective community sentencing—specifically, that communities should choose the projects and that the results, including reoffending rates, should be published. Will Ministers be positive about those recommendations? I am sure it would be appreciated.
Nick Herbert
I think we will be positive about exactly that kind of proposal—we have already published formal consultation proposals to strengthen community sentences, which was one of the recommendations in the report. That is important, because the report itself drew attention to the fact that those who were brought before the courts in relation to the riots had 11 previous convictions, which showed that the justice system had not been effective in dealing with such problem offending.
Mr David Ruffley (Bury St Edmunds) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
Yesterday, the Government published their response to the consultation entitled “Getting it Right for Victims and Witnesses”. For too long, many victims have felt themselves to be an afterthought for the criminal justice system. Our reforms will ensure that victims and witnesses get the support they need when they need it. Our proposals include an aim to raise an additional £50 million from offenders to be spent on victims’ services. Responsibility for commissioning most victims’ services will eventually go to democratically accountable police and crime commissioners, ensuring that decisions about service provision respond to local need. We will reform criminal injuries compensation so that it is focused on victims of serious crime and is sustainable, and there will be a new victims code making it clear what victims can expect from the criminal justice system and ensuring that they are treated with dignity and respect.
Mr Ruffley
A UK prisoner is litigating in the European Court of Human Rights asserting his right to vote. When does the Secretary of State expect that decision to be handed down by the Court, and does he expect the House of Commons to be able to vote on the issue of votes for prisoners?
Mr Clarke
There has been repeated litigation involving several member states that do not allow prisoners to vote, as we have never done. The most recent litigation was Scoppola v. the Italian Government, in which our Attorney-General intervened on behalf of the British Government to argue that Parliament was more responsible for this issue than the Court. The Government will respond to that judgment, which went against a blanket ban, in due course.
Sadiq Khan (Tooting) (Lab)
There are 6,500 prisoners who have been ordered by trial judges to serve indeterminate sentences for public protection. It is important for public safety that they be released only after a proper risk assessment, but more than 3,500 are waiting for appropriate programmes and a risk assessment. Does the Justice Secretary have any plans to increase the number of programmes and assessments to address this issue?
Mr Clarke
This system, which we are getting rid of, as the Under-Secretary of State for Justice, my hon. Friend the Member for Reigate (Mr Blunt) reminded us earlier, has put a tremendous load on the prison service in terms of programme design, availability of suitable places and the Parole Board system. We are addressing that and trying to reduce the delays, but it will take us some time to get through the system. Of course, some will remain indeterminately imprisoned, but we want as many as possible to finish their proper sentence, to get them out and to put behind us this rather shameful chapter in the history of sentencing in this country.
Sadiq Khan
As is normal, the Justice Secretary did not answer the question I asked. Let me try another. His ministerial colleague said that there were no immediate plans to change the release test. Yesterday, Lord McNally said that the Government may use Executive action to release those serving IPPs, and would also change the balance of judgment to be made by the Parole Board to free up prison places. Those two actions could lead to prisoners who are currently serving IPPs being released without due regard to public safety. Which Minister should we believe, and is it really worth taking a risk with public safety to reduce prison numbers?
Mr Clarke
I will check what Lord McNally actually said. We are not contemplating either of those steps at the moment. We are putting extra resources into programmes and into addressing the problems that the Parole Board is faced with. We are quite determined not to take risks with public safety, but indeterminate sentences really were one of the worst ways of trying to do that, as they left a grave sense of injustice and difficulty coping with the proper assessment of people, for open-ended release.
Andrew Jones (Harrogate and Knaresborough) (Con)
T2. My right hon. and learned Friend recently announced extra financial support of £50 million to be provided for victims of crime, with offenders being forced to make the financial contribution. I strongly welcome that, but could see no information on the Department’s website about when the scheme will start. Can he help with that?
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
Subject to parliamentary approval of the orders that have been laid before the House, the changes to the victim surcharge should be implemented in October. We would expect to see the revenue starting to come in six months thereafter. The money—up to £50 million—will come from offenders and go to victims, which is a move away from the taxpayer being responsible. The Government’s policies will also mean courts ordering offenders to pay more in compensation to victims—indeed, that will be the first duty on sentencers to consider.
Dan Jarvis (Barnsley Central) (Lab)
T4. According to the Legal Services Consumer Panel, 180,000 wills are written each year by unregulated services. Both the national press and the Barnsley Law Society have reported that thousands of people are being ripped off by unregulated will-writing services. What does the Justice Secretary think is the solution to the problem?
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
The Government recognise this as a serious issue. We are in discussion with the Legal Services Board, which has just done a consultation, and we will be making an announcement in due course.
Mr Philip Hollobone (Kettering) (Con)
T8. In thanking my right hon. Friend the Minister for Policing and Criminal Justice for visiting a community payback scheme in Kettering on 18 June, may I ask whether he agrees that the work we saw being undertaken was both worth while and sufficiently arduous to prevent future reoffending?
The Minister for Policing and Criminal Justice (Nick Herbert)
Yes. I am grateful to my hon. Friend for inviting me to Kettering to see that scheme. The offenders were wearing fluorescent jackets to identify them as people doing work on behalf of the community. They were working hard constructing a path alongside a river, which will be of huge value to the community and would not have been constructed but for that work. That shows that we can make community payback an effective and meaningful punishment on behalf of the community.
Sheila Gilmore (Edinburgh East) (Lab)
T5. Professor Harrington, the independent reviewer of the work capability assessment, has highlighted the fact that Department for Work and Pensions officials are not routinely given feedback when appellants’ appeals have been successful, which means that they cannot improve practice. Why not?
Mr Djanogly
There are costs involved in feedback, but that does not mean that the DWP cannot ask for feedback if it wants it. The efficiency of the tribunal processes is being looked at carefully, with Ministry of Justice officials and Ministers working closely with DWP equivalents.
Bob Blackman (Harrow East) (Con)
T9. Many countries outside the UK have legal systems that are based on ours, and this is particularly true in the Commonwealth. What has my right hon. and learned Friend done to market the legal services in the UK to those countries?
Mr Kenneth Clarke
We are making a considerable effort to market British legal services, both within the Commonwealth and across the wider world, in many important emerging markets and elsewhere. I am glad to say that we are working closely with the Bar Council and the Law Society in doing so. Legal services in this country are held in the highest regard in the world—our judges are more trusted and our system is more effective than most others—and they contribute 1.3% to the GDP of this country. Legal services are second only to financial services in the City of London, and are something we should promote and support.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
T6. Is the Minister able to put a figure on how much the repeated failure of Applied Language Solutions to provide interpreters in court proceedings has cost the taxpayer through delayed proceedings?
Mr Blunt
We have published assessments of ALS’s performance, and we will continue to do so, but it is impossible to arrive at the numbers the hon. Lady is seeking. Her question seems to imply that the previous system for booking interpreters was a model of exactitude and correctitude; it was not. ALS’s performance is now reaching the required contract level.
David Mowat (Warrington South) (Con)
In this country, we now have 1,200 whiplash claims a day, which is about 30 times more than in France or Germany. The industry costs to the rest of us are £2 billion a year, resulting in many young people being unable to afford to insure their cars. What discussions has the Minister had with the relevant regulatory body of the Law Society that drives this industry?
Mr Djanogly
The Government are committed to reducing the number of whiplash claims, and we have had discussions with all parties involved in these claims. We will consult over the summer on reducing the number of whiplash claims, including through looking at the medical certificates that are handed out, as well as at small claims levels.
Caroline Lucas (Brighton, Pavilion) (Green)
T7. My constituent Sam Taylor has been subjected to, and still lives in fear of, the most terrible harassment from her ex-partner. The new offences relating to stalking represent real progress, but Sam’s case shows that serious work still needs to be done on the ground to ensure that she and her family can be properly protected. Will the Minister meet Sam, along with the chief superintendent of Sussex police and me, to hear why she remains concerned?
Nick Herbert
I would be very happy to meet the hon. Lady to discuss that issue.
Mr David Davis (Haltemprice and Howden) (Con)
On 4 September, the European Court of Human Rights will hear the case of Nadia Eweida v. the United Kingdom Government. I understand that the Government are resisting the case. Miss Eweida is the lady who effectively lost her job with British Airways for wearing a cross, a symbol of her religion, at work. Is it any part of the British Government’s policy to support the denial of people’s religious rights at work? If not, will we reconsider our position on that case?
Mr Kenneth Clarke
I will consult the Attorney-General, who is no doubt preparing the Government’s defence in this case. This is obviously a hugely difficult issue; the case has gone through the courts here and is now going to be heard in Strasbourg. Whatever one’s feelings about the narrow facts of the individual case, there are wider issues about the enforcement of religious rights in employment, and I have no doubt that they will be properly canvassed. I will consult my right hon. and learned Friend the Attorney-General.
Yasmin Qureshi (Bolton South East) (Lab)
Will the Justice Secretary confirm that, despite Ministers’ claims to the contrary, judges will be left with no option under the proposals in the Justice and Security Bill but to grant closed material proceedings?
Mr Clarke
I disagree. It is certainly my intention—this is the way in which the Bill is drafted—that there will be closed material proceedings only when the judge is satisfied that there would be a risk to national security if the evidence were to be given in open court. We are not taking into secrecy or excluding from the court any evidence that is heard in court at the moment. For the first time, we are creating an opportunity for the judge to consider intelligence evidence, but that will happen only in those cases in which the judge is satisfied that national security is involved.
Greg Mulholland (Leeds North West) (LD)
I am sure that Ministers would agree that causing death by dangerous driving is a serious offence, particularly when drivers are under the influence of alcohol or drugs, yet it is not regarded as serious by the Criminal Injuries Compensation Authority. I have had two constituency cases in which the families have suffered not only the appalling loss of a family member but huge financial loss. Unlike the families of manslaughter and murder victims, they are not eligible for any compensation.
Mr Clarke
Compensation is for criminal offences, and it depends on the severity of the injury. We are concentrating on the most severe injuries that can be suffered. It would be very nice to extend it to all road traffic cases, particularly those that cause outrage or particular damage, but it would be impossible to ask the taxpayer to pay compensation in such cases.
Hazel Blears (Salford and Eccles) (Lab)
Last week, I had the opportunity to have an excellent meeting with the courageous and very impressive chief crown prosecutor of Greater Manchester, Mr Nazir Afzal. He has given his full personal backing to the pilot of Clare’s law, which will identify serial perpetrators of domestic violence and is due to be launched in Greater Manchester in the next few weeks. Will the Minister ensure that criminal justice systems across the country support those pilots so that we can protect people from domestic violence?
Mr Robert Buckland (South Swindon) (Con)
The failure to bring criminal prosecutions against those who have wrought such havoc to our banking system continues to cause huge public concern. Has my right hon. and learned Friend had any discussions with ministerial colleagues about how the proposed fresh investigations will be properly supported and resourced?
Mr Kenneth Clarke
On reading what I have of these cases, it seems to me quite plain that possible crimes are involved in what has been described. I am glad to say that the Serious Fraud Office is, I am assured, investigating. It is properly a matter for it and not in the end a matter for Ministers whether anybody is prosecuted for anything. I think we are all reassured to know that this is being inquired into, as anybody guilty of crime must be brought to justice.
Alison Seabeck (Plymouth, Moor View) (Lab)
There is evidence in the south-west of companies setting up internal companies to pursue debt—in effect, two companies pursue the same debt. The Office of Fair Trading describes this as an unfair practice and the direction guidance says that such practice constitutes harassment when two bailiffs chase the same debt. There are clearly Chinese walls in this practice; is it going to be looked at as part of the regulation review?
Mr Djanogly
If bailiffs are involved, it does fall within the terms of the consultation. I will come back to the hon. Lady on the specific point.
Anna Soubry (Broxtowe) (Con)
The Secretary of State could be forgiven for not knowing that 72 years ago yesterday, he was born in the same ward of the same Nottingham hospital as my constituent Mr Roy Plumb. Unfortunately, Mr Plumb had to retire as a magistrate on his 70th birthday. I do not expect the Secretary of State to refer to his own age and I would not want him to retire, but does he agree that the time has come to allow magistrates to serve beyond their 70th birthday?
Mr Kenneth Clarke
I congratulate my hon. Friend’s constituent on his birthday yesterday. The argument for retaining a retirement age of 70 for judges of all kinds—I agree that this is a mere stripling for most occupations—is that, unlike me and most other people in their 70s, they cannot be removed from office: they are there for life, and can be removed only for quite serious bad behaviour. If we let everybody go on until whatever age, we will get into difficulties and politicians or somebody else will have to start appraising their performance, as they cannot be dismissed peremptorily. That is what has made us hold back from raising the compulsory retirement age for magistrates and judges at every level.
Ann Coffey (Stockport) (Lab)
On 15 May, I asked the Minister when he was going to respond to the recommendations of the Justice Select Committee on the presumption of death in guardianship, which were published on 22 February. He responded, “Shortly”. May I please ask the question again?
Tessa Munt (Wells) (LD)
A couple of weeks ago, the Under-Secretary of State for Justice, the hon. Member for Reigate (Mr Blunt) visited the high-performing Shepton Mallet prison in my constituency. It has a great team of staff. Will the Under-Secretary or the Secretary of State comment on the fairness of recognising the high numbers of years of service of prison officers with jubilee medals, but not honouring the support staff, who are equally important in the smooth running of this prison, in the same way? Would it not be churlish not to produce some more medals so that they can be given to the support staff as well?
Mr Speaker
It might be churlish to interrupt the hon. Lady, so on this occasion I did not, but a blue pencil would be of benefit.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
The Secretary of State will know that his Department will face tribunal costs of almost £50 million, largely arising from appeals to the work capability assessment. Given that 40% of those appeals are successful, is it not now time that his Department and the Tribunal Service discussed with Atos Healthcare how to get some of the money back—otherwise, the public are paying twice for wrong decisions?
Mr Djanogly
The hon. Gentleman makes an important point. Better decisions need to be made by Departments in the first place so that fewer are appealed, and the Ministry of Justice is working with other Departments to that end.
Business of the House
(12 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Leader of the House of Commons (Sir George Young)
Mr Speaker, I should like to make a short business statement. The business for this Thursday will now be proceedings on the Supply and Appropriation (Main Estimates) Bill, followed by a debate on two motions relating to professional standards in the banking industry. I shall make my usual business statement on Thursday.
Ms Angela Eagle (Wallasey) (Lab)
I welcome that statement from the Leader of the House. Can he tell us how long he expects the debates to last?
Sir George Young
I am grateful to the hon. Lady for her welcome for the statement. The plan is to table a business motion today which will appear on the Order Paper tomorrow. The debate will be the main business on Thursday, and we plan to bring it to a conclusion at 5.15 pm to allow time for debate before 6 pm.
Mr Speaker
Order. I remind the House that questions on the statement must relate to the statement itself, and thus only to the implications of the change in business. They must not extend to the arrangement of business more widely, and certainly not to the issues of substance that will be the subject of the debate on Thursday. I hope that that is helpful to the House.
Mr John Redwood (Wokingham) (Con)
Will the Leader of the House ensure that on Thursday it will be in order to debate banking competition and the structure of the state banks, so that we can have a proper debate on banking?
Sir George Young
The question of whether a speech would be in order would be a matter for you in the Chair, Mr Speaker. My right hon. Friend will be able to see the two motions which we hope to table today and which, in that event, will be on the Order Paper tomorrow. I am sure that, if he catches your eye on Thursday, he will be able to couch his speech in such a way as to remain in order.
I said that there will be debates at 5.15 pm; I meant votes.
Hugh Bayley (York Central) (Lab)
As a direct result of the announcement made by the Leader of the House, we will lose the opportunity on Thursday to debate a motion selected by the Backbench Business Committee about VAT and ambulance services. Can the Leader of the House tell me when time will be made available for that debate? Has he a date in mind, and how much time will be provided?
Sir George Young
I very much regret the inconvenience to the House and to Members who were planning to take part in Thursday’s debate on the two motions proposed by the Backbench Business Committee. I intend to find time for one of those two debates between now and the summer recess if possible. I hope to be able to say more on Thursday.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
The other motion tabled for that day is in the name of members of the Public Administration Committee, and invites the House to give its opinion of our recommendation that the adviser on ministerial interests should be able to instigate his own inquiries instead of having to wait for a referral from the Prime Minister. Given that this is a very topical issue and that the Government have yet to respond to our latest report, may I ask my right hon. Friend to find time for that debate, not least because I am sure he would not want the impression to be given that the Government were reluctant to debate the issue?
Sir George Young
The subject that my hon. Friend has raised is indeed important, but my own view—without any disrespect—is that the crisis in the banking industry is even more important, and that it is entirely right for the House to find time to debate it. I can tell my hon. Friend that we plan to honour our commitment to the Backbench Business Committee to find at least 27 days for debate on the Floor of the House in each Session. I hope to say a little more about the time available, but the Committee already has half a day next Wednesday, and I hope that it will also have the last day before the House rises, so it is not the case that it has been totally starved of time.
Natascha Engel (North East Derbyshire) (Lab)
The debate on banking is of course very important, and the House understands that. It is only regrettable that it happens to be a Back-Bench day that it is replacing. Will the Leader of the House not only undertake to look into that, but guarantee that both the important debates that have had to be postponed will be held before the House rises for the summer recess?
Sir George Young
I am grateful to the hon. Lady for her comments. At the meeting of the Backbench Business Committee this morning, representations were made to her for a debate on the banking industry, so there is an appetite for that. In response to her request to make good the two half days, as I have said the Committee already has a half day earmarked for sittings motions next Wednesday, and I hope it will also have the last day before we rise for the recess. I will use my best endeavours to find another half day between now and the time the House rises. I cannot go further than that at this time.
Mr Peter Bone (Wellingborough) (Con)
This is an outrage, Mr Speaker. This is the Executive imposing their will on Back-Bench time. I invite the Leader of the House to change his decision, as there is some irrelevant business on Monday and we could hold this debate in Executive time then.
Sir George Young
Far from there being irrelevant business on Monday, it is business that I think is so important that it warrants two days of debate. The issue we will be debating on Thursday is also very important. It arose since the last business questions, and there is a debate in the country about the banking industry. I think it is important that this House should also be part of that debate, which is why we have rearranged the business.
Chris Bryant (Rhondda) (Lab)
Will the motions on Thursday require that the Joint Committee operate according to the rules of the primary Chamber, namely the House of Commons, as opposed to the House of Lords, and will there be an opportunity for a free vote on who gets to chair the Committee?
Sir George Young
The issue of who will chair a Joint Committee, if it is set up, would be a matter for that Committee. The hon. Gentleman will be able to see the motions when they appear on the Order Paper, and they will include the two alternatives: the inquiry that has been proposed by the Opposition, and the Joint Committee that has been proposed by the Government. They will both be put before the House.
John Healey (Wentworth and Dearne) (Lab)
The Leader of the House’s statement makes it clear that the Government are going to ever greater lengths to avoid a full judge-led inquiry. By the time this House votes at 5.15 pm on Thursday, the Treasury Committee will have held three sessions on the LIBOR scandal, and it is also halfway through an inquiry into governance in the banking industry. If the Leader of the House wants Parliament to do the job, why not let the Select Committee do it, instead of involving the Lords?
Sir George Young
The right hon. Gentleman has begun to engage in a debate that might take place on Thursday, but it goes slightly beyond the scope of the business statement. I hope that in the debate members of the Treasury Committee—including, perhaps, the Chair of the Committee—might express their views on the proposition we will have put before the House.
Kelvin Hopkins (Luton North) (Lab)
I want to add my support to the Chairman of the Public Administration Committee, the hon. Member for Harwich and North Essex (Mr Jenkin), and to emphasise that there is support for his view on both sides of the House and the Select Committee. This issue is about devolving powers from the Prime Minister, which would be a significant constitutional change, and it deserves the House’s full attention.
Sir George Young
It is indeed an important matter, and I think I am right in saying that the Chairs of all the Select Committees have added their names to the proposal, so it does have all-party support. I gently say to the hon. Gentleman, however, that in the 13 years before the last election, the Labour party consistently failed to give the Prime Minister’s adviser the freedom which is now advocated.
John McDonnell (Hayes and Harlington) (Lab)
Presenting just these two options does not necessarily represent the views of all Members. Many will want to have an immediate inquiry by the Treasury Committee, to enable a longer-term inquiry to take place. If that were to happen, we could address the immediate issues and have recommendations about the immediate legislative changes needed to address, in particular, confidence in the City, but then also have a longer-term inquiry that could report back in due course.
Sir George Young
The motions we put down tomorrow for debate on Thursday will be amendable, although whether any amendment is chosen is a matter for the Speaker.
Wayne David (Caerphilly) (Lab)
I am glad the Leader of the House remembered to inform us that there will be votes on Thursday. Will the Government parties be whipping on the issue, given its importance and the need for consensus?
Sir George Young
Issues of whipping are a matter for my right hon. Friend the Patronage Secretary. I do not know whether the hon. Gentleman was in the House yesterday, but the Government made their views on this issue known then.
Mark Durkan (Foyle) (SDLP)
I thank the Leader of the House for his statement. Yesterday, we were promised one motion, but today we are being told that there will be two, which apparently, given what he has just said, will be rival motions. As has been mentioned, many people see a case for a parliamentary inquiry that will inform amendments to the Financial Services Bill and also see the need for a wider judicial inquiry to get to the bottom of this problem. This “strokery” of good key business being made a casualty of today’s announcement and of rival motions will frustrate Parliament in doing the job it needs to do in response to this crisis.
Sir George Young
I say to the hon. Gentleman that there is a disagreement between the two sides of the House as to the best way forward. The right way to resolve that disagreement is to have a debate and then have a vote on the two alternative propositions. That is how this House makes a decision.
Honours (Equality of Titles for Partners)
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I beg to move,
That leave be given to bring in a Bill to make provision for husbands and civil partners of those receiving honours to be allowed to use equivalent honorary titles to those available to women; and for connected purposes.
The aim of this Bill is to ensure that husbands and civil partners of dames and baronesses should be allowed to use a title of some sort if they wish to do so. I feel that the position regarding honours should and needs to be reviewed. I became aware of this anomaly in 1992 when, as a Conservative party agent in Mitcham and Morden, I was working for Angela Rumbold. After a long and distinguished ministerial career, and on ceasing to be the Minister of State at the Home Office, Angela became the deputy chairman of the Conservative party, was in charge of candidates and was created a dame by the then Prime Minister and hon. Member for Huntingdon, the right hon. John Major. I remember that being an enormous honour for my friend, whom I had served for nearly 10 years at that time, but I felt some sorrow for her husband John, who received no recognition for his support—and his finance—throughout her time as a councillor in the royal borough of Kingston upon Thames and her 10 years as the Member of Parliament for Mitcham and Morden.
At the time, I felt that that was unjust, and I vowed to try to correct the anomaly should I ever have the opportunity to do so. Just recently, my hon. Friend the Member for Banbury (Sir Tony Baldry) became a knight bachelor in Her Majesty’s birthday honours list, and I am delighted that his work in this House has been recognised. Although his wife is rightly allowed use the term “Lady” as a prefix to her name, the late John Rumbold received no acknowledgment on his wife becoming a dame of the British empire. Similarly, my hon. Friend the Member for Worthing West (Sir Peter Bottomley) was not recognised while his wife sat in the other place as the Baroness Bottomley of Nettlestone, until he was made a knight bachelor.
I am not going to argue that wives of peers or knights should be forced to give up their ladyship titles. I fear to do so would get me into a great deal of hot water, not only with the readers of The Daily Telegraph, but with my dear Aunt Juliet. Although I have concentrated on Members of this House and the other place, this issue is replicated in other walks of life. My solution to sorting out this anomaly is that the husbands of dames and baronesses should be allowed to call themselves “honourables”—this is similar to the arrangements for children of peers—should they want to do so.
The honours system has evolved over the years. Although the Anglo-Saxon monarchs are known to have rewarded their loyal subjects with rings and other symbols of favour, it was the Normans who introduced knighthoods as part of their feudal government. The first English order of chivalry, the Order of the Garter, was created in 1348 by Edward III. Since then, the system has evolved to address the changing need to recognise other forms of service to the United Kingdom. Interestingly, until the l7th century wives of knights were called dames, but that was replaced with the “Lady” prefix, which I suspect was introduced to avoid confusion. Until 2004, the adopted children of peers had no right to any courtesy title. Pursuant to a royal warrant dated 30 April 2004, adopted children are now automatically entitled to the same styles and courtesy titles as their siblings. However, like biological children, they cannot inherit peerages from an adopting parent and so, as they cannot be heirs apparent, adopted sons may only use the styles of younger sons.
I understand that although in the 19th century Scottish judges were allowed to use the honorary title “Lord” and would often take the name of their estates, their wives had to remain “Mrs” and would not be allowed to use the prefix “Lady”. On one occasion, a Scottish judge booked himself and his wife a double room in a Paris hotel and, when he signed in as “Lord and Mrs” whatever, the general manager of the hotel refused to take their booking because he thought that the judge was there with his mistress. He said he did not mind what happened in Britain, but such shenanigans were not going to be allowed in France. Very annoyed, the Scottish judge wrote to Queen Victoria, who pronounced that in future wives of Scottish judges should be allowed to call themselves “Lady”, thereby stopping any confusion.
I ask this: if wives, children and adopted children of knights and peers are allowed to use their titles, why should dames’ and baronesses’ husbands be subject to such overt sexual discrimination? Similarly, surely we need to update the honours system for those who are in a civil partnership. That is why I commend the Bill to the House.
Chris Bryant (Rhondda) (Lab)
The hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) is such a nice chap that it is awfully difficult to disagree with him on most things—[Interruption.] Unfortunately for the hon. Member for Daventry (Chris Heaton-Harris), who is not quite such a pleasant Member of the House, I do disagree on this point. Are there not too many titles already in this country for us to want to dole out a whole load more? We have more than 800 peers, plus the countless hereditaries—the Scottish hereditaries, the Irish ones who still have rights in this country and the English hereditaries. On top of that, we have all their heirs, as the hon. Member for Plymouth, Sutton and Devonport mentioned, who have subsidiary titles and are referred to as “Lord This that and the next thing”, “Viscount This that and the next thing”, “Earl Something” or whatever else.
I checked this earlier and it is even possible to buy a plot of land that gives a person the right to be called a laird, lord or lady from www.highlandtitles.com. I see the hon. Member for Epping Forest (Mrs Laing) nodding; she has obviously done it already. The website states:
“Many of our customers choose to update their driving licence, credit cards and such like to reflect their new status.”
What a delight! I do not want to praise just one company; there is also www.lordtitles.co.uk. For £18.95, or for an additional £6.95 for a premium title, a person can get their own title. The website effectively guarantees that they will be
“offered the best seats in restaurants”
and get
“airline upgrades and top-notch service.”
We know all that is true because the editor of GQ, Dylan Jones, who wrote an ironic, I hope, biography of the Prime Minister, which I am about to read now, wrote:
“At last my chance to lord it over you. Ladies and gentlemen, please grab your forelocks and give them a good old tug. Because I have just become a Lord of the Manor…the title I have was purchased from a website called lordtitles.co.uk…and I intend to lord it over everyone I know…I look forward to…flashing my credit card at impressionable waiters in New York and Los Angeles.”
This is all, of course, a pile of nonsense. The hon. Gentleman mentioned the fact that in 2004 the Earl Marshal finally caught up with the fact that some peers had adopted children and allowed by warrant that they could use their courtesy titles but not inherit. That seems more scandalously unfair than anything else mentioned by him. It means that Andrew Tottenham, the adopted son of the Marquess of Ely, has to be called Lord Andrew Tottenham, not Viscount Loftus.
I note that Debrett’s, which is where the hon. Gentleman’s speech seems to have come from, states:
“It is very important that anyone corresponding with a member of the peerage is aware of the rank and precedence of the person he or she is in contact with, so that the correct form of address may be used.”
To be honest, it is not important to my constituents in the Rhondda. We have only one person with a title that I am aware of living in the Rhondda, Baroness Gale of Blaenrhondda. She is from Blaenrhondda, and the people of Blaenrhondda love her, but she does not own Blaenrhondda as the titles were originally intended to denote.
There is no need for legislation to change the courtesy titles—no need at all. These courtesy titles are no different from the fact that we call one another Mr, Mrs, Esquire, the Reverend or the Honourable. They are merely courtesy titles, and all we need to do, if we want to, is change our custom and practice. There is no need for legislation. The courtesy titles that have applied to the wives of people who have peerages, knighthoods or baronetcies have made sense only when those wives have chosen to take the name of their husband, so that, for instance, Mrs Prescott becomes Lady Prescott and Mrs Meale becomes Lady Meale.
If I were ever to marry a woman—I know that is unlikely, but I very nearly got there a long, long time ago—I certainly would not be marrying the kind of woman who would want to take my name. Many women today choose to keep their own name. Consequently, there is an additional layer of prejudice that the hon. Gentleman’s Bill would introduce against people who choose not to take their partner’s name. That applies to those who enter into civil partnerships as well.
What the hon. Gentleman is suggesting would devalue those who get honours in their own right. For instance, take Lady Bottomley of Nettlestone. I have no idea why she is “of Nettlestone” because she was born in Dunoon, and Nettlestone is a place in the Isle of Wight, which is nowhere near the place where she was formerly a Member of Parliament. Her husband—the hon. Member for Worthing West (Sir Peter Bottomley)—was knighted in 2011. I am delighted that he is a knight of the realm but I think it is unfair that his knighthood should be eclipsed by his wife’s peerage and, therefore, the title that he would get as a courtesy title under the proposed Bill.
Similarly, I am delighted that my right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock) is now a dame, but I hope very much that her husband, who is the hon. Member for Aberdeen North (Mr Doran), will also at some point get a knighthood in his own right and not have to rely on a courtesy title.
The custom is a relic of a bygone age when women were merely adjuncts. In effect, they were referred to as the chattels, along with the household chattels, of a peer or a knight of the realm. I know that the hon. Member for Plymouth, Sutton and Devonport thinks his Bill will bring greater equality and that, for instance, for lesbian couples and gay couples it will mean that they will suddenly be able to provide a courtesy title for their partner, but think of the complications likely to occur when Lord Alli’s partner is suddenly able to acquire a title which bears no relation to his own title. If the hon. Gentleman were going to do something for the LGBT community that would increase equality, he would be far better off supporting marriage equality than introducing this rather futile piece of legislation.
Finally, if Conservative MPs have to rely on introducing ten-minute rule Bills of this kind, it seems to me that they are a party increasingly out of touch with the modern world.
Question put and agreed to.
Ordered,
That Oliver Colvile, Mrs Eleanor Laing, Sheryll Murray, Dan Byles, Mr Marcus Jones, Mr Lee Scott, Jack Lopresti, Ian Paisley, Caroline Dinenage, Keith Vaz, Sarah Newton and Stephen Gilbert present the Bill.
Oliver Colvile accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 9 November 2012, and to be printed (Bill 55).
Finance Bill
(12 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
19:31 - The House divided: - Ayes: 240 / Noes: 308 - Question accordingly negatived.
19:46 - The House divided: - Ayes: 0 / Noes: 0 - Question accordingly agreed to.
22:57 - The House divided: - Ayes: 308 / Noes: 233 - Question accordingly agreed to.
The Exchequer Secretary to the Treasury (Mr David Gauke)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
New clause 3—Sixth form colleges (exemption from VAT)—
‘In Schedule 9 to the Value Added Tax Act 1994 (Exemptions), in Group 6 (Education), the following shall be added at the end of Note (1) (description of eligible body)—
“(g) a sixth form college”.’.
New clause 10—VAT: review—
‘No new Order shall be made under section 30(4) or 31(2) of the Value Added Tax Act 1994 unless the Chancellor of the Exchequer has fully reviewed the impact of any such Order on jobs, living standards and businesses, making reference to the HMRC Consultation “VAT: Addressing Borderline Anomalies”, and placed a copy of the review in the Library of the House of Commons.’.
New clause 12—Rate of VAT—
‘(1) In section 2(1) of the Value Added Tax Act 1994 (Rate of VAT) for “20 per cent.” substitute “17.5 per cent.”.
(2) Subsection (1) shall have effect from Royal Assent and shall expire at such time as the Government presents to Parliament a report stating that the UK economy has returned to strong growth.’.
Government amendment 17.
Government new schedule 1—‘Categorisation of supplies.
Government amendments 18 to 20.
Mr Gauke
A number of VAT measures are to be debated today. To help the House, let me outline how I intend to deal with them. I will first address new clause 4, which relates to VAT on face-value vouchers, before turning to Government amendment 17 and new schedule 1, which address VAT anomalies. I am also conscious that a number of new clauses have been tabled by other right hon. and hon. Members, which I will respond to more fully later in the debate. I will also address amendments 18 to 20, which are consequential amendments dealing with VAT anomalies.
New clause 4 is a Government change to protect revenue. It guards against the possibility of widespread VAT avoidance by the use of so-called single-purpose face-value vouchers. Because of the seriousness of the threat, I announced the change by way of a written ministerial statement on 10 May. Following a decision by the European Court of Justice in May, we need to amend our legislation as it relates to single-purpose face-value vouchers, such as phone cards, so that VAT is due when such vouchers are issued.
We need to act with immediate effect to prevent a loophole due to the mismatch between the ECJ decision and current UK legislation. This could occur because individuals could argue that VAT cannot be collected on redemption by virtue of the Court’s decision, and it cannot be collected on issue by virtue of UK legislation. Therefore, the new clause protects around £200 million of revenue a year and guards against avoidance that could otherwise run into hundreds of millions of pounds.
The changes made by new clause 4 will remove single-purpose face-value vouchers from the UK’s VAT regime. For face-value vouchers more generally, normal VAT rules will apply and they will be taxed when they are first sold. There is also a transitional rule to ensure the taxation of vouchers that were issued before 10 May but used to pay for goods and services after that date, other than where that would lead to double taxation.
It might be helpful to hon. Members if I provide a little background to the new clause. As I have said, the issue arose in connection with a recent decision of the European Court of Justice concerning the VAT treatment of cross-border supplies of single-purpose vouchers, in this case phone cards supplied by a business in the UK to customers in other member states. Most member states tax single-purpose vouchers when they are issued, but in the UK the issue is disregarded and VAT becomes due only when the vouchers are used to obtain the underlying goods or services. This treatment is welcomed by UK businesses, because it delays the point at which they have to account for VAT, so creating a cash-flow advantage and an absolute saving on those vouchers that are issued but never redeemed.
However, in the case before the European Court of Justice, the business concerned complained that the difference in treatment between the UK and some other member states caused double taxation, because VAT was due in the member state where the card was sold to the final consumer and again in the UK when it was used to pay for telephone calls. The Court found against the UK’s approach in such a way that, until UK law was changed, suppliers of single-purpose face-value vouchers could have escaped VAT altogether. In the current market, that would have led to a tax loss of £200 million a year. In addition, if UK law had not been changed there would have been the risk of widespread avoidance involving the use of single-purpose vouchers, which could have led to a significant loss of tax.
To give an example, a car manufacturer could have issued a face-value voucher for a new car of £15,000, which the customer could then redeem at his local dealership. UK law said that there was no tax on the issue of the voucher, and the Court of Justice of the European Union said that there was no supply at redemption and, therefore, no tax. That may be an extreme example, but it illustrates the problem that could arise in a variety of retail scenarios.
The changes that new clause 4 make would remove single-purpose face-value vouchers from the UK’s VAT regime. For face-value vouchers more generally, this means that normal VAT rules will apply, and such vouchers will be taxed when first sold. There is also a transitional rule to ensure the taxation of vouchers that were issued before 10 May but used to pay for goods or services after that date, other than when that would lead to double taxation, but the Court’s definition of what constitutes a single-purpose voucher allowed us to retain the UK’s treatment for most vouchers.
The Court took the view that a single-purpose voucher is one that can be used to obtain goods or services of only one type, and which are subject to a single rate. Single-purpose face-value vouchers that are for one type of good or service form only a small proportion of the overall market for face-value vouchers, because most face-value vouchers can be exchanged for a range of goods or services. For example, a cinema voucher may be exchanged for tickets as well as for confectionary. Both the entry to see the film and the confectionary make suppliers liable to standard-rate VAT, but as they cannot be said to be of the same type the voucher is not caught by the judgment. We therefore expect the change to affect a relatively small number of businesses, and I hope that that explanation is helpful to the House.
In conclusion on face-value vouchers, the new clause is a proportionate response to the significant risk of tax loss arising from the use of single-purpose vouchers. It is carefully targeted against the risks and retains the VAT treatment for the great majority of vouchers sold in this country, and I commend it to the House.
Amendment 17 and new schedule 1 relate to the categorisation of suppliers for the purposes of value added tax. New schedule 1 would implement the changes announced at the Budget, which have been refined in the light of consultation, to address anomalies and loopholes in the area of VAT liability. The VAT system contains a number of anomalies along the borderlines of VAT exemptions and VAT zero rates, and addressing some of those anomalies and loopholes is precisely what the Chancellor announced at the Budget.
The Government announced at the Budget that they were introducing a number of measures to address some of those VAT anomalies, reducing uncertainty, costs for business and for HMRC, and raising revenue. On Budget day, we proposed a number of measures and launched a consultation to engage stakeholders and to listen to their ideas. The measures that we announced proposed to clarify the treatment of catering to ensure that all hot takeaway food is taxed, and to clarify the meaning of “premises” in the context of whether food is consumed on or off a supplier’s premises.
We proposed also to tax sports nutrition drinks to ensure that all sports drinks receive the same tax treatment, and to remove self-storage from exemption in order to ensure that all suppliers of storage receive the same tax treatment and to counter avoidance.
Mr Gauke
I certainly will, although at this point I am just setting out what we set out at the Budget. I will turn to each individual measure in more detail in a moment and happily give way to my hon. Friend at that point.
We propose to remove the anomaly whereby approved alterations to certain listed buildings are zero-rated while alterations to other buildings and repairs to and maintenance on all buildings are standard-rated. We included transitional arrangements for alteration works to listed buildings which had been contracted before the Budget, and we wanted to put beyond doubt the fact that VAT applies to the rental of hairdressers’ chairs.
Finally, we proposed to ensure that holiday caravans are taxed consistently at the standard rate of VAT. The proposal, as set out in the consultation document, was that all the changes would take effect from 1 October via secondary legislation, supported by anti-forestalling provisions in this Bill. The consultation was opened on 21 March, and overall HMRC received some 1,500 responses. Owing to the volume of interest in the consultation, we decided to extend it, and since it has closed we have reflected fully on the points made during the process.
As the House will be aware, in two areas—hot food that is cooling down naturally and static holiday caravans—the Budget proposals created a high degree of business uncertainty, so the Government wanted to let people know our preferred course of action as soon as possible; we did that on 28 May. Last Thursday, we published a consultation response document and tabled the new schedule setting out our approach to all the measures on which we consulted. We stand by the rationale for removing anomalies, but have made several refinements, including those we announced on 28 May. They are intended to improve the policy and reflect the practical concerns raised in the consultation.
Diana Johnson (Kingston upon Hull North) (Lab)
HMRC produced a document on the impact of the caravan tax, but can the Minister provide enlightenment on the impact of the 5% VAT imposition? There are no figures now on how many jobs will be lost and by how much demand for static caravans will decrease, and I was hoping that the Treasury had worked that out.
Mr Gauke
Clearly there is a substantial difference between 20% VAT and 5% VAT. We set out our estimates in relation to the 20% rate, and some of the concerns that people took from what HMRC set out were, I think, somewhat greater than the reality warranted, because the impact set out and the assumption regarding the reduction in demand related solely to that element to which the change from zero-rated to standard-rated applied. On many caravans that are sold, the VAT is recovered—VAT already applies to an element of the price of a static caravan: that of the fixtures and fittings.
We do not think the impact of the 5% rate is likely to be substantial. In the usual course of business there are tax changes—national insurance contributions and rates are the subject of regular fluctuations—and in many cases the VAT change may well be absorbed. In addition, we have given industry much more time by deciding not to implement the change until April next year. Caravan manufacturers will have the opportunity to sell more caravans in advance of next year’s summer season—the information we have is that spring tends to be the busiest period. The overall impact on the industry is therefore unlikely to be significant.
Before discussing each of the anomalies and saying more about static caravans, I would like to give the House a little bit of history about the VAT system. As I am sure all hon. Members know, the VAT system was introduced in 1973 and amendments and adjustments were being made as early as 1974. The then Labour Government added confectionary, soft drinks, ice cream, potato crisps and certain other savoury snacks—
Mr Speaker
Order. My ears pricked up when the Minister suggested he might furnish the House with what he gently described as “a little bit” of information about VAT. In offering to the House—in a public-spirited fashion, I am sure—a potted history of the value added tax system, I am sure that he will have regard to the new clause that he is presenting.
Mr Gauke
I certainly will, Mr Speaker. I did say I would give a little history and, following your guidance, I will focus on the little.
I hope it helps the House if I explain that, in the almost 40 years in which we have had VAT, there have been changes from time to time. There were changes in the VAT on building alterations in 1982 and 1984, on hot takeaway food in 1984 and on newspaper and magazine advertising in 1985—I could go on, Mr Speaker, but let me move on.
Nigel Mills
My hon. Friend refers to the marketing of such things as sold hot. Will he confirm that a baker who markets something as freshly baked would not fall foul of this provision, given that presumably when something is freshly baked it is hot? I think that the intention is that, say, a freshly baked sausage roll that is cooling down would not be subject to VAT, but if that marketing term were used it could perhaps be caught by the provision.
Mr Gauke
The final details as to what exactly will or will not constitute marketing something as hot will be set out in the HMRC guidance. However, I take on board my hon. Friend’s perfectly reasonable point that something that is presented essentially as fresh, but cooling, is different from something that is clearly presented as hot at the point at which one purchases it.
Stephen Gilbert (St Austell and Newquay) (LD)
I am tempted to ask my hon. Friend whether he knows how many different chocolate eyes a gingerbread man must have to go from being zero-rated to standard-rated. The answer is on HMRC’s website.
On packaging, new schedule 1 uses the wording:
“whether or not the packaging was primarily designed for that purpose”.
There is some ambiguity as to whether a simple paper bag might be caught by that definition. Can the Minister assure us that people will be able to get their pies and pasties in a paper bag from the bakery without their being standard-rated?
Mr Gauke
The purpose of that wording relates to packaging that is specifically designed for the retention of heat. For example, hon. Members will all have experience of a paper bag with a foil interior that is used for such purposes. I do not think that a simple paper bag would fall into that category. In most people’s experience, pasties and suchlike are generally left on shelves rather than contained within bags while in the shop. I hope that that provides some clarification.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
We have arrived at this change after 20-odd years in which, through various legal challenges, we have come to our current conclusions on this aspect of VAT. Can the Minister assure us that we are not facing another 20 years of litigation in order to get these finer details clarified?
Mr Gauke
One can never rule out the fact that some people will be litigious and try to take a creative view of any particular guidance. However, we believe that we have reached the right position after much consultation and discussion with the industry and with hon. Members, many of whom have been very engaged in the matter. I look around the House and see at least two Members who have been in my office to make representations on this point. We believe that we have reached a position that is sustainable and fair, and that is what we are putting to the House in the new schedule. The additional criteria will ensure that hot food will generally be taxed at the standard rate of VAT, but if food that would be zero-rated when cold is bought when it happens to be cooling down, but is not yet cold, it will still be zero-rated provided that it does not meet any of the criteria that I set out. These changes will add further tests to make the relief less open to abuse and provide a level playing field for all businesses supplying their customers with hot food.
Turning to the issue of holiday caravans, which we have touched on briefly, the VAT zero rate was originally intended to apply to the sale of caravans used only for residential purposes. To achieve that objective, the rules drawn up in the 1970s applied tax only to the sale of smaller caravans that could legally be towed on UK roads by a typical family car. However, over the years, an increasing number of large caravans have been used for holiday purposes. Those caravans inadvertently benefit from the VAT zero rate that was intended for residential caravans. That has led to widespread inconsistency in the VAT treatment of the sale of holiday caravans.
Under the current legislation, any caravan wider than 2.55 metres or longer than 7 metres is zero-rated as a residential caravan. The Government propose to replace the definition of a zero-rated caravan based on size with a new definition based on whether the caravan has been designed for residential use. To achieve that, we propose a new test that links the zero-rating with British Standard 3632, which indicates that the caravan has been designed and manufactured for continuous, all-year-round occupation and is therefore suitable for residential accommodation.
We consulted on whether the additional criteria should be added to ensure that the zero rate applies only to caravans intended for residential use. Given the reaction to the proposal, we decided that rather than having a single dividing line between a zero rate of VAT on residential caravans and a rate of 20% on static holiday caravans, static holiday caravans should be subject to VAT at the reduced rate of 5%. Static residential caravans—those that meet BS 3632, or early equivalents in the case of second-hand sales of older caravans—will remain zero-rated, as per the Budget proposal. We do not intend to restrict the zero rate further by adding additional criteria.
Diana Johnson
I wonder whether it is sensible to make decisions on tax policy based on manufacturing standards. Manufacturing standards will change and no doubt get better, so is that a sensible way of operating tax policy?
Mr Gauke
In this particular circumstance, the manufacturing standard provides a better definition or borderline than the size criteria that I set out. It was put to us in the consultation that it would be very easy for manufacturers to do a bit more here and there, and that a static caravan that was once not BS 3632-compliant suddenly would be. When we investigated that, we concluded that it was quite expensive and difficult to meet BS 3632. Genuine residential caravans meet that standard, but non-residential, holiday vans do not. It seems to be an effective borderline. Of course these matters will be kept under review, but we think that this is a sensible conclusion and one that the industry recognises. The evidence that the industry has put to us is that BS 3632 adequately distinguishes between residential caravans and static caravans.
It is worth pointing out that BS 3632 caravans tend to be more expensive and are built to a higher specification. For those reasons, they tend to be used more in the residential market than in the holiday market. It is worth coming back to the intention of the 1970s definition for zero-rated caravans.
We recognise that static holiday caravans fall in a grey area between residential property and temporary holiday accommodation, which have different tax regimes. We have therefore produced the fair compromise of a 5% VAT rate. The argument was sometimes made to us that static holiday caravans should be treated like a second home, on which VAT is not paid. However, council tax is paid on a second home, which is not the case with static holiday caravans. Imposing the council tax regime on static caravan homes would have placed a significant burden on their owners and holiday parks, so we believe that we have made a fair compromise. As I said earlier, to give the industry more time to adjust, the measure will be delayed until 6 April 2013. All the other measures that we are discussing today will proceed as planned on 1 October this year.
Catherine McKinnell
My hon. Friend the Member for Kingston upon Hull North (Diana Johnson) asked about the impact that the current proposals will have on the industry. Will the Minister confirm that the Treasury has not yet calculated that impact?
Mr Gauke
We assessed what the impact would be if VAT was at 20%, and obviously 5% is a quarter of that, so one can draw correlations. Most industries supply VAT-inclusive durable goods at a profit, so it is reasonable to apply VAT in this case. The impact that we originally set out in the tax information and impact note at the time of the Budget will be significantly lessened by the change to the 5% rate, particularly bearing in mind that there is already a full 20% rate on a fair proportion of static caravans because of the durable goods contained within them.
Andrew Percy (Brigg and Goole) (Con)
We can partly assess what the impact will be from what manufacturers themselves have said, which is that they do not expect the 5% rate to have an impact of any great severity on them. However, it is important to recognise that there needs to be stability, so an assurance that the Government will not raise the rate in future would be welcome, as would an undertaking that there will be an assessment of the rate after a year or two to see whether it has had any impact. Generally, the industry has welcomed it.
Mr Gauke
My hon. Friend is right to say that the industry has welcomed the change to our policy. As we would expect, it does not anticipate the 5% rate to have a significant impact on it. As far as the stability of the rate is concerned, the standard wording is to say that all decisions are for the Chancellor and all taxes are kept under review, but I do not anticipate that the Government will return to this issue in any great hurry. I am sure my hon. Friend will be pleased about that. Were we to do so, I have no doubt that he would make strong representations once again. I hope he will take some comfort from that.
Diana Johnson
The National Caravan Council has said that the caravan industry is fragile after the problems that it experienced in 2008. Based on the figures in the KPMG report, there would have been 6,000 job losses if the imposition of the 20% rate had gone ahead. Am I right to assume that with the 5% rate, the Treasury is working on the assumption that the impact will be a quarter of that number, which means 1,500 job losses?
Mr Gauke
Perhaps it will help the hon. Lady if I run through the situation. We have to raise a certain number of taxes, and VAT probably does less harm to the economy than almost any other tax that one could mention, whether it be employers’ national insurance contributions, which reduce the number of jobs, or corporation tax, which reduces investment. There is an issue with any tax.
On this particular policy, however, we are talking about a 5% rate on 80% of the price of a caravan, the other 20% being standard rated already, and on 85% of sales, the other 15% being standard rated already—or rather the purchaser being able to recover input taxes on it. There is then an elasticity of demand, and the 5% rate might result in a 5% reduction in demand, but of course that involves various assumptions and some uncertainty. As my hon. Friend the Member for Brigg and Goole (Andrew Percy) said, however, much of the industry does not think it will have a significant impact.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
I wish to reinforce that point. The site operators, of which, as the Exchequer Secretary knows, there are many in south and west Wales, would also come to the same view—although not ideal, they thoroughly understand the situation and recognise it as one they can manage for the foreseeable future. They much welcome the news that it will not be revisited in the foreseeable future.
Mr Gauke
My hon. Friend is absolutely right. Tax is but one of the various factors that will have an impact on demand, and VAT is but one tax. I shall not dwell on it, Mr Speaker, but I should mention that the Government are putting in place a much more competitive corporation tax regime, which will be to the advantage of caravan manufacturers and many others.
I shall touch briefly on alterations to listed buildings. The reaction to our announced changes to VAT on approved alterations to listed buildings demonstrated the need for the measure on the grounds of simplification alone. The consultation and media coverage have highlighted the huge uncertainty over whether an item of building work is an alteration or a repair. The purpose of the measure is to avoid the need for such discussions by applying the same VAT liability to all alterations, repairs and maintenance. Repairs and maintenance to all buildings, including listed buildings, have always been liable to VAT, and alterations to non-listed buildings have been since 1984. The Budget announcement changes none of that, although a zero rate currently applies to alterations to protected buildings—mostly listed dwellings but also scheduled monuments and listed buildings used for charitable and other residential purposes.
For listed buildings, the borderline between alteration and repair or maintenance is a major source of confusion. The Budget announcement has no impact on the repair and maintenance of listed buildings, which have always been liable to VAT, so there will be no change to the VAT treatment of repairs to thatched roofs or steeples, contrary to what has been reported in the press. The Budget decision also reflects our view that grants can provide a more flexible mechanism than VAT for providing specific financial support for the heritage sector. We have increased the funding for the listed places of worship scheme and broadened its scope so that churches and other listed places of worship can claim grants to offset the impact of VAT on their alterations, repairs and maintenance.
The Budget proposal for alterations to listed buildings includes transitional arrangements, and, following the consultation, we have decided to make these more generous. As with the Budget proposal, the transitional arrangements will cover cases where written contracts had been entered into before Budget day 2012 or, in the case of the first grant of buildings that have been substantially reconstructed, where 10% of the work had been completed before Budget day. We have now agreed that they should also apply where listed building consent had been applied for before the Budget, and the transitional arrangements will be extended so that, where a project qualifies, zero rating can apply until 30 September 2015. These extensions will mean that the zero rate will continue to apply for most alteration projects where work was close to starting at the time of the Budget announcement.
Let me turn to the Budget proposal for self-storage.
Catherine McKinnell
I apologise for interrupting the Minister’s flow, but I want to take him back to listed buildings. He spoke about grants being available to churches for alterations and repairs. However, my understanding is that there is concern that what is proposed is more of a rebate or reclaim of tax spent, rather than a grant that would be available before the alterations and repairs are undertaken. Will he clarify what the position will be?
Mr Gauke
The first point to make is that the increased funding for the listed places of worship scheme was entered into after consultation with the Church of England, which led for other religious groups in this matter, and I understand that they are satisfied with the arrangements that have been reached. The listed places of worship scheme, which the previous Government set up, has been extended to allow recovery costs relating to VAT for both repairs and alterations. It offers church groups, for example, an opportunity to recover the costs they would otherwise incur, but is now much more generously funded, and a much greater proportion of VAT costs will be able to be reclaimed. Indeed, VAT costs should be able to be reclaimed in full for the time being, such is the scale of the support we have made available for the listed places of worship scheme.
It is perhaps worth pointing out that we always made it clear that we would increase the listed places of worship scheme, because of the increased costs that were going to be placed on churches, but after further discussions, with the Church of England in particular, we realised that the amount we had initially said would be adequate was not adequate, and we increased it. However, to deal with the hon. Lady’s specific question, what is proposed is indeed a reclaim arrangement. That is how it will work, and that is how it worked in the last Parliament as well.
Catherine McKinnell
Will the Minister clarify, therefore, whether he has received any expressions of concern about churches, which often rely on fundraising to undertake works, having to raise additional money, which they will then have to reclaim from Her Majesty’s Revenue and Customs, or about the additional burden that this will place on what are already quite stretched resources?
Mr Gauke
I understand the point the hon. Lady raises. The Church is satisfied with the arrangements. She is suggesting that in order to fund a project, a church group would need to fund the cost, plus 20%. That is not how it should work, because the scheme will be sufficiently flexible to ensure that a church group will have the funding in time, so that it does not have to raise an additional 20% or so. I have had considerable conversations with Church representatives on this issue, and I am not getting representations that they are concerned about that point.
Catherine McKinnell
I have just one last question about this issue. Has HMRC undertaken any assessment of the additional bureaucracy and administrative costs that will result from all churches having to engage in the process?
Mr Gauke
The advantage of the way in which we have introduced this measure—through the listed places of worship scheme—is that there is already a mechanism in place for providing grants for repairs. That is something we inherited, and although I cannot say this about everything we inherited, it is quite helpful. We anticipate that there will be a monthly repayment process through the listed places of worship scheme. With regard to the hon. Lady’s concern about cash flow, the main point to make is that the Church is content with the arrangements.
Jim Shannon (Strangford) (DUP)
I thank the Minister for his clarification on that matter. I understand that if churches want to reclaim VAT in such circumstances, such a claim will have to apply to work on the footprint of the original construction. When work is done not only to the old part of the church but also to the new, will it be possible to differentiate a claim so that the work done on the old part and that carried out on the new extension can be treated differently?
Mr Gauke
The arrangements that will be in place following the legislation will mean that repairs and alterations will be chargeable for VAT. However, the listed places of worship scheme will apply to both types of work. It has been the case for some time that repairs involved the payment of VAT. The listed places of worship scheme will enable people to reclaim the VAT costs relating to those repairs. An extension—which is an alteration, rather than a repair—will now have VAT charged to it, but it will be possible to reclaim it through that same scheme. The scheme is now more generously funded than it was before the Budget, which means that a higher proportion of the costs that the churches would have incurred will now be able to be reclaimed. We have taken steps that the churches have widely welcomed.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
I am sorry to have missed the beginning of the Minister’s remarks on this subject. I was actually checking up on certain aspects of a similar issue in my constituency. He said that the Church of England was content with the arrangements, but I hope that he will accept that it is not just the Church of England that is involved. I have a lot of churches, places of worship and listed buildings in my constituency, and I have been contacted by a church that was in the advanced stages of preparing to carry out work that could be seriously affected by the proposals. Will the Minister guarantee that, if the funding for the scheme does not meet the requirements, he will look again at the level of funding provided? Will he also monitor the scheme closely to ensure that no extra bureaucracy is introduced that could delay projects that would otherwise go ahead?
Mr Gauke
The hon. Gentleman is absolutely right to say that not just the Church of England is involved. I said earlier, however, that the Church of England had led on behalf of all the churches on this matter. On his second point, we have made the transitional rules more generous for churches that were close to commencing work at the time of the Budget. I obviously cannot comment on the specific case in his constituency without knowing all the details, but I think that he will find that many cases in which plans had reached an advanced stage will benefit from the transitional rules. He mentioned the funding for the scheme. We believe that this is a generous settlement, but we will of course keep such matters under review. He also mentioned bureaucracy. The scheme is organised by the Department for Culture, Media and Sport, but the Treasury will also take a close interest in it. The two Departments have worked together very effectively on this matter, and we are keen to ensure that the scheme works in an adequate way. I would underline the point that the representations that we have received from the churches suggest that they are happy with the arrangements.
Mr Frank Field (Birkenhead) (Lab)
The Minister says that the two Departments are now working closely together on the scheme. Was there a similarly close working relationship when the Treasury was thinking up the proposal? Did the DCMS know about the proposal and approve it—before it was modified, of course?
Mr Gauke
The right hon. Gentleman is attempting to draw me into dangerous, and perhaps more interesting, territory. All I would say to him is that all decisions are for the Chancellor, although of course the Department for Culture, Media and Sport was involved at an appropriate level.
The Budget proposal for self-storage changed the liability of supplies of facilities for self-storage from exempt to taxable. Following consultation, we planned to avoid creating a competitive advantage for those larger operators with more expensive facilities. These businesses can partially mitigate the impact of the change by using the capital goods scheme to claim back some of the VAT they had previously paid on the purchase of these facilities, whereas smaller businesses with less expensive facilities cannot. We will therefore make a separate provision by statutory instrument to amend the capital goods scheme so that self-storage providers affected by the measure whose individual capital items are worth less than a £250,000 threshold for the scheme can opt into it and have the same input tax recovery benefits as larger providers with capital items that would already qualify for the scheme.
We also propose to ensure that the storage of live animals will remain exempt, as the original proposal might inadvertently have applied VAT to stabling, and we propose to introduce an anti-avoidance provision so that if the storage is used by a third party with the permission of the person who contracts for the storage, it is taxed in the same way as if it were self-storage. This will prevent someone from avoiding taxation by getting a third party to contract with the supplier. We have revised the exclusion for storage facilities provided to persons connected with the supplier so that it is more directly targeted on facilities that are subject to the capital goods scheme. This fine-tuning reflects the benefit of consulting and listening to what respondents say, but it does not undermine the rationale for the measure.
For hairdressers’ chairs, the schedule provides a clearer description of the services typically provided under a chair rental agreement and excludes services that could legitimately be provided with a simple supply of a right over land. The schedule also reflects a change to make it clear that the supply of a whole building to a hairdresser will not become taxable unless it is supplied along with other goods or services.
Finally, regarding the measure to apply VAT to all sports drinks and to clarify the definition of premises for the purposes of determining whether food is consumed on or off the suppliers’ premises, we are proceeding as planned in the Budget.
Nigel Mills
I am grateful to the Minister for giving way to me again. On the sports drink issue, I am sure he will remember the old milk advert suggesting that if children did not drink their milk, they would end up playing for Accrington Stanley rather than Liverpool. The gap between those two teams might be a bit less nowadays, but the idea was that milk improves physical performance. Will my hon. Friend confirm that an ordinary pint of milk will not be caught within these provisions?
Mr Gauke
I confirm that I remember the adverts and that milk will not be standard rated for these purposes. I refer my hon. Friend to the remarks the Chancellor made in respect, I think, of the 2010 Budget—that everyday essentials will not become standard rated. However great the advance of Accrington Stanley and the decline of Liverpool, that will remain the case.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Will the Minister provide a bit more clarity, as I believe the industry has been extremely concerned about the definition of a sports drink as opposed to sports nutrition products? I understand that some drinks would not be caught within the definition, but that some products legitimately used by athletes—by weight-lifting participants, for example—would be. Given the concern about it, further clarification from the Minister would help.
Mr Gauke
The broad point is that sports drinks—such as Lucozade and others—are standard rated and have been for some time, and that sports nutrition drinks marketed as such will now become standard rated. We believe that that is fair. These products can be distinguished from a pint of milk or a milk drink not designed or marketed for sports nutrition purposes. Nothing in the consultation responses calls us to query the rationale for the measures or to amend the draft legislation other than through a minor amendment to tidy up the wording.
Catherine McKinnell
Can the Minister reassure me that his proposal will not lead to the same riddles and illogicalities that arose from the original pasty tax proposal, meaning that the same product marketed or packaged in a different way could end up attracting a different rate of VAT? Will he also tell us what consultations he has had with the industry?
Mr Gauke
We have completed a period of consultation and received a number of representations. In recent days, I have met representatives of GlaxoSmithKline and listened to their concerns. As for the hon. Lady’s first question, when products are aimed at different markets but clearly targeted at particular consumer groups, I think it reasonable to view them in the light of some of the competing products that are aimed at exactly the same market. Our research suggests that most sports drinks are clearly targeted at particular markets, and their VAT treatment will follow from that.
Catherine McKinnell
The Minister has not really explained why the Government should want to target a sports industry or sports-related products for tax purposes when much more unhealthy products might remain tax-free. Will he clarify that?
Mr Gauke
If the Opposition are setting out the principle that whether or not VAT applies should depend on the healthiness or otherwise of the products involved—which brings us back to hot food—we may have to engage in a slightly different debate, and I am not sure that either of us wants to go in that direction.
Catherine McKinnell
I am happy to clarify the fact that I am not setting out any particular policy position on whether sports goods or health products should be targeted for tax. However, the Minister appears to be saying that although the milk that is marketed for general consumption is VAT-free, if it is marketed for sports-related consumption it will be subject to VAT. Will he explain that policy?
Mr Gauke
VAT is charged on all beverages. Typical sports drinks which are consumed primarily to rehydrate or quench thirst are already taxed accordingly at the standard rate, but some sports drinks companies have won court rulings that their products are not beverages because of their nutritional content and because they are not designed to quench thirst. The changes that we are introducing will ensure that all sports drinks are subject to the same VAT treatment whether they are consumed for rehydration or for nutritional purposes, because they are targeted at much the same group, and we think it only right to apply the same approach to consumers. The argument for the zero-rating of food is that it should apply to everyday essentials, but it is difficult to apply that argument to sports and nutritional drinks.
Julie Hilling (Bolton West) (Lab)
I am desperately trying to understand what the Minister is saying will happen to sports and nutrition products. Is he saying that all drinks will now be subject to 20% VAT? What about other nutritional products that are not sold in liquid form?
Mr Gauke
Let me try to be helpful to the hon. Lady—not for the first time during our deliberations, I hope. We propose that drinks aimed at the sports nutrition market will be standard rated. We are not applying the same approach to meal-replacement drinks. There is a clear distinction between them, as one is more closely aligned to food than to sports drinks.
Mr Speaker
I am sure we are all indebted to the Minister for the informative character of his contribution —and, of course, for his oratory.
Catherine McKinnell
I will speak to new clauses 10 and 12, as well as the Government amendments that the Minister has already set out for us in quite some detail today.
The Opposition’s new clause 10 seeks to put a stop to the chaotic farce of ill-thought-through VAT changes being slapped on items from the pasty to the caravan, from haircuts to church alterations—imposed, defended, downgraded and then, in some cases, eventually quietly removed by Ministers during the parliamentary recess, once they realised quite how ridiculous the changes were to begin with, particularly given the current economic climate. We simply ask the Government not to meddle with VAT exemptions until they have carried out a proper assessment and worked out exactly what the impact of any change would be on jobs, living standards and businesses.
We assume that, before imposing a 20% tax, the Government will do their sums, work out who would be affected, consult them and think long and hard about whether such a change was a good idea. Our new clause 12 seeks to reverse the VAT bombshell, which, as I am sure many Members will recall, the Liberal Democrats shouted so loudly about before the election, and before they all subsequently discovered that they actually supported raising the 20% rate after all. That was a surprise all around, even to themselves, I think. In fact, everyone’s surprise about that was surpassed only by the discovery that the Liberal Democrats had also been in favour of £9,000 tuition fees all along.
Labour is clear that higher VAT hits the poor harder than the rich. It drives up the cost of living at a time when people are already feeling the squeeze, and it takes money out of people’s pockets and off the high street at a time when businesses are crying out for spending to drive growth. Our five-point plan for jobs and growth calls for VAT to return to 17.5% on a temporary basis until the economy is strong enough to cope with a rise. That would give £450 a year back to couples with children, to give the economy a boost and to drive growth.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The hon. Lady will of course recall that we had this exact same debate during last year’s Finance Bill, and when the House divided on a Plaid Cymru-Scottish National party motion her party abstained. Can she explain her party’s damascene conversion in tabling the same amendment to this year’s Finance Bill?
Catherine McKinnell
Can the hon. Gentleman clarify whether he is talking about the debate that we had on raising VAT from 17.5 to 20%, because that is what we are addressing today?
Jonathan Edwards
An amendment last year sought to do exactly what the measure she is arguing in favour of would do. That was presented to the House by Plaid Cymru and the SNP, and the Labour party abstained.
Catherine McKinnell
I thank the hon. Gentleman for that clarification. I do not have the full details of the intricacies of that particular debate, but I know that what I am proposing is our policy and we support it. We are going to vote today for this measure to reduce VAT to 17.5%.
Catherine McKinnell
That is an interesting question, coming from a Minister who has just justified a temporary delay of the rise in fuel tax that is apparently to be paid for by underspends that are not quantified by the Government, who are in a much better position to provide detailed costings to the House but cannot for their own tax reductions. We have said all along that the Government’s current policies are costing the taxpayer more. Borrowing is increasing, not reducing—the Government are borrowing £150 billion more over the spending period—and the benefits bill is sending the economy backwards, not forwards.
Catherine McKinnell
I have just answered it. I would be grateful if the Minister could similarly provide detailed costings as to where the Government’s tax reduction for the fuel relief is going to come from. If he were able to do that, we could certainly provide detailed costings of our tax proposal. The point is that the reduction to 17.5% will put money back into people’s pockets, get the economy moving and get growth back into the economy. That will help to bring down borrowing, which is increasing at the moment.
Gavin Williamson (South Staffordshire) (Con)
Can the hon. Lady quantify, for the benefit of those in the Chamber, how much that 2.5% reduction would cost?
Catherine McKinnell
I repeat what I said before: the Government’s current policy of increasing VAT to 20% is taking money out of people’s pockets and is causing a slump in demand. It is very strange that these questions are coming from a Government who are borrowing more than they intended over the spending period, not less.
Stephen Gilbert
The hon. Lady mentioned a figure of about £400 a year. What I missed, and what I am hoping she will be able to clarify, is whether that is per person or per family. If we knew that, we might all be able to do the maths as to how much this measure would cost the Exchequer.
Catherine McKinnell
The figure that the hon. Gentleman is looking for is £450 for a couple with children. It would put money back into their pockets, boost the economy and drive growth. Let us not forget that the Institute for Fiscal Studies has predicted that the Government’s tax credit changes will mean that families will be £511 worse off this year and £1,250 a year worse off by 2015.
Andrew Percy
Who would benefit more from a VAT cut, a family earning just above the minimum wage or a millionaire?
Catherine McKinnell
Clearly, a family would gain more from a VAT cut because they spend much more on VAT as a proportion of their household income. The hon. Gentleman’s indignation at that response demonstrates just how much the Government are out of touch with the reality of the effect of their spending plans on households and household incomes. That would explain why this economy is going backwards rather than forwards under the Government’s plans.
Julie Hilling
Does my hon. Friend find the interventions of Government Members bizarre? The Government inherited a growing economy and we now have a double-dip recession created totally in Downing street by their efforts to have no other aim than driving down the deficit. They are stifling growth and making ordinary families pay the cost of their economic failure.
Catherine McKinnell
I thank my hon. Friend for that intervention and think that the response from Government Members is deeply worrying, as it shows worrying complacency about the direction in which they are taking this country and about the decisions they are making on the economy, which are making things worse, not better.
Our new clause 12 would reverse the VAT rise immediately and prevent it from rising again—I emphasise this point—until the Government can show that our economy is growing strongly again. That is the right move to get our economy back into growth and out of this double-dip recession. I also want to put on the record that we will oppose the Government’s new schedule 1, which would bring in ill-thought-through and unwelcome VAT changes that, despite the concessions, are still wholly unsatisfactory.
Diana Johnson
Does my hon. Friend share my concern that the proposals in schedule 1, especially those on the caravan tax, seem to have taken no account of job losses or of the effect on demand when we are in a double-dip recession and will cost the Exchequer more than it would gain in revenue?
Catherine McKinnell
I thank my hon. Friend for that intervention and her focus on the subject of the debate—that is, these deeply worrying and shambolic VAT changes. We have discussed at some length the new proposals that followed the Government’s concessions and we have had the opportunity to question the Minister on them. I share my hon. Friend’s concern at the failure to provide costings for some of the changes and the lack of consideration of the concern about jobs and growth that our new clauses aim to deal with. Those factors need to be given proper consideration and the Government do not appear to have done their homework.
Nigel Mills
New clause 12 would delay the rise to 20% in VAT until there was strong growth in the economy. Can she help us by defining what strong growth would be? What percentage growth might it be? Or would it be growth based on a properly balanced economy rather than a financial services-led boom?
Catherine McKinnell
I could probably answer the hon. Gentleman’s question with just four words: “out of double-dip recession.”
The Government’s economic credibility, not to mention any reputation for competence they might have had, has taken a massive hit over the VAT changes. They put VAT on pasties and took it away. They put VAT on caravans, then they reduced it to 5%. They put VAT on churches and kept it. Then they invited payment of the charge up front. Churches could claim it back by submitting forms to the Treasury for access to a special fund, which essentially is a big pot of all the money that they paid up front in the first place. What a shambles. Do the Government even know what they are doing any more? They say that their U-turns show that they are listening. When they got it so horrendously wrong, it is good that campaigners were able to get through to them.
I know that hon. Members on both sides of the House have worked hard to get the Government to listen on the subject of the VAT changes, but is it not all too serious to be left to second chances? Do not the people of this country deserve a Government who can get it right first time? People saw in the Budget a true reflection of a Chancellor who tried to sneak through thoughtless changes and got found out.
Let us look at some of the Government’s tax changes. The selection speaks volumes about this Government. They gave a tax cut to banks and to millionaires, but showed no mercy to people who eat pasties. The pasty tax will go down in history as one of the most incompetent Government debacles ever. The attempt to raise the price of pasties and sausage rolls by 20% was claimed to be necessary to close an anomaly, but was universally seen as evidence of an out-of-touch Government trying their luck and grabbing tax on a food that Ministers never eat. The Save Our Savouries campaign run by The Sun pointed out that caviar is still VAT-exempt. Perhaps we can learn something from that. Perhaps the Minister will comment on that in his concluding remarks.
The Prime Minister told us:
“I’m a pasty eater myself. . . I love a hot pasty”,
but he gave himself away when he said that his last pasty was from a shop that turned out not to exist. It was just one gaffe after another. The Chancellor ended up giving evidence to the Treasury Committee on how to tell whether a pasty was hot or cold. Members pointed out that because products would be subject to VAT if they were above ambient temperature when bought, pasties could cost different amounts on summer and winter days.
Stephen Gilbert
Notwithstanding some of the flaky accusations the hon. Lady is making against the Government, can she explain why Labour Members will not join in supporting the Government on new schedule 1, which addresses the concerns that were expressed during the consultation process?
Catherine McKinnell
Our position is that we would like none of the VAT changes to be introduced so by voting against new schedule 1 today, as I have already explained, we vote against all the VAT changes.
As was pointed out, if the pasty counter was near the oven, the ambient temperature would be higher. If it was near the chiller, the ambient temperature may be lower. Greggs’ official consultation document asked whether servers would ultimately have to take the temperature of both the pasty and the surrounding air to determine whether a 20% surcharge should be applied. The proposal was universally and rightly rounded on as ridiculous. Ken McMeikan, the chief executive of Greggs the bakers, which I am proud to say is based in my part of the world, Tyne and Wear, deserves a mention for his excellent campaign against the pasty tax. A massive £30 million was wiped off the value of the company in the week after the Budget as orders were threatened and jobs put at risk. Along with several hundred other bakers, Mr McMeikan delivered a petition to 10 Downing street. He told Ministers:
“we are the voice of half a million people. We embody their resentment at what this Government is trying to impose against the people’s will. . . ordinary hard working people simply do not want this pasty tax.”
I visited a local school breakfast club with Mr McMeikan and I know just how committed Greggs is to local schools and community projects. It did not deserve to have its business torpedoed by Ministers who are too out of touch ever to have eaten one of its products. Eventually the Government backed down on the pasty tax—they had to because that was the only move they could make—but they left behind them a legacy of arrogant disregard for ordinary people that will not quickly be forgotten. My only hope now is that the U-turn that has been made will be made properly. Representatives of Greggs are still raising concerns that the new wording of the regulations on hot food now state that VAT should be charged if it
“is provided…in packaging that retains heat (whether or not the packaging was primarily designed for that purpose)”.
The hon. Member for St Austell and Newquay (Stephen Gilbert) raised the matter with the Minister, but his answer did not provide certainty, so I would be grateful if he would clarify in his reply exactly how the Government will ensure certainty for this slightly battered production market.
Any sort of paper bag or wrapping could inadvertently help to retain heat, so there is a danger that pasties could still be caught in the regulations and that this whole incompetent mess of U-turns and retractions will all have been for nothing. I hope that the Government will take the opportunity to clarify that point and reassure Greggs and other bakers up and down the country that supplying customers with paper napkins, for example, which could inadvertently slow down the cooling process, will not result in an extra 20% charge for their customers.
Greggs would like confirmation, as I am sure would other bakers across the country, on whether taking trays of baked products from the oven and stacking them in counters that have no other means of heating or heat retention would be considered to be slowing down the cooling process. The practice is used by bakers to minimise food handling and the number of trays in use, but there are genuine concerns in the industry that it could constitute slowing down the cooling process and so incur a VAT charge.
The Government’s second U-turn was on their attempt to charge 20% VAT on static caravans—[Interruption.] I am asked from a sedentary position “Are you only on the second U-turn?” Yes, I am. I venture to guess that caravan holidays, like pasties, are not familiar to most members of the Cabinet. They saw an opportunity to take some extra tax and went ahead without considering the impact on individuals, jobs, growth or tourism. Because of the huge campaign mounted against the policy—I pay tribute to Members on both sides of the House for that, particularly hon. Members who represent the Hull constituencies, who are particularly concerned about the impact on jobs in their area—the Government backed down, but they are still trying to impose the 5% charge, as the Minister set out in more detail earlier.
The Treasury’s own figures show that 20% VAT on static caravans would result in a 30% fall in demand. The industry estimates that it would result in 1,000 job losses in manufacturing, excluding the supply chain. We know that at least one factory in the supply chain, Willerby Holiday Homes, put all 700 of its staff on a 90-day consultation as a direct result of the Government’s announcement that it would levy 20% VAT on its product. The National Caravan Council states that 4,300 jobs might be lost in holiday parks, plus another 1,500 jobs from associated suppliers.
I appreciate that the Minister has sought to give some reassurances on the change and indicated that the Government are listening, to the extent of reducing the VAT rate to 5%. However, he has made it clear today that no actual calculation has been made on the potential impact of the 5% charge, which is of great concern. Even the reduced charge of 5% will mean either that caravan holidays will become more expensive for holidaymakers or that holiday parks will be forced to absorb losses and job cuts. At a time when consumers are already severely squeezed, many people will simply have to go elsewhere. In turn, the whole economy of holiday towns would be hit, with shops, pubs and attractions losing their main business. Is that really what the Government intended?
Catherine McKinnell
I would be delighted if the hon. Gentleman would answer.
Mr Stuart
I am grateful to the hon. Lady, who is being most generous in giving way. I ask her to note that the National Caravan Council, the industry body, and the British Holiday and Home Parks Association have welcomed the 5% rate. They feel that the Government did listen and that the industry can take on that burden as part of the whole national effort to tackle the vast deficit her party left behind when it left government.
Catherine McKinnell
I am pleased that the industry is “delighted” with a 5% increase in VAT on its products. That is surprising in the circumstances.
Catherine McKinnell
I give way to my hon. Friend the Member for Kingston upon Hull North (Diana Johnson), who wanted to intervene earlier.
Diana Johnson
I would not say that the industry is “delighted.” I think that it accepts the measure, on the basis that it was very concerned about the 20% figure. My concern as a constituency MP, with 90% of static caravans being built in Hull and the surrounding area, is that there are 43.6 people chasing every vacancy in my constituency. That is the highest figure in the UK, and any job losses are going to be very difficult for my constituents, so that is why I am pressing the Minister to be very clear about the number of job losses that the 5% imposition will bring about. Will the shadow Minister comment on my concerns?
Catherine McKinnell
I thank my hon. Friend for that rational and considered intervention and appreciate that the industry is willing to accept the change, as it is much easier to bear than the original suggestion of 20%, but that is the point I seek to make. The Minister in his opening remarks confirmed that no assessment has been made of the impact of the 5% increase on the industry, and that is gravely concerning, because, as the hon. Member for Brigg and Goole (Andrew Percy) suggested, the industry needs certainty, security and stability to create the jobs that my hon. Friend is so concerned about.
The fact that the proposal is being put in place without a proper assessment of what is a lesser impact but still one of 5% is deeply concerning, because the last thing the industry needs is for the measure to be reviewed 12 months down the line, be seen to have had a detrimental impact, and for it to have to go through the whole process all over again.
Brandon Lewis
I thank the hon. Lady for her generosity in giving way. In Great Yarmouth, I represent a £500-million-a-year tourism industry, with about 50% of our bed space in static caravans. Our industry was concerned, but its message to me is that it thinks the 5% rate is not only fair, but better than it had hoped for.
The industry understands the arguments that everyone has to do their bit and that there has been an anomaly for a long time, and feels that the measure is manageable, will not have an impact on its business and is fair. We are very pleased, in fact, that we finally have a Government who say that they will consult and listen, do so and come back with exactly what the industry wants.
Catherine McKinnell
The only point I can make is that the industry suffered the serious blow of having a 20% tax announced. That has been reduced to 5%, which it will obviously welcome, but we propose to remove the VAT changes altogether, because at this particular time the last thing that any industry needs, but particularly the holiday, static caravan and manufacturing industries, is a VAT hike. We need to invest in jobs and growth to get the economy moving, to get out of the double-dip recession that we are in and to get back into growth.
Sheila Gilmore (Edinburgh East) (Lab)
Does my hon. Friend share my astonishment at the previous intervention? If the proposal to impose that VAT rate had never been made, there would have been no need for consultation or listening—and it would have been far better to have consulted first. What happened to the notion of a proper pre-Budget report, where suggestions could have been made in general terms and then we could have had a consultation? We all sat here listening to a very strong defence of the original proposals only a few months ago.
Catherine McKinnell
My hon. Friend speaks a lot of sense and makes her point very forcefully. The Government seem to have tax-grabbed first and consulted later. They have sneaked through changes—the ones they have got away with, they have pocketed and the ones they have been seriously challenged on, particularly by their own Back Benchers, they have had to relent on. But that is no way to conduct tax policy or business.
Julie Hilling
Is my hon. Friend as confused as I am by Government Members saying that their local manufacturers were asking for a 5% increase and demanding to be charged VAT? That is what it sounds like.
Catherine McKinnell
I made that very point when I expressed surprise at the impression being given that the static caravan industry warmly embraces and welcomes the change. A more rational description is that the industry accepts it as a much better deal than the one they were originally given by the Government—a slapped-on VAT increase to 20%, which would certainly have had an impact on jobs and compounded the lack of growth in the economy.
Once again, the change was announced during a parliamentary recess, the same day as the U-turn on the dreaded pasty tax. As Parliament was not sitting, there was no opportunity for the House to scrutinise the details of the Government’s plan—details such as where the money to pay for the change of heart would come from. The Government have yet to provide an answer to that question. We know the money will come from “underspends” in unidentified Departments, but we do not know where those underspends have occurred, whether they were planned, or why the coalition’s No. 1 priority of deficit reduction is no longer the default destination. The two measures—pasties and caravans—were supposed to raise £70 million, which is now unaccounted for. I hope that someone somewhere knows how to make up those sums. Many ordinary people consider £70 million quite a big hole to fill. How do Government plan to deal with it?
The third U-turn is the Government’s partial reversal on the so-called church tax. Ministers claimed that, in future, VAT would be payable on alterations to listed buildings, which are currently exempt. Of course, as the Government acknowledged today, half the listed buildings in this country are owned by the Church of England, which pointed out immediately that the change would cost it at least £20 million. Many churches collect donations from their congregation to pay for necessary alterations—often basic alterations, such as to provide a toilet and to ensure that the whole community can access the building. Without greater reassurances, the Church told the Government, the extra 20% payable would result in projects already scheduled having to be cancelled, and many of those projects were part of initiatives that churches had been encouraged to undertake through the big society.
The Government did not agree to a U-turn as such. I imagine they felt a bit embarrassed by that point, although that did not stop them performing another U-turn just days later—again, when Parliament was not sitting—on the charity tax. Instead, when they realised how hard churches would be hit, they agreed to give an extra £30 million to the listed places of worship scheme, so that churches could claim the money back in grants.
It is welcome that churches will no longer be hit with the huge extra cost of VAT, but my understanding of the Exchequer Secretary’s comments today is that churches will be asked to pay the VAT up front, then claim it back. They will have to raise the money to pay for the work they need to carry out, then wait for months to—hopefully—get it back. The hon. Gentleman says that measures have been put in place to make sure that churches do not suffer cash-flow problems, but I am not clear how much reassurance that provides. If he gives more detail when he winds up the debate, I am sure the House will be grateful. For a Government who say that they are waging war against red tape, it seems a bureaucratic process to put in place. My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) raised concerns not just about the bureaucracy for HMRC and the Treasury in processing the payments and rebates, but the bureaucracy for the churches, which could well do without it.
I also understand that, contrary to what the Minister said about the Church of England’s being entirely happy with the proposal, many churches have expressed concern that the uncertainty would put them off accessing the scheme and relying on the VAT rebate. Churches could be deterred from undertaking necessary alterations and repairs. The other concern is that the measure does not help non-religious listed buildings, which still have to pay the 20% tax. Many people will choose not to go ahead with their projects. Among other things, that will hit jobs in the construction industry, and we all know how hard that has been hit by the downturn and the double-dip recession. It is an extra setback for that industry that listed building projects will not go ahead because of the 20% increase in cost.
We have seen at least partial U-turns on the pasty, the caravan and the church, but the Government have refused to budge on two issues. Sports nutrition drinks are still being subjected to a 20% price hike while sugary milkshakes will still be VAT exempt. The Government want to put VAT on sports drinks that are advertised or marketed
“as products designed to enhance physical performance”
or “accelerate recovery after exercise”.
The Minister sought to provide clarification for the Opposition, but I, for one, am none the wiser about the rationale behind the policy. No rationale has been offered for why a sports drink designed to provide and facilitate exercise and fitness should be targeted for VAT while drinks laden with refined sugars and fats are still exempt. Moreover, as my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) said earlier, the industry has raised serious concerns about whether milk and milk products will unintentionally be caught up in the ruling. From the Minister’s comments today, I wonder whether that is unintentional at all.
We all remember the “Make mine milk” ads in which well known sportspeople such as Denise Lewis promoted the benefits of milk for sport. If milk has been marketed as something that enhances physical performance and sporting prowess, will the Government levy VAT on it? My understanding from the Government’s comments today is that they would. There is no indication about how the anomaly would be resolved by the Government or whether they even have an issue. For that reason, we will vote against this shambolic VAT reform.
The final issue on which we have concerns is the VAT levied on hairdressers’ chairs. The Chancellor wants self-employed hairdressers to pay 20% VAT on hiring a chair in a salon. With the cost of chair hire up, hairdressers will have to choose between passing the cost on to their customers or absorbing it themselves. Industry data show that that will disproportionately hit small businesses and their customers, especially women between 16 and 44 years old. Why do the Government think that a good idea?
If the measure is just another routine closing of an anomaly, have the Government considered who they are hitting with it and why? I am truly concerned that the measure looks as if it was worked out on the back of an envelope, without any consideration of how many jobs it might cost. Our amendment would force the Government to consider carefully the impact on jobs and growth before imposing VAT on any previously exempt products. It is not clear that they have given any thought to the change that I have mentioned.
Steve Rotheram (Liverpool, Walton) (Lab)
On haircuts, I wonder whether the increase in VAT in the case of hairdressers will precipitate a return to hairstyles such as the one that I currently sport.
Catherine McKinnell
My hon. Friend read my mind as I gazed across the Chamber.
Giving a tax cut to millionaires and the banks but making it harder for self-employed women and their customers reveals a Government who are, once again, truly out of touch with ordinary people’s lives. New clause 12 seeks to go further on VAT and create a temporary reduction in the rate from 20% to 17.5%. The Liberal Democrats ran for election on a manifesto that warned of the dangers of a VAT rise with their pledge to protect constituents from the “VAT bombshell” threatened by the Conservatives. The Deputy Prime Minister pledged:
“We will not have to raise VAT to deliver our promises…Let me repeat that: Our plans do not require a rise in VAT.”
Why were they so against VAT? Perhaps it is because the evidence clearly shows that people on lower incomes are hit proportionately much harder than the rich by VAT because they tend to spend more of their income rather than save and invest it. Government Members will claim that, looking at different measures, more VAT is paid by the rich—the hon. Member for Brigg and Goole (Andrew Percy) fell into that trap—but there is absolutely no doubt about the fact that VAT is regressive and that those on lower incomes spend a higher proportion of their income on it than those on higher incomes. Even the Prime Minister agrees. In 2001, he said:
“If you look at the effect...as compared with people’s income then, yes, it’s regressive”.
Jake Berry (Rossendale and Darwen) (Con)
Does the hon. Lady concur that those on lower incomes pay a higher proportion of their income on fuel, and will she therefore welcome the postponement of the 3p increase in fuel duty?
Catherine McKinnell
I not only welcome it but point out that we proposed it, and the Chancellor shortly followed us on the same day. Our proposal to bring about an immediate reduction in VAT to 17.5% would deliver that 3p fuel duty reduction for drivers and put money in their pockets not only in respect of fuel but right across the board. It is a measure that is absolutely required to turn our economy round from the double-dip recession we are in.
Stephen Gilbert
Is not the real VAT bombshell the fact that the hon. Lady does not know how much this policy would cost Her Majesty’s Treasury? In the hour or so for which she has been talking, has she had any inspiration from colleagues?
Catherine McKinnell
As I said, it is the Government’s job to work out the cost of any tax changes or spending commitments, and they have not even been able to provide answers as regards their own fuel duty reduction.
Mr Gauke
As the hon. Lady says that it is the Government’s job, let me tell her—I do not want to keep her in suspense —that her policy of reducing VAT to 17.5% would cost £12 billion to £13 billion a year. Does she dispute that number, and can she explain how she is going to pay for it?
Catherine McKinnell
If our policy turns the trajectory of the economy around from one of recession to one of growth, then clearly it will pay for itself and bring down the benefits bill, which is currently going up.
John Mann (Bassetlaw) (Lab)
I would like clarity on what the Opposition’s policy is. [Interruption.] I can hardly hear myself think. Is it our policy that VAT will be permanently reduced to 17.5% or that the reduction will last for 12 months and then it will go back up to 20%?
Catherine McKinnell
We are suggesting—we hope that the Government will jump on our way of thinking, as they did with the delay in the rise in fuel duty—an immediate reduction to 17.5% until we get the economy back into growth.
Catherine McKinnell
It all depends on how long the Government take to get the economy back into growth. The reaction of Government Members seems strange, when they are driving the economy into recession rather than into growth.
Andrew Percy
The hon. Lady will be aware that the temporary reduction under the last Government had a significant cost impact on a number of businesses. If the economy suddenly went into growth in the quarter following the reduction, would she expect businesses to take the burden of the costs of implementing the reduction and then unimplementing it in two successive quarters?
Catherine McKinnell
The hon. Gentleman is getting ahead of himself, given that we are in a double-dip recession, that growth has stalled, that all the predictions of the Office for Budget Responsibility are being revised down day on day, and that borrowing is going up. Everybody agrees that we need demand in the economy. The way of generating demand in the economy is to put money back into people’s pockets. I remind hon. Members that before the increase in VAT, the economy was on a trajectory of growth. That was before this Government took over and brought in their disastrous austerity policies.
Sheila Gilmore
Does my hon. Friend agree that the Minister’s figures assume that when VAT rises or falls, it has no impact on people’s expenditure? The thrust of what we have been saying, not just in response to the Budget, but for several months, is that the rise in VAT has dampened demand. The tax-take in May, for example, was down by 7%. Far from a static amount of money being drawn in, a VAT reduction would increase demand and, ultimately, increase the tax-take.
Catherine McKinnell
I thank my hon. Friend for her characteristically rational contribution. I would add that the recent Institute for Fiscal Studies report estimated that the Government’s tax and benefit reforms will make a couple with children £511 worse off in this financial year and £1,250 a year worse off by 2015. It does not take an economic genius to work out what that does to demand in the economy.
The Prime Minister admits that a 2.5% increase in VAT hits the poorest hardest, so what happened to, “We’re all in this together”? I would like to hear an answer on that. As well as hitting poor people the hardest, higher VAT is hitting the economy at a time when we can least afford it. As we have discussed, the Chancellor unveiled a fuel duty cut last week, using mystery funding sources. Dropping VAT could have taken 3p a litre off petrol immediately. Across the board, a temporary cut in VAT would stimulate growth and get the economy moving again. Putting money back into people’s pockets is the only way to support businesses and create jobs—the very things that the Chancellor left out of his mangled Budget. That is why a temporary return to 17.5% is part of Labour’s five-point plan for jobs and growth.
John Mann
Is not another way to stimulate the economy to spend the money on employing the police officers who have been sacked and on reversing the ambulance cuts, the fire service cuts, the Army cuts and other cuts? We could use the £50 billion that a VAT cut would equate to over a Parliament to employ public servants, rather than to cut taxes.
Catherine McKinnell
My hon. Friend makes a valid point. Since June 2011 we have lost more than 100,000 public sector jobs, which means that there have been redundancies at a rate of one a minute since the Government took office. Yet the private sector, which the Prime Minister anticipated would flood in to create jobs, has simply not delivered. It has created only half that number of jobs, leaving the other half of those people on the dole and claiming benefits. That is pushing Government borrowing up, not down.
The measures that we suggest would boost the economy and people’s spending power and ensure that we are not saddled with taxes that no one can afford. We want to see the economy moving into growth again.
Sarah Newton (Truro and Falmouth) (Con)
When I came into the Chamber to listen to the opening part of this debate, I did not anticipate speaking. However, I am very pleased to have caught your eye, Mr Deputy Speaker, because I felt utterly compelled to join in, notwithstanding my current incapacity. It has been an illuminating debate.
I listened to the shadow Minister’s speech and the interventions of her colleagues, and I find it staggering that they are not going to listen to the submissions of my constituents on the pasty tax, caravans or fundraising for places of worship, on which many people work so hard. Oh no—their opinions do not count for anything to the Opposition. They are not going to listen to all the representations that have led to the Government’s sensible proposals. The listening exercise to improve and amend the Budget has led to proposals that respond directly to all the concerns expressed by my constituents, and I dare say by the constituents of a great number of colleagues.
Julie Hilling
I am really very confused. My constituents have been saying exactly the same thing, which is why Labour Members have been arguing against this dreadful Budget in the Chamber, the Public Bill Committee and wherever we can. We have said that the Government should not put VAT on pasties, caravans, hairdressers’ chairs and so on. I agree with the hon. Lady about that. Thank heavens, the Government listened to us a bit in the end, but sadly not enough.
Sarah Newton
It is surprising to me that, as far as we are aware from the comments of the shadow Minister, the Opposition will be voting against the very improvements that the hon. Lady says they have been working so hard to achieve. I do not doubt her good intentions or that she has been working very hard to represent her constituents, but if she was truly doing so, she would walk through the Lobby with the Government this evening, because they have listened thoroughly.
Let us take the pasty tax, for example. It will not surprise Members that I am keen to talk about pasties, because not only am I a big fan and regular consumer of them, but I represent Cornwall, where they are an incredibly important industry. When I listened to the Budget some months ago, it was clear to me that the Government were doing exactly the right thing. They had seen some dreadful anomalies in VAT on food that had led to huge unfairness. Independent owners of fish and chip shops in my constituency had to pay VAT, but other outlets selling hot takeaway foods did not. The Government’s attempt to sort out VAT struck me as perfectly reasonable.
We all know that what is really holding back growth in our economy is that for too long, small businesses have been massively overburdened by a dreadfully confused and muddled-up tax code. Under the last Government, the tax code multiplied and multiplied. We would probably have to use a wheelbarrow to carry all its volumes into the Chamber. The current Government are making a very reasonable effort to simplify some of the taxes that are such a burden on businesses in my constituency. They have listened carefully to the representations that have been made and are now going to create a level playing field for all people producing and selling takeaway food. That will benefit independent bakers in small businesses throughout Cornwall who bake pasties.
Mr Graham Stuart
As my hon. Friend is aware, the Government inherited the largest overspend and deficit in the developed world, so it was right for them to probe every possible area of tax revenue. It was also right for them to listen to people when representations were made and to respect parliamentary democracy. Does she agree that if the Labour party had listened to Back Benchers when it was in power, we would not have got into the mess that we are in and we would not have the vast deficit that the Government are having so valiantly to fight to reduce?
Sarah Newton
My hon. Friend makes his point as passionately and persuasively as always, and he is absolutely right.
To return to pasties—one of my favourite subjects—when I listened to the Budget, it was clear to me that there was a problem with the proposals as they stood. Some of the architects of those proposals clearly did not understand how pasties are baked in Cornwall. Within hours I spoke to my hon. Friend the Exchequer Secretary, who clearly understood the problem that I described to him. He said the Government realised that there could be some complications and unforeseen consequences, hence the reason for their consultation. Colleagues from around the country responded positively to that consultation, and their concerns have now been met.
I am staggered by what the Opposition wish to inflict on our country by not supporting the Government tonight. In the nightmarish scenario that they won the Division, we would return to the situation in which the Treasury wastes hundreds of thousands of pounds of taxpayers’ money every year having to fight litigation cases against multi-million-pound companies that are trying to avoid paying VAT. The extremely complicated tax code that was developed under Labour over its 13 years was a lawyers charter. I have nothing against lawyers—I am married to a very good lawyer—but that ever-increasing and complicated tax code means that, not unreasonably, companies try to avoid paying tax. That causes Her Majesty’s Revenue and Customs to be tied up in court, spending hundreds of thousands of pounds on lawyers fees that it could be spending in a far better way.
It beggars belief, but what the Labour party is saying tonight is, “We are on the side of companies trying to avoid tax. We are on the side of lawyers who are constantly taking HMRC to court.” What a dreadful waste of taxpayers’ money. The Government are trying to have a fair and simple tax system that everybody in the country can understand, so that we are not caught out by those who avoid taxation.
Sheila Gilmore
I wonder whether the hon. Lady has noticed the size of the Bill. It is apparently one of the biggest Finance Bills ever, which suggests that the tax code is being added to all the time. Would it not have been easier for the Government never to have made their VAT proposal in the first place?
Sarah Newton
No. As I have said—very clearly, I hope—the Government’s change will bring about a lot of clarity and be beneficial. For example, new schedule 1 clarifies what constitutes takeaway food and hot food. I accept the point that my hon. Friend the Exchequer Secretary made that we can never be 100% certain that companies will not litigate to try to wriggle their way out of paying their taxes, but the added clarity will be welcome to pasty makers. They will understand the situation that applies to pasties that are made and consumed in the way that they are in Cornwall.
For the benefit of Opposition Members who do not seem to understand what master bakers do in pasty shops in Cornwall, I will explain that each day they get up very early to make high-quality bread, cakes and buns as well as pasties. They cook them on their premises so that they are beautiful and freshly made. Throughout the course of the day, anybody can buy freshly made bread, cakes, buns, scones or pasties. Thanks to the clarification in the new schedule, we can continue doing that in the certain knowledge that we will not pay VAT. Labour Members, however, who, feeling peckish on their way home tonight, decide to pop into the West Cornwall Pasty store, perhaps at the station, will, as in every other takeaway food outlet at the station, quite rightly pay VAT, because those pasties are deliberately kept warm all day long alongside other takeaway food. It is only right and proper, therefore, that they pay VAT.
Jake Berry
Of course, it was not just a pasty tax; it would also have affected the fantastic Cissy Greens pie shop in Haslingden. We are dancing from the River Ogden to the River Irwell in celebration of the fact that we can enjoy our Cissy Greens pies without VAT.
Sarah Newton
My hon. Friend makes a good point. This affects master bakers, whether of pork pies, sausage rolls, steak pies or chicken pies, the length and breadth of the country. Those self-employed, highly skilled master craftsmen can carry on producing their much-loved regional foods, which we enjoy all over the country and which make our country so distinct, as we celebrate our rich and varied food heritage. I hope that that addresses any misapprehensions among Labour Members about the benefits of the pasty tax.
Much has been made of the Government’s U-turns. I welcome having a Government who, when they launch a consultation, as they did after the Budget, actually listen to representations on a range of measures, and I am pleased that the Chancellor is driving our economy in the right direction. We have to reduce our deficit and get our expenditure under control. The hard-working families and small businesses in my constituency understand that, and frankly will feel let down by this retread idea of a 2.5% reduction in VAT—the only proposal we hear from Opposition Members. But, of course, we do not know whether that will be their proposal tomorrow, next week or next month, because the shadow Minister could only say that it was the proposal today. If that is their only proposal and if it is only for today, how can families in my constituency have any confidence that they would drive the economy in a better direction? I am confident that the Chancellor is on the right road, and I am certain that focusing on the Budget, making sensible changes along the way, is the right way to go.
John Mann
Does the hon. Lady agree that it is good news that the Chancellor listened to me on pasties, on caravans—after I invited him on holiday with the Prime Minister and me in a caravan—and on petrol? Does she also agree that it would be even better news if he also listened to me on churches and VAT on listed buildings?
Sarah Newton
I am glad that the hon. Gentleman makes that intervention, because I was going to talk about that issue. First, however, I would like to make a little more progress on the analogy I was drawing to the House’s attention. We all get behind the wheel of a car from time to time—sadly, at the moment, I cannot, but I hope to be back there before too long—and when on a journey we are often certain of our destination, but sometimes we are not as good navigators as we would like and have to put on our sat-nav to help us, and sometimes we get an instruction from that irritating person on the sat-nav saying, “As soon as the road ahead is safe and permits, please do a U-turn.” At that point, do we throw up our hands in horror and say, “Oh, it’s just appalling to have to make a U-turn”, or do we think, sensibly, that to reach our destination in a safe and timely way it is appropriate to make the occasional U-turn? I have no problem with the Government making U-turns if it gets us to our destination in a timely and safe way.
The hon. Gentleman asked me about the changes to listed buildings. Having the beautiful Truro cathedral in my constituency, I was concerned about the proposals and immediately consulted the diocese and a wide range of churches in my constituency about their implications. I brought all that information to the Chancellor’s attention, as, I am sure, did Members across the House, and I was satisfied with his response. The Second Church Estates Commissioner, my hon. Friend the hon. Member for Banbury (Sir Tony Baldry), is to be congratulated on how he co-ordinated all our efforts and on the work he has done with the Church Commissioners and the Treasury. Their solution is both practical and actionable, and has met with the perfect satisfaction of churches in my constituency.
I know that many Members wish to join in the debate, so I shall conclude. It is immensely important that we have a Government who listen, who consult on proposals and who then act on them. Whether on fuel duty, pasty taxes, caravan taxes or fuel taxes, my constituents are immensely pleased and relieved that the Government have listened and helped hard-working people and small businesses during these difficult times.
Mr Frank Field
I want to speak to new clause 3, although it might first be appropriate to pick up on one theme from the speech by the hon. Member for Truro and Falmouth (Sarah Newton). She said she was pleased that the Chancellor was creating a level playing field. Well, if there is any area of the country where it would be difficult to create level playing fields, it would be in Truro. But anyway, I am pleased that she is satisfied.
I wish to make a plea for a level playing field for young people in my constituency and other constituencies who go to sixth-form colleges, and I wish to compare their tax position with that of young people undertaking sixth-form studies in school. In a recent Westminster Hall debate, led by my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), we discussed how poorer young people in sixth-form colleges or similar establishments were discriminated against in respect of free school dinners compared with young people in school. Here is yet another example of discrimination against young people, depending on the institution they attend.
I plead again with the Government, in respect of VAT, to treat sixth-form colleges as we treat schools with sixth forms. In Birkenhead, most pupils have no option but to attend sixth-form college if they want to undertake post-16 studies because the sixth forms of most of the schools were pooled together in that one enterprise. The VAT on services that the college purchases, but which schools do not pay, adds £300,000 to the college budget—a reduction of 4% in that budget.
My plea to the Chancellor will be brief and simple;I will not go up and down the country lanes, visiting various constituents, bakers and so on. He hoped to create a level playing field for taxation for sixth-form colleges and sixth forms in schools by the end of the Parliament. That was a noble objective, but the 2015 election, as it draws ever nearer, will certainly concentrate Government Members’ minds not only on small U-turns but perhaps on more major ones.
The Institute for Fiscal Studies undertook an analysis of the Government’s public expenditure changes which showed that the part of the education system that will be most handicapped and suffer the largest cuts by 2015 will be colleges of further education. Indeed, they will experience a 20% real-terms cut in their budgets by 2015. I know that it would not be in order to ask the Minister to respond to that, but given that the Government’s policies are making the playing field even more unequal for sixth-form colleges, compared with the treatment of sixth forms in schools, let me make a plea for him to concede that point and exempt sixth-form colleges, whose students are of an age that if they were not at college, they would be in school.
Bob Stewart (Beckenham) (Con)
I do not understand why this has ever occurred. How come a sixth-form college is not treated exactly the same as a sixth form in a normal school? They may be in different areas, but they are essentially the same kids. I do not understand it, so perhaps the right hon. Gentleman—my friend, because I have known him a very long time—can tell me the answer.
Andrew Percy
It is a pleasure to follow the right hon. Member for Birkenhead (Mr Field), who made an interesting contribution, on an issue that I was not planning to speak about, but which I hope will be pursued if his new clause is not accepted this evening.
This has been an interesting debate. I am only sorry that the Minister’s attempt to take us through every VAT change since 1973 was cut somewhat short. We got to about 1983, which was probably as far as most of us needed to get, but it was interesting none the less. The debate has also been interesting because of the number of food products that have been mentioned. At one point, when we were talking about rotisserie chickens, pasties and sausage rolls, I thought it was lunchtime at the Percy house, but apparently not. I am proud to say that I eat pasties: I ate my last one from Fuller’s bakery on the precinct in Goole just the other day. I cannot say that I partake of sports drinks, so I will not take much of an interest in that part of the debate, but I am certainly pleased that the Government have seen sense on pasties. I am not sure that I necessarily share the full analysis offered by my hon. Friend the Member for Truro and Falmouth (Sarah Newton) about the seamless transition of policy. I do not think it has necessarily been the Government’s finest hour, but at least at the end of the process we have a system with which we can all live.
I want to make a few brief comments about the caravan tax. It is a pleasure to see my hon. Friend the Member for Beverley and Holderness (Mr Stuart), who assisted with—[Interruption]—sorry, who led the campaign. I chide him with an in-joke. He led the campaign very ably and got us all together. He deserves credit for that, and I am pleased to see him here for this debate. The impact that the measure would have had is well documented in the various debates we have had. The Minister knows from the meetings we had with him that we were very concerned, particularly in our part of the world, where the vast majority of the relevant manufacturing is and where a lot of the supply chain is based, including, in my constituency in Brigg, a number of companies that were affected. I also have some of the parks that would have been affected in my constituency. I am pleased to see my hon. Friend the Member for Cleethorpes (Martin Vickers), who would have similarly been greatly affected, from the point of view of the park owners, had the measure gone forward. It is therefore incredibly important that we have reached the position we have.
Some genuine points have been made about the consultation. One needs only to do a Google search to find headline after headline, in both local and national papers, about the state in which the industry has found itself in recent years. Indeed, it had to go to the previous Government looking for support, although I am not sure that a great deal was forthcoming. We are talking about an industry that has struggled considerably over the past few years, so quite who came up with the idea of slapping on 20% VAT, thereby affecting sales by up to 30%, I do not know, and I hope that some lessons will be learned. I prefer to see what the Government have done not as a U-turn, however. There was a US politician who used to describe a U-turn as a recalibration of policy, so I welcome this recalibration of policy. It is a shame that the previous Government did not do that on more occasions, as my hon. Friend the Member for Beverley and Holderness mentioned.
Mr Stuart
I am grateful to my hon. Friend. Now that a 5% VAT rate has been introduced, does he agree that any Government, whether the coalition or a future Labour Government, would be ill-advised to return to this issue with any form of increase? The level of 5% can be accepted. People do not pay council tax on these caravans. We are talking about a compromise, but one that can last, that the industry can live with and that the political establishment should live with. Indeed, no Government should ever think of returning to the issue at any time while even someone as young as my hon. Friend is in this House.
Andrew Percy
I am being abolished at the next election anyway, so there are only three years in which the Government might have to worry about me. However, they would frankly be stupid—if that is not unparliamentary language—to look at the issue again. I think any Government will take note of the campaign.
The final assurance I seek from the Minister is that we will continue to be conscious that there will still be a potential impact, as was mentioned in interventions by the hon. Member for Kingston upon Hull North (Diana Johnson), who also fought valiantly. I hope that the Treasury will continue to monitor that.
In the final minute, I want quickly to say something about the Opposition’s VAT cut for millionaires, which I think is what they are proposing. Whereas we on this side of the House have decided to target tax changes at those struggling the most—for example, by raising the personal allowance and taking some of the poorest out of tax altogether—the Opposition policy is to issue a massive VAT cut for high earners and millionaires, and just to pepper money around. The Opposition are not quite sure how much—they have not told us, although we think the figure might be £12 billion—and they do not know for how long the measure would be in place. What a policy! The interesting thing we have learnt is that we now know that the Opposition’s official policy is to support, ultimately, VAT at 20%, because they have said that the measure would be temporary, meaning that they have therefore definitely agreed the 20% rate.
Andrew Percy
No, I am not going to give way, because other people want to speak.
The shadow Minister talked a lot about VAT consultation and the Government’s failure, she said, to consult on the changes. I just wonder whether she has consulted very widely on her proposal to reduce the rate temporarily to 17.5%, because I suspect not.
Diana Johnson
It is a real pleasure to follow the hon. Member for Brigg and Goole (Andrew Percy), who, with characteristic humility, accepted that bringing forward these VAT proposals was not the Government’s finest hour, unlike the hon. Member for Truro and Falmouth (Sarah Newton), who unfortunately is no longer in her place. She has a rose-tinted view of the shambles of this Budget and the proposals that have been put forward, which caused consternation, upset and distress to many individuals and businesses around the country. However, she now seems to think that we should be celebrating the fact that the Government have had to cobble together this compromise.
I shall be supporting new clause 10, which was tabled by those on our Front Bench, and I want to speak against the Government’s new schedule 1. Our opposition to new schedule 1 underlines Labour’s commitment to having low taxes, because it would implement a tax increase, including the 5% VAT on caravans, which I want to address.
Diana Johnson
This section of the debate is about VAT. When we are in a double-dip recession, the imposition of VAT on items such as caravans is not going to help us to grow out of that economic position. That is what I will concentrate on.
The proposal for 20% VAT to be levied on static caravans came out of the blue in the Budget. There had been no consultation with the industry, and no warning that the Government were planning that measure. The impact assessment published alongside the Budget stated that the 20% VAT would result in a 30% reduction in the market for static caravans. The Government’s U-turn involved a 75% reduction in the amount of VAT involved, and 5% will now be levied from April 2103, as opposed to 20% from October 2012.
I can go some way towards welcoming the fact that the Government have listened and put forward a response to the widespread view that the imposition of 20% VAT would have been a disaster. There was cross-party work on the issue, with a number of debates, early-day motions and petitions. I will give the Minister his due; he did take the time to listen to what people had to say, especially those from my part of the world. However, serious concerns remain about the effect that the 5% VAT will have, and I want to run through them tonight.
I want to talk first about jobs and demand, which are at the heart of the issue. As I said, the Treasury’s own figures showed that the imposition of 20% VAT would have resulted in a 30% reduction in demand for static caravans. It worries me that the Treasury seems incapable of using figures appropriately. When I looked at the impact assessment, I realised that it had got the figures for businesses and manufacturers in the caravan industry wrong. It worries me that it cannot even get such basic information correct when it sets out to consult on a proposal. I want to see much better research into the impact of the 5% VAT on caravan manufacturers.
I have not been reassured by what the Minister has told me today, even though I have pressed him to tell me what will happen to manufacturers in the caravan industry. I did not feel that he really had a grasp of what the numbers might be. It worries me that there has been no proper assessment of this policy. Does he think that levying 5% VAT will put at risk roughly a quarter of the demand that the 20% VAT would have put at risk? Does he also think that the number of job losses in the caravan manufacturing industry will be reduced from the 6,000 mentioned in KPMG’s report to about 1,500 as a result of the change in VAT? Will he also comment on the knock-on effects for the wider UK tourism and domestic holiday industry?
I want to draw the Minister’s attention to the HMRC document, “VAT: Taxing Holiday Caravans”, which was published at the end of last week. On the economic impact of the 5%, it states:
“This measure is likely to lead to an increase in the price of static and larger touring caravans which could lead to a fall in demand.”
I take the view that the Treasury civil servants are among the brightest and best that the civil service has to offer, and it seems odd that they have been able to come up with nothing more definitive than that the measure “could” lead to a fall in demand. The document goes on to state:
“Although the overall impact on the macro economy is expected to be negligible, the measure will impact local manufacturing in Yorkshire and the Humber where the bulk of static holiday caravans are manufactured.”
Most people in Hull and East Yorkshire would agree with that, but surely the Treasury can come up with something better. The section of the document entitled “Impact on businesses including civil society organisations” states:
“The vast majority of static holiday caravans are manufactured in Yorkshire and the Humber and a small number of manufacturers account for the vast majority of all UK sales. Although some manufacturers produce other types of caravans, static caravans are the main source of income for most of these manufacturers.”
Again, it worries me that the document uses such general terms. Where is the meat in all this? Where are the figures? Where does it tell us what the actual economic impact of the policy will be?
Let us bear in mind that we are in a double-dip recession and we are all desperate to get growth back into the economy. I mentioned in an intervention that 46.3 people in my constituency chase every job vacancy going, so any loss of jobs in the caravan manufacturing industry is a disaster for my constituents. I think that the hon. Member for Brigg and Goole mentioned that the caravan industry suffered very badly in 2008-09, and it is only just getting back on its feet. If the Treasury thinks that the imposition of 5% VAT will be fine for an industry that is struggling in a double-dip recession when people are not spending, it really needs to look again at its figures and ensure that they all add up.
The Minister said that the goods within a caravan were already taxed, in that VAT had already been levied on such items. My understanding is that the figure involved is about 5%. Will he tell us whether the 5% proposed in the Bill will be an additional 5%, making a total of about 10% VAT payable? I am confused by that, and the Minister has not made it clear.
One of the strongest arguments against the initial proposal for 20% VAT was that it would raise very little revenue for the Treasury. When taking that into account, we also need to consider the welfare costs that would be incurred from people in the industry losing their jobs. Has the Minister looked at the figures involved? Does he think that the sums add up?
HMRC now estimates that the 5% VAT will first raise revenue in 2013-14, when it will bring in £5 million a year, rising to £10 million a year from 2013-14. That is a relatively small amount of money, given the Government’s overall spending, especially in the light of the millions that they have found in the Budget for tax cuts for millionaires. Let us put this into perspective: £10 million is perhaps a third or half of what Mr Diamond’s severance payment might be.
This measure will have an impact from next year onwards, while raising £5 million to £10 million. When we take into account the fall in demand in the industry and the resulting job losses, I do not think that the Treasury will end up in credit. Introducing the measure could result in more money being spent, through welfare benefits. Will the Minister set out for me the sums that he is using to ensure that the measure will bring a net benefit to the Treasury? In my view, this is an ill thought-through policy, and these are crazy economics.
The Minister referred to the manufacturing standard, BS 3632. As I said in my intervention, using a manufacturing standard to dictate tax policy is silly.
Mr Graham Stuart
I want to return to the hon. Lady’s point about the overall costs. A significant percentage of the cost of a new caravan is found in the chattels inside, which already have VAT on them. So the additional overall cost will not be higher than 5%; it will be more like 3% or 4% on the overall average retail cost of a caravan. The manufacturers are telling me that they think that that can broadly be absorbed within their business model. It will have some negative impact, but a fairly minimal one. We are certainly not talking about 10% costs, but about rather less than 5%.
Diana Johnson
I am grateful for that intervention, and I pay tribute to the hon. Gentleman for the work he did on this matter. However, I would really like to hear from the Minister what the VAT level is going to be, because my understanding is that it is 5% plus the additional VAT already levied. The hon. Gentleman says that it is 3% or 4% and not 5%, but is that 3% or 4% on top of the 5%, which would mean it was 8% or 9%, not 5%?
Mr Stuart
Basically, VAT has already been paid on those chattels, so if 25% of the cost of the caravan were for the chattels, that already includes VAT, so we are looking at 5% on 75% of the overall cost of the caravan. That is why it is significantly less than 5% as an addition to the actual cost when someone goes to a park to try to buy a caravan. The additional costs as a result of this change will be significantly less than 5%—I say that clearly and categorically.
Diana Johnson
I am grateful to the hon. Gentleman again, but I would still like to hear from the Minister exactly what the figure will be. My understanding—I was at the same meeting with the caravan manufacturers in Beverley as the hon. Member for Beverley and Holderness (Mr Stuart)—was that a figure was levied across the whole price of the caravan, including the chattels in the caravan at around 3% or 4% of the overall cost. Will the Minister clarify that? Are there two figures that we need to be aware of, or is it just 5% overall of the total amount of the purchase? I have to tell the Government that if this were intended to make things clearer, the truth is that it is making things even more complicated and less transparent.
Let me return to the BS 3632 specification. I was saying that I thought that that was not a sensible way to make tax policy. I know that the distinction between static caravans and those used for residential purposes 365 days of the year is based on the reference to BS 3632. If we look at the responses to HMRC’s consultation, we see that while many respondents felt it would be relatively straightforward to upgrade static caravans to meet the BS 3632 standard so that they could benefit from zero-rated standing, many others said that the costs of doing so would be prohibitive. There is a confusion there, which is why I would like the Minister to be very clear about it.
With certified British standards changing all the time because manufacturing gets better and better, how often does the Minister think he would need to return to this tax provision to update it? I doubt whether it will be set in stone for years to come; it will have to be looked at and changed in the future. I heard the Minister’s reassurance that we would not see changes to the standard in the future, but he is opening the door to potential changes. The system that the Minister has devised, based on the British standard and keeping the distinction between static, residential and touring caravans, does not make things clearer and more transparent; rather, I think it extends the anomalies in the tax system.
An even bigger issue for me is the lack of clear evidence of what the change to VAT policy will do for my constituents and for jobs in my city. That is what really concerns and worries me. I know that the Minister has listened carefully to my pleas about employment and jobs. I hope he will think again and will instruct his officials to do a proper piece of work, so that when MPs scrutinise Government policy, they will have accurate figures to look at in order to assess whether the Government’s policies will result in what they say they are trying to achieve. In this case, I do not think the Government will see additional revenue in the Exchequer. If they bring forward this ill thought-through proposal, which will disproportionately affect my constituents, there will be a loss to the Government.
Stephen Gilbert
I feel as if I have fallen into a parallel universe in this debate. It is interesting, is it not, that although Labour crashed the economy so totally, Labour Members today want to provide a £12 billion giveaway by reducing VAT—something that would presumably have to be paid for by further cuts in the public services that they say they want to protect, or indeed by an increase in borrowing. It seems inconceivable to me that this measure is on the amendment paper in the name of Labour Members. I recall that when I was growing up there was television programme called “Jamie and the Magic Torch”. I used to enjoy it considerably, but it seems that we have a show on the other side of the Chamber tonight called “Ed and the Magic Money Tree”, with the Opposition unable to be clear or consistent about their VAT policy.
Another bizarre aspect of the debate is that when the Government are forced into what my hon. Friend the Member for Brigg and Goole (Andrew Percy) refers to as a “recalibration” on a number of issues, which my constituents certainly welcome, the Opposition oppose the measures that the Government are taking to address the problems that they initially highlighted. It strikes me as utterly bizarre that, a few months ago, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell)and her hon. Friends raised concerns, as did I and other hon. Members, about the pasty tax, the caravan tax, the problems affecting static caravans and other issues, yet tonight the same hon. Lady and her colleagues are going to vote against the U-turn that the Government have made. It may well be the case that the Government have made a U-turn, but it is clear from the positioning going on tonight that Labour has taken a wrong turn.
Labour Members cannot have it both ways. They cannot criticise a Government for being cavalier when they do not listen, and then criticise them as chaotic when they do listen. As they well know, the reality is that on all these issues, particularly on tackling anomalies in the VAT system, the problems were set out in the consultation that my right hon. Friend the Chancellor rightly announced. That consultation was widely subscribed to by many interested parties, and the Government took the responses to it into account and changed their view on the back of the evidence they received. I for one recognise that none of us has a monopoly of wisdom. It is surely in the finest traditions of good government that the people likely to be affected by these rules are listened to and that a Government take advice if a deleterious effect is pointed out.
Labour Members talk about the need to consult, but when they abolished the 10p tax rate, plunging millions of the lowest paid into further tax, I do not think they consulted on that measure. That is why, as I say, the last few moments of the debate have been somewhat eye-opening, highlighting the sheer opportunism of the Opposition in opposing a U-turn. They call for consultation, then, in the very debate that shows that the Government are listening, they choose to ignore it. Frankly, as I said at the outset, that is bizarre.
My constituents would want me to welcome new schedule 1 and Government amendment 17. Those provisions will protect jobs in Cornwall, protect the Cornish high street and high streets across the country, protect the secondary spend in the wider economy and will ensure that Cornwall, which is already a disadvantaged part of the our United Kingdom, is not further disadvantaged by proposals that the Government have, thankfully, amended.
I would also like to thank the Minister. In all the discussions between him, me and my hon. Friends, he has always been entirely professional, courteous and constructive in his engagement. I would like to thank others, too. As the hon. Member for Newcastle upon Tyne North knows, Greggs is based in her constituency. Its effort to mobilise more than 500,000 signatures across the country for a petition that my hon. Friends in Cornwall and I were able to deliver to Downing street showed the level of grass-roots concern about proposals that could have been very damaging.
I thank the National Association of Master Bakers; that is not a sentence that one wants to rush through! Its engagement with this issue has been constructive and professional, and it has represented the views of its industry to the Government very effectively. For what will probably be the only time in my life, I also thank and pay tribute to The Sun, which ensured that the issue touched the popular zeitgeist and was able, ultimately, to deliver change. More locally, the Western Morning News, the voice of the south-west, played a useful role in keeping the issue in the public eye.
I can tell the Minister that people in Cornwall are relieved that this coalition Government took soundings, listened and, at the end of the day, delivered a result that will protect an iconic and important Cornish industry. It is estimated that the measure will safeguard about 13,000 jobs in Cornwall, put hundreds of millions of pounds into the local economy, and guarantee the production of the 180 million Cornish pasties that are made in the county every year.
Bob Stewart
Everyone has been saying how great it is that VAT will no longer be charged on pasties, but I should point out those who own fish and chip shops are at a slight disadvantage by comparison. I just want to balance the equation a bit, and that is one of the things that we were trying to put right.
Stephen Gilbert
I entirely agree with my hon. Friend. He will be pleased to know that new schedule 1 will deliver the level playing field to which he and my right hon. Friend the Prime Minister have referred, and on the subject of which I have received representations from fish and chip shops in my constituency.
If a product in a fish and chip shop is being kept artificially warm it is standard-rated, and new schedule 1 will ensure that the same applies in a pasty or pie shop. The simplicity for which the Government aimed has been delivered, as has the level playing field for suppliers of hot food. I hope that my hon. Friend will convey to the fish and chip shop proprietors in his constituency with some enthusiasm the message that, as a result of the constructive process of consultation and engagement undertaken by the Government, the special status of baked goods which are hot only as a product of their baking process has been recognised. The fact that a freshly baked hot pasty which is simply cooling down will remain VAT-free should be welcomed by one and all.
Sheila Gilmore
The hon. Member for St Austell and Newquay (Stephen Gilbert) seemed to think that he was living in a parallel universe, and, indeed, most of we Opposition Members thought that we were living in one as well. The process that has taken place is rather like the process that takes place when someone says “I want £10 from you”, and then, after a great deal of argument, says “I will make it just £2, so you should be happy”, and we find ourselves saying “Thank you so much for listening.”
Yes, it was good that the Government listened. I do not think that any Opposition Member has said otherwise, although we might have preferred them to listen from the outset. They had an opportunity to do so on Second Reading. One or two Conservative and Liberal Democrat Back Benchers voted against the Government even then in order to make their views known, but many others who had heard the Government say that the measures were necessary voted for them. Yes, it is good that the Government have listened, but it might have been better had they never embarked on this road. We must ask whether it was sensible for the Treasury—which, one assumes, is in charge of our economy to some extent—to spend the last four months dealing with matters which it had, after all, generated in the first place.
Roberta Blackman-Woods (City of Durham) (Lab)
Does my hon. Friend agree that the Government listened only partially, especially when it came to the imposition of VAT on listed buildings? Churches will still have to undergo a bureaucratic process in order to claim it back, and other listed buildings will still be subject to VAT for repairs. That could really affect the country’s heritage.
Sheila Gilmore
I shall say something about precisely that issue later.
The time and effort of officials and politicians was largely wasted by a process that, in some but not all instances, led us back to where we started at a time when the economy was tanking. Could not much of that energy have been expended on something far more worth while? It was said on Second Reading that this was not a Budget for jobs and growth but a Budget that tinkered at the edges of various issues, and the Government have themselves conceded that all that tinkering was probably a bad idea.
Diana Johnson
Does my hon. Friend agree that the VAT measures in the Budget had a major effect on business confidence in certain industries? For instance, when the caravan industry was threatened with the imposition of a 20% rate, some companies issued their work forces with 90-day potential redundancy notices.
Sheila Gilmore
Of course the stress and anxiety affected confidence and well-being. Indeed, it may have led to a further plunge in demand as people anticipated the impending redundancy which, thankfully, did not come about in many cases. That is an important consideration at a time when the economy is struggling so much.
I think that a great deal of time was wasted because the Government included measures in the Budget rather than dealing with the position earlier. If they believed that there were anomalies in the VAT system, why did they not consult? As I have suggested before, they could have said “We are minded to look at these things” at the time of the autumn statement, rather than at a time when they were putting together a Budget that, apparently, they wanted to balance. We heard a lot about that at the time.
Why did the Government not say “We want to look at these anomalies and review them in a general context”? One of our amendments proposes that that should happen in future. If there is to be consultation, it should be proper consultation. Saying, as the Chancellor did in March, “This is what we have to do and this is why we have to do it, but we will have a bit of consultation afterwards” is putting the cart before the horse. I hope that that lesson will be learned for the future.
Julie Hilling
One theory being put about is that the Chancellor was hijacked by civil servants whose pet projects had been turned down by the Labour Government, who had said “Don’t be silly”, and the Treasury was suckered into proposing a load of nonsensical changes.
Sheila Gilmore
That may indeed may be the case. I recall that in 2007 a new council took charge in Edinburgh—it was a Liberal Democrat-SNP coalition—and it announced that it was planning to close some 22 schools. There was a very interesting cartoon in the local paper. It showed officials coming out of a meeting with the new administration and turning to each other and saying, “We never expected them to accept all that. That was a starter for 10, and we thought we’d get beaten back.” The officials had put forward this proposal and the new and inexperienced administration had said, “Yeah, we’ll go for that.” It did them some reputational damage. They proposed closing 22 schools, but then had to roll back very substantially because of the public outcry. The officials had expected to be told, “Actually, that’s not what we want to do. That’s not sensible. Let’s see the proper workings before we ever go public on this.” Perhaps the suggestion that this Budget measure was a consequence of our having a very inexperienced Government and Chancellor was right, therefore.
Roberta Blackman-Woods
Does my hon. Friend not agree that that view is much too kind to the Chancellor and the Government parties, as they clearly dreamt up these mad ideas themselves?
Sheila Gilmore
I will resist the temptation to take up my hon. Friend’s invitation to agree with that view, because we have to be tolerant, to a degree, of inexperience. There is currently a strong cult of youth and inexperience in our politics, but that might change, and it might at some point in the future be acknowledged that there is merit in looking to those who have had experience of life and living before entering politics, rather than to those who become as exalted as the Chancellor of the Exchequer before they have lived and experienced a great deal of ordinary life.
I shall spare Members having to listen to me list all the listed buildings in my constituency that are not churches. Those who want to know what those buildings are can read the relevant Committee report in Hansard. There is an important point, however. It has been assumed that because the Government made a concession—albeit not a full one, perhaps—to churches, the problem has been solved. There are other listed buildings that are not churches, however, which will now face the 20% rate with no financial assistance or concession made to them. These buildings are equally important. Churches are extremely important as historical monuments, even if some of them are no longer used as churches. In Edinburgh, there are examples of churches that have been converted to other uses, but there are other buildings that are at risk, too, and imaginative alterations might be made to some of them in order to put them into community use. This extra cost will put some such community projects at risk, however, and will put some buildings at risk, too. If those buildings cannot be put into community use, it is likely that they will deteriorate and end up having to be demolished on safety grounds.
Roberta Blackman-Woods
Does my hon. Friend agree that it is thoroughly irresponsible to bring in the increase on repairs on listed buildings without conducting a proper impact assessment, and that the Government should review this policy?
Sheila Gilmore
I agree. The Government have pointed out that VAT falls on repairs but it did not previously fall on alterations, and they say we should equalise the situation. That misses the point. Alterations often enable buildings to have a different use from their previous one. They are made to be able to function again for business, residential or community-use purposes. Such alterations are generally bigger projects than simply repairing the roof and ensuring that the rain does not come in. The costs involved can be great, and this 20% addition to the cost will therefore be very considerable and will put many such projects at risk. Many people have made that point, and do not feel the Government concession in respect of churches goes nearly far enough. We must bear that in mind. We will find out in the future whether these concerns were right.
In respect of VAT at least, this Budget has been shambolic. It is not good enough for people to say, “Well, because there has been a change, the whole process is now a good one.” It has not been a good one reputationally for the Government—and perhaps we, as Opposition Members, should be pleased about that. We cannot be pleased, however, when we see the effects that a declining economy has on so many of our constituents, who feel they are faced with a Government who truly are not caring.
Let us think about the arguments made in defence of some of these changes. On listed buildings, we have heard all sorts of arguments, such as, “The previous situation allowed rich people to build swimming pools.” There was no particular evidence of that, but the Chancellor obviously thought it was a good argument to put up because he liked the idea of presenting himself as being on the side of the small person rather than the rich—despite the overall effect of his Budget policies.
Roberta Blackman-Woods
Does my hon. Friend agree that if the Government were indeed concerned that alterations were going to be made to create swimming pools, the measure could simply have exempted such alterations?
Sheila Gilmore
That is indeed the case. Conducting research and finding good evidence before making and changing policy is of paramount importance. We have seen that in respect of many aspects of this Budget. We saw it in the debate yesterday in respect of the 50p tax rate. There were a lot of hypotheticals—a lot of “maybes” and “perhapses”—but there was not a lot of solid evidence.
This has been a poor piece of policy making. I congratulate the Government on turning, but if they had thought things through first, they would never have had to turn.
Nigel Mills
It is a pleasure to follow the hon. Member for Edinburgh East (Sheila Gilmore). We have heard each other speak quite a lot over the last eight weeks or so. It is also a pleasure to have a chance to talk on VAT measures.
I will start by addressing the Opposition’s new clause 12. If we are talking about ill-thought-through measures that should not have been brought forward, this is a prime example. It would cost £12 billion if it were in place for a year, not that the Opposition know how much it would cost or how they would pay for it. It is intriguing to ponder how they can tick off the Government for announcing a U-turn that costs a few million pounds a year and accuse us of not having a balanced Budget because of it, while they have a proposal for a £12 billion hole in the Budget that would do untold damage to the public finances, probably completely wreck our country’s reputation for trying to sort out its deficit and lead us into a situation none of us would even want to dream about.
Charlie Elphicke (Dover) (Con)
Does my hon. Friend agree that this £12 billion spending commitment is astonishing and irresponsible and proves how unfit Labour is for government?
Nigel Mills
My hon. Friend may be that cruel, but I probably would not go that far.
New clause 12 is not a highly principled statement that VAT should be 17.5% rather than 20%, as it would apparently be just a temporary reduction. Moreover, when Labour was in government, it had plans to raise VAT. These are the stances Labour has taken recently: before the election, it had a plan to raise VAT; later, when there was a proposal for a VAT rise, Labour abstained; and now it proposes a temporary cut, back down to 17.5%. The country can be forgiven for not knowing what on earth Labour’s view is. If Labour ever got back into power, would it reduce VAT from this 20% rate that it seems to so loathe?
This Labour new clause proposes a temporary cut that would apply from Royal Assent to the Bill until the UK economy returns to strong growth. No definition of “strong growth” has been provided. When I asked for one, we were not told that it was 2% or 3% a year. We did not get a sensible approach about it being when the economy is growing based on balanced growth and sustainable industries such as manufacturing, rather than on inflating a massive debt-filled boom. We were told that “strong growth” meant not being in a double-dip recession any more. We could end up in a bizarre situation whereby we reduce VAT on Royal Assent and then, when we get the last quarter’s financial data, which I am sure we all hope show the economy growing again, we have to reverse the temporary cut. It could be in place for only a matter of days, which would result in a huge administrative cost; the move would be utterly pointless. [Interruption.] I hear someone saying from a sedentary position that that is ridiculous, but that is what the new clause would mean. We are doing a serious thing here. We are legislating, not engaging in sixth-form school debate. If we were to pass this new clause tonight, it would be in the Finance Bill, it would become law and it would have to come into effect. This is not a little proposal that we can idly dismiss but an actual idea that the Opposition want us to legislate for. It is clearly nonsensical on all levels, and we need discuss it no further.
Diana Johnson
Does the hon. Gentleman feel that better decision making might come through consulting before putting a proposal to Parliament, and getting all the ducks lined up before coming before the House?
Nigel Mills
I agree with the hon. Lady, and I said yesterday that it would be better to consult before trying to legislate, but we did have a detailed consultation document that looked at this idea. I do not think that the legislation to implement this proposal was in the original draft of the Finance Bill, but it would have been brought forward by a statutory instrument later on; although it was announced as an idea, it was not in a legislative form at that point, so strictly speaking the Government have done what she calls for.
I wish to make one comment on the pasty tax, as an aside. It is clear that when making tax policy we have to avoid things that have a handy popular nickname. We have had big campaigns on the “pasty tax” and the “caravan tax”. It has been a bit harder to get the public behind a “sports drinks nutritional drink tax.” If it had been called a “Lucozade tax”, there might have been more publicity. The Government should be careful in making future tax policy to look out for what nicknames might be used. However, those who favour tax being understandable may feel that all taxes should have a simple nickname so that the public understand what they are for.
On the new “pasty tax” definitions, I am concerned that we might end up with some things that are unclear, such as the definitions of what is being “marketed” as “hot” and of what wrapping is allowed. We are told, “Don’t worry, it will be clear in HMRC guidance what is allowed.” However, we should be trying to legislate clearly: Parliament should be clear in what it says. I hope the Minister can put it on the record that bakeries on the high street that are trying to sell freshly baked products will not find those things subject to VAT unless they are kept hot or are wrapped in a heat-retaining bag, and that using ordinary, simple packaging or marketing those products as “freshly baked” will not be caught. That is absolutely the intention that Parliament has, and we should make it clear.
On sports drinks, I am concerned about going down the road of having a principle of deciding a tax treatment on the basis of how something is advertised or marketed, rather than on the fundamental underlying nature of the product. We can see that strange ways of how someone chooses to market something might change the tax treatment. I think I understand the aim of this proposal, which is to provide for high-sugar drinks sold as sports drinks when they are not much different from Coca-Cola or other fizzy products that we are trying to equalise the VAT treatment on. The wording in new schedule 1 leaves where the line is open to question.
We exchanged comments earlier about whether milk could strictly drift into being covered by the wording if it was marketed as something that aids physical performance and whether we risk a court, at some point, taking an utterly perverse and stupid view that milk is caught by the provision, given that we clearly do not intend it to be. We need to be careful what we mean. That line will be tested and people will ask, “What is a sports drink that is largely based on milk or some milk-derived product, and what is an ordinary pint of milk?” Where will we draw the line about what is VAT-able? A Mars drink is advertised with the slogan, “Unlike other sports drinks, this milk product actually tastes nice.” It is hard to understand why a Mars milk-flavoured drink is not going to attract VAT but a sports drink will. We need to be careful to avoid people not knowing what we actually mean.
If I market a whey-based product that is made up into a drink as a sports product, VAT will apply, but if I market it as a diet product or a nutritional supplement, perhaps for the elderly who are struggling to get enough calories in their diet, that will presumably not be VAT-able. All I have to do if I want to buy the thing to use it for sports purposes is choose the one marketed for an old person’s supplement, and although I would be able to use it in exactly the same way as the sports drink on the next shelf, I would be buying it for 20% less. I am not entirely sure that that is what we intend. Although I understand what is going on, we have to be careful if we start defining tax policy based on how something is sold and not on the underlying product.
With those few remarks, may I finally commend the Government on the position they have got these things into? It is vastly better than where we started, and I will certainly vote for new schedule 1.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. May I inform hon. Members that I want to bring the Minister in at twenty-past?
Julie Hilling
I took my car for a service last week at my local garage, which is a one-man band. He said, “For heaven’s sake, will you get rid of that lot? They are ruining my business.” When I asked him what he meant and what the Government were doing that was ruining his business, his reply was, “VAT—the 20% rate is destroying my business, and all the other small business owners I know think exactly the same.” Sadly, a reduction in VAT from 20% is not an option in this debate, but putting VAT on to so many other things just increases the problem for hard-pressed businesses and struggling people.
Bob Stewart
The hon. Lady tells us that she went to her garage and the man said, “Get rid of that lot”, but what would her lot do instead to give him much more business? That is what I would be delighted to hear, and I hope that she can give me an answer.
Julie Hilling
What Labour would have had is jobs and growth. We would not have been in a double-dip recession and we would not be in this stupid position of cutting too fast and too deep, which is ruining the British economy. Unfortunately, we are not in government.
It has been incredibly difficult to prepare this speech, because it is hard to work out, in this omnishambles of a Budget, what this disorganised Government have done a U-turn on. Perhaps I should not call them U-turns, because in many cases the Government have done them only partially; I am not sure whether these are L-turns or C-turns. I thought that they had done a full U-turn on the caravan tax, but I discovered this afternoon that they have not done a full U-turn at all, and the pasty tax is as clear as mud. I was having a discussion with colleagues before this debate as to what food is now VAT-able and what is not. It seems that a rotisserie chicken that will be cold when someone eats it is VAT-able, whereas a pasty that comes out of the oven will not be, unless it is put on a hot plate. But what happens if the oven is put on low so that the pasty is just kept warm? Will that pasty be VAT-able or not? The Minister needs to explain to me and the nation how this proposal is different from his first proposal, and how it is to be policed. Will taxmen regularly visit all the sandwich shops in the country to check on their ovens? That needs further explanation.
What about the mess of heritage tax? Again, we saw panic among Government Members and a little U-turn, perhaps to silence the bishops and return some money to places of worship for their alterations. However, £30 million will not go far, and the tax has been a huge blow to many communities.
Jim Shannon
Some 30,000 listed building consents were given last year, with some £120 million being spent on alterations. Does the hon. Lady feel that that £30 million will be adequate compensation ?
Julie Hilling
I thank the hon. Gentleman for that intervention. Clearly, I do not believe that £30 million is anywhere near the sum needed to compensate. Of course, the Government have also said that those people will get lottery and Government grants, but hang on a minute: is that not just taking with one hand and paying back with another? The change has been a huge blow to many communities that have been working for years and years to raise enough money to rescue old buildings and convert them for use by the whole community, only to now have to find another 20%.
The Government have tried to say that we should not worry too much about the heritage tax as it is really about charging millionaires who live in listed buildings and who get their indoor swimming pool tax-free, but there is no evidence for that. They conclude on the basis of a review of 105 applications that the majority of the work covered by the relief is
“not necessary for heritage purposes”,
but as nearly 30,000 listed building applications are made a year, that does not seem to me to be good evidence. From a sample of 12,049 applications, only 34 were for swimming pools. Perhaps we could deal with the problem in a slightly different way rather than imposing the heritage tax on all buildings. Indeed, 50% of those who live in listed buildings are in socio-economic groups C1, C2, D and E—supervisory, clerical, junior management, administrative, skilled workers, semi-skilled workers and unskilled workers. People in those groups are not usually millionaires.
That implementation of VAT will not raise a great deal of money in the scheme of things, but will be another blow to the construction industry and run the risk of more of our heritage buildings going to rack and ruin. Of course, once VAT is put on something it can never be returned to zero.
Skip taxes seem to have been introduced and then withdrawn. I think they probably have been withdrawn—who would know? The Government seem to be introducing a self-storage tax, however. Self-storage is often used by people in transition, such as those who are selling or buying houses or those whose homes are undergoing renovation. It is also used by people who have downgraded or moved to a different community and therefore have to live in much smaller accommodation. It is usually in a prime location so that customers can come and go as they choose, changing their winter wardrobe for their summer wardrobe or taking goods in or out of storage. Removals and storage providers have storage facilities as an ancillary part of the business and are therefore frequently in more remote places, as the location of the property does not need to attract customers. One reason for putting VAT on self-storage was to level the playing field for removal companies, even though they have different purposes. The effect will be that ordinary people will be hit again. Businesses that use self-storage to store documents and so on will be able to reclaim the VAT, but the ordinary person will not.
I think we still have a hairdressers tax. That will mean that self-employed hairdressers who rent a chair in a small salon will have no choice other than to register for VAT and decide whether to charge their customers VAT at 20% or to absorb the cost themselves. Of course, that will particularly hit females aged between 16 and 46—the very people whom the Government say they want to encourage to be entrepreneurs, start up their own businesses and pay into society.
The situation with sports nutrition is another unholy mess. If I have got this right—I hope that the Minister will correct me if I have not—sports drinks will become VAT-able, but sports nutrition products will not. If the Minister wants to intervene, I am happy for him to do so.
Julie Hilling
Does that mean that it will be exempt if a liquid product is made into a solid and people are just advised to drink water with it? What about weight-management products? More than 20% of the products in the sports nutrition category are for weight management. If they are slimming products, they are zero-rated, but they could also be considered to be sports nutrition products. We could have a bizarre situation in which men and women who exercise hard, follow a balanced diet and use sports nutrition products to help them get into shape would pay VAT, whereas those who skip meals, sit on the sofa and take magic slimming products would not.
It seems odd that we are making that tax change in Olympic year, when we are encouraging people to get fit, but it is typical of this Budget. It is a shambles that will create more anomalies than it will resolve. With all the U-turns—even though we welcome some of them—it is still totally confusing. Even after listening to the Minister this afternoon and spending many weeks on the Bill Committee, I am still not clear what the Budget says.
Secondly, the Budget rewards millionaires and punishes ordinary people. It punishes the squeezed middle and the battered base, which my hon. Friend the Member for Gateshead (Ian Mearns) frequently mentions. The VAT changes all hurt people who lead ordinary lives. They all hit hard-pressed businesses and do absolutely nothing for jobs and growth. The millionaires still get their tax cut, but they are not paying the tax that is due. If the rest of us decided not to pay our taxes, could we have a tax cut too? Or does that apply only to the very rich, who can also avoid their tax by paying accountants a great deal of money?
Charlie Elphicke
I want to speak briefly about new schedule 1. In my constituency is A and S Self Storage, run by Diana and George Pelly, which is a small family-run storage business. My concern is about how the new measure will work and I hope that Ministers will take on board some of my points.
The mischief that the new schedule seeks to attack is the business whereby big companies exercise the option to tax on a piece of land, build a storage facility and later disapply the option to tax, giving themselves a tax advantage. The Treasury have applied VAT on all self-storage and my concern is that some 250,000 people in the UK use self-storage and will find from September onwards that their bills will suddenly go up by 20%. I hope that the Government will consider this a little further and think whether there is a better way to deal with the real mischief, which is the abuse of the option to tax.
My other concern is that the revenue raised will disproportionately benefit larger businesses that can claim back costs under the capital goods scheme, rather than the smaller businesses, which cannot. Effectively, it will disproportionately benefit the four big players in the self-storage industry at the expense of smaller businesses such as A and S Self Storage. I hope that Ministers will consider that point.
The Exchequer impact is also in question. The Exchequer says that the measure will raise money, but the Self Storage Association’s brief states:
“In its calculations the Government has not taken into account the significant reclaim of VAT under the CGS rules, which Deloitte have calculated to be £43m based on the detailed results of their survey…According to Deloitte many operators, particularly the largest ones, could accelerate CGS recovery under existing VAT law.”
I want to plead for caution on the part of Ministers and ask them to consider carefully the question of tackling the underlying abuse, which is the business of disapplying the option to tax. I appreciate that many Members will find that exceptionally dull, as it involves highly technical VAT law, but my principal concern is that it is a hard thing to raise VAT across the board for 250,000 people when one really wants to target the few people who are playing the system to get more tax money for their businesses at the expense of everyone else and of the UK Treasury.
Mr Gauke
It is a great pleasure to respond to the debate. I thank my hon. Friends the Members for Truro and Falmouth (Sarah Newton), for Brigg and Goole (Andrew Percy), for St Austell and Newquay (Stephen Gilbert), for Amber Valley (Nigel Mills) and for Dover (Charlie Elphicke) for their remarks. In many cases it has been a pleasure to work closely with them on some of the Budget measures that we have discussed. I thank my hon. Friend the Member for St Austell and Newquay for his kind remarks. I am grateful for the courteous and constructive way in which he engaged with us, and I am grateful also to my hon. Friend the Member for Truro and Falmouth and, although he is not here, to my hon. Friend the Member for Camborne and Redruth (George Eustice), who were very involved in these matters. [Hon. Members: “He is here.”] I am delighted to see that he has joined us. Even if I did not know he was here, I would have said something nice about him. He can assess my sincerity on that basis.
My hon. Friend the Member for Dover made a point about the capital goods scheme. I think he was otherwise engaged earlier today, but I confirm to the House that we are making a separate provision by statutory instrument to amend the capital goods scheme so that self-storage providers affected by the measure and whose individual capital items are worth less than the £250,000 threshold for the scheme can opt in to the scheme and have the same input tax recovery benefits as larger providers with capital items that would already qualify for it. My hon. Friend can note that within two minutes of his making a request, the Government have acceded to it. I hope he is pleased with that.
I want to pick up on some of the points made and say a word or two about some of the new clauses. I think the point that the right hon. Member for Birkenhead (Mr Field) is addressing in new clause 3 is the funding of sixth-form colleges, as opposed to whether they are charged for VAT. Sixth-form and further education colleges are under the control of local authorities and have always been funded differently from schools or academy schools. I think he has in mind a refund scheme along the lines of that for academies.
Sixth-form colleges have never been able to receive VAT refunds against expenditure on their non-business activities, but the basic funding principle for sixth-form colleges is that their VAT costs are taken into account within their up-front funding allocation. Thus funding for sixth-form colleges includes cover for various costs, including VAT, on top of the direct costs of teaching. The right hon. Gentleman has put his argument on the record. Essentially, he argues for additional funding for sixth-form colleges. That must be assessed in light of the current fiscal situation.
New clause 10, which requires an assessment of the impact of the VAT borderline changes, is virtually identical to new clause 3, which was debated and defeated in the Committee of the whole House on 18 April, and to amendment 200, which was withdrawn in the Public Bill Committee on 21 June. Given that the amendment was debated and defeated the first time and withdrawn the second time, I suggest that the Opposition withdraw new clause 10 on this occasion.
On new clause 12, the Opposition have tabled an amendment to return the rate of VAT to 17.5% until
“such time as the Government presents to Parliament a report stating that the UK economy has returned to strong growth.”
This would be very costly. I know that the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) was keen not to provide a cost to the House, but the proposal would cost £12 billion to £13 billion. That would substantially erode our fiscal credibility, and if credibility is lost and interest rates rise, the impact on the fiscal position would be severe. We would expect this to have a negative effect on the UK economy. If the Opposition believe that the answer to our current problems is more borrowing, they should stand up and say so. If the solution that the economy needs is a bigger gap between what we raise in tax and what we spend, let me give the hon. Lady the opportunity to say that now.
Catherine McKinnell
Is the Minister aware that the overall borrowing that the Government are engaged in is £9 billion higher now than was planned in October 2010, so the Government’s own economic strategy is resulting in higher, not lower, borrowing?
Mr Gauke
I am not sure whether the hon. Lady welcomes that. Does she support more borrowing or not? The Institute for Fiscal Studies has made its position clear on what would happen if we pursued the policies that the Opposition advocate or have advocated—that moves around a bit. It stretches the Opposition’s credibility if they think that their approach means that borrowing now would be lower. I think the sincere position of the Opposition is that we should have a bigger fiscal stimulus—we should be borrowing more now in order to pump money into the economy. Is that their position?
Catherine McKinnell
The Opposition’s point is that the Government’s own plans are resulting in more borrowing. The alternative is to give a 2.5% VAT cut to households to stimulate demand in the economy and get the economy out of the double-dip recession that it is in and back into growth, which will ultimately bring borrowing down.
Mr Gauke
So when borrowing is higher than we plan it to be, it is a disaster, but when borrowing is higher because the Opposition would bring that about through a deliberate policy, that would be a fiscal stimulus. I am not entirely clear where they are trying to go with this. We know why the public finances are more difficult than we had anticipated. It is to do with the eurozone, the increase in commodity prices and the fact that the economy took a bigger hit than anyone had previously realised, but a discretionary fiscal loosening of £12 billion or £13 billion, which is what the Opposition are about to vote on, would be taking a huge risk with our credibility.
It is worth making the point that if we do that, we lose our fiscal credibility and we are likely to see long-term interest rates rise. That will result in our paying out more in debt interest. A one-point rise in interest rates would mean £7.5 billion in additional debt interest payments by 2016-17, and an increase for the average mortgage borrower of £1,000 per year. Is that what the Opposition want? Do they think that would help?
Sheila Gilmore
The Minister should accept that he has given a partial quotation from his own Office for Budget Responsibility. He is fond of saying that the recession has been deeper than previously thought. Yes, the OBR did say that, but it also said at exactly the same time that the climb out of that recession had been faster than had previously been thought. That was a result of the economic stimulus measures that the previous Government put in place.
Mr Gauke
The OBR was very clear about the reasons why the economy did not grow as quickly as it had predicted. That was not because of the measures that we had taken to clamp down on borrowing. It was because of the factors that it set out. Now, at a time when we see other countries without fiscal credibility facing enormous difficulties, the Opposition want a discretional fiscal loosening of £12 billion or £13 billion a year. That is not responsible opposition. That is not a responsible policy and it is not a policy that this Government will pursue. I urge the Opposition not to press new clause 10.
I note that the Opposition are also opposing the VAT measures in total. That would be an additional cost of £210 million. These are measures that will remove anomalies. We have listened to the concerns raised by hon. Members and others to improve what we initially set out.
Catherine McKinnell
Can the Minister clarify how much the U-turns that the Government are legislating for today will cost and whether the £210 million has been factored into them?
Mr Gauke
After the changes we have announced, the Budget remains fiscally neutral. The reality is that the £70 million we are talking about has to be compared with the policy of cutting VAT, which would cost between £12 billion and £13 billion, and the £210 million for refusing to go ahead with the VAT changes we have announced. I am afraid that that simply underlines the fact that, once again, the Labour party has no fiscal credibility, will not face up to the challenges in the public finances and remains unfit for office.
“Caravans | Group 12” |
Catherine McKinnell
I beg to move, That the clause be read a Second time.
In this new clause we call on the Government to consider repeating the bank bonus tax, which raised £3.5 billion in 2010-11, and to use the revenue to create 100,000 jobs for young people. It is an understatement that this has not been a good few weeks for the banks. First, there were the disgraceful mistakes at Royal Bank of Scotland that left thousands of people unable to access their own money for up to a week. I am sure that top bankers there managed to get by for a few days, but for people on low incomes it is no laughing matter to be left without a week’s wages.
Gavin Williamson
Does the hon. Lady think that those who set up the regulatory system that governed the banks, such as the shadow Chancellor, should come to the House to apologise?
Catherine McKinnell
Then came the shocking revelations at Barclays—[Hon. Members: “Oh!”]—of traders fiddling the markets, cheating with mortgage and lending rates.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Will the hon. Lady not have the courtesy to answer my hon. Friend’s question?
Catherine McKinnell
I will answer the question, but it was rather an insult to the people who have suffered from the situation at RBS, which was caused by administrative failures and poor management. The question put by the hon. Member for South Staffordshire (Gavin Williamson) does not address the severity of the matters that I am laying before the House.
Then came the shocking revelations at Barclays: of traders fiddling the markets, cheating with mortgage and lending rates—
Catherine McKinnell
It would be more appropriate for the hon. Gentleman to make his intervention now, but I will complete my sentence. Those traders then paid each other for the favours with bottles of Bollinger.
Gavin Williamson
The point that I was trying to ask the hon. Lady to explore was that the regulatory system put in place under the last Labour Government has led to market failure and the recent LIBOR problems. Does she not think that the shadow Chancellor should come to the House to explain why he took no action when he was City Minister? Yes or no?
Catherine McKinnell
I was talking about the situation at RBS, which was caused by a total administrative meltdown and computer failure; it had nothing to do with regulation. On the subject of regulation, Conservative Members called for less regulation. Politicians on both sides of the House need to consider where we go from here.
Mark Lazarowicz
Whatever people say about the banks’ responsibility for things that happened in the past, there can be no doubt that what has happened at RBS in the past few days is the responsibility of people running the bank now and of those responsible for the financial sector now, who include the Government.
It is not just those on low incomes who suffer from the damage caused by the difficulties at RBS, which obviously is trying its best to resolve them. Businesses in my constituency have contacted me saying that if the problem is not resolved immediately, they face closure. The Government need to take that issue seriously, but clearly they are not.
Catherine McKinnell
I absolutely agree with those sentiments. When discussing the impact that the total administrative failure at RBS had had, particularly on those on low wages but also, as my hon. Friend has just said, on small businesses, I was shocked and taken aback at the political opportunism involved in jumping up and raising a question about regulation, which is entirely irrelevant to the matter that I was discussing.
Charlie Elphicke
The issue had an enormous impact on the amount of taxes paid in this country. Why were interest rates being rigged by the previous Government, according to the memo?
Madam Deputy Speaker (Dawn Primarolo)
Order. The subject before us is what we will be debating, Mr Elphicke; we do not need to be sidetracked at this stage. I call Catherine McKinnell.
Catherine McKinnell
I am sure that my hon. Friend will raise a much more relevant matter in his intervention.
Grahame M. Morris
I am grateful for my hon. Friend’s patience and tolerance in the face of such provocation. Does she agree that part of the problem that we are trying to address through new clause 13 is the culture of excessive bonuses? Opposition Members recognise that that is part of the problem and we are trying to address it with the bank bonus tax.
Catherine McKinnell
I thank my hon. Friend. I have not made much progress yet, but the point that I was trying to make is that a whole series of actions by the banks have let ordinary people and businesses down. It is time that the banks played their part in putting some of that right.
Bill Esterson (Sefton Central) (Lab)
I apologise if I am preventing my hon. Friend from making progress. She need take no lessons from Conservative Members about regulation. They wanted less regulation, not more, and the point that they are trying to make now is disgraceful.
The issue is fairness. People are crying out for a repeat of the bank bonus tax in these tough times. Those with the broadest shoulders should make the biggest contribution in dealing with our problems. Many problems, particularly those faced by young people, could be resolved by the new clause.
Catherine McKinnell
My hon. Friend sums up in a nutshell why I am speaking in favour of the new clause.
The shocking revelations from Barclays this week are nothing short of a scandal. Barclays—along with we do not know how many other banks now under investigation —broke the rules to make a profit and put global economic stability at risk. It played fast and loose with rates that affect people’s mortgages and credit cards and, it would appear, gave little thought to how people could be affected.
In another shocking scandal, we found out that thousands of small businesses had been sold expensive insurance products that they did not need and could not use, spending money, which could have been used to protect jobs, to pay for products that never should have been offered to them in the first place. How many businesses have lost out as a result? All those actions on the part of the banks were totally unacceptable. The banks have been taking without giving back. The Government can take action now to put the situation right.
Gavin Williamson
I thank the hon. Lady for being so generous in giving way. I agree that the Government should take action to address some of the issues that have been raised. She mentioned a number of scandals. Will she name, for the record, the years when they occurred and which Government were in power when they occurred?
Catherine McKinnell
Members of the public will find this distasteful. We all share concern about the situation with the banks and the terrible events that have come to light in the past week or so. Government Members should be taking the lead on putting the situation right, but all they are interested in is scoring party political points. They need to be careful if they are not to lose all the public’s trust in their ability to start putting things right.
The Government can take action today. Stephen Hester, chief executive of RBS, has rightly said that he will decline his bonus this year in recognition of the serious damage that his bank has caused. Bob Diamond, chief executive of Barclays, resigned this morning over the currently developing scandal. It is right that those in charge take responsibility.
However, the banking industry as a whole is still benefiting from a tax cut this year—a tax cut, when their incompetence has cost thousands of people days of frustration, inconvenience and hardship. They have a tax cut when champagne swaps and dodgy dealing have been used to fiddle internal lending rates and when small businesses have been ripped off in yet another mis-selling scandal.
Our bank bonus tax would set that right, making the banks pay their fair share in tax instead of letting them get away with it. We want the money to be used to create 100,000 jobs for young people who are at risk of becoming the next victims of this double-dip recession made in Downing street. Labour’s bank payroll tax raised £3.5 billion in 2010-11 but this Government replaced it in 2011-12 with a levy raising just £1.8 million—barely more than half. Those are the Office for Budget Responsibility’s own figures, set out on page 101 of its economic and fiscal outlook paper in March this year.
The autumn statement in November last year had forecast a higher first take, but that turned out to be over-optimistic. That could be the case with future forecasts. The levy is supposed to raise £2.8 billion in 2014-15, but we cannot be sure of getting that. The OBR has had to keep revising all forecasts down and down, apart from those for Government borrowing, which keep going up and up. It is clearly inadequate to introduce a levy on banks with only half the yield of the previous tax. Along with the richest 1% of the country who have benefited from the scrapping of the 50p tax rate, this is one of the only parts of the Budget where the Government have given handouts. What does that tell us about their priorities? It tells us that they are not on the side of working people hit by the banks’ recent malpractice, but on the side of banks and millionaires. That shows just how out of touch this Government are.
We want to take tough measures to make the banks pay their way, and bringing back the bonus tax on top of the new levy is the fairest way to do that. It is clear where that extra money needs to go. We would use our double bank tax to plug the gaping hole in jobs and growth left by the Chancellor’s omnishambles of a Budget, which contained not one mention of the word “jobs”.
Bob Stewart
The hon. Lady envisages producing 100,000 jobs. What sort of jobs would they be, and how would they contribute to the economy?
Catherine McKinnell
It is nice to receive a considered intervention from a Conservative Member. The 100,000 jobs would be created through support from the future jobs fund. They would be guaranteed jobs paid at the national minimum wage for six months to give young people a real chance of getting on to the employment ladder.
This is about not only providing those jobs but creating economic growth and putting money into people’s pockets to create those opportunities. That aspect was absent from the Chancellor’s Budget speech, which is all the more shocking because of the seriousness of the problem. At Christmas, the number of young unemployed people reached 1 million for the first time since comparable records began, and long-term youth unemployment is rocketing too. Across the UK, the number of people aged 24 and under who are claiming out-of-work benefits for more than six months has increased by 60% since May 2010, while the number claiming for more than 12 months has more than doubled by over 125%. In this double-dip recession, young people cannot find work because between five and 10 people are chasing every vacancy. Depending on which part of the country they are in, it could be, and often is, a lot worse. The jobs are simply not there for young people to go into.
Yet the Government recklessly cancelled the very programme that was designed to create youth jobs. We want to use money raised from banks to put that right. In opposition, the Government supported Labour’s future jobs fund, which got young people into real, paid jobs. The Prime Minister called it “a good scheme”, and the Conservatives said that they had
“no plans to change existing Future Jobs Fund commitments”.
I apologise to the hon. Member for Beckenham (Bob Stewart) for my response to his intervention; in fact, it is through the real jobs guarantee that we would look to invest in new job opportunities for 100,000 young people. The future jobs fund was the successful scheme that the Prime Minister heralded as “a good scheme” but it was scrapped as soon as this Government took power.
I see that no Liberal Democrats are here for this debate. That is a crying shame and a shocking indictment of their commitment to young people and to making sure that bankers pay their way. The Liberal Democrats also pledged their support to the future jobs fund but swiftly supported the Government in scrapping it as soon as they got into power. In April 2010, in a letter to the Association of Chief Executives of Voluntary Organisations, their then work and pensions spokesperson —now the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb)—said:
“We have no plans to change or reduce existing government commitments to the Future Jobs Fund. We believe that more help is needed for young people, not less”.
The future jobs fund was scrapped just one month after that letter was sent.
Let us remind ourselves of what that scheme achieved. It offered every young person up to the age of 25 a job if they had been out of work for six months, with penalties for anyone who refused the opportunity. The jobs were real jobs, paid at the minimum wage, that lasted for six months—and that was guaranteed.
Alison McGovern (Wirral South) (Lab)
Has my hon. Friend read, as I have, the research from the DWP that tells of the impact on young people not only in terms of numbers but in terms of their confidence, dignity and self-worth?
Catherine McKinnell
I absolutely agree. It is not just about giving opportunities to young people where so few exist, but about this desperately concerning period in which we risk creating an entire lost generation, because young people are coming out of school, higher education and college and finding no opportunities at the other end. Once they fail to get on to the ladder of work and opportunities, the consequences can be long term and cause a lifetime of damage. The Government need to factor that in and grasp it now before it is too late to make sure that these opportunities are provided and that too many young people do not miss out. That is why it is so important that we use this opportunity to make sure that the bankers who caused much of the global economic and financial meltdown take responsibility for that and pay their way, giving young people real chances and opportunities.
Bill Esterson
My hon. Friend is making a powerful case for repeating the bank bonus tax. Does she agree that the Government should be considering the evidence from the 1980s about the effect that long spells of youth unemployment had on young people and how hard it was for many of them ever to find decent jobs and catch up? As a result of the Government’s delay and refusal to adopt this policy, they are in grave danger of repeating exactly the same mistakes, with all the misery that that will cause.
Catherine McKinnell
My hon. Friend makes a powerful intervention and reminds me particularly of my own region, the north-east, where too many people lost out on opportunities in the 1980s and never quite recovered from the experience. When I talk to young people today, I find that some of the brightest are coming out of school and choosing not to go to university or college but instead to try desperately to find whatever work opportunities might be available to them because, apart from the fact that they are put off by the tuition fees, they are so worried that if they did step on the ladder and go to university they would come out at the end to find there were still no opportunities. There is a deep sense of anxiety among young people that the Government need to be seriously aware of.
That is what is so concerning about the scrapping of the future jobs fund, which was not only providing real opportunities for young people and breaking the cycles of lack of opportunity, but helping businesses to open up and take on young people in particular. The Government replaced it with the work experience scheme, which they eventually rolled out last year and which offers only eight-week, unpaid placements. There is nothing to say that that is not valuable in itself, but it is simply not doing enough for enough young people. It is also available only for people under 21, so it does not cover unemployed people who have left further or higher education. Again, that compounds some of the anxieties that young people are expressing to me when they say that if they go on to college or university they will be no better offer at the end and they will instead be saddled with a lifetime of debt.
Mark Lazarowicz
It is worth remembering, is it not, that this younger age group, who will no longer be getting jobs under the future jobs fund, but only its successor, will also be one of the main targets of the Government’s cuts in welfare benefits?
Catherine McKinnell
Yes. I think that we all shuddered when we heard the proposals put forward by the Prime Minister which will mean that under 25-year-olds must either live at home or become homeless.
The youth contract, which was introduced only in April this year—too little, too late—offers very little extra, with no guarantee of a job, no guarantee of the minimum wage, but what the Government call “personalised support”, which we know from leaks could be little more than a weekly text message.
I am surprised that Government Members are not jumping up to proclaim the Government’s success with apprenticeships. Even with apprenticeships, it is difficult to believe the figures on the tin, particularly after McDonald’s recently revealed that it had spent £10 million of Government funding but had not created a single new job. The money was used to fund career progression for existing staff. That may be a worthy aim, but this is not the dawn of the apprenticeship revolution that the Government would have us believe.
Charlie Elphicke
Would the bank bonus tax proposed in the new clause be in addition to or replace the Government’s bank levy?
Catherine McKinnell
I am happy to confirm that it would be in addition to the levy. We raised £3.5 billion from the bank bonus tax in 2010-11 and would like the same amount to be raised again.
Catherine McKinnell
I am going by the OBR’s figures. I suggest that the Government do the same if they want to take advantage of this opportunity.
It is clear that we need action on jobs for young people. The bank bonus tax would bring in the money that is needed to create the real, paid jobs that will give under-25s the start that they need to get into the job market. That money could put £100,000 young people into jobs. Austerity on its own clearly cannot do that. The cuts are going too far and too fast, are choking off the recovery and are making it harder for people to get into work. We need an extra stimulus.
Rather than give the banks a tax cut this year, we want to make them pay their fair share of tax. We would use that money to give young people the start that the Government’s hotch-potch of schemes is failing to provide. That is what the new clause would achieve and I urge hon. Members to support it.
Charlie Elphicke
I am extremely grateful to have the opportunity to speak in this debate.
It is important to distinguish between the policies of the previous Government and those of the current Government. The bank bonus tax and the bank levy have a different ethos or philosophy. The original bonus tax—Members will correct me if I am wrong—was intended to be a one-off measure. In the March 2010 Budget, the Labour Government confirmed that the tax would not be extended, even though the gross yield proved to be higher than had been forecast.
Grahame M. Morris
Does the hon. Gentleman agree that part of the problem with the banking crisis is the excessive bonus culture? Perhaps shareholders and Governments should have dealt with that, but we will discuss that on Thursday. Is this proposal not an attempt to address that issue and to ensure that those with the broadest shoulders, who have done so well over the past 10 years with their huge bonus payments, make a contribution now that times are tough?
Charlie Elphicke
The hon. Gentleman makes an interesting point, but there are two problems with his argument. First, the tax would fall not on the greedy employees and bankers whom he wants to whip, but on the bank. Secondly, during his Government’s period of office—he will correct me if I am wrong—Fred Goodwin received some £15 million in bonuses, which he paid tax on at the old tax rate. The hon. Gentleman is therefore seeking to close the door after the horse has bolted.
Grahame M. Morris
The hon. Gentleman is being very generous and accommodating, as always. Does he know what the bonus figure has been for Bob Diamond over the past two years, while the hon. Gentleman’s Government have been in office?
Charlie Elphicke
For me, the issue is the size of the bonuses not in the private banks, but in the taxpayer-owned banks. That is the real concern that we ought to be focusing on. That is why the Government’s bank levy is the right way forward.
Charlie Elphicke
Let me develop my point and I will then take further interventions.
The Government’s bank levy is the right way forward because if we take too much money out of the banking system, we will be pulling out capital. If we pull out too much capital through taxation—or, indeed, through dividends—we will constrain the ability of the banks to lend. We have a crisis in which banks are not lending because they are hoarding capital. If we pull more capital out of the banking system, it will constrain the granting of mortgages and loans to small businesses. In my constituency, that is an important issue, because many small businesses are having great difficulty in getting the lending that they need.
Catherine McKinnell
I appreciate the argument that the hon. Gentleman is making, but is he not aware that long-term youth unemployment in his constituency has risen by 100% since this time last year? Does he not think that desperate action is required to bring that figure back down to zero?
Charlie Elphicke
I am all too aware that my constituency has had a difficult time and that youth unemployment has been rising. It rose significantly in the last Parliament under the previous Government, who completely mismanaged the economy. I welcome the fact that the jobseeker’s allowance count in my constituency has fallen in the latest figures. That is really positive. All of us are, of course, concerned about unemployment and want to see more jobs and money. That is why we need to get the banks lending again. That will help businesses to expand and to create the jobs, money and prosperity that we want to see.
Mark Lazarowicz
I am a little unclear about the logic of the hon. Gentleman’s position. He is against taking money out of the banks in the form of a bank bonus tax because it would affect the capital that they can lend to businesses. I think that is a fair assessment of his position. However, that criticism also applies to the bank levy that his Government are in favour of. How is it that he is in favour of a bank levy that takes capital out of banks, but against a bank bonus tax that is paid for by the people who get the bonuses?
Charlie Elphicke
My position is that the bank levy strikes the right balance. That is why I asked the shadow Minister whether her proposal would be in addition to, or an alternative to, the bank levy. That is significant. She is arguing, on the gross figures, for more than £3 billion more to be pulled out of the banking system. That would have an immediate effect on the capital that banks can lend to small businesses and hard-pressed home owners.
Bill Esterson
The hon. Gentleman says that his solution is to get the banks lending again. This Government have categorically failed at that. What we are coming forward with is a concrete set of proposals. He has acknowledged that youth unemployment in his constituency is a problem and that it has doubled since his Government came to power. Why will he not accept concrete proposals that would deal with the blight that faces many young people in his constituency?
Charlie Elphicke
The hon. Gentleman is simply suggesting that we give with one hand and take away with the other. He might think that he can throw lots of money at dealing with the problem of youth unemployment, but he would meanwhile be constraining businesses in getting the capital that they need to create new jobs and maintain their existing jobs. That is the central flaw in the Opposition’s argument. They want to take more money out of the banking system when capital and lending are already constrained.
The issue that we need to deal with is bonuses. The Government have taken action on bonuses in the taxpayer-owned banks. They have said that there will be no cash bonuses of more than £2,000 at the taxpayer-owned banks. It is right to have longer-term share incentivisation schemes, which align people’s interests with the success of the banks over the longer term.
Grahame M. Morris
The hon. Gentleman is developing an interesting argument. Does he agree that bonuses have been too high not just in the state-owned banks but in the privately owned banks, and that shareholders should do their duty and exercise some control over bonus pots? Bonuses have been paid in banks, such as Barclays, where performance has clearly not justified them.
Charlie Elphicke
Shareholders have been exercising control. Under this Government we have seen the shareholder spring and real action by institutional investors to restrain pay in the boardroom, which grew so much under the previous Government. Under the current Government, there has been action to ensure that shareholders have far greater power over remuneration reports and can push down the excessive rewards that have been given for not enough success.
It is right that an honest day’s work means an honest day’s pay and really good work deserves really good pay, but it is fundamentally wrong to say that the Government have not taken action. They have encouraged shareholders to do their bit as business owners to ensure that we do not have the excessive pay of yesteryear. A responsible Opposition would say, “We congratulate the Government on ensuring that excessive pay is stopped, and we take responsibility for the fact that when we were in government, we allowed a something-for-nothing culture in which everyone knew the price of everything and the value of nothing.” We need an understanding of the value of things once again. The Government have got it right by saying that there will not be excessive bonuses in the taxpayer-owned banks. Although the Project Merlin agreement was not perfect, it was a move in the right direction, as is the permanent bank levy that the Government have introduced, which raises £2.5 billion a year.
Bill Esterson
The hon. Gentleman keeps saying that the amount raised by Labour’s levy was lower than £3.5 billion, but the Office for Budget Responsibility has given only one figure. Can he confirm what it was?
Charlie Elphicke
The OBR has given so many different figures that I do not know exactly which one the hon. Gentleman is referring to. I will read him what Lord Sassoon said:
“The net yield raised by the bank payroll tax is estimated to be £2.3 billion, while gross receipts were £3.45 billion. An explanation of the methodology underlying the estimate of net yield can be found in”
a previous written answer. He continued:
“In line with guidance from the Office for National Statistics, the yield from the bank payroll tax was allocated to the 2010-11 tax year, as this is the point at which the tax was passed into legislation.”—[Official Report, House of Lords, 20 January 2011; Vol. 724, c. WA57.]
The current Government’s levy on banks therefore raised more than the previous Government’s levy.
The previous Government said that their levy was meant to be a one-off, but now Labour is in opposition it is saying, “Let’s make it permanent.” It also wants to make it additional to the permanent bank levy, and it is using the recent scandal, of which Barclays is the first bank to be found guilty publicly, as an excuse to do that. It should be more responsible in opposition than that.
Bill Esterson
As the hon. Gentleman will not admit to the figure that the OBR gave for Labour’s levy, I will tell him that it was £3.5 billon. The Government set up the OBR as an independent organisation to give such figures, so I am absolutely amazed that he will not rely on it. That is nearly double the amount raised by the current bank levy in its first year, and significantly more than is predicted for coming years. As we have heard from the shadow Minister, the predicted figure is falling because of the recession that has been created in Downing street.
Charlie Elphicke
I believe that the OBR’s figure was for gross receipts, which were not £3.5 billion but £3.45 billion. We need to examine the net yield raised, which was £2.3 billion. That is a lower figure than the £2.5 billion raised under the current Government’s system. I appreciate that the difference between net and gross can be confusing, because not all of us are accountants—I certainly am not. Nevertheless, more cash is coming through the door under the current Government’s arrangements.
The hon. Gentleman’s argument misses a central point, which is that the Opposition want their bank bonus levy to be an additional impost on the banks. My concern is that that would pull more capital out of the banking system. Right now, we need to lend to business and kick-start the economy.
Grahame M. Morris
The hon. Gentleman says that accountants know the cost of everything and the value of nothing, but how does he weigh the cost to the banks against the cost to this lost generation—the 100,000 people in Dover, Easington and the constituencies we represent—consigned to a life on the dole?
Charlie Elphicke
If we get lending going again, the economy growing again and decent private sector jobs creating more wealth as a nation, we will do better over the longer term. Having short-term measures to create jobs out of thin air—the 100,000 jobs that the Opposition talk about, for example, which would broadly be public sector-type and make-work-type jobs—is not the way to create a sustainable economy. We need to expand the private sector, expand business and expand jobs, so that they are sustainable over the longer term, not just for a year or two.
Catherine McKinnell
I appreciate the theory that the hon. Gentleman is putting before the House, but is he aware that the Welfare Reform Act 2012 is projected to cost £25 billion more than was predicted in 2010? So his theory is just not working.
Charlie Elphicke
The hon. Lady knows that the economic recovery is being held up by the chilling effect of the eurozone and because the previous Government made an even bigger mess of the economy than was previously thought. So of course it has taken us longer to recover. None of us wants our economic difficulties to continue; we want the economy to improve, but this can be done, in part, by getting banks lending again and ensuring they have the capital needed to do that safely.
Charlie Elphicke
I have taken enough interventions. I have been generous in giving way and in dealing in detail with the hon. Gentleman’s points in particular.
The Opposition are saying, it seems, that we should take more money out of the banking system, but that would be irresponsible because it would constrain banks’ ability to lend. The Opposition use Barclays as an excuse to blame everything on greedy traders manipulating the LIBOR interest rate. I would urge caution, however, because I have looked through some of the internal documents floating around, particularly the note of a conversation involving Paul Tucker of the Bank of England. If I may, Madam Deputy Speaker, I shall briefly read it to the House by way of scene setting and to demonstrate the Opposition’s mischievousness in seeking to impose this tax.
Madam Deputy Speaker (Dawn Primarolo)
Order. I am sure that the hon. Gentleman is about to make a fascinating point, but he will of course assure me that it is relevant to the new clause.
Charlie Elphicke
It is indeed, Madam Deputy Speaker, because a key part of the Opposition’s rationale for the new clause is that what happened at Barclays was so disgraceful that we need to punish the bankers. A large part of the shadow Minister’s argument is that these bankers are outrageous and we need to impose a tax. My point, however, is that we need to consider the wider picture. I am particularly concerned about the comments concerning what the previous Government did on regulation as well as tax. It says here:
“Mr Tucker stated the levels of calls he was receiving from Whitehall were senior and that, while he was certain that we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”
It seems it was not only greedy bankers manipulating the interest rates and putting pressure on the LIBOR interest recording; it seems more clearly to have gone to the heart of government and to have been sanctioned by Downing street, according to some comments on the internet. When we talk about how to tax the banks, we need to consider how to get more lending and ensure responsible banking with incentives for the long term. We also need to ensure that members of the previous Government accept their responsibility for the Barclays scandal, the LIBOR situation and their own behaviour.
Catherine McKinnell
The information that the hon. Gentleman is laying out is very interesting, but I would like to make it clear that the Labour party has been calling for an additional levy on banks’ payrolls this year for months, if not a year—I do not have the exact date. The scandal that has unfolded this week has highlighted the contribution that the banks made to the financial collapse and the collapse of the banks, which led to the economic recession that we have suffered. For that reason—
Madam Deputy Speaker
No, not okay. All interventions are supposed to be brief, and that includes Front-Bench interventions. I think we have got the gist of it now.
Charlie Elphicke
What I have set out also highlights the previous Government’s role in failing to regulate and, it seems, in indulging in a bit of market manipulation pressure of their own. I do not think that is acceptable. In her scene setting, the shadow Minister was basically saying, “What happened at Barclays is outrageous; therefore we need to do this.” What I am saying is that we should be careful what we wish for, because banks need enough capital to lend to small businesses, to create the jobs and money that we need to expand the economy and make this country a great success in the next 10 years, building Britain back up to the sort of success that we saw in the ’80s.
Ian Lavery (Wansbeck) (Lab)
New clause 13 is extremely important and deals with the bank bonus tax for youth jobs. It is an admirable new clause.
It is indisputable that the financial services industry is an essential part of our economy, but equally, there must be an acceptance that the industry—the banks and the financial institutions—needs to pay its way. The June 2010 Budget announced that a levy based on banks’ balance sheets would be introduced from 1 January 2011. Labour supports the bank levy, but we want to go further. We want to repeat the bankers’ bonus tax, which brought in an estimated £3.5 billion. We can argue about net and gross, as the hon. Member for Dover (Charlie Elphicke) explained; however, as far as we on this side of the House are concerned, the bankers’ bonus tax brought in £3.5 billion. Despite slight increases in the rate of the levy, the Government’s failure to repeat Labour’s bank bonus tax—and, in the meantime, create more than 100,000 jobs for young people—means that the banks simply received tax cuts last year and will do so in future years. It is wholly unacceptable, when we have a double-dip recession, for us to allow banks off with fortunes and tax cuts year on year.
In the last financial year, the amount raised by the bank levy was just over half the amount raised by Labour’s bank bonus tax—£1.8 billion, compared with £3.5 billion. The Chancellor’s spending review plans have simply failed. The Government’s austerity measures have led to the flatlining of growth in the economy, resulting in long-term youth unemployment spiralling to record levels. In the last year it has gone up by 112%, while the number of young people out of work for over a year has gone up even more, by around 156%. That is the result of the Government scrapping the future jobs fund, immediately after they came to power, without putting a viable alternative in place. They had no idea what would replace the fund or how on earth they would be able to create any employment, for young people in particular. The Work programme started only a year later, in June 2011, and we all know now, from people coming to our surgeries, about the difficulties that the workfare and other programmes have created.
That is why we are calling for Labour’s youth jobs guarantee, which would redress the Government’s scrapping of the future jobs fund. On a cautious estimate, we believe that the bank bonus tax could raise at least £2 billion this year, which the Government could use to build thousands of affordable homes and introduce the real jobs guarantee for young people who are long-term unemployed.
As part of Labour’s five-point plan for jobs and growth, the real jobs guarantee would cost £600 million, and would provide a six-month job for every 18 to 24-year-old who had been on jobseeker’s allowance for 12 months or more. We estimate that it could assist up to 110,000 people in that category. The Government would pay full wages directly to the business, which would cover 25 hours of work per week at the minimum wage. That would equate to about £4,000 per job. In return, the employer would be expected to cover the young person’s training and development for a minimum of 10 hours a week. The ultimate objective would be the opportunity of a permanent job at the end of the six months. New clause 13 would tackle the issue of youth unemployment, and make the banks pay their way.
Graeme Morrice (Livingston) (Lab)
It is a great pleasure to follow my hon. Friend the Member for Wansbeck (Ian Lavery), although I noticed that my hon. Friend the Member for Easington (Grahame M. Morris) also rose when you called me, Madam Deputy Speaker.
Madam Deputy Speaker (Dawn Primarolo)
Order. I hope this does not mean that I will get a speech in stereo; I hope his hon. Friend will wait until I call him before he speaks.
Graeme Morrice
A good point, Madam Deputy Speaker. I suspect that my hon. Friend might repeat some of my points, as we Labour Members have robust arguments in support of the bank bonus tax in new clause 13, to which I am delighted to lend my support this evening.
Given the dramatic events at Barclays over the past few days, it is particularly apposite to be discussing the contribution of the banks to the well-being of our economy and how to deal with the excessive bonus culture in the financial services sector. Our position on this issue has been clear and consistent: bonuses should be exceptional payments paid for exceptional performance. Far too many highly paid bankers, however, continue to be paid astronomical bonuses, often seemingly with little or no connection to meeting their performance targets. While such excessive and unjustifiable bonuses remain, the case for a tax on bank bonuses is strong and undoubtedly popular with the public. The LIBOR scandal at Barclays will cause the banks’ reputation to plummet to a new low. Few would have believed that the public’s opinion of them could get any worse, but they manage to keep coming up with inventive new ways of further undermining the trust of their customers and the wider population.
Bill Esterson
My hon. Friend has made an important point about the popularity of a tax on bank bonuses with the public, but the tax should not just be popular; it should also work. Nothing that Government have done has remotely worked, and those failures—including their failure in regard to bank lending—are the real reason why this is the right thing to do.
Graeme Morrice
I agree, and I shall deal with that aspect of bank lending in due course. It is vital for people’s trust in British banks to be restored as quickly as possible.
Mark Lazarowicz
Is not one of the tragedies the fact that the hundreds of thousands of people who work in the financial services sector—many thousands of them in my constituency and that of my hon. Friend—are being let down by those who are receiving the big bonuses? I was shocked and horrified by what is being done in their name, because they are often the victims of the criticism and the policies in the banks which have led to today’s debate.
Graeme Morrice
I agree. Many of my constituents who work in the banking and financial services sector contact me regularly to express concern about what their employers are doing.
Bob Stewart
The problem with the banks seems to be that they will not lend because they are frightened, and they are frightened because they must have money themselves. Perhaps we should think about the connection between bonuses and the way in which banks lend to small businesses, and perhaps a decent bonus could then be given to a bank that is run by someone who helps the economy by lending.
Graeme Morrice
That is a valid point, with which I shall deal shortly.
The strength of the balance sheets and the corporate reputation of our banks are crucial building blocks enabling us to restore confidence in the economy and return to growth. However, I am afraid that the Prime Minister’s limited parliamentary inquiry into what happened at Barclays will not command the confidence of the public, or be regarded as an adequate response to the catalogue of failings and scandals that have befallen our banks in recent years.
The full public inquiry into banking standards that has been called for by my right hon. Friend the Leader of the Opposition would be the most effective way of demonstrating to the public that both politicians and those in the industry are serious about ending unacceptable practices and taking steps to restore faith in our banking system. A repeat of the bank bonus tax would help to reassure the public that bankers are making amends for their part in our current economic woes by helping young people to return to work and enabling new homes to be built.
I know that many Government Members believe that the bankers have been let off lightly in regard to bonuses and paying their fair share towards recovery. Senior Government figures have talked tough on bank bonuses, but have stopped short of taking meaningful action. Indeed, rather than ensuring that bankers made a bigger contribution, the Chancellor gave them a massive tax cut in the Budget, as a result of which the richest bankers will pay millions less in tax from next April. As Deborah Hargreaves, chair of the High Pay Commission, said when the new 45p rate was announced:
“This tax cut for bankers will be galling for the millions of pensioners who will see their bills go up because of this Budget.”
As well as the reduction in the personal tax paid by bankers, the Chancellor’s cuts in corporation tax mean the banks received a tax cut last year and will do so again in future years. Despite the Chancellor’s slight increase in the rate of the bank levy in January this year and 2013, the Government’s failure to repeat the bank bonus tax leaves the banks considerably better off, while our constituents face cuts in tax credits, higher living costs and a squeeze on millions of pensions.
At the same time, small businesses across the UK continue to struggle to access the lending they desperately need to grow and create jobs, with lending to SMEs having fallen by more than £9.5 billion last year.
Charlie Elphicke
Why then make it harder for banks to lend by taking more money out of them through the Opposition’s proposal?
Graeme Morrice
That may be the hon. Gentleman’s opinion, but I reiterate the point that, because of the Government’s policies of the past two years, the official figures show that banks lent £9.5 billion less to SMEs last year than in the previous year, so there is a problem now.
Bill Esterson
My hon. Friend is right about the poor state of bank lending, but the reality is that the banks are not lending because they have no confidence; they have no confidence in this Government because they have pushed us back into a double-dip recession. That is the reality, and that is why action is needed. That is why this Labour proposal is the right way forward to kick-start the economy and start to solve the problem of youth unemployment.
Graeme Morrice
I agree. I am sure that many Members have been contacted by SMEs based in their constituencies who are desperate because they cannot attract as much lending from the banks and other financial institutions as they enjoyed a number of years ago. While many are critical of the lending banks, they are also critical of Government policy. Members on the Government Benches may not agree with that, but it is the reality, and that is why people are approaching us with these complaints and concerns.
The continued failure on lending is making a mockery of the Chancellor’s promise to link the pay of the chief executives of each bank with performance against SME lending targets, but there is now another chance for Members on the Government Benches to demonstrate to their constituents that they are genuine about making bankers pay their fair share. Labour’s bank bonus tax raised about £3.5 billion, as confirmed by the independent Office for Budget Responsibility. As my hon. Friend the Member for Wansbeck (Ian Lavery) said, even on a cautious estimate, we believe that this year alone it could raise at least £2 billion, over and above what is already in place. The Government could use those funds to introduce the real jobs guarantee for young people who are long-term unemployed, potentially helping 100,000 into work. It could also be used to build thousands of much-needed new affordable homes.
In conclusion, by supporting the new clause hon. Members can show that we are serious about holding bankers to account and ensuring that they pay their fair share, while also raising additional funds to address the people’s priorities—youth jobs and affordable homes—and make a real contribution to turning around our ailing economy.
Rushanara Ali (Bethnal Green and Bow) (Lab)
I support the new clause because today more than 1 million of our young people—one in five of them—have no job. That is not because they are not trying to find work and it is not because they are not working hard to get experience and skills; it is because in this flagging economy—in this double-dip recession created by this Government’s failed economic policies—the jobs just are not there. Yet, at the same time, we see the banks paying out huge bonuses to some of those responsible for the economic mess we are in. Britain is now bottom of the pile for social mobility, and that is due to this Government’s failures. The top 1% of our society now control a greater share of the national income than at any time since the 1930s. Despite these crippling inequalities, this Government’s priority has been to give tax breaks to millionaires while building their austerity programme on the backs of some of the poorest in this country.
The current labour market is a bleak place. The hardest hit by unemployment remain women and older people, who face discrimination in the labour market, and of course young people. Long-term unemployment is at its highest since 1996. As my hon. Friends have already said, youth unemployment has increased by more than 100% in the past year. That is a travesty, because it means that we have failed to help young people live up to their ambitions and find the jobs they want—or, indeed, find any jobs at all. It also means that a great wealth of talent and productivity is being lost. That is a travesty, too, and one this Government should be ashamed of. According to a recent Association of Chief Executives of Voluntary Organisations report, that will cost the Treasury £4.8 billion this year and it will cost the economy £10.7 billion in lost output. I support the new clause because the Government’s plans are driving a wedge through our society, leaving too many people behind.
Social mobility in this country has ground to a halt, and as I represent one of the most deprived areas of London, I see that all too clearly; it has always been hard, but now we are moving backwards. Every week, I meet young people in my constituency who are losing out. My area has one of the highest rates of youth unemployment, at more than 8%. The loss of the education maintenance allowance is making it harder for these young people to stay on in school. The lack of jobs makes it seem like the rising cost of university or education is just not worth it. Georgia Rowe, a student at one of the colleges in Tower Hamlets, recently said to me:
“I thought about university but it doesn’t guarantee a better job. You might as well not be in debt.”
This is the generation of young people who are being left behind.
That is why Labour has proposed the real jobs guarantee to help give our young people a chance, as we know the scarring effects that long periods of unemployment can have. People need work experience, training and to learn the skills that make them more employable in today’s difficult labour market. I know what a massive difference it can make to a young person’s chances if they get a little experience. Programmes such as Job Ready, which is hosted by Futureversity in my constituency, and Skillsmatch, and those of the Adab Trust and City Gateway, along with access to a job, can help people overcome the psychological barriers to economic opportunity, and build ambition and confidence. They connect business and young people, opening up new opportunities and partnerships, but those programmes are all struggling without adequate support.
The Work Foundation has rightly called the Government’s approach to youth unemployment “piecemeal” and “fragmented”. The Government’s headline plan to get young people back into work through the Work programme and youth contract is failing. They have managed to get only about a third of those on the programme into jobs, and in this age of austerity that is not good enough. Recent figures in my constituency showed that at least 15 people were chasing every job vacancy. The Government should be looking for real ways to help solve these problems and not continuing to kill off jobs and growth prospects through their draconian austerity measures.
Young people in my constituency can see the opportunities a short distance away in Canary Wharf and the City of London. They want to know how to get jobs there. They see bankers in the city getting tens of thousands of pounds in bonuses while unemployment soars. This is what happens when social mobility grinds to a halt. Those kids in my constituency, who are as talented and aspirational as any others, simply do not have the same opportunities, so it does not seem like such a bad idea to ask those who have so much to pay a little more.
When I consider the behaviour of the banks and some of their employees, I do not always see shining examples of socially responsible companies. The finance sector is a vital part of our economy and many companies and their staff behave responsibly, but too many of the highest paid behave the worst, as we have seen with the Barclays bank scandal. Such behaviour is at best reprehensible and at worst criminal and requires inquiries and investigations as soon as possible, yet those people are some of the highest paid in the country. Bob Diamond earned 600 times more than the average income in my constituency, so a tax on the excessive bonuses received by people such as him is only too fair. But instead the Government are reducing the tax paid by banks, with the bank levy raising just over half as much in 2011-12 as Labour’s bank bonus tax would have raised this year.
Mark Lazarowicz
I was interested to hear my hon. Friend say that Bob Diamond’s bonus and salary were 600 times the average wage in her constituency and want to highlight that point. Most of us understand that top bankers will probably be paid a lot more than most people in the country under any system, but such a discrepancy is obscene. That is what people find so disgusting and what they want to see tackled.
Rushanara Ali
I thank my hon. Friend for his intervention and hope that the Government are listening. They must understand how serious the matter is and the deep resentment and anger that are felt in constituencies such as mine. The borough that contains my constituency is also the borough in which Canary Wharf is based and the injustice of some of the behaviour and the worst abuses in the banking sector must be addressed. The Government must take responsibility.
Bob Stewart
It is very decent of the hon. Lady to give way. When she refers to figures that are 600 times a normal wage or to huge bonuses, at least there is compensation. If those sums are declared, quite a lot—perhaps 40%—will come back to HMRC, which we could then redistribute. It is better that way than if it is hidden offshore.
Rushanara Ali
The hon. Gentleman should perhaps look at the tax records of Barclays bank, as he will find that it has not paid the taxation that it should have paid. His Government should do more to ensure that the taxes that should be paid are paid. I also think that his Government has a poverty of ambition in not accepting our amendment to make a massive difference to unemployment in constituencies such as mine. I urge the Government to think hard about the impact on the 1 million young people—a sizable number of whom are in my constituency—and consider what could be done to address the problem rather than trying to defend bankers’ bonuses.
Mel Stride (Central Devon) (Con)
The hon. Lady is being very generous in giving way. The notion of very high bankers’ bonuses is nothing new, of course, as it has been going on for an awfully long time. Her party was in office for 13 years. Could she explain exactly what it did about that?
Rushanara Ali
After the financial crisis, as part of the deal, my party introduced the bankers’ bonus tax and we raised £3.5 billion that went towards the attempt to get people back into work that was so successful in constituencies such as mine. I urge the hon. Gentleman’s party to consider what works, and that did work. Instead of being partisan and ideological, his party should look at what works and enforce it. The people of this country will not forgive his Government for not acting, for creating a double-dip recession and for leaving so many people out of work. It is a disgrace and he should apologise, with his party, for presiding over two years of being in government in which they have caused a double-dip recession and much more unemployment. That is what his party should be focused on and addressing, not trying to score party political points. You are in government. Do something.
Madam Deputy Speaker (Dawn Primarolo)
Order. Has the hon. Lady given way or has she concluded?
Madam Deputy Speaker
Good. May I remind everybody that I am not in government?
Mel Stride
It is a great shame that you are not, Madam Deputy Speaker.
Will the hon. Member for Bethnal Green and Bow (Rushanara Ali), by the same token, apologise for the doubling of unemployment under the previous Government?
Rushanara Ali
When my party was in government, we cut unemployment. We got a million young people into work. After the financial crisis, when unemployment started to increase, we did something about it. I urge the hon. Gentleman’s Government to do something about unemployment, instead of looking backwards. Do something about the unemployment rate which is causing so much damage to our country, instead of doing what his party did when it was in power in the 1980s, which was to go around telling people that unemployment was a price worth paying.
The hon. Gentleman’s party is demonstrating that the nasty party is back with a vengeance. That is devastating for people in constituencies such as mine. They do not want to see the nastiness of the party. They want jobs. I suggest that his party focuses on creating jobs and growth. That is what people want.
Rushanara Ali
I should like to conclude my speech. I have given way enough, but if the hon. Gentleman wants to hear more about the issues affecting our country and my constituents—[Interruption.] I give way.
Gordon Birtwistle
I am very grateful to the hon. Lady. Would she concur with the noble Lord Mandelson when he said that the Labour party was intensely relaxed about people being filthy rich?
Rushanara Ali
The noble Lord Mandelson said that those people should pay taxes, and when my party was in power we brought unemployment down. That is what I urge the hon. Gentleman’s party to act on. I urge the Government, instead of defending bankers’ bonuses, to think about the 3 million people who are out of work. That is the responsibility of his party and his Government. He should talk to them about solving the current problems, instead of looking backwards.
Mark Durkan (Foyle) (SDLP)
When we are talking about banksters—to use a term that was coined as far back as 1932 by an Irish-American radio priest—we are talking not just about people who are filthy rich, but about people who are filthy rich by foul means. They have engaged in rackets, they get paid in packets. Why do they deserve a cut in their taxes?
Rushanara Ali
They do not deserve a cut in taxes. I hope the Government will take serious action, otherwise the public, who already feel this way, will rightly believe that this Government are not for them but for the vested interests and the millionaires who make so much money and are not willing to pay their dues or to make the appropriate contribution. I am sure the Government do not want to be on the side of people who are milking the system and making so much money and not making the appropriate contribution.
I call on the Government to pay attention, to listen not just to my party, but to the millions of young people who want a job and an opportunity to make a contribution to this country. We have a plan that could help get them get into real work and would reward those who work hard—a plan that is costed and paid for by asking some of the wealthiest in our society to contribute just a little more. With the economy back in a double-dip recession and economic confidence so low that investment growth has virtually ground to a halt, job opportunities for these young people desperate to find work will not appear without help. I hope the Government will see sense and give young people in Britain the much-needed support that they deserve, by supporting the new clause.
Alison McGovern
I would like to begin my remarks on new clause 13 by agreeing with much of what has been said today by Opposition colleagues. I want briefly to take the House back a couple of years to 2010, when I was lucky enough to secure an Adjournment debate on young people and unemployment, the first such debate I led in the House. For me, it could not have been on a more important subject than the position of young people in the labour market in my constituency. I do not wish to put myself forward as some kind of Cassandra or some awful foreseer of what has come about, but I warned the Minister then that the swift withdrawal of some of the more successful things the Labour Government had been doing to tackle young people’s unemployment would lead to more young people being on the dole. Sadly, that is what has happened. In fact, two years later the ONS tells us that an extra 65,000 16 to 24-year-olds are now without work. That is not just a waste of talent and funds, but a moral shame.
I want to say a few words on that subject and why new clause 13 is so important to young people facing that difficult situation. The Government have had two years to tackle the problem, yet all of us here have to admit that the problem is getting worse, not better, and that action is needed more today than it was in 2010. The Government would not listen then; I beg them to listen now.
Bill Esterson
My hon. Friend has a proud record, before and since reaching this place, of advocating for young people and employment. She is quite right to draw attention to the Government’s record. We should remember that we saw the same thing happen in the ’90s. The Government are going back to exactly the same failed policies of the ’90s. The difference between Government and Opposition Members is that when we were in government we looked after unemployment. We kept unemployment, repossessions and business failures low. Under this lot they have gone up and we are seeing the problems for young people, which is why we need the action we are debating right now.
Alison McGovern
I thank my hon. Friend and neighbour in Merseyside for his intervention. He is quite right. The return to things such as the youth training scheme has been one of the most unfortunate aspects of the Government’s work in this area.
Mel Stride
The hon. Lady makes the important point that youth unemployment is deeply regrettable and has been rising recently, but she skips over the fact that youth unemployment has been rising since 2004, so most of the period of that rise actually occurred on her watch when the kinds of policies she is advocating were clearly not working.
Alison McGovern
The hon. Gentleman needs to be careful about apportioning blame, because although we have seen an extreme rise in youth unemployment over the past couple of years because of the recession—I will move on to the problem of demand in the economy later—under the Labour Government there was successful action to prevent levels of youth unemployment from rising to those we saw in the ’90s. If he wishes to, we can talk at length in the Chamber on another occasion about some of the structural reasons for young people’s unemployment, such as how skills are transferred in different ways, how small businesses recruit differently, which hits younger people more than it does those with experience in the economy, and why those patterns were starting to emerge from 2005. However, in new clause 13 we are trying to establish the urgency of getting money from a particular source and prioritising the needs of young people in my constituency and in his.
The Association of Chief Executives of Voluntary Organisations has done an important piece of work to calculate the cost to the Exchequer of young people being out of work, and, although I hope that Treasury Ministers will have already heard the figures that my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) cited, I want to alight on this one. If youth unemployment continues at current rates, by 2022 the cost to the Exchequer and to the economy in lost output is estimated to be £28 billion—on top of the human and social costs. That is a huge figure, and we as a country cannot afford to see this crisis continue.
I shall take a few moments, however, to consider not only the financial cost, huge and important though that is, but the impact of the crisis on individuals, on their pride and on their self-worth. I mentioned earlier the Government’s own research, carried out by the Department for Work and Pensions, into the future jobs fund, and if Ministers have not read it they would do well to do so. The research, first, considered the impact on young people who took part in the future jobs fund programme, and it is a shame that the hon. Member for Dover (Charlie Elphicke) has left his place, because I wanted to ask him—I tried to intervene on him to do so—whether he had met, spoken to or asked the opinion of any young person who took part in the future jobs fund.
Just in case hon. Members have not had the opportunity to read the research, however, I shall quote a young person and how they were feeling prior to the introduction of the future jobs fund. They said that they were
“feeling a bit low. I was about four and half, five months, unemployed and I thought ‘oh no, this isn’t good’. Most employers I spoke to, it was like if you’ve been unemployed for more than 2 months, it really puts people off. I knew how to do a job; it’s just the fact that I’d been unemployed for nearly 5 months. Almost half a year, which was quite embarrassing really. I know there was nothing out there, but it was still kind of embarrassing.”
Despite this person realising that aggregate demand and low job vacancy numbers had caused their problem, they blamed themselves, so I ask hon. Members to consider the impact of low self-esteem and poor mental health on the extra 65,000 young people who have become unemployed since 2010.
The research, secondly, asked young people how they felt about their work once they had taken part in a future jobs fund employment placement, and to me the following quotation says it all. On the question of what the most important gain was, one person said:
“Trust in my determination. Self belief, the belief from my employer that I am able to succeed”.
What more important thing could anybody have for success in life than self-belief? When people are left to languish on the dole, such self-esteem is undermined every single day.
Mr James Gray (North Wiltshire) (Con)
I strongly admire the sincerity of the hon. Lady’s compassion for those people, but I am not sure that reading out two or three vox pops necessarily adds to the intellectual coherence and probity of the argument. She admitted a moment ago that youth unemployment was dangerously high during the Labour years. It remains very high, and we are very worried about that, but what does she actually propose we should do about it?
Alison McGovern
I am not sure I know where to start. I am reading out the testimony of young people who have been unemployed. That is not some kind of media vox pop; it is an example of real people who have been affected by the phenomena that we have been talking about, and we should listen to them. If the hon. Gentleman does not want to listen to what I have to say, let him listen to young people in my constituency and in his own, and to how they feel about being thrown on the scrapheap.
I shall briefly discuss bankers’ bonuses, and why the measure before us is an entirely appropriate one to take in order to fund for young people employment that will stand them in good stead for the rest of their careers. Profit-making banks have had a reduction in corporation tax, but I shall not go over the reasons why the tax in question is an appropriate one to levy on their payroll. We have to face the fact that in the City of London we have seen behaviour that cannot be tolerated. For the sake of the future of our young people, what is needed now is some sort of restorative justice to rebalance people’s ability to make a good life for themselves. Young people in this country are facing a more difficult labour market than they have for many years. I beg the Government to listen and take some action now.
Grahame M. Morris
Thank you for the differentiation, Madam Deputy Speaker. It is a pleasure to be in such august company as that of my hon. and good Friend the Member for Livingston (Graeme Morrice)—
Madam Deputy Speaker
Perhaps the hon. Gentlemen are trying to confuse me, because now they are sitting next to each other—but only one has the Floor.
Grahame M. Morris
I am grateful to you, Madam Deputy Speaker, for the opportunity to speak in this debate and to follow my hon. Friends the Members for Wansbeck (Ian Lavery) and for Livingston, and indeed the hon. Member for Dover (Charlie Elphicke), who served on the Public Bill Committee. He is not in his place at the moment, but I found his contribution interesting, as always.
I support new clause 13, tabled by the Opposition Front-Bench team, which would introduce a bankers bonus tax to fund a job guarantee for every young person who has been out of work for more than 12 months. History will judge this Budget as chaotic. It has been a Budget of U-turns—on pasties, on caravans, on skips and on charities. It should be remembered as a Budget for “millionaires row”—admittedly, that is a little sparse at the moment—but I hope it will not be remembered as the Budget that let the greedy bankers off the hook. Tonight, I want to put on the record the impact on the north-east.
The north-east requires an alternative vision for economic confidence, growth and jobs. The proposals in new clause 13 of a guaranteed paid job for people who have been out of work for 12 months, as suggested by the Institute of Public Policy Research North, would boost the process of regeneration that is so badly needed in my region. According to economists at IPPR North, coalition spending cuts have worsened the impact on our region’s economy and added to unemployment—especially youth unemployment—in the north-east. Well over 32,000 public sector jobs have been cut. I remind the House that unemployment in my region stands at 11.3%; 145,000 people are out of work. The private sector-led recovery that was promised has clearly not materialised in my region, at least, and a recent report from Northern TUC shows declining employment in the private sector.
In the Public Bill Committee, I gave some examples of the private sector haemorrhaging jobs in my constituency, and I do not propose to repeat that tonight. The problem we face—the hon. Member for Beckenham (Bob Stewart), who is no longer in his place, raised this point—is that money is being sucked out of the region through public spending cuts, benefit cuts and the slashing of regeneration and infrastructure projects, worsening the economic problems. The Government, through their policies, are squeezing out demand from the regional and national economies. That is counter-productive, as it pushes up both the benefits bill and Government borrowing.
The Prime Minister and the Chancellor pretend that there is no alternative, but the Opposition recognise that politics is about priorities and making choices. Sadly, the Chancellor has chosen to give a £40,000 tax cut to 14,000 millionaires, while more and more people in my area are losing their jobs and young people in particular have little prospect of finding paid employment. He has also chosen to keep VAT, a deeply regressive tax that hurts the poor, at 20%.
IPPR North has said that business confidence is failing. The lack of confidence among employers has created a hire freeze across the north that looks likely to get worse. The unwillingness of employers to take on permanent staff only increases economic insecurity for ordinary households. Where vacancies do exist, they are often for low paid and insecure work. Given that more than 1 million young people are out of work, we need real action from the Government to stop the next generation from wasting away on unemployment benefits. That is where the real jobs guarantee comes in. We need to offer a jobs guarantee, especially to young people, to stimulate the economy and offer personal hope to each individual.
Richard Fuller (Bedford) (Con)
General Government expenditure accounts for 50% of the economy, our debts are at record levels and we have the highest deficits. Does the hon. Gentleman think that the answer to debt, deficit and the Government’s massive share of the economy is for the Government to do more or to do less?
Grahame M. Morris
I would have more respect for the hon. Gentleman’s intervention if he had sat through the whole debate, because those points have been raised. It behoves the Government to do more, not less; we have to learn from the lessons of history. I urge hon. Members to support new clause 13.
Mark Lazarowicz
I want to say a few words in support of a bank bonus tax. I emphasise that I am supporting that not to bash the bankers, but to end the unacceptable face of banking in the form of an excessive bonus culture that is still far too widespread.
As I said earlier, the vast majority of people who work in financial services certainly do not get vast bonuses; many thousands of people in my constituency work hard behind bank counters or in bank offices serving customers, and they are often on modest incomes. Many have paid with changes in working conditions, while others have paid with their jobs, when redundancies flowed from the financial crisis caused by the irresponsibility of senior executives. We are not targeting those people; we want to do something about the small minority who are still getting excessive rewards.
A study published at the end of June showed that average pay for chief executives at 15 leading banks in the US and Europe increased by 12% over the last financial year. That may be less than the 36% increase in the previous year, but whatever the increase—it is about 50% when we add both increases—it is wildly out of line with falls in profits and share prices that have frequently characterised the sector. That is not performance-related pay in any sense that most people would understand and it is certainly not a performance that would justify what is effectively a further tax cut on top of a tax cut for the highest paid.
A tax targeted on bank bonuses is necessary because the existing attempts to curb the bonus culture have so obviously failed. That is the key point. The issue is not about saying that people should not be very well paid at the top of banks and financial institutions, but we want to get away from a position in which sums wildly in excess of anything that could be said to be deserved are paid as a matter of course. None of the steps taken so far has changed that culture, even in an era of financial crisis among the banks and beyond.
The second reason why we want a bank bonus tax is that it would raise money for some valuable purposes. The issue of jobs for young people affects all our constituencies. My constituency normally comes in the middle range of unemployment across the UK, and we have seen a substantial increase in youth unemployment. I certainly want that issue to be tackled in my constituency.
We are also saying that the bank bonus tax would be used to provide affordable housing. That, of course, would bring two benefits. First, it would bring more housing into the sector. Constituencies such as mine have to some extent, although on a lesser scale, experienced the same phenomenon as happened in London, where high rates of pay in certain sectors such as financial services have pushed up house prices and made it harder for people on lower incomes to get affordable housing, so this proposal would be important for those people as well. Of course, building affordable housing and new homes also gives a boost to the economy through providing new jobs in the construction sector and helps people who have been out of work because of the collapse of that sector in many parts of the country.
Our proposal of a bank bonus tax would not only tackle the excessive bonus culture but provide jobs for our young people and affordable homes, giving a boost to the construction sector. I therefore hope that the House will support it.
Mr Hoban
We have heard a series of slightly strange speeches by Labour Members. We have become accustomed to their belief that they left us a golden economic legacy, but the reality is that when they left office unemployment was higher than when they came into office. They seem to believe that the problems of youth unemployment started under this Government. At least the right hon. Member for South Shields (David Miliband) has the good sense to recognise that it is a long-standing and deep-seated issue and that its growth started under the previous Government.
Labour Members seem to forget that when they left office the deficit was out of control. We have tackled that and reduced the structural deficit by a quarter.
Bill Esterson
Youth unemployment is higher than when Labour left office, unemployment generally is higher than when Labour left office, and the economy was growing when Labour left office whereas now we are back in recession. Will the Minister confirm all three of those facts?
Mr Hoban
The challenge that we face is dealing with the economic legacy left by Labour, with the huge boom in financial services and the huge bust that followed.
We have heard Labour Members’ story that they presided over a golden age in the financial services sector. The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) could not bring herself to admit that the scandal over LIBOR fixing took place between 2005 and 2008 or that the interest rate mis-selling that affected so many small businesses took place in the same period leading up to the financial crisis.
Labour Members deplore the bonus culture, but let us not forget that when they were in government, bonuses were paid out in the year that they were earned and paid out in cash. That was the hallmark of the age of irresponsibility that characterised their time in office. This Government are taking action to tackle the bonus culture. This Government have introduced rules to ensure that bonuses are not paid out in the year they are earned but spread over a three-year period, that they are not paid out in cash but in shares, and, crucially, that they can be clawed back where there have been problems in the business or where there has been wrongdoing. This Government have tackled the bonus culture in the UK whereas the previous Government let it run riot, and we have seen the financial consequences of their so doing.
Mark Lazarowicz
The bank bonus tax was first introduced by the previous Government. In fact, I think that our Government should have done much more about the bonus culture in the banks in the past and was wrong not to do so. However, will the Minister at least accept that at no stage did his Government suggest any action whatsoever to tackle the bonus culture? He should not suggest that the responsibility lies only with Labour but accept his share of the responsibility as well.
Mr Hoban
We have taken action to tackle the bonus culture by ensuring that the interests of shareholders and management are aligned and that where there is wrongdoing bonuses can be clawed back. That is a significant change that has happened since this Government came to office. In the same way that we are remedying the regulatory failures left behind by the previous Government, particularly by the shadow Chancellor, the inquiry set up into the fixing of LIBOR will ensure that in future LIBOR is regulated to fill the hole in the Financial Services and Markets Act 2000 and ensure that there are criminal penalties for manipulating LIBOR—again, filling the hole left by the shadow Chancellor when he designed the regulatory system.
Mark Durkan
The Minister refers to what the Government have done since coming to office. What did the then Opposition suggest in the previous two Parliaments by way of concrete proposals on regulation or bonus culture or amendments to any of the flawed measures that the previous Government introduced?
Mr Hoban
When the previous Government brought forward the Financial Services and Markets Act 2000, we voted against the decision to transfer the supervision of the banks from the Bank of England to the FSA. We are putting right that failure by the previous Government. We criticised the financial services reforms brought forward by the previous Government in the aftermath of the financial crisis. We said that they were tinkering around the edges and did not address the fundamental problems at the heart of regulation. The work that we did in opposition laid the foundations for a much tougher, more intrusive and more interventionist regulatory regime to tackle the problems left by the previous Government.
Mr Campbell
When the Minister talks about the economic mess, does he mean the £600 billion that the Labour Government had to give to the banks to bail them out and keep them afloat?
Mr Hoban
The UK economy has suffered hugely as a consequence of the financial crisis. It has lost £140 billion in growth. We have to tackle the causes of that failure, as well as tackling the deficit that the previous Government left behind. That is what we are doing through the Financial Services Bill, which is passing through Parliament at the moment.
John Hemming
In December 2008, the then Chancellor said:
“The measures that I announced in October have stabilised the banking system, and inter-bank lending rates have fallen. The three-month LIBOR rate halved to just over 3 per cent. this week.”—[Official Report, 18 December 2008; Vol. 485, c. 1213.]
Does the Minister think that that was a fantasy, like much of what the Opposition propose?
Mr Hoban
The last Prime Minister had a problem recognising his responsibility for the problems that befell the economy.
One way in which we have sought to get the balance right in the taxation of businesses is by introducing the bank levy. We took that decision in opposition. We thought that it was right to ensure that banks paid their fair share towards dealing with the risks that they pose to the economy. The measure was opposed by the previous Government. They did not want to introduce a bank levy on a unilateral basis. We had the courage to make that decision and to ensure that banks pay their fair share.
The bank levy is a tax on the balance sheets of banking groups and building societies. It complements the wider regulatory reforms that are aimed at improving financial stability, such as the higher capital and liquidity standards. It thereby ensures that the banking sector makes a fair and substantial contribution that reflects the risks that it poses to the financial system and the wider economy. The levy is also intended to encourage banks to move away from risky funding models.
From the outset, the Government have been clear that we intend the levy to raise at least £2.5 billion each year. The Opposition should get their facts right. They have trotted out the gross figure that was raised by the bank payroll tax. They must bear in mind that the tax also reduced pay-as-you-earn and national insurance receipts. That is why the actual yield of the bank payroll tax was only £2.3 billion. Our levy will therefore raise more, year after year, than was raised by their one-off bank payroll tax.
The target yield for the levy was set out in the Government’s first Budget. We also announced our intention to make significant cuts to the main rate of corporation tax. Let me deal with another red herring from the Opposition. We were clear at that time, as we are now, that the bank levy yield will far outweigh the benefits that banks will receive from the corporation tax changes. Other sectors, including manufacturing, will benefit from the reduction in corporation tax, but banks will not benefit because of the bank levy. In the 2011 and 2012 Budgets, the Chancellor has gone further and announced two more cuts in the main rate of corporation tax. It now stands at 24%. The increase in the bank levy announced in the Budget offsets the benefit of those additional cuts to maintain the incentives on banks to move towards less risky funding.
New clause 13, tabled by the shadow Chancellor, is, in the words of Yogi Berra, the great American baseball coach,
“déjà vu all over again”.
This is at least the fifth time in this Parliament and the second time in the passage of the Finance Bill that we have debated the bank payroll tax. We have heard no new arguments from the Opposition and nothing to persuade us to vote for it.
Yet again, we have to point out to the Labour party that such a tax would be counter-productive and unnecessary. The bank payroll tax was introduced as a one-off interim measure in the last Parliament ahead of regulatory reforms and changes to remuneration practice and corporate governance. The previous Chancellor, the right hon. Member for Edinburgh South West (Mr Darling)—somebody the hon. Member for Newcastle upon Tyne North should listen to and learn from—said that it could not be repeated. He pointed out that it was a temporary measure until bank remuneration practices were changed, and we have changed those practices.
The new clause calls for the proceeds of the tax to be used to help employment, but I should take some time to remind the House of the measures that we are already taking to do that. We have introduced the youth contract and are investing £1 billion over the next three years in supporting half a million young people into employment and educational opportunities. We will provide 160,000 wage incentives worth up to £2,275 each to employers who recruit an 18 to 24-year-old through the Work programme. There will be an extra quarter of a million voluntary work experience or sector work academy places over the next three years and a further 20,000 incentive payments to encourage employers to take on young apprentices, taking the total to 40,000.
We are also providing additional support through Jobcentre Plus and the opportunity for people to be referred for a careers interview with the national careers service. We are already providing more apprenticeship places than any previous Government, with a record 457,000 apprenticeships delivered in 2010-11 and a commitment to delivering 1.2 million over the entire spending review period. That is a quarter of a million more than the previous Government’s commitment.
The hon. Member for Newcastle upon Tyne North says that the bank payroll tax should be used to help youth employment, but let us consider the number of ways the Labour party has already announced it would be used. The Leader of the Opposition was asked where the money would come from to reverse the increase in VAT, and he said:
“I said for example we should have a higher bank levy.”
It was also suggested that it be used to pay for higher capital spending of about £7.5 billion in 2010, which would have required £6 billion from the bank levy. The Leader of the Opposition said that reversing child benefit changes could be afforded by using the bank payroll tax—yet another use for it.
The bank payroll tax is the tax that continues to give, the tax that the Opposition always turn to when they want to find a way of plugging the black hole in their figures. They used it to explain how they would reverse tax credit savings, spend more money on the regional growth fund, cut the deficit and turn empty shops into community centres. We have heard a remarkable number of ways in which something that the previous Government said was a one-off would be used to fill the black hole in Labour’s economic thinking.
Charlie Elphicke
How many times over have the Opposition spent that money so far?
Mr Hoban
My hon. Friend is right to ask me that question. About 15 times. Every time there is a tricky question, what is the answer? Let us reintroduce the one-off bank payroll tax. That demonstrates the emptiness at the heart of Labour’s economic policy. It has no concrete ideas to tackle what happened in the financial crisis or the economic problems that it left behind. The Opposition are reduced to trotting out the same stale arguments for the fifth time running, and I urge the House to reject them once again.
Catherine McKinnell
We have heard some passionate speeches from Labour Members, but I am concerned about the lack of contributions from Government Members. Only one, the hon. Member for Dover (Charlie Elphicke), contributed in the entire debate. He put forward some interesting views and theories, and I commend him for engaging in the debate, because there is little of more importance right now than youth unemployment.
The hon. Gentleman concluded his speech, however, by hailing a return to the 1980s. I do not know about other Opposition Members, but it sent a shudder of fear through me, because although some people had the time of their lives in the 1980s—we have fond images of the City, the champagne flowing, the pinstripe suits and the brick-sized mobile phones—for many the 1980s were not pleasant or a time of growth but devastating, particularly for youth unemployment. Parts of the UK, including my region of the north-east, other English regions, Scotland and Wales, suffered dreadful decimation of their traditional manufacturing industries, and in many ways are still paying the price. We risk repeating that fate today, which is why we are proposing to impose a bank payroll tax on the very institutions that played a large part in causing the international financial crisis that led first to the recession and then to today’s double-dip recession.
Catherine McKinnell
I give way to the only Conservative Member to contribute to today’s debate.
Charlie Elphicke
How do the Opposition justify spending this money 15 times over?
Catherine McKinnell
No, we have clear plans: we would like to spend the bank payroll tax on creating youth jobs. I would have thought that Government Members would grasp that opportunity, given that short-term unemployment is up 112% and long-term unemployment is up 156%. I would have thought that Conservative Members would be shouting out for any solution to bring those figures down.
Or are Government Members happy to see another generation of young people thrown on to the scrap heap with no opportunities and no way out? The future jobs fund gave opportunities to young people. It was heralded by the Prime Minister as a good scheme and promises were made not to scrap it, but as soon as the Government took office it was put in the bin. And we have seen little put in its place: the work experience scheme, for which we waited a whole year, is producing very few results.
For that reason, we are proposing a solution. On a cautious estimate, we believe that this year the bank bonus tax could raise at least £2 billion, which the Government could use to create thousands of affordable homes and introduce a real jobs guarantee for long-term unemployed young people. As part of Labour’s five-point plan for jobs and growth, the real jobs guarantee would cost £600 million—a small price to pay for tackling the chronic youth unemployment about which Labour Members have spoken passionately this evening.
Under the real jobs guarantee, the Government would pay full wages directly to businesses—again something I would have thought Government Members would support—and support businesses taking on new members of staff. It would cover 25 hours of work at the minimum wage—£4,000 per job—and in return the employer would cover the training requirements and the young people would be required to take the jobs made available. It would be a genuine contract and a real jobs guarantee.
We cannot stand by and watch another generation of young people left to suffer the effects of this double-dip recession, which is why we propose this bank bonus tax as a real solution and why I urge hon. Members to vote for the new clause.
Question put, That the clause be a read a Second time.
Mr Gauke
I beg to move, That the Bill be now read the Third time.
The Bill proposes wide-ranging reforms of the tax system to reward work and promote growth. It supports business and growth, creates a fairer, more efficient and simpler tax system, and builds on our commitment to improving the tax policy-making approach. However, it should be seen against the fiscal backdrop that we inherited.
Before I discuss the Bill in more detail, let me remind Members of the challenges that we face. When we came to power, we were confronted by the largest peacetime deficit that the country had ever seen. One pound in every four was borrowed. Members will recall—[Interruption.]
Mr Deputy Speaker (Mr Nigel Evans)
Order. I am finding it rather difficult to hear the Minister.
Mr Gauke
Members will recall that the independent Office for Budget Responsibility revealed that the underlying damage to the economy and our challenge in repairing it was much greater than anyone had thought. It was therefore vital for us to take decisive action to restore the economic stability that was needed for recovery, and the Bill is part of that. In order to address the enormous debts that we inherited, confront Britain’s problems and get the economy moving, the Government have undertaken a sustained programme of deficit reduction.
As I said earlier, the Bill supports business and growth. It implements milestones for the corporation tax roadmap, overhauls the controlled foreign companies regime, and introduces the patent box.
Mr Alan Reid (Argyll and Bute) (LD)
My hon. Friend mentioned the controlled foreign companies regime. I support the Government’s efforts to ensure that all the tax that must be paid in the UK is paid in the UK, but, as he knows, concern has been expressed about the possibility that by introducing these rules the Government will inadvertently harm small developing countries which may lose tax revenue. I hope that they will ensure that there is no such side effect.
Mr Gauke
We debated that in the Committee of the whole House. The purpose of the CFC rules is to protect the UK tax base, as has always been the case, but the Government have a proud record of supporting developing countries, and we have a firm commitment to meeting our international obligations on that front. This country also has a proud record of building capacity in developing countries and improving their ability to collect taxes. In many developing countries, the UK has already made a substantial contribution, and we will continue to do so.
Both the patent box and the CFC changes form part of the Government’s wider plans, which will help UK businesses to operate in an increasingly globalised world. I am sure all Members agree that those measures are essential to restore medium and long-term growth.
Despite the challenging economic backdrop that the Government inherited, we have made significant progress. We have already introduced a further cut in the rate of corporation tax that will give us the lowest rate in the G7, the fourth lowest rate in the G20, and the lowest rate that this country has ever known. By next year, the Government will have cut corporation tax by 6%, helping to make the UK the most competitive country in the G20. According to the OBR’s assessment of the Budget, the reduction will increase the level of business investment by about 1% by the end of the forecast period. That is equivalent to an increase in the total amount of business investment of £3.4 billion between now and 2016.
Many businesses have seen that we are, as promised, open for business. WPP and others have recently announced that they are considering returning to the UK, or that they wish to set up business here. I am delighted to say that Rowan and Lancashire have already come here, and once the CFC rules are in place in 2013, we shall be looking for more businesses to follow them. Following the Bill’s publication in March, one of the big four advisory firms announced that it was engaged in discussions with between 10 and 15 multinational companies that were considering locating substantial operations in Britain as a result of corporate tax reforms. The CBI has commented that these much-needed changes
“will help make the UK a more attractive place for companies to invest, do business and create jobs.”
The Government aim to create a tax system that is easy to understand and with which it is easy to comply, and the Bill contributes to that. It provides real help for families and business. It raises the personal allowance to £8,105—which, curiously, was not mentioned very frequently in Committee—and, combined with the further increase of £1,100 next year, will mean a tax cut for 24 million people and 2 million people being taken out of income tax altogether.
Sheila Gilmore
The Minister was waxing lyrical about simplification, and I was wondering whether he has reconsidered his view as to whether the proposed child benefit reform creates simplification or complication.
Mr Gauke
If we do not want people earning £20,000, £25,000 or £30,000 a year to be paying for benefits to go to much wealthier households, the alternative would be an extension of the tax credit system. That would have placed a much greater burden both on households and the Government. Of the available alternatives, we have gone for the simpler option.
We are deferring the 3p per litre duty increase that was planned for August to January next year. Action by this Government to reduce the deficit and rebuild the economy is already benefiting businesses and families and keeping mortgage rates low. As hon. Members know, this Government have also had to make difficult decisions so we can tackle the deficit left to us by the previous Administration. They include withdrawing child benefit from households earning more than £50,000. That is a fair way to make savings, so we can meet our targets to cut the deficit.
We are also taking steps to ensure that the wealthy pay their fair share too. The Budget package ensures that the wealthiest will pay five times more than the cost of reducing the additional rate of income tax. The introduction of a new higher rate of stamp duty land tax of 7% on properties sold for more than £2 million will raise over £1 billion in the next five years. At the same time, this Government are also tackling avoidance, as demonstrated in the Bill. The new SDLT enveloping entry charge rate of 15% will deter those seeking to put their high-value property into corporate structures to avoid tax. Also, debt buy-back measures will raise over £500 million from banks that try to avoid paying the tax due, and the introduction of the UK-Switzerland agreement will ensure we can address the tax loss from those who put their money into Swiss banks to evade tax.
There has been extensive scrutiny of this Bill, including about 44 hours in Public Bill Committee. From looking at some of the new clauses tabled for today, I am happy to see that the Opposition continue to stick to their same theme on this Bill, which is to ask for reports, rather than focusing on policies. We have seen 34 Opposition-requested reports over the last 10 weeks, but no real policy alternatives. Yesterday, we were discussing Groucho Marx, and I wonder if the Opposition ever needed to be reminded of the quote:
“The problem with doing nothing is that you never know when you are finished.”
In order to make progress with Government business in good time, we agreed with the Opposition, through the usual channels, to programme parts of this Bill.
It is a delight to see my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) once again in his usual place. As he rightly said yesterday, this legislation is the body, soul and guts of this Budget.
I thank all who participated in Committee and on Report.
Fiona O'Donnell
It is very generous of the Minister to give way. Would he also like to reflect on the comment made by the hon. Member for North East Somerset (Jacob Rees-Mogg) that a good government is one that take tough decisions and stick to them? Does the Minister think that could be said in respect of their handling of this Bill?
Mr Gauke
This Government have taken tough decisions to bring the deficit down, and we are sticking to that plan even though some Opposition Members would rather give up on deficit reduction and continue to borrow in the same unsustainable way that we borrowed up until 2010. This Government remain determined to stick to that plan. I thank the hon. Lady for giving me the opportunity to underline that point.
I thank all those who have been involved in every stage of this Bill, including both Front Benchers and Back Benchers engaged in this matter, not to mention various others. I wish briefly to mention a couple of Treasury officials. First, I congratulate Mr Edward Troup, who, as announced earlier this week, has accepted the post of tax assurance commissioner and second permanent secretary at Her Majesty’s Revenue and Customs. His wealth of experience and enthusiasm will be a great asset for HMRC, but a sad loss to the Treasury. I also thank Jamie Miller, who has been the Bill manager for this Bill, and indeed has served on the past six Bills over the past four years. Despite that, he has remained remarkably cheerful, notwithstanding the provocation that all of us have given on that front.
In conclusion, this is a good Bill that builds a stronger and more balanced economy. It will strengthen the UK, making us more competitive and more ready to face the challenges ahead, and I commend it to the House.
Rachel Reeves (Leeds West) (Lab)
I thank my hon. Friends the Members for Pontypridd (Owen Smith), for Newcastle upon Tyne North (Catherine McKinnell) and for Kilmarnock and Loudoun (Cathy Jamieson) and others for serving on the Public Bill Committee with me over the past several weeks. I also thank our able Chairs for supervising us during that process and the Commons Clerks for their advice and assistance throughout the process in Committee and in the House.
The Bill has been on quite a journey since it was first presented to the House just a few months ago. I fear that the Exchequer Secretary spoke too soon last December when he announced that
“the Government’s more open, predictable and simple approach to tax policy making is working well.”
He said that by publishing tax legislation in draft form first,
“we are giving greater certainty and stability to taxpayers and businesses”.
I do not think that taxpayers and businesses, or indeed Members of this House, realised that the Finance Bill itself was still only a draft when it was published in March. This Finance Bill has been through so many stages of crossing out and rewriting that it would have been easier for the Government to have scrapped it and started again, perhaps with some measures that would have supported jobs and growth.
As we have heard throughout the Committee and Report stages, the Budget has been a total and utter shambles. When we first saw this Bill back in March, it contained provisions to raise VAT on hot food, on static caravans and on improvements to listed buildings.
Mr Reid
What was in the Budget back in March was a consultation exercise on VAT on static caravans and so on. I am glad that after that exercise the Government listened and amended their proposals, but it was a consultation. This Government, unlike the previous one, listen to what people say in consultations.
Rachel Reeves
That is the first time I have heard a Finance Bill being called a consultation—I do not even know where to start.
The Budget in March also included a 3p rise in fuel duty in August and limits on charitable donations. All this was necessary, we were told, to deal with the deficit. Yet the Bill before us, as we reach Third Reading, contains none of those measures. We have had a series of abrupt reversals that, according to one estimate, will cost the Exchequer nearly £700 million.
Opposition Members argued that these measures were misconceived from the start, and that adding to the costs faced by families and small business at this time would make it even harder for our economy to climb out of the recession that this Government have dug us into. But it must be a matter of regret that so much uncertainty and confusion has been created for those affected, doing real damage to businesses, charities, pensioners and families, and that at a time of tight public finances the Government’s financial and fiscal planning seems to be in such disarray, with no one at all clear what the Government’s priorities actually are.
Despite the Government’s belated change of heart on those matters, the Bill remains a deeply flawed, unfair and utterly inadequate response to the problems facing our country today and that is why the Opposition will vote against it this evening. The Bill still offends against the most basic principles of fairness by giving priority to a reckless and irresponsible tax cut worth tens of thousands of pounds for a few thousand millionaires while at the same time asking millions of ordinary people who are already under pressure from rising prices, falling wages and cuts to tax credits and benefits to make further sacrifices and endure further hardship.
The Bill breaks a promise that the Chancellor made in the Budget last year to Britain’s pensioners that their age-related allowance would rise in line with inflation for the rest of this Parliament and instead imposes a stealth tax that will hit 4.5 million people over the age of 65, all of whom live on modest pension savings. The Bill is breaking the principle of universal child benefit and still means that one-earner families will lose thousands of pounds a year while a two-earner family on almost twice as much will keep all their benefit. It is a botched, half-baked measure dreamt up for a party conference speech but the measures are described by the Institute of Chartered Accountants in England and Wales as a “policy disaster” that are
“in danger of becoming a practical disaster when they come into effect”.
We have raised a number of other concerns about the Bill, such as the controlled foreign companies changes and the impact that they will have on developing countries. What is most wrong with the Bill, however, is that it represents a massive missed opportunity to end the recession and get our economy working for ordinary working families, pensioners, businesses and young people. It could have been a Bill that took the tough decisions necessary to ensure that those who could make a fair contribution to deficit reduction did so, so that those hit hardest by the current crisis were not put under even more pressure.
It could have been a Bill that cut VAT, giving immediate relief to hard-pressed families and giving our economy the stimulus it needs to get growth under way again and to make unemployment fall. It could have been a Bill that redirected money wasted on excessive bank bonuses and put those resources to better use, helping young people get back to work and constructing new affordable homes.
Rachel Reeves
The Government are borrowing £150 billion more. That is the cost of the Government’s failed economic policies. The reality is that with more people out of work claiming benefits and fewer people in work paying taxes, Government borrowing is higher and not lower.
Jacob Rees-Mogg (North East Somerset) (Con)
I am grateful to the hon. Lady for giving way, but there is a little problem with her maths. She is accusing Her Majesty’s Government of spending £150 billion more and then wants to spend umpteen billions on top of that on a VAT cut. There is absolutely no sense in that.
Rachel Reeves
We have seen that this Government’s plan has failed, as unemployment remains far too high, with a million young people out of work. It has failed, and the economy is back in recession—we are one of only two countries in the G20 that are in recession—and the Government are borrowing more. In fact, in the first two quarters of this financial year, the Government are borrowing £4 billion more than they were last year. Their plan has failed and it is time to try an alternative that gets the economy moving again and that gets people back to work and paying taxes so that the economy can grow and the deficit can be brought down sustainably.
We have proposed a bank bonus tax because we think that it is right that those people with the broadest shoulders should pay a little more. On the day that Bob Diamond has resigned after taking £100 million of bonuses in just a few years, would it not have been far better tonight if we had supported the bank bonus tax and used that money to fund a programme of youth jobs to get our economy working again?
We could have used the Budget and the Government could have used the Finance Bill properly to accelerate infrastructure investment to help the struggling construction industry and to create much needed jobs in our economy. Instead, we have a Bill that will go down in history as a monument to this Government’s incompetence, complacency and inability to grasp that what the current economic situation demands is a Government who stand up for ordinary working people. The Bill fails on fairness and asks millions to pay more so that millionaires can pay less. It fails to address the real challenges that this country faces—a recession made in Downing street and a Government with no plan to get us out of it.
Stephen Williams (Bristol West) (LD)
Before I turn to the broad sweep of the Bill, I want to mention again clause 180, to which the Minister referred in his winding-up speech in response to my hon. Friend the Member for Argyll and Bute (Mr Reid). Many of us will have been written to by a coalition of charities such as Christian Aid and ActionAid, with which I have been working closely on the effects of the clause. The reason for that concern is felt internationally. The OECD has estimated that developing countries lose three times the amount of aid that they receive from developed countries through tax avoidance in their own countries.
In 2011, the United Nations, the International Monetary Fund, the World Bank and the OECD came together and said that the G20 countries have an obligation to ensure the smooth running of the international tax system. It was therefore appropriate for G20 countries to undertake spill-over analyses of proposed changes to their own tax systems and the possible impact of those changes on the fiscal circumstances of developing countries.
Fiona O'Donnell
Will the hon. Gentleman take this opportunity to explain to the House why, if he is so passionate about the issue, he withdrew his amendment in Committee and failed to vote for ours?
Stephen Williams
If the hon. Lady was so interested, she could have studied the Hansard record of the debate. The purpose of my amendment at that stage of the Bill was to probe the intentions of the Government and to get on the record statements from my hon. Friend the Minister that the Treasury and the Department for International Development were going to work more closely together. The hon. Lady’s party made it clear that it would not support my amendment in order not to hold up that controlled foreign companies change going through. I suggest that she has a word with her Front-Bench team.
I move on to new clause 6, which I tabled. Because of the length of time spent once again discussing the bank bonus levy and Labour’s five-point plan, we did not get to it this evening. Perhaps the hon. Lady might like to think about why that was the case. New clause 6 called for joined-up working between the Treasury and the Department for International Development. You, Mr Deputy Speaker, I and many other hon. Members and Members of the House of Lords were in Committee Room 14 this morning to listen to President Carter, Archbishop Desmond Tutu and former Irish President Mary Robinson, three of the Elders, who were talking about human rights and in particular developing nations. They specifically praised the record of this Government as the first major Government in the world to reach the 0.7% target for overseas aid. I urge my colleagues in Government again to build upon that achievement by making sure that our aid is well spent and raises the capacity of overseas Governments to develop their own tax collection capability so that they are not so dependent on us in the future.
As others wish to speak, I turn to the wider measures in the Bill. For those of us who have been on the entire journey, it has been a long trip from the Budget to Second Reading, to Committee of the whole House, to 18 sittings of the Committee, and to the past two days. Some of the things that were there at the start did not make it all the way through to the end. Maybe somewhere in Cornwall there is someone sitting in a caravan, eating a pasty washed down by sports drinks, filling in a gift aid form, perhaps to a church restoration fund. Such a person ought to be happy that this Government listen.
Some things, to be fair, were consistent all the way through that process. We heard them again this evening from the hon. Member for Leeds West (Rachel Reeves)—Labour’s five-point plan. As a boy, I was brought up to go to Sunday school, so I cannot help but be reminded of the parable of the feeding of the 5,000; they start off with such a small amount and expect it to achieve so many things, but without the benefit of miraculous intervention.
When all these measures are long forgotten, having simply been about tens of millions or hundreds of millions of pounds, it is the really significant measures in the Budget, which involve billions of pounds, that will be remembered in the sweep of history. The most significant of those is the progress towards raising the income tax threshold towards £10,000. My party, the Liberal Democrats, can take particular pleasure in the fact that the Budget and the Finance Act, as the Bill is soon to become, set us off towards another milestone on the route to achieving the £10,000 tax-free threshold. It will already lift 800,000 people out of income tax, and it will do so for 1.1 million people over the coming year and 2 million next year, allowing more people to retain the benefits of their work. We also saw in the Budget the introduction of effective wealth taxes, new rates of stamp duty, a new clampdown on stamp duty avoidance, something the previous Government shirked on many occasions, and new restrictions on reliefs against tax.
When the history of this Government and this Budget is written, it is the rise in the threshold to £10,000 that will be long remembered when all the ephemera we have been dealing with, and which Opposition Members have been so keen to raise over the past 12 weeks, are long forgotten. The raising of the threshold, which will lift people out of taxation, is the big issue that will be remembered for many years to come.
Jim Shannon
I know that on Third Reading we cannot debate the issues again, but I want to ask a quick question on a commitment the Government gave last year during a debate in which recognition of marriage in the tax system was discussed. They gave a commitment to bring in the necessary changes to introduce transferable allowances, the need for which is urgent. I would like to remind the Government of their commitment to recognise marriage in the tax system and press the Minister to respond on the matter. The Prime Minister said:
“I have always supported the idea of supporting marriage through the tax system, specifically supporting the idea of a transferable tax allowance. The idea of a transferable tax allowance is in the coalition agreement.”
I am sure that the Minister will be able to reaffirm that. The Prime Minister continued:
“It’s something we would like to do in this parliament”.
As he is the Prime Minister of the coalition, I am sure we can look forward to a commitment on that at some time in the future.
The Government have made a number of U-turns, or J-turns, as some Members called them—or, as the hon. Member for Brigg and Goole (Andrew Percy) called them, recalibrations. It does not matter what we call them, so long as they are done for the right reasons, and the Government’s U-turns so far have been for the right reasons and we welcome them.
However, perhaps it is now time to have a commitment from the Government on transferable allowances. If the Minister is unable to tell us exactly when the Government will introduce legislation to recognise marriage in the tax system, will he provide clarity on a different but related point? Recognition of marriage in the tax system will require HMRC to make various operational changes, particularly in the IT systems. Can he reassure us that this preparatory work is already under way so that when the Government bring forward legislation to recognise marriage in the tax system there is no further delay? If he cannot do so tonight, will he make it an urgent priority to make a statement to the House setting out the time that will be required to change the IT systems and announce that he has instructed that work to begin in readiness for the introduction of the transferable allowance legislation?
Bill Esterson
When listening to the hon. Member for Bristol West (Stephen Williams), I was reminded of the rather depressing speeches and interventions from some of his Tory colleagues in our previous debates on youth unemployment and the bank bonus tax, who showed very clearly that they do not live in the real world. They have no idea of the impact on young people of the chronic levels of unemployment they now face or the depressing reality that this is a repeat of what happened under the Tories in the ’80s and ’90s.
The shadow Chief Secretary to the Treasury mentioned Bob Diamond’s £100 million in bonuses, which, under the real jobs guarantee scheme, would create 25,000 jobs for young people. I wonder whether Government Members consider that a better use of £100 million in bankers’ bonuses, because I certainly do.
We have already seen new schemes from the Government which are depressingly familiar; they remind me of the youth opportunities programme and its successor, the youth training scheme, in the early ’80s, and of how benefits were withdrawn from young people during those years when there were no jobs. There are no jobs for young people in my constituency or in many parts of the country.
Bill Esterson
I will always give way to a fellow member of the Communities and Local Government Committee.
Heather Wheeler
Why is it that in South Derbyshire the number of apprentices has gone up by 80%, when the hon. Gentleman says that there are no jobs for young people? What is going on in his constituency that is not happening in South Derbyshire?
Bill Esterson
People in the hon. Lady’s part of the world must be incredibly lucky, because it must be the only place in the country where that is the case.
In reality, every Member knows that the youth unemployment figure has gone over the 1 million mark; that is a fact which everyone here accepts.
Bill Esterson
I ask the hon. Gentleman, when he intervenes, to explain why one of this Government’s first acts was to scrap the successful future jobs fund, which the previous Government introduced and Members who are now on the Treasury Bench said they would keep.
Richard Graham
I am very grateful to the hon. Gentleman for giving way, after some careful thought. In answer to his question, in my constituency the biggest difficulty with the future jobs fund was that, first, the placements were not real jobs but national service, because they were from the Government or charities; and, secondly, they had no future. They did not, therefore, meet even the definition of their own title: future jobs fund.
The hon. Gentleman has heard about the situation in South Derbyshire. The situation in Gloucestershire is that the number of apprenticeships has risen massively over the past three years and has continued to go up by 20% over the past year, and that youth unemployment has fallen by 150 every month for the past three months. It is not perfect, but things are getting better.
Bill Esterson
I cannot decide which of those 14 questions to answer, but as a former banker the hon. Gentleman is in a good position to comment on the financial crisis, which was caused by some of his former colleagues. What he says gives no comfort. He mentions national service, and I went back to the ’80s and ’90s, but he has gone back far further than that, to something that really did not solve any problems for young people.
Richard Graham
I shall be very brief, I promise. I have a specific suggestion for the hon. Gentleman—in two questions. First, how many jobs fairs has he organised in his constituency? Secondly, how many apprenticeships have been started in his constituency?
Bill Esterson
I speak to people in my constituency all the time, and they tell me just how hard it is to find jobs. I have employed somebody who was on the future jobs fund, and they have been extremely successful, but people who have been out of work for more than six months, whether they have left school, college or graduated from university, find it almost impossible to get jobs.
The reality is that, in this situation, just as in previous decades under previous Conservative Governments, employers are already turning to people who have just left school or college or just graduated; they are not looking at people who have been out of work for a long period. The depressing reality is that we will see another generation of young people consigned to the scrapheap unless this Government take the action that the Labour party proposes in repeating the bankers’ bonus tax.
Julie Hilling
I wonder whether my hon. Friend, like me, sees a constant stream of young and older people coming to his constituency surgeries desperate for work. Does he agree that the future jobs fund provided something better than having to work in a supermarket for nothing?
Bill Esterson
My hon. Friend gained vast experience of dealing with young people before coming to Parliament, and she has been a strong advocate for them ever since. Her experience is very similar to mine. It is absolutely disgraceful that we have Ministers sitting there laughing at what is happening to young people up and down this country, who cannot get jobs because we have a Government who entered office when the economy was growing strongly—[Hon. Members: “Oh!”]—despite a global economic downturn and a global economic and financial crisis caused by the friends of people like the hon. Member for Gloucester (Richard Graham).
Gordon Birtwistle
Would the hon. Gentleman like to comment on the large number of young people who have come from abroad and now have jobs in the UK?
Bill Esterson
I am not sure what that has to do with what I was talking about. Perhaps the hon. Gentleman can agree with me that what we need is action from this Government—action to help young people find jobs.
The hon. Member for Dover (Charlie Elphicke), who is no longer here, mentioned several times the fact that the banks are not lending and said that that is the problem, but he forgot to say that the reason the banks are not lending is that they have no confidence in this Government—the Government who have pushed us back into a double-dip recession so that we are now one of only two countries in Europe in that position, the other being Italy. That lack of confidence is why banks would rather shore up their own position—and, of course, pay exorbitant bonuses to their top executives. The banks are not lending to the small businesses that need the money to create the jobs and drive the growth that is needed. Unless the banks start to do that, the Government need to step in.
That is why the proposal from Labour is so important. It is why repeating the bankers’ bonus tax would make so much difference to young people and to this country as a whole. But what did we get from this Government? The cut in the 50p tax rate. Three hundred thousand of the wealthiest people in the country will benefit from a tax cut paid for by the rest of us, particularly the poorest and pensioners through the granny tax. That is the reality of the Government’s proposal, which they are pushing through tonight. That is why we should oppose the Bill.
What I expected was an end to the sort of heckling we have heard from Ministers, who clearly enjoy the prospect of young people being out of work. I would like to think that that is not what they really think. I had hoped for a degree of fairness from the Government—perhaps I was being unreasonably optimistic. There is nothing fair in 300,000 of the wealthiest—
Bill Esterson
The hon. Gentleman keeps coming back for more—I am intrigued.
Bill Esterson
If it were true that it helps the poorest people in our society, perhaps the hon. Gentleman would have a point, but it does not help many of the very poorest and it does not help those young people I was talking about who cannot find a job because the Government will not take action and because they cut the future jobs fund when they first came into office.
What we really needed from this Government was a Budget of fairness. Instead, we got that tax cut. What they should be doing is repeating Labour’s bankers’ bonus tax, which raised £3.5 billion—[Interruption.] Government Members do not have to take my word for it; they can take the word of the independent Office for Budget Responsibility, which they themselves set up. They are even questioning their own organisation’s figures. That £3.5 billion was nearly twice as much as the £1.8 billion raised by the bank levy. The bank levy is a start, but the Government could repeat the bank bonus tax and use the money to get young people back to work and the housing industry going. The temporary VAT cut would help small businesses that cannot get loans from the banks.
I know that people want to get home. [Hon. Members: “Hurrah!”] Always happy to oblige. We have had a Budget for the wealthiest in our society. The Bill gives help to the top 300,000 earners, but does nothing for young people or those out of work.
Sheila Gilmore
During the various debates on the Bill, there have been references to the 1980s and the 1970s. Does my hon. Friend agree that there were probably comments like the ones we heard tonight in the 1930s, when people in the south of England said that there was no depression?
Bill Esterson
I thank my hon. Friend for her comments —[Interruption.] If the right hon. Member for New Forest West (Mr Swayne) would like to make an intervention, I will happily take it.
My hon. Friend is absolutely right that we are seeing a repeat of what happened in the ’30s, and we have none of the policies necessary to get us out of this situation.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Will the hon. Gentleman give way?
Bill Esterson
No, I am not going to take any more interventions; the hon. Gentleman can sit down.
We should be seeing the investment from the bank bonus tax and a temporary cut in VAT. The Bill—[Interruption.]
Mr Deputy Speaker (Mr Nigel Evans)
Order. Please—I cannot hear Mr Esterson speak.
Bill Esterson
The Bill does nothing to help grow the economy or get us out of the problems we face. The House should vote against it.
Question put, That the Bill be now read the Third time.
Business without Debate
Mr Deputy Speaker (Mr Nigel Evans)
With the leave of the House, we shall take motions 3 to 6 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Prevention and Suppression of Terrorism
That the draft Terrorism Act 2000 (Video Recording with Sound of Interviews and Associated Code of Practice) Order 2012, which was laid before this House on 10 May, be approved.
That the draft Counter-Terrorism Act 2008 (Code of Practice for the Video Recording with Sound of Post-Charge Questioning) Order 2012, which was laid before this House on 10 May, be approved.
That the draft Terrorism Act 2000 (Codes of Practice for the Exercise of Stop and Search Powers) Order 2012, which was laid before this House on 10 May, be approved.
Police
That the draft Police and Criminal Evidence Act 1984 (Codes of Practice) (Revision of Codes C, G and H) Order 2012, which was laid before this House on 10 May, be approved.—(James Duddridge.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Education
That the draft Education (Amendment of the Curriculum Requirements for Fourth Key Stage) (England) Order 2012, which was laid before this House on 11 June, be approved.—(James Duddridge.)
The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until tomorrow (Standing Order No. 41A).
Mr Deputy Speaker
With the leave of the House, we will take motions 8 to 12 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Energy
That the draft Renewable Heat Incentive Scheme (Amendment) Regulations 2012, which were laid before this House on 11 June, be approved.
Energy Conservation
That the draft Green Deal (Energy Efficiency Improvements) Order 2012, which was laid before this House on 11 June, be approved.
That the draft Green Deal Framework (Disclosure, Acknowledgment, Redress etc.) Regulations 2012, which were laid before this House on 11 June, be approved.
That the draft Green Deal (Qualifying Energy Improvements) Order 2012, which was laid before this House on 11 June, be approved.
Electricity
That the draft Electricity and Gas (Energy Company Obligation) Order 2012, which was laid before this House on 13 June, be approved.—(James Duddridge.)
Question agreed to.
European Union Documents
Motion made, and Question put forthwith (Standing Order No. 119(11)),
Financial Management: Annual Audit
That this House takes note of European Union Document No. 14879/11 and Addenda 1 to 3, relating to the Commission Report on the Protection of the European Union’s financial interests: Fight against fraud - Annual Report 2010, together with two unnumbered Reports from the European Court of Auditors dated 10 November 2011, relating to the Annual Report on the Activities Funded by the Eighth, Ninth and Tenth European Development Funds in the financial year 2010, and the Annual Report on the implementation of the budget concerning the financial year 2010; regrets that the EU budget has been given a qualified audit by the EU oversight body the Court of Auditors every year for the past 17 years; agrees that, in these challenging economic times, the same high standards applied to national budgets should be applied to the EU budget, especially as national taxpayers fund the EU budget; supports the Government’s decision to, for the first time, oppose signing off the EU budget earlier this year; and encourages the Government to continue to call for important and urgent improvements to the quality of EU financial management.—(James Duddridge.)
Question agreed to.
Violence against Health Workers
(12 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Nic Dakin (Scunthorpe) (Lab)
Our national health service employs more than 1.7 million people. Of those, just under half are clinically qualified, including 120,000 hospital doctors, 40,000 general practitioners, 400,000 nurses and 25,000 ambulance staff, as well as an army of other health care workers. Only the Wal-Mart supermarket chain, Indian Railways and the Chinese People’s Liberation Army directly employ more people.
On average, our health service deals with 1 million patients every 36 hours. That is about 500 people a minute or eight people a second. As those figures suggest, the size and volume of the NHS means that literally millions of interactions between patients and staff occur every single day. In the vast majority of cases, these interactions are positive and result in successful outcomes for patients and staff alike, which is why, simply put, the NHS is one of the best health care models on the planet. But sadly, things sometimes go wrong for patients and badly wrong for staff. The superb staff who provide such sterling service to the public can find themselves the victims of violence while working on our behalf to provide those very services. The purpose of this debate is to highlight this wrong and seek support from the Government for righting it.
The NHS management service’s latest statistics reveal more than 150 reported physical assaults on health care staff per day—and that is before verbal assault is taken into consideration. According to the latest 2010-11 NHS survey, 7% of NHS staff had been victims of assault in the previous 12 months. The Royal College of Nursing’s research reveals further troubling statistics, with almost 11% of those surveyed having been assaulted at work in the previous two years and more than 60% of all respondents having suffered verbal abuse at work. Indeed, one respondent commented that
“verbal abuse seems to just be accepted as part of our work”.
That is totally indefensible.
In Northern Lincolnshire and Goole hospital trust, which serves the Scunthorpe area, there were 13.1 assaults per 1,000 members of staff in 2009-10. Although that figure is below the national yearly average of 16.8 per 1,000, it is still far too high. One assault against any person simply trying to do their job in any profession, never mind people who routinely save lives every day, is completely unacceptable.
Two weeks ago, I joined a local ambulance crew for five hours of their 12-hour shift, and I was hugely impressed by the professionalism of the paramedic team and the staff at Scunthorpe general’s accident and emergency department. Patients were treated with great skill, care and dignity, which is exactly as it should be, but I was shocked to learn that the fantastic paramedic I was with had gone to a house call about a year ago and was seriously assaulted by the man he had gone to help. He was chased around the house by the man, who violently and persistently assaulted him. The assault was so bad that it resulted in his being off work for six months.
I received today this e-mail from a staff nurse at Scunthorpe general hospital:
“I understand that you are taking part in an adjournment debate tonight on the above subject. I was assaulted by a patient in January this year. With colleagues I went to clean up a patient that…had attacked a nurse earlier in the day and no one felt able to approach him since. I was subjected to a violent attack which meant I was on sick leave for three months. I have had intensive physiotherapy and still attend physio regularly. I suffered a needlestick injury while trying to sedate the patient and will be tested for blood borne viruses in the next few weeks. During the time I was off work and, for some time since, I have been in constant pain, I had limited use of my right arm and restricted movement of my neck. I could not hold a pen to write or brush my teeth. Everyday tasks took hours and I became depressed and withdrawn. Even now I am unable to perform all my duties as a nurse. Yet, mine was not a serious injury. I have made considerable improvement but will always have some level of pain and restriction of movement.”
She goes on to thank us for raising this issue in Parliament.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on bringing this issue to the Chamber, and I wish to associate myself with his comments. In Northern Ireland, including in my constituency and in particular the Ulster hospital, there have been several attacks on accident and emergency personnel and ambulances. It is not specific to Scunthorpe but happens across the UK. Would better co-ordination between the hospital authorities, ambulance and emergency personnel and the police be a way of addressing some of these issues?
Nic Dakin
I thank the hon. Gentleman for his comments. He reminds us that, sadly, the problem affects people across the nations of the United Kingdom. I will come to the issue he raises later, but I want now to quote the final comments of the nurse who wrote to me:
“You can have no idea what it means to have this problem recognised and debated. I do not expect to be compensated in monetary terms for the pain I have suffered or the possibility that I may not be able to work to retirement age but I do want to see measures put in place to effectively protect staff who are expected to deal with difficult and violent patients.”
The costs of such assaults are multi-fold. There is the cost to the NHS of care for the victim, the cost to the NHS of the health worker’s absence from work and the possible loss of an employee if recovery is not complete. Added to that is the potentially devastating impact on the health worker’s own health and well-being, with further strain on family, friends and the wider community. I would like to pay tribute to all the fantastic people working in the NHS, including the people and organisations working hard to prevent such violence from taking place against health workers. Northern Lincolnshire and Goole Hospitals NHS Trust has launched an e-petition to heighten public awareness of the issue. The fact that the trust has recognised it in this way is to be applauded, but there is much more to be done. That is why the trust’s partnership approach, working with Unison and others to find ways of practically addressing the issue, is to be welcomed.
NHS Employers—part of the partnership for occupational safety and health in health care—is also actively involved in raising the issue of violence and aggression against staff, and is looking at how it can be managed, working hard to help create healthy and productive workplaces. Work is also under way—led by NHS Protect, with input from the Royal College of Nursing and others—to look at preventing and managing physical assaults on staff which result from a patient’s underlying medical condition, such as dementia. Many physical assaults result from a patient’s underlying clinical condition, but rather than ignoring this, steps can be taken to reduce the risks. Work to take these positive initiatives forward needs to be systematically supported and funded if it is to bring real change and reduce the risk to health workers from such patients.
All these initiatives are positive and to be welcomed. However, I want to highlight a number of concerns raised with me by the Royal College of Nursing, Unison and others. I am keen for the Minister—who I know is committed to ensuring that the Government do their best in this area—to say in his response what practical steps the Government are taking to address those concerns. The Government have funded work by the Design Council with a limited number of A and E units to reduce violence through design solutions. That is to be welcomed. How will the work be evaluated, and how will any improvements to the safety of staff and patients in such units be shared and implemented more widely? With the end of Secretary of State directions, which required NHS trusts to have measures in place to protect staff, how will it be possible to ensure that all provider services meet standards similar to those currently set under Secretary of State directions? They include access to a local security management specialist, training on conflict resolution, central reporting of physical assaults and a requirement to follow policies and guidance—for example, lone working guidance—published by NHS Protect.
Lone working nurses and health care workers absolutely need protection. They often form an invisible work force. Many health workers already work alone with limited, if any, back-up or support. The quite proper policy direction of providing more services in the community means that more health workers are likely to find themselves in potentially vulnerable situations as sole workers. How will Government ensure that there are systems in place to minimise risk and protect the work force?
Full consideration needs to be given to the possible impact of changes in health care delivery combined with efficiency savings on the likelihood of risk of violence against staff. In particular, a risk assessment of the impact of closing units, lengthening A and E waiting times and staff shortages needs to be undertaken and the effects mitigated. That needs to be recognised. In this climate of cost-cutting and austerity, how can we be certain that such measures will be put in place to reduce the risks to staff? Staff who report incidents need more support from their employers and the police. They need feedback after they have reported incidents, and they need to know what action is being taken to prevent any reoccurrence. Lack of feedback and support can lead to under-reporting of incidents and reduced morale.
I welcome the fact that pressure from Unison has resulted in a change to the code for Crown prosecutors to increase the number of prosecutions for assaults on public servants. The closer working relationship between NHS local security management specialists and trade union safety representatives has been a positive development. NHS Protect has also agreed protocols with the police and the Crown Prosecution Service. Under the memorandum of understanding with the Association of Chief Police Officers, the police are committed to progressing all cases of violence and abuse against NHS staff as a priority. The Crown Prosecution Service has also made a commitment to
“work with the police to ensure that these cases are treated with the seriousness that they deserve and encourage a robust charging policy”.
It is crucial that that should lead to a more consistent approach by police forces to following up the perpetrators of either physical or verbal abuse. RCN research suggests that police follow-ups are sometimes inconsistent around the country. Some forces follow up complaints robustly and work closely with local hospitals, but others appear reluctant to get involved in procedures, especially when the incident involves a patient with an underlying mental health condition. Such incidents in particular need more close examination, as a significant number of physical assaults on health workers are by patients with underlying mental health problems. How can the Government ensure that the memorandum of understanding between ACPO, the CPS and NHS Protect will be consistently and effectively implemented?
The reporting and investigation of assaults also need to be properly addressed. According to the RCN survey, although only about 11% had suffered physical abuse at work, 74% of the incidents they recalled were never reported to the police. Staff need to be confident that they will be supported by their employers and the police. They need to be given the confidence always to report assaults. There needs to be a culture of trust that, when reported, such assaults will be taken seriously and fully investigated, with proper support given to the victims. Proper feedback and support in the reporting process will help to keep up morale in the NHS work force and reassure staff that they should not expect to be put in danger while carrying out their duties on behalf of all of us.
In this age of austerity, budgets are being squeezed, and organisations that protect workers are being asked to do important jobs with a lot less funding. For example, the Health and Safety Executive, which plays an important role in keeping people safe at work, has had its work force reduced by a third in the last 10 years, with the number of inspections that it carries out falling from 75,000 to 23,000 a year. That could lead to the real danger of worker safety being jeopardised, which makes it even more important for NHS employers to take completely seriously the need to protect their work force and minimise the risk of attack from patients. Health and safety is not red tape; health and safety saves lives.
Worryingly, the cuts in NHS and local authority budgets and in the Health and Safety Executive are in danger of combining with the confusion caused by the NHS reforms to cause local security management specialists to become increasingly reliant on safety representatives to help them to identify those work areas in which NHS staff will be most at risk. Many local security management specialists used to work with primary care trusts. With the abolition of PCTs, there is a possible danger of confusion and uncertainty about their role in the workplaces that they cover. How will the Government ensure that the risk inherent in the changes does not lead to more health care workers finding themselves in situations in which their personal safety is put at risk?
Every single person should be able to go to work without the fear of physical harm. I strongly back Unison’s calls for a zero-tolerance approach to safeguarding NHS staff. Everyone needs to work together with a clear and persistent focus to make sure that all staff can carry out their work free from the fear and the threat of physical or verbal assault. When individuals are found guilty of attacks on health care workers, that should inform the sentencing and be treated with the utmost seriousness.
As Julian Corlett, Unison branch secretary for Scunthorpe general hospital, wrote to me:
“Violence directed at health workers is never acceptable and is not part of the contract of employment. We must dispel the myth that violence in the NHS is inevitable, or unpredictable and therefore uncontrollable. It therefore remains our key objective to see a significant and sustained reduction in the number of violent incidents directed at NHS staffs across the country, with more prosecutions and severe sanctions for those perpetrating such violence. There has to be the presumption that those committing these offences are more likely to face prosecution than not if we are to see sustained reductions in the figures anytime soon.”
Julian speaks from experience with great passion and clarity; his words will echo round this Chamber and in the world outside it. We should be vigilant and proactive in ensuring the safety of those who work within the NHS. In the words of the children’s laureate, Michael Rosen, on the 60th anniversary of the NHS, we must do all we can to protect the
“hands that touch us first...and the hands that touch us last”.
The Minister of State, Department of Health (Mr Simon Burns)
I begin by congratulating the hon. Member for Scunthorpe (Nic Dakin) on securing this debate on violence against health care staff. It is an issue that every Member of this House can agree is totally and utterly unacceptable in every instance. I would like to praise the reasoned and measured way in which the hon. Gentleman made his points. I also share with him the disgust about what has happened to some of his constituents who work—day in, day out—on behalf of patients in his constituency. Sadly, this problem is not restricted solely to his constituency, as it applies to all constituencies where, regrettably, acts of violence are directed against NHS staff. I can assure him that this Government have zero tolerance of that sort of treatment —physical or verbal—against people who work in our NHS on behalf of patients.
Violence against health care workers can never be tolerated. Nobody should expect to suffer violence at work. This is especially the case for those who are committed to caring for others. Clearly, the human cost alone makes it unacceptable; although the physical effects may be transient, the deeper emotional scars can often last a lifetime. Beyond the effect on the individual, too, there are other factors: the disruption to services caused by the incident and its aftermath; the impact on staff welfare, sickness absence, recruitment and retention and the cost of additional security, all of which divert resources, human and financial, away from providing health care.
In short, the cost to the NHS of violence is huge and it affects us all. I am determined that we should do all we can to prevent violence against health care staff and to take the toughest possible action when violence does occur to ensure that those responsible are held accountable for their actions. From the outset, the Government have been committed to taking action to tackle the problem of violence. We have encouraged NHS organisations to work more closely with their local police forces to clamp down on anyone who is aggressive or abusive to staff—and while we may have made progress, there is still a long way to go.
In 2010-11, the latest year for which figures are available, there were almost 58,000 reported physical assaults on members of NHS staff. Hon. Members are able to consult the reported figures for each health body, as these are placed in the Library each year. In the majority of those assaults—some 40,000—the patient’s medical condition was a factor. This means the culpability of the assailant may have been in question or that a legal sanction may not have been appropriate. However, that still leaves some 18,000 cases in which the assailant’s medical condition was not a factor. While this number is smaller than for the previous year, it is nowhere near small enough: 18,000 is 18,000 too many. We are committed to taking whatever further action is required. The hon. Gentleman expressed concern about sanctions and convictions. I can tell him that sanctions against offenders, ranging from cautions to fines to imprisonment, have increased—there was a 24% increase in 2010-11—but the number is still not high enough.
We are taking action in a number of ways. Some are new, while others have succeeded in the past and we have therefore continued to support them. Of course, the main priority is to prevent violence by protecting staff and managing high-risk situations before they escalate. NHS Protect, which the hon. Gentleman mentioned, is the body that leads the work to tackle crime throughout the health service. It has identified violence against staff as one of its key priorities for 2012-13, and has developed a work programme aimed primarily at preventing assaults.
There are trained security management specialists at more than 90% of NHS trusts in England. They are responsible for investigating security breaches, along with the police, and for implementing new systems to protect NHS staff more effectively. NHS Protect supports NHS organisations by providing advice, assistance and best-practice guidance.
The Criminal Justice and Immigration Act 2008 introduced powers to deal with antisocial behaviour on NHS hospital premises, which enable an authorised person to remove those who are suspected of creating a nuisance or disturbance. A three-year training programme funded by the Department of Health and managed by NHS Protect, which will end in April 2012, has enabled more than 600 staff at over 80 hospitals to be trained in the implementation of the Act. They have been empowered to respond to disruption such as foul language and verbal abuse, intimidating gestures, excessive noise in waiting areas or wards, and the obstruction of thoroughfares. Feedback from staff trained by NHS Protect in the use of the Act’s provisions indicates that the powers are working well in practice on the front line, helping to provide a safer environment for NHS patients, staff and visitors.
The hon. Gentleman raised the important issue of design, particularly but not solely in accident and emergency departments. In November last year, I was pleased to be able to speak at the launch of a project organised jointly by the Department of Health and the Design Council involving the use of design to reduce violence in A and E departments. Leading experts developed and tested potential solutions and identified areas for action. We are currently in the implementation phase of that project. Early indications are positive, but in order for the impact of the solutions to be fully evaluated, a detailed framework has been generated by the design team to record both quantitative and qualitative data. Those data will generate the evidence base that will formally endorse the concepts, proving their efficiency and their impact on the costs of violence and aggression in A and E departments. The evaluation has not yet finished, but we hope to communicate the results later in the year.
The Government intend to change the legal framework in respect of antisocial behaviour. One of those changes is designed specifically to tackle antisocial behaviour affecting the NHS. As Members may have noted from the Home Office White Paper that was issued in May this year, we propose that NHS Protect be named as a relevant authority to apply for crime prevention injunctions. That is intended to enable a quicker response to the problem of antisocial behaviour, and to avoid the need for the police or local authorities to apply for injunctions on behalf of an NHS body.
While much of the work will focus on assaults for which the person committing the act can be held responsible, we will not ignore cases in which a person’s medical condition is a factor in violence, especially as such cases represent the majority of reported physical assaults against NHS staff. NHS Protect is working with a clinically led expert group to develop guidance on the prevention and management of violence in circumstances in which the medical condition of a patient puts staff at greater risk of assault.
When necessary, we need to challenge the idea that the existence of a particular medical condition is a bar to prosecution. Whenever an assault occurs, an assessment of the assailant's culpability must be made. When assailants cannot be considered legally culpable for their actions, prosecutions cannot be appropriate, but when assessments reveal that people were in control of their actions and knew what they were doing, there should be a presumption that sanctions will be sought. Indeed, there is some clinical opinion that such action can assist in making a person understand the impact of their behaviour, and so affect it in a way that discourages repeated incidents. For action to be taken against offenders, we first need staff to report when they have been subject to violence, either verbal or physical. That staff have confidence in the action that will be taken is paramount in encouraging them to do so, and the role of the local security management specialists is key to that.
All the initiatives I have mentioned are designed to prevent violence from occurring. We must, however, remain prepared for the times this prevention activity is not as effective as we would like it to be. When violence does occur, we need to ensure that those responsible are held to account.
To pick up on the valid point the hon. Gentleman made about joint collaboration, NHS Protect has signed a three-way agreement with the Association of Chief Police Officers and the Crown Prosecution Service, with the stated intention of curbing violence and antisocial behaviour in the NHS. This agreement recognises that the police and the CPS are bound by guidance and codes of practice on communications with victims and witnesses, and that employers have a duty to support in every way they can staff who have been victims. This joint-working agreement supports the Government’s commitment to act. NHS Protect will this year be working to translate this national agreement into local protocols for more effective collaboration between the police, the CPS and health bodies in seeking appropriate sanctions for acts of violence. NHS Protect is currently identifying best practice in the management of physical assaults in mental health settings, with a view to issuing specific guidance for that sector. This will include working with the police to take forward prosecutions where it is appropriate to do so.
The hon. Gentleman also raised the important issue of how to protect the lone worker. To better protect lone workers, NHS Protect led the delivery of a lone worker alarm service for the NHS. Over 40,000 staff, and more than half of NHS trusts across England, now use this service, which enables a lone worker to signal covertly for help from the emergency services if they find themselves in a dangerous situation. The service also provides a system control centre, which enables listening to, and recording of, incidents in case evidence is later needed as part of a prosecution.
I wholeheartedly share the hon. Gentleman’s concern about violence against health care staff. We should always do everything we can to prevent it, and when we cannot prevent it, we should seek the strongest sanctions against those responsible.
I hope that the hon. Gentleman and the House are reassured by my account of the work we are undertaking, and by the Government’s and my own personal commitment to tackling this completely unacceptable problem.
I thank the hon. Gentleman. He rightly holds this subject very close to his heart. The Government share his concern, and we are determined to do all we can to minimise the cowardly, dastardly and disgusting attacks on people who do so much to help the frail, the vulnerable and the sick in this country.
Question put and agreed to.
Ministerial Correction
(12 years, 4 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Deputy Prime Minister
(12 years, 4 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Deputy Prime Minister (Mr Nick Clegg)
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 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.
[Official Report, 26 June 2012, Vol. 547, c. 162.]
Letter of correction from Nick Clegg:
An error has been identified in the oral statement given on 26 June 2012. The statement should have read:
The Deputy Prime Minister (Mr Nick Clegg)
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 over 190 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.
Petition
Value Added Tax on Savoury Products
Westminster Hall
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Elections (National Assembly for Wales)
(12 years, 4 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
Paul Murphy (Torfaen) (Lab)
I am grateful for the opportunity to raise this important issue in Westminster Hall. This debate was intended to occur two weeks ago, but as that clashed with the Welsh Grand Committee, the usual channels and I agreed to postpone it for the convenience of Members who represent Welsh constituencies, and one who does not—the Secretary of State for Wales. There has been a bit of fuss about another Welsh Grand Committee that was planned for yesterday, but for which only half a week’s notice was given. The whole thing amounts to something of a fiasco, in terms of debating the exceedingly important issue of the electoral arrangements for our Assembly in Wales. The subject has been debated at length and with great expertise and skill by those in the House of Lords, and in my view, this debate should have been held not in Westminster Hall but on the Floor of the House.
Chris Ruane (Vale of Clwyd) (Lab)
Did the Secretary of State give any reason why only half a week’s notice was given of such an important Committee?
Paul Murphy
Not to me, although I am sure that my hon. Friend the Member for Pontypridd (Owen Smith), who will wind up for the Opposition, will touch on that. I am sorry that the Secretary of State is not here. I have a great deal of time and respect for the Minister, but on this occasion the Secretary of State should be present. Secretaries of State sometimes think that they are too grand to come to debates in this Chamber, but when I was Secretary of State I certainly took part in Adjournment debates. I think that she should be in this Chamber, but she is not, and we will hear what the Minister has to say.
Susan Elan Jones (Clwyd South) (Lab)
My right hon. Friend is a distinguished Member of this House and a former Secretary of State for Wales. Does he agree that the fact that the Secretary of State is not here is totally disrespectful to Welsh Members? I venture to suggest that if we had been a group of community campaigners from Buckinghamshire who were opposed to High Speed 2, she would have been present, even if it was 6 o’clock in the morning. Is it not time for her to turn on her alarm clock and show Wales a bit more respect?
Paul Murphy
None of this is a surprise to me, because it follows the pattern of what happened when we discussed parliamentary constituencies during the progress of the Parliamentary Voting System and Constituencies Bill. There was no adequate debate on the Floor of the House; the guillotine fell, and we did not really have the chance to discuss the issues for Wales. Furthermore, the Secretary of State refused point blank to hold a Welsh Grand Committee on the issue. But enough of that; I am sure that the Minister will be able to explain the Secretary of State’s absence in his concluding remarks.
I wish to come to the essence of the debate, which is the Government’s Green Paper concerning electoral arrangements for our National Assembly in Wales. I will not touch on some of the more peripheral issues, but will rather focus on the central matter of how boundaries are configured and how constituencies are worked out in Cardiff. The Green Paper is flawed for two reasons. First, it is almost exclusively based on partisan grounds, and follows the pattern of the gerrymandering that we saw in the case of parliamentary constituencies. Secondly, that is backed up by the fact that there are only two options in the Green Paper, which is deeply wrong.
If we want a proper debate on how Welsh Assembly Members are elected, to say simply that the status quo is one option and the other is a 30-30 match—30 directly elected Members and 30 top-up Members—is not the end of the story, and other possibilities should have been included in the paper for consideration. I may disagree with most of them, but that is not the point—the option should be there. There is a genuine argument, with which I know the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) and his party—and, I suspect, the Liberal Democrats—agree, regarding the single transferable vote. I do not particularly believe in that, but it should have been an option in the Green Paper.
The option that I favour should also have been considered: retaining the 60 Assembly Members and having two Assembly Members per new parliamentary constituency. I would favour the election of those two Members by first past the post, but they could be elected under the alternative vote system.
Jonathan Evans (Cardiff North) (Con)
The right hon. Gentleman spent a good deal of time talking about the Secretary of State, but I am rather sad that he did not mention the full turnout of Conservative MPs from Wales. He is touching on electoral arrangements, and proposing, in essence, that we move away from the system of proportional representation. As he will know, I debated these issues with Ron Davies, then Secretary for State for Wales, during the course of the referendum campaign. Ron Davies promised the people of Wales that there would be a proportional system. Does the right hon. Gentleman think that before a change is made to any electoral arrangements, the matter should be put to the people in a referendum?
Paul Murphy
The answer to that is yes; I believe that to be the case for major electoral changes, and I will come on to that point, because it is an important part of today’s debate. I am not necessarily saying that we should move away from the proportional system. I would favour a first-past-the-post arrangement and, after the referendum that was held on the alternative vote, I think that the people of Wales would, too, but I would argue that the options should be in the Green Paper, so that the people of Wales have the opportunity to debate and discuss them, and eventually to decide on the method by which their Assembly will be elected.
Ian Lucas (Wrexham) (Lab)
We have all gone through the process of the Boundary Commission inquiry into parliamentary boundaries. Does my right hon. Friend find it extraordinary that this proposal was made after all those hearings had ended, and that the Assembly boundaries were not part of that process? Would it have been better for the issue to have been put forward for consideration at that initial stage?
Paul Murphy
Of course it would. The reason why it was not is that the system is entirely partisan.
Chris Ruane
My right hon. Friend is generous in giving way. To go back one step, it is my understanding that the Prime Minister told the First Minister that no constitutional issues would be sprung on him or on the National Assembly. That involved an element of trust. There is no mandate for the changes that we are discussing in the Tory manifesto. A promise was made to the First Minister that the changes would not go ahead, yet they were sprung on him. What does that do for the trust between Britain and Wales?
Paul Murphy
It seriously damages it, and I will come on to that issue in a second.
Alun Cairns (Vale of Glamorgan) (Con)
Does the right hon. Gentleman think that the grandstanding from Opposition Members, and even some of the so-called logical arguments that he presents, are undermined by a former Secretary of State, and a former Labour Government, who went against guidance from the Electoral Commission when they changed the electoral system?
Paul Murphy
No, because I think those issues were different at the time. The other option that is not in the Green Paper is the question of whether top-up Members of the National Assembly should be elected on an all-Wales basis, as opposed to a regional basis. Personally, I think that would be more logical, and that there should be a list system for Members elected by proportional representation. My point, however, is that these debatable options should have been put to the people of Wales but were not, and that is why the Green Paper is flawed.
My hon. Friend the Member for Vale of Clwyd (Chris Ruane) touched on the assurances that were given to the First Minister of Wales concerning electoral arrangements for the National Assembly. I understand that the Secretary of State said last week that no such assurances were given, but I want to provide the Chamber with two quotations from what was said when the National Assembly debated the issue some weeks ago. The first comes from the former Presiding Officer of the National Assembly, Lord Elis-Thomas:
“Would it surprise the First Minister to know that, when I was Presiding Officer…I received assurances from the Prime Minister…and the…Secretary of State that there would be no change in our boundaries to coincide with Westminster boundaries?”
The First Minister, Carwyn Jones, answered:
“I received an assurance on two occasions from the Prime Minister that there would be no change without the consent of the Assembly, and I am on record as saying that. I took that assurance in good faith and I expect it to be adhered to. However, the reality is that Scotland will continue to have different boundaries for Scottish Parliament and UK Parliament constituencies. If it works in Scotland, what evidence is there that it could not work in Wales? None is offered.”
The point is that there is obviously a huge difference of opinion between the First Minister and the former Presiding Officer on one hand, and the Secretary of State on the other. Whom are we to believe in this instance? The First Minister has made it absolutely clear to me and to others that such an assurance was given.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
The right hon. Gentleman has mentioned the First Minister’s recollection of what my right hon. Friend the Prime Minister said to him. It is important at this juncture to make it absolutely clear that that is not a recollection that is shared by the Prime Minister.
Paul Murphy
In which case someone is telling untruths. The reality is that the former Presiding Officer, Lord Elis-Thomas, confirms that he was told exactly the same thing as the First Minister. Whom are we to believe? If there are such vast differences of opinion on this matter, the Government should rethink their whole strategy on the Green Paper.
Ian Lucas
The intervention from the Minister is very significant, because when I put this question specifically to the Secretary of State last week, she said that she was not aware of the conversation between the Prime Minister and the First Minister. She was very careful in the wording that she used with me. When the Minister winds up the debate, I would like him to be very clear that the Prime Minister is denying that he said to the First Minister that the assurance was given. Will the Minister confirm that, because if that is the case, someone is not telling the truth?
Paul Murphy
Of course they are not, and the point about this whole business is that it undermines the trust between the two Governments and the two Parliaments. It cannot be the case that the First Minister did not discuss such an important issue with the Prime Minister when the Prime Minister visited Cardiff—or, indeed, with the Secretary of State. It is so fundamental to the future of the National Assembly and the way in which it is elected that it seems impossible that the issue would not have been discussed, and that assurances would not have been given. I cannot go any further, because on the one hand the Minister says that the assurance was not given, and on the other Lord Elis-Thomas and Carwyn Jones say that it was.
Mr David Jones
I am grateful to the right hon. Gentleman for giving way to me again, because clearly this is a matter on which Opposition Members would like further clarification. The position is clear so far as the Prime Minister is concerned: he agrees that the electoral arrangements for the Assembly are not within the Assembly’s devolved competence. That is a point on which the First Minister appears to agree. When they had their discussion, the Prime Minister said that the Assembly should be fully engaged in the process. He does not recall, as the First Minister seems to recall, saying that the matter was to be decided by the Assembly itself and, indeed, the notes of the discussion do not reflect the First Minister’s recollection of the conversation.
Paul Murphy
Whoever said what to whom, the reality is that we are now in a fine old mess over it. It seems to me that the Government should go back and rethink their whole approach, not just on the Green Paper, but on how they handle relations with the National Assembly, the Welsh Government and the First Minister.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op)
It is inconceivable that the First Minister would not recall precisely what he was told, and what he understood he was being told, on a matter of this importance. However, I am sure that the matter is of lower importance to the Prime Minister. The point is that the integrity of discussions between Government and Ministers in the Welsh Government is in question as a result of the withdrawal from an assurance that was heard, so we understand, on more than one occasion by both the First Minister and the former Presiding Officer.
Paul Murphy
One wonders how much the Prime Minister knows about the details of these things. Sometimes confusion arises because of that. However, my right hon. Friend the Member for Cardiff South and Penarth (Alun Michael) is right to say that this opens up a serious chasm between the Government in Wales and the Government here in London, which is highly regrettable, because that is in no one’s interest.
The point that is so important and that came through very clearly in the debate in the National Assembly is that the Government and Parliament here have the legal right to take the decision with regard to the electoral arrangements for Wales, just as they have the legal right to abolish the Welsh Assembly, but they ain’t going to do that. They have no moral right to do those things without the consent of the Welsh people, or those who represent the Welsh people.
The point has constantly been made—those of us who were about in those days will reinforce this—that, as everyone knows, the decision to establish devolution in Wales was based on a very narrow majority. Nevertheless, it was a majority. The people of Wales took part in a highly charged referendum campaign. In that campaign, what was put to the people of Wales was the electoral arrangement that now stands. They voted on it on the basis that it was part of the package. That means, in my view, that we cannot unravel such a basic platform of devolution without either asking the people of Wales about it in a referendum, as the hon. Member for Cardiff North (Jonathan Evans) said, or getting the absolute agreement, by consensus, of all the political parties in the National Assembly. That is the moral thing that should happen. It is not necessarily the legal thing that should happen, but in moral terms, it seems absolutely the case that before anything goes ahead, it should have either the approval of the people in a referendum, or the approval of the directly elected representatives in the Welsh Assembly, once they have reached consensus, on the basis that no political party, and particularly not the Conservatives, went into the election—either the general election or the election for the National Assembly—with a mandate for this change.
Jessica Morden (Newport East) (Lab)
My right hon. Friend makes a very powerful point. I can honestly say that no one has come to me recently in my constituency clamouring for change in the electoral system or the make-up of the Welsh Assembly. Does he think it bizarre that the Secretary of State is expending energy on the Green Paper at a time when she should be concentrating on jobs and growth?
Paul Murphy
Absolutely. The Secretary of State should also be trying to ensure that she has reasonably good relations, despite the political differences, with the Government in Cardiff. It seems to me that there is almost a permanent state of civil war between the United Kingdom Government and the Welsh Government on various issues. That has come to a head on this point about the electoral arrangements.
Susan Elan Jones
My right hon. Friend has been very generous with his time. Does he, like me, think it is significant that Conservative Members in the National Assembly for Wales have concerns about the matter? Take, for example, the statement of opinion signed by the Minister’s counterpart in Clwyd West, Mr Millar, and by Mr Paul Davies and Mr Russell George. It says:
“This Assembly recognises that there is absolutely no mandate to change the current electoral system in Wales and that any future change should be put to the people of Wales.”
I am sure that, like me, my right hon. Friend the Member for Torfaen (Paul Murphy) will be very interested to hear the Minister tell us who he thinks speaks for the people in Ruthin market on this issue—him or Mr Millar.
Paul Murphy
Indeed. My hon. Friend has pre-empted me; I intended to give a similar quote from the very same Member of the Assembly. Darren Millar said to the Western Mail some time ago that the Welsh Assembly Conservative group
“has made its position very clear. We have said we want the status quo to continue. We don’t want any change. That’s our position. We think the 40:20 position we have with the existing boundaries is perfectly adequate.”
Not even the Conservatives—the Secretary of State’s friends in the Assembly in Cardiff—agree with the Green Paper, so what is she doing this for? What is the point of it? Unless she gets consensus and agreement, this will be a running sore between the two Governments and the two Parliaments.
Jonathan Evans
Will the right hon. Gentleman clarify a point? I thought that the option to which he refers is option 1 in the Green Paper.
Paul Murphy
Reading the Green Paper, it is clear to me that the Secretary of State’s preferred option is option 2. That is rather different, particularly bearing in mind that she has been telling everyone that she has the right to do this and the right to do that, because she is the Secretary of State for Wales. So was I, but one can have a legal right to do something, but not a moral right. There certainly is no moral right to do this from Chesham and Amersham.
Dr Hywel Francis (Aberavon) (Lab)
A moment ago my right hon. Friend asked the rhetorical question: what is the point of all this? I suggest that the point—I hope that this is not true—is that, cynically, the Secretary of State wishes to undermine devolution. She has eloquently pointed out the background to devolution, the struggle to achieve it and the very narrow majority for it. On my right hon. Friend’s watch, and that of previous Labour Secretaries of State, we developed the strategy of partnership, and now we see it unravelled.
Chris Ruane
I thank my right hon. Friend for giving way a third time. My hon. Friend the Member for Aberavon (Dr Francis) says that a reason why the Tories propose the change is to undermine devolution. I suggest a reason on top of that: it fits in with a raft of legislation. There is the equalisation of seats, for party political advantage; the bringing forward of individual electoral registration by one year, with consensus smashed, for party political advantage; and this new proposal, put forward for party political advantage. If one party acts without consensus, another party—it might be us next time, in 2015—could adopt a similar position.
Paul Murphy
In the past, issues as important as these constitutional questions have been the basis of consensus among political parties, whether in Westminster or in Cardiff. We had no consensus whatever on the Parliamentary Voting System and Constituencies Act 2011. That legislation was entirely for party advantage, although the boundary review in Wales turned the tables on those who thought that they would get an advantage out of it. The Prime Minister wants consensus now. On the reform of the House of Lords, for example, he wants all the parties to come together and agree on something. That is different, is it not? In that case, he wants something to happen, but there is no consensus here.
I will conclude, because many other Members want to take part in the debate. The Scotland Act 2012 was passed by this Parliament. It gave extensive new powers to the Scottish Parliament, but was also based on the consent of Members of the Scottish Parliament. Why not have that in Wales? Why not base suggestions—in the Green Paper, or elsewhere by the Secretary of State—on the consent of the National Assembly for Wales and the political parties there, or, if that does not work, the consent of the people of Wales in a referendum?
Guto Bebb (Aberconwy) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone.
I listened to the opening remarks of the right hon. Member for Torfaen (Paul Murphy) with a degree of interest, but also with surprise. The implication in the comments is that the Labour party in Wales is not partisan, but anybody who lives in Wales is very aware that if there is one party in Wales that is partisan, it is Labour. The changes in 2006 were made with no consultation and the offered guidance was rejected for party political purposes, but we have already heard this morning that that was different.
Chris Ruane
I thank the hon. Gentleman for giving way. In 1997 we came in with a majority of 180, so if the Labour party was simply seeking party political advantage, we would have steamrollered the legislation through. We could have had first-past-the-post and controlled Wales for ever, but we did not do that. We introduced proportional representation, and we did the same in Scotland and for European elections. All the constitutional steps we took over 13 years were taken with consensus, but these arrangements are steamroller government on important constitutional issues.
Guto Bebb
Once again, the hon. Gentleman has not responded to the point about 2006. As a result of the changes, we lost very good Assembly Members, not least my hon. Friend the Member for Montgomeryshire (Glyn Davies), who would have stayed with the Assembly were it not for the fact that changes were made to the rules specifically to damage the opposition parties. [Interruption.] I hear Labour Members talk about democracy, fairness and party advantage, but I will take no lessons from them whatsoever.
Another key point is that a Green Paper is all about consultation. It is part of a consultation process. Why is the Labour party so scared of consultation? Because it does not do it in a Welsh context.
Paul Murphy
The hon. Gentleman will recall that the change in the Government of Wales Act 2006 with regard to Members not being able to stand as an Assembly top-up or an Assembly first-past-the-post Member was based on a Labour election pledge. There was an electoral pledge and it had a mandate.
Jonathan Evans
On the point that the hon. Member for Vale of Clwyd (Chris Ruane) raised, at the time of the referendum on creating the Assembly, was it not the case that Labour pledged that there would be a referendum? Furthermore, Plaid Cymru and the Liberal Democrats certainly would not have supported the creation of an Assembly without ensuring that there was an appropriate proportional system of election. Bearing in mind that the outcome was 4,000 votes in 1 million, is it not likely that we might not have had an Assembly at all?
Alun Michael
Let us remind the hon. Gentleman of two things: first, as other hon. Members have pointed out, Labour created a system that deliberately went against its political interest in order to have balance and give an opportunity to smaller parties; and, secondly, in the 2005 general election Labour committed to dealing with some problems that had arisen in the Assembly, particularly the separation of government from the Assembly as the body to which the Welsh Government are accountable. That was an election issue, which was dealt with in advance of those changes being made in legislation.
Guto Bebb
I am sorry to say that the right hon. Gentleman shows the arrogance of Labour. The Labour party did not create the Assembly. The people of Wales created the Assembly. I accept the comments made by my hon. Friend the Member for Cardiff North (Jonathan Evans); the decision of the people of Wales to say yes to the Assembly was based on the offer made. It was not a gift from the Labour party. It was a decision taken by the Welsh people, and the Welsh people are not the same as Welsh Labour. Some Opposition Members should remember that.
To return to the key issue, we are discussing a Green Paper. What surprises me is the fact that the Opposition do not seem to understand the word “consultation”. They do not accept that the document is for consultation. The hon. Member for Clwyd South (Susan Elan Jones), for example, highlights the possible difference of opinion between the Assembly Member for Clwyd West and the Minister, my hon. Friend the Member for Clwyd West (Mr Jones). I have not heard the Minister state his opinion on the issue, but I have seen him present the Green Paper.
I am proud to stand here on behalf of the party that has democratic debate among its members. We are willing to debate the issue and contribute to the Green Paper and consultation, because the issue is of concern to the people of Wales. We are asking whether we want a system similar to that in Scotland, with boundaries for the Scottish Parliament that are not the same as the Westminster boundaries. That question is worthy of discussion. I am the MP for Aberconwy, a constituency that, under the proposals for changes to the Westminster boundaries, will probably disappear into a seat called “North Wales Coast.” We shall see whether that is the ultimate resolution.
There is no doubt but that there was a manifesto commitment to change the Westminster boundaries, and as a result of that commitment, there is an issue as to whether constituency boundaries need to be coterminous. I need to be persuaded that the change is needed, but I am not running away from the debate, because there is a debate to be had. What is disappointing about the discussion so far today is that there seems to be unwillingness even to grasp the need to have that debate.
A key problem is the growing disconnect between the people who elect us and the democratic process. We need to think about that issue carefully. Do people want to elect a Member for Anglesey and Bangor for Westminster and for Anglesey alone for the Assembly? That discussion is worthy of this House and the wider polity in Wales.
Wayne David (Caerphilly) (Lab)
How does the hon. Gentleman explain the fact that the Government have already brought forward a standing order for the delegated legislation procedure that has been agreed by the House, allowing the next Assembly elections to be fought on the existing boundaries?
Guto Bebb
I am happy for that issue to be clarified by the Minister in due course.
The key thing, in my view, is that there is a debate to be had. There are disagreements within the parties. I believe that some members of the Labour party would be fairly happy with a change. We have heard a lot from the former Secretary of State for Wales, the right hon. Member for Torfaen, about the need for two Members to be elected from a single constituency. That view has been talked about this morning. I find it incredible that the Labour party can talk about political advantage and put forward a plan for two Members for one constituency, which would also be a partisan change.
The other thing that I am surprised by this morning is the fact that the right hon. Gentleman mentioned the fact that there were two options in the Green Paper: the status quo and the change to 30:30. In my reading of the Green Paper the status quo is not an option, because option No. 1 is to keep 40 constituencies but to have them equalised. I have some concern about that proposal: one of my key concerns about any changes to the Welsh Assembly is the need to ensure a buy-in to the concept of the Welsh Assembly in all parts of Wales. I represent a constituency in north Wales, including parts of the north Wales coast, and there is often a feeling that Cardiff does not concern itself, or take as much interest in, the affairs of north Wales as those of south Wales and Cardiff in particular. That may or may not be fair. Some past Assembly proposals have led to that perception. However, it is important to point out that equalisation, for example, would probably result in fewer Members from north Wales and west Wales.
Guto Bebb
And possibly fewer from mid-Wales as well. That would be a matter of concern to me, but, again, it would not make me oppose a discussion of the issue. It would lead me to contribute to the debate and make my views known.
I welcome the debate. It is important not only to engage parliamentarians in Westminster and Cardiff bay in the debate, but to try also to engage the people of Wales. The issue is not whether the decision can be implemented without the consent of the Welsh Assembly. It would be a mistake to implement any change without its consent. A far more important matter is that no change should be implemented without the consent of the people of Wales. We are talking about the electoral arrangements for the Welsh Assembly. The issue should be debated and discussed, and we should be willing to consider the options; but the decision should rest with them—not for any reasons of party political advantage, but because any change, if change were necessary, would be for the benefit of Welsh democracy and the further development of the Welsh Assembly.
Albert Owen (Ynys Môn) (Lab)
I congratulate my right hon. Friend the Member for Torfaen (Paul Murphy) on securing the debate. The issue is important, but as my hon. Friend the Member for Newport East (Jessica Morden) said, it is not a priority, certainly not for constituents in Ynys Môn or, indeed, north Wales.
I want to reiterate some of the points that my right hon. Friend made, but also to take up some of the comments of the hon. Member for Aberconwy (Guto Bebb), with whom I agree on many constitutional issues. I used to agree with him on some constitutional issues when he was a member of another party; but I have been firm in my belief that changes to the electoral system should be brought about by referendum of the people of Wales. That must be the principle we stand for in this place. Only recently, the people of Wales were given a referendum on relatively small extra powers, yet when it comes to making significant changes to the boundaries on which they will elect Assembly Members, there is no question of the Conservative party offering a referendum.
The priorities for my constituents are the cuts, policing and the armed forces—all those issues—but not electoral arrangements. Yet in the short time for which they have been in office the Government have already pushed through changes to the boundaries in which Members of Parliament are elected. That must be a huge priority for them—but not, it seems, when it comes to the House of Lords. There is a possibility that changing the second Chamber could be dealt with by a referendum; but when it comes to National Assembly arrangements, then, with no mandate, the change should go through—and with little consultation too.
I want to address the Minister’s remarks about whether the Prime Minister said one thing or the First Minister said another. I assure him and the House that when I asked the Prime Minister a question in the Chamber, about the respect agenda, his response was very firm: he respected the National Assembly and the other bodies, and would listen to what they said. The First Minister has made it very clear in the National Assembly that he feels the proposal should not go ahead in the way in question. If the Prime Minister is to be taken at his word—he gave me a cast iron guarantee, as he did his Back Benchers on the European referendum—he should respect the views of the Assembly and the First Minister and withdraw the Green Paper and engage in a proper debate.
The hon. Member for Aberconwy said consultation was important. In a parliamentary democracy we have the relevant debates before a general election. We put our policies into a document called the manifesto and allow the people of Wales to judge the parties on it. That is what democracy, the voice of the people, is about. We have changed from a position where parliamentary parties seeking election put policy in their manifestos to one where they do not have a policy, but invent one when they are in office.
I do not know why the proposal has become a priority for the Minister and the Wales Office. Perhaps they have little to do, and are looking for issues to run with. No one I represent—or, indeed, who is represented by other Members of Parliament in the Chamber—has come forward to say “We need to do this.” Yes, there is an issue of coterminosity, because of the changes in the parliamentary boundaries. The hon. Member for Aberconwy said that his seat would disappear as a consequence of the proposals, and the Parliamentary Voting System and Constituencies Act 2011. I can guarantee what would happen if he said to his electorate before the election, “The seat that I am standing for will be done away with, because my party will push through electoral changes.” Yes, the manifesto quite correctly said there would be a change of boundaries, but nowhere did it say that a quarter of the seats in Wales were to disappear. I challenge the hon. Gentleman to intervene, if he feels it necessary, because that is what he voted for.
Guto Bebb
The manifesto commitment was for an equalisation of the seats in the United Kingdom. I fail to see how anyone would not have seen that as a change that would result in a proportionately larger fall in the number of seats in Wales, because Wales has traditionally been over-represented in comparison with the population. That over-representation was justified in historical terms, but with the existence of a law-making Welsh Assembly I fail to see how the issue could have been a surprise to anyone in my constituency.
Albert Owen
The hon. Gentleman might feel that that is a good academic argument, but it was not the outcome of the Act of Parliament. When it came to the Isle of Wight or the Western Isles, or many parts of the United Kingdom with strong Liberal representation, there was consensus. There was no equal representation across the United Kingdom.
Albert Owen
I give way to my right hon. Friend the Member for Cardiff South and Penarth (Alun Michael) and then to the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart).
Alun Michael
The hon. Member for Aberconwy (Guto Bebb) would be well advised to read the Westminster Hall debate initiated by the hon. Member for Monmouth (David T. C. Davies), who castigated the Government for the way in which the size of constituencies in Wales had been downgraded because of the relationship between Wales and England. Reading that speech might be an education for the hon. Gentleman.
Albert Owen
I often agree with the Chairman of the Welsh Affairs Committee. In his most recent pronouncement he criticises Defence Ministers—I am sure that the Minister wants to hear this because he always criticises Assembly Members for not coming before the Welsh Affairs Committee—for not coming forward when radical changes are being made to regiments in Wales. There is inconsistency in the Government’s stance.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
Does the hon. Gentleman at least accept that there is a distinction between the Government and the Boundary Commission? The Government passed legislation that a constituency should be 75,000, or 5% either way, but it was the independent Boundary Commission that actually drew the lines.
Albert Owen
I do not believe that the hon. Gentleman is really apportioning blame to the Boundary Commission. He and his party voted on strict criteria, which were then imposed on the Boundary Commission. First, they allowed exemptions in some areas, which means that the argument that the hon. Member for Aberconwy made about equalisation across the entire United Kingdom is a false one. Secondly, the Boundary Commission was given no room for manoeuvre, which is why we will end up with this Government doing away with a quarter of the seats in Wales.
Susan Elan Jones
Does my hon. Friend agree that there is a degree of nonsense in what certain Conservative Members are saying? It seems that they want fewer Conservative Members of Parliament in Wales as long as it does not affect their own seats. In his role as Parliamentary Private Secretary, the hon. Member for Montgomeryshire (Glyn Davies) has to sit silently, but he has described the changes as the death of parliamentary democracy in mid-Wales. Although he is not allowed to speak, he can nod—he is not even nodding this morning. Does my hon. Friend not agree that there is real inconsistency in what the Conservatives are arguing on this point?
Albert Owen
I have highlighted the inconsistencies of the Conservative party on these issues, but I now want to move to some of the important points that my right hon. Friend the Member for Torfaen made in his opening remarks. I have dealt with the first point: there was no mandate for the change. There is no respect for the National Assembly as a body and for the First Minister as a leader of that body. That is absolutely clear from what has come out of this debate and from the way in which the matter is moving forward. As for the idea that there is dialogue among people through a Green Paper—the hon. Member for Aberconwy gave me the ammunition to go after this one—I have to say that not many people concentrate on a Green Paper. Many people concentrate on manifestos. That is the difference.
Albert Owen
The hon. Gentleman may shake his head, but that is what parliamentary democracy is based on. I am disappointed that the Secretary of State is not here this morning. She was the one who said at Welsh questions that she wanted to lead this debate. This was the opportunity for her to do so. Perhaps 9.30 is a little too early in the morning for her to turn up to lead a debate, but at 11.30 on Monday she wanted to do so. I am glad that my right hon. Friend the Member for Torfaen has given us this opportunity at 9.30 on Tuesday.
Mr David Jones
Let me correct the hon. Gentleman. This is not the debate that the Secretary of State wanted to lead. She wanted to lead the debate in the Grand Committee that Opposition Front Bench Members refused to have.
Albert Owen
I do not take notice of what my Front Bench colleagues say on every occasion, but they were absolutely right about this. What they said—if the Minister is going to quote them, he should do so correctly—was that they wanted a debate on the Floor of the House, in the main Chamber. Changing the way in which people are elected and the numbers who can be elected to the National Assembly are important issues. I welcome a debate, but not after the event.
The hon. Member for Aberconwy said that the status quo is not an option, so the only option left is 30:30. Those are the only two options presented by the Government. We stay with the status quo, which will not be an option, or we go for 30:30. I have concerns about equal weighting between regional Members and constituency Members. Members of the Assembly and Members of Parliament serve a community. There is a link with the individual who is elected. He or she represents the views of the people and they can be voted out. When we increase the regional lists—this is another inconsistency among some Government Members—we make things less representative. The power goes not to the people but to the party managers, which is something I disagree with, whether for the European elections, the Assembly elections or any other election. In this Chamber today, there are three Members who were regional Assembly Members, and I have respect for all of them as individuals, but they have all chosen to come here and to be elected on a constituency basis. I take from that that they favour that form of election.
Glyn Davies
I realise that there is a convention that Parliamentary Private Secretaries do not speak in a debate, but I do not want the hon. Gentleman’s point to pass unchallenged. As an individual Member, I certainly did not decide to move from the Assembly to Westminster; it was the election result that decided that.
Albert Owen
I did not single out the hon. Gentleman, but I am glad that he has intervened, because we miss his contributions. The fact that he is a PPS and is unable to contribute to debate is a sorry thing for this Parliament and this Chamber.
There is an important point about the lack of democracy when there are list Members. If we go to 30 seats in the parliamentary boundaries and they are coterminous, we should have dual membership. I disagree that it will give an advantage to the Labour party, because the electorate are sophisticated in Wales and they will make their choices. They have limited choices as to who their regional Members are. That is decided by party managers, which is what this Government want; they want to strengthen their grip over who gets elected to the Welsh Assembly.
Chris Evans (Islwyn) (Lab/Co-op)
In my own region and in the region of my hon. Friend the Member for Blaenau Gwent (Nick Smith), in south-east Wales, Labour consistently tops the poll on the regional list yet we do not have a single Labour regional AM. Is that democratic? Is that not ignoring the democratic will of the people?
Albert Owen
No, it is not democratic, but it was accepted by the electorate in Wales when we had a referendum. I accept that members of the public in Wales knew what they were voting for, but I do not accept having radical changes without going back to the people of Wales and having another referendum so that they can endorse or disagree with the principles. That would be real democracy.
Jonathan Evans
I wonder whether the hon. Gentleman could calm his colleague, the hon. Member for Islwyn (Chris Evans), who has such a sense of injustice, by reminding him that in the Assembly elections last year, Labour got 43% of the constituency vote and 70% of the constituency Members. I say that in case he feels hard done by.
Albert Owen
I thank the hon. Gentleman for pointing that out, and for once again putting on his record his disagreement with the Conservative party on the way we elect Members. He has been honest and consistent that he wants greater representation through proportional representation, and I give him credit for that. Indeed, I am at one with him. We should elect all our Assembly Members on the basis that they serve their constituencies and that the constituents have the right, every four or five years, to turf them out if they think that they are not doing a good job, or re-elect them if they think that they are doing a good job. We should strive for having a named person and a named party, which is open democracy, not for increasing the list proportion, which does away with that and gives party managers a greater responsibility that they do not deserve.
Why is the issue a priority? It was not in the Conservative manifesto. I do not believe—I will take an intervention if it is not the case—that it was in the Liberal Democrat manifesto. We had a referendum on the alternative vote, which I support and would do so in the future if we had a proper Green Paper to advance it. Why did we have a referendum on the alternative vote but not on changing the boundaries for the Assembly? Why are we pushing this forward? The reason why we pushed AV up the parliamentary timetable was because it was the cement that kept the coalition together. Perhaps, this is cement, too. I will take an intervention from the Liberal Democrats, although I know the hon. Member for Brecon and Radnorshire (Roger Williams) is going to speak in a minute, to hear whether they have been pushing for the measure. I have not seen any political party pushing it in this place.
Going back to the respect agenda, there needs to be real respect for elected bodies, whether they are in Wales, Scotland or Northern Ireland. The Prime Minister should check his notes and look for what he actually said in the meeting, because two against one is a democratic vote in my thinking, and two people remember one thing and one does not. I rather suspect that the Prime Minister’s memory is failing him or that he has done another U-turn. He is very good at doing U-turns; he has done dozens of U-turns. I remember him telling the electorate in Wales that he would not, in any circumstances, put VAT up, yet he did so as a priority when he came into office. I say to him, “Check your notes, certainly show respect for the First Minister and the people of Wales and let’s have a proper debate on this before we move forward.”
I believe that there is no consensus to be built around this narrow Green Paper. What we need is a proper debate in both institutions; indeed, we have had an excellent one in the House of Lords. I hope the Minister will reflect on what has been said by far more independent-minded people in the House of Lords on the issue. We need a proper debate in which we have the choices in front of us: whether we really want to be radical and move forward, or just to edge forward, giving more power to party managers rather than to the people of Wales.
Can the Minister clarify some points in his winding-up speech? What mandate does he have for the changes? I think I know the answer to that question. What are the views of the Assembly and does he respect them? Indeed, does he respect the views of the Welsh Conservative group within the Assembly, who have made it quite clear that they do not want these changes? How did the Government build the consensus that they put into the Green Paper and how do they hope to move forward?
I suggest that the only way forward is to scrap the proposed changes; to get the parliamentary boundaries firmed up, with Parliament’s will; and to look at the issue properly and give the people of Wales the chance either to endorse it or kick it out.
Mr Philip Hollobone (in the Chair)
Order. I shall call the shadow Minister at 10.30 am. Before then, we have Roger Williams and Wayne David. Gentlemen, it is up to you, but I should think that five minutes each would be a fair allocation of time.
Roger Williams (Brecon and Radnorshire) (LD)
Thank you, Mr Hollobone, for giving me this opportunity to speak. I believe that this is the first time that I have served under your chairmanship.
Once again, the hon. Member for Ynys Môn (Albert Owen) has shown his splendid independence, which has won him so much popularity and support in his constituency. He is right to say that there is very little appetite among the population of Wales—certainly among my constituents—for further constitutional change. Indeed, there would be even less appetite for it if they saw us trying to debate whether we should debate, or when we should debate, constitutional issues. We are a relatively small congregation in Wales of 40 MPs. There must be more consultation in future about when and how we can discuss these important issues, because it does us no good to be seen to be rowing about things that are viewed by the people we serve as of little importance.
The right hon. Member for Torfaen (Paul Murphy) secured the debate and I congratulate him on doing so. He introduced it in a very statesmanlike way. Unfortunately, however, there were some rather partisan interventions, which sometimes forced him to divert from his decided path. Nevertheless, the debate has thrown up some sharing of views; I would not say that we have gone so far as consensus, but debates such as this one help to firm up ideas, and the pros and cons of particular proposals.
From my point of view, it is a very happy occasion when we can debate these things against a background of acceptance in Wales of the Assembly. At one time, a lot of people thought that the Assembly would not play a constructive part in the governance of Wales, yet the evidence of the recent referendum, when a considerable majority of people voted for extra powers, demonstrates the support that the Assembly receives from the Welsh people.
As far as that support is concerned, one of the key issues—yes, we would all like a better health service and better education for our young people—that attracts the people of Wales to the Assembly is the way Assembly Members are elected and that the Assembly is a body that reflects opinion within Wales. I have been given a little quote by my hon. Friend the Member for Cardiff North (Jonathan Evans); I think that it was Ron Davies who said that he did not want the Assembly to be
“Mid Glamorgan council on stilts”,
so that it was completely dominated by Labour. It was on that basis that Plaid Cymru and the Liberal Democrats were attracted to the cause of the Assembly for Wales.
In considering these issues, we must understand that the people of Wales accept the Assembly and they like the electoral system that we have. Yes, the Liberal Democrats would like to have the single transferable vote and we share that view with Plaid Cymru. However, we made the concession and reached agreement on that issue, so that the referendum on the Assembly could be carried; we think that is a good thing. Over time, we will again put forward the case for STV, but we will look at the proposals in the Green Paper and decide whether any of them are helpful to us and helpful to the people of Wales.
We would support the 30:30 option. We would perhaps look at the election of regional Members on a whole-Wales basis. We believe that there could be dual candidacy, so that people can stand in both the regional and the constituency part of the elections. Indeed, we believe that these issues should be debated in Wales and should have an airing. This debate has been the start of that process, as far as the House of Commons is concerned; we have already had the debate in the House of Lords. I look forward to continuing the debate, particularly with the people of Wales as well as among ourselves in Westminster.
Wayne David (Caerphilly) (Lab)
Thank you, Mr Hollobone, for calling me to speak. I will keep my comments brief. I just want to make one essential point: that the whole consultation on this issue is partisan. It is skewed to the benefit of the Conservative party, and the sooner the Liberal Democrats wake up to that reality, the better. I will quote a few passages from the Green Paper to support that contention. The first relates to preventing an individual from standing for the list and for a constituency. The Green Paper says that the proposal to end that prohibition
“should help smaller parties in particular”.
It goes on to say:
“It may also have a positive effect on representation in the Assembly; currently high quality candidates who stand as a constituency candidate…are lost to the Assembly”.
Well, that is democracy. People lose elections; that is not something that we should be against, although the Green Paper is against it. We should say, “Fair enough, that’s the democratic process.” Why on earth do we want to prevent that from happening by having this skewed approach towards democracy?
My second point is on the all-important issue of the Assembly boundaries. We all know that the Parliamentary Voting System and Constituencies Act 2011 was a partisan document. It reduced the number of MPs across the UK by 50, but the largest reduction was in Wales; it was a reduction of 25%. It is likely that the Labour party will suffer most from that reduction. According to that Act, geography is now a minor consideration in determining parliamentary boundaries, as are topography, history, community and sense of identity; it is all down to a rough equality of numbers.
If anyone has any doubt at all about whether that Act is a partisan piece of legislation, they should compare the Isle of Wight and the Isle of Anglesey. Under the Act, the Isle of Wight is to have two MPs. Why? To keep Conservative English Back Benchers happy. Yet Anglesey will not even have one. That is crudely partisan. The Government are even distorting their own legislation to keep the Conservative party happy, and that is no way to enhance democracy or introduce constitutional change. As my right hon. Friend the Member for Torfaen (Paul Murphy) says, change must be on the basis of consensus. That is how it always has been done, and how it should be done.
Regarding the boundaries, the Green Paper states:
“These developments mean that we need to change the present arrangements for Assembly constituencies”,
because of the 2011 Act. That is wrong. They do not need to be changed. In fact, the 2011 legislation contained a decoupling clause, which made it absolutely clear that the Assembly boundaries would not depend on parliamentary boundaries, so the Government want to revise their own legislation. To complicate things even more, bizarrely, the Government introduced a statutory instrument confirming the existing Assembly boundaries for the 2016 elections. They intend to rescind their own statutory instrument and contradict their 2011 legislation, and that is extremely confused, to say the least.
Option 1 of the two options outlined states that continuing with 40 Assembly constituencies
“would require a new system of boundary reviews”,
but a boundary review system is already in place, and the Government have confirmed the boundaries for the next Assembly elections. That statement might be referring to a system for the future but, on the basis of what we have had already, the changes are likely to be minor if we stick with the status quo. The Government’s arguments are false and superficial, and what is really behind the changes is a partisan approach to constitutional change.
The Government believe that this is about consultation, but I suggest that it is all about gerrymandering. To take up a point made by a number of Members, the approach taken shows an unbelievable—I will be kind—misunderstanding between the Secretary of State for Wales and the First Minister of Wales. That is no way in which to approach an issue as important as representation and democracy, and I urge the Government to recognise that they have been ham-fisted. They need to recognise that there are fundamental flaws in the Green Paper, say that it is a mistake, and recognise that the way forward is on the existing boundaries.
Owen Smith (Pontypridd) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my right hon. Friend the Member for Torfaen (Paul Murphy) on securing this useful and important debate. It is a profound matter of regret to me, and to my right hon. Friend, that the Secretary of State is not here to listen to the arguments on both sides, not least because the Minister’s comments, and their further underlining of the clear disagreement between the Prime Minister and the First Minister, are a matter of the utmost seriousness. The word of either the Prime Minister or the First Minister is being called into question, and as the Secretary of State is at the heart of that unfortunate disagreement, it ill behoves her not to engage in the debate today.
It is no surprise, however, that the Secretary of State is not here, because that is in keeping with the ham-fisted, high-handed manner in which she has dealt with the matter over recent weeks. She has accused me of playing games. I put it to her that we are not playing games but merely articulating the views of Opposition Members and, I suggest, the National Assembly, which are already on record. This is a matter of profound significance to the National Assembly and the people of Wales. I ask whether there is any other Welsh issue of this significance being debated in the House this morning. I did not see anything on the Order Paper that should be detaining the Secretary of State. I certainly felt that my attendance here was important enough to warrant my sending my apologies to the shadow Cabinet, which meets as we speak.
I want to make something clear about the debate that we did not have this week. I wrote to the Secretary of State several weeks ago, telling her that I thought this such an important issue that it ought to be debated on the Floor of the House. She did not have the courtesy to write back with her opinion but merely tabled, through the usual channels, a debate in the Welsh Grand Committee. That was why we objected to the debate; it was nothing to do with the timing, but because we felt it ill-considered and ill-judged to debate something of this significance in Committee, and not to expose a constitutional matter to wider discussion.
This is a high-handed and ham-fisted way of going about things. As my right hon. Friend the Member for Torfaen made clear in his eloquent remarks, the Green Paper is highly partisan. It represents a barely veiled political agenda of increasing representation for minority parties in Wales. As my hon. Friend the Member for Caerphilly (Wayne David) said, that agenda is, incredibly enough, there in black and white in the Green Paper. I include among those minority parties the Welsh Tory party and Plaid Cymru, a party that, extraordinarily, is not represented in this debate about the National Assembly for Wales.
Jonathan Evans
Does the fact that the Labour party got 43% of the vote in the Assembly elections not make it a minority party?
Owen Smith
No, it very clearly does not. The Labour party is here today speaking for Wales, and it is a shame that the hon. Gentleman sought earlier to misrepresent the options in the Green Paper. He suggested that on the table was one option of keeping the status quo, and he knows that that is not straightforwardly true. The option is to keep 40-20, but to shift to a more equalised block of constituencies by changing all the constituencies across Wales, with none of the benefits of retaining coterminosity with the parliamentary boundaries. Even that minor change is so significant that the consent of the National Assembly for Wales, as proxy for the people of Wales, ought to be sought.
The Green Paper is partisan, and also arrogant, in that it completely eschews the tradition of seeking consensus on issues such as constitutional change. When in office, the Labour party sought change through cross-party consensus, including when we proposed changes to the National Assembly for Wales in election manifestos. Amusingly enough, even the Tory party is split on this issue, with the party in Westminster taking one position in documents, and the party in Wales, which is perhaps more in touch with the people of Wales, taking an alternative one.
This is essentially an anti-devolution Green Paper, at odds with the spirit, if not the law, of devolution, as my right hon. Friend the Member for Torfaen said. How else can we describe a proposal from a Westminster-based, Tory-led Government for changes to both constituencies and elections to the National Assembly for Wales—a proposal that does not require the consent of the Assembly or the people of Wales? The proposal lacks even a modicum of a mandate, and thus lacks legitimacy, and it should be called out for what it is.
The two options are clear. One is to keep the 40-20 split but change the nature of the boundaries. That has all the disbenefits of reorganisation and none of the benefits of retaining coterminosity. That is why, of course, the Secretary of State is not minded to take the option forward. It is a red herring, designed to deceive. The second option is to shift to 30 on a list and 30 first past the post, increasing the number of Members elected via proportional representation, and decreasing the number directly elected by 10.
No one is suggesting that the nature of the National Assembly should be set in stone or fixed in aspic. Nobody is suggesting that no changes should be proposed and no reforms undertaken. Many people in Wales have lots of ideas—we have heard some suggestions today—about how the National Assembly could be reformed, but few of those people would have the temerity to propose imposing those changes on the National Assembly and the people of Wales without seeking their consent in any meaningful fashion. Fewer still would have the nerve to propose changes without any real evidence or impact assessment of how they will affect voting patterns or election turnout in Wales.
However, our absent Secretary of State proposes to do just that, giving effectively one option, the justification for which is cut and pasted from the Parliamentary Voting System and Constituencies Act 2011, with nothing to back up either that or the alternative except the threat that if the option she favours is not adopted, the other even more destructive and disruptive option will be adopted. So much for the respect agenda.
That is happening despite the fact that in the Select Committee on Welsh Affairs last year, when I suggested that the Secretary of State had precisely such a plan in the back of her mind and warned her not to try to gerrymander the map in Wales, she told me that
“before anything goes forward to do with boundaries there would be a loud, long and large period of consultation”.
Consulting on a flimsy Green Paper for a few months over the summer, and treating the National Assembly as a consultee like any other individual or institutional consultee in Wales, while the Secretary of State for Wales refuses to submit to any meaningful scrutiny, does not constitute a loud, long or large consultation to my mind. It is certainly not appropriate to the changes proposed.
As my right hon. Friend the Member for Torfaen said, consider the contrast between that and the attitude taken by this Tory Government when they sought to introduce changes to the nature of the voting arrangements for Parliament in Westminster. We had a three-month, significantly contested and well-resourced campaign, followed by a national referendum. I am not necessarily suggesting that that is comparable to the changes proposed in the Green Paper, nor am I necessarily suggesting, as some have done, that the changes necessitate a referendum. However, I put it to Members that at the very least, the consent of the National Assembly must be obtained as a proxy for that of the people of Wales if there is to be no referendum on the changes.
Consider, too, the changes mentioned in this debate in respect of the passage of the Scotland Act 2012. This Government explicitly accepted that the Scottish Parliament should have to consent to the views included in the Bill before it could become law in Scotland. Why does this Welsh Secretary, parachuted into Wales, not feel that a similar job should be done for Wales? Why does she treat the National Assembly for Wales with such disdain when her counterpart in Scotland treated the Scottish Parliament with such respect?
All that prompts the question: why these changes, and why now? Like others here, I cannot but conclude that it is about narrow party self-interest for smaller parties that will benefit from an increased proportion of Members in the National Assembly being elected by proportional representation. To proffer a piece of evidence in support of that contention, think back to 1999, when the Labour party was well supported by the people of Wales and did well at the elections, with the Tories winning just one seat by first past the post. What was the impact for them on the list? Eight seats were delivered. I suggest that a similar position might well come about, with similarly happy benefit for Conservative Members, if the proposals are adopted.
One cannot help thinking that the reason why Plaid Cymru is so quiet on the issue is that the party has cooked up a deal with the Conservative Secretary of State to accept the proposals, because it knows that they will benefit Plaid Cymru, too. The people of Wales will note Plaid Cymru Members’ absence from this debate and understand precisely what they are about.
Owen Smith
I find it absolutely amazing that Members from the so-called party of Wales should be absent from a debate on electoral arrangements for the people of Wales alone. It is an absolute dereliction of duty for them not to be here engaging in this debate.
Suspicions only harden when we consider the fact that No. 10 has now been dragged into the debate about Wales. That too strikes me as extraordinary. No. 10 is now reduced to the kind of weasel words that we read in the newspaper this morning and heard repeated by the Minister earlier today:
“the Assembly should be fully engaged in the process of deciding its future electoral arrangements”.
What does “fully engaged” mean? Does it mean consulted with, like any Tom, Dick and Harry in Wales, any public body or any MP? I suggest that that is not full engagement. Equally weaselly is the Prime Minister’s letter to the First Minister. He did not say that the changes in Wales should be decided by the people of Wales, but he certainly said, in the words of the First Minister, that the people of Wales should agree with the changes through the National Assembly. That is a bone of contention to which we will need to return later.
In conclusion, I have some questions for the Minister sent here today by his extremely busy Secretary of State to represent the Wales Office. First, what exactly does No. 10 mean by “fully engaging” with the National Assembly? Does it mean anything more than consulting with it, as with others in Wales?
What weight will the consultation accord the views of the National Assembly? To quote the motion passed there by the Tories, Plaid Cymru and Labour, it has already voted to:
“This Assembly recognises that there is absolutely no mandate to change the current electoral system in Wales and that any future change should be put to the people of Wales.”
Given this Government’s complexion, what notice will be paid in particular to the views of the leader of the Welsh Tories, Andrew R.T. Davies? He said:
“I think the Assembly should determine its own boundaries”.
In another interview, he said:
“I am in favour of the status quo”.
Ultimately, what will this Government do if, as seems likely, the National Assembly holds to its course and continues to submit evidence to the consultation saying that it does not believe that there is a mandate for the changes and does not support them? Will the Secretary of State for Wales continue to drive through the changes in the teeth of clear opposition from the National Assembly? If so, something has gone badly awry in the arrangements between Wales and Westminster. The Minister and his Secretary of State would do extremely well to consider the damage that will be done to that relationship if they press ahead. Devolution was intended not to diminish the voice of Wales within the UK, but to amplify it. It was intended to grant greater control over national affairs to the people of Wales via the National Assembly, within the framework of the UK. That framework is delicate, as events in Scotland are displaying only too clearly. All of us who believe that we in the UK are better together should reflect on that, and on the impact on that delicate framework.
Imposing ill-considered and ill-judged changes from Westminster on the National Assembly will only damage it. I am not playing games; I am simply stating the facts. I hope that the Minister has some answers on behalf of his Secretary of State.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
Mr Hollobone, it is a pleasure to serve under your chairmanship. In the brief time available to me—some 11 minutes—I will do my best to answer many of the questions posed in this debate. I congratulate the right hon. Member for Torfaen (Paul Murphy) on initiating this debate. He was kind enough to say during his remarks that he had considerable respect for me. I must tell him that as a lawyer, I am always suspicious when told that people have respect for me, because the expression “with great respect” is the greatest insult in the legal profession. I believe that the right hon. Gentleman’s compliment was, in fact, meant as a back-handed insult to the Secretary of State for Wales, and that insult was echoed by many Opposition Members. Frankly, the personal nature of their criticism does them little credit.
It is important that the facts are set out clearly on the record. As the right hon. Gentleman will know, although we have had the benefit of a one-and-a-half-hour debate today, the Secretary of State had offered to hold a Grand Committee on the issue. The right hon. Gentleman is an important supporter of the Grand Committee system and, had that offer been accepted, we would have had a three-and-a-half-hour debate yesterday morning. For the life of me, I cannot understand why his party’s Front-Bench representatives refused that offer. The right hon. Gentleman said that it was made on short notice, but as he will know there is little time left in this parliamentary term to hold such a debate. I hope that I am not being unfair to the shadow Secretary of State, the hon. Member for Pontypridd (Owen Smith), but I think that, had the right hon. Member for Torfaen been in his position, that offer would have been accepted and we would have had a Grand Committee debate yesterday, led by the Secretary of State, and not the attenuated process that we have gone through today.
Susan Elan Jones
Why is the Minister waffling so much? Where is the Secretary of State for Wales?
Mr Jones
The hon. Lady’s personal animosity towards the Secretary of State is well known, so I will not grace her comments with any further response.
This debate is about the Government’s Green Paper on the future electoral arrangements for the National Assembly for Wales, but the Labour party appears to spend most of its time agonising about process. Having hacked through that undergrowth of process, its principal complaint seems to be that it is the Assembly, not Parliament, that should be responsible for determining those electoral arrangements. The position, however, is absolutely clear: this Government can only work within the devolution settlement that was put in place by the Government of Wales Act 2006. That Act was implemented by the Labour party, so it is rather rich that its Members are now complaining about the arrangements that they thought perfectly adequate back in 2006. I witnessed the passage of the Bill through Parliament, and I cannot recall any of those Members suggesting at the time that the arrangements should be anything other than those that we are pursuing.
Mr Jones
No, I will not, because I have been left very little time by the hon. Member for Pontypridd.
Under the settlement, the Assembly’s electoral arrangements are not a devolved issue, so constitutionally it is entirely proper for Parliament to consider the question. The issue of the First Minister’s conversation with the Prime Minister has been raised. Let me make the position clear for the record: the Prime Minister’s recollection is that, when he met the First Minister at the Broughton aircraft factory, he told him that the Assembly should be fully engaged in the process. He did not say that the matter was to be decided by the Assembly itself. Frankly, it would have been extraordinary if he had done so, because that is not an option under the devolution settlement. As I have said, the notes from the meeting do not reflect the First Minister’s recollection of what was said.
I repeat that this debate is about a Green Paper, in which the Government are asking important questions about the future conduct of Assembly elections and the make-up of the Assembly itself. It is, as my hon. Friend the Member for Aberconwy (Guto Bebb) has pointed out, a consultative document, and the Assembly, the Assembly Government, Opposition Members—in fact, everybody—are not only free but positively encouraged to play into that process. I have no doubt that the right hon. Member for Torfaen will himself play into it and make submissions to the consultation, which will continue until 13 August.
The Government are seeking to establish whether people think that the Assembly constituency boundaries should reflect the 30 proposed new parliamentary boundaries in Wales, or whether there should remain 40 constituencies, which would have to be of equal, or nearly equal, size. I find it extraordinary when Opposition Members criticise the principle of equality of vote, because it was my understanding that the Labour party—we have been reminded of this by several Opposition Members, most notably the hon. Member for Ynys Môn (Albert Owen)—considers democracy to be important. It is wrong, according to the values of any democracy, that a vote in the constituency of Cardiff South and Penarth should be worth almost twice the value of a vote in Arfon. What is sauce for the parliamentary goose is sauce for the Assembly gander, and that is precisely what we seek to achieve—fairness and equality within the voting system.
We have made it clear, as the hon. Member for Caerphilly (Wayne David) has pointed out, that we favour a move to 30 constituencies that are coterminous with parliamentary constituencies, because that would be cleaner and clearer for the people of Wales. Under such a system, they would know which constituency they were casting their vote in, whether it was at a Westminster or an Assembly election. I do not believe that there is anything controversial about that.
This has been an extraordinary debate, because it should have taken place yesterday in Grand Committee, and it should have lasted for three and a half hours, rather than an hour and a half. I must say that it is because of the ineptitude of the shadow Secretary of State in opposing the motion for a Grand Committee when it was made on the Floor of the House that we did not have the debate yesterday. I do not believe that his party’s Back Benchers are idle or cowardly, but that the hon. Gentleman has completely mishandled the process.
It is also extraordinary that Opposition Members appear to be clamouring for a debate on the Floor of the House about a consultation paper. When the Parliamentary Voting System and Constituencies Bill was progressing through the House, they clamoured for a Grand Committee on the issue, yet when they were offered a Grand Committee on the Green Paper, they refused it because they wanted a debate on the Floor of the House. This is a question of utter, shambolic inconsistency on the part of Opposition Members in general and the hon. Member for Pontypridd specifically. I realise that he is very new to the job and that he is inexperienced, but it would have been more beneficial to him if he had sought the counsel of the right hon. Members for Torfaen and for Neath (Mr Hain) before he decided, in such a cack-handed manner, to refuse the offer of a debate in Grand Committee.
The Green Paper is an important document. I hope that Opposition Members will play into the process and that the hon. Member for Pontypridd will learn from this experience and exercise a little more caution before shouting, “Object”, on the Floor of the House.
Mr Philip Hollobone (in the Chair)
Order. As Members who have just arrived to take part in the next debate will note, we have had a very interesting and lively debate on the electoral arrangements for the National Assembly for Wales. We are now going to have an equally interesting and fascinating debate about East Anglia rail. It gives me great pleasure to call the hon. Member for Suffolk Coastal (Dr Coffey).
Rail (East Anglia)
(12 years, 4 months ago)
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Dr Thérèse Coffey (Suffolk Coastal) (Con)
Mr Hollobone, it is a great pleasure to serve under your chairmanship. I am delighted that many colleagues from our counties are here today. I extend a warm welcome to the hon. Member for Nottingham South (Lilian Greenwood), who will be alone on her side of the Chamber because East Anglia has not a single Labour Member of Parliament. However, she will be pleased to know that Labour councillors have worked through their district and other councils, local enterprise partnerships, rail passenger groups and MPs to put together a vision, so she should not feel completely alone. I was delighted to be able to send both her and the Minister a copy of the prospectus before today’s debate.
Investing in East Anglia’s rail will benefit local residents and the national economy. Connecting our economic hubs, moving freight on to rail and improving our branch line services, alongside smarter ticketing, new and refurbished trains and better stations, will make a huge difference to people in Suffolk, Norfolk, Essex and Cambridgeshire. That is why we are all united with the people I mentioned earlier to try to deliver a document, “Once in a generation—A rail prospectus for East Anglia”, which was launched yesterday. I am delighted that many MPs were able to put their name to our proposals.
I know that some colleagues are planning to speak and some are planning to intervene. I will indicate the appropriate point, if that is okay, because I will be referring to some colleagues who are not able to be here today. That will be clearly signalled, and I hope that the signalling is better than that which we experience on the great eastern main line.
In putting the matter into context, if I paint a negative picture, I am afraid that it is, sadly, a true one—poor reliability, cramped commuters, old stock, unsmart ticketing and a poor deal for East Anglian rail passengers, who, with the premium in the last franchise, are net contributors to rail services in the rest of the country. However, I am delighted that we have come together to say that we can have a better service. It is possible and feasible, and there is a genuine commitment to try to ensure that the infrastructure for East Anglia is among the best, so that we can harness the economic benefits and a better quality of life for people.
I have just dashed from a meeting of my Select Committee, in which we were interrogating Broadband Delivery UK and the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey), who has responsibility for broadband. Broadband is another key asset, but better broadband for our counties will not replace the need for people to travel to work and for investors to come out to our communities.
I have mentioned the prospectus already, and I am not planning to regurgitate every single priority in the document. I will try to give an overview and focus on Suffolk.
Some colleagues are not able to attend today—some are ministerial colleagues who approached me to say that unfortunately they have meetings and cannot attend. They include my hon. Friend the Member for Norwich North (Miss Smith), whom I think should be given great credit for trying to pull together, on a long journey—even longer than from my local station at Darsham—the different interests into one compelling vision for our counties and for growth. She has led the way, and she should be thanked for trying to ensure that her constituents will get a better service out of the vision.
Unfortunately, my right hon. Friend the Member for South East Cambridgeshire (Mr Paice) is also unable to be here today. He wanted me to stress the importance of the Ely North junction. I am sure the Minister will hear the words “Ely North” many times in today’s debate, as it is a key interchange, not only for residents in Ely and north Cambridgeshire, but for unlocking our freight corridor and services to Cambridge and the other hubs of Norwich and Ipswich. It is also important to an east-west link so that, instead of going via London, commuters can go from Oxford to Cambridge to Norwich, linking three great universities of knowledge and investment.
My right hon. Friend the Member for Chelmsford (Mr Burns) cannot be here, sadly, because he is trying to run the national health service, but he has been pressing for greater capacity, a new station in his constituency and the track improvements that are required on the great eastern main line to make a difference for passengers.
My hon. Friends the Members for Great Yarmouth (Brandon Lewis) and for Waveney (Peter Aldous) wanted to remind us that we need green transport, enabling green growth in the green enterprise zone shared between Norfolk and Suffolk. The hon. Member for Cambridge (Dr Huppert) wanted to remind us about increasing connectivity in the key east-west interchange. My hon. Friend the Member for Ipswich (Ben Gummer), who is in a Select Committee meeting, has been pivotal in trying to improve investment into Ipswich and surrounding constituencies, including mine and that of my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), who is present. My hon. Friends the Members for South Suffolk (Mr Yeo) and for Harwich and North Essex (Mr Jenkin), who are also in Select Committee meetings, continued to stress, quite rightly, the importance of Manningtree as a commuter station and key attributes such as the investment in the station, but also the important need for accessible platforms.
I will happily welcome interventions from colleagues now.
Jim Shannon (Strangford) (DUP)
The hon. Lady is probably thinking, “What is a Northern Ireland Member going to say about East Anglia rail?”, but I would like her to take on board my point. A great number of Army camps are stationed in Norfolk, and service personnel use trains to get from base to camp—one of them reported to me last week that it took an hour and a half extra to get from A to Z. Does the hon. Lady feel that the usage of trains by Army personnel puts a greater onus on rail improvement in the area?
Dr Coffey
The hon. Gentleman makes an important point. I have not considered military travel, although there is an Army regiment in my constituency. However, we should ensure, through our county councils and as Members, that the document—which, although it is a prospectus, is not exhaustive—includes such considerations. I note that the constituency of the hon. Member for Colchester (Sir Bob Russell), who is present, has a significant Army presence, which is quite close to the railway station, but I am sure that other colleagues whose constituencies have RAF bases, including Marham in the constituency of my hon. Friend the Member for South West Norfolk (Elizabeth Truss) and Wattisham in the constituency of my hon. Friend the Member for Bury St Edmunds (Mr Ruffley), will want to follow that issue up.
Other Members present are from different counties, so they will talk about specific lines or issues there in more detail. For investors, including in tourism, the issue is capacity to get out of London to our different economic hubs. We should ensure that it is as easy as possible to get on the train to come to some of our beautiful beaches and our cultural highlights in different parts of our counties. Commuting into London is also an issue. There is no doubt, particularly in Essex, that people are fed up of terrible trains, having to stand for a long time and being crammed in. It is not fair on them. There is a two-way process: one thing that we need to do is boost off-peak services through tourism initiatives. LEPs and our county and district councils are keen to ensure more frequent and reliable services.
There is no question but that Cambridge with its research centre and development of capital, Norwich with the knowledge base in its university, especially in life sciences, and Ipswich and surrounding areas and their software development industry, provide a big opportunity for expanding connections between the counties. The risk is that the Government get it that the east of England is already a net contributor to the national economy and, therefore, do not think it needs investment, but we can generate a lot more investment as a consequence of such improvements.
Sir Bob Russell (Colchester) (LD)
I congratulate the hon. Lady on securing the debate and on her speech. For the benefit of the Minister, will she confirm that there has been detailed discussion among hon. Members from across the four counties? We were not united at the start of the journey; we are now united. I hope that I will have an opportunity to expand on that later.
Dr Coffey
That is a fair point. We have all been united in our vision of wanting better services for our constituents. We may have been less united, in our discussions with Network Rail and LEPs, on what that meant. I would like to think that the intentions of hon. Members across the counties have always been clear. This is not about trying to reduce services for our constituents, but improving them.
Mr Stewart Jackson (Peterborough) (Con)
I congratulate my hon. Friend on securing the debate. She has not mentioned the pre-eminent city in Cambridgeshire—Peterborough, as opposed to Cambridge. I jest. Does she agree that the great advantage of this prospectus, apart from its ambition, is that it is comprehensive and holistic? It integrates different modes of transport. It is not just a list of discrete transport schemes. There are references to the Felixstowe to Nuneaton freight corridor, taking the pressure off the A14 and the A11, and traffic movements to Stansted airport, all of which show that the prospectus is ambitious and, in the long run, will be good for the taxpayer as well as the local people in East Anglia.
Dr Coffey
My hon. Friend is absolutely right, and reinforces the point that investment in our rail infrastructure could mean that our region, rather than other parts of the country, can be a huge multiplier. The idea that people want to travel up to Lowestoft by car to have a look at investment is ridiculous. Along the east Suffolk line, sitting in a one-carriage train, perhaps after making the connection at Ipswich, is not always the most attractive way to arrive for an investors’ meeting.
For a quicker service on the great eastern main line, we need to speed up the trains. One way to do that is to focus on level crossings. I will refer to this again when I come on to the issue of branch lines, but we need to ensure that there are stretches where trains are unhindered. We also need to open up capacity at Liverpool Street station. Certain things have to happen before any of that can take place. Crossrail will have to be completed, which we hope will happen by 2018. We have to continue the work at Bow Junction to ensure that those lines can be used and that we get those slots. Peak services along the great eastern main line are already at full capacity. Although freight currently runs on the line, it does not do so during peak times. Extra capacity, therefore, is critical.
I do not pretend to be a rail specialist. I do not know the difference between four-tracking, the clever loops that Network Rail is now thinking about, or the extra bit of track that is needed in that stretch near Chelmsford. What I do know, however, is that there are clever brains working on solutions that will mean that we can open up vital capacity. By doing so, we can increase reliability and speed.
Mr Keith Simpson (Broadland) (Con)
What a vision of loveliness my hon. Friend is, and I congratulate her on securing this important debate. To cut to the chase, many MPs and many of our constituents believe that, in the past, neither Network Rail nor the franchisees have taken East Anglia seriously. We have the impression that previous franchisees have asset stripped. We have been dumped on with out-of-date rolling stock, and capacity has never been properly considered. The key question is this: is she confident that Network Rail and the new franchisees will take this seriously? If they do not, one could be forgiven for thinking that perhaps the Government do not have a priority.
Dr Coffey
I thank my hon. Friend for that intervention. We have to be serious and we need to ensure that the Government are serious, so that when the new tender is put out for 2014, the very exacting standards that we are demanding, exemplified by the prospectus, are delivered. Nothing less than that will be good enough. My hon. Friend mentioned rolling stock, and I agree with him. I will come on to the issue of traveller experience later. Yesterday, some hon. Members were on the same train as me travelling to London Liverpool Street. I am convinced that they are the same trains I used to travel on as a student between Liverpool and London, back in the early ’90s. To simply recycle stock when, on average, our carriages are 25 years old, makes me wonder how old some of our stock actually is.
We have a large number of unstaffed stations. Abellio is the current franchisee. It has a very short franchise, and has made some real improvements. We now have print-at-home and mobile phone ticketing. That might not suit every single passenger, with the demographic of our constituents, but it is a huge step forward. Instead of paying the full price, customers can now print at home or get a neighbour to do it for them. That is a big improvement, and I give credit for that to Abellio.
Matthew Hancock (West Suffolk) (Con)
From the point of view of my constituency, I emphasise the unity behind the proposals. My hon. Friend mentioned bottlenecks. She must agree that unblocking bottlenecks, especially at Ely, is a vital part of the prospectus, not least because increasing the amount of trains to Brandon, with stronger links to Cambridge and Norwich, is vital for its economic future. Therefore, it is not just on the east coast, but throughout East Anglia, that unblocking bottlenecks is critical for our economic future.
Dr Coffey
I could not agree more with my hon. Friend. Perhaps we should have started a book on how many times Ely North junction was going to be mentioned. I am sure that the Minister will be fully aware, by the end of the debate, of how important Ely North junction is across the county.
On other aspects of reliability, returning to a point made by my hon. Friend the Member for Broadland (Mr Simpson), Abellio is currently upgrading some locomotives to try and address short-term reliability challenges. There is nothing more frustrating than a lack of reliability. People may be happy with a slower service as long as it is reliable and on time.
My hon. Friend the Member for Peterborough (Mr Jackson) alluded to the issue of freight. I represent Felixstowe, which has the largest container port in the UK. Placing more freight on to rail is a key strategic priority. Indeed, it is part of the A14 challenge, which the Under-Secretary of State for Transport, my hon. Friend the Member for Hemel Hempstead (Mike Penning) is leading on behalf of the Department for Transport. We can get more freight on to rail. I am delighted that the Department had already confirmed the funding for the Ipswich north curve, which will mean that instead of trains going into London, they will be able to go straight across Ipswich and on to those lines. In the next franchise, in the longer term, we want to see the electrification of the track, which will improve connectivity, reliability and speed. It is critical for both Felixstowe and Harwich to remove some lorry traffic from the A14. The Ely North junction is key part for further developments up into the midlands. It would make such a difference for quite a small amount of money. To develop both junctions at the same time would make a lot of economic sense. My understanding is that the cost is approximately £41 million. I am a great believer in challenging Network Rail to do work more cheaply. I am sure that I am not the only hon. Member who feels that Network Rail mentions costs in units of £1 million, whether for a lift, bridge or whatever. With the McNulty review, I am sure better ways will be found to bring those bills down.
I am sure that hon. Members from different counties will refer to their own branch lines. My hon. Friend the Member for West Suffolk (Matthew Hancock) has already done so by mentioning Brandon, and the need to ensure that it becomes an inter-county line, not just a humble branch line. I have nine stations in my constituency. In the past year, when the service went up from two-hourly to hourly from Ipswich up to Saxmundham, we saw an increase in the number of passengers. We know that improving services will provide a return to the Government and to rail companies in terms of fares.
I was delighted to work recently with my hon. Friends the Members for Waveney ) and for Central Suffolk and North Ipswich on pressing the Government for funding for the Beccles loop. I am delighted that £3 million was confirmed a couple of years ago and that Suffolk county council came up with the other £1 million. We broke the ground not too many months ago and work is under way. In December, we will finally have an hourly service. That is compensation for there no longer being any through trains from Lowestoft to London. That sacrifice—made before we became MPs—allows more trains on the line between Ipswich, Colchester and London to increase capacity, preventing a slow diesel train, for example, holding other trains up. My constituents have paid a fairly heavy price until now, but I am sure that we will all be rejoicing in December; it will be a nice Christmas present for rail passengers in my county.
I have already mentioned the Beccles loop. Our county council’s ambition is a loop near Wickham Market station so that more freight can go to Sizewell C during its construction. It is important that we do as much as we can to get lorries carrying freight—construction materials—into the site and removing spoil from it off the mainly single-track roads in Suffolk.
I have already mentioned Felixstowe. I shall mention it again in relation to passengers. The port is keen to move more into freight and is legally obliged to dual the track between Felixstowe and Ipswich. My right hon. Friend the Minister is already aware of this and was kind enough to meet my hon. Friend the Member for Ipswich and I last week to talk about it. It is crucial that we continue not to reduce passenger services, but to ensure that obligations are kept and that the outcomes for passengers are the same, if not better.
Some colleagues from elsewhere may regard this as a wish list: it is a wish list, but it is a credible one. East Anglia has been the Cinderella of British rail for too long. With a commitment to railways not seen in a century, the coalition Government have the chance to be our Prince Charming, or Princess Charming, depending on legislation next year. I should like the Minister to accept our proposal and let East Anglian passengers travel happily ever after. However, this is no fairy tale; it is a real vision and a tale with a moral. When MPs, councils, businesses and passenger groups come together, we can achieve together, and that matters for passengers, for economic growth and for jobs, which is all great news for our constituents.
East Anglia can provide a huge economic benefit to the country, but we need infrastructure. Broadband is under way and we now need rail to complete the green dream and ensure that East Anglia rail delivers.
Mr Philip Hollobone (in the Chair)
If hon. Members would like to resume their seats, let me say that there is a wealth of East Anglian talent before me. The running order, since we are talking about railways, will be Priti Patel, Elizabeth Truss, Sir Bob Russell, George Freeman and Daniel Poulter. The wind-ups will start no later than 12.10 pm, so we have about 50 minutes.
Priti Patel (Witham) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing this timely and important debate on rail services and infrastructure in the East Anglian region. She has clearly outlined the case for rail investment throughout the region, which is set out in the prospectus, and has given a strong explanation of the reasons for this debate today and the development of the “Once in a generation” prospectus, which was launched yesterday.
I pay tribute to all hon. Members from the region who have come together on a cross-party basis to draw up the document, because every colleague has had an input. This has been a labour of love, involving many stakeholders throughout the region. I put on record my particular gratitude to Chris Starkie of the New Anglia LEP for putting the prospectus together, corralling most of us to work on it and receiving our input.
I pay tribute to all Essex Members of Parliament who contributed to the document, to Alastair Southgate of Essex county council and to representatives from the Essex Rail Users Federation, particularly Derek Monnery and Mark Leslie, who have been stalwart in representing the voices of local consumers. For once, they have taken the voice of Essex on rail to the heart of the Department. They played a big role in overseeing the document—scrutinising many drafts of the prospectus and making strong contributions to ensure that our needs were met. Indeed, the work put into this prospectus and the big vision that it outlines for rail travel in the region has exceeded any previous endeavour. The outcome produced by the LEPs, councils and MPs is a collective effort that we can all be proud of.
The prospectus is ambitious, innovative and sets out comprehensive policies that are grounded in reality and achievable. I hope that my right hon. Friend the Minister agrees that those policies are all deliverable—the new post-2014 franchise coincides with Network Rail’s control period 5 for investment—including new trains, improved services for all our commuters, better stations and modern facilities. My hon. Friend the Member for Suffolk Coastal has already mentioned many examples of the poor and inadequate facilities for all our commuters. Those have to be dealt with.
I pay tribute to my right hon. Friend the Minister for always engaging constructively with many hon. Members, including me, on rail issues. Previous Westminster Hall debates were held in 2010 about the poor services to Essex commuters provided at the time by National Express East Anglia. She understood much of the frustration and dissatisfaction felt by our rail users. Of course, the franchise went to Abellio. I trust that she will continue to show understanding of the problems that our commuters face, and that she will support the measures that hon. Members from the region advocate.
Speaking as an Essex MP, it is in the best interests of Essex, the region and the country for the Government to adopt this prospectus and ensure that Network Rail and the future operator of the post-2014 franchise deliver the measures. First, the prospectus is a robust economic and business case in support of rail improvements. Secondly, it advances proposals that will provide commuters with long-overdue value for money.
There is a compelling economic case for new rail investment in Essex and the Anglia region. Essex is England’s economic growth engine and, as many hon. Members have heard me say before, it is the county of entrepreneurs. Despite the current economic climate, some 6,000 new enterprises a year are set up in Essex, creating jobs, growth and prosperity. These businesses need good rail links, and commuters need punctual, prompt rail services to open up employment opportunities in London as well as across the region.
With an enterprise zone in Harlow set to generate almost 5,000 new jobs, a new business park in Chelmsford, freight and passenger growth at Stansted airport and DP World investing £1.5 billion in creating a world-leading modern deep-sea container port in the London gateway, it is vital that our vibrant, entrepreneurial economy benefits from a modern rail network fit to ensure that the county can achieve its full potential, not just today and tomorrow but in 10, 15 and 20 years.
Let us be in no doubt that if rail improvements are made to support increased freight and passenger capacity, Essex will continue to be the gateway for trade and investment throughout the region and in Europe and the world. However, if our railway infrastructure continues to be overlooked—which is unjustifiable in my view and that of all colleagues—there will be serious consequences not only for the Essex economy but for UK plc. A commitment to investing in railways in Essex and implementing the proposals in the rail prospectus will send out a strong, clear signal to entrepreneurs and investors who come to the county, and Essex will become an even greater place to set up and run a business.
The costs of providing a modern rail service in the regions will be repaid many times over through fares and through the benefits of the extra economic growth that is generated. It is, for want of a better term, a no-brainer. There will be a long-term return on this investment. Increased rail capacity and better services are also needed to support our local population growth. Over the next 20 years alone, it is estimated that the current population of 1.4 million will grow by 14%. To accommodate those new people, who will of course flock to Essex, in the three local planning authorities that cover my constituency the construction of 60,000 new homes is anticipated. Many thousands more homes will be built throughout the county and the region, which will mean more demand for the railways. Moreover, more people are already using the railways. In the Braintree district alone, last year there were 4.2 million passenger journeys, which represented a rise of more than 130,000 on the previous year. More than half of those journeys—almost 2.2 million in total—came from Witham station in the heart of my constituency.
After years of poor service and under-investment for all commuters, many of whom are paying between £4,000 and £5,000 a year to commute into London, people deserve to start seeing some of that money put back into their infrastructure and service. Commuters currently feel as though they are being used as cash cows, with little coming back in return, although their fares have made the Greater Anglia franchise one of the most valuable and profitable, for train operators and the Government. We are pleading for something to be given back to our commuters. In 2010-11, the last year for which figures are available, the Office of Rail Regulation confirmed that the franchise raised £108.9 million for the Treasury, as commuters travelled almost 4 billion passenger kilometres. Despite all that money going in, however, our commuters have faced miserable journeys and an appalling customer experience, in particular in years such as 2010 and 2009. When National Express East Anglia ran the franchise, the customer experience was terrible and, according to the correspondence we were all receiving, customer satisfaction was at a low. In one study, 62% of passengers revealed that they arrived in London on time while only 48% travelling from London did so. In addition, the overcrowded conditions were horrendous, and they remain so because more and more people are using the service.
I am optimistic that Abellio can make some improvements during its current, short, two-year franchise. It has also been able to press Network Rail again on many of the delays, which is positive. We cannot, however, continue to tinker at the edges, with this sticking-plaster approach. It is all about investment and long-term future-proofing, which is why the implementation of the rail prospectus for East Anglia is so important to commuters in the region.
The prospectus gives all our commuters genuine hope and optimism. It demonstrates a commitment to give them, finally, the 21st-century rail services that they deserve and, to be frank, that they have been paying through the roof for. I urge the Minister to study the prospectus closely and to engage with us all. I know that she will; she is highly accommodating and has been constructive in all our dialogues so far. In my view, the costs will be relatively modest while the benefits will revolutionise our region, travel for commuters and businesses, and the whole economy. It will be worth it for us all.
Elizabeth Truss (South West Norfolk) (Con)
I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing the debate. It was tremendous when we all met yesterday at Liverpool Street station—commuters saw the swarm of East Anglian MPs launching the manifesto that we had put together. This is the first time that all of the MPs from East Anglia have agreed on a common platform from which to make progress, which is highly important and significant.
I cannot compete with my hon. Friend, who has nine stations in her constituency. I represent only five, although they are five important stations: Watlington and Downham Market on the Fen line; and Brandon, Thetford and Harling Road on the Norwich to Cambridge line. Those stations are incredibly popular and, over the past four years, we have seen a rise in passenger numbers of 20% at both Thetford and Downham Market, which outstrips the national rise. The reason is the strong growth in employment in Cambridge and throughout the region—Norfolk has bucked the trend in manufacturing, and we are also doing well in the food and farming industries—so we see a growing number of people using the train to get to and from work.
Having used the services many a time, I can testify that the carriages are getting more and more packed, in particular at peak hours, going both ways; an interesting thing about the Fen line is that it has almost as many people travelling out of London as into London, so the route is well balanced. That is only the start of what we are about to see, with massive growth in population throughout Suffolk, Norfolk and Cambridgeshire. We will see another 200,000 homes by 2021, so it is vital to have the rail services to deal with that increased capacity, because by then the congestion in our region will cost the economy an estimated £1 billion.
At the moment on those lines, we have hourly services, with a few additional services in peak hours, and that simply is not enough with the increased employment, housing and growth in the area. With my fellow local MPs, I have been calling for half-hourly services. The current work that we are doing to understand the effect of improvements to the Ely North junction indicates that investment in it would have a positive net present value of £260 million to our local economy, which is huge.
The Ely North junction is becoming famous in debates on East Anglian rail. It is a small area from which tracks were removed in the early 1980s, making it only a single-track junction. I recently visited it with my hon. Friend the Member for Mid Norfolk (George Freeman). Sadly, due to health and safety reasons, we were not allowed to walk along the tracks to see the junction, but we made do with kneeling at the level crossing, such was our commitment to see the junction improved, and driving around the Ely area, which is in neither of our constituencies. We wanted to visit to ensure that we understood the logistics.
To upgrade the junction would be a relatively low-cost endeavour, but the effect would be felt on a vast number of lines; my hon. Friend the Member for Suffolk Coastal spoke about freight services but, likewise, journeys to Ipswich, Peterborough, King’s Lynn and Norwich would all be improved. The critical importance of the junction came to light in May last year when I had a meeting with my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay) and Network Rail. That key bottleneck was identified as what stood between us and getting a half-hourly service.
There are other issues on the line, such as the single track between Littleport and Downham Market, which often causes delays; likewise, a lot of level crossings ought to be dealt with by Network Rail. In the short term, however, opening up the Ely North junction would make half-hourly services possible on the line. In December 2011 my hon. Friend the Member for Norwich North (Miss Smith) organised a rail summit, at which the issue was highlighted. We had a further summit in January, specifically to discuss the junction.
My hon. Friends the Members for Mid Norfolk and for West Suffolk (Matthew Hancock) also held a meeting with the Transport Secretary in May. She very much agreed that we needed to see expenditure evened out across the country. She understands, as we do, that for a long time East Anglia has paid into the pot while other parts of the country have taken out of it. Given the economic potential in our area, that is damaging not only for local passengers and commuters but for the economic growth potential of the country as a whole.
Simon Wright (Norwich South) (LD)
One of the sectors of the economy that has not been mentioned yet but is incredibly important to Norwich is the retail sector. It is worth more than £1 billion every year, and one of the biggest complaints that I receive from shoppers is lack of parking. Does my hon. Friend agree that encouraging more shoppers to use rail, which we can do by improving the service, will unleash the current block on growing the retail sector of the economy, so ensuring that Norwich will continue to be one of the UK’s top 10 retail destinations?
Elizabeth Truss
I agree with my hon. Friend. There is also huge tourism potential in the region. Along the Norwich-Cambridge line, stations such as Thetford and Brandon could provide a good base for tourism in the Brecks if services were more frequent. People could also go shopping in Norwich when visiting the area.
At the moment, not only do we have unprecedented agreement among MPs of the region but we have a golden opportunity, with the Thameslink franchise coming up in 2013 and the Greater Anglia franchise coming up in 2013, to ensure that we specify the services we want. I encourage the Minister to ensure that half-hourly services are specified in both franchises. Demand exists from passengers, and the train operating companies have the ability to deliver, but it would be helpful to have a resolution from the Department for Transport that it will ask for that level of service, which our local commuters need, so that we have real value.
The other concern that I want to raise is intercity express programme trains, which were scheduled to go to King’s Lynn as part of the Thameslink franchise. Is that still the case, and can the Minister guarantee that we will see the new rolling stock on the line; that if we are successful in securing a half-hourly service we will not have a shuttle service from Cambridge to King’s Lynn, and that direct services to London will continue? Direct services are important for many local residents who either commute to London, or must travel there for business reasons. I would like answers to those specific points, but I am encouraged by the level of engagement of the Department. I hope that that will bring to an end years of under-investment in East Anglian rail, and that we are about to see a new golden era for our transportation. This is a huge opportunity to support a growing part of the country, and I again thank my hon. Friend the Member for Suffolk Coastal for this debate.
Sir Bob Russell (Colchester) (LD)
I declare an interest because of my rail ticket from Colchester to London. I believe that Colchester is the sixth busiest commuter station in the home counties, so I have more than a passing interest in the matter. I think my constituents who are commuters would say that at the moment they are not receiving value for money.
I congratulate my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing the debate, and on all her hard work. I endorse every word that my neighbour, my hon. Friend the Member for Witham (Priti Patel), said, with her pan-Essex approach to the driving force of the economy in the east of England.
I would like the Minister fully to appreciate how unanimous MPs from the east of England are. I stress that because a lot of hard work has been done. When the journey started, not everyone was on board, and I plead guilty to being one of those who kicked up a fuss. One of the weaknesses and strengths of the new Anglia local enterprise partnership is that it is concentrated on Suffolk and Norfolk. It does an excellent job, but in my opinion the initial prospectus was silent on Essex. Others disagreed, and thought that the silence was covered, but I did not think it was. The prospectus now is fully focused on the whole of the great eastern main line from Norwich to London through the three counties. The guarantee in the prospectus is that there will be no reduction in the frequency of inter-city trains stopping at Colchester. I leave other MPs with stations in their constituencies to make their case.
There is a feeling in north Essex, of which Colchester is the obvious capital, that we are a neglected part of the county, because we are not in the new Anglia LEP. We are in the same LEP as Kent and East Sussex. In north Essex, we barely acknowledge Southend, let alone Kent and the outer reaches of Brighton. It is a credit to those who drew up the final prospectus that they widened their horizons beyond Suffolk and Norfolk, and recognised that we are all in this together—to coin a phrase. I regard myself as East Anglian before Essex, being only 5 miles from the Suffolk border. I urge the Minister to appreciate that, as we heard from previous speakers, we are East Anglia-orientated, not south Essex and not London. We are East Anglian in culture. I am delighted that the new Anglia LEP is adopting us, because we will get a better deal from the new LEP than we got from whatever the name is of the one we are in. We are a neglected corner.
I appreciate that others want to speak, so I shall be brief. I endorse the comments of the three previous speakers, but I want to put on the record that the guarantee in the prospectus of no reduction in the frequency of inter-city trains is important. We all have wish lists, and I also want to put on the record my four domestic wishes. I would very much like a direct service from Colchester to Cambridge via Ipswich; we must acknowledge that Cambridge is the central place in the six counties of east England. I would very much like a Sudbury to Colchester Town direct service. I do not have five or nine stations in my tight, urban constituency, but I have three. I would also like direct services from Colchester Town to London. That is not impossible, and additional capacity and the speeding up of services that others have mentioned is necessary. Finally, we are approaching the summer season, and I would like, if possible, Sunday services to the Essex coast from Colchester Town and my third station, Colchester Hythe.
I thank everyone involved in the issue and, to emphasise the point for the Minister, I repeat that this is the unanimous voice of East Anglia.
George Freeman (Mid Norfolk) (Con)
It is a pleasure, Mr Hollobone, to serve under your chairmanship. I add my voice to those congratulating my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on our behalf. I also congratulate my hon. Friend the Member for Norwich North (Miss Smith) on leading the choreography to pull us all together, which is no easy task. I add my name to those of hon. Members who mentioned the local enterprise partnership, Abellio and Network Rail, who have all worked closely with us to make sure that the document has their active support and their approval of the measures within it as realistic. Jonathan Denby of Abellio has been a powerful force in helping to shape and drive the matter.
The prospectus sets out an ambitious, long-term vision for the East Anglian rail network. First and foremost, for far too long, commuters have had to put up with unacceptable under-investment in a network that they have paid for many times over. I want to focus on the importance of the East Anglia rail network in underpinning our modern economy.
Before coming to Parliament, I spent 15 years in East Anglia helping to build, finance and manage fast-growth science and technology businesses around Cambridge and Norwich. I know well and can testify to the growth potential in the area to which other hon. Members have referred, and which the Government are recognising in a number of their initiatives for an innovation-led recovery. They have powerfully—rightly in my view—set out the need for us to adopt a different model of economic growth and development in the light of the crisis that we inherited. It is a more balanced model of development driven much more from the regions and by business with finance following business growth, and without everyone having to commute to London to feed the banking machine, which is free to support and grow real businesses around the country, particularly drawing on our skills in the knowledge economy, whether life sciences, the digital economy, clean energy, food, nutrition or agriculture.
As hon. Members know, no region is better equipped than East Anglia to grab that opportunity, and to lead a new model of economic growth. Since the war—for far too long—East Anglia has been treated, seemingly, by successive Administrations as an area that can be taken for granted and from which people will commute to London, however poor the investment. Alternatively, it is seen as something of a rural backwater for retirees and house dumping when London targets need to be accommodated.
The area is ready to rise and do something more for this country. It is building great businesses across the board, but it cannot do that without infrastructure. That is why a coalition of Norfolk MPs, and those from across East Anglia more widely, are coming to the Government with a central message: we do not want a handout; give us a way in and a way out and we will deliver sustainable growth.
Fast modern rail is crucial to modern economies around the world for a number of reasons. We live in a global economy, and every start-up business in our area needs to think globally. Fast rail is a crucial link to our airports at Stansted and Norwich, as well as other London hubs, and it is crucial if we are to link the City of London’s world-class financial expertise to businesses in those clusters. In life sciences, for example—my area of expertise—if we do not link better Oxford, Cambridge and Norwich to London, so that people can fly in from around the world to visit companies, scientists and investors in these areas, we will not unlock our full potential. I like to think that in due course, our Cambridge-Norwich line might be part of a wider emphasis on a Oxford-Cambridge-Norwich railway that links the life sciences.
As we heard in an eloquent speech from my neighbour, my hon. Friend the Member for South West Norfolk (Elizabeth Truss), the cost of the gridlock that is East Anglia on an average morning or evening comes to £1 billion a year. People are sitting in cars and trains going nowhere in an area that has a lot more to offer.
Finally, Cambridge sits at the heart of the region that has the potential to drive global growth. As I know well because I was working there at the time, perhaps the most powerful thing that happened to unlock Cambridge’s growth—described eloquently as the “Cambridge phenomenon”—was the improvement of fast rail links to London, and principally the two hourly non-stop service. It became known as the “VC Express” or the “Cambridge Flyer”, and it dramatically shortened not only travel times, but cultural perceptions of the distance between Cambridge and London. Investors in London started jumping on the train and popping up to Cambridge for a morning to meet and view interesting companies. That is not happening at the moment in Ipswich, Norwich and other areas, but it could.
As we have heard, our region has been woefully neglected over the years. It was heartening to hear the Minister and the Secretary of State recognise at the highest level the need to balance rail expenditure between areas and tackle regional discrimination. It has also been recognised that the area is a net contributor to the Treasury, and with infrastructure we could deliver growth and sustainable development.
I would like to put down a marker. If the Government are thinking about pilot schemes for integrating the train operating companies with Network Rail to drive new models of more integrated planning, as we mention in the prospectus, we would like East Anglia to be considered for any such initiative.
We will not build a high-quality economy and attract and retain world-class talent if we allow our area to become a giant housing estate, with commuters condemned to traffic and gridlock. That is especially important to residents in my constituency of Mid Norfolk which sits, as the Minister may know, between Cambridge and Thetford on the Cambridge to Norwich line. Average incomes in my constituency are below £20,000—well below the national average. It is a very rural area that some might describe as something of a backwater in terms of national communications. It sits in the middle of the only county that is not yet connected to the national trunk road system, but it is zoned for massive housing growth, particularly in Wymondham and Attleborough, as well as further down the Cambridge-Norwich line in Thetford and Brandon.
The towns of Wymondham and Attleborough are happy to grow, but they want infrastructure so that growth is sustainable and will not be allowed to damage and undermine their quality of life. The railway sits at the heart of that challenge. If we simply build houses, and plan on the basis that everybody will drive, the morning after our beloved A11 is opened in its newly dualled state, it will quickly become a car park. The A11 needs to be the artery of East Anglia, but that will require more people in new homes to jump on the train to Cambridge, Norwich, Thetford or Ely in the morning.
The Minister will not be surprised that I mention the Ely North junction. It is the key bottleneck in plans to unlock the Cambridge-Norwich railway that was reopened less than a decade ago. The plans have strong cross-party support, but the junction is a bottleneck on the Cambridge-Norwich line, the Fen line and the freight line. I know that the Minister and the Secretary of State have been at pains to listen to the problem, and we are grateful for the time and trouble that they have taken. The Minister’s support on this issue has been crucial, and we hugely look forward to her reply.
Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)
Many key points have already been touched on, and we have heard a lot from hon. Members about the historical under-investment in the East Anglian rail network. We heard in a well articulated speech by my hon. Friend the Member for Witham (Priti Patel) that although fares continue to increase, the reliability of the service continues to be a problem, and there has been consistently poor value for money for passengers who use the line.
[Mr Peter Bone in the Chair]
My hon. Friend the Member for Mid Norfolk (George Freeman) rightly highlighted the fact that if we want a first-class business environment in the east of England and East Anglia, we need first-class infrastructure. We are pleased with the strong Government support for investment in high-speed broadband in rural areas in Suffolk, Norfolk, Essex and other counties, but a key part of a first-rate business infrastructure involves a first-class railway. That is important for agriculture, life sciences, retail and the tourism industry, which is growing throughout our region. It is also vital for every passenger who uses the railways in East Anglia on a daily—or in some cases weekly—basis; we have seen a growing number of passengers throughout our region.
It is a pleasure to serve for the first time under your chairmanship, Mr Bone, and I, too, congratulate my neighbour and hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing the debate. I want briefly to highlight three key issues. We can all talk about important stations and branch lines in our constituencies. I have one station in my constituency—Westerfield—but I will not talk about it today. That does not mean that the station and those who use it are not important, but we need to highlight the key considerations. Improving the great eastern main line will benefit every branch line and station that comes off it. The Government have already listened to that key message, and we are grateful.
Commuters have suffered from lack of reliability on the service. My constituents who use the railways in East Anglia tell me that if they could have one thing, it would be a more reliable service that does not break down but ensures that people get to where they are going on time. That is vital for businesses and for each and every passenger on a daily basis. The lack of reliability of railways in East Anglia has undermined the service that they provide to their passengers. At the heart of the prospectus launched this week is a request that before we see increases in speed, reliability of the service must be the priority.
A key part of improving reliability involves improving capacity, and the prospectus rightly outlines the need for additional track capacity, particularly on the great eastern main line. As my hon. Friend the Member for Peterborough (Mr Jackson) highlighted earlier in the debate, we must ensure that businesses are supported correctly and that more track capacity is freed up on the Felixstowe to Nuneaton freight rail link, which is an important part of this debate. As the prospectus highlighted, if we want to support businesses in East Anglia, a first-class rail link between the midlands—one of the manufacturing engine rooms of the British economy—and Felixstowe, which takes 46% of the UK’s container traffic, is vital.
Furthermore, in terms of the passenger arguments that we are advocating today and the increased reliability of service, it is not desirable for freight to travel from the midlands into London and then back out, as happens at the moment. That slows down the passage of freight and is bad for business, but it also clogs up passenger capacity on the lines, which would be much better used to support improved reliability—a more reliable passenger service. Therefore, a key part of the rail prospectus is about ensuring not just that business is supported through the Felixstowe-Nuneaton freight rail link, but that there is recognition of the importance of that link to the passenger service. I am talking about the freeing up of passenger capacity on the rest of the rail network in East Anglia and particularly on the great eastern main line.
The primary issues are reliability of service and capacity, but it is also desirable to increase, where possible, the speed of service. However, we will get a faster service only if we deal with reliability and capacity as the first priorities. Reliability and capacity improvements will of course lead to greater train speed. If we want to achieve Norwich in 90, Ipswich in 60 and all the other key considerations, the only way we can do so is by focusing on reliability and capacity of service.
All the MPs present at the debate are very grateful for the support that the Department has given us in our fight for improved rail services in our own constituencies, but all of us are also aware that the issue is much bigger than any individual station or branch line. It is about improving the overall reliability and capacity of the service in East Anglia, with a focus—a laudable focus—on the great eastern main line as the primary driver for delivering that. I thank my right hon. Friend the Minister for her support for all that we have been doing. I again commend my hon. Friend the Member for Suffolk Coastal for securing the debate. I look forward to the Minister’s supportive comments when she responds to it.
Ben Gummer
Very timely. It is a great privilege to be able to contribute to the debate. I apologise for having come to it a little late; it clashed with a sitting of the Select Committee on Justice.
This is a very important week for the railway in East Anglia.
Elizabeth Truss
Does my hon. Friend agree that the launch that took place yesterday at Liverpool Street station showed the sense of purpose of all the MPs of East Anglia in putting their names to a new manifesto, and does he think that that should be taken very seriously by the Department for Transport when it is considering our overall national transport strategy?
Ben Gummer
I agree. My hon. Friend will know and I am sure that you, Mr Bone, will know very well that that sense of purpose is unusual in the east of England. When first the railway was driven up to Norwich, the good people of Norwich tried very hard to ensure that it did not go through Ipswich. They preferred a route that went via Cambridge. In the end, they got something approaching both. At that time, the town and the city were at war with each other for the privilege of having the railway. Happily, sense prevailed, but such was the animosity during that period—there is a serious point to this—that the quality of the infrastructure laid down suffered; investment was not forthcoming because there was no political direction to facilitate the backing required. That is why only two lines go between Chelmsford and Ipswich and then from Ipswich to Norwich. The result of that and the rather substandard nature of the track itself in places is that it has never fulfilled the desires and wishes even of the Victorian builders. We have constantly had to catch up since in terms of infrastructure improvements.
We start, therefore, from the position of having a poor railway in our region. It has had running repairs and second-hand rolling stock at every point; it has never had new rolling stock, apart from at its inception in the 1830s and 1840s. That is why all of us coming together as Members of Parliament, county councils, borough councils and local enterprise partnerships across the region is so important. We have established that sense of purpose with a view to obtaining what is a rather modest amount of investment compared with other infrastructure projects across the country.
I impress on my right hon. Friend the Minister both our unity and the fact that what we are asking for is very small compared with the release of economic growth and the possibilities for jobs and prosperity that the investment would give our region. I was not here earlier in the debate, but I am sure that the issue has been brought up. All of us have a vision not just for the railway, but for our region as a whole. It should be the California of Europe. It has a knowledge base that is certainly comparable with that in California, if not greater. It is a place where people want to live; it is a very attractive place in which to live and work. It is also close to the largest finance centre in the world. There is no reason at all why the eastern region should not achieve double-digit growth.
The reason why we are so keen to see that growth is that it will unlock potential for our constituents, especially those in certain areas. In our region—you, Mr Bone, will see this in your own constituency—there are significant pockets of severe deprivation, some of which are in my constituency. If we are to offer the people living there the opportunities that the Government are keen to extend to larger areas of deprivation in London and the north and in the nations of Scotland and Wales, we should also consider areas that may be smaller but suffer from similar levels of deprivation and require the assistance that the Government can provide in terms of investment.
George Freeman
Does my hon. Friend agree that as well as the importance of the commuter lines down to London, the regional links, not least between Ipswich, Cambridge and Norwich, are very important? We could combine Cambridge’s bioscience and digital and Norwich’s agricultural science, cleantech and food and medical science with Ipswich’s wonderful West Suffolk college and the Martlesham BT digital centre of excellence. If we put those together, we would build a very powerful triangle of innovation, to the benefit of all the villages and towns in the area.
Ben Gummer
I entirely agree. It is remarkable—a wonder—to see what has been achieved in Cambridge. It is remarkable also to see what is happening in Norwich—20 years of life science investment and innovation coming right. That is why it is so exciting to see some of the incipient projects in Ipswich. I was at University Campus Suffolk a few weeks ago to hear about some of the joint research projects that it is undertaking with significant universities around the country. It is a brand-new university—the youngest in the country—and it is already doing exciting advanced research. Some of the research, as my hon. Friend will know, involves geriatric science and the life sciences connected with that.
In Ipswich, there is an incipient life sciences industry, based around the largest software research centre in the country—Martlesham, just outside Ipswich, in the constituency of my hon. Friend the Member for Suffolk Coastal (Dr Coffey). Together with a very significantly growing food and drink sector and a large tourism sector in the county as a whole, it should contribute to remarkable growth, which could be released to the UK economy. East Anglia is already one of only two regions that are net contributors to the UK economy. Its contribution could be made even more significant.
Elizabeth Truss
We hope soon to get the Cambridge Flyer extended to King’s Lynn and Norwich. Does my hon. Friend agree that if there was a train like the Cambridge Flyer to Ipswich—the Ipswich Flyer—it would help to drive growth in a similar way to what we have seen in Cambridge?
Mr Peter Bone (in the Chair)
Order. Before the hon. Gentleman replies, I remind the Chamber and people who may have arrived late that the winding-up speeches are to start in about a minute’s time. The hon. Gentleman might like to bear that in mind.
Ben Gummer
Thank you for your guidance, Mr Bone. I am glad that I have no more than a minute left to contribute to the debate.
I will make one final point because I agree with every point my hon. Friend the Member for South West Norfolk (Elizabeth Truss) made. It is important that the line from Ipswich should benefit towns nearby, such as Colchester, and continue across the east-west link, from Cambridge to Bedford and thence to Oxford, creating an arc of knowledge across the country.
The Minister knows that travellers in East Anglia pay some of highest premiums in the railway industry. That money goes out of the region to subsidise loss-making lines elsewhere. We need to retain some of that money to invest in our area. It is only right that our constituents— not only the fortunate and well-off, but those who lack opportunities—can retain a bit more of that investment in our area, so that we can improve our rail links and make the contribution to our local, national and European economy that we aspire to make.
Lilian Greenwood (Nottingham South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bone. I am sorry that Mr Hollobone had to leave, because I know that we share a particular interest in rail investment.
I congratulate the hon. Member for Suffolk Coastal (Dr Coffey) on securing the debate and co-ordinating it so well with the publication of “Once in a generation—A rail prospectus for East Anglia”. She made an eloquent case on behalf of her constituents and the wider region. There may be competition for the title of the Cinderella of the railways—I am thinking of my midland main line—but the importance of improving Ely North junction has been put across strongly today.
The prospectus is a substantial document that presents strong arguments for future transport investment in East Anglia. I congratulate those involved in producing it. The east of England needs and deserves better transport links, particularly given the anticipated population growth, which hon. Members described. As a shadow Transport Minister, I welcome the prospectus’s publication, and I hope that it receives a sympathetic hearing within the Department for Transport. I look forward to the Minister’s response.
As many have said, the east of England is a net contributor to the Treasury, and better transport links could enhance that contribution. The prospectus reveals the patchwork of provision across East Anglia. Too many lines suffer restrictions on capacity, with passenger numbers on the west Anglia route alone expected to increase by 42% by 2021, leaving 59% of trains overcrowded. With the Government set to allow fares to increase by up to 11% next year, passengers expect and deserve better. As the hon. Members for Suffolk Coastal and for Central Suffolk and North Ipswich (Dr Poulter) rightly said, improving links to Felixstowe is vital for the expansion of rail freight, and to reduce congestion on the roads, cut carbon emissions and free up extra capacity for passenger services.
The proposals set out today would strengthen East Anglia’s vital economic links to London, but the document’s ambition does not stop there. The previous Government undertook improvements to lines and stations between Oxford and Cambridge, and the prospect of a reopened and revitalised varsity line is worth looking at in detail. The prospectus also presents a strong case for looking at modernisation of stock and track, including electrification, in East Anglia.
There is a compelling case for investment that meets local need and supports wider economic growth. The hon. Members for Witham (Priti Patel) and for Colchester (Sir Bob Russell) made a strong case on behalf of Essex and its potential for generating jobs through inward investment and business expansion. The hon. Member for Mid Norfolk (George Freeman) set out clearly how Norfolk and East Anglia can contribute to sustainable growth if properly linked to key centres, including the City of London. Perhaps next time I am on a windy Norfolk beach, I will try to remember that East Anglia is the California of Europe. The hon. Member for Ipswich (Ben Gummer) made an important point about the development of high-tech industries in that part of the country, particularly around Cambridge.
I agree that better infrastructure is needed to drive up passenger satisfaction rates, which are the lowest in the country. Unfortunately, I am concerned that Government policy may end up holding the proposals back. Labour Members have supported £528 million of efficiency savings in rail, but the Government have pushed ahead with a further £759 million cut to capital spending.
Sir Bob Russell
Will the hon. Lady briefly spell out all the improvements that the Labour Government made to the rail infrastructure in East Anglia in their 13 years in power?
Lilian Greenwood
Labour took action in government, and I am happy to say that transport spending in the eastern region increased in real terms during our time in power. In our last year in office, it stood at £1.494 billion, but I do not deny that a new approach is needed. That is why I will set out our proposals for a real devolution programme with transparent and fair regional funding. Unlike the Government’s proposals on devolution, ours include democratic accountability.
The prospectus makes a powerful case for investment in East Anglia’s rail network, but Government cuts have made it less likely that the funding will be found.
The Minister of State, Department for Transport (Mrs Theresa Villiers)
It is simply not true that the Government are slashing spending on our railways. We have embarked on the biggest programme of capacity expansion in the rail network since the Victorian era. The hon. Lady should get her facts right.
Lilian Greenwood
I am sorry that the Minister felt the need to spell that out, because she is wrong. She is cutting money from planned rail investment, and there will be an impact when hon. Members seek investment. I look forward to hearing what she has to say on the high-level output specification and what it means for not only East Anglia, but other parts of the country.
The hon. Member for Suffolk Coastal has said that she was reassured that
“it is not on the Government’s Agenda to reduce passenger rail services.”
She will surely hope, therefore, that the Government do not follow the model they adopted when they issued the west coast invitation to tender. The document allowed bidders to reduce daily stops at stations by up to 10%. Any reduction in service would be compounded by the McNulty report’s ticket office closures in the counties represented here today. Colchester Town in Essex, Thetford in Norfolk, and Whittlesford Parkway in Cambridgeshire, to give just a few examples, all face having their staff withdrawn. I am sure that the hon. Lady, having secured the debate, will also put pressure on her Government to ensure that existing services in East Anglia are protected. [Interruption.]
Passengers are already feeling the pinch. Services are overcrowded, and the Government have decided to increase fares by 3% above the retail prices index for the remainder of the Parliament. They have also given train operating companies the freedom to average out the rise, leading to fare rises of up to 11% next January. When personal and family budgets are under great pressure, with some commuters paying as much as £4,000 or £5,000 for their annual travel, the Government should be on the side of East Anglia’s commuters, not vested interests in the rail industry. [Interruption.]
Mr Peter Bone (in the Chair)
Order. If Mr Shelbrooke wants to intervene, would he mind standing, rather than grunting from a sedentary position?
Lilian Greenwood
Thank you, Mr Bone.
It is regrettable that the Government have added to the uncertainty about the future of East Anglia’s rail network. When National Express ceased to operate East Anglia rail earlier this year, the Government should have entrusted the franchise to public ownership through Directly Operated Railways, thereby providing stability in the run up to the Olympics. A two-year private tender with no long-term security or incentive for investment was not the solution East Anglia needed.
The Government’s tendering process in East Anglia also raises questions about their commitment to devolution. It is clear from the prospectus, and hon. Members’ contributions today, that there is local appetite for greater involvement in guiding infrastructure spending and delivery in East Anglia. We, in Labour, wish to promote that spirit by working more closely with local authorities to deliver a better transport system. The Government have already entered into negotiations with transport authorities in the north of England on potentially devolving responsibility for railway operations in that region. Why not do the same in East Anglia?
I urge the Government to listen to the calls in the prospectus to strengthen transport links to Stansted airport. Half of all passengers arrive at Stansted by public transport—the highest proportion for any major airport in the UK. Better transport links could help to relieve airport capacity constraints in Greater London without the environmental costs associated with other proposals. The Government are locked in distracting internal arguments on Heathrow expansion and fantasy islands in the middle of the Thames, but would it not be better to listen to those arguments instead?
In conclusion, I welcome the publication of the document and the spirit in which it was compiled. We want closer working between local authorities and other representatives, and we would back them with genuine devolved powers over transport spending. Discussions with the Department for Transport must now begin. There are many other worthy projects to consider at a time when capital budgets have been cut too far and too fast. Nevertheless, the report’s authors must be commended for the case that they have made on behalf of East Anglia, and I wish them all the best in their endeavours.
The Minister of State, Department for Transport (Mrs Theresa Villiers)
I join other hon. Members in congratulating my hon. Friend the Member for Suffolk Coastal (Dr Coffey) on securing the debate and providing a timely and valuable opportunity to discuss the future of rail services in East Anglia. I take on board the points that many of my hon. Friends made about the unity behind the prospectus that was published yesterday. I am well aware that regional rivalries go back to before the time when Boudiccan hordes burned down Colchester, so it is no mean feat to unite Essex, Suffolk and Norfolk, and the whole of East Anglia.
We fully recognise the importance of good transport links in East Anglia; that is why the vital dualling of the A11 got the go-ahead. My hon. Friend the Member for South West Norfolk (Elizabeth Truss) and others were right to highlight the importance of housing growth and the provision of infrastructure to support it. My hon. Friend the Member for Mid Norfolk (George Freeman), with his characteristic insight, analysed the economic benefits of transport improvements and the potential for expanding life sciences in East Anglia. Like everyone else on the coalition side of the House, I acknowledge the importance of getting the cost of running the railways down, so that we can take the pressure off fares and respond to the kinds of points that have been made by several hon. Members, including my hon. Friend the Member for Witham (Priti Patel).
Punctuality and reliability, which are obviously crucial, were raised by my hon. Friends the Members for Suffolk Coastal, for Witham, for Central Suffolk and North Ipswich (Dr Poulter), and for Ipswich (Ben Gummer). The period of poor service that came about with the start of the franchise was very unfortunate. Abellio has apologised to its customers. I am hopeful that lessons have been learned. Performance has improved significantly since a problematic start. I welcome the collaborative work that is now under way between Abellio and Network Rail, with a view to improving infrastructure performance and ensuring that possessions are managed more efficiently.
The resilience and reliability of the infrastructure remains a concern. I have no doubt that the rail regulator will continue to scrutinise Network Rail’s record and press for improvement. Network Rail is, however, working hard to address the problems, with a major renewal of the overhead line equipment, which has been one of the greatest sources of vulnerability over recent years. The Government are also taking action to crack down on cable theft, which Network Rail highlighted for me as a key problem for the reliability of the network.
Improvements are on the way. Parts of the east of England will benefit from Thameslink. Others, in Essex, will benefit from Crossrail, as we have heard. The work on Beccles loop is happening, thanks partly to support from Suffolk county council. I recognise the aspirations for progress on the western section of East West Rail, and the possibility of a future link between Cambridge and Oxford. Of course, progress is being made on the central section, which we hope will provide momentum for further progress. I agree with my hon. Friend the Member for Central Suffolk and North Ipswich on the crucial importance of upgrading freight connections, particularly between Felixstowe and Nuneaton, to ensure that we relieve pressure on the roads by providing an attractive freight alternative on the rails. The Government are committed to continuing to invest in improving our railway’s capacity to take freight.
The extent to which we can fulfil all the aspirations that have been talked about today, and to which we can achieve goals of the kind set out in the prospectus, will depend on the funds available, and, of course, a careful assessment of competing priorities around the country. I got the message loudly and clearly—
Mr Peter Bone (in the Chair)
Order. On the point about loudly and clearly, it would help if the Minister faced forward, so that the microphone could pick up what she is saying.
Mrs Villiers
Thank you for that steer, Mr Bone.
Later this month, we will publish our high-level output specification, to cover what we want the rail industry to deliver in the 2014-to-2019 period. Some of the larger headline schemes are likely to be directly mentioned in the statement, but most of the projects needed to deliver the general outputs that we will set in that statement will not be explicitly listed, so the July statement will not have all the answers on exactly how the benefits of rail improvements will be shared around the country. It will be followed by an industry process to decide which upgrades are needed to deliver the specified outputs, overseen by the Office of Rail Regulation. I assure hon. Members that careful consideration will be given to the points made about the Ely North junction and other improvements today. I should mention that this HLOS statement, like the last one, is likely to contain certain general funding pots that are to be made available over the five-year period, which could be used to support various different schemes around the country, including in East Anglia.
The forthcoming long franchise for Greater Anglia will be important in answering the questions we have heard today. We are granting a longer, more flexible franchise, because we believe that that will give the train operator a stronger incentive to invest in the improvements passengers want, including better trains and stations. We expect the next Greater Anglia franchise to start in the summer of 2014, and to last for up to 15 years. Our reforms to franchising put passenger satisfaction and service quality at the heart of the outputs that we require train operators to deliver. We will work closely with bidders and Network Rail to see how we can maximise the opportunity to integrate decision making more effectively between track and train management—that is another aspiration in the prospectus—and we will also require the next franchisee to introduce ITSO smart ticketing across the franchise.
Ben Gummer
Will the Minister reflect on a comment made by my hon. Friend the Member for South Suffolk (Mr Yeo)—that in essence rail travel has not really changed for the past 50 years? The long franchise gives a tenderer a fantastic opportunity to have a rethink about passengers and how the railway experience works, and to do some innovative things. That can be managed only in the 15-year context that the Government are setting.
Mrs Villiers
I agree that a long franchise can give many more opportunities for a train operator to innovate, and for us to draw private sector investment into the railways.
We will launch a public consultation on the next Greater Anglia franchise later this year. A detailed business case will be developed, and, drawing on the results of the consultation, we are likely to appraise a range of improvement options. As to what goes into the franchise, I emphasise that we have no plans to remove daytime passenger services from the Felixstowe branch line, which was a matter of importance to my hon. Friend the Member for Suffolk Coastal. Although Hutchison Ports has proposed the change, it has an obligation under section 106 of the Town and Country Planning Act 1990 to fund the required infrastructure upgrades.
We have heard many other aspirations: there are the half-hourly services called for by my hon. Friend the Member for South West Norfolk, and the specific service changes called for by my hon. Friend the Member for Colchester (Sir Bob Russell). Decisions on those will be made only after the consultation has taken place, but I shall ensure that this debate is fed into the process.
Mrs Villiers
I am afraid I do not have time; I have only a couple of minutes left.
As for aspirations such as “Norwich in 90”—a campaign for that has been led by my hon. Friend the Member for Norwich North (Miss Smith)—it is too early to say what the franchise will specify for the train service between London and Norwich. However, in making such decisions we will need to take into account the interests of all the communities on the line, and those who live in intermediate destinations such as Chelmsford and Colchester. Whatever train service we adopt, we shall encourage bidders to put together affordable proposals for improved journey times and a better customer experience.
We did some work on options for Norwich to London before letting the short franchise, and that suggested that spending about £10 million to £15 million on new locomotives and refurbishing existing passenger vehicles would make it possible to save about seven minutes on most trains, and that could be funded in a 15-year franchise from additional revenue. However, that is just one option. We hope that franchise bidders will devise alternative plans that either cost less or produce greater benefits for passengers.
One factor, of course, that bidders will have to take into account is the requirement to make modifications to rolling stock by 2020, to provide proper access for people with reduced mobility. In response to all hon. Members who talked about the state of the rolling stock—some of it is fairly elderly—let me say that there will be changes over the next few years because of the deadline. The decision on whether that will involve targeted improvements, full refurbishment, new rolling stock or a combination of all three lies in the future, but change will have to be made. In the meantime, Abellio is pressing ahead with a deep clean of rolling stock.
In conclusion—
Police (Surrey)
(12 years, 4 months ago)
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Mr Dominic Raab (Esher and Walton) (Con)
It is a great pleasure to serve under your chairmanship, Mr Bone. Before the debate had even started, I had already benefited from your advice and wisdom. Thank you. I am also grateful for the opportunity to address the Minister and to discuss police funding in Surrey.
Few issues are of greater importance to people throughout the country than ensuring that their local police force has the resources that it needs. The residents of Esher and Walton, and indeed of the county of Surrey, are no exception. Surrey’s front-line police officers do a first-rate job. I commend the dedication and commitment that they bring to keeping our communities safe. We are also blessed with a top-notch chief constable.
I want to say at the outset that I support the Government’s drive to promote efficiency and reform in the police service, which is in the interests of both law enforcement and the taxpayer. I commend the Minister for his pioneering efforts in that regard. In the current financial climate, all parts of the public sector must do their bit to deliver maximum value for money, and the police cannot be immune.
However, I have concerns about the current consultation on changing or removing the damping mechanism for police funding. The damping mechanism is a critical safeguard for forces such as Surrey, which lose out disproportionately under the central funding formula. In particular, the mitigation provided by the damping mechanism ensures that Surrey police enjoy the same level of increase or decrease in funding as other forces.
Neither Surrey police, Surrey police authority nor I object in principle to a review of the damping mechanism, but logically and fairly, it ought to be part of the wider review of police funding that the Government have pledged to carry out before the next comprehensive spending review. If the anomalies in the current funding formula could be ironed out to create a truly needs-based, fair system, damping could be phased out, but the current consultation, which focuses on the future of the damping mechanism from 2013-14 onwards, risks leaving Surrey financially high and dry through no fault of its own. That cannot be right.
Jonathan Lord (Woking) (Con)
Is it not the case that Surrey taxpayers pay some of the highest taxes into our national Exchequer, yet we also end up paying some of the highest precepts? It is not because Surrey police are not efficient; they are. Surely that cannot be fair.
Mr Raab
I thank my hon. Friend. He is absolutely right. As someone who worked in local government before becoming an MP, he knows the details far better than me. That basic logic and flow cannot be right. It cannot be right that we keep paying more and more and get less and less back. It is unsustainable.
That message was borne out in no small part by a 2009 review conducted by Oxford Economics of local application of the central funding formula. Surrey loses out under that formula for various compound reasons. For example, the funding formula takes into account daytime net flows of traffic, but not total traffic or total accidents, which are disproportionately high in Surrey compared with the other indices. It takes into account average deprivation, which is relatively low in Surrey, but ignores our proximity to areas of high deprivation, taking little account of cross-border criminals who may target the county. My borough, which is in the north-east, has a lot of that kind of crime. Nor does it take into account the impact of our proximity to Heathrow and Gatwick, which is also linked to crime levels.
Sir Paul Beresford (Mole Valley) (Con)
Does my hon. Friend agree that no account is taken of traffic through the county? That is a crucial point. As I understand it, data are available to show that through traffic relates to crime.
Mr Raab
I thank my hon. Friend. He is absolutely right. Oxford Economics considers the issue of flow in some detail. I commend the report to the Minister if he wants to examine the detail of what we are discussing.
Other elements, such as our proximity to high population areas, have also been proven relevant to levels of crime but are not factored into the funding formula, which measures only population levels within the county. Those shortcomings are mitigated by the damping arrangements. It is therefore unfair to remove or revise one without considering the other.
Surrey police do an outstanding job, which is reflected in the public’s 90% confidence rating. Today’s report by Her Majesty’s inspectorate of constabulary, “Policing in Austerity: One Year On”, breaks down the situation by individual forces, showing the progress that the Surrey police have made in dealing with austerity.
Mr Sam Gyimah (East Surrey) (Con)
Does my hon. Friend acknowledge that we should recognise the achievements of Surrey police in maintaining the same level of service to the public in Surrey, despite reductions of about £7 million in their budget so far, and that further cuts could risk public safety?
Mr Raab
My hon. Friend is absolutely right. The key issue is sustainability. It cannot be right that those who perform best in terms of delivering cost efficiencies while adding further front-line officers should be penalised and find themselves victims of their own success.
Surrey has achieved those net satisfaction ratings despite having faced challenging conditions for a number of years. It is important to put the issue in context; it is not all about austerity under the coalition. Surrey did not share in Labour’s “land of milk and honey” spending spree. While real-terms spending on the police increased nationally by 19% between 1997 and 2010, funding for Surrey police was cut by 39% in real terms. Measured by central funding per person, Surrey got the worst deal of all 43 police forces in England and Wales.
Faced with that legacy, Surrey police responded positively. In July 2010, the Audit Commission and Her Majesty’s inspectorate of constabulary praised Surrey police for their efficiency in work force deployment, the way they centralised cross-cutting functions such as human resources and their rigorous and robust approach to achieving cost savings.
Surrey police followed that up with their policing plan for 2011-14, which rationalised the police estate. That, of course, involved a difficult set of decisions that had to be conveyed, sold and communicated locally. It is a very tangible thing to replace police stations or sell off old estate to make way for new hubs. That was difficult. Surrey police also reformed their procurement practices; it is widely accepted that they were in the vanguard in doing so. They cut middle management, which is also difficult, as it creates morale issues in a force. It was not an easy decision, but they took it. Through the net savings, they focused on putting officers into the areas of greatest need, including neighbourhood policing and serious crime investigations, precisely the areas that the public, and I as their MP, want to be priorities for investment.
Over and above all those savings, Surrey police’s rigorous approach and financial discipline allowed the force to reinvest in an extra 200 police constables. That would be extraordinary given the financial straits everyone is in, but it is particularly so for Surrey, given the legacy that it inherited.
Despite the dire financial legacy left by the last Government, Surrey was the only force in England and Wales able to increase officer numbers between September 2010 and September 2011. As the Audit Commission, HMIC and the Home Office have commented, Surrey police are a model of how to get a financial house in order. They did so proactively, before the financial crisis compelled the wider belt-tightening now under way. They did not wait for the waves to hit; they were on the front foot. Like other forces, they are now halfway through a 20% real-terms cut in central Government funding. Surrey police have dealt with all those challenges while improving their record against several key indicators of performance, such as serious crime detection.
However, Surrey has reached its limits. If the damping mechanism is removed, the force stands to lose, in total—there are two components—£4 million in funding, the equivalent of losing 83 police constables. That would be a serious blow to the force and a kick in the teeth, not only to the force, which has taken such steps to be a model of cost-efficiency, but to the people of Surrey, who pay such high levels of tax, too little of which returns as investment in local public services.
Our police need to be properly funded to deal with the wide range of challenges that they face daily. There is a perception of Surrey as a leafy backwater with no crime, challenges or deprivation, whose sleepy towns and villages are the last place where crime or antisocial behaviour is a real issue; but as my colleagues who have spoken, and others, know, that is a myth. The reality is, as has been said time and again, that Surrey is a county force grappling with metropolitan issues.
Jonathan Lord
My wonderful ward of Maybury and Sheerwater is deprived by national standards and has a diverse ethnic mix. Does my hon. Friend agree that we can ill afford to lose 80-odd police constables in Surrey?
Mr Raab
I thank my hon. Friend for that intervention and I agree with him. One of the problems with the myth about Surrey—it is as true of his constituency as it is of mine—is that average levels of affluence hide pockets of deprivation and real social challenges, which play out in terms of law enforcement, policing, crime and antisocial behaviour. Having made difficult financial sacrifices and tightened their purse strings, communities want to be able to keep the savings for front-line policing. The key issue in my hon. Friend’s and my constituencies, and in those of my hon. Friends the Members for Mole Valley (Sir Paul Beresford) and for East Surrey (Mr Gyimah), is visible and responsive policing. We are seeking to make sure that that is safeguarded, and the damping mechanism is critical.
It is precisely because, overall and on average, Surrey is an affluent area that it has become something of a target for professional criminals from other areas. During my time as an MP, I have seen professionals targeting shops and businesses in Cobham, Thames Ditton and other areas, which also suffer from antisocial behaviour, robbery and other crimes. Overall, almost 50% of crime in the county is committed by non-Surrey residents, while in 2008, 59% of the organised crime gangs affecting Surrey operated from London. That cross-border crime is a serious concern.
Equally, as my hon. Friend the Member for Mole Valley mentioned, Surrey roads require constant policing. The county is in the top 6% of local areas for volume of traffic per resident, and in the top 15% for accidents per resident. None of that is accurately reflected in the funding formula. Unsurprisingly, despite all Surrey police’s good work, those factors, which are not picked up by the funding formula, have affected law enforcement capability, which is being measured against finite and shrinking resources.
One specific issue that I have raised with Surrey police authority and the chief constable is Surrey’s sanctioned detection rate, which is the percentage of crimes for which someone is charged, summonsed or cautioned. Surrey’s rate has been either the lowest or second lowest in England and Wales for each of the past three years. In 2010-11, it was 8% below the national average. That is a visible, tangible symptom of the difficult challenges with which the force is grappling with regard to finances and law enforcement capability. Although the figure is improving, the one thing that Surrey police cannot afford is to lose scores of officers, which is the risk we face as a result of the review of the damping mechanism.
The people of Surrey should not be short-changed when it comes to the police. Let us bear in mind that in 2010 Surrey contributed £5.5 billion to the Treasury, but we got back just one third of the national average level of funding for local public services. The residents of Surrey—the taxpayers of Surrey—understand that they need to do their bit. They also understand the need for Britain to cut her coat according to her financial cloth. They have been some of the most proactive participants in that regard, given all that has been said about the discipline that Surrey police have shown in the past few years. However, those residents and my constituents will neither understand nor support changes that result in Surrey police losing millions of pounds every year if their protection from a skewed funding formula is stripped away.
The future of police funding is an important and contentious issue. I know why Ministers are nervous about tinkering with the police funding formula, and a full discussion on how to reform it is beyond the scope of today’s debate. However, that wider debate needs to take place before changes to the damping mechanism can reasonably be pushed through. I urge the Minister to give an assurance that the damping mechanism will only be altered, phased out or reduced as part of a coherent package of reforms, and not in isolation.
Neither Surrey police nor the people of Surrey are asking for special treatment. This is not about a subsidy; it is about mitigation of the knock-on effect of a funding formula that does not accurately reflect local needs in Surrey, and the same is true for other forces. We are not asking for special treatment; we are asking for a fair deal. The damping mechanism gives Surrey some mitigation from the flaws of the funding formula, and until that formula is properly reviewed and reformed, that protection should remain intact.
The Minister for Policing and Criminal Justice (Nick Herbert)
Welcome to the Chair, Mr Bone. I congratulate my hon. Friend the Member for Esher and Walton (Mr Raab) on his forceful speech and on securing the debate and the support of his colleagues. I take Members who represent Surrey constituencies seriously when they hunt in a pack, as they have done today, and will pay the closest attention to what they say.
I join my hon. Friend in paying tribute to the Surrey force, which is ably led by its new chief constable. It emerged with a good review, from the report issued yesterday by Her Majesty’s inspectorate of constabulary, of how it is dealing with the inevitable reductions in spending that the Government have asked police forces to make. The review said that the force has a good history of bringing down costs and changing how services are delivered. It began to transform how it operates in 2009, before the 2010 comprehensive spending review. As a result, it is in a good position to achieve its savings target by 2015.
The force has plans in place that, if delivered, will achieve 100% of the £27 million-worth of savings that it is required to make between 2011 and 2015. In making those savings, and in contrast to every other force, Surrey plans to increase the number of police officers by 50—that is a 3% increase compared with other forces, which are losing officers. It is the only force in the country able to do that over the spending review period. Within that total, the force is reducing the number of officers in more senior ranks by not replacing retiring managers, and increasing the number of constables by up to 200. Surrey also plans to increase the number of police community support officers by 50, while reducing the number of police staff by some 8%.
That all means that, by 2015, 80% of Surrey’s work force will be on the front line, which is a considerably higher proportion than most other forces, where the average is about two thirds. In common with other forces, Surrey is increasing the proportion of its police officers on the front line from 78% to 90%, which is exactly what I think the public want to see.
On outcomes, crime is still decreasing in Surrey, although at a slightly lower rate than in England and Wales as a whole. It is important that the force maintains its focus in adapting to the changed spending environment and continues to deliver a high-quality service to the public and to reduce crime, which is, of course, the most important outcome for members of the public. My hon. Friend drew attention to the particular circumstances of Surrey’s funding and set out the ways in which he believes Surrey is disadvantaged. First, he mentioned that Surrey has raised a much higher proportion of its funding from its local precept than other forces; indeed, I think it raises more of its money from the local precept than any other force in England and Wales. There is a greater call on local taxpayers than in other parts of the country, but equally, Surrey has been relatively protected from the reduction in central Government funding. The forces that raise less money from their precept have suffered a proportionately greater reduction in funding than those that raised more, such as Surrey. That is merely a statement of the fact.
Let me elaborate. By 2012-13, the current financial year, Surrey was raising nearly half its overall funding from the precept. When we were allocating the funding for all forces in England and Wales at the beginning of the spending review period, a question arose. Since other forces were going to be affected to a greater extent by not raising more money from the local precept, should they have a lower reduction in their spending than forces such as Surrey? It was argued, including in this Chamber, by various hon. Members whose constituencies are policed by the forces concerned, that it would be wrong to penalise them when forces such as Surrey were more able to withstand the reduction in central funding.
The Government took the view that it was not right in principle to penalise local taxpayers for the fact that they were already contributing more for their local policing service. At the time, forces, police authorities and chief constables were expecting a 20% reduction in central Government funding. We had not indicated or confirmed that it would be an even 20% reduction for each force, so it was open to us to adjust the amount according to the money that was raised through the precept. Through the damping mechanism, we decided that the equitable solution, taking all factors into account, was to do what they expected us to do, which was to use the damping mechanism to achieve an even reduction in funding for all forces, including Surrey. From that point of view, I do not believe that Surrey was disadvantaged by our decision.
Sir Paul Beresford
The Minister will be aware that after Labour entered government in 1997, the tendency to shift money away from the south and south-east was to such a degree that even the Audit Commission commented on it. That included local government, schools, the national health service and the police. His argument is based on a funding formula that we want reviewed because it is flawed. We feel that we need a review. The damping stays, and after the review, he will have to have another form of damping, because he will have the arguments much the same way, but at least Surrey will be getting what we anticipate to be a fair share of the cake.
Nick Herbert
I hear what my hon. Friend says, but I disagree that the formula is not fit for purpose. It allocates funding according to need. The Government’s position is that we wish to move towards a full application of the formula. The question is not whether we do that, but at what rate and how. It would have been a great deal easier for the previous Government to move to full application of the formula and away from the distorting effects of damping when there were increases in funding for all forces. It is a great deal harder to do that when funding for forces is declining. Had we done so, some forces that benefit from damping, including Surrey—to the extent of an additional £3.2 million in the current financial year, as my hon. Friend the Member for Esher and Walton pointed out—would have seen a greater reduction in central Government funding.
For the reasons that I have set out, we felt that the equitable approach was not to move away from damping towards full application of the formula in the first two years of the spending review. However, we reserved our position in relation to years three and four. I have just consulted police authorities about what we should do regarding damping in those years. That consultation has just closed, and we will analyse the responses carefully. I will not prejudge our decision, but the points expressed by my hon. Friends the Members for Esher and Walton and for Mole Valley (Sir Paul Beresford) are well made.
Jonathan Lord
If the current funding formula truly reflects need, why do Surrey taxpayers, in addition to all the taxes that they pay nationally, have to pay the highest precept in the country? The Minister has already accepted that we have an excellent and efficient force.
Nick Herbert
The formula takes into account the need in an area. Taking a step back, if we look at the other end of the spectrum, towards a force in an urban area, where there is particular social deprivation, much higher levels of crime and all the complexities that arise because of that, it is obvious that the need is higher, and the formula reflects that. I accept that there has been a greater call on local taxpayers as a result of the amount provided to Surrey by central Government, but my point is that our decisions on spending reductions for all forces in years one and two, far from disadvantaging Surrey, treated all forces evenly, because those that raise much less from their council tax would have seen a much greater reduction in funding.
I should point out that Surrey has increased its precept in the current financial year. It has chosen not to freeze the precept, despite the Government’s offer. That increases the funding for the force. If Surrey were to increase its precept again in the last two years of the spending review, assuming the increases suggested by the Office for Budget Responsibility and no change in the current damping arrangements, the real terms reduction in funding over the whole spending review period would be just over 10%, which does not approach the 20% suggested for other forces. That is a 1.4% reduction in cash terms. Surrey is therefore in a relatively advantageous position, enabling it, for instance, to increase its officer numbers. Even if Surrey does not increase the precept in the last two years, the real-terms reduction in overall funding will be about 13%, or less than 5% in cash terms.
I am just stating the factual position that, as local taxpayers have been forced to contribute more, which I accept, Surrey has been relatively protected from central Government funding reductions over the past two years. The consequence is that it has not had the reductions in police officer numbers that other forces have had to make. Nevertheless, my hon. Friends have made strong points about the application of damping, and I will take those into careful consideration when I decide what to do in years three and four of the spending review. Their points about damping and the application of the formula were well made, and I assure them that they will be noted.
Millennium Development Goals
(12 years, 4 months ago)
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Mr Virendra Sharma (Ealing, Southall) (Lab)
It is a pleasure to serve under your chairmanship on this important issue, Mr Bone. I thank the Minister in advance for responding to my concerns, and I thank hon. Members for attending the debate.
An estimated 24 million children worldwide grow up without parental care. In some regions, as many as 30% live apart from their parents, and research suggests that that figure is increasing. Every child deserves to grow up, to go to school and to live their childhood free from hunger and disease, exploitation, abuse and violence. Experience has shown that this happens best when children are loved and cared for in a family setting.
The millennium development goals have focused global efforts to improve the lives of the world’s poorest people, yet many of the crucial targets are in danger of not being reached by 2015. That would have a devastating impact on the well-being of children throughout the world. Failure to provide proper care and protection for children is hindering progress in achieving many MDGs. Future development goals, which are currently being developed, need to recognise and eradicate those mistakes.
There are huge gaps in child protection systems around the world. Such systems are crucial to ensuring the protection of children who are without parental care. Therefore, addressing child protection in the MDGs and the successor framework is key in supporting the rights of such children. I will outline how children’s rights to care and protection are the missing link in achieving the MDGs. Children without the care and protection of their family are particularly vulnerable and hard to reach.
I want to cover two issues related to the MDGs: the importance of including protection and care concerns in efforts to monitor the MDGs; and the need to address the absence of an explicit reference to child protection and care in the current MDGs, if the post-MDG framework is to be effective in improving children’s well-being in the future.
MDG 1 aims to end poverty and hunger. Children who are in the care of the state, either in residential care or in detention, may fail to receive adequate food, despite the obligation on Governments to provide it, while children who are not in conventional households, such as those living on the streets, in migrant families, or in child-only households, are often excluded from social protection schemes. Poorly designed social protection systems are, at best, failing to reach children who are without adequate care and protection, and, at worst, actively encouraging family separation or child labour. In South Africa and Ukraine, payments to foster or extended family carers mean that children will be in better resourced households if parents give them up to other forms of care.
Anas Sarwar (Glasgow Central) (Lab)
I congratulate my hon. Friend on securing this important debate. In an answer to a parliamentary question I tabled, I was surprised to discover that the Department for International Development does not have a dedicated child protection policy. Does my hon. Friend think that that is something DFID should have, signalling post-MDG intentions?
Mr Sharma
I thank my hon. Friend for that appropriate intervention. I am sure that the Minister has taken note and will respond to it. I agree with my hon. Friend and share his concerns.
MDGs 2 and 3 seek universal education and gender equality. In its 2012 annual report, DFID acknowledges that to meet the target of universal primary education, efforts need to shift to the hardest-to-reach children. Education for all will not be achieved unless the current widespread exclusion of young married girls and children in extended family care, prison or work is addressed. Children who have lost both parents are 12% less likely to be in school than other children. The vast majority of children living and working on the streets do not attend school, while children in detention often have no access to formal school during their sentences. For the 13.6% of children who are child labourers, including a quarter of children in sub-Saharan Africa, combining work with school often has a negative impact on learning achievements, with long working hours preventing children from attending school at all.
International recognition of the links between child labour and education have not translated into policy change on the part of many Governments. To get education for their children, the only option for some families, who are in poverty or are far from a school, is to send their children away to live in institutions that provide education but are detrimental to their well-being in other ways. Long distances to school mean that some children have to find alternative accommodation, making them vulnerable to exploitation and abuse.
MDG 4 addresses child health. The widespread use of residential care for children under three places many children and infants at greater risk of dying young. In Russia, official statistics suggest that the mortality rate for children under four years old in residential care is 10 times higher than that of the general population. In Sudan, of 2,500 infants admitted to one institution in a five-year period, only 400 survived. There are currently at least 8 million children in residential care, with evidence to suggest a growth in this form of care in many countries in the former Soviet Union, sub-Saharan Africa and south Asia.
Finally, MDGs 5 and 6 address maternal health and combating HIV/AIDS. Ensuring that children have adequate care and protection is essential for improving maternal health and combating the spread of HIV. Preventing early marriage is essential for stemming the spread of HIV and preventing girls from becoming mothers at an early age when the risks of maternal and child mortality are highest. Trafficked children, child domestic workers and other working children often face sexual abuse. An estimated 2 million children, mainly girls, are sexually exploited in the commercial sex trade each year. Street children are often sexually active at a very young age.
Early sexual activity has profound implications for maternal and child health. Forced sex and limited power in relationships mean that girls without adequate care and protection often face early motherhood, with severe consequences for the health of both young mothers and babies. Pregnancy-related deaths are the leading cause of mortality for 15 to 19-year-old girls. Those who give birth aged under 15 are five times more likely to die than women aged over 20. Babies born to young mothers are also less likely to survive. Early and often forced sexual activity among children lacking adequate care and protection increases the risk of HIV infection. Lack of control over contraceptive use, inadequate knowledge of reproductive health, frequent sexual activity and having sex with often older husbands all result in such children being more vulnerable to HIV infection and other sexually transmitted diseases.
Children on the streets are often discriminated against by service providers and unable to access health care or advice about contraceptive use. DFID is committed to achieving education for all, including the most hard-to-reach groups. What is it doing to ensure that children who are outside parental care receive an education, and that their parents do not have to make agonising choices between schooling and care and protection?
DFID makes substantial investments in social protection programmes around the world. What is it doing to ensure that social protection reaches the most vulnerable and is designed in a way that keeps families together and does not push them apart? Through its commitment to achieving the MDGs, DFID is working to reduce child and maternal mortality and the spread of HIV. What is it doing to reduce separation from parents and deal with the abuse and exploitation that is so often the cause of dangerous early pregnancy and HIV infection?
DFID is focusing more on fragile and conflict-affected states and is working to mitigate the negative effects of climate change. What is DFID doing to ensure that, in dealing with preparedness and responses to conflict and disasters, emphasis is put on preventing families separating and on protecting children whose families are torn apart by war?
It is important that DFID ensures the development of indicators of impacts on children who are outside parental care and/or facing situations of abuse or exploitation.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Will my hon. Friend give way?
Mr Sharma
I am sorry, I shall continue.
DFID must invest more in appropriate, integrated child protection systems that adhere to the UN guidelines for the alternative care of children. The Prime Minister has recently been appointed co-chair of the UN Secretary-General’s high-level panel, looking at what comes after 2015 when the targets for the millennium development goals end. The first presentation of the panel’s work will be made in September.
The coalition Government recognise the importance of strong families in improving the lives of children in the UK, yet in their work in the developing world not enough is being done to keep families together. The UN is co-ordinating a global process to develop a post-MDG framework and there is an opportunity for the UK to influence the process, and the outcomes of the development of these goals, by promoting specific reference to children’s rights to care and protection in any framework and by ensuring that extra effort is made to consult hard-to-reach children, so that their voices are heard in the global debates on a framework that could shape their future. I should like the Minister to address his Department’s role in those two areas.
The post-MDG framework should include specific targets on children’s protection and care, for example, by measuring reductions in numbers growing up in large institutions, in detention, in harmful child labour, living and working on the streets, or experiencing violence, abuse or neglect in homes and schools. A consideration of children’s protective rights will also help to ensure the equitable achievement of the millennium development goals. Only through a consideration of such basic rights will it be possible to make wide-reaching and sustainable progress in efforts to alleviate child poverty, increase access to education, improve maternal and child health, and reduce the spread of HIV and AIDS.
The Minister of State, Department for International Development (Mr Alan Duncan)
I thank the hon. Member for Ealing, Southall (Mr Sharma)for calling a debate on a topic that has an important bearing on the lives of so many people around the world. There is little doubt that children who live without parental care or in situations of severe family abuse and neglect are the most vulnerable in any society.
Children in the poorest countries are particularly at risk, especially those living through conflict or humanitarian disasters. In most societies children with disabilities face particular difficulties, as do children living in institutional care. Girls are often the most vulnerable, which is why the UK Government are working closely with partners, such as the Nike Girl Hub, to improve the lives of many thousands of girls living in abject poverty worldwide.
UNICEF estimates that almost 18 million children worldwide have lost both parents and 153 million have lost one parent. Many of those children face real hardships. They are often left without protection and care. Some are fortunate enough to be able to live with relatives or friends, but many more end up on the streets, having to fend for themselves and eke out a living.
Supporting vulnerable girls and boys is an important priority in international development. The UK Government are helping to tackle it in a range of ways, including through specific programmes aimed at improving the lives of the most vulnerable, as well as through our work with others, including overseas Governments, the United Nations, the private sector and civil society.
I can answer the question asked by the hon. Member for Glasgow Central (Anas Sarwar) in his intervention by making it clear that those who work on child rights and child protection receive training and tuition on those subjects. DFID tailors child protection programmes to the context of individual countries and includes child protection clauses in its grants to partners.
Hon. Members will be aware of international statutes that have a bearing on the issue of vulnerable children. The UN convention on the rights of the child and the International Labour Organisation’s convention on child labour provide a universally agreed set of non-negotiable standards and obligations on human rights for children that must be respected by Governments in all societies, and clear frameworks to hold Governments and others to account. The UK is not just a signatory to those conventions, but is actively working with others to ensure that the standards are put into practice and genuinely help to improve the lives of the poorest and most vulnerable people across the world.
In answer to the hon. Member for Ealing, Southall, I shall focus on four ways in which we are working to improve the lives of vulnerable children living without parental care. First, international evidence shows that cash transfer programmes are one of the most effective ways of reaching orphans and vulnerable children. In some cases, those are in the form of pensions, because many of the children live with their grandparents. For example, where one or both parents died from HIV/AIDS, such payments provide a vital source of income to help poor families care for children and stick together. In other cases, cash transfer programmes directly target the children themselves. For example, in Kenya, DFID is supporting the Government’s orphans and vulnerable children programme, which directly targets children without parental care, and is reaching more than 55,000 households. Over the past few years, it has resulted in a reduction in the proportion of those aged six to 13 doing paid work from one in 20 to one in 100. It has also helped to reduce the number of people living on less than a dollar a day from one third to one fifth.
In Zimbabwe, DFID is supporting the Zimbabwean Government’s national action plan for orphans and vulnerable children. It will help at least 25,000 children to secure their basic rights and meet essential needs, by providing money for food and school fees and helping orphans to access justice services.
Secondly, the UK is the second largest donor to the UN children’s fund—UNICEF—which works in 190 countries, helping the poorest and most vulnerable children in a huge range of areas, including health and education, child labour, trafficking, and recruitment into armed forces, and giving critical support to children in institutional care. In 2011, for example, UNICEF helped 19 million women and children with nutritional support after natural disasters, and helped 6 million of the most vulnerable children receive schooling in the aftermath of a disaster or humanitarian emergency.
Thirdly, as the hon. Member for Ealing, Southall rightly said, the millennium development goals are central to the UK’s development priorities, which we are ensuring include the poorest and most vulnerable children. For example, we support universal primary education, because we know that the high cost of education is the biggest deterrent to school attendance by the most marginalised children. By supporting countries such as Kenya, Tanzania, Malawi and Uganda to remove school fees we have seen a dramatic surge in school enrolment, helping more than 1 million extra children to go to school in each of those countries. Through the UK’s support to the World Food Programme’s “Food for Education” programme, we are helping to provide high-energy biscuits to 400,000 children in Afghan secondary schools and, therefore, an incentive for very poor children to attend school.
Children are often orphaned because of diseases such as HIV/AIDS, malaria and tuberculosis. The MDGs are vital in focusing the international community and Governments on tackling such killer diseases and, as a result, have prevented millions more children from losing their parents in the first place. The MDGs have helped to shape the quickest and biggest improvements in poverty reduction, child survival and school enrolment that the world has ever seen. The goals that follow the MDGs after 2015 must build on that success, while learning lessons from them.
I am aware that some people argue that the post-MDG goals should be a continuation of the current MDGs, while others say that the United Nations should completely rewrite them. The UK Government will play a role in helping to shape the new goals and will work to ensure that they meet the needs of the poorest. Our commitment comes right from the top; I am delighted that the Prime Minister will be co-chairing the high-level UN panel that is to lead the process. All may rest assured that he is personally committed to the new framework dealing with the needs of the most vulnerable and marginalised children.
Last, but certainly not least, our support to civil society partners is also vital to reach the most vulnerable children and communities. For example, through Save the Children, the Government are providing vital life-saving support to those affected by the humanitarian crisis in the Sahel. We are assisting Save the Children and other organisations to mobilise early support for the most vulnerable children. Last year, DFID’s funding helped Save the Children to reach 2.7 million people with emergency food, clean water and health care in east Africa.
Through War Child we are helping children in detention centres in Afghanistan; boys are often locked away just for petty theft, and girls are usually locked up for what is called running away or eloping. Conditions in many such centres are deeply shocking; children are often denied education and they are given little food or comfort. War Child’s interventions are helping to improve the justice system as well as conditions in the centres, and children are assisted to reconnect with their families and local communities when they leave the centres.
Our support to Plan International is helping more than 6,000 children who live and work on the streets in Dhaka, Bangladesh, to transform their lives. It provides safe shelters, basic education, health and sanitation facilities, information on issues such as sexual abuse, child labour and trafficking, and counselling for the most vulnerable and traumatised children.
In conclusion, the UK Government are acutely aware of the vulnerability of children around the world, in particular those without safeguards to protect them. We are doing a great deal on this agenda but, clearly, more needs to be done. We will continue to work with others to find effective ways of meeting the needs of those children. We are also fully aware that the post-MDG framework must include a focus on the world’s most marginalised people, including vulnerable children. I thank the hon. Member for Ealing, Southall for raising the issue in today’s debate. He has done a great service to an important cause in the field of development.
Question put and agreed to.
Written Ministerial Statements
(12 years, 4 months ago)
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Extra-statutory Concession (A19)
(12 years, 4 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
Her Majesty’s Revenue and Customs is today publishing a consultation document on extra-statutory concession (ESC) A19.
The document sets out HMRC proposals to introduce changes to ESC A19 over the course of the next year and seeks the views of taxpayers to inform any future changes.
ESC A19 allows HMRC, under certain prescribed circumstances, to forgo the collection of tax arrears where they arose because of HMRC’s failure to act on information provided by the individual, their employer or the Department for Work and Pensions (DWP).
Following discussions with taxpayer representative bodies over the last year, it is clear that more can be done to make ESC A19 easier for customers and their representatives to understand and to ensure that the concession remains fit for purpose following the introduction of the national insurance and PAYE Service (NPS). In response to those discussions, HMRC has proposed a revised version of ESC A19 and would now like to seek wider public opinion on this revised version to help test its thinking in this area.
In particular the consultation seeks to:
improve the clarity of ESC A19 so that it is more user-friendly and easily understood by taxpayers;
help HMRC bring greater objectivity to ESC A19; and
help HMRC align ESC A19 with the HMRC charter and ensure that it continues to be available in appropriate cases.
The consultation document is available on the HMRC website at: http://www.hmrc.gov.uk/consultations/index.htm.
Sanctions for Directors of Failed Banks
(12 years, 4 months ago)
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The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government are today launching a consultation on proposals that could prevent the directors of failed banks from holding similar positions at financial institutions in the future. The Government are also consulting on the possibility of introducing criminal sanctions for serious misconduct in the management of a bank.
The Financial Services Authority’s (FSA) report into the failure of the Royal Bank of Scotland, published in December 2011, highlighted how errors made by senior management contributed to the bank having to be saved by the taxpayer. It also set out the difficulty in taking regulatory action against the individuals concerned under the Financial Services and Markets Act 2000.
The Government are committed to tackling the legacies of the crisis and implementing the most far-reaching reforms of British banking in our modern history. Today’s proposals are some of the most ambitious in Europe.
The first proposal will make it easier for the regulator to stop directors of failed banks from taking up similar positions in the future. At present, the onus is on the regulator to prove that an individual is not fit to hold an executive position in a bank. The proposals in the consultation, if taken forward, will mean that an individual who has been a director in a failed bank will have to prove that they acted properly and were not responsible for the failure before taking up a similar position in another financial institution in the future. If taken forward, the necessary measure would be included (as a Government amendment) in the Financial Services Bill.
The second proposal would involve the creation of a new criminal offence for serious misconduct in the management of a bank. Government recognise that there are practical issues to consider and that the introduction of a new criminal offence could raise complex issues. So this is an initial consultation. As a result, it would not be possible to include the proposal in the Financial Services Bill and, if it is taken forward, the Government would envisage including the necessary legislation in another Bill during this Parliament.
The consultation will close on 30 September 2012. Copies of the consultation document have been placed in the Libraries of both Houses.
Planning Simplification Measures
(12 years, 4 months ago)
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The Minister of State, Department for Communities and Local Government (Greg Clark)
Today I am announcing additional measures to support the delivery of sustainable development by making the planning system simpler and more effective.
The national planning policy framework and the Localism Act provide the basis for a radically improved planning system and there is clear evidence that they, and the earlier written ministerial statement on planning for growth, are already delivering results: we are seeing the rate of local plan adoptions rise—37 plans have been adopted in the last 12 months, compared with less than 60 adopted in the six years before the 2010 general election, and high levels of approval rates for planning applications.
The proposals I am announcing today will help streamline the process of applying for planning permission, ensure that planning is properly resourced and create greater engagement and accountability in the process.
Over 100 local planning authorities are working with front-runner communities on neighbourhood planning. To help those communities with their neighbourhood plans, we will be providing further funding to the four organisations currently offering support on neighbourhood planning: the Royal Town Planning Institute (Planning Aid); the Prince’s Foundation for Building Community; the Campaign for the Protection of Rural England, working with the National Association of Local Councils; and Locality (the Building Communities Consortium). The further funding will enable the four support providers to offer practical and bespoke advice and assistance to those leading communities with their neighbourhood plans.
In line with commitments set out in the growth review and autumn statement, we have identified a number of potential changes to the use classes order and associated permitted development rights. If agreed, they would provide new opportunities for development and sustainable economic growth through the reuse of existing buildings, without the need to apply formally for planning permission. These include temporary or so called “meanwhile” use of empty commercial premises as recommended in the Portas review. A consultation paper is being published alongside this statement.
The national planning policy framework has successfully distilled over 1,000 pages of policy into around 50, with clear benefits for every user of the system. The next challenge is to do the same with planning guidance—some 6,000 pages of it. Practitioners will have an important role to play in ensuring we establish clear, usable guidance that supports effective planning and I will shortly announce more details on the approach we propose to take.
There is also scope to make the information requirements for planning applications clearer, simpler and more proportionate. This can be achieved without undermining the ability of local planning authorities to make well-informed decisions, or the ability of the public fully to understand what is being proposed. I am publishing detailed proposals for consultation alongside this statement.
We also intend to speed up the process for determining planning appeals, which I know can be a source of frustration for applicants and communities alike. We will consult on proposals to both shorten and streamline the process for all parties later this year.
It is important that local authorities, communities and planning inspectors can rely on the information contained in applications. To reinforce this point I will amend the declaration on the standard application form so that applicants are asked to confirm that the information provided is, to the best of their knowledge, truthful and accurate.
We are also proposing to make technical amendments to regulations to clarify and improve the operation of the community infrastructure levy. We intend to introduce these regulations in the autumn.
Providing planning departments with the resources that are required to turn round planning applications efficiently and effectively is important. The planning application fee is a relatively small component of the costs of any development, but delays by planning departments in the processing of applications can lead to substantial costs for residents and professional developers. Fees are currently set by Government and have not been increased since 2008. Most councils are experiencing a shortfall in fee income which is failing to meet the costs of deciding planning applications which, in turn, has to be subsidised by ordinary council taxpayers, who end up subsidising the planning process. The Government therefore propose a one-off adjustment to uprate fees in line with inflation, amounting to around 15% since 2008. We intend to introduce new fee regulations that would make this change come into force in the autumn.
Appropriate resources must be matched by improved performance. The growth review announced the Government’s intention to introduce a “planning guarantee” that it should take no longer than 12 months to determine any planning application, including any appeal. The guarantee places an equal expectation on local planning authorities and the Planning Inspectorate that they deal with cases in no more than 26 weeks. The guarantee is aimed at the minority of decisions that take a significant amount of time beyond the statutory time frames of eight and 13 weeks (for minor and major applications respectively) to determine. Later in the year we will publish a consultation paper on proposals to underpin the guarantee, together with a report on existing performance against it by planning authorities and the Planning Inspectorate.
We are also taking a number of steps to improve the performance of statutory consultees such as the Highways Agency, Natural England and the Health and Safety Executive. Alongside the requirement for key consultees to produce improvement plans, announced in the autumn statement, we intend to take forward our commitment to ensure that there is a more effective mechanism for applicants to obtain an award of costs, if there has been an appeal against refusal of planning permission where a statutory consultee has acted unreasonably. I have today published a consultation paper setting out these proposals. The suggested changes to the award of costs circular also make it clear that appellants may be at risk of having costs awarded against them if the evidence on which they have based their appeal is found to be manifestly untrue.
Taken together, the measures that I am announcing will make a further important contribution to our task of making planning simpler, more accessible and better able to support sustainable development.
The consultation documents being published as part of today’s announcements will be available on the Department’s website.
Olympics Security
(12 years, 4 months ago)
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The Secretary of State for Defence (Mr Philip Hammond)
In December 2011, I informed the House about the military contribution that was being planned in support of the police-led safety and security operation being put in place for the London 2012 Olympic and Paralympic games. I can now confirm that, following further planning and exercising, the Government have agreed to the deployment of ground-based air defence (GBAD) systems as part of this contribution.
The deployment will consist of four Rapier and two high-velocity missile (HVM) systems which will form part of an integrated and multi-layered air security plan that includes Typhoon aircraft (at RAF Northolt) and helicopters (at Ilford TA centre and from HMS Ocean) as well as a network of air observers and radars. This plan provides the most effective capabilities to deliver a safe and secure airspace during the games.
Both the Rapier and HVM systems were deployed to six carefully selected sites for the live military exercise, Ex Olympic Guardian, which took place between 2 and 10 May. The exercise allowed us to test the integration of the equipment with the other elements of the air security plan and confirmed the effectiveness of the GBAD systems, including the associated detection capabilities that are themselves important in compiling the best situational awareness of the airspace over London.
The Government recognised at the outset that the deployment of military equipment and personnel across London could be unsettling. The deployment of military assets, including GBAD, is a temporary measure to provide security over the period of the games. Since December, the Ministry of Defence (MOD), with the Metropolitan police, has been engaging local communities, landowners, relevant council leaders and Members of Parliament to allay concerns, provide reassurance about these deployments and, as far as possible, take measures to minimise the local impact. The MOD remains committed to this engagement and is pleased that the majority of the public recognise and support our important contribution to keeping the games, London and the UK as secure as we can. A small number of activists object to the deployment of these defensive measures and a legal challenge to the Government’s decision to deploy GBAD has been initiated. The MOD will defend these proceedings vigorously and is confident of defeating them.
The coming weeks will also see the return of HMS Ocean to the Thames, Typhoon aircraft to RAF Northolt and helicopters to Ilford TA centre. The mobilisation of volunteer reservists in support of the Olympics will also begin in earnest. The defence contribution to the wider police-led safety and security operation is on a similar scale to that of other recent Olympic games. It is a balanced and proportionate measure which will deter would-be aggressors and reassure domestic and international audiences that we are ready to play our role in ensuring a safe, secure and enjoyable 2012 Olympics.
Child Sexual Exploitation
(12 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Education (Tim Loughton)
Today I am setting out details before both Houses of three reports that deal with sexual exploitation of children and I outline the Government’s plans to take our existing action plan forward to deal with this horrendous crime.
The conviction of nine members of a network responsible for child sexual exploitation in Rochdale on 8 May raised serious concerns about the safety of young people in residential care and the ease with which they can fall prey to such abuse. On 9 May, the Secretary of State for Education asked the deputy children’s commissioner to report to him urgently on emerging findings from her inquiry into child sexual exploitation in gangs and groups. He asked that the report should focus particularly on risks facing looked-after children living in children’s homes.
We are very grateful to Sue Berelowitz for this early report which sets out emerging findings ahead of the interim report which will be published in September. It is being published today, together with our response to its recommendations which we accept in full and are driving forward as set out below.
Sexual exploitation blights the lives of too many of our children and young people and we need to do more to protect children, support victims and punish perpetrators. That is why the Government published their “Tackling Child Sexual Exploitation Action Plan” in November 2011, looking at this abuse from the point of view of the young person and the impact not just on the victim but the whole family. We have been driving forward implementation of the plan, involving five Government Departments working with a wide range of local and national organisations, voluntary and community sector partners, and law enforcement agencies. We have made it very clear that this kind of criminal behaviour will not be tolerated and that offenders like those in the Rochdale case can expect to face the full force of the law.
We are also publishing today a progress report on the implementation of the action plan and announcing further urgent action to help protect young people in residential care in light of recent serious concerns about the vulnerability of such children, in particular those placed a long way from their home area.
Our progress report shows that local safeguarding children boards and others have been rising to the challenge to do more to identify and tackle child sexual exploitation. Recent well-reported police operations have highlighted some very effective joint working by the voluntary and community sector and by statutory agencies. There are many examples of valuable initiatives that are making a practical difference—such as the “Say something if you see something” campaign addressing the problem of hotels unwittingly being used as venues for the sexual exploitation of young people and the Barnardo’s project which is developing specialised foster care placements for victims of child sexual exploitation. The new sentencing regime for dangerous offenders, which is likely to be implemented by autumn 2012, will introduce mandatory life sentences for very serious repeat offenders and help bring more perpetrators to justice.
But as long as exploitation still exists, we can and must do more. There are still areas of the country where the existence of child sexual exploitation is not properly acknowledged or addressed. This is wholly unacceptable, and underlines the need to sustain the drive to implement the action plan fully. To support this, we are publishing alongside the progress report a new, accessible, step-by-step guide for front-line practitioners on what to do if they suspect a child is being sexually exploited. We will continue to work with local safeguarding children boards and practitioners to promote improved practice supported by this new guide.
The Office of the Children’s Commissioner’s report published today sets out a compelling case for making urgent improvements in children’s residential care. While it makes it clear that the majority of children who become victims of sexual exploitation are not in residential care, it is also clear that these young people are disproportionately at risk. The report highlights concerns about the quality and stability of placements in children’s homes. It draws particular attention to the large number of children who are placed a long way from their home area, and who can be at additional risk through such isolation. The Government accept the report’s recommendations about how to secure improvements and provide better safety and support in children’s homes. These concern, in particular, the responsibilities of local authorities in deciding to place a child in another area, and in responding if there are problems.
The Government also welcome the “Report from the Joint Inquiry into Children who Go Missing from Care”, issued on 18 June by the all-party parliamentary groups for runaway and missing children and adults and for looked-after children and care leavers. This emphasised the need to tackle failings in arrangements to safeguard these extremely vulnerable children and young people.
In the light of concerns raised by the Rochdale case about the safety of children in residential homes, Ofsted immediately brought forward for urgent inspection a number of homes where information received suggested some concern about the sexual exploitation of residents.
Ofsted’s new framework for the inspection of children’s homes, which was introduced in April this year, focuses more strongly on whether a home has taken action to implement recommendations in previous reports, and whether improvements are flowing through in consequence.
In addition, we are taking the following immediate action to respond to the recommendations in the reports from the deputy children’s commissioner and the all-party parliamentary groups:
Make sure that we have a clearer picture of how many children go missing from care and where they are by improving the quality and transparency of data;
Ensure children’s homes are properly protected and safely located by removing barriers in regulation so that Ofsted can share information about the location of children’s homes with the police, and other relevant bodies as appropriate;
Help children be located nearer to their local area by establishing a “task and finish group” to make recommendations by September on strengthening the regulatory framework on out-of-area placements. While there may be good reasons for placing a child or young person at some distance from their home area, it is difficult to accept that nearly half of all children in children’s homes benefit from such distant placements. Both reports are clear about the problems that can arise. We will consult on changes in the autumn.
Establish a further expert working group to look at the quality of children’s homes. This will review all aspects of the quality of provision in children’s homes, including the management of behaviour and the appropriate use of restraint, and the qualifications and skills of the work force. Too many children are still being placed in homes for short periods of time, and the care they receive can often fail to address the complexity of their needs. The group will consider the location and ownership of homes, local authority commissioning practices and arrangements to drive improvement. It will complete its work by December.
The actions we are announcing today underline the Government’s determination to tackle child sexual exploitation and protect our most vulnerable children.
The following documents will be available in the Libraries of both Houses:
Report on the emerging findings of the Office of the Children’s Commissioner’s inquiry into child sexual exploitation in gangs and groups,
Letter from Tim Loughton MP to Sue Berelowitz, deputy children’s commissioner,
Letter from Tim Loughton MP to Ann Coffey MP, chair of the APPG for runaway and missing children and adults,
“Tackling Child Sexual Exploitation Action Plan” progress report and step-by-step guide for frontline practitioners on what to do if a child is being sexually exploited.
Midlands and North-East England Floods
(12 years, 4 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
I would like to provide an update on the significant flooding events that took place on Thursday 28 June following a further period of extraordinarily high rainfall.
Last Thursday, there were heavy thunderstorms across Northern Ireland, Wales and England where it particularly affected the midlands, Yorkshire and both the north-west and north-east. These thunderstorms caused intense rainfall over short periods, with levels of up to 35 mm seen in just 1 hour in Hereford and Shrewsbury, and up to 50 mm of rainfall in 2 hours in the north-east.
It has been confirmed so far that at least 570 properties were flooded, mostly through surface water flooding, caused by particularly intense rainfall over short periods in urban areas.
Around 80 properties have been reported to have flooded in both the midlands and the north-west, around 400 properties have been flooded in Yorkshire and the north-east, and approximately 35 properties flooded across Lincolnshire.
I am also very sorry to have to report that, tragically, one gentleman, Mr Michael Ellis, lost his life after being swept away in flood water in Bitterley, near Ludlow in Shropshire. I am sure that all Members of the House will join me in offering their heartfelt condolences to all his family and friends, at this difficult time.
The flooding experienced has also seen serious impacts on transport links. Both east coast and west coast mainlines experienced significant disruption due to landslides associated with the heavy rain. In the north-east and north-west there was widespread and severe disruption to highways, and across all affected areas many minor roads were temporarily closed. A thunderstorm near to Birmingham airport also caused temporary closure with delays to flights being caused, and a small number of diversions and one cancellation.
At the height of the flooding event on Thursday, more than 20,000 customers were without power, with 3,000 still being disconnected on Friday morning. Around 63 schools had to be shut on Friday due to the effects of the flooding, mostly in the north-east.
To put the amount of rain that we have seen recently into context, I can confirm that 2012 has had the UK’s wettest recorded April-June quarter since records began. I can also confirm that this June has officially been the wettest in both England and Wales since records began. Up to 27 June, the total UK rainfall was a record 130.1 mm. This has not been a normal event. The previous wettest June was that in 2007.
I would also like to once again take the opportunity to praise the excellent response from our front-line emergency services. I know that specialist flood rescue teams were requested and attended in affected areas, and this made a real difference in the response to the emergency.
The Prime Minister, the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), who is the Floods Minister and I have all visited impacted areas in the past few days, giving us all the opportunity to meet with people who have suffered through the flooding of homes and businesses. We understand the devastation flooding causes. However, it has also been impressive to see the community spirit shown in those impacted areas where people really do come together to overcome adversity, as well as providing the opportunity to meet with some of the brave emergency responders who put their own lives at risk to ensure the safety of others. On Saturday, I visited the north-east where east Gateshead and North Tyneside bore the brunt of the storm. But I am pleased to say that existing flood defences like Blackball Mill protected at least 100 homes from serious flooding.
I am also very grateful for the diligent work by Met Office and Environment Agency staff in the Flood Forecasting Centre. Timely warnings were given as well as the promotion of the text messaging service for those in flood-affected areas. The predictions that have been in place, not just for this event but throughout all of the flooding events that we have been experiencing in the past month have been invaluable, and have made a real difference in our ability to prepare for flooding and limit its impacts as much as possible, such as teams of local authority and Environment Agency operational staff working well before the flood waters arrived, clearing drains, testing defences and preparing flood basins.
As the clean up for these events takes place, Government officials will soon be discussing the recovery arrangements with local authorities in affected areas. However, unfortunately over the past weekend we have experienced further significant rainfall, and this has led to further flooding of 79 properties in Cumbria and 18 in Lancashire. My sympathies go out to all those affected at what is undoubtedly a difficult time.
As I said last week, with our changing climate, we will never be able to completely prevent flooding as we have seen over the past week and in earlier June. However, through the excellent preparations and work of front-line responders, including the police, fire service and the Environment Agency, and the investment being made by Government, we are better prepared for flooding than ever before.
Foreign Affairs Council
(12 years, 4 months ago)
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The Minister for Europe (Mr David Lidington)
My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs attended the Foreign Affairs Council (FAC) in Luxembourg on 25 June.
Foreign Affairs Council (FAC)
The FAC was chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland. A provisional report of the meeting and all conclusions adopted can be found at:
http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/131188.pdf.
The agenda items covered were as follows:
European Neighbourhood Policy
Ministers discussed the situation in the EU’s southern neighbourhood, focusing on Syria and Egypt. This Council marked the anniversary of the revision of the EU’s neighbourhood policy. The conclusions summarised the progress to date on the EU’s southern neighbourhood policy. Ministers agreed on the Council’s approach to EU funding in the neighbourhood from 2014, incorporating clear conditionality, with the capacity to reduce funding in the event of democratic regression.
Syria
The discussion centred on concerns about the deteriorating situation in Syria, and the significant consequences for the region. Ministers agreed conclusions (see link above) condemning the shooting down of the Turkish military plane on 22 June and the recent atrocities. They reiterated the EU’s support to the Annan plan, and called for more robust and effective pressure through a UNSC resolution, using chapter VII measures. They also confirmed additions to EU sanctions listing a further six banking and state entities and one individual and a strengthening of the EU arms embargo on Syria. The Foreign Secretary encouraged further engagement with Russia.
Egypt
The Council welcomed the peaceful conduct of elections in Egypt. The conclusions (see link above) congratulated Mohammed Mursi on his election as Egypt’s President; welcomed his commitment to inclusivity; reiterated the EU’s full support to Egypt’s democratic transition and renewed the offer of EU assistance. The conclusions reflected broad agreement on Egypt.
Iran
The Council confirmed its position on Iran oil sanctions, allowing the embargo to come into force on 1 July. High Representative Catherine Ashton gave a factual account of the E3 plus 3 and the 18-19 June Moscow meeting, noting that the next stage would be technical talks.
EU Human Rights Strategy
Ministers adopted conclusions on a strategic framework on human rights and democracy with an action plan implementing it. The Government took the difficult decision to override the House’s scrutiny reserve resolution on the action plan. This decision was not taken lightly, as the Government consider that parliamentary scrutiny is as an essential ingredient to the democratic process and oversight of EU decision-making. The two texts are the culmination of a two-year review of the EU’s external human rights policy, and the EAS hopes also to agree a third element: an EU special representative for human rights. The Foreign Secretary set out our strong support for EU action on human rights globally, while stressing that the agreed elements do not affect in any way the balance of competences between the EU and member states. He added that Parliament would want to debate the issue before the UK could give approval to the mandate for the proposed EUSR on human rights. Ministers also stressed the importance of freedom of religion, and of women’s rights.
Bosnia and Herzegovina
Ministers agreed conclusions welcoming political progress since the start of 2012. They discussed further the steps which Bosnia and Herzegovina would need to take to make progress along its EU path. Ministers noted the European Commission’s high-level dialogue on accession on 27 June, which would be an opportunity to deliver key EU messages to Bosnian leaders.
Pakistan
High Representative Ashton briefed Ministers about her recent visit to Pakistan, during which the EU-Pakistan strategic dialogue had been launched. The Foreign Secretary argued that Pakistan should remain a strategic priority for the EU, and led calls for stronger engagement over the next five years, under the EU-Pakistan engagement plan agreed earlier this year. Ministers agreed wide-ranging conclusions (see link above) offering EU support for Pakistan’s forthcoming elections, reaffirming commitment to trade concessions, and pointing to a third EU-Pakistan summit to deepen the relationship further.
Other Business
Ministers exchanged views on how visa policy could be used to encourage political change in Belarus. The situation in Mali was also discussed, and this item will be on the agenda of the FAC in July. Ministers also approved:
An EU position for the 14th meeting of the EU-Moldova Cooperation Council;
A Council decision authorising the opening of negotiations of a framework participation agreement in crisis management with the Republic of Moldova;
A partial general approach on the EU’s external financing instruments for the next multi-annual financial framework, as the basis for negotiations with the European Parliament;
Conclusions on central Asia, a progress report on the implementation of the EU strategy for the region, and the appointment of Patricia Flor as EU special representative for central Asia;
Conclusions on the Democratic Republic of the Congo.
I will continue to update Parliament on future Foreign Affairs Councils.
Nursing and Midwifery Council (Strategic Review)
(12 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Health (Anne Milton)
On 26 January 2012, I announced to the House that the Government had commissioned the Council for Healthcare Regulatory Excellence (CHRE) to conduct a strategic review of the Nursing and Midwifery Council (NMC). The review has been published today and a copy 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.
Strong regulation of nurses and midwives is crucial to ensure public protection and, as the CHRE report shows, effective leadership within the NMC is key to this. The Government will be seeking urgent assurances that the processes which are in place for the appointment of a new NMC Chair are robust, given the importance that strategic leadership will have for the future performance of the NMC.
I would like to thank the CHRE for its work. The Government expect to see the NMC implement all of the recommendations that have been made.