House of Commons
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Oral Answers to Questions
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Pat Glass (North West Durham) (Lab)
1. What recent discussions he has had with the Secretary of State for Communities and Local Government on fiscal incentives to encourage the construction of affordable housing.
The Chief Secretary to the Treasury (Danny Alexander)
The Chancellor is at the G20 meeting in Mexico, so I have been asked to reply.
On 6 September, the Government announced an ambitious package to boost housing supply, including an additional 15,000 new homes for affordable rent and bringing 5,000 empty homes back into use. We will also help a further 16,500 first-time buyers get back on the housing ladder through Firstbuy. The package includes a £10 billion debt guarantee, which will enable housing associations to benefit from the Government’s hard-earned fiscal credibility.
Pat Glass
I thank the Minister for that answer, but we have lost 120,000 construction jobs since 2010 and we are building 100,000 fewer affordable homes than even this Government tell us we need each year. When the Minister reflects on the choices he had before him, does he still believe that slashing the affordable housing grant by 60% at the same time as giving a massive tax cut to millionaires was the right thing to do?
Danny Alexander
In fact, the decision we made to move to a new affordable rent model to get more homes for the money available to us—the auction was over-subscribed, with 170,000 properties in the affordable sector being built under that model—was a good use of very limited resources, and a much more efficient use of them than the previous Government achieved.
Mr Richard Bacon (South Norfolk) (Con)
Has the Chief Secretary had a chance to look at the report by the National Self Build Association, “Lessons from International Self Build Housing Practices”, and does he agree that if we were to do more to help self-builders, we could help solve many of our housing problems, as well as increase local council tax revenue and stamp duty for the Treasury?
Danny Alexander
I have not had a chance to study that report, but, in the light of my hon. Friend’s question, I certainly will. He will know that the new national planning policy framework specifically encourages self-build, and many of the planning system reforms the coalition Government have pushed through will help self-builders to achieve their aspirations.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Chief Secretary spoke about the bidding for affordable housing, but the well has now run dry. Housing associations in my area have no more money to spend on affordable housing, and the birth rate in my area is increasing. What will the Chief Secretary do to ensure that in future people in Hackney and around the country have affordable homes to live in?
Danny Alexander
I want to see more affordable homes built. That is why this Government are the first Government to put in place Government guarantees for housing associations; that was never done by our predecessors. The Infrastructure (Financial Assistance) Act 2012, which received Royal Assent last week, will enable housing associations to benefit from £10 billion of Government guarantees, lowering their cost of finance and enabling them to build more homes. That has been widely welcomed in the housing association sector, including by the National Housing Federation. I think the hon. Lady should welcome it, too.
Andrew Stunell (Hazel Grove) (LD)
I greatly welcome the progress that has been made, but it is equally important to ensure that we have good construction standards for new housing. May I also impress upon Ministers the importance of supporting the zero-carbon homes target?
Danny Alexander
Let me start by paying tribute to my right hon. Friend for the work he did at the Department for Communities and Local Government, especially his leadership of the empty homes programme, which is making a major contribution to bringing homes back into use. I understand the importance of the zero-carbon homes programme. The building industry has argued for that, and I hope we will make progress on it soon.
Chris Skidmore (Kingswood) (Con)
2. What fiscal steps he is taking to encourage job creation in the private sector.
Gavin Williamson (South Staffordshire) (Con)
8. What fiscal steps he is taking to encourage job creation in the private sector.
The Chief Secretary to the Treasury (Danny Alexander)
Despite these tough economic times, under this Government private sector employment has increased by more than 1 million since 2010, as firms benefit from our stable and credible fiscal policy, but, of course, we are not complacent. We are helping private sector growth through a radical programme of reforms and investment, including the £2.5 billion regional growth fund, issuing up to £50 billion in guarantees for infrastructure and housing, and funding 250,000 more apprenticeships than the previous Government had planned.
Chris Skidmore
Today marks the halfway point of the coalition Government. As the Minister said, there are 1 million more private sector jobs than there were in 2010 and more people in employment than ever before. Will he work even harder to build on his fantastic record in the second half of this Government’s term?
Danny Alexander
Yes, I certainly will. [Interruption.] I know the Opposition do not like to hear this, but my hon. Friend is right to highlight the good performance of the British labour market and the facts that the private sector has created more than 1 million new jobs in the last two and half years and that there are more people in employment in this country than ever before.
Gavin Williamson
Under the Labour Government, we lost 65,000 private sector jobs in the west midlands. In stark contrast, since 2010 my constituency alone has already secured £400 million in investment. What more will my right hon. Friend do to secure private sector jobs in South Staffordshire and the west midlands?
Danny Alexander
My hon. Friend is right to say that the Labour party’s record on encouraging the private sector was at its most catastrophic in the west midlands, for which the figures he gave are absolutely correct. That is why another £124 million of funding for projects in the west midlands was announced in round three of the regional growth fund and why we are providing additional support for the automotive sector, which is so important in his constituency and region. Of course the improved climate for business, the removal of regulations and the funding for apprenticeships will benefit businesses in the west midlands, as well as in the rest of the country.
Geraint Davies (Swansea West) (Lab/Co-op)
Yesterday, a report from the Welsh Government showed that scrapping tolls on the Severn bridge would increase the value of the Welsh economy by £107 million. Will the right hon. Gentleman commission a report to show how quickly the cost of reducing and getting rid of the tolls would be offset by the increase in income tax resulting from more jobs created in Wales?
Danny Alexander
The hon. Gentleman mentions finance in Wales, so I would have thought he might have started by welcoming the announcement I made two weeks ago on a new funding settlement for Wales and the commitment, in principle, for the first time ever—this was never made by the Labour party when it was in government—to borrowing powers for the Welsh Government. That is a major step forward. We will hear shortly from the Silk commission, which is examining revenue-raising powers. I will certainly consider the matter the hon. Gentleman raises in response to the Silk commission.
Ms Margaret Ritchie (South Down) (SDLP)
The Chief Secretary to the Treasury will be aware of ongoing ministerial discussions about setting the rate for corporation tax in Northern Ireland. Can he advise on the recommendation the Treasury will make to the Prime Minister, who will be setting that level and making a determination shortly?
Danny Alexander
I am not going to prejudge the work of the joint ministerial working group, which includes Ministers from the Northern Irish Government, my colleague the Exchequer Secretary, who is there on behalf of the Treasury, and the Northern Ireland Secretary. That group will soon produce a report, which will come to the Treasury and to the Prime Minister. We look forward to considering it and responding in due course.
Mr Brooks Newmark (Braintree) (Con)
Does the Chief Secretary agree that the seed enterprise investment scheme announced by the Government in the past year is the sort of highly attractive fiscal incentive that will both encourage angel investors to back entrepreneurs and, at the same time, stimulate the job growth in the private sector that we need?
Danny Alexander
I congratulate my hon. Friend on the work he has been doing to promote the seed enterprise investment scheme. His description of it is absolutely right, and I know it is being looked at widely by investors who wish to invest in small firms in this country. I hope it will help to transform the landscape for that sort of investment in newly formed companies in this country, and I hope that he will continue his hard work.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
When the Government introduced their flagship policy on a national insurance holiday scheme they proclaimed that about 400,000 businesses would benefit. In answer to a parliamentary question in May, Ministers told me that about 16,000 applications had been received. Will the Chief Secretary tell the House how many businesses have now applied? Is it not time to listen to Labour and the Federation of Small Businesses, and extend this scheme across the country and ensure that all small businesses can benefit from it?
Danny Alexander
I think we have heard yet another unfunded spending commitment from the Labour party in that question. The hon. Lady is right to say that this scheme has not been taken up as widely as we had expected, which is why we are putting in place other measures to support small and growing businesses: the funding for lending scheme will get finance to small firms; tax incentives of the sort just mentioned by my hon. Friend the Member for Braintree (Mr Newmark) will help to get investment in small and medium-sized enterprises; and of course the Government have set a target of 25% of procurement from small firms, too. That is the right policy for small businesses in this country.
Mr Philip Hollobone (Kettering) (Con)
3. What recent assessment he has made of the level of employment in (a) Kettering constituency, (b) Northamptonshire and (c) England.
The Economic Secretary to the Treasury (Sajid Javid)
The number of people in employment in the year to June 2012 was 47,000 in Kettering, 347,000 in Northamptonshire and 24,497,000 in England. I am pleased to tell my hon. Friend that the number of people employed in each of those three areas is higher than when the Government took office.
Mr Hollobone
The employment rate in Kettering is well above the national average. Of all the policy options before the Chancellor, which offered the best prospects of sustained, long-term and lasting employment growth for my constituents in the borough of Kettering?
Sajid Javid
The one policy that brought the coalition Government together was our determination to deal with the record budget deficit we inherited. When the Government came to power, the previous Government were borrowing £300,000 a minute. We have cut the deficit by 25%, which has brought confidence and jobs back to Britain.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
As an English and a Yorkshire MP I have a great interest in how the Heseltine review, “No Stone Unturned”, will help my region. Some of us in Yorkshire are very pleased with the report, because there is a glimmer of hope for more jobs and more investment in Yorkshire. What will the Treasury do to follow up the report that it commissioned?
Sajid Javid
This Government rightly commissioned the report because we believe that Lord Heseltine has a lot of experience in that area. We will study it carefully and will respond in due course.
Mr Peter Bone (Wellingborough) (Con)
Does the Minister realise that unemployment in my constituency went down last month? Does he also realise that in the neighbouring constituency, Corby, the unemployment level fell by 5%? Does that not show that the Conservative-led Government is succeeding in Northamptonshire?
Sajid Javid
My hon. Friend is absolutely right. In the first two years of this Government, the private sector created 1 million new jobs whereas in the last 10 years of the previous Government the sector created about half of that figure.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
One way to tackle youth unemployment in Kettering and Northamptonshire and across the UK would be for the Government to commit now to repeating Labour’s tax on bank bonuses on top of the bank levy to fund much-needed new jobs for young people. Is the Minister aware that in some parts of Northamptonshire, such as Corby, the number of under-24s on the dole for more than 12 months has gone up by a shocking 233% in just the last year?
Sajid Javid
I am not surprised that the hon. Lady is talking about youth unemployment, because in the last 10 years of her Government it rocketed by 72% from 534,000 to 921,000. The previous Government created the problem and this Government’s policies are bringing the number down.
Pauline Latham (Mid Derbyshire) (Con)
4. What assessment he has made of the fiscal implications of the Government’s proposed employee-owner scheme.
Jesse Norman (Hereford and South Herefordshire) (Con)
6. What recent representations he has received from businesses on the fiscal implications of employee ownership.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government expect that the scheme will cost up to £100 million in 2017-18. The initial estimate will be refined following the Department for Business, Innovation and Skills consultation on the implementation of the new employee-owner status, which involves engagement with business and others and will close on 8 November. The annual breakdown of the estimated Exchequer cost of the policy will then be published at the autumn statement once it has been certified by the Office for Budget Responsibility.
Pauline Latham
Will the Minister update the House on the response he has had from businesses and business organisations about the new employee organisation ownership scheme?
Jesse Norman
Studies have shown that employee-owned companies grow as fast as limited companies, are more resilient and better at creating and keeping jobs, and have higher levels of staff well-being and fairer pay, which means that they are proven to create social value. As well as removing current tax incentives, will the Government consider a new capital gains tax relief for businesses sold into employee ownership?
Mr Gauke
My hon. Friend will be aware of the Nuttall review, which reported last week. The Treasury is also considering its role in helping employee ownership to support growth as well as options to remove barriers, including tax barriers. That work is being considered in the run-up to the autumn statement.
Lindsay Roy (Glenrothes) (Lab)
Does the Minister agree with the chief executive of Sainsbury’s, who said that “trading employment rights” for company shares is
“not what we should be doing”?
Mr Gauke
What Sainsbury’s does is a matter for Sainsbury’s, but I also point out the comments made by the likes of the leaders of the Federation of Small Businesses, the British Chambers of Commerce and the Institute of Directors, who have said that this measure will help entrepreneurs, start-up businesses and the fast-growing companies that we need. Surely the whole House should welcome that.
Mr Michael Meacher (Oldham West and Royton) (Lab)
Given that the Government have been keeping extremely mum about the tax avoidance implications of the scheme and that it looks like a wide-open tax loophole for the better off, what capital gains tax avoidance does he estimate it will create?
Mr Gauke
In the design of the scheme we will take steps to deal with tax avoidance opportunities to ensure that we do not create any loopholes, but this is a scheme that will encourage entrepreneurs and start-ups to provide businesses with an opportunity to expand rapidly, and it is exactly the sort of flexible approach that this country needs in the current economic climate.
Sir Nick Harvey (North Devon) (LD)
Will the Minister clarify the status of the idea of trading employee rights for share ownership? It has been described as a voluntary scheme, but does the Minister accept that it will swiftly become a de facto compulsory scheme? What level of employee shareholding is anticipated? The media have speculated that it could range from 2,000 from 50,000. It might be acceptable at 50,000, but it would be very different at 2,000.
Mr Gauke
There will be a range of options—the minimum is 2,000, and the maximum is 50,000—but this is not going to be a matter that is compulsory. It will not be the right answer for every business, but there are some businesses that need flexibility to find employee status somewhere between a full employee and someone who is self-employed such as a partner, as many hundreds of thousands of people are. I think that it is a sensible, pragmatic response.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
5. What the level of public sector net borrowing was in the (a) first six months of 2012-13 and (b) equivalent period in 2011-12.
The Financial Secretary to the Treasury (Greg Clark)
Public sector net borrowing totalled £37 billion in the first six months of 2012-13, compared with £62.4 billion in the equivalent period in 2011-12. However, income and expenditure vary throughout any year, and it is too early to draw firm conclusions about the year as a whole.
Tom Blenkinsop
Between 2010 and 2015, debt will increase under the coalition by £465 billion in just five years in real terms. How much of that debt is due to an increase in borrowing for higher welfare benefit costs as a result of the Chancellor’s double-dip recession?
Greg Clark
I am amazed that the hon. Gentleman has the temerity to talk about debt when the legacy of the previous Government has made it clear that it has been the worst in the G7. The Office for Budget Responsibility has said that the changes in Government spending have directly added to gross domestic product, and have helped matters, rather than subtract from it.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
Government borrowing will be higher when multinational companies pay royalties, management charges and technical licence fees between group companies and across borders, which will depress taxable profits in the UK and shift them abroad. Ensuring such payments properly reflect the service or technical knowledge provided is a complex transfer pricing issue, so does the Minister share my view that tackling abuses in that area is not about the number of HMRC staff but about ensuring that they have the right expertise and experience?
Greg Clark
My hon. Friend is absolutely right. It is crucial that the right skills are there, but we have taken a role internationally in leading this. In fact, in Mexico, the Chancellor is leading the way across the world in making sure that we have a co-ordinated regime.
Chris Leslie (Nottingham East) (Lab/Co-op)
I do not quite understand why the Minister is reluctant to be straight with the House on the facts, particularly given the question asked by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop).
Mr Speaker
Order. I am sure that the hon. Gentleman is not suggesting that any Minister would be anything other than straight. He may want to deploy another word with reference to dealings with the House.
Chris Leslie
Absolutely. Perhaps it was inadvertent—I would not in any way wish to imply that the Minister was deliberately obfuscating on the facts. I wanted to pick up on a specific question. As I understand it, public sector borrowing in the first six-month period of the last financial year was £62.4 billion. It was £65.1 billion in the first six months of this financial year, so will he confirm that that is £2.6 billion higher, that borrowing has risen, and that the deficit has gone up?
Greg Clark
No, the numbers vary from month to month. The hon. Gentleman needs to wait until the end of the financial year. January is the key month for these things, as he knows, but if he is interested in getting matters straight on the facts, will he clarify the shadow Chancellor’s suggestion that there was no structural deficit before the recession, because according to the IMF not only was there a structural deficit but it was the worst in the G7?
Chris Leslie
As I understand it, Mr Speaker, we ask the questions—the Minister is supposed to answer them. Why will he not confirm that borrowing figures are higher and that the deficit has risen? Will he stop being so complacent, get a grip of our economy and public expenditure, and confirm that the Government will keep their promise? The Chancellor said that the coalition Government will take responsibility for balancing Britain’s books within five years, so will they keep that promise?
Greg Clark
The facts are as I set out, but if the hon. Gentleman is implying that in some way he is against a deficit, that he wants to pay down the deficit, can he explain why he can hold that position and simultaneously be in favour of increasing borrowing? The shadow Chancellor is on the record as saying that his plans mean a short-term increase in borrowing. Let him say by how much and when.
Mr Speaker
Order. I am chairing these proceedings. Let me just make it abundantly obvious to the Minister: the hon. Member for Nottingham East (Chris Leslie) gets two questions. He does not get a third and it is not the business of the Opposition to answer questions in this Chamber—that is the responsibility of the right hon. Gentleman in respect of Government policy. Let us be clear about that.
Mr Edward Leigh (Gainsborough) (Con)
Notwithstanding what we have just heard, surely, given the still very high and worrying levels of public debt, is it not incumbent on all coalition Members, from whatever party, to continue to support the Chancellor in the very difficult decisions he may have to take in the coming months that may amount to further cuts to public spending?
Greg Clark
It is in everyone’s interest to support the path we have embarked on to pay down the deficit. We know that the confidence in the UK economy, which has led to record low interest rates, depends on credibility—a credibility that the policies of the Opposition, by borrowing more, would jeopardise.
Gavin Shuker (Luton South) (Lab/Co-op)
7. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term unemployment.
Rushanara Ali (Bethnal Green and Bow) (Lab)
9. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
15. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment.
The Economic Secretary to the Treasury (Sajid Javid)
The UK labour market is showing some signs of recovery. There are more people in work now than ever before, and youth unemployment is at its lowest since 2011. The Youth Contract was launched in April to support up to 500,000 young people into employment, and the Work programme has been under way since 2011.
Gavin Shuker
In my constituency, long-term youth unemployment is not up by 11% or 110%, but by 1,150%. Will the Government now apologise for their complacent decision to scrap the future jobs fund?
Sajid Javid
I think it is the hon. Gentleman who should be apologising. He is probably having a hard time explaining to his constituents why the number of young people on jobseeker’s allowance in the last five years of the previous Government went up by 45%. I have some good news for him, however. Under this Government, that number is down, and under this Government the number of vacancies in his local jobcentres is up by 30%.
Rushanara Ali
All other Olympic boroughs received a much-needed economic boost from the Olympic games, but the Office for National Statistics figures show that youth unemployment increased in my constituency between June and October, not to mention the 141% increase in long-term youth unemployment in the past year. Does the Minister agree that tackling this problem requires action from the Government, with a bank bonus tax to fund 100,000 jobs for young people, and action locally by the council, to take this issue seriously?
Sajid Javid
I know the hon. Lady takes this issue very seriously, which is why I believe she took her right hon. Friend the shadow Chancellor to Queen Mary university recently to discuss it with young people. I hope that they told young people that under the previous Government youth unemployment was created as a problem—up 72% in 10 years. I hope she also told them that youth unemployment has fallen by 62,000 in the last quarter because of the Youth Contract, the Work programme, investment in apprenticeships and other Government policies.
Tom Greatrex
Long-term youth unemployment in my constituency in the past two years has increased by 188%. Rather than flinging back his low-grade abuse, could the Minister explain to the House his objection, as we approach bank bonus season, to implementing a bank bonus tax to help fund jobs for those young people?
Sajid Javid
The hon. Gentleman will know that the Government have introduced a permanent tax on bank balance sheets, which will raise far more than a bank bonus tax. If he is interested in the fiscal action the Government are taking to create jobs, maybe he can tell his constituents about the brownfield allowance the Government introduced for North sea oilfields a couple of months ago. A few weeks later there was investment of £1.6 billion, creating up to 2,000 jobs in Scotland and beyond.
Harriett Baldwin (West Worcestershire) (Con)
One of the fiscal measures that best increases the incentive to find work for those who have been out of work for a long time is the benefit cap. Is the Minister surprised to learn that this morning a measure that will save the taxpayer half a billion pounds over the next two years and greatly increase the incentives to work was voted against by the Labour party?
Sajid Javid
I thank my hon. Friend for bringing that to the House’s attention, and I am not surprised to learn it, given Labour’s opposition to the benefit cap. The Government are determined to make the welfare system work in order to help people find employment, and that includes the benefit cap as well as the introduction of universal credit.
Andrew Selous (South West Bedfordshire) (Con)
Does my hon. Friend recognise that it was virtually impossible to be long-term unemployed under the last Government, because they used to take people off the register, put them on a short-term course, and then put them back again, and is he pleased that we are being more straightforward?
Sajid Javid
My hon. Friend makes a good point. A number of people have made those accusations. The important thing is that youth unemployment is falling—down by 62,000 in the last quarter.
Mr Alan Reid (Argyll and Bute) (LD)
Has my hon. Friend considered the submission that the Government have received from FairFuelUK showing that putting up fuel duty will hinder job creation, and will he give serious consideration to cancelling the planned January fuel duty increase inherited from the Labour party in order to boost job prospects?
Sajid Javid
We carefully consider all submissions from stakeholders, including the FairFuelUK campaign. The important thing is that had the Government continued with their inheritance on fuel duty, that duty would have been 10p higher, which would have made things a lot more difficult for ordinary people.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
10. If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years.
Emma Reynolds (Wolverhampton North East) (Lab)
11. If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years.
Gordon Banks (Ochil and South Perthshire) (Lab)
12. If he will use the revenue received by the Exchequer from the forthcoming auction of the 4G mobile telephone spectrum for the purpose of building affordable homes over the next two years.
The Chief Secretary to the Treasury (Danny Alexander)
No decision has been taken on how to use the full revenue from the 4G mobile spectrum auction, but the Department for Business, Innovation and Skills was allocated an entitlement of up to, but no more than, £600 million for science projects from the fund. As I said in answer to an earlier question, on 6 September the Government announced an ambitious housing package to boost housing supply, building on our £4.5 billion investment to deliver 170,000 affordable homes over the spending review period.
Chi Onwurah
Perhaps the Chief Secretary is reluctant to commit because he does not trust his colleagues in the Department for Culture, Media and Sport to overcome their history of delay and dither when it comes to 4G. In Newcastle, thousands of families are on the council house waiting list and thousands of construction workers are unemployed. Does he not agree with the director general of the CBI, who said that this plan was exactly what the economy needed?
Danny Alexander
I recognise the concerns that the hon. Lady and other MPs have about the provision of housing in their own constituencies, and that is precisely why, on 6 September, we announced, among other things, the availability of up to £10 billion of Government guarantees for housing associations—precisely to enable them to build more affordable housing.
Emma Reynolds
In the last quarter, there was a 2.5% contraction in the construction sector, and since the Government came to power 119,000 construction jobs have been lost. Why, therefore, do the Government not take their own advice, cut through the dither, sell off 4G, and use the money to construct 100,000 affordable homes and create 150,000 jobs?
Danny Alexander
The Department is getting on with the sale of 4G as quickly as possible, but the hon. Lady should be a bit wary about the policy she is promoting. For a start, it is based on assuming that we continue with the Government’s affordable rent policy, which her colleagues oppose, but without it the costs would be a great deal greater. Also, I think she is proposing to reverse the £600 million investment in science policy, which we have already committed to from this fund.
Gordon Banks
My question is very, very simple. Will the Chief Secretary use the revenue from this sale to create jobs?
Danny Alexander
I note that when the Labour party was in government and had receipts from the 3G auction, it used the resources to pay down debt, which was very prudent. Instead, we are bringing forward policies to support housing, such as the Government guarantees, which will be available to housing associations in Scotland, as well as in other parts of the country.
Damian Hinds (East Hampshire) (Con)
Alton in east Hampshire has just benefited from a much-needed £9.5 million affordable housing scheme. What more can be done, working with other Departments, to bring on more such schemes, partly using council land, especially in the overcrowded south-east?
Danny Alexander
My hon. Friend is right to highlight the importance of releasing public sector land for development for housing, including affordable housing. The Homes and Communities Agency is well ahead of its targets for releasing such land and for schools—
Danny Alexander
I am answering the question, which relates to the proceeds of the auction. We are using other policies, rather than the proceeds of the auction, to support this objective.
Mr Gary Streeter (South West Devon) (Con)
Rather than spending money we do not yet have, would it not be better for the Department to continue to work with the Department for Communities and Local Government and others in unlocking major housing schemes which have become stuck in recent years, such as the proposed new town of Sherford in my constituency? Is that not a better way of building affordable homes and boosting the economy?
Mr Speaker
Order. The hon. Gentleman is a very experienced Member. The question is about using the revenue from the auction —
Mr Speaker
Order. That is the term of—[Interruption.] Order. No assistance is required from the hon. Gentleman. He will accept my ruling and he can like it or lump it.
Danny Alexander
Rather than the proposal to use revenues from the auction, there are other policies that we can use to support the objective highlighted in the question, including those highlighted by the hon. Member for South West Devon (Mr Streeter)—planning reform, releasing public sector land and other fiscal steps that the Government can take which do not involve committing to this policy now.
Charlie Elphicke (Dover) (Con)
Will the Minister confirm answers to my written questions—that the reserve for the auction is £1.4 billion and that half has been allocated to science and higher education investment? Is this a case of Labour spending money that we do not have, yet again?
Danny Alexander
It is exactly that. The reserve price is £1.4 billion, of which £600 million has been allocated to important science projects, such as the Graphene institute in Manchester. Were we to follow the advice of the Opposition, we would have to cancel significant science projects which are vital to growth in this country. That would be the wrong policy for the British economy.
Glyn Davies (Montgomeryshire) (Con)
14. What fiscal steps he has taken to reduce the cost of living.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government have taken wide-ranging action to support households. We cut fuel duty last year and have kept it frozen since then. We have also helped those in work by raising the personal allowance by £1,100 in April 2013—the largest tax cut for the median earner in more than a decade. The Government recently announced another year of a council tax freeze and a reduction of the rail fare cap for two further years.
Glyn Davies
A major factor in the costs facing families across the United Kingdom is the rapidly increasing cost of energy. Does my hon. Friend agree that Governments have a responsibility to limit such increases as far as possible, including the costs to energy users of paying for the unsustainably large subsidies paid to onshore wind farm developers?
Mr Gauke
My hon. Friend is right to raise the issue of energy prices. The Government are doing what they can on that front. We are supporting Ofgem’s work in ensuring that there is competition in the energy markets, and of course we are determined to do what we can to get people on lower tariffs.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Does the Minister accept that the Government’s increase in VAT has led to 5p on a pint of beer and 3p on a litre of fuel?
Mr Gauke
We have to take action to try to deal with the deficit that we inherited, and let us not forget that. The hon. Gentleman mentions fuel. Because of the steps that we have taken on fuel duty, petrol pump prices could be as much as 10p lower per litre than they would have been had we stuck with the fuel duty escalator that we inherited.
Andrea Leadsom (South Northamptonshire) (Con)
16. What recent steps he has taken to reform banking and to redirect banking fines to the public purse.
The Financial Secretary to the Treasury (Greg Clark)
The draft Banking Reform Bill outlining fundamental reforms to the banking sector was published last month and is undergoing pre-legislative scrutiny. We have tabled amendments to the Financial Services Bill which provide for fine revenues net of enforcement costs to go to the public purse in future. The Bill is being debated today in the House of Lords. Some £35 million of those fines received so far this year will be used to support armed forces charities.
Andrea Leadsom
Does the Minister agree that one of the best ways to ensure good practice in future is through more transparency and competition in the banking sector? Does he further agree that full bank account portability could be a great way to achieve that?
Greg Clark
I do agree that we need much more competition in the banking industry, and account portability can play a major role in advancing that. The Vickers commission looked at it, and my hon. Friend has been very vigorous in proposing ways in which she thinks it can be implemented. My hon. Friend the Economic Secretary and I will meet her to discuss how we can advance these proposals.
Bill Esterson (Sefton Central) (Lab)
Small businesses are responsible for 40% of the jobs in my constituency, but with the banks not lending to small businesses, it is very hard for them to grow and create the extra jobs that are needed. What action will the Minister take to make sure that the banks do lend to small businesses so that they can play their part in the growth and jobs desperately needed in my constituency and elsewhere in the country?
Greg Clark
The hon. Gentleman makes an important point. It is crucial that we get funds to small businesses to get them lending. In fact, lending to small and medium-sized enterprises is up 13% over the past year. He will know that the new funding for lending scheme, which is being conducted in co-operation with the Bank of England, is making £80 billion available to the banking system for the purpose of lending.
Steve Baker (Wycombe) (Con)
We need more competition in banking. Later today, I will chair a meeting with Mr David Fishwick, who has been trying to start a responsible and trustworthy local bank but has found that the barriers to entry are far too high. Will my right hon. Friend look at Mr Fishwick’s report on community banking and consider meeting him to discuss his experiences and see whether we can make it easier for communities to create the banks they need?
Greg Clark
I certainly will. I think that there has been a concentration in the number of banks as a result of the financial crisis, and that is not a situation I want to see endure. If the suggestions in the report will help to reverse that, I am all ears.
Mr Andrew Love (Edmonton) (Lab/Co-op)
Comparisons between banking fines for similar offences in this country and in the United States show that we are well behind the curve in that regard. Has the Minister had an opportunity to speak to the Financial Services Authority about a more robust form of regulation that will ensure that fines are appropriate to the issue at stake?
Greg Clark
The hon. Gentleman, who is a distinguished member of the Treasury Committee, makes an important point. It is crucial that the change we need in the culture of banking is achieved through leadership and through a clear warning that abuse, mis-selling and all the other vices that banks can fall into will be punished rigorously. The FSA knows my views on that and I will reinforce them to the authority.
Bob Blackman (Harrow East) (Con)
17. What recent steps he has taken to tackle tax evasion and reduce tax avoidance.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are investing over £900 million in strengthening Her Majesty’s Revenue and Customs’ response to evasion and avoidance and are on course to bring in around £7 billion in additional tax each year by 2014-15. HMRC is increasing the number of staff working on compliance and using innovative approaches to improve how it identifies and tackles evasion. The Government will soon introduce the UK’s first general anti-abuse rule while also strengthening avoidance disclosure rules and publicity.
Bob Blackman
I am a strong supporter of lowering direct tax rates on individuals and companies, but hard-working families in my constituency want to know that companies and high-worth individuals are paying their fair share of tax. What is my hon. Friend doing to ensure that individuals and companies pay their fair share of tax rather than avoid it?
Mr Gauke
My hon. Friend is absolutely right. That is why we are taking action to strengthen HMRC’s compliance capability, why we are introducing a general anti-abuse rule, why we want to ensure that everyone pays their fair share of tax, and why the Chancellor made it clear yesterday in Mexico that we are working at an international level to ensure that the system that applies to multinational companies does just that.
Kelvin Hopkins (Luton North) (Lab)
The Minister talks—it might be wishful thinking—about bringing in an extra £7 billion a year, but the tax gap is at least £120 billion a year, and some people think it is more. Is it not time that the Government took chasing billionaire tax dodgers more seriously and stopped cutting public spending and squeezing the poor?
Mr Gauke
The hon. Gentleman will be aware that the figure of £120 billion does not have much support from anyone who knows much about statistics. The actual figure is £32 billion. That is the number we inherited from the previous Government and we are determined to bring it down.
Stephen Williams (Bristol West) (LD)
The Minister will be well aware of the anger of many of our constituents about the activities of companies such as Starbucks and Amazon to minimise their tax rates through aggressive tax avoidance. Is not part of the answer more international co-operation, perhaps among OECD countries, to restrict the ability of those multinationals to siphon off profitable activities into low tax havens?
Mr Gauke
My hon. Friend is right to point out that we need to be vigilant about aggressive tax avoidance and the diversion of profits from where genuine economic activity occurs. That is why the Chancellor of the Exchequer is leading the way on that, working with the German Finance Minister, and why we had the announcement from Mexico yesterday that the G20 is focusing on that and encouraging the OECD to progress its work so that we can deal with this as soon as possible.
Mr George Mudie (Leeds East) (Lab)
18. What estimate he has made of the level of economic growth since the October 2010 spending review.
The Economic Secretary to the Treasury (Sajid Javid)
The economy grew by 1.8% in 2010 and 0.9% in 2011. The Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts.
Sajid Javid
The hon. Gentleman is a distinguished member of the Treasury Committee, and I think he knows better than that. The Government introduced an independent Office for Budget Responsibility to make forecasts, and the OBR report in October 2012 said that there were several reasons why the out-turn has been different from the forecasts, including
“deteriorating export markets…impaired credit conditions”
and “euro area anxiety”. Perhaps the hon. Gentleman can welcome yesterday’s report from the Centre for Economics and Business Research, which said that Britain would be the fastest-growing economy in Europe in 2013 and 2014. [Interruption.]
Mr Speaker
Order. The shadow Chancellor is perfectly free to decide not to speak when he is on his feet, but that does not mean that instead he can speak from his seat.
George Freeman (Mid Norfolk) (Con)
On behalf of my constituents, I welcome the news that the economy has returned to growth, and I draw the Minister’s attention to the success in the life sciences sector. Eli Lilly has announced a new early-stage neuroscience facility in the UK, Johnson and Johnson has made Britain the home of its new global innovation centre, and more than £1 billion has been raised this year in early stage funds. Is that not the only sustainable route to a really balanced recovery?
Sajid Javid
My hon. Friend is absolutely right. The only sustainable growth is long-term growth in private sector jobs.
Mr Adrian Sanders (Torbay) (LD)
20. What his policy is on taxation on unearned wealth; and if he will make a statement.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are committed to a fair tax system in which those with the most contribute the most. The UK’s tax system is a progressive one, and wealthy individuals make a substantial contribution to the Exchequer. The Government have increased that contribution in a number of ways since the election.
Mr Sanders
Social mobility for younger people in Torbay is often curtailed by inequality not of income but of wealth, meaning that far too many will never be able to buy their own homes. Will he redress that imbalance by taxing unearned income as much as we tax the wages of the vast majority of my constituents?
Mr Gauke
The Government have increased stamp duty land tax on the most valuable properties. We have also increased the rate of capital gains tax. It is a question of balancing that with practicalities; we think that some of the proposals in this area may have a number of practical difficulties. But we have taken action on some of the taxes that have increased the burden on the wealthiest.
Mr William Bain (Glasgow North East) (Lab)
21. What recent assessment he has made of the effect on economic growth of the level of bank lending to businesses.
The Financial Secretary to the Treasury (Greg Clark)
As I said to the hon. Member for Sefton Central (Bill Esterson), the Government and the Bank of England are taking action to improve the flow of credit to business. The £80 billion funding for lending scheme is designed to incentivise banks to maintain and boost their lending to businesses and households.
Mr Bain
According to the Bank of England, net lending by the banks to small and medium-sized businesses fell by a further £2.4 billion in the three months to this August. Does not the Government’s failure to address that decline show exactly why the IMF downgraded GDP estimates for Britain by 0.6% for this year, and a further 0.3% for next year?
Greg Clark
The hon. Gentleman calls for action, but I would have thought that the funding for lending scheme was precisely the type of action that he wanted. The Bank of England has been clear that, in the absence of funding for lending, it was quite possible that rates and lending would have declined because of the turbulence and anxiety in the eurozone. Actually, it has been an important factor in getting money to businesses. I hope that the hon. Gentleman will welcome that.
Tim Loughton (East Worthing and Shoreham) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chief Secretary to the Treasury (Danny Alexander)
The core purpose of Her Majesty’s Treasury is to ensure the stability of the economy, promote growth and employment, reform banking and manage the public finances so that Britain starts to live within her means.
Tim Loughton
That is all very interesting, but Anne Marie Carrie, the excellent head of Barnardo’s, recently said that the proposal to remove housing benefit from all under-25s
“is reckless and unfair as it will leave some of this country’s most vulnerable people stranded.”
I am particularly concerned about the impact on care leavers, who do not have a family home or family to fall back on and for whom a safe and stable roof over their heads means they can keep off the streets, out of the NEET statistics and out of trouble. Will the Chief Secretary guarantee now that he will work with other Ministers to make sure that any changes to housing benefit for under-25s do nothing further to disadvantage that already disadvantaged group?
Danny Alexander
My hon. Friend makes a very important point about care leavers. These ideas have been floated as part of a discussion within Government on the next phase of welfare reform. I will certainly make sure that his point is brought to bear in any discussions on that proposal.
Rachel Reeves (Leeds West) (Lab)
At a time when we are seeing cuts to the budgets for police, NHS and schools, it is right that last week this House gave the Government a mandate to negotiate a real-terms cut in the EU budget. However, instead of developing a strategy to deliver this, the Prime Minister has simply resorted to threatening a veto before negotiations have even begun. Of course, walking away is always an option for any EU Government, but can the Chief Secretary confirm that if Britain or any other country just turns up and uses the veto, the budget will rise in line with inflation anyway, costing British taxpayers an extra £310 million?
Danny Alexander
I start by congratulating the hon. Lady on the news that she is expecting a child, which was announced a few weeks ago. I am sure that the whole House would wish to join me in that.
Labour’s position becomes ever more extraordinary; its opportunism on Europe seems to know no bounds. That is why we have heard words of unease from several Labour Members who thought that Labour was a pro-European party. This Government have taken the toughest position of any European Government in these negotiations. We saw what happened with the previous Government’s negotiating tactics when they gave away half of Britain’s rebate. We are not going to do that all over again.
Rachel Reeves
I am not sure whether I caught an answer there. Frankly, the Chief Secretary should know better. After all, he was not only the chief press officer for the Cairngorms national park but the chief officer for Britain in Europe, and he should know that the only way to deliver a real-terms cut is to argue for one and build alliances to deliver it. Perhaps he should listen to his Cabinet colleague who said last week that it is “absolutely ludicrous” to threaten the veto now, weeks before the summit. Is that not just the desperate ploy of a weak Prime Minister with no influence, no allies and no strategy? He should get a good deal for Britain—a cut in the budget.
Danny Alexander
The hon. Lady was a pro-European once; I still am. We seem to be seeing an outbreak of amnesia on the Labour Benches. Not only has the hon. Lady forgotten what Labour did in the last multiannual financial framework negotiation, when it gave away half of Britain’s rebate by not forming any alliances and instead giving up vast amounts—billions of pounds—of Britain’s money, but the shadow Chancellor seems to have forgotten that more recently his party was running the largest structural deficit in the world economy in the good times, leaving this country more exposed than ever to the financial crisis. This country does not want amnesia from Labour—it wants an apology.
Graham Evans (Weaver Vale) (Con)
T5. Manufacturing in this country halved during the Labour period, falling from 22% of GDP in 1997 to 11% in 2010, and during that period the sector employed half the number of people it did in 1997. With this in mind, what recent representations has my right hon. Friend received regarding investment in manufacturing industry in the north-west?
Danny Alexander
My hon. Friend is right to highlight the work that we are doing to increase manufacturing through, for example, the advanced manufacturing technology institute and investment from the regional growth fund. We have had a number of representations from the north-west, not least from my hon. Friend the Member for Burnley (Gordon Birtwistle), who has made representations on capital allowances for businesses.
Mr William Bain (Glasgow North East) (Lab)
T2. Nearly three in 10 workers in my constituency, including half of all part-time workers, earn less than the living wage of £7.45 an hour. Does the Chief Secretary, unlike the Prime Minister, back the living wage? Is he not wrong to boast about a recovery that is not being felt in the pay packets of millions of people on low and middle incomes?
Danny Alexander
Labour Members had 13 years to introduce a living wage; if they believed in it so much they could have done something about it when they were in office. This Government are increasing the income tax personal allowance towards the goal of £10,000 set in the Liberal Democrat election manifesto. As of next April, the amount of income tax paid by someone working full time on the minimum wage will have been halved under this Government. I would have thought that the hon. Gentleman would want to welcome that.
Ian Swales (Redcar) (LD)
T7. The regional growth fund is a great help in sorting out the economic devastation left by the previous Government in areas such as Redcar and Middlesbrough. Does the Minister agree with Michael Heseltine that areas such as the Tees valley can become economic powerhouses again, and will he support a further round of the regional growth fund?
Danny Alexander
I welcome what my hon. Friend has said about the regional growth fund. With him, I have visited recipients of that fund in his constituency, and seen at first hand the benefits on Teesside. He will also welcome the fact that Teesside is a candidate in the next wave of city deals, which will provide an opportunity further to enhance the economy of that area. I hear his representation for a fourth round of the regional growth fund, and I will consider that alongside other policies in the normal way.
Lilian Greenwood (Nottingham South) (Lab)
T3. Instead of insulting hard-working parents and calling them “fiscal nimbys”, will the Minister explain how it is fair that a couple earning up to £100,000 a year will keep all their child benefit, while a one-earner family on £50,000 will see theirs cut?
The Exchequer Secretary to the Treasury (Mr David Gauke)
We looked at introducing this measure on the basis of household income, but it would mean bringing 8 million households into the tax credit system and impose a much greater administrative burden on many people. At least Labour Members are consistent: they have opposed every measure to try to reduce the welfare budget, whether it be the welfare cut or child benefit for higher earners. It is time for us all to look at public spending in that area and bring it under control, but the Labour party will simply not do that.
Karl MᶜCartney (Lincoln) (Con)
T10. In the light of a recent report by the Centre for Economics and Business Research, which suggests that UK growth will outstrip many of our European neighbours in 2013 and 2014, will my right hon. Friend assure the House that the Government will continue to deal with the UK’s structural deficit? That deficit started to emerge before 2008, despite repeated protestations to the contrary by the shadow Chancellor.
Danny Alexander
Yes, I can certainly give my hon. Friend the assurance he requires. The coalition Government have put Britain back on the path to fiscal credibility, and we have cut the deficit by a quarter in our first two and a half years in office. We intend to continue in that policy direction, which is endorsed not only by the CEBR but by many other organisations.
Mr Andrew Love (Edmonton) (Lab/Co-op)
T4. What is the Minister going to do about all those multinational companies that are paying little or no tax? Her Majesty’s Revenue and Customs claims that it is powerless because those companies are gaming the system. Instead of pious statements issued from Mexico about what we might or might not do, may we have some action from the Minister? He could start by increasing from 65 the number of tax experts who actually deal with this problem.
Mr Gauke
Anyone would think that there was a completely different arrangement in 2010, but I am afraid that is not the case. The Government are working at an international level to ensure that multinationals pay the tax that is due, and that profits on their economic activity is paid where it occurs. We are also strengthening HMRC’s capacity in that area and giving it greater skills to tackle the issue. I would have thought the Labour party welcomed the progress we are making when compared with the lack of progress under the previous Government.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Does my right hon. Friend agree that one way to stimulate additional growth is through better use of the prompt payment code? Will he join me in calling on businesses and public sector organisations to adopt that code and adhere to it?
Danny Alexander
I very much agree with my hon. Friend, and we have already raised that issue with central Government Departments. We will certainly reinforce that message. I know that my right hon. Friend the Minister for the Cabinet Office and Paymaster General has been advancing that as part of the reforms to public procurement, and I will pass on my hon. Friend’s concerns to him.
Mr Stephen Hepburn (Jarrow) (Lab)
T6. When universal credit is introduced next year it will cut the living standards of hundreds of thousands of working people—yes, working people. Will the Minister join the Archbishop of York, the Mayor of London and the Labour party and demand a living wage?
Danny Alexander
I think the hon. Gentleman’s criticism of universal credit is extraordinary. Universal credit will simplify the benefits system and ensure a single, clear process for all people in receipt of benefits. Having a clear single taper will ensure that everybody knows they will be better off in work—something they could not be sure of under the previous Government.
Nigel Mills (Amber Valley) (Con)
The Government have seen the benefits that transparency can bring. Would it be good to require large corporates to publish their tax returns so that we can all see how they achieve the low rates of tax they pay?
Mr Gauke
It is right that large corporates engage in this debate, and there is a lot of public interest in the matter. One must ask whether tax returns in themselves will provide the full information—my hon. Friend has great expertise in this area—and whether that is the right way to address the issue. We have a tradition of taxpayer confidentiality in this country, as does every major economy.
Robert Flello (Stoke-on-Trent South) (Lab)
T8. Will those on the Treasury Bench tell us the expected cost to HMRC in, for example, extra staffing and IT support of dealing with the massive number of extra self-assessment returns—it is estimated at around 500,000—that will result from child benefit changes?
Mr Gauke
The cost of implementation of the child benefit policy will be £100 million over five years, but it will bring in £1.7 billion in the first year. I should also point out that the likelihood is that the number of people in self-assessment next year will be no higher than the number in self-assessment last year.
David Rutley (Macclesfield) (Con)
Will my hon. Friend tell the House what steps he is taking better to support small and medium-sized enterprises through the tax system?
Mr Gauke
We have taken a number of measures, including reducing the small profits rate from 22%, which it would have been, to 20%. We have also introduced measures such as seed enterprise investment schemes and small business rate relief. We have taken such measures because we recognise that small businesses will be an engine for growth for our economy and in employment.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
T9. The Prime Minister has said that a family with children will lose an average of £511 under the Government’s changes this year alone. Is that fair when the Government are cutting taxes for the most wealthy?
Danny Alexander
The Government are increasing taxes on the wealthiest in society and using that money for a number of things, including to put in place a new free child care entitlement for disadvantaged two-year-olds; to extend the child care entitlement of three and four-year-olds to 15 hours a week; and to reduce the income tax personal allowance, which benefits families in work. The hon. Lady should welcome rather than criticise those policies.
Duncan Hames (Chippenham) (LD)
Some pensioners with capped draw-down and self-invested pension plans have seen their retirement income halve as a result of decisions by the Government Actuary’s Department. How would the Minister suggest those pensioners cope in retirement with such a sharp fall in access to what is, after all, their own money?
The Economic Secretary to the Treasury (Sajid Javid)
My hon. Friend is right to point out that pensioners are facing pressure because of low interest rates and longevity. The Government Actuary’s Department makes recommendations to the Government and we must take them seriously—we keep the matter constantly under review.
Sheila Gilmore (Edinburgh East) (Lab)
The Government make a great deal of creating 1 million private sector jobs—[Hon. Members: “Hear, hear!”] Wait, wait. Half of those jobs, according to their statements, were in place after eight months of their coming to office, meaning that in the following 22 months only another half a million jobs were created. That suggests that the rate of growth has slowed substantially as a result of the Chancellor’s policies.
Danny Alexander
Once again, Labour Members are on the search for bad news, but the hon. Lady has picked the wrong subject. More than 1 million private sector jobs have been created since the election. The most recent figures show that tens of thousands more jobs have been created in the private sector and the largest ever number of people in employment in this country. That should be welcomed by everyone in the House, including her.
Andrew Bridgen (North West Leicestershire) (Con)
Will the Minister update the House on steps he is taking to ensure that the affordable housing programme remains on course to deliver the £19.5 billion of public and private investment in affordable housing over the course of this Parliament?
Danny Alexander
Yes, I will. The affordable rent programme was over-subscribed and will deliver more homes than originally expected. My colleagues in the Department for Communities and Local Government will ensure that they are delivered as quickly as possible. By putting in place the new guarantee programme for housing associations, we can further accelerate that programme, ensuring that we meet the targets my hon. Friend describes.
Child Abuse Allegations (North Wales)
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for the Home Department (Mrs Theresa May)
With permission, Mr Speaker, I would like to make a statement on historic allegations of child abuse in the North Wales police force area.
In 1991, North Wales police conducted an investigation into allegations that, throughout the 1970s and 1980s, children in homes that were managed and supervised by Clwyd county council were sexually and physically abused. The result of the police investigation was eight prosecutions and seven convictions of former care workers.
Despite the investigation and convictions, it was widely believed that the abuse was in fact on a far greater scale, but a report produced by Clwyd council’s own inquiry was never published, because so much of its content was considered by lawyers to be defamatory.
In 1995, the then Secretary of State for Wales, my right hon. Friend the Member for Wokingham (Mr Redwood), appointed a QC to examine all the relevant documents and recommend whether there should be a public inquiry. The recommendation was that there should be not a public inquiry but an examination of the work of private care homes and the social services departments in Gwynedd and Clwyd councils. This work revealed not only shortcomings in the protection of vulnerable children, but that the shortcomings had persisted even after the police investigation and subsequent prosecutions.
In 1996, my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), the then new Secretary of State for Wales, invited Sir Ronald Waterhouse to lead an inquiry into the abuse of children in care in the Gwynedd and Clwyd council areas. The Waterhouse inquiry sat for 203 days and heard evidence from more than 650 people. Statements made to the inquiry named more than 80 people as child abusers, many of whom were care workers or teachers. In 2000, the inquiry’s report “Lost in Care” made 72 recommendations for changes to the way in which children in care were protected by councils, social services and the police. Following the report’s publications, 140 compensation claims were settled on behalf of the victims
The report found no evidence of a paedophile ring beyond the care system, which was the basis of the rumours that followed the original police investigation and, indeed, one of the allegations made in the past week. Last Friday, a victim of sexual abuse at one of the homes named in the report—Mr Steve Messham—alleged that the inquiry did not look at abuse outside care homes, and he renewed allegations against the police and several individuals. The Government are treating those allegations with the utmost seriousness. Child abuse is a hateful, abhorrent and disgusting crime, and we must not allow these allegations to go unanswered. I therefore urge anybody who has information relating to the allegations to go to the police.
I can tell the House that Mark Polin, the chief constable of North Wales police, has invited Keith Bristow, the director general of the National Crime Agency, to assess the allegations recently received, review the historic police investigations and investigate any fresh allegations reported to the police into the alleged historic abuse in north Wales care homes. He will lead a team of officers from the Serious and Organised Crime Agency and other investigative assets as necessary, and the Child Exploitation and Online Protection Centre will act as the single point of contact for fresh referrals relating to historic abuse in north Wales care homes. He will produce an initial report reviewing the historic investigations and any fresh allegations by April 2013. I have made it clear to Mark Polin and Keith Bristow that the Home Office is ready to assist with the additional costs of that work.
In addition, as the Prime Minister said yesterday, the Government will ask a senior independent figure to lead an urgent investigation into whether the Waterhouse inquiry was properly constituted and did its job. Given the seriousness of the allegations, we will make sure that that work is completed urgently.
Given that there have also been serious allegations about other historic child sex offences, I should also inform the House of the work being conducted by Her Majesty’s inspectorate of constabulary. This will establish a full picture of all forces that have received allegations in relation to Jimmy Savile, examine whether these allegations were investigated properly, and identify wider lessons from the response of the police forces involved. I have been assured by HMIC that its work will also take into account any lessons that emerge from these latest allegations.
Before I conclude, I would like to warn hon. Members that if they plan to use parliamentary privilege to name any suspects, they risk jeopardising any future trial and, therefore, the possibility of justice for the victims, which I believe the whole House wants to see.
I believe that the whole House will also be united in sending this message to victims of child abuse: “If you have suffered and you go to the police about what you have been through, those of us in positions of authority and responsibility will not shirk our duty to support you. We must do everything in our power to do everything we can to help you, and everything we can to get to the bottom of these terrible allegations.”
I commend this statement to the House.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
I thank the Home Secretary for her statement. She is right that these are deeply disturbing allegations. Child abuse and sexual abuse of children and young people are among the most despicable of crimes. When adults who should be trusted to care for children abuse their power and position of trust by committing violent crimes, it can haunt those young people for the rest of their lives. That is made worse if society and the institutions charged with protecting children, including in the criminal justice system, fail to step in to provide greater protection or hold the perpetrators to account. The Home Secretary is therefore right to act on the latest concerns.
There are three major issues, each of which needs to be addressed. First, where crimes have been committed or suspected, we need a proper criminal investigation, led by the police in the pursuit of justice. Secondly, we need to know whether there has been an institutional failure to deal with the issue before, be it turning a blind eye, covering things up or simply failing to get to the bottom of what happened. Thirdly, we need to know what further changes are needed to our current framework for safeguarding children and investigating abuse. However, we cannot look at the allegations around north Wales in isolation. The same three questions—about criminal allegations, potential institutional failure and the lessons for today—are just as significant when it comes to the abuse by Jimmy Savile, as well as more current problems, such as the events in Rochdale or the work that the Children’s Commissioner is doing on child sexual exploitation. I am concerned that the Home Secretary’s response will not be wide enough to cover all those issues. Let me take each in turn.
I welcome the points that the Home Secretary has made today about the new criminal investigation into the allegations in north Wales, and in particular the involvement of the Child Exploitation and Online Protection Centre, which has considerable expertise. Clearly the investigation must go more widely than north Wales if that is where the evidence takes it. I hope that she can provide that assurance to the House. On the historic reviews, I welcome her decision to look again at the Waterhouse inquiry, which I assume will involve looking at whether child abuse that might have taken place outside the care system was sufficiently considered.
However, we have a whole series of inquiries under way into similar problems, in addition to important police and criminal investigations. As I understand it, there are three BBC inquiries into what happened with Jimmy Savile, a Department of Health inquiry—as well as several separate hospital inquiries—a Crown Prosecution Service inquiry, a new north Wales inquiry and an inquiry by Her Majesty’s inspectorate of constabulary into other forces that may have received allegations about Jimmy Savile. The Home Secretary will know that we have already raised our concern that the Savile investigations should be brought under a single inquiry. We remain concerned that these multiple inquiries have no way to draw together the common themes, the problems or the lessons that need to be learned. Of course we need to get to the bottom of what is happening in each case, but at the moment the framework that the Government have set out risks being confused.
The reason this is important is that we have to have a proper way to learn the right lessons for the current framework for safeguarding children, because there are clearly current lessons to be learned. Obviously a series of child protection policies have been introduced since many of the events took place. Big changes include the Children’s Commissioners, strengthening the law repeatedly, new measures and policies on safeguarding in schools and social services, and the creation of CEOP. However, we all remain concerned that victims of sexual abuse, particularly children, are too often simply not believed or taken seriously enough—abuse that was ignored for too long against girls and young women in Rochdale very recently, as well as concerns that have been raised in Rotherham. We have also seen the forthcoming Children’s Commissioner’s report, which will raise concerns about wider child exploitation. We have raised concerns too about some of the policy changes that the Government have introduced, such as changes to vetting and barring arrangements and changes to the way in which CEOP will operate. Primary care trusts have also raised concerns about the way in which child safeguarding will be treated in the NHS as a result of the reforms.
There are wider concerns, and lessons for today that need to be learned alongside the detailed historic investigations that rightly must take place. I know that the Home Secretary is deeply concerned by these crimes, and that she takes them extremely seriously. I therefore urge her to look again at the framework for these inquiries and at the possibility of a single overarching inquiry or review that would draw all the evidence together and consider what needs to be done to protect children now.
It is extremely hard for the victims of child abuse and of sexual abuse against young people to speak out and to talk about crimes that are so intimate and so deeply disturbing, and they show great bravery when they do so. We need to show them that they will be listened to, that we will give them the support that they need and that everything possible will be done to protect children in the future as well.
Mrs May
I am grateful to the right hon. Lady for the approach that she has taken to these serious issues. It is right that we should work together across the House to find the best solution, not only to get to the bottom of anything that we have failed to uncover so far, but to support the victims—which, as she and I have said, is so important.
In looking at these issues, it is right that we should first look into the police investigations to see whether any avenues that should have been followed were not pursued, and whether any issues have been uncovered as a result of the allegations that are now coming forward that should be dealt with. We must also pursue any criminality that comes forward, so that the victims can see that justice is being done.
That is why I have put an emphasis on the police investigation, and on the NCA working with the North Wales police to look into the historic allegations and ensure that everything necessary was done. If there are any avenues to be pursued in any criminal investigations, I am absolutely clear that the police should take them wherever they go. It is important that the NCA’s director general should bring in various assets, including, crucially, the Serious Organised Crime Agency and CEOP. CEOP is renowned for dealing with these issues, and it is right that it should be the single point of contact for any fresh allegations that come forward.
If, at the end of the processes that we have set in train, it appears necessary to move forward to a wider investigation, of course we will look at that. At this stage, we need to get the police investigations into any criminality under way, and to ensure that the Waterhouse inquiry did as it was intended to do, and did it properly. As I have said, however, if there is a case to be made for a wider inquiry at some stage in the future, we will of course look at the issue.
I shall return to the point on which the right hon. Lady and I ended our statements today. She was right to say that other police investigations had taken place in which there were issues over whether the victims were believed. We need to be able to reassure victims that, when they come forward, they will be listened to and taken seriously. It is incumbent on all of us in the House, in the positions of authority and responsibility that we hold, to ensure that that is the case.
Tim Loughton (East Worthing and Shoreham) (Con)
The Prime Minister is to be congratulated on the urgency with which he has responded to this matter, and the Home Secretary is to be congratulated on the speed with which she has come to the House today. Many weeks ago, when the Savile affair first reared its ugly head, I said that it was just the tip of the iceberg. We should not be surprised that child abuse has now raised its head in the political spectrum as well.
As the shadow Home Secretary has said, we now have a multiplicity of inquiries, and the Home Secretary has just announced an inquiry about an inquiry. Rather than waking up to find a new institution involved in this mire every week, is it not now time to have an overarching and robust public inquiry into all the failings in child protection in various institutions—the BBC, the health service, the police, the Church and so on—during the latter part of the 20th century? All institutions involved with children and young people should be made to have a robust child protection policy that is fit for purpose in the 21st century. All perpetrators should be exposed and brought to book, and all victims should be given credence and closure at last.
Mrs May
I commend my hon. Friend, who has championed the interests of children and child protection throughout his time in this House. He has a worthy record of bringing these issues before the House and the public.
My hon. Friend talked about bringing perpetrators to book, but as I said in my response to the shadow Home Secretary, what matters at this stage is that we are able to let the police do the job of identifying the allegations brought forward, pursuing the investigations and bringing perpetrators to book where possible. He has rightly said that this is not just an issue that has hit the care homes in north Wales, as the allegations of child abuse and actions of child abuse go wider in respect of the number of institutions involved in various ways over the years. As I said to the shadow Home Secretary, let us see the criminal investigation routes pursued, and if there is a case to go wider, of course the Government will look at that.
Paul Murphy (Torfaen) (Lab)
In February 2000, I was the Secretary of State for Wales and reported Sir Ronald Waterhouse’s report to this House of Commons. Does the Secretary of State agree that, although the report exposed monumental wickedness and came up with superb recommendations, including the creation of a Children’s Commissioner for Wales, and that however important it is to look at Sir Ronald’s inquiry, it is much more important to deal with the investigations into fresh allegations that are now before us? Secondly, will the Home Secretary assure the House that she is in close contact with Carwyn Jones, the First Minister of Wales, who is obviously also dealing with this issue, as social services are devolved?
Mrs May
I recognise that when the Waterhouse inquiry was set up and when it reported, it was generally welcomed in the House for the work it had done. Given the fresh allegations, however, I think it is important to ask somebody to look again at that work. Alongside it, what is of course important, as the right hon. Gentleman said, are the police investigations, looking into any fresh allegations that have been made and, as I say, looking at the historic allegations and investigations, too, to ensure that those were indeed conducted properly and went as widely as they needed to. As for the First Minister for Wales, my right hon. Friend the Secretary of State for Wales has spoken to him. As the right hon. Gentleman will know, policing is not a devolved matter, but there will be further discussions with the First Minister on a number of these matters, including the review of the Waterhouse review.
Sir Edward Garnier (Harborough) (Con)
My right hon. Friend has just announced a number of inquiries, but I agree with the right hon. Members for Normanton, Pontefract and Castleford (Yvette Cooper)and for Torfaen (Paul Murphy) and with my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) in that there is a real imperative and priority for the police to get on with their job now, which is to investigate fresh allegations of criminality—and they must be left unhindered to do that, without being inhibited by other forms of inquiries into inquiries. I urge my right hon. Friend to allow the police to get on with that and, if necessary, to delay any inquiries into the inquiries so that the suspects can be prosecuted and, if necessary, found guilty, and the innocent can be relieved of the suspicion that is current in the media.
Mrs May
I thank my hon. and learned Friend for his comments. It is absolutely right that the police should be unhindered in their work of investigating any fresh allegations and, as I say, any historic allegations as well. If any charges are to be brought, the individuals need to be identified and criminal prosecutions pursued. The review into the Waterhouse inquiry will not, I think, get in the way of the police investigations, as it is a review into how that inquiry was conducted. It is right that the police are allowed and able to get on with the job. If people have committed horrendous crimes, we all want to see them brought to justice on the basis of the evidence and we want the criminality to be pursued.
Keith Vaz (Leicester East) (Lab)
I commend the Home Secretary for the speed with which she has acted on this issue. I remind her that when the Children’s commissioner gave evidence to the Home Affairs Select Committee in its inquiry into Rochdale, she said that child abuse was happening in every town and city in this country. At the end of the day, I think the right hon. Lady is going to have to have a public inquiry—an overarching inquiry that brings all the strands together. In the meantime, will she assure us that the National Crime Agency will have this co-ordinating function with all the other inquiries that are going on? Will she please involve the Director of Public Prosecutions at the earliest opportunity. In the end, the victims want to see people prosecuted.
Mrs May
I thank the right hon. Gentleman for his comments. He has reminded us of the remarks made by the Children’s Commissioner when she came before the Home Affairs Committee. The director general of the NCA, Keith Bristow, working with SOCA, CEOP and any other assets he feels necessary to bring to bear at the invitation of the chief constable of North Wales, will primarily be looking into those allegations. If it is the case that other allegations surface in another context, which it would be appropriate to wind into the investigation, the director general of the NCA would, of course, be able to do that.
Dr Julian Huppert (Cambridge) (LD)
These allegations are indeed very distressing. In the original Waterhouse inquiry, 28 people were named but their names were not publicly reported because the judge reasonably assumed that it would prejudice any future trial—a trial that never happened. Does the Home Secretary agree that whenever there is an inquiry into what happened historically, as opposed to the recent allegations, it must get to the bottom of why there was no follow-up police investigation after Waterhouse concluded?
Mrs May
My hon. Friend is right. One point of bringing extra resource in to support the North Wales police on this issue is to look at the historic allegations and to investigate whether everything was done that needed to be done in respect of following up criminal prosecutions as well as ensuring that all the evidence was taken.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
I commend the Home Secretary for her statement today and the urgent action she has taken. I am very pleased that CEOP will be involved and that every extra resource will be there, if necessary. Some of these allegations, however, are not fresh; they were made during the proceedings of the Waterhouse inquiry. I believe that the right hon. Lady is right that a two-strand approach is vital and that the police should get on with it immediately. As to the inquiry itself, if the individual looking into it says, as others have said here today, that we need a further, overarching public inquiry, will the Home Secretary agree to it?
David T. C. Davies (Monmouth) (Con)
I welcome the fact that, following these serious allegations, the Home Secretary has acted very quickly indeed to investigate the specific problems in north Wales. Will she reaffirm that if anybody is found to have been involved in this, they can expect absolutely no mercy and that the full force of the law will be pursued in the courts?
Mr Tom Watson (West Bromwich East) (Lab)
The lesson of Hillsborough and hacking is that a narrowed down investigation is the basic building-block of a cover-up. To limit this inquiry to north Wales and Savile would, in my view, be a dereliction of the Home Secretary’s duty. It would guarantee that many sickening crimes will remain uninvestigated, and some of the most despicable paedophiles will remain protected by the establishment that has shielded them for 30 years. Will the right hon. Lady please guarantee that the SOCA inquiry has licence to follow any lead it finds in what will be, after all, a serious criminal investigation. There should be no historic sexual abuse of children which is off limits to this investigation, and the police should be supported by a dedicated team of child protection specialists, many of whom have been raising their concerns for years. Whether someone was raped and tortured as a child in Wales or in Whitehall, they are entitled to be heard.
The media may be transfixed by the spectre of a paedophile Cabinet Minister abusing children, but what actually matters are the thousands and thousands of children whose lives have been ground into nothing, who prefer to kill themselves than carry on, who have nowhere to turn, to whom nobody listens and whom nobody helps. Does the right hon. Lady sincerely want to start making amends, or can she live with being what she has just announced—the next stage of a cover-up?
Mrs May
I am sorry that the hon. Gentleman has chosen to take that tone. I know that he is keen to see the large-scale inquiry to which a number of Members have referred. I have explained why I think it important for the criminal investigation to run its course, and to be pursued without fear or favour. I assure him that what I, and the Government, want to do is ensure that we establish investigations, and that, if there are people who should be pursued for the purpose of prosecution, such a process then takes place. I have made that absolutely clear.
It is entirely true that there have been a number of instances, over the years and across the country, of different forms of child sexual abuse. We now see the online and on-street grooming of children, and a number of other variations of child abuse. What is so horrific is the extent to which that abuse has been taking place in our country and throughout our communities over the years.
There are various ways in which the police are investigating these matters and inquiries are taking place. In relation to the issue in north Wales, it is important for the police to be able to pursue any criminal investigations without fear or favour, taking those investigations, absolutely clearly, where the evidence leads them. That is what they should be doing, that is what they will be doing, and that is I believe the best way to bring justice to the victims.
Glyn Davies (Montgomeryshire) (Con)
Today’s statement concerned some of the most shocking incidents that I can remember occurring during my political life in Wales. Like others, I greatly commend the Prime Minister for the speed with which he established the urgent investigation.
It may well be true that we must have the wide-ranging inquiry to which several Members have referred. However, we do not want to lose sight of the fact that there is an issue in north Wales that must be dealt with comprehensively. We must ensure that those responsible are brought to book quickly, and that we do not lose this particular shocking issue in a wider investigation that will take a long, long time.
Mark Tami (Alyn and Deeside) (Lab)
Does the Home Secretary agree that one of the fundamental flaws in the Waterhouse inquiry lay in its terms of reference? That is why we need a far more widespread inquiry.
Mr Rob Wilson (Reading East) (Con)
I, too, welcome my right hon. Friend’s swift action, in relation to both the independently led review of the Waterhouse inquiry and the involvement of the National Crime Agency, which I think is very important. Does she agree that all the evidence collected by “Newsnight”, by the Bureau of Investigative Journalism and by others should be placed in the hands of the police immediately? That is absolutely essential if justice is to be delivered not only to the victims, but to those who have been unfairly libelled on the internet in recent days.
Simon Danczuk (Rochdale) (Lab)
There has clearly been institutional blindness to abuse, whether it has taken place in Rochdale council, at the BBC or even within political parties. We now need a Government framework that encourages all victims to come forward, whatever cases are involved. Does the Home Secretary not agree with that?
Mrs May
I am happy to repeat what I said in my statement, and also a minute or so ago. I think that anyone who has been a victim and who feels that there are allegations to be made should make those allegations, but I also think that such people should go to the police, who should be investigating the allegations and ensuring that we can, where possible, bring the perpetrators to justice.
Mr Graham Stuart (Beverley and Holderness) (Con)
Tomorrow, after a year-long inquiry, the Education Committee will produce its report on child protection in England. There has understandably been a great deal of focus on the perpetrators in recent weeks, but we focused unapologetically on the victims. May I ask the Home Secretary to look at the report carefully? What is most important—even more important than bringing people to justice—is ensuring that no child suffers as children suffered in past years when, overall, the system let them down.
Mrs May
I will, of course, look at the Committee’s report carefully. As my hon. Friend says, we often concentrate on the perpetrators. We hope that part of that involves giving the victims an opportunity for justice, but concern for the victims must also drive what we are doing.
Ian Lucas (Wrexham) (Lab)
I thank the Home Secretary for coming to the House so promptly, but the problem with what she has said today is that the victims have heard what she has said in the past. They gave evidence to the Waterhouse inquiry, but that evidence was not listened to and did not become public, and no prosecutions—or not enough prosecutions—followed. What can the Home Secretary do to assuage the feelings of those victims, and to make them understand that this inquiry will actually lead to the taking of some responsibility? Is it not about time that we had openness, after all these years, about the evidence that was given to the Waterhouse inquiry?
Mrs May
I would say to anyone who has been a victim and is concerned about what has happened in the past that the whole point of setting up a police investigation under the director general of the National Crime Agency is to enable a body of police to look into the investigations and inquiries that took place previously, and to establish whether they were properly conducted or whether avenues of inquiry or allegations that should have been pursued were not pursued, in order to identify instances in which it will be possible to bring perpetrators to justice. This is not just an inquiry into what has happened; it is a police investigation, and it will focus on precisely that issue.
John Hemming (Birmingham, Yardley) (LD)
On 26 October, the Government voted down proposals to make cover-ups harder and to protect children in care. What measures do they propose to ensure, in particular, that people have a right to complain to someone independent?
Mrs May
The hon. Gentleman has led me on to territory that is not fully within my remit, but I can say that one of the messages we hope will be conveyed by the action we are taking today is that people who make serious allegations will be listened to and taken seriously, because that issue has arisen in many areas. We want to ensure that people do not feel that they cannot come forward because they will not be taken seriously or because action will be taken against them, and that when child abuse has taken place, it is uncovered and dealt with properly.
Mark Durkan (Foyle) (SDLP)
Is the Home Secretary asking the security services to review and, where appropriate, share any intelligence that they have relating to cases and places of abuse and to the persons, networks and patterns involved, not just in north Wales but—as other Members have suggested—more widely, including, but not only, in respect of Kincora?
Sir Paul Beresford (Mole Valley) (Con)
Does my right hon. Friend agree that many fresh allegations could come from individuals who have hidden the appalling attacks made on them so many years ago, and who will be reluctant to come forward because that would disturb the life that they have built since? Do such people not need the reassurance and protection that can be provided by CEOP, the police and others if they do come forward?
Mrs May
That is an important point. For many victims who wish to come forward, it will not be an easy process but a very painful process, which, as my hon. Friend says, could disrupt the lives that they have been able to build subsequently. However, I assure him that CEOP is well able to deal, and well used to dealing, with people who are in difficult circumstances and who may find it difficult to come forward. That is why I think it so important for CEOP’s ability and specialism to be brought to bear on the investigation.
Joan Walley (Stoke-on-Trent North) (Lab)
Given what we now know about the powers of investigation and terms of reference used in the north Wales inquiry, will the Home Secretary have regard to other similar inquiries? I am thinking in particular of the Staffordshire “pindown” inquiry undertaken by Allan Levy. Can the Home Secretary assure the House that if similar questions arise in relation to any other inquiry, they will be encompassed within any further investigations?
Karen Lumley (Redditch) (Con)
I was a Clwyd county councillor representing Wrexham at the time of the north Wales children homes inquiry, and I was on the panel that looked at the report that was never published. Let me tell the House that its contents were horrendous. Can the Secretary of State assure me and the House that no stone will be left unturned to make sure that the people who came forward can have closure and that those responsible for these dreadful crimes can be punished?
Geraint Davies (Swansea West) (Lab/Co-op)
Will the Home Secretary look into whether there was a systemic problem in north Wales whereby those accused of child abuse without conclusive evidence to prove it were redeployed within the wider world of social services? Although they no longer had direct access to children, they were still part of that system. If that is the case, we will need a much wider inquiry.
Sir Tony Baldry (Banbury) (Con)
One of the major concerns in all this is the number of credible claims of child abuse that were made to the police about Savile and others that never resulted in charges being brought. Will my right hon. Friend give an undertaking that the work done by HMIC will lead to a report that the House will then have a chance to debate?
Mrs May
My hon. Friend raises an interesting point. I am sure the House will want to return to this issue either in relation to the HMIC report or anything further that comes out of the investigations being set up today. One issue HMIC will be looking at in a number of forces is whether the police respond properly to these sorts of allegations. As a number of Members have said, one of the more general concerns is that victims often find it difficult to be heard, or do not come forward because they do not think they will be listened to.
Yasmin Qureshi (Bolton South East) (Lab)
As a former prosecutor of historical sexual abuse cases in care homes and institutions, as well as within the family, I informed the House in a debate some months ago that sexual abuse of our young people is very common and much more prevalent than we appreciate. We need not only an inquiry into any abuse that has been taking place in care homes or other institutions but to take a proper look at what we should do to protect our young children in the future and what rules we should put in place to make it easier for young victims to come forward and tell us what has happened to them. I repeat that it is not only care homes that have sexual abuse problems; there are also sexual abuse problems in the home and the family.
Mrs May
I acknowledge the hon. Lady’s experience in this area, and she raises an important point about the extent of such abuse and the scenarios in which it takes place. She says we should look at the broad issue of child protection. She will have heard my hon. Friend the Member for Beverley and Holderness (Mr Stuart) informing the House that the Education Committee will publish its report on child protection tomorrow, and I am sure the whole House will want to look at that issue very seriously.
Jackie Doyle-Price (Thurrock) (Con)
As my right hon. Friend may be aware, rape crisis centres are reporting a considerable increase in activity as victims of historical abuse come forward. While it is welcome that people are responding to how seriously we are all taking these allegations, we do not want to be unable to right the wrong they have suffered by not being in a position to give them adequate support. Will she make sure that the infrastructure we have in place to support rape and abuse victims is satisfactory and supports them to get closure?
Mrs May
I recognise the problem my hon. Friend raises, and only last week I heard directly from representatives of rape crisis centres about the increase in the number of historical victims coming forward. The Government have been able to provide some extra funding for rape crisis centres to put them on a more stable footing and to open some new centres, but I recognise that there are issues in respect of their ability to handle the volume of people coming forward and also the appropriate way to deal with them, as many of the recent therapies have not always satisfied the needs of some of those victims.
Paul Flynn (Newport West) (Lab)
One of the boys involved in this case was persuaded to give evidence only to find that, after going through the horror of churning up the memories of the dreadful things he had suffered, there was no justice at the end of it. He later took his life. I know that the hard-bitten reporters who persuaded him to give evidence on the promise that there would be justice have lived with that sense of injustice ever since. I ask the right hon. Lady to look not only at the fresh evidence but at the evidence that was available at the time and that was almost certainly suppressed by powerful people. Will she look at the evidence produced by Paddy French and the Rebecca Television website on an edition of “Wales this Week” that was never broadcast?
Mrs May
The police investigation will look at the evidence that was available at the time in these historical abuse allegations, and at whether the evidence was properly investigated and whether avenues of inquiry were not pursued that should have been followed up and that could have led to prosecutions. I can therefore say to the hon. Gentleman that the police will, indeed, be looking at that historical evidence. That is part of the job they will be doing.
Nicola Blackwood (Oxford West and Abingdon) (Con)
I, too, welcome the Home Secretary’s decision today. Does she agree that if there is a single message that must go out from all these inquiries and investigations it is that all victims of child abuse or sexual exploitation who come forward will be believed? Even if there is a successful police investigation and even if the Crown Prosecution Service decides the victim is a credible witness, too often they feel that they are treated like the criminal in court. Will the Home Secretary work with the Director of Public Prosecutions to make sure all special measures are implemented so that that does not happen in any prosecutions that come out of this inquiry?
Mrs May
I am very happy to raise that issue with the Law Officers in relation to what happens in court. We have made considerable progress in dealing with victims of these crimes in court, but I recognise that some still find it very difficult to give evidence, and without that evidence the prosecution is often not possible.
Paul Goggins (Wythenshawe and Sale East) (Lab)
I also welcome the statement and the speed with which the Home Secretary has made it. In recent days she and her officials will have rightly been in close discussion with North Wales police about the work to be done by Keith Bristow, and it is very welcome that the Home Office is offering financial support. When serious issues such as these have to be dealt with in future, what role will police and crime commissioners have in discussions between the Home Office and local police forces? What part will they play in making decisions about future action?
Mrs May
The police and crime commissioner will replace the police authority. There will be certain circumstances in which it is right, as it would have been for the police authority, for the commissioner to be part of initiating a particular piece of work. There will be other circumstances in which it is entirely right for the chief constable to do that.
Stuart Andrew (Pudsey) (Con)
I welcome the statement. As a Leeds MP, it has been sad to see how the Jimmy Savile allegations have rocked people’s trust. As a councillor in Wrexham at the time of the inquiry, I remember how it sent shockwaves throughout the community. Even after the inquiry, there was considerable angst among people in the area about the appalling things that had happened. My right hon. Friend has rightly encouraged anyone with accusations to come forward, but there were rumours at the time of people who were too frightened and anxious to do that because of the exposure it may have given to their family and the complete lack of trust they had in the authorities who were supposed to be looking after them in the first place. Can she assure me that those who do come forward will be listened to without fear of recrimination and that everything will be done to support them through a very difficult process?
Mrs May
Yes, I can give my hon. Friend that reassurance. This is why it is particularly important that the single point of contact for people will be CEOP, which has the experience of and expertise in working with victims of these appalling crimes. CEOP has the ability to work with those who find it difficult to come forward, and it will enable them to do so in a way that allows their story to be heard and listened to.
Mrs Madeleine Moon (Bridgend) (Lab)
As a former social worker who worked in child protection in Wales, I welcome the statement, but if this is to be a successful examination, we have to look at why this was able to happen and what the lessons are for today—the lessons will go wider than just the Home Office. May we have an assurance that there will be an examination across Departments as to why we continue to place vulnerable children away from their home areas, and away from their families, their friends and the support networks they trust, where they can have the assurance that if they go back to those networks such revelations will not be buried and hidden? We are failing generations of children by still placing them far away from their families because of cost and because we no longer have local authority children’s homes in which places can be found for vulnerable children.
Mrs May
The hon. Lady raises a wide issue about the way in which we treat children and young people who are in care and are the responsibility of the state. Sadly, this country has an appalling and shameful record on the way in which we have dealt with young people in care, across a range of issues. Obviously, the points that she has made will be noted by my right hon. Friend the Secretary of State for Education, under whose remit this primarily comes.
Nick Smith (Blaenau Gwent) (Lab)
Will the Home Secretary tell us more about the terms of reference for the appointee who is looking into whether the Waterhouse inquiry did its job? Surely these must be as wide as possible, given this dreadful case.
Susan Elan Jones (Clwyd South) (Lab)
I am grateful to the Home Secretary for coming to the House to make the statement and to my right hon. Friend the shadow Home Secretary for calling for a single overarching inquiry, as I believe there will be a great deal of support for that in north Wales, as well as in other places.
Most of us cannot even begin to imagine the pain that many victims of this dreadful abuse will be going through today. They will be watching and reliving some of their experiences, which, in many cases, may have been buried for decades. The hon. Member for Pudsey (Stuart Andrew), a former Wrexham councillor, raised this point eloquently. My concern is that many people would like to go to the police to say what happened to them but they fear that the perpetrators are much more powerful than they are. They want to know that we will be on their side. If any Member of the House of Lords were found to be guilty and to be a perpetrator, would the Government support stripping them of their peerage and taking them out of the House of Lords for life?
Mrs May
Obviously, what would happen to any individual who was found to be a perpetrator following any potential criminal prosecution is a matter that would need to be determined at the time. I think that the whole House shares a view on the valid point that the hon. Lady makes about those who fear that they will not be heard; we in this House have responsibility, authority and power, and we should make sure that the message that goes out from us clearly today is that victims will be heard. If someone has been a victim and has allegations to make, I ask them please to bring them forward and take them to the police. The purpose of the investigation is to ensure that we follow all avenues of inquiry, and that victims can see that their voice is heard, that they are listened to and that, where possible, perpetrators are brought to justice.
Chris Ruane (Vale of Clwyd) (Lab)
The Secretary of State said that she has not had direct contact with the First Minister of Wales, Carwyn Jones. May I suggest she does make contact with him and with the Children’s Commissioner for Wales to ensure that there is full co-operation and the free flow of information across all UK borders—those of England, Scotland, Northern Ireland and the Channel Islands—in a Welsh inquiry or in an overarching UK inquiry?
Mrs May
As I understand it, a number of conversations are being held with the First Minister of Wales—as I indicated earlier, the Secretary of State for Wales has already been in touch with him. I think there will be discussions about the nature of the review of the Waterhouse inquiry as part of that. Of course, as instances emerge—as allegations are made and victims come forward—it will be necessary to ensure that there is an exchange of information in the investigations. One benefit of being able to bring the director general of the National Crime Agency, along with the assets of SOCA and CEOP, and other force assets, as necessary, into this investigation is to make sure that all the information sharing that is necessary is done.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Keith Bristow is a very highly regarded senior police officer but, as he told the Home Affairs Committee the other week, he is already up to his neck in another serious, high-profile police investigation and he is also trying to establish the National Crime Agency. Is the Home Secretary absolutely confident that he will be able to give this matter the full attention that it obviously demands?
Mrs May
Yes, indeed I am. This investigation provides a good example of the benefits of having a central authority—a central body—that can draw resource from a number of areas, particularly the specialist resource from CEOP and SOCA, and bring that to bear. Before the invitation came from the chief constable of North Wales police we of course discussed with Keith Bristow his ability, and that of the various assets under him, to undertake this, and he is clear that he is able to do so.
Ann Coffey (Stockport) (Lab)
I, too, thank the Home Secretary for her statement. There is a wide difference between police forces in not only how they respond to allegations of child sexual exploitation, but how well they currently assess risks to children in their area. What has happened to these children in the past is terrible and we must do all we can to ensure that we safeguard children from sexual abuse. Does she agree that Her Majesty’s inspectorate of constabulary should make it a priority to inspect police forces to see how well they safeguard children in their area?
Mrs May
One issue that HMIC will be examining in its work on Savile and on the lessons learned from this north Wales investigation and, if necessary, others, is how the police deal with these matters. One of HMIC’s tasks will be to ensure that forces are taking those lessons seriously and embedding them in what they do. Of course, once the college of policing is up and running, it will also be a body with responsibility for developing standards and good practice in a number of areas, and I would expect this to be one of those areas.
Jim Shannon (Strangford) (DUP)
I, too, thank the right hon. Lady for today’s statement and for the speed with which the Government have brought it to the House. As is clear from the Jimmy Savile abuse and the north Wales care home abuse, paedophile groups were prevalent in many parts of the United Kingdom in the 1970s and 1980s. Organisations that give help to abused children are almost being overwhelmed by the phone calls they are receiving—they are reporting a 100% increase in calls for help from young children. What assistance can she give organisations tasked with helping these vulnerable children?
Mrs May
The hon. Gentleman makes a valid point about the number of people now coming forward. As more revelations of a historical nature are made, I hope that people will feel better able to come forward to indicate their concerns and the problems they have been dealing with in their lives. As he says, a number of organisations are working with and helping those children. The issue of child protection is one that this House and the Government have taken and will continue to take seriously in terms of ensuring not only that there is child protection in the first place, but that when there are victims they can come forward and are given the support they need.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I served as a member of the inquiry team that looked into and reported on abuse of children in residential care in Edinburgh and it was some of the most harrowing work I have ever done. From that experience, I am very aware of how difficult it is for victims to come forward. I appreciate the importance of CEOP, as well as what the Home Secretary is saying about the police, but many victims will fear that they will not be believed or will worry that they will be let down again. What resources will she put in place for social services departments, the voluntary sector and counselling organisations to enable people to come forward, tell their stories and be supported throughout, whatever action is taken?
Mrs May
It is not for me to put resources into social services departments, as that is obviously another area of responsibility, but we will be considering the issue across Government. I hope that the message that has gone out from this House today to reassure victims that they will be listened to will be heard and that people will have the confidence to come forward. The hon. Lady’s point about wider support for victims has been raised by a number of other Members and I will ensure that it is considered by the responsible Departments.
Bill Esterson (Sefton Central) (Lab)
The Education Committee heard worrying evidence that there is still a big problem with older children not being listened to or believed because of what is regarded as difficult behaviour. That is consistent with what happened in Rochdale and with what a number of other Members have said. Notwithstanding that, does the Home Secretary agree that it is very important for child protection to have greater co-operation between the police and other agencies so that children are put at the centre of all child protection work?
Mrs May
The hon. Gentleman makes an important point about co-operation at a more local level in responding to cases involving individual children. All the evidence suggests that the best protection and results happen when agencies work together and when not just one single agency considers the protective needs of a child. He makes an interesting point that we will take away and consider.
Point of Order
Huw Irranca-Davies (Ogmore) (Lab)
On a point of order, Mr Speaker. Ash dieback disease is a major national disaster of huge proportions, and of direct and immediate interest to every hon. Member of this House. It is therefore disappointing to learn that the Secretary of State for Environment, Food and Rural Affairs has written a detailed letter updating hon. Members on this environmental emergency, but that the letter has been exclusively distributed by the Government Whips’ admin unit to Government—governing party—MPs only.
As you are guardian of the rights of this House, Mr Speaker, I seek your guidance on the appropriateness of a Secretary of State, in a moment of great national emergency, seeking to use the functions and resources of the private office exclusively to brief only his own party colleagues. Surely every hon. Member of this House is equal in their standing and equal in their need to hold the Executive to account.
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. If Ministers acting as Ministers with the support of the civil service are making information available to hon. and right hon. Members of this House, they should without question do so equally. That requirement does not of course apply to political parties making information available to Members of the House. I hope that that distinction is clear and intelligible to the House. I cannot have a debate with the hon. Gentleman about it and there is no requirement to do so, but if he is seeking genuine clarification—his brow is furrowed in such a way as to suggest that that is so—I shall briefly indulge him.
Huw Irranca-Davies
Thank you, Mr Speaker, and I do not intend to detain the House any longer than I need to. Further to that point of order, the letter is signed not by a party political unit but by the Secretary of State in name as the Secretary of State for Environment, Food and Rural Affairs. If I were to share the letter with you, Mr Speaker, perhaps you could offer some clear advice on whether it falls within the remit of the civil service or party politicking.
Mr Speaker
I am grateful to the hon. Gentleman for his follow-up point of order. I have not had sight of the letter and I am happy to look at it, but I do not think that I need now to add to anything that I have said.
Free School Meals (Children Over the Age of 16)
Nic Dakin (Scunthorpe) (Lab)
I beg to move,
That leave be given to bring in a Bill to make provision to introduce free school meal arrangements for children over the age of 16 who attend colleges to bring them into line with arrangements for children who attend schools, academies and free schools; and for connected purposes.
Free school meals are a vital tool in ensuring that all students have access to education regardless of their background. More than 100 years have passed since Campbell-Bannerman’s Liberal Government gave local councils the power to give free meals to children from poor families. It was the great 1944 Education Act that made it an entitlement for children to have a free school meal. Consequently millions of young people, for a century or more, have benefited from free school meals, which has increased both access to education and social mobility.
The situation today, however, is not entirely satisfactory as there remains a significant inequity in the provision of free meals for the over-16s. Students who meet eligibility requirements can claim free school meals if they attend school sixth forms, academies, university technical colleges or free schools, but their contemporaries at sixth-form colleges and further education colleges cannot. That long-standing injustice is an issue that I have raised continually since my election to this House two and a half years ago.
Along with MPs from all parties, I contributed to a Westminster Hall debate in June led by the former Education Secretary, my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett). The strong concern expressed by Members from both sides of the House demonstrated the breadth and depth of support for addressing the injustice. From my 30 years’ experience of working with post-16-year-olds and four years as principal of John Leggott college in Scunthorpe, I know the direct impact that not having access to a college meal in the daytime has on concentration, attendance, retention, achievement and, inevitably, a young person’s progression on to other things.
Free school meals should be available to those who need them regardless of where they choose to study. If the eligibility of students who meet the criteria for free school meals depends on the type of institution they attend, that is not only morally wrong but potentially piles disadvantage on top of disadvantage. The fact that 16 to 18-year-olds in colleges miss out is particularly unfair when 13.3% of them are from disadvantaged backgrounds compared with 8.3% in maintained school sixth forms and academies.
It gets worse, because some areas of the country are served more heavily by colleges for post-16 education than by schools, which means that young people lose out through a postcode lottery because of where they live. That injustice affects not just a minority of students, but a significant proportion. Across the country, some 103,000 students are missing out on a free lunch to which they should be entitled. In Yorkshire and the Humber, that is 10,700 students, including 257 students who attend Scunthorpe’s North Lindsey college and 103 students who attend Scunthorpe’s John Leggott college.
There are three reasons why there is greater urgency now about addressing the injustice than hitherto, and why the Association of Colleges’ campaign “No Free Lunch?” on fairness for FE students is so timely and deserving of our support. The landscape has been transformed, first by the scrapping of the education maintenance allowance, secondly by the raising of the participation age to 17 and then to 18, and thirdly by the increasingly fragmented nature of post-16 provision.
The existence of EMA masked the disadvantage of being unable to access free school meals. With EMA gone, the injustice is even starker. The raising of the participation age will mean more students from disadvantaged backgrounds will stay on beyond 16, and they deserve to be supported with a free school meal, if they are eligible, whichever institution they study at. Why should new institutions such as free schools, academies and UTCs be able to provide free school meals while FE and sixth-form colleges cannot?
The availability of free school meals at some institutions but not others not only damages the education and well-being of individuals, but promotes division in the education system. Let us take as an example the bizarre situation in Hackney, where a UTC opening on the same site as the college can offer free school meals to its students while the college cannot. Let us also look at an example of the real-life impact of this unfair policy on young people. Ryan Ashton attends Lancaster and Morecambe college, and is seven months into a two-year level 3 national diploma in sport. Despite being eligible for free lunches at school, he was shocked to find when he began college that he was no longer eligible. As he is studying sport, his day can be very physical, and when he has not had enough to eat he can feel faint and dizzy. There is a family history of diabetes, so good diet is particularly important. He says:
“I do think this campaign is very important. I know I’m not one of the worst off, but still need some support. I think there needs to be help for students like me.”
To afford his lunch, Ryan works as a football referee, and also uses this income to fund his travel.
This is a story that will resonate with thousands of students who are forced to take on part-time jobs or go to other additional lengths just to be on a level playing field with their counterparts in school sixth forms and academies. That is completely at odds with the Government’s commitment to social mobility and equal opportunity, which is why the urgent action sought by the Bill is needed. Another consequence of the current injustice is that colleges have to fund free school meals out of their own squeezed budgets. Last year, North Lindsey college in Scunthorpe spent £5,000 on providing meals for students in particular need. At a time when all education institutions have to cut costs, why should some be forced to pay for free school meals and others not?
Anne Tyrell, principal of North Lindsey college, says:
“There is a wealth of educational research that demonstrates that effective learning can only take place once basic needs are satisfied (food being one of these). There is no justification for the fact that students in colleges do not have the same right for a free school meal say they would if they had stayed on at a school sixth form. As real family incomes are reduced, and combined with the removal of EMA, there is even more need to ensure that at the very least there is parity on the issue. This may seem a small step but it is essential if we are to truly widen participation and ensure social mobility and access to education, training and qualifications for all our young people.”
The lifetime public finance cost of young people aged 16 to 18 not participating in education, employment or training is estimated to be at least £12 billion. There is also a significant cost to individuals of not participating and therefore not securing skills and qualifications. The estimated cost of extending the right to free meals to college students is £38 million in the Department’s overall budget of £56 billion. That is the equivalent of 1p in every £14 spent, so the numbers add up and make good business sense. The Government could use the review of eligibility for free school meals under universal credit to consult on reviewing the eligibility for institutions to provide that to the qualifying demographic.
Toni Pearce, National Union of Students vice-president for further education, said:
“There can be no justification for the basic inequity which says that you can’t get free school meals if you study at a college from the age of 16 to 18, but can if you study at a school sixth form. Eligibility for free meals should clearly be based on need—not on where you choose to study.”
Janet Grauberg, UK director of strategy for leading children’s charity, Barnardo’s, said:
“Even the Secretary of State for Education has acknowledged this anomaly, which means the most disadvantaged students are penalised for choosing to study in a further education college rather than a school sixth form.
We now need action, not words, to stop this happening. Barnardo’s report, ‘Staying the course’, found some of the poorest students are skipping meals just to afford the bus to college. We fully support AOC’s No Free Lunch? campaign and urge the Government to correct this disparity as soon as possible.”
As part of its investigation into 16 to 19 participation in education, the Select Committee on Education unanimously concluded:
“There is no logic in making free school meals available to 16-18 year olds in schools but not in colleges”.
The case for extending the right to free school meals is clear-cut and compelling, and I believe that the Government acknowledge the need to address it. In a very positive meeting with representatives of sixth-form colleges and with me last month the Secretary of State recognised the need to look seriously at this issue. In a recent written answer, the Minister for Schools accepted that it was a long-standing anomaly and said that the Government were working through the available options. I hope that the option in this ten-minute rule Bill is one that he will grab with both hands.
Question put and agreed to.
Ordered,
That Nic Dakin, Mr David Blunkett, Sir Roger Gale, Sir Bob Russell, Caroline Lucas, Angela Smith, Caroline Dinenage, Mr David Ward, Jim Shannon, Yvonne Fovargue, Robert Halfon and Ian Swales present the Bill.
Nic Dakin accordingly presented the Bill.
Bill read the First time; to be read a Second time on 1 February 2013 and to be printed (Bill 87).
Standards and Privileges
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Leader of the House of Commons (Mr Andrew Lansley)
I beg to move,
That this House
(1) approves the Second Report from the Committee on Standards and Privileges (House of Commons Paper No. 635);
(2) endorses the recommendation in paragraph 62; and
(3) notes that Mr Denis MacShane has been disqualified as a Member of this House.
The report by the Standards and Privileges Committee into Mr MacShane’s conduct describes it as
“the gravest case which has come to us for adjudication, rather than being dealt with under the criminal law”.
This was deeply reprehensible conduct, including, as the report says, actions “plainly intended to deceive.” That will have angered many of our constituents and Members of this House alike.
In this House, we are determined to meet the highest standards in public life. The events that were the subject of the complaint against Mr MacShane took place between 2005 and 2008. Since the expenses scandal three years ago, we have instituted measures to seek to rebuild trust in our procedures and in Members themselves. The Parliamentary Standards Act 2009 provides for an offence of providing false and misleading information to the Independent Parliamentary Standards Authority. This is designed to ensure that anyone submitting false invoices now would be caught and could be prosecuted.
We are committed to ensuring that such behaviour could not take place now or in the future, but we must recognise that independent scrutiny and enforcement is not enough. We should expect Members of the House themselves to set and meet the highest standards of conduct. The fact they have not is a matter of deep regret, and in this House I know we will be determined to demonstrate that we will not tolerate such lamentable breaches of those standards. We must make it clear that such breaches will be dealt with seriously and proportionately. It is in pursuance of this that I have moved the motion.
Mr MacShane has sought and secured disqualification from the House. The motion notes this, but none the less approves the report by the Committee on Standards and Privileges and its recommendations. To do so will establish that the House will act against Members on the basis of the Committee’s report and the Commissioner’s inquiries and conclusions. It may be that Members will not wish to debate in detail the findings of the report and investigations by the Parliamentary Commissioner for Standards, recognising that any possible further action now lies outside this place. None the less, in my view, it is important that we put the endorsement by the House of the Committee’s report on the record.
The Chair of the Committee will wish to explain its conclusions and recommendations in further detail, but I should like to put on record our thanks to him and his Committee, and to the Parliamentary Commissioner for Standards, for their work in this case, and for their continued work in the House. It has been the practice of this House to endorse the findings of the Committee on Standards and Privileges, and I invite hon. Members to do so today.
Ms Angela Eagle (Wallasey) (Lab)
May I add my thanks to my right hon. Friend the Member for Rother Valley (Mr Barron), the Chair of the Standards and Privileges Committee, and to the other members of the Committee for the work that they have done on the report?
I rise following the speech made by the Leader of the House to support the suggestion in the motion before us today that:
“This House approves the Second Report of the Committee on Standards and Privileges…and endorses the recommendation in paragraph 62.”
The motion before us goes on to point out that the former Member of Parliament for Rotherham took the decision to resign his seat after he was made aware of the content of the Committee’s report on its publication last Friday. His own stated reason for doing that was that it was right that he should take responsibility for the mistakes that he has made and be accountable for them by leaving Parliament. We believe that in these circumstances he has done the right thing. His resignation emphasises the importance of respecting the rules for claiming reimbursement of expenses incurred by Members of the House in the performance of their parliamentary duties. It is crucial that the public have confidence in these arrangements, too.
The report deals with claims made between 2004 and 2008, which relate to the system that was in place prior to the creation of the Independent Parliamentary Standards Authority. This has led, as the Leader of the House pointed out, to a much more robust and transparent system that minimises the chances of such abuses occurring in the future. This sorry episode will serve to reinforce both the importance of the rules and the gravity with which serious breaches are regarded by this House.
Mr Kevin Barron (Rother Valley) (Lab)
I will be very brief. The Committee’s report sets out the circumstances of the case clearly. The inquiry related to claims made between 2005 and 2008 under the old expenses system. I cannot be certain that this is the last of the expenses scandal, but I hope that it is.
On a personal note, I have known Denis MacShane since he was first selected to contest a by-election in Rotherham in 1994. I have worked with him as one of the three MPs in the borough since then and know he has always had the interests of his constituents, and the wider Rotherham borough, at heart. The events of the last three years will not totally overshadow my memory of the work that Denis has done in Rotherham.
The Committee, however, was united in its finding that this was the gravest case that has ever come before it. The absolute sums were not the issue; it was the manner in which they were claimed, the flagrant disregard for the rules of the House, and the failure to co-operate with the commissioner’s investigation that most concerned the Committee. We judged that to be a breach of the code of conduct. There may have been suggestions that hon. Members are above the criminal law. That is not true, and that needs to be addressed.
The commissioner’s investigations are into possible breaches of the code of conduct, not criminal matters. The procedures are fair, but the commissioner is not conducting a criminal investigation and neither is the Committee. As we said in the report:
“The decision as to whether conduct is criminal and as to whether proceedings should be brought is one for the police and the CPS.”
In 2008, the Committee, the Parliamentary Commissioner for Standards and the police agreed that criminal investigations should take precedence over the House’s disciplinary proceedings. For that reason, we agreed in 2010 that the case should be referred to the police, and the commissioner referred it. After a long investigation, the police and the Crown Prosecution Service decided not to proceed. They doubtless considered that decision very carefully. They now have our report and may consider it again. That is their decision, not ours.
If our report contains new material, the police can use it to guide their investigations. Receipts, invoices and claims are not privileged, and do not become so simply because they are reproduced in a parliamentary report. It is true that the correspondence between the commissioner and those he investigates could not be used in court proceedings without impeaching and questioning proceedings in Parliament. It is our view that that would be a breach of article 9 of the Bill of Rights. In reality, however, that correspondence is likely to be inadmissible anyway. There are strict legal safeguards about the gathering and use of evidence in criminal proceedings. The House’s disciplinary procedures are scrupulously fair, but they are disciplinary processes, not criminal investigations. It would be most unwise of the House to speculate on the criminality of an hon. Member’s conduct.
The Committee has given its judgment on breaches of the code, and the House is invited to agree. Whether or not conduct such as that described in our report is criminal, it is clear that we will not tolerate it. I welcome that, and I hope that the House agrees.
Sir Paul Beresford (Mole Valley) (Con)
Clearly, as a member of the Committee I support the findings and I support the motion. I do not want to go through the report, but I just want to raise an issue that comes from it. The commissioner’s inquiry was in two parts. The first included a measure of co-operation from the Member in question combined with research into retained files. That evidence was sufficient for the Committee to decide to pass further inquiries to the police, which we have already had explained to us. The second half was subsequent to the police investigation. This time the Member refused to co-operate and a fuller investigation was partially blocked. It is a requirement of the House that Members co-operate with the commissioner. There is no fifth amendment; co-operation is expected. It is very often the core of the inquiry for the commissioner to have that response and co-operation.
I have not been a member of the Committee for very long, but I understand that there has been at least one case, and perhaps more prior cases, where a Member has refused to co-operate. In at least one case, the House imposed a suspension after which the Member returned to the House, leaving the Committee with an unsatisfactory report and no real resolution. This is a concern that the Committee and the House should look into, because I suspect that this will not be the last occasion when this type of reaction to the commissioner will happen.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
It is with some regret that I raise, on behalf of my constituents who have raised it with me—this is not to mitigate anything in respect of the report and the actions of Denis MacShane—the question of why there seem to be double standards. The Minister for Schools, the right hon. Member for Yeovil (Mr Laws), was clearly guilty of falsely claiming £60,000 of House expenses and has been returned to the Cabinet, yet other Members have been recommended for expulsion from the House.
Mr Speaker
Order. I think the hon. Gentleman has concluded his remarks, but they were outside the terms of the motion. Of course, if he wanted to pursue the matter, it would require a substantive motion.
Question put and agreed to.
European Union (Croatian Accession and Irish Protocol) Bill
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Europe (Mr David Lidington)
I beg to move, That the Bill be now read a Second time.
I convey the regrets of my right hon. Friend the Foreign Secretary who is unable to attend today’s debate. As you know, Mr Speaker, he is in Laos attending to official business on behalf of Her Majesty’s Government.
The Bill provides for parliamentary approval of the Croatian accession treaty and for a protocol on the concerns of the Irish people, the so-called Irish protocol, which is to be added to European Union treaties. The Bill also provides for the secondary legislation that will be required to apply transitional immigration controls on Croatian nationals exercising their right to free movement once Croatia accedes to the European Union.
Henry Smith (Crawley) (Con)
I very much welcome those transitional immigration controls that will be imposed for the accession of Croatia. We learned from that mistake in 2004 when countries from elsewhere in eastern Europe joined the European Union, and I support the Government’s actions.
Mr Lidington
I am grateful to my hon. Friend for his comments. I hope to say more about the transitional controls later, but he will have observed that the Minister for Immigration, my hon. Friend the Member for Forest of Dean (Mr Harper), is here, and I can assure him that the Home Office and the Foreign and Commonwealth Office are working hand in glove on the preparation for Croatian succession.
For many years, EU enlargement has enjoyed firm cross-party support in the House. We can look back to the premiership of the noble Lady Baroness Thatcher to see support being expressed for enlargement covering the newly enfranchised democracies beyond what was once the iron curtain, at a time when it was not fashionable or even believed feasible that those countries of central and eastern Europe could become full members of the European family of nations. Today, for the countries of the western Balkans, including Croatia, that process of accession provides a means of entrenching political stability, democratic institutions, the rule of law and human rights —traditions and values that that part of our continent needs but which were crushed for much of the last 100 years.
Angus Robertson (Moray) (SNP)
I endorse the Minister’s comments. May I invite him to underline that the accession agreement foresees not only the points that he has made but the fact that on accession Croatia will nominate a commissioner, take up a seat on the Council of Ministers and have 12 MEPs?
Mr Lidington
The hon. Gentleman is right. Our support should not only be about what Europe is or ought to be; I also want to stress the point that enlargement, and Croatia’s accession in particular, is firmly in our national interest.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Just to clarify, as well as the rights and responsibilities that will come to Croatia if we pass this accession Bill, is it also correct that it will have to join the Schengen area and eventually become part of the eurozone, with the agreement that it will join the euro?
Mr Lidington
Croatia’s accession treaty provides for it to join the Schengen area and the eurozone, but, as the hon. Gentleman knows well, if Croatia is to join either it will be required to meet some further tests. It is already understood in Zagreb and throughout the Schengen area that it will be at least two years before Croatia can contemplate a successful application. I know from the debates on the bids by Bulgaria and Romania to join the Schengen area that the current members look carefully at the strength of internal and external controls over immigration and asylum before they concede the much greater rights of freedom of movement and freedom from all kinds of border checks that go with Schengen membership.
Mark Field (Cities of London and Westminster) (Con)
The Minister referred to Romanian and Bulgarian accession. He will recall that before they joined the EU in 2007 they had to clear various hurdles and various parts of their economy had to be shown to be compatible with the EU, but at that juncture there was only a very limited stipulation stating that, if they failed to do so, their accession would simply be delayed by 12 months. Will he go into detail about precisely what hurdles Croatia will have to clear, particularly any penalties if it fails to meet economic requirements?
Mr Lidington
I want to come to that in greater detail later, but I can say now that the process that Croatia has gone through has been much more demanding than what was expected of Romania and Bulgaria or earlier accession states. One lesson that EU member states drew from the experience of Romanian and Bulgarian accession was that we needed to invent an additional category of accession conditions covering justice and fundamental rights measures. That is now embodied in chapter 23 of the accession process. Those things that, in the case of Romania and Bulgaria, ended up being addressed—in my view, rather unhappily, in terms of the actions of all sides—through the co-operation and verification mechanism post-accession have, in the case of Croatia, been addressed upfront.
We have learned further lessons from Croatia’s accession process. Although chapter 23 has been a significant advance, we recognise that, as we look forward to an accession process that in the Government’s view should embrace all the countries of the western Balkans, we need to find a way of ensuring not only that the accession process provides incentives for, and insists upon, rigorous reforms of the administrative and judicial life of an applicant country but that the applicant country has the opportunity to establish a clear track record of implementing those reforms. With the decision earlier this year to open accession negotiations with Montenegro, a new approach has been introduced under which those chapter 23 measures—and, for that matter, the chapter 24 measures applying to home affairs matters—will be dealt with first. The objective is to open those negotiating chapters early on, to see those reforms under way and then to hold those chapters open until the end of the process, so that it becomes a question not only of seeing reforms enacted but of seeing a consistent track record.
Mark Field
I hope that the Minister will forgive me, but his answer prompts a further question. He referred to the coalition Government’s support for other nations in the western Balkans joining the EU in due course. Would the same apply to Serbia, assuming that Croatia was happy about it and assuming that Serbia wished to join and met all the guidelines? Would the Government approve that too?
Mr Lidington
Yes, we have made it clear—my right hon. Friend the Foreign Secretary repeated this in Belgrade in the past couple of weeks—that we support Serbia’s ambitions to join the EU. It is also, however, important that while remaining vigorous supporters of EU enlargement we remain committed to rigorous accession criteria. That is in the interest of the candidate countries and of the integrity of the EU.
Kelvin Hopkins (Luton North) (Lab)
My constituency is home to some Bosnian Muslims. The accession of Croatia will erect a much more significant border between Croatia and the other Balkan countries—setting Montenegro aside—particularly the significant ones to the south, Serbia and Bosnia. Before Serbia attains accession, which might be many years ahead, the relationship may change. Does the Minister have any thoughts about how that relationship might change in the future?
Mr Lidington
I hope that the requirement to police the external EU border between Croatia and Bosnia and Herzegovina will provide an additional incentive to political leaders in the latter to commit themselves with greater energy to the task of political and economic reform, particularly political reform and reconciliation, which is needed if they, too, are to qualify for EU membership.
One of the sadnesses about the western Balkans today is that Bosnia and Herzegovina, which a few years ago saw itself as at the head of the queue of potential new members of the European Union, has now fallen behind not only Croatia, but Montenegro in that race. I want to see Bosnia and Herzegovina move towards EU membership, and for that matter NATO membership too. I hope that one impact of Croatian accession is that people and leaders in Bosnia and Herzegovina will see that they need to commit themselves with renewed energy and vigour.
The United Kingdom’s interest in Croatian accession lies partly in the fact that we have a national interest in the long-term political stability of the western Balkans, and partly in the fact that there are economic benefits to expanding the single market. Our trade with the eastern and central European countries continues to grow. To give the House one example, United Kingdom exports to the “emerging Europe” countries of central Europe have trebled over the past 10 years, reaching around £16 billion in 2011. More recently, in the first quarter of this year our exports to countries in the east of Europe have increased by no less than 28%, so in economic terms, amidst the current financial crisis, the project of EU enlargement remains as relevant now as it ever has been to our economic as well as our political interests.
Following the ratification of Croatia’s accession treaty by all 27 EU member states, Croatia is expected to join the EU on 1 July 2013. Meanwhile, we expect Croatia to sustain the momentum of six years of significant reform, particularly on judiciary and fundamental rights issues, so that it meets fully all EU requirements by the time of accession. This is something to which I know the Croatian Government are committed. When I visited Zagreb in July this year to discuss the ongoing reform progress, I was impressed with the dedication in evidence, particularly from the Foreign Minister and the Justice Minister of Croatia. They are very aware of the challenges that face their country and they are keen to prove to us as their neighbours and friends, and to their own citizens, that they can make a success of accession. It is on that basis that we look forward to welcoming Croatia to the EU as the 28th member state.
Graham Stringer (Blackley and Broughton) (Lab)
Is that not a rather pious hope? Once Croatia is a member, if it decides to resile from the commitments, what actions can be taken? What actions have been taken as Hungary has departed from the standards that we would expect from a member of the European Union? The answer is none.
Mr Lidington
There are within the treaties articles that can be invoked. For example, if a member state departs from fundamental standards of human rights and democratic values that are embodied in the articles of the treaty, ultimately its full rights as an EU member can be suspended. [Interruption.] The hon. Member for Moray (Angus Robertson) reminds me that when a far right party entered the Government of Austria a few years ago, Austria found that it started to get frozen out of normal EU business. So although they may be blunt instruments that are in the treaties, the instruments are there.
There is a provision in the pre-accession monitoring arrangements under which, if Croatia fails to deliver on what she has promised, the Council is entitled to take all necessary measures to deal with the situation. That might, for example, mean that if Croatia were to fail to carry through the necessary market reforms of its shipbuilding sector—I do not expect that—certain EU financial benefits could be withheld until those reforms had been implemented. I do not think we are as lacking in sticks as the hon. Member for Blackley and Broughton (Graham Stringer) suggests.
Mr Lidington
Let me say this, then I will give way. Croatia has applied for European Union membership both because it sees this as of symbolic political importance and its leaders want to entrench democratic values, human rights and the rule of law in their country, and because Croatia sees some significant economic benefits to participation in the single market. Croatia also wants to move on and apply for Schengen membership. The one thing that Croatia’s leaders know is that if they were to depart from the promises that they have given, their chances of benefiting in the way they hope and their people expect would be reduced accordingly. That remains a powerful motive.
Michael Connarty
The Minister has led on to the question that I wished to ask. He mentioned application for Schengen and cross-border rights, but the Schengen acquis requires countries to sign up to a great deal of immigration and co-operation in cross-border law and other aspects. Is it expected that the Schengen acquis will be put in place part by part before the application, or is Croatia not expected to do anything in relation to those things? That is relevant as we struggle with opt-ins and opt-outs.
Mr Lidington
What Croatia has to do is what was set out in the negotiating chapters, particularly in chapter 24, to equip itself to deal with the responsibilities of European Union membership. I shall say a little about the borders issue later to try to address those comments. Membership of Schengen requires Croatia and any other member of Schengen to go further. The pace at which any reforms specific to Schengen are introduced and implemented is a matter between Croatia and the Schengen members. It is difficult for me as a Minister for a country that has chosen to stay outside Schengen and has no intention of joining it to try to prescribe what the pathway should be for Croatia’s hopes to join the Schengen agreement.
In its report the European Scrutiny Committee made a number of criticisms of the Commission’s and the Government’s conclusions about the readiness of Croatia to join the European Union. The Government will of course reply formally to the report of the Scrutiny Committee in due course, but as the Committee has chosen to tag its report to the debate today, I thought it might be helpful to respond to the main thrust of the Committee’s criticisms now, during the debate. We will have other opportunities during later stages of the Bill to explore the points that my hon. Friend the Member for Stone (Mr Cash) and his Committee raised, and as I said there will be a formal Government response to the Committee in due course.
I shall try to deal briefly with three or four of the main issues raised by the Committee in its conclusions. Let me take first the issue of war crimes, both co-operation with the International Criminal Tribunal for the Former Yugoslavia and domestic war crimes. On co-operation with the tribunal, I want to stress that not just the United Kingdom but the European Commission and the tribunal itself believe that Croatia is fully co-operating with the tribunal. Indeed, the chief prosecutor, Mr Brammertz, has now said that he sees no need for him to visit Zagreb again and he has taken the decision to wind down the status of the tribunal’s office in Croatia. On 3 May this year, while visiting Zagreb, Mr Brammertz said that there were “no outstanding issues” that might burden relations between Croatia and ICTY. On 7 June, in a statement to the UN Security Council, he said:
“The Office of the Prosecutor continues to rely on Croatia’s cooperation to efficiently complete trials and appeals. In the current reporting period (as at 14 May 2012), the Office sent 18 requests for assistance to Croatia. The Croatian authorities have given timely and adequate responses to the requests made and it has provided access to witnesses and evidence as required. The Office will continue to rely on Croatia’s cooperation in upcoming trials and appeals.”
The chief prosecutor, who in the past has been critical of what he saw as shortcomings in Croatia’s level of co-operation with him, has now said that in his view Croatia has co-operated, and continues to do so, in the way he would rightly expect.
The issue of domestic war crimes is a difficult one. One need only look to our own country’s history in Northern Ireland to see how difficult it can be to get to the truth about some of the most vile murders. There are about 1,200 cases on file relating to domestic war crimes in Croatia, but we need to break that total down into three categories. There are about 400 cases for which trials are pending, about 400 where the accused cannot be found and a further 400 or so where the indictments are in a pre-investigative phase but the perpetrator is unknown—it is believed, on the basis of evidence, that a war crime might have been committed but no individual or group of named individuals can be cited as having been responsible. The average length of a trial for a domestic war crime is about six to seven months.
In 2010, four specialised chambers were established to deal with domestic war crimes. In May 2011, new legislation took effect to require the transfer of outstanding cases to those chambers and, in the autumn of 2011, new judges were appointed to those specialist tribunals. So far, 87 cases have been transferred to the specialist tribunals. The Government’s view is that progress has been too slow and that the Croatians need to devote more resources to that work. Our assessment is that the commitments Croatia made can be described as “almost complete” but that more progress is still required. We are confident, given the commitments we have had from the Croatian Justice Ministry, that that acceleration will have taken place by the time we reach the expected accession date.
Some of that progress is simply about procedural reforms: new listing priorities have now been established; prosecutorial standards are being applied better; there is, importantly, improved co-operation between the Croatian and Serbian authorities in investigating war crimes; and the Croatian side has submitted a draft agreement between those two countries for co-operation in the prosecution of such cases. The Commission has said that more still needs to be done to secure the attendance and protection of witnesses, who might well fear for their safety when giving evidence in this kind of case. We think that progress has been slower than it ought to have been but are confident about the seriousness with which the Croatian authorities are taking it.
I will move on to borders and address the point that the former Chair of the European Scrutiny Committee, the hon. Member for Linlithgow and East Falkirk (Michael Connarty), made in his earlier intervention. Croatia has been making good progress. She already has 81 fully operational border crossing points and has given assurances that the necessary infrastructure and technology will be in place to support those crossing points and ensure strong border management by the time she accedes to the EU. The most important outstanding element is the need to provide formal border crossing points in the Neum corridor, which is the very narrow stretch of Bosnian territory that divides Croatia. The Croatians have told us that they are on course to complete the border crossing points in that important area next spring.
After Croatian accession, of course, there will continue to be border controls between Croatia and its European Union neighbours. Because Croatia will not join Schengen straight away, those neighbouring countries that are EU member states already will maintain their border controls with Croatia, so any third-country national who got into Croatian territory, whether before or after EU accession, would still be subject to the same level of controls in a country such as Slovenia, and certainly in the United Kingdom, as they are today. I will add that one key advantage for us of Croatia’s accession is that she will come within the scope of the Eurodac regulation and the Dublin agreement on returns and readmissions, which will be helpful to us in the case of any people who manage to get through and abuse the asylum system and need to be returned to Croatia.
Alok Sharma (Reading West) (Con)
There will obviously be a seven-year transition period on economic migration from Croatia. Can the Minister tell the House—this is a general point relating also to Romania and Bulgaria—whether it would be possible under British law for us to extend that transition period if we think that is right for Britain?
Mr Lidington
The answer is that we cannot go beyond the period for transitional controls laid down in the treaties. I will say a little more about arrangements for Croatia later. For Romania and Bulgaria, we have extended the transitional controls for the maximum period committed and they have to come to an end by the end of 2013.
Jacob Rees-Mogg (North East Somerset) (Con)
May I add a rider to the Minister’s answer? This is without a “notwithstanding” clause to the European Communities Act 1972, but this Parliament could of course do that if it wanted to.
Mr Lidington
This Parliament can of course pass any legislation it wishes to. In that sense, what my hon. Friend says is constitutionally correct, although I in no way want to mislead him into thinking that the Government intend to introduce such an amendment to the 1972 Act.
Mr Lidington
I know that I will have disappointed my hon. Friend grievously.
Mr Cash
My right hon. Friend, far from disappointing me, has enlivened me to rise, and I do so for this very good reason: this is the first time, as far as I am aware, that any Minister has conceded from the Dispatch Box that the constitutional principle of the “notwithstanding” formula is valid. I was delighted to hear what he had to say.
Mr Lidington
My hon. Friend is tempting me dangerously far from the scope of the debate, but I simply refer him to the happy day we spent in Parliament debating the sovereignty clause of what became the European Union Act 2011. If he looks at Hansard, I think he will find that I stated very clearly that if Parliament wanted to amend the 1972 Act at any stage, it is open for it to do so but—
Mr Speaker
Order. The right hon. Gentleman is a most earnest and assiduous member of Her Majesty’s Government, but the safest path for him to tread is in the direction of Croatia and the borders thereto.
Mr Lidington
I am grateful for that rescue, Mr Speaker. I want to move on to one other element of the Committee’s criticisms.
Wayne David (Caerphilly) (Lab)
I understand that there has been a long-standing dispute about moneys held in the Ljubljanska banca in Slovenia which, it is suggested, belong to Croatia. Has that issue been resolved?
Mr Lidington
I discussed that with both the Slovenian and Croatian Governments when I was visiting Ljubljana and Zagreb earlier this year. We encourage both countries to find a bilateral solution. It is clearly not for the United Kingdom to lay down how that should be done, but they need to find a bilateral agreement that is in accord with the various international treaties to which the two countries are party. We hope that they succeed in the very near future.
The Committee was critical of the Government’s assessment that Croatia was making good progress with the reform of the judiciary and the courts. I am conscious that I have given way a lot and that other Members want to speak, but I want to deal with the most egregious element of the problems with the legal system in Croatia: the backlog of civil cases, to which the Committee drew particular attention.
The backlog in criminal cases in Croatia has fallen for some time and continues to fall, and we ought to pay tribute to the work that the Croatians have done to achieve that. They are still finding it a battle to reduce the backlog in civil cases, but it is important that we should not be misled by grand totals of the number of civil cases before the courts.
According to the figures that I have for the first half of 2012, roughly 844,000 new civil cases reached the Croatian courts; in the same period, roughly 836,000 cases were resolved. Although the total number of cases pending increased slightly, it would be wrong to think that 800,000-plus cases simply sat there in the “pending” tray and never moved. The truth is far from that. There has been a reduction in the backlogs in respect of the older cases—those over 10 years old or over three years old. The Croatians have also assigned a significant number of additional judges to focus on the backlog. Again, although we accept that further work needs to be done, we think that Croatia has made good progress and is committed to completing it. We do not believe that that is a reason to delay its accession.
I move on to migration. Croatia has a modest population of about 4.5 million. The potential impact of Croatian migration is relatively small, but we know that appropriate immigration controls are crucial for stability in our labour market, particularly in the current economic climate. Recently, the Home Office published its intention to impose transitional controls on Croatian workers in line with the Government’s policy to impose such controls on workers from all new member states, under the terms provided for in their accession treaties.
The accession treaty for Croatia sets out the framework within which member states may apply transitional controls to Croatian nationals who wish to work in their country. That framework is as follows. During the first two years following accession, the existing 27 member states can apply either national immigration controls or those resulting from bilateral agreements to regulate access to their labour market by Croatian nationals.
From the third year to the fifth year, member states have the option either to continue to apply the same controls as in the previous two years or, if they choose, to grant Croatian nationals the right to move and work freely, in accordance with European Union law. For the fifth year, member states must grant Croatian nationals the right to move and work freely in accordance with EU law. However, if member states find that they are subject to serious disturbance of their domestic labour markets—this has to be an evidence-based assessment of the kind that we seek from the Migration Advisory Committee—those member states may choose to continue to apply controls for a further two years, taking us up to a seven-year maximum period after accession, having first notified the European Commission.
The Home Office will be bringing forward detailed regulations on the transitional controls early in 2013, so the House will have the chance to debate the detail of those ahead of Croatia’s planned accession date. However, the Government’s intention is that for the first two years at least we would continue with the current arrangements under which Croatian nationals who would qualify to come and work here under the points-based system would be allowed to do so, although we do not envisage further relaxation beyond that.
Angus Robertson
For decades since independence, there have been associations between the former Yugoslavia and the subsequent nations. There are decades of experience of citizens from that part of the world working in Germany and Austria as Gastarbeiter. Based on that assessment, do the Government agree that when the free movement of labour comes into force, those citizens are most likely to travel to countries with which there is an historic association—in the first instance, Germany and Austria?
Mr Lidington
The hon. Gentleman is right. According to our figures for 2011, about 2,000 Croatians emigrated to other EU member states and half of those went to Germany. UKBA figures for 2011 show that only 115 Croatian nationals were admitted to the United Kingdom to work.
Michael Connarty
I appreciate the Minister’s argument about the small number of those likely to immigrate legally. The problem is that the equivalent-sized country of Moldova, which has a population of 4.5 million, has a trafficking record similar to that of a country with 50 million people. It is used as a gateway. The problem is not legal migration but whether there is a prospect of the mafia—for want of a better word—of the Balkan states using Croatia as a gateway for people trafficking. That would be the concern. Are the police in Croatia up to dealing with such an influx?
Mr Lidington
That is a perfectly fair question, but I assure the hon. Gentleman that there is no evidence at the moment that Croatia is being used by traffickers as he says has happened in Moldova. However, people traffickers are extremely professional, well organised multinational businesses. We have to be vigilant and continue to work closely with the Croatian authorities, trying to provide the practical advice, support and training that we have been giving them as they carry out their immigration, asylum, judicial and administrative reforms, so that their own systems are up to scratch in ensuring that they cannot be exploited by traffickers. The Croatian Government would not want that to happen, and nor would we.
Now I want to talk briefly about the Irish protocol. The addition of the Irish protocol to the EU treaties does not have a significant impact for the United Kingdom. It relates to a series of guarantees given to the Irish people as a condition of their ratification of the Lisbon treaty, but it does not change the substance or application of the treaty. It confirms the interpretation of a number of its provisions in relation to the Irish constitution. Helpfully, the Irish interpretation of the Lisbon treaty aligns with our own.
Angus Robertson
I invite the Minister to take the opportunity to acknowledge that the Irish protocol underlines the rights of member states to set their own tax rates. The Irish Government sought that important guarantee. However, that rings true not just for the Irish Republic but for all member states of the European Union in future, which is welcome.
Mr Lidington
It is very welcome that the Irish protocol makes that assertion about tax sovereignty, which is in line with our own interpretation of the Lisbon treaty and previous European Union treaties. The Irish protocol also confirms that neither the charter of fundamental rights nor the Lisbon treaty in the area of freedom, security and justice affects the scope and applicability of the Irish constitution as regards the right to life, protection of the family and protection of rights in respect of education. It confirms that the Union’s action on the international stage, particularly under common security and defence policy arrangements, does not prejudice the security and defence policy of individual member states or the obligations of any individual member states. It also deals with other matters specific to Ireland, such as its long-standing position of military neutrality. It was formally agreed by Heads of State and Governments of the 27 member states in June 2009. It amounts to a guarantee in international law that the concerns raised in Ireland were unaffected by the entry into force of the Lisbon treaty. Once all 27 countries have formally ratified the Irish protocol, it becomes binding in terms of the European Union as well as of international law.
The Government’s original intention had been that we might include with this legislation a comparable but differently worded protocol as regards the Czech Republic. That is still stalled in the Brussels decision-making process. The European Parliament has yet to produce an opinion on the Czech protocol, and until that has come out of the Brussels negotiations it would be premature for us to think about bringing forward legislation here in Parliament.
Jacob Rees-Mogg
I wonder whether, while negotiating the Irish protocol and the Czech protocol, Her Majesty’s Government considered repatriating any powers to the United Kingdom which could have been part of this treaty negotiation.
Mr Lidington
As I said, the protocol was negotiated in 2009, so I fear that my hon. Friend’s challenge has to be for my predecessors in office who are now on the Opposition side of the House. Nothing would have been served in terms of the United Kingdom’s interest by our now saying that we would block ratification of the Irish protocol unless we obtained some concession of our own, because the thing at stake would not have been the ratification of the Lisbon treaty but the ratification of the Irish protocol, to which we have no objection and which is wanted by one of those countries with which we have an extremely close bilateral relationship.
Mark Durkan (Foyle) (SDLP)
Does the Minister accept that the protocol confirms the pre-existing sphere of competence of Ireland under its own constitution, further supplemented by the confirmation in relation to neutrality?
Jacob Rees-Mogg
I wanted my right hon. Friend to confirm, as I think he has, that it was open to the UK, as with any treaty negotiation, to use this as an opportunity to negotiate for our own interests, but the Government decided on this occasion that it was not worth doing so.
Mr Lidington
The point of principle that my hon. Friend makes is certainly right—that during a treaty negotiation it is open to any member state to withhold its consent unless it receives a concession that it is seeking. Obviously, during such a negotiation every member state has to calculate where its national interest lies and what kind of bargain it wants to achieve. However, this is now water under the bridge, as these events took place before the previous general election.
Chris Bryant (Rhondda) (Lab)
No, the Minister is wrong. What a member state tries to do, across the piece and over a period of time, is to decide what its main priorities may be. That does not mean that every time a treaty is coming up, it decides to put yet another thing on the table. Indeed, I would argue that the problem with the Government’s current approach is that they are trying to fight the European Union on too many fronts at the same time and will not secure any of their intended outcomes.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am aware that the hon. Gentleman has only just come in, but we do need shorter interventions. I know that he gets carried away, but I am sure that he will be shorter in future.
Mr Lidington
I am not going to get drawn into a historical battle about my predecessors’ record in office. I would argue that the previous Government were too reluctant to use the leverage that we had from negotiations at the time of the Lisbon treaty, but that is a matter that the House can debate and historians will no doubt wish to comment on in future, and I do not want to spend further time on it today.
The measure before us will provide for the accession of Croatia to the European Union, thus marking another step in the Government’s long-held support—this country’s long-held support under successive Governments—for the enlargement of the European Union. Enlargement has been a project whereby the European Union has benefited from the United Kingdom’s ideas, engagement, and—dare I say it?— leadership over many years and under successive Administrations.
If we compare the history of Europe in the 20 years since the fall of the Berlin wall with the 20 years following the treaty of Versailles, drawing a contrast between, in the earlier period, a time when fragile new democracies collapsed under the strain of domestic political tension, dictatorship and invasion, and, in the 20 years just passed, a time when we have seen democracy, the rule of law and human rights entrenched in ever more countries on our continent, we can see the advantage that European Union enlargement has brought, and we can be proud of our own nation’s contribution to that process. In that spirit, I ask the House to support the Bill’s Second Reading.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I call Michael Connarty. [Interruption.] Sorry, I mean Emma Reynolds.
Emma Reynolds (Wolverhampton North East) (Lab)
Thank you, Mr Deputy Speaker.
I will attempt to be relatively brief, or at least briefer than the Europe Minister, in order to allow my colleagues and others to speak.
The Opposition welcome the Bill, which will, first, give effect in UK law to the treaty on the accession of the Republic of Croatia to the European Union and provide parliamentary approval of that treaty; and, secondly, provide approval for the so-called Irish protocol, which gives specific guarantees to the Irish people regarding the extent and application of the Lisbon treaty and safeguards Ireland’s right to decide its own policies on the right to life, family and education, taxation, and Irish neutrality.
With regard to the accession treaty, there is, as the Europe Minister underlined, cross-party support for enlargement of the European Union in this House, and that has long been the case. This support is based on both the political and the economic case for enlargement. The process of EU accession has provided, and continues to provide, an incentive for peace, democratisation, economic reform, the promotion of human rights, and the development of anti-discrimination legislation. That is the clear political case for enlargement. The Nobel peace prize committee rightly recognised that the EU has played a vital role in unifying a continent ravaged by wars and inspired peace and democracy beyond its borders.
In terms of the economic case, again I find myself in agreement with the Europe Minister. It is clearly in the UK’s national interest for British companies to have access to the largest single market in the world, with some 500 million consumers, and for that market to continue to grow with enlargement. We are confident that British businesses will find new opportunities in a reformed Croatian economy.
When the Labour party was in government, we supported the accession path for the western Balkans. Since the end of the bloody conflict in the former Yugoslavia and the signing of the Dayton accords, which took place only some 17 years ago, there has been remarkable progress. We were strong supporters of Slovenia’s accession in 2004. Croatia started accession negotiations in the same year and those negotiations were concluded in June last year. Croatia has transposed the 35 chapters of European law into its national legislation, and that is no mean feat. We welcome the transformation of Croatia’s society, economy and democracy that adopting these laws has brought about, although we still have concerns about progress in certain respects; I will come to those later.
In December last year, the accession treaty was signed by Croatia and all 27 member states, and it was approved by the European Parliament. Parliaments in all other member states are now debating the accession treaty and going through the process of ratification, as are we, and 16 member states have so far ratified it.
In the run-up to accession, Croatia has “active observer status.” Its 12 observer MEPs are allowed to speak but not vote in the European Parliament, and it has the same rights on Council working groups and Commission committees. The Commission’s recent enlargement report, published last month, set out three areas in which Croatia must do more—competition, judiciary and fundamental rights, and security and justice.
This time last year a debate in this House looked specifically at Croatia’s progress on chapter 23 of that report—judiciary and fundamental rights—and several right hon. and hon. Members made the point that we should learn lessons from previous rounds of enlargement. It is important that the momentum Croatia has built up does not stall, and that progress is made before accession. We must avoid the European Union having to put in place a co-operation and verification mechanism to monitor areas that have not seen sufficient progress prior to accession. I am therefore happy to see that pre-accession monitoring is ongoing in Croatia, and we are expecting a further report from the European Commission some time in the new year—spring, I believe —and before Croatia’s expected accession on 1 July.
When in government, the Labour party led the way in putting pressure on Croatia and all states in the western Balkans to engage fully with the International Criminal Tribunal for the Former Yugoslavia to bring war criminals to justice. Indeed, chapter 23 of the report was opened so late because at the time the Labour Government judged that they needed that leverage to ensure the Croatian Government co-operated fully with the ICTY. I think we were right to do so, and all outstanding fugitives wanted by the tribunal are now on trial in The Hague.
In April last year, former military commanders, Ante Gotovina and Mladen Markac, were sentenced by the Court for their role in the war. Those convictions show that justice has been done, and that the international community can and will pursue the perpetrators of war crimes. Engaging constructively with the Court is a test of Croatia’s willingness to draw a line under its past and look towards a brighter future within the EU.
The European Commission also highlighted that increased effort is needed to strengthen the rule of law, improve the judicial system and fight corruption. There is still significant concern over the extent of corruption at both local level within the public procurement process and in some state-owned companies.
Pete Wishart (Perth and North Perthshire) (SNP)
The hon. Lady will know that another very important European debate was to take place in Westminster Hall this afternoon, but the lead speaker did not turn up. Does the hon. Lady have any excuse for why that happened and why hon. Members did not get that debate?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. That has no relevance to this debate, and hon. Members should know a little better than trying to embarrass each other. Surely we have better manners.
Emma Reynolds
I remind the hon. Member for Perth and North Perthshire (Pete Wishart) that today’s debate is about Croatia’s accession to the European Union. Should other states wish to join, there will be debates in this House and Parliaments around the EU about that accession, and I am sure that conditions will be attached. I am sure there will be future opportunities to debate the subject to which the hon. Gentleman refers, even if that is not in order today.
To return to the subject, there is concern about conflicts of interest and the funding of political parties and electoral campaigns in Croatia. The European Commission has recommended that a conflict of interest commission “be established without delay”, and the Opposition support that demand. On competition policy, Croatia has taken positive steps to strengthen its anti-trust laws, but further progress is needed in relation to state aid in the steel and shipbuilding industries. As the Europe Minister said earlier, progress is also needed in restructuring the Croatian shipbuilding industry.
On border security, notwithstanding the Minister for Europe’s earlier remarks, Croatia will at some point assume responsibility for the EU’s south-eastern border. What happens on that border will directly impact on the rest of the EU, and indeed the UK, in terms of preventing illegal immigrants from entering the EU, and breaking up and stopping human trafficking—my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) referred to that issue. Croatia’s role in those areas will be vital, and we therefore welcome increased co-operation between Croatia and its neighbours. I welcome what the Europe Minister has said about the UK’s assistance in that area.
More widely, Croatia has taken positive steps towards accession in a number of areas, which should be welcomed. The police force and courts have undergone important reforms. A new police law has raised standards and removed political pressure, and respect and protection for human rights—in particular LGBT rights—has improved. During the debate in the House last year, I raised the issue of LGBT rights in Croatia, and expressed concern that a gay rights parade in Split had been attacked with no intervention or protection from the police. I am pleased to say that since that debate, gay pride events in Split and Zagreb have taken place peacefully and been protected. The European Commission and MEPs have continued to put pressure on the Croatian Government, and in particular I put on the record my thanks to Michael Cashman, a Labour MEP who has continued to put pressure on that Government for those welcome improvements.
Mr Lidington
I am sure the hon. Lady would want to join me in paying tribute to the strong personal commitment of Vesna Pusic, the Croatian Foreign Minister, who has made it something of a priority to see that Croatia makes good on its pledges and obligations concerning civil rights of the kind mentioned by the hon. Lady.
Emma Reynolds
I welcome that intervention, and the commitment of the Croatian Foreign Minister in that area.
Clause 4 of the Bill provides
“a regulation-making power to make provision on the entitlement of Croatian workers to work and reside in the UK;”
and I welcome the further clarification provided by the Europe Minister. The Opposition believe that the Government should implement the maximum transition period for Croatian nationals who want to come to the UK to work, as we did when in government with the accession of Romania and Bulgaria.
As I stated in a European Scrutiny Committee debate earlier this year, the Labour party fully supports the Irish protocol, which it helped to negotiate when in office. We value the continued partnership between the UK and the Republic of Ireland, and recognise the special relationship that our two countries share. As we have heard from the Minister, the draft Irish protocol contains safeguards for Ireland on the right to life, family and education, taxation, and Irish neutrality, and it provides a clarification on the application of the treaty on the functioning of the European Union, and the treaty on the European Union, and does not change the content of these treaties. We welcome that clarification, and support the Irish protocol as part of the Bill.
In conclusion, Croatia’s preparations to join the European Union have been more thorough than in previous accessions. An impressive range of reforms have been introduced and valuable lessons have been learned from previous accessions. Croatia’s accession to the EU will send a signal to the rest of the Balkan countries that their future belongs in the EU, and it will provide encouragement and incentives to those Governments not to let up on the pace of reform, but to root out corruption, reform their political and judicial systems, and modernise their economies.
Jacob Rees-Mogg (North East Somerset) (Con)
May I say what a particular pleasure it is to see that the Prime Minister, in his wisdom, has tabled a motion for 7 pm so that this debate may continue “until any hour”? It is always reassuring when European debates are not limited by an unnecessary constraint on time, although I note that having done that, the Prime Minister has left the country. Perhaps he does not want to hear hon. Members’ full ruminations on this subject.
I begin by commiserating with Croatia, which has decided that it wishes to join the European Union—an organisation that others may be looking to get out of if they possibly can. One always has a certain sympathy with nations that gained their freedom not so long ago and now wish to hand it over to another body and organisation.
I refer hon. Members to the report by the European Scrutiny Committee, which the Minister touched on. It concerns me that, once again, the European Union is not learning from experience. It always thinks that countries may be ready for something, yet it comes as a nasty shock when those self-same countries are not ready. We saw that with monetary union, which the EU pushed on member states that were not conceivably ready to join. It said that there was an efficient system afterwards to ensure that countries would be brought into line, and that everything would be made to work ex post facto, but that is precisely what did not happen. We see the same with Romania and Bulgaria, which are constantly found to be in breach of their commitments. The European Scrutiny Committee has highlighted various issues, some of which go beyond the Minister’s remarks, while others reiterate his points about the difficulties of Croatia’s membership of the EU.
I would highlight Croatia’s 2,000 mile border. My concern is not Croatia’s 4 million population, but that lots of people can get through a border, as we have seen in Greece. Unless a country has a rigorous system of citizenship in the first place, people can establish rights to be members of it, or pretend to have done so. Once they are inside the EU, they can come waltzing into England without so much as a by-your-leave, as they can into Scotland—I am pleased to see so many of our friends from the Scottish nationalist party in the Chamber for the debate.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It is the Scottish National party.
Jacob Rees-Mogg
Not nationalist? I do apologise.
If a country has weak borders, it undermines the free movement of people within Europe.
Kelvin Hopkins
There has been discussion in recent years of the possibility of passport controls at internal borders. If there were, and if everyone had to carry a passport if they were not a resident of a country, we would solve some of that problem.
Jacob Rees-Mogg
I am very reluctant to see controls on the free movement of people within the UK. We ought to have secure borders, and the extension of the EU has weakened our border controls and allowed member states to give their citizenship away. One recent case is Hungary, which sells citizenship. If Hungarian citizenship is sold, UK citizenship is also effectively sold, because people will have the free right to move and settle here. In due course of time, when the provisional practices that apply to countries such as Croatia, Bulgaria and Romania end, their citizens will also be able to work here.
That ought to concern us. I agree with my right hon. Friend the Home Secretary, who has said that we need to look at the whole question of the free movement of people, because of certain extraordinary anomalies within it, which were highlighted on “The World Tonight” on Radio 4 last night. The programme explained the difficulties that UK citizens have in bringing in a dependant who is not an EU national. However, a member of another EU nation state who is resident in the UK can bring in a dependant who is not an EU national.
One could argue that the structures of the free movement of people in the EU are in fact racist, because they deny the right of people from Commonwealth countries, who are often non-white, and who have very close associations with the UK, to come here, when people within the EU, with whom we sometimes have very little connection, can come here. We must therefore look at the free movement of people of the EU. It used to be a rich man’s club, but it is a European man’s, and indeed woman’s, club that excludes members of the Commonwealth who are not also EU members, who are often not white. This is a serious question for us to think about. Is the basis of the free movement of people within the EU fundamentally a racist principle? We need to consider whether seven years will be enough for Croatia, and whether we should amend British law to restore controls over immigration that are fair to people across the world, and that do not discriminate favourably towards Europeans but unfavourably towards others.
Croatia might not be ready to join and might fail to meet the requirements of the EU. On tackling corruption, the Commission is concerned that only three people have been found guilty of abuse of office. The Commission states:
“The implementation of the Law on the Police should be ensured, in particular to depoliticise the police and increase professionalism”.
The fact that that problem has not been tackled is a difficulty. What if we cannot have confidence in the police in a country that is about to join? Even if it is not part of Schengen, it will be part of the European arrest warrant arrangements, but it does not have a de-politicised police force or one that has been made sufficiently professional. Are we really, after the middle of next year, going to allow British subjects to be arrested on the say-so of a Croatian court, when Croatia has a police force in which even the European Commission does not have confidence?
The European Scrutiny Committee report shows that what is sought from Bulgaria and Romania is not happening. The same applies to some extent to Croatia. Is there an autonomously functioning and stable judiciary? That, too, relates to justice and home affairs agreements. We allow the judiciary of foreign countries to have an effect on subjects of Her Majesty going about their business in the UK, but countries that are joining the EU do not meet basic standards. The report states that we have not seen
“concrete cases of indictments, trials and convictions regarding high-level corruption and organised crime”.
We are therefore concerned that the state is corrupt at the highest level, yet we are allowing it to join before the problems are sorted out. That is once again the triumph of hope over experience—can letting them in and hoping to sort it out possibly be the right way forward when we have so many commitments through joint recognition of standards in fellow member states? We are also concerned that Croatia does not have
“a legal system capable of implementing the laws in an independent and efficient way.”
We must be more careful and prudent. Widening is a good thing—it is splendid to have a wider rather than a deeper EU—and it is good thing that newly emerged democracies have been able to come into the EU fold. However, when we have so many commitments to the EU that can be enforced upon us by foreign countries, is it right that we should let them in before the requirements have been met or without installing protections for ourselves by amending the treaties? I therefore have concerns that the opportunity to negotiate repatriations of power to the UK that could protect us from some of the inadequacies of the Croatian state before it joins the EU has not been taken—whether by the previous Government or this one is beside the point.
In that context, it is worth looking at what Ireland has done. As we know, Ireland was bullied by the EU into voting twice. That was a classic example of the EU believing in democracy for others but not for itself. It is a question of it saying, “Vote as often as you like until you give the right answer, and then you don’t need to vote again.”
Jacob Rees-Mogg
I agree with my hon. Friend. There is a problem with how the rule of law applies across the EU. How can the EU have a rule of law when it allows in countries that do not meet the basic tests of being free of corruption and of having a properly functioning judiciary? They can then apply their law to our citizens. Surely that cannot be just or in line with the rule of law.
On the concessions Ireland received, I give my wholehearted support for what the Prime Minister said in 2009, when he thought it was a good idea to do what the Irish did and to get concessions for the UK. In his brilliant speech, he said he wanted
“the return of Britain’s opt-out from social and employment legislation in those areas which have proved most damaging to our economy and public services, for example the aspects of the Working Time Directive which are causing real problems in the NHS and the Fire Service”.
I agree with him, but we should have brought those powers back in the negotiation on the treaty we are debating. He also said he wanted a “complete opt-out” from the EU’s charter of fundamental rights, and was once again absolutely right. The Minister for Europe ought to go back to our European friends and say, “This is what the Prime Minister wanted in the treaty, so perhaps we could have it.” The Prime Minister also said he wanted to limit
“the European Court of Justice’s jurisdiction over criminal law to its pre-Lisbon level, and”
ensure
“that only British authorities can initiate criminal investigations in Britain”.
The Prime Minister showed brilliant prescience. He knew what this country needed and what it ought to get back. The Bill could have brought it back, because we could have said to our European partners that we will not agree to Croatia’s entry or Ireland’s protocols if we are not given—[Interruption.] You are looking as if you were doubtful that my remarks would be relevant to the subject matter at hand, Mr Deputy Speaker. I can assure you that—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I assure the hon. Gentleman that I knew he would come into order. It was only a matter of time.
Jacob Rees-Mogg
I am grateful to you, Mr Deputy Speaker. How lucky it is that there is unlimited time for this particular debate.
The Irish have shown with their protocol that it can be done. In fact, this is an exciting opportunity for this country. The Bill will be taken, and will be amendable by, a Committee of the whole House, and there has been much rejoicing at the conversion of the Labour party to deep, true-blooded, thorough-going Euroscepticism.
Emma Reynolds
I assure the hon. Gentleman that Labour remains a pro-European party. On Croatian accession and the Irish protocol, does he seriously think that his Government could withhold support for the Bill and negotiate and repatriate all the things that he has just mentioned? I do not think that he believes that to be a realistic prospect, because he is far too sensible.
Jacob Rees-Mogg
I am grateful to the hon. Lady, who is as flattering and charming as always, but it is good enough for the Irish, who got some serious concessions. The concession on taxation is a very important one. It establishes that taxation is not to be set at the European level. In fact, it is clever of the Irish to have got it, because Lisbon is bringing in an awful lot of things by the back door and the Irish have managed to close that back door, or the stable door as one may like to call it.
Mr MacNeil
Is the hon. Gentleman telling the House that the Irish have been more adept and a bit more clever than the UK in playing their hand in Europe?
Jacob Rees-Mogg
I know it is implausible that the Irish could have been more adept than people living in Na h-Eileanan an Iar, but they did indeed manage to get something by virtue of having a proper democracy that required a referendum on the treaty of Lisbon, to which the Irish people had the sense in the first instance to say no, but then they were bullied by Europe into saying yes at a later stage, with some guarantees. If we had had a referendum, I think that the British Government might have been able to get some pretty serious guarantees.
The hon. Member for Wolverhampton North East (Emma Reynolds) asked whether I really believe that the Government could have negotiated concessions for the United Kingdom. Yes, I absolutely do, because the European Union wants the Lisbon treaty to function fully; the Lisbon treaty only functions fully with the Irish agreement, because it had to be agreed by unanimity; the Irish agreement was conditional on the protocols given in the Croatian accession treaty; and therefore it follows that if the United Kingdom had insisted on concessions to us that would have let the Lisbon treaty carry on for everybody else, we would have been in a very strong negotiating position to achieve them. That is probably still the case.
I want to return to the general rejoicing at the socialists having become a new Eurosceptic party, as, of course, they were, rather less successfully, under Michael Foot not so many years ago. As a Eurosceptic party, they voted last week to stop spending more money in the European Union. It occurs to me that the Bill could be amended to say that it will come into effect only at the point at which our full rebate—which was given away by our Labour friends when they were last in government—is restored. Now that the Labour party is so committed to cutting expenditure in the European Union, it would almost certainly be willing to support such an amendment, so we can use this Bill on the Floor of the House to achieve the reduction in spending that so many Members of this House showed that they wanted last week. Indeed, I think it is the united will of the Conservative party that less money should go to Europe.
Graham Stringer
Is there not a deeper point to the Bill? Although expansion has genuine economic and political benefits, the United Kingdom’s influence is being diminished. Under qualified majority voting we will have less influence. Another country will also be a recipient of funds, as opposed to a donor, so our position is weakened.
Jacob Rees-Mogg
The hon. Gentleman is absolutely right. He makes a crucial point, which we will discuss further in our second debate, in which we will see that eurozone votes, as a qualified majority, are able to outvote everybody else, which seriously diminishes the UK’s voting power, as does this Bill. By adding another member state, we will go from 17 to 18 recipient, mendicant countries and 10 that pay in. It also means that one more part of the qualified majority will be against us and for more spending and for the ratchet of Europe.
We need to be very cautious about what we do when we do not get anything in return—that is my main point. I am quite happy to welcome other nations to the European Union, if they really want to join. I understand that the Scottish nationalists might want to rejoin. I thought that the great argument for Scottish nationalism was that they would be free from Europe as well, but that is not the way they are going. We are not getting anything in return.
Mr MacNeil
To clarify for the hon. Gentleman, the point of the 2014 referendum will be to transfer political power pertaining to Scotland from Westminster to Edinburgh.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. May I tell the hon. Gentleman that he does not need to respond to that intervention, because he need only address the Bill?
Jacob Rees-Mogg
Thank you, Mr Deputy Speaker. I was merely going to say, “From Westminster to Brussels,” but never mind—that will be debated at a later point.
The crux of the matter is that this was an opportunity for Her Majesty’s Government to ensure that we improved matters with regard to the free movement of people, extended the time for which that could be implemented, and asked the right questions about whether Croatia is ready to join and then delayed that until the right time. We are taking a risk with home affairs and justice by allowing this to go through and by recognising the Croatian justice system when it may not yet be fit. We are not taking the opportunity that the Irish have taken. We should do what the Prime Minister said in 2009 and use every single treaty negotiation to reinforce the repatriation of powers and to ensure that the United Kingdom can govern herself.
This Bill is a great opportunity, because it is required to be passed unanimously by all member states of the European Union. We have an opportunity to tag on a budget-related concession to our ratification of the Bill, to ensure that article 312(4) of the treaty on the functioning of the European Union does not automatically kick in to force a rise in EU expenditure when the British people and many others want it to be cut. Let us give this Bill a Second Reading, but let us amend it in the Committee of the whole House to put British interests first.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Thank you, Mr Deputy Speaker, for my temporary promotion to speaking on behalf of the Opposition in this debate, which is not, unfortunately, something that has ever been, or is likely to be, accorded to me by those who run my party. Some would say that it is their loss, but it is my great pleasure to speak in support of my hon. Friend the Member for Wolverhampton North East (Emma Reynolds), who is my party’s Front-Bench representative and has been assiduous in her work and done a great job since she took over the brief.
I see this debate in three parts. The first is about whether the UK Parliament supports Croatia’s membership of the European Union. I hope that hon. Members—apart from those who may demur from the wish of any country to join the European Union—would not want to deny Croatia or, indeed, the European Union the benefits that they will get as a result of further enlargement. In that spirit, I hope that hon. Members will support the proposal.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
As my hon. Friend will know, I have been a strong pro-European all my political life, but I am very worried that yet another country is coming in from eastern Europe without a great democratic tradition. Hungary seems to be breaking every rule of a modern democracy, yet the European Union does nothing about it. I am getting more concerned about—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman has only just walked in and the usual courtesy is to listen to a little bit of the debate before intervening. We also need shorter interventions. I call Michael Connarty—it is up to you whether you answer.
Michael Connarty
I understand the emotions that are running among those who have been pro-EU in their —[Interruption.]
Mr Deputy Speaker
Order. The hon. Member for Huddersfield (Mr Sheerman) should know better than to challenge the Chair. It is not my fault that he may have been somewhere else in the House. If his preference is to be on a Committee rather than here, that is his choice, but he should not expect to walk in and intervene in that way.
Mr Sheerman
I was on a Statutory Instrument Committee upstairs, and I have every right as a Member of Parliament to intervene on my colleague.
Mr Deputy Speaker
What I have said is that it is discourteous to other Members of this House not to have listened a little bit to debate, but instead to walk in and intervene straight away. That is my ruling.
Michael Connarty
I repeat: I understand that people who have been supportive of the EU process over many years are now expressing great concerns. Those concerns have been expressed in the European Parliament, and they are certainly expressed at great length in the Parliamentary Assembly of the Council of Europe, on the basis of human rights, as some of the issues in Hungary are a challenge in that respect. The question for us today is not what the EU should do about Hungary, however, but what we should do in relation to Croatia’s application to join the European Union.
As hon. Members know, I work on behalf of this Parliament as a member of the Labour delegation in the Parliamentary Assembly of the Council of Europe. In fact, I work in the committee on culture, science, education and media, which is chaired by Mr Gvozden—I believe that is the correct pronunciation—Flego, who is a professor from Croatia. He is very dedicated to human rights; in fact, a number of his colleagues are leading the way in challenging their Government to come up to the standards we require in the European Union and to support the application. The problem—the hon. Member for North East Somerset (Jacob Rees-Mogg) alluded to this—is that this treaty is one of the ones that, when the Government introduced the European Union Act 2011 and said that they would renegotiate the terms and relationship with the EU in this Parliament, was listed as not requiring a referendum because it is an accession treaty. That is a great pity, because the accession treaty not only allows Croatia to enter, but allows protocols to be added to the Lisbon treaty—that is, to amend it.
It is a great regret for many people in this country that we did not take the Lisbon treaty to a referendum, as we would have had to do if it were a constitutional treaty. Hon. Members will recall that when I chaired the European Scrutiny Committee and we reported on this matter, we came to the conclusion that the Lisbon treaty was not much different from the constitution, apart from a few flags, bunting and anthems. Really, it maybe should have been decided then whether a referendum was required. It will always be a great point of contention with the British people—and, I think people in this Chamber—that we did not get that clarified at the time.
Michael Connarty
I remember the unity of the Conservative party at that time, although most people have forgotten about it, given the number of attacks that the hon. Gentleman has led on his own Government. In fact, if that unity had continued, we would not have seen the ridiculous situation of him and others joining the Labour party last week to vote down his Government on an issue to do with the EU. It might have been better for his party if it had remained unified; for us, it has exposed the faultline that runs through the parties.
Mark Pritchard (The Wrekin) (Con)
On a point of order, Mr Deputy Speaker. Just for the record, it was a Conservative amendment that the Labour party supported.
Mr Deputy Speaker (Mr Lindsay Hoyle)
As the hon. Gentleman well knows, that is not a point of order. The other thing is that we are getting distracted from what is before us. Rather than being tempted into discussing the decisions of a previous House many years ago, let us get back to Croatia and Ireland.
Michael Connarty
The point has been made that there should be a wider mandate in deciding whether the treaty should go through. It should not just rest with this House. As you have said, Mr Deputy Speaker, that has been decided before, but the Bill contains provisions on the Irish protocol, which, as has been pointed out, provides only a clarification. It is the same protocol that the UK got in the original Lisbon treaty, but as was pointed out in many debates and in many legal opinions that we received in the Committee, all it stated was what was already in existence—that every country has the right to its own Bank and that no country will lose any rights that it already has because of the Lisbon treaty coming into force.
The protocol did not change anything, but if the Irish people require that reassurance, that is fine. However, it does trigger a change in the Lisbon treaty, and a change in a major treaty should, in reality, be required to be put to the British people—if, as has been pointed out, we are also to get the credibility of the Irish people. They may not do things they like; indeed, I remember when the Irish delegation came to tell us that because Ireland was a small country—one of my colleagues, the leader of the Scottish National party, was at the meeting when they said this—it had to do what Europe wanted, whereas the UK was a big country that could argue its corner much more strongly. The protocol will make no difference to the situation in Ireland, but it is in the Bill and it changes the treaty.
Angus Robertson
If the hon. Gentleman believes that Ireland does not have clout because it is a small country, can he explain why we are discussing an Irish protocol today?
Michael Connarty
The simple point is that it is because unanimity is required for an accession treaty. Clearly the concession was given to Ireland, and the concession for the Czech Republic is still being debated. However, as for what happened in the Lisbon treaty, I take our Irish colleagues’ word for it, because they are the people who have to live day in, day out with the consequences of what is being forced on their Government, citizens and industries by the European Union, because of the European Union’s decision on the present crisis. That is the context in which they were speaking.
Let me return to the question of whether Croatia is fit to be a member of the European Union at this time, which has taken up a lot of the Committee’s time and was referred to by the hon. Member for North East Somerset. As he is in the party of the majority, I would have thought that he would put on record the context and the comments that were made throughout the whole process. For example, when the Minister came to us in March, he said:
“It is important that the Commission’s Comprehensive Monitoring Report in the Autumn is able to reflect significant further progress”.
That was the offer to us, as it were, to say that things were not going particularly well in Croatia on coming together on the aspirations we had. We talked strongly in our Committee about the need for conditionality, because Romania and Bulgaria did not accede with the conditions met. In fact, in many instances they slipped back from the original agreements once they were in. That was a point made by my hon. Friend the Member for Blackley and Broughton (Graham Stringer)—and possibly the Member behind me—who intervened to say that once a country is in the European Union, very little can be done to make it speed up. The temptation for economic advancement from the European Union is slipping away as the crisis in Europe becomes more and more of a problem; therefore, the European Union has less and less of a carrot to offer countries, and it would appear that it is not willing to use sticks in the way that might be encouraging to those countries either.
At that time we waited for that report, which duly came to us. The report was not one to fill members of my Committee with joy and pleasure, because it was full of criticism of the Croatian position. It was quite true that some advances had been made, but the report also said, for example, that Croatia needed to
“Complete the adoption of related by-laws, to ensure the implementation of the police law,”
so there were problems in police law. The report said:
“While Croatia’s preparations in the field of migration and asylum are nearly complete, the government still needs to finalise and adopt the new migration strategy,”
adding:
“While border police staffing targets have nearly been met and training continues, Croatia needs to achieve the established recruitment target for border police for 2012”—
this is the autumn report for 2012 we are talking about. The report also talks about the integrated border management plan, which is vital, as the Minister admitted, because of the strange situation whereby a piece of Bosnia splits Croatia in half, so that two borders face each other with another country in the middle, which is a real faultline.
I want to draw the attention of the House to some of the points in the final report of the Committee, for 2012-13, which was considered by the Committee on 24 October. That is the most recent document that we have, and people should take the trouble to read it. I want to highlight some of the deep concerns expressed by the Committee. Paragraph 1.82 states:
“Addressing impunity clearly remains a major challenge, with the majority of war crimes yet to be successfully prosecuted”.
One of the basic demands of the Balkan countries is that they co-operate fully with the International Criminal Court. It is a matter of concern that, when they come into the European Union, there would be no pressure on them to continue in the desired direction. Perhaps it is only the temptation of membership that makes them focus on this issue. The report continues goes on to state that
“further measures are needed to facilitate the protection and attendance of witnesses.”
A country cannot get prosecutions without witness protection, and it cannot therefore be a country that is fully co-operating with the International Criminal Court.
I have mentioned trafficking, and I shall go into more detail in a moment. Paragraph 1.83 of the report states that the Commission has noted
“in particular that training for judges, prosecutors and others dealing with trafficking needs to be improved, and that sentencing in this area is very low compared to other types of organised crime.”
I recall a comment by a senior police officer in the UK, who caused a great scandal by telling a woman police inspector who tried to pursue a human trafficking case, “We don’t do human trafficking here. We do burglary and violence.” The worry is that Croatia does not see human trafficking as a major problem, but it is certainly a major problem for those who are trafficked.
Paragraph 1.84 of the report states:
“Tackling the scope for corruption in Croatia also still requires much work.”
That was in October, after the matter had been considered by the Minister and his Department, and by our own senior officials who give us evidence and support in our Committee. These warnings cannot be ignored. The paragraph goes on:
“Croatia has not efficiently implemented all legal measures to prevent conflict of interest. Local-level corruption needs attention, particularly in public procurement.”
Corruption is an endemic problem. It comes from the former Soviet Union countries, and it must be properly addressed. Paragraph 1.85 states:
“Croatia needs to ensure that a strong system is in place to prevent corruption in state-owned companies.”
Again and again, we are getting strong warning signals that Croatia is not yet in a good place to enter the European Union.
Paragraph 1.86, in reference to our call for conditionality, states that
“the Commission is still seeking of both Bulgaria and Romania: an autonomously functioning, stable judiciary, which is able to detect and sanction conflicts of interests, corruption and organised crime and preserve the rule of law”.
Those were conditions for Bulgaria and Romania in 2007, yet both were allowed in without meeting their conditionality provisions. We still do not believe that those conditions are being correctly met by Croatia. The Commission is also seeking
“concrete cases of indictments, trials and convictions regarding high-level corruption and organised crime”—
of which there is still no evidence—
“and a legal system capable of implementing the laws in an independent and efficient way…That state has clearly not yet been attained in Croatia. It is doubtful that it will be prior to accession. Yet, despite the demonstrable ineffectiveness of post-accession monitoring, that now seems the only option open to the EU.”
It is as though we are heading for the only doorway, but that doorway will not lead to reality for the people of Croatia, and we must be concerned about that. I aspire to seeing Croatia joining the EU and becoming part of the wider family of Europe. I do not have confidence, however, that when it gets in, its lifestyle and its approach to the issues that we are discussing will be better than they were before it joined the EU. The factor that is changing things is the attraction of going into the EU, but that will be lost once Croatia goes through that door.
I want to raise the matter of human trafficking, because I think that people are blind to what is going on. I want to talk about human trafficking for slavery as well as that for prostitution and sexual abuse, which is massive. The latest figures, which I read in a pamphlet entitled “This Immoral Trade”, suggest that 27 million people are in some kind of slavery around the world. That situation is not helped by what we know is going on, through our work with the EU group, Parliamentarians Against Human Trafficking. That work is based on the work of the Human Trafficking Foundation, which is based here in London and should be commended.
Concern has been expressed that there is trafficking from Montenegro and Bosnia into Croatia. Although the numbers involved are relatively small, this appears to show the inability of the authorities to protect the victims. There is also a question about trafficking from Turkey through Bosnia. The Human Trafficking Foundation in London has gathered quite a lot of statistics on that matter. In many places, the movement is not only into Europe but into the middle east, which illustrates a new way of targeting people for exploitation. I would like the Minister to tell us what he has been doing with the Croatian Government to make them more aware of the growing number of people being trafficked through Croatia into Europe.
Reference has also been made to Slovenia in this regard. It has a weird situation, in that it grants 300 artistic dance visas every year. The women involved turn out to be employed in strip clubs and brothels in Europe, having come through Slovenia. That is a bogus use of such visas to help traffickers, and we wonder whether these subjects will be discussed. Will the Minister reassure us that, if Croatia comes into the EU, he will encourage it to join the organisation that I have just mentioned, Parliamentarians Against Human Trafficking? It could then join us and other European countries in trying to stop this vile trade.
I am worried by the lack of awareness of judges in this context, and by the low tariffs being applied in cases of trafficking because of the low status afforded to the activity. We need assurances that the accession process will mean that Croatia will have to sign up to the directives on human trafficking and on the exploitation and sexual abuse of children.
Turning to the final point in my three-part analysis, I want to know what lessons have been learned from the process. Article 49 of the treaty on the functioning of the European Union, which deals with a country applying to join the EU, states:
“The conditions of admission and the adjustments to the Treaties on which the Union is founded, which such admission entails, shall be the subject of an agreement between the Member States and the applicant State. This agreement shall be submitted for ratification by all the contracting States in accordance with their respective constitutional requirements.”
That is what we are doing today. When the Minister was asked about Schengen, he said that an application to join Schengen would be expected from Croatia within a couple of years, but he did not say whether there would be an obligation on it to join. I should like clarification on that point, and I imagine that colleagues from the various parties and constituencies in Scotland would as well, as this is a hot subject. Would an accession country have to join Schengen, and what would the conditions be?
There is another question to which we have not had a clear answer. At the moment, we are torturing ourselves over various parts of the acquis communautaire and the Amsterdam treaty, including the opt-ins and opt-outs. For me, the significant thing about 2014 will not be the anniversary of some battle that took place at Bannockburn, down the road from where I used to be a councillor in Stirling. It is that we will have to decide—I believe we have to take the actual decision in 2013—whether to opt out en bloc from all the co-operation that we have set up on policing and immigration—all the things that are fundamental to the Amsterdam treaty and are part of Schengen—that give us a unified rule of law that protects all our citizens and takes on those who wish to damage their lives. In that situation, would the acquis have to be signed up to piece by piece, or could Croatia just sit there for two years and then say, “Let’s not make an application for Schengen; let us not bother; it is too much trouble. Our people will get the right to travel after four or five years in any case, without Ministers having to sign up to Schengen”? The Minister has not clarified that.
We do not know what the conditions are. Can a country really say yes to join the EU, but not bother applying to join Schengen two years hence—or must it join Schengen? This issue is important for this country, for Croatia and for the future debates that will take place about other countries that wish to break away from one country and then reapply for membership of the EU.
I think it is important that we get some answers in the context of Croatia. I would be deeply concerned if the Minister told me that Croatia need not apply for Schengen membership in a couple of years’ time—that it does not need to apply. The attraction is that its citizens will be able to travel, but we hear that so few of them travel in any case. Will they not bother? Will they not become part of the wider protection system that I always thought Schengen was about—throwing a ring around the European Union to protect our citizens from the lack of rule of law, and to co-operate across citizenships and across the police and other authorities.
In the finality, I welcome Croatia coming into the European Union, but I do not do so blindly. I worry that those who drive the machine that is the European Commission want enlargement at any cost—regardless of the fact that it might bring in more problems. We have got to stop the Commission from doing this. Unfortunately, from the reports we have had from the Minister and from our Committee, it seems that we have not done well enough as yet—but I will vote for the Bill.
Mr William Cash (Stone) (Con)
I very much endorse the concluding remarks of the hon. Member for Linlithgow and East Falkirk (Michael Connarty), and I agree, too, with many of the remarks made by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg).
The real question is whether Croatia should become part of the European Union. I think it is a matter for Croatia. If it wants to apply, as far as I am concerned, it is that country’s affair. It also affects us, and the comments in our European Scrutiny Committee report stand on the record, so nothing further needs to be said that has not been said already. I believe, however, that if Europe enlarges and includes Croatia, it will simply be yet another example of the manner in which—as the hon. Member for Linlithgow and East Falkirk and my hon. Friend the Member for North East Somerset have said—the whole of the European Union is enlarged without regard to the impact it will have.
I take a simple view about this issue. I believe that the European Union is, as I have said in many previous debates, at a crossroads. I think that a fundamental change is taking place within the EU, and I believe, as the vote on the EU budget indicated, that this is increasingly recognised on both sides of the House. I have also picked this up from other member states, when I go to meetings of COSAC—the Conference of Parliamentary Committees for Union Affairs of Parliaments of the European Union—as Chairman of the European Scrutiny Committee.
Croatia will have become a member of the European Union as it now is and, no doubt, even if there were to be a fundamental shift in the relationship between ourselves and other member states, it would continue to remain a member in some shape or form of the new European Union, which I am absolutely certain is being created in people’s minds, although it has not yet got into the formalities of the arrangements.
I do not really need to say any more at this time. I wish the people of Croatia well; actually, I wish the European Union well, too, but the truth is that the current arrangements are in need of very substantial change. I think that change is going to come and I do not think that anything can stop it. As I said to the Prime Minister the other day, the tectonic plates have moved—they are not merely moving—so the question is: what is the tsunami that will follow? The Croatian accession is something I can live with, but I believe that it will be caught up in the fundamental changes that I am certain are in the process of being achieved even as we speak.
Angus Robertson (Moray) (SNP)
It is always a pleasure to follow the hon. Members for Stone (Mr Cash) and for Linlithgow and East Falkirk (Michael Connarty), as we served together in the European Scrutiny Committee for over a decade. I am delighted to participate in today’s debate—first, because of a connection I have with Croatia that goes back 21 years to when I was given one of my first journalistic assignments as a new, young and keen journalist working in Vienna. I was sent down to Croatia to report from the front line of the Croatian civil war. It was a bizarre experience. Many right hon. and hon. Members will have been to Vienna—a splendid city. I found it remarkable that it was possible to get into a car and drive for three hours to the border crossing at Spielfeld—shortly after the Austrian army had stationed tanks to stop any incursion from the then former Yugoslavia, although Slovenia had declared independence by that stage—and then to cross the border and drive for another two hours through Zagreb and just past it to the city of Karlovac, which was the front line in the war at that stage. I was there to interview refugees and others in Croatia for a broadcast that was intended to bring home the realities of the situation in Croatia for the purposes of the largest charitable collection for refugees in the former Yugoslavia, Nachbar in Not or Neighbours in Need, which was in the process of being established.
Let me pass on a couple of recollections. It should be borne in mind that this was only 21 years ago. I recall talking to a priest outside his church, and asking him where the front line was. He replied “Right there”, indicating the corner of the very street on which we were standing, and suggested that it would probably be a good idea for me to get off the pavement and out of the firing line. Shortly after that, I spoke to a group of women who had just arrived from just south of Karlovac, which was then occupied, after being forced to leave their homes. The fate of their husbands and children was uncertain: they did not know whether they had been taken into captivity or worse, and they were understandably beside themselves with worry.
There I was, in my early twenties, having just driven down a motorway from a western European country into the middle of what was a circumstance of total horror for people living in Croatia. Now, only 21 years later, here we are, discussing the pros and cons—or rather just the pros, given that, as far as I am aware, no one opposes it—of allowing Croatia to join us and the other European Union member states. We have not really discussed the fact that Slovenia has been, very successfully, a member of the EU since 2004. Looking back at what has happened in both Slovenia and Croatia, which will shortly be in the EU together, is breathtaking.
I am strongly in favour of Croatia’s membership, which has already been voted on in the European Parliament. The result there was overwhelming, and I welcome it. All four groups of which most of us are part—the European People’s party, the Social Democrats, the Liberals in the European Parliament and the Greens-European Free Alliance—voted almost unanimously in favour of Croatia’s accession.
I want to take up some of the observations made by the hon. Member for Linlithgow and East Falkirk. There are a number of important points to be made about Croatian accession. There is still work to be done. I suggest that anyone who is interested in the subject should consult the House of Commons Library research paper 12/64, and also the recent European Scrutiny Committee report entitled “Croatia: monitoring the accession process”. All the Committee’s members have been looking closely at issues on which further progress is required, notably those relating to judiciary and fundamental rights.
Pages 8 and 9 of the House of Commons research document deal with questions that I think should be put on the record. It states that
“a detailed new negotiating chapter on judiciary and fundamental rights… applied… to Croatia”
with
“31 ‘benchmarks’ (compared with between three and six for most other chapters), covering”
areas such as
“judicial transparency, impartiality and efficiency; corruption and organised crime; minority and other rights; refugee return issues; and full cooperation with the ICTY”
—the International Criminal Tribunal for the Former Yugoslavia.
Those are all very important, but specific reforms that are still needed between now and accession, as has been pointed out by the European Commission. On 10 October, only last month, it produced findings on Croatia, pointing out that specific reforms are still needed in respect of: implementing and advancing measures set out in September 2012 for increasing the efficiency of the judiciary and reducing the court backlog—that was addressed by the Minister for Europe—and adopting the new enforcement legislation, in order to ensure the execution of court decisions and reduce the backlog of enforcement cases. The number of civil, commercial and enforcement cases outstanding in the courts has increased in 2012. The Minister made the point that a large number of cases have been dealt with, but more cases have come into the queue and that is not a good indication of the sustainability of implemented reforms.
I have not yet heard any mention of the fact that post-accession safeguard clauses are in place. It is important to understand them, because there are many concerns about Bulgarian and Romanian membership and what has happened subsequently. That is a prism through which we must understand the position on Croatia, because the monitoring mechanisms for Bulgaria and Romania are not being replicated in relation to Croatia. However, three safeguard clauses and various transitional provisions in Croatia’s accession treaty can apply for several years after accession. They are designed to deal with difficulties that might be encountered after membership and are as follows: a general economic safeguard clause; a specific internal market safeguard clause; and specific justice and home affairs safeguard clauses. I know that the Minister is listening closely so perhaps he will help us by setting out the Government’s position on whether there is full confidence that the safeguard clauses will deliver what everybody requires from Croatia.
It is also worth noting that queries about Croatia’s accession have also been raised in the Parliaments of other member states. Within the past month, there have been pretty outspoken commentaries from the president of Germany’s Bundestag, Norbert Lammert, the chairman of the European committee in the Bundestag, Gunther Krichbaum and the SPD’s European spokesperson, Michael Roth. They are not Europhobes—they are not anti-European in any way—but they have asked a series of questions, so it is important that we should examine the points they have made.
We should also note that in reaction to those points other senior figures in Europe have intervened to suggest that the concerns are not everything they have been cracked up to be. Thus, European Parliament president Martin Schulz has intervened subsequent to those views being expressed from the Bundestag, and in recent weeks the European Parliament’s rapporteur on Croatian accession, Hannes Swoboda, has said that
“new obstacles should not be created for Croatia. There are some issues which Croatia must solve, and it is feasible. Enthusiasm in Europe for Croatia's entry in mid-2013 should not wane. I am absolutely certain that Croatia will be in in mid-2013, a small portion of work remains to be done, but one should be serious and not set new obstacles”.
That is helpful in putting into perspective where the outstanding issues lie.
Michael Connarty
Like me, the hon. Gentleman is a great enthusiast for countries that wish to take on the mantle of European Union citizenship, but is he not playing it a little light? He is quoting someone from the European establishment, which is determined to have a greater Europe that it will administer. The worry is that when Croatia comes in, its citizens will find that the people who should protect them will start to slide back and the life they hoped to have will not be realised.
Angus Robertson
The hon. Gentleman makes a good point but this is not simply about the citizens of Croatia. It is also about all other EU citizens; we are talking about the impact on other EU citizens who will be in Croatia in the future. That is why these provisions are important to citizens here and there and why I asked the Minister for Europe to clarify the point about the safeguards. I agree with the hon. Gentleman entirely and everybody—citizens of Croatia and everybody else in the EU—wants to be reassured that the uniform minimum standards will be upheld everywhere. That is, after all, the advantage of the European Union.
Now that I have spoken about Croatia, I want to touch on the matter of the Irish protocol. I intervened to ask for clarification on the point about tax-varying powers, which are very important to the Irish Republic. It shows that as a small member state of the European Union, Ireland has been able to influence the process by seeking protocols and clarification on such important subjects. If they were unimportant, we would not be discussing them. Every single member state of the European Union is discussing in its Parliament the priorities of the Irish Government, as we are today.
Rather than concentrating on tax, I want briefly to mention Ireland’s defence and security priorities. It is important to acknowledge that Ireland views the protocol as very important in its maintaining its peacekeeping role and traditions and we should take the opportunity to reflect on that. Why? In my 11 years in this place, I have never heard anybody pay tribute to the scale of Ireland’s contribution to the United Nations. There have been 56,000 individual missions to 54 different UN peacekeeping operations. That service has not been without cost. To date, 85 members of Irish defence forces have given their lives in the cause of world peace.
The high standing of the Irish defence forces in UN peacekeeping is reflected in the senior positions that have been held by Irish military personnel: force commander in Cyprus; force commander on the Syria-Israel border; force commander in Lebanon; chief of staff in the United Nations; troop supervision organisation in the middle east and in Liberia; and chief military observer on the India-Pakistan border. Most recently, of course, we saw the European Union’s endeavours to deal with the genocide in and its impact on the countries neighbouring Darfur, which was commanded by Irish Lieutenant General Patrick Nash, who was the EU’s operational commander to Chad and the Central African Republic in 2008. In addition, an Irish general commanded the multinational task force centre in Kosovo in 2007 and defence forces officers serve in key positions in UN headquarters in New York. The importance of the protocol and Ireland’s UN commitments have been underscored by Tanaiste and Minister for Foreign Affairs Eamon Gilmore, who stressed the triple-lock of approval for international missions involving the UN, the Irish Government and Dail Eireann.
Today we are affirming those priorities and that is a good thing. It is good to reflect on the contribution made by Ireland to the EU and the UN. It is also good to reflect on the role of smaller countries, both those in the EU and those that are joining. The Minister helpfully clarified that Croatia, a country with a population of fewer than 5 million, will join other EU member states of similar size, that is, Denmark, Finland and Slovakia. He confirmed that it will have 12 MEPs, a commissioner —an important role, as we all know how powerful the Commission is—and seven votes in the Council of Ministers. In addition, Croat nationals will take up important EU posts, with Commission plans to hire 249 Croat officials, one of whom will serve as a director general. That is extremely beneficial for Croatia.
Let me contrast that with the position of another European nation with a population of 5 million that is entitled to only half the Croatian entitlement of MEPs, has no right to nominate a commissioner and has no guaranteed votes in the Council of Ministers. That nation, of course, is Scotland and I look forward to Scotland having full membership rights after the 2014 independence referendum. Unlike Croatia—perhaps I can clarify accession mechanisms in response to the intervention made by the hon. Member for Linlithgow and East Falkirk—Scotland would assume its membership from within the European Union, as recently outlined by the honorary director general of the European Commission, Graham Avery.
Angus Robertson
I shall make my point, then give the hon. Gentleman an opportunity to respond. I listened with great interest to what he said, and I am now clarifying the matter that he raised in the debate.
In recent parliamentary evidence, Graham Avery said:
“Scotland’s 5 million people, having been members of the EU for 40 years, have acquired rights as European citizens; for practical and political reasons, they could not—”
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman knows as well as I do that passing reference is one thing, but we will end up in a major debate. He is not where he was when he began speaking on this subject. There was much that was great in his history of Croatia, but I do not need to hear the history of Scotland.
Angus Robertson
I am grateful, Mr Deputy Speaker. [Interruption.] If I can respond to Mr Deputy Speaker and say that I was pleased to be able to discuss the different ways in which nations plan to accede to the EU. It is a simple statement of fact that there is a different position for those within the EU and those who are outside it.
Wayne David
Has the hon. Gentleman received the legal advice that the Scottish First Minister has clearly not received?
Mr Deputy Speaker
Order. Two Members cannot be on their feet at the same time. We will end up with three of us on our feet.
Angus Robertson
If the intervention by the hon. Member for Caerphilly (Wayne David) is in order, Mr Deputy Speaker—[Interruption.] It is not in order, in which case I am disappointed that I will not be able to complete the answer as I would wish.
Michael Connarty
Having read the opinion—it has been given in writing, I think, to the Select Committee on Foreign Affairs—on the question of Scotland’s accession, has the hon. Gentleman read the other 13 submissions that contradict Mr Avery and do not take the same position, to say—
Mr Deputy Speaker
Order. I know that Mr Robertson wants to get back on to the subject, and that no hon. Member wants to distract him. He is not a man who is easily distracted.
Angus Robertson
You are very kind, Mr Deputy Speaker. I am disappointed that the hon. Members for Linlithgow and East Falkirk and for Caerphilly (Wayne David) have been ruled out of order when trying to mention Scotland in the way that they did. However, they had an opportunity to take part in the Westminster Hall debate earlier this afternoon. Unfortunately, they were not able—
Mr Deputy Speaker
Order. I have been very generous, but I am not going to be as generous now. I am sure that the hon. Gentleman wants to contribute a lot more to the debate, and we do not want to open up a debate about Westminster Hall. That is something that we are not going to do.
Angus Robertson
I shall conclude, Mr Deputy Speaker, by saying that I think that a nation of nearly 5 million— Croatia—joining the EU in 2013 is a good thing. It is good for the citizens of Croatia, and it is good for citizens in the rest of the European Union. We need to reflect on unresolved issues. Trafficking is a very serious matter, and there is a long track record in the European Scrutiny Committee of Members who care deeply about it. I commend the non-governmental organisation that the hon. Member for Linlithgow and East Falkirk cited. We need to obtain assurances on those issues. It is important not only for the citizens of Croatia and the rest of the European Union but for those people who may be trafficked in future through any EU member state, which is why I again appeal to the Minister to take the opportunity to clarify the fact that the safeguards are of the highest standards and that we can have confidence in them.
We can look forward to Croatia’s membership. I reflect that I have not heard a single intervention today to suggest that it is a bad thing for this nation of 5 million people to take its seat at the top table in agreement with the Croatian Government. It is a gain in sovereignty for it to be able to take part directly in the EU, not just in the Council of Ministers, but with 12 MEPs in the European Parliament and a commissioner playing an important role. That bodes well for Croatia and for the western Balkans, leading to greater confidence in peace and stability in the region. We should send a strong message to other nations, whether Bosnia and Herzegovina, Serbia or others, that the door remains open to them. We are in favour of further enlargement. Beyond the issue of Croatia, reflecting on the fact that the Irish protocol is something that the Irish Government and people thought was important, Europe has listened. The protocol and the assurances within it—
Angus Robertson
This is my peroration. The protocol and the assurances relating to tax-varying powers are welcome, and for that reason, my right hon. and hon. Friends will support the measure as it proceeds through Parliament.
Mr William Bain (Glasgow North East) (Lab)
It is always a pleasure to follow the hon. Member for Moray (Angus Robertson). I am sure that throughout the debate we will have a few flashpoints over our differences in interpretation of the treaties, and the lessons of the Bill.
It is a testament to how far Croatia has progressed in the past nine years since it first applied for EU membership that we are being asked to approve the Bill that will ratify its likely accession to the EU as the 28th member state on 1 July 2013. Whereas 20 years ago it was recovering from the aftermath of the conflict with Serbia, the siege of Dubrovnik and the break-up of Yugoslavia, Croatia now has exciting plans to diversify its economy and invest in energy and tourism, and is cutting its deficit to under 4% of GDP, albeit in a period of somewhat patchy economic growth.
Although members of the European Scrutiny Committee are right to point to the further progress that needs to be made on judicial reform, the elimination of corruption in state-owned companies and the detection of crime, and that more must be done to bring suspected remaining war criminals to justice, it is also fitting that we now ratify the accession treaty signed on 9 December 2011, following 18 other EU member states that have done so, or have voted to do so, since February.
In January, some two thirds of those voting in Croatia’s referendum supported its accession to the EU as a means of embedding the rule of law and democratic values, and as a route to prosperity. There are, as hon. Members have mentioned, still some outstanding issues in connection with the ratification of the accession treaty by Slovenia, which has indicated that an agreement with Croatia over debts arising from the collapse of Ljubljanska banka in the 1990s still has to be reached.
Croatia proceeded through the 35 chapters of accession in the period of just more than five years, prior to the Commission’s making a favourable recommendation on its membership status. The political criteria required Croatia to ensure the stability of institutions guaranteeing democracy, the rule of law, human rights and respect for, and protection of, minorities. The economic criteria require the existence of a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the EU.
The acquis criterion refers to the ability to take on the obligations of membership arising from the treaties and the Union’s legislation—the acquis—including adherence to the aims of political, economic and monetary union, which would mean in due course Croatia adopting the euro as its currency, as under article 5 of the accession treaty it has no opt-out from participation in economic and monetary union. Indeed, no other accession state has had an opt-out, and no newly acceding or re-acceding member state would be likely to have one in future either.
The Commission’s monitoring report from last month found real progress being made on many fronts, although further attention had to be paid to the protection rights for LGBT people, the selection of new judges and prosecutors, and rooting out corruption in public procurement. On asylum and immigration policy, Croatia shows a good level of compatibility with the EU acquis, although further progress is required on visa requirements. As a new member state that will have to sign up in due course to the Schengen acquis, further work before entry to the Union will be required with regard to the free transit agreement with Bosnia and Herzegovina.
It is interesting to note that the record for the shortest period from application to accession in the history of the EU was Slovakia, which completed all stages within two and a half years. Croatia’s accession process, which has taken five years, compares relatively favourably with that. Of course, the example of Slovakia’s accession is a cautionary tale for all states intending to accede or re-accede that believe the process to be a mere formality. As we know from remarks by the Commission, the President of the EU Council and the FCO, that would not be the case for any state seeking accession or re-accession.
Croatia had to make speedy progress in several areas of the accession process, demonstrating the standard that the EU expects of new aspirant member states or—dare I say it?—parts of member states that decide to separate and form new entities that might seek entry to the EU. This debate is instructive, therefore, not only because of what Croatia had to do to satisfy the entry criteria or what other aspirant states, such as Serbia or Turkey, might have to do in the future, but in terms of what Scotland might have to do to become a member state if it votes for separation in 2014.
The first area where Croatia had to make significant reforms was in relation to the creation of an independent central bank. The EU Council issued a draft common position on the progress of the access negotiations with Croatia in 2009 in which it commented extensively on the advances made in the administrative capacities and remit of Croatia’s central bank, the HNB. It noted that during the financial crisis of 2008 the bank adopted prudential measures regarding reserve requirements and foreign currency liquidity requirements. In particular, it reduced the reserve requirements from 17% to 14%, decreased the foreign currency liquidity ratio from 28.5% to 20% and raised banks’ maximum allowed open foreign exchange positions. The HNB has been designated by the Council as the component supervisory authority for electronic money institutions—a vital step in ensuring financial stability, which is a prerequisite of EU entry.
The Council also accorded significant importance to the capacity of the central bank in its foreign currency liquidity requirements. Croatia has implemented regulations aligning it with the EU acquis on the new capital framework, the supervision of electronic money institutions, the winding up and reorganisation of credit institutions, the supplementary supervision of financial conglomerates and deposit guarantee schemes, and the enforcement of prudential requirements. Croatia required all this financial infrastructure before the Commission recommended that it be accepted for entry.
Let us apply the example of Croatia to the debate on other potential aspirant countries seeking accession or re-accession. Such a state, if it did not have its own central bank, would have to rely on another sovereign country’s central bank in order to harden or relax financial rules and requirements.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are drifting. I have pulled up other Members for doing the same. We need to stick to the subject in hand, rather than turning to other areas of accession.
Mr Bain
It does not follow from the EU’s deliberations with Croatia that Croatia’s offering another state’s central bank would have been acceptable to the EU in order to obtain the Commission’s recommendation for approval. That has intriguing lessons for future accessions and re-accessions. That is the implication of the Bill.
Croatia, through the State Agency for Deposit Insurance and Bank Rehabilitation, can guarantee bank deposits. It made significant improvements to this scheme in anticipation of complying with EU directive 94/19/EC, which specifies that all member states must have in place a safety net for bank depositors. It cannot be a criterion, then, for future accession or re-accession countries to fail to have a system to protect bank deposits. That is the implication that comes from Croatia’s accession process and which is reflected in the Bill.
The obvious question arises—the FCO mentioned this in a statement on Thursday—of how, if part of the EU were put into limbo, it could possibly meet the terms of such an EU directive, having no independent central bank, no machinery to guarantee bank deposits and having to rely on the central bank of another state to guarantee bank deposits. Those are all implications that come from Croatia’s accession process.
The lessons of the negotiations for any new aspirant state highlight the following issues: does it have its own financial services regulator or would it seek to continue with the current regulatory framework, which would be conducted by another state? What would be the governance arrangements for any financial services regulator? What degree of independence from Government would that have? What institution would be prepared to stand behind financial services firms with large deposits or policy holder liabilities? Indeed, how would it be possible to provide lender of last resort facilities without assuming regulatory control over financial transactions such as mortgages, insurance and even pensions? All these are issues that arise out of the Bill and the accession process that Croatia went through.
Finally, a framework to wind up failing or failed banks is required. In Croatia’s case, in chapter 9 of the 2009 common position document, the EU welcomed the alignment of Croatia’s legislation to the EU acquis with regard to bank accounts, branch accounts and the re-organisation and winding up of banks. In addition, the European Bank for Reconstruction and Development, in its 2010 to 2013 strategy for Croatia, considered the securities market regulator highly effective in pursuing complex cases. All those steps were essential in showing compliance with the EU acquis in order for Croatia’s application for membership to be accepted.
With reference to the rights of EU citizenship being conferred on Croatians joining the EU, it is appropriate that the Bill permits a phasing in of the right to work. The Minister was right to say that the UK should make use of the flexibility that allows up to seven years before full free movement rights will apply to Croatian nationals in the UK, as was the case with the accession of Bulgaria and Romania to the EU earlier.
The Opposition support future enlargement on the proper criteria. We note the applications made by Serbia, Montenegro and Turkey. Serbia was granted candidate status on 1 March this year, but has been advised by the EU that it can commence formal accession negotiations only if progress is made on the status of Kosovo and its future relations with Kosovo.
The Bill is important for Croatia’s relations with the rest of the EU and the outside world. In demonstrating that a country engaged in a bloody conflict two decades ago can emerge and be in a position to join the EU now, it shows the powerful benefits of full membership of the EU—benefits that go far beyond being a member of the European Free Trade Association. Simply being a member of that institution could render a country liable to be a net contributor to the EU budget but without any influence over how it is spent, and to be bound by the rules of the single market but with no ability to shape those rules. It was interesting that we had some figures this morning from the recent past of Scottish politics advising that a separate Scottish state should, instead of seeking EU membership, seek membership of EFTA instead—
Angus Robertson
On a point of order, Mr Deputy Speaker. Would I be right in remembering your ruling to Members of the House that the debate should be about Croatia, not Scotland?
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is not a point of order, but the hon. Gentleman is absolutely correct. I have mentioned to Mr Bain that I need him to come to order on Croatia. I am sure he will do that, in the same way as other Members did who drifted when we pulled them back into order. That is where Mr Bain is now going.
Mr Bain
Indeed, that demonstrates Croatia’s wise decision to join the EU proper rather than seeking membership only of the European Free Trade Association, given the clear advantages that will accrue to its people when it becomes a full EU member state.
Furthermore, the Bill demonstrates precisely what states must do and the entry criteria with which they must comply before becoming members of the EU. I congratulate the people of Croatia on the progress they have made and welcome their entry next year. However, I also believe that it demonstrates the value of membership of the United Kingdom, the votes we have as a member of the EU Council and the ability to influence key decisions. That is a real benefit, and one that I and Opposition Members would not wish to see Scotland lose in coming years.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
I am grateful for the opportunity to contribute briefly to the debate—possibly more briefly than I had anticipated, given your recent ruling, Mr Deputy Speaker. Debates on the EU in this House often focus on our membership, and rightly so, but I think that it is important that, as the UK is a member state, we also engage with the wider issues, so I am pleased that we are debating Croatia’s accession.
As my hon. Friend the shadow Europe Minister and other Members have said, we support Croatian accession and EU enlargement more widely, provided that the proper criteria are met. With every new country that joins, the single market is widened and new markets are opened up for our exports. That can only be good for business across the UK and for our economy as a whole. However, it is very important that we ensure that candidate countries are ready to join before accession. Although Bulgaria and Romania were granted conditional accession, that turned out perhaps not to be a good model, and I think it is right that it was not repeated in Croatia’s case.
Given Croatia’s difficult not-too-distant history, and that of the wider Balkans region, I am particularly pleased that we are debating such progress and such a positive step. The EU has developed and progressed significantly since its relatively modest beginnings after the second world war, and Croatia’s accession reminds us of the power of the EU in moving on from conflict and as a mechanism for countries working together for positive aims. As we have heard, Croatia will be the second state from the former Yugoslavia to join the EU, and I very much hope that others will make progress towards membership.
Over the past 10 years or so, I have visited Croatia and other Balkan countries a number of times, sometimes on holiday and sometimes as part of a visiting group of political representatives, both as a Member of Parliament and before I was elected. I continue to be interested in the region, its progress and the challenges it faces. Earlier this year I joined other hon. Members from both sides of the House on a visit to Bosnia. Although she is not present, I want to thank the hon. Member for Redditch (Karen Lumley) and her office for arranging what was a very informative trip, and also for her good company.
I had previously visited Bosnia about 10 years ago, and at the time I was struck by the sense of optimism and hope for the future. I must say that I encountered quite a different and much less optimistic mood when I visited this year. I came home with renewed interest in what is happening in that country and a deep sense that we need to pay much more attention to Bosnia’s situation. At times, the situation in that country has seemed intractable, and I fear that it might get harder to resolve. I hope that we can support other countries in the region to move forward alongside Croatia.
Hon. Members will be aware that this has not been an easy process for Croatia. From the creation of its Ministry of European Integration in 1998 and the submission of its formal application for membership in 2003, it appears, hopefully, that the people of Croatia will finally be granted EU membership by July 2013, ending a 15-year journey. However, there is still work to be done by the Croatian Government to ensure that they are ready to finalise accession, most notably in relation to security of the new EU border that they will control.
I have crossed the border from Slovenia into Croatia; the Minister mentioned the border crossing, which is where the narrow strip of Bosnia juts into Croatia. I have also crossed from Croatia into Montenegro. I thought I might end up spending longer than I wanted at that crossing; as we approached from Dubrovnik, my now husband stalled the car and we went kangarooing into the checkpoint with rather a lot of noise and commotion—not really what people want to do as they approach a border checkpoint. For whatever reason, however, the officers simply checked our passports and waved us through; I assume that they thought that no one who was up to no good would make such a dramatic entrance.
Notwithstanding the border issue, membership of the EU will make a real difference to Croatians, enshrining basic rights and principles, opening up Europe to them and signing them up to the single market. Given the history and struggles of their country, that is a significant step as it progresses into the future.
I am conscious, Mr Deputy Speaker, of your remarks about comments concerning other countries that might accede to the EU and I know that you are aware of the ongoing debate about that issue. What is not helpful in that debate are baseless assertions from the Scottish Government that continuing seamless membership of the EU is guaranteed. That has been discredited by clear statements from the current President of the EU Commission. It will have taken Croatia 10 years to meet the criteria necessary to join the EU, from negotiating issues relating to its financial regulatory system to its external political relationship. I do not think that people in Croatia would have put up with the leaders of their country misleading the public about the legal advice on membership of the EU as we have seen the Scottish First Minister do.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. As I have made clear, we do not want to drift. I know that the hon. Lady is making comparisons, but I am sure that the people of Croatia are not discussing Scotland, just as we will not.
Gemma Doyle
Thank you, Mr Deputy Speaker.
A new country needs to establish itself and the appropriate institutions, and Croatia has shown how difficult that process can be. I am sure that that will be a lesson for all new states seeking to join the EU. EU membership is not automatic and is not easy to obtain, but after significant progress in the past 15 years, I very much support the Bill and look forward to welcoming Croatia’s accession to the EU next summer.
Wayne David (Caerphilly) (Lab)
My comments will be brief and I assure you, Mr Deputy Speaker, that I will not mention Scotland.
If we are honest with ourselves, the European Union often comes in for justifiable criticism these days, particularly on the Floor of the House. However, in many ways it has been a success story, given how the single market has developed and become successful—and will become more successful in future, I hope. It has also been successful in having been one of the contributory factors to western Europe not experiencing a war since the two we saw in the last century.
The big exception is the Balkans, of course. I well remember the appalling loss of life that occurred in the former Yugoslavia in the 1990s and the European Union being unable or unwilling to do anything—relying on NATO and the Americans in particular to intervene to ensure peace and eventual stability in that region of Europe. If there is an eloquent testimony for the need for the European Union to work collectively to ensure that such a thing never happens again, it is the experience of the former Yugoslavia. Linked to that is the third big achievement of the European Union—its gradual increase in size, from its original six members to today’s 27, and we are looking further afield. That is a tremendous success for the European Union. It speaks volumes about how the EU is often perceived by people outside it, rather than ourselves within it, as something worth belonging to. That momentum will continue, albeit in a different way, into the future.
I welcome the Bill. As hon. Members have said, the whole process of Croatia coming closer to the European family has been quite a long one; it has taken at least 10 years. It is important for us to recognise that lessons have been learned from the previous enlargement processes. In particular, the Minister referred to the process by which Romania and Bulgaria joined the European Union, as did Slovakia. Looking at it objectively, things could have been done better in relation to those member states, where the struggle to create a fair and open justice system still has some way to go. I think that the lessons have been learned and are reflected in how Croatia’s accession has been approached. To Croatia’s credit, many of the difficult experiences of the recent past have been confronted by apprehending and bringing to justice war criminals, and that process needs to continue. Painful though it is for some elements in the country, it is important for that process to be firmly set in stone and ongoing.
As a major trading nation, it is important that we do everything possible to open up the Balkans to trade and to establish effective market mechanisms. Croatia has gone through quite a lot of economic difficulty over the past few years, and things are far from easy today. Nevertheless, we need to support its people as much as possible in making sure that they get over the difficulties they have experienced and complete the transition to a fully market-oriented economy, albeit one with social responsibilities.
It is important, too, to recognise that we live in a world that is becoming increasingly integrated—we live in a global economy, as is often said—but we are also seeing the free movement of people around the globe in an unprecedented way. I well remember receiving a briefing from a chief constable in Gwent in which, when I asked him where the major source of crime in Gwent emanated from, he said that it was the Balkans. That brought the point home graphically. Although he might not have been thinking specifically of Croatia, he highlighted the fact that while we are often concerned about tackling the problems in our country, we have to be aware that many of them begin elsewhere. International crime—Members have referred to the trafficking of human beings—is clearly a case in point.
One of the foremost concerns expressed by Members is immigration. Those concerns must be recognised. The Government have correctly said that secondary legislation will be introduced to ensure that we have an effective transition period prior to the free movement of labour, but it is worth bearing it in mind that we have lessons to learn. For example, Lithuania is a relatively small country that is less populous than Croatia, and it has been estimated that the number of Lithuanians resident in the United Kingdom has increased from 14,000 to 128,000. I am not against the free movement of peoples, and I am not against Lithuanians or Croatians coming to live in this country if they have work to do and can contribute to our economy, but we must be careful to ensure that we have in place the proper infrastructure so that those people are fully integrated and the necessary facilities so that they are supported as they should be. Will the Minister provide reassurances about the anticipated number of people who will seek residence in the United Kingdom once Croatia has full EU membership and the transitional period has come to an end?
I hope that Croatia’s accession will not be the end of the beginning of the process of enlargement, but that it will lead to future enlargement. Iceland has been mentioned, as has Turkey for many years. Unfortunately, Turkey has not made good progress recently, but it is nevertheless a key state for consideration. In the western Balkans I hope that the good example of Croatia—and Slovenia before it—will be noted by other states. As the Minister said, it is unfortunate that Bosnia and Herzegovina’s likely membership of the EU has slipped back, but we must be as encouraging as possible to ensure that it, too, has the prospect of joining the European family. Labour Members, and I hope Government Members, welcome this Bill and, with all necessary safeguards and caveats, we look forward to Croatia becoming a member of that European family.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
First, I apologise to Members on both Front Benches for arriving late to this debate; I was somewhat caught out by the change in timetabling that has taken place, and no disrespect was intended. Like my fellow Celt who spoke before me, I shall not be tempted into matters domestic in terms of Scotland, not least because of my role on behalf of the Liberal Democrats and the Better Together campaign. Indeed, I will be talking about little else for the next two years, so I consider this debate a burst of the oxygen of freedom that will not be with me for much longer.
I have listened to your constructive admonitions, Mr Deputy Speaker, about the dangers of straying off topic. However, I cannot help recalling anecdotally that when the right hon. and learned Member for Kensington (Sir Malcolm Rifkind) occupied the office of Europe Minister in Mrs Thatcher’s Government, a rather sudden reshuffle saw George Younger become Secretary of State for Defence, and the right hon. and learned Member for Kensington be appointed Secretary of State for Scotland. The following weekend the Scottish Constitutional Convention was launched. The late, great Donald Dewar spoke as shadow Scottish Secretary, and he reflected on the ever-disputatious state of British politics, and Scottish politics in particular, as evinced on that occasion by the absence of the SNP.
The new Secretary of State for Scotland looked around and thought of what he had been dealing with in eastern Europe and its emergent democracies, and all the turmoil, chaos and upheaval. He was now unexpectedly and suddenly appointed Secretary of State for Scotland, but he must have looked at his previous job and thought how much easier life was when he had only the rest of the world to worry about, and not Scotland. I think that will be the fate of several of us over the next couple of years.
I want to look at this issue not just from the perspective of the House of Commons, but, together with others in the Chamber, at a wider Europe as represented in the Council of Europe—I know the hon. Member for Linlithgow and East Falkirk (Michael Connarty) will have spoken about that earlier in the debate. In welcoming Croatia’s accession in due course, it is worth bearing in mind the role that Croatia has already played as a valuable ally in continuing tough times, for us and for our other international obligations. For example, it has contributed 320 troops to the international security assistance force in Afghanistan, which speaks strongly and well. It has contributed to peacekeeping and associated activities in Libya and elsewhere in the world. It has demonstrated its internationalist credentials, and we are right to pay tribute to that today.
The Government was recently defeated in a contentious vote in the House of Commons. It was pointed out to me that each and every Liberal Democrat MP was present and—unbelievably—all voted for the coalition, I think for the first time. We voted on the losing side; it was the reverse Midas touch that we always bring to great parliamentary occasions.
It is worth bearing in mind the bottom line as far as Croatia is concerned. Political agreement was reached by the Council that the cost of accession to the EU should, in the current financial perspective, be met within existing headings—in other words, it should be budget neutral. At a time of such contention about the budget, it is only correct and proper that we put that agreement on the record. Although the next multi-annual financial framework—the term rolls off the tongue—has yet to be agreed, the benchmark has been set by how this accession has been handled. The UK played a role within the Council of Europe in assuring it. If Conservative Members are as worked up as they were last week, they might want to give credit where it is due, and approve of the financial implications of this accession.
The hon. Member for Glasgow Springburn—[Interruption.] Is that correct?
Mr Kennedy
I was near enough. I have represented constituencies such as Ross, Skye and Inverness West, or Ross, Cromarty and Skye. Single title constituencies always have me scratching my head.
As the hon. Member for Glasgow North East (Mr Bain) has said, the negotiations were successful. The political and social distance travelled in just a couple of decades is immense—that is not a long time, and Croatia is not far distant from us in global terms. Nevertheless, the accession negotiations were tough. Croatia was the first country to negotiate under the new chapter 23—tough new rules on judicial reform and fundamental freedoms that were introduced at European level as a result of the lessons learned from the Romanian and Bulgarian accessions.
Therefore, the European institutions have acquitted themselves well in dealing with Croatian accession both politically and in terms of financial prudence, and according to the founding principles of Europe, which follow from the founding principles of the Council of Europe—human rights, the rule of law and democracy. We hear so much that is negative, so it is worth putting those things on the record.
On the Irish dimension of the Bill, it is worth stressing that the protocol does not change the content or application of the treaties. Indeed, the European Council conclusions adopted in 2009 confirm that the guarantees given to the Irish, which form the subject of the protocol,
“will clarify, but not change either the content or the application of the Treaty of Lisbon.”
The conclusions also state that the contents
“will in no way alter the relationship between the EU and its Member States”
and are
“fully compatible with the Treaty of Lisbon and will not necessitate any re-ratification of that Treaty”.
Those who might be tempted down another diversionary line—another fault line in parliamentary politics—might wonder whether the Bill could be used to prise open the argument over the repatriation of other powers, but the answer is most definitely non, non, non. That was made crystal clear some three years ago, but it is worth underscoring in the debate.
When the Conservatives were in power alone back in the ’80s, with very large majorities and Mrs Thatcher at the helm, the Foreign Office and Prime Minister argued in support of the enlargement of Europe. Many of us who came at the argument from an instinctively pro-European point of view believed that the Conservatives supported the widening of Europe to prevent the deepening of Europe. It was a colossal political misreading. It was not, perhaps, as colossal as Mrs Thatcher’s instinctive initial opposition to the reunification of Germany, but it was of that order—a classic Conservative misreading of the way in which Europe would develop.
As we have seen over the 20 to 25 years since then, the widening of Europe has necessitated, in so many respects, a further deepening, resulting in a European Union, or a European Community or Common Market, as it was initially known. It began with six members, now has more than two dozen, and is likely to have many more. Common sense alone suggests that one does not have to be a constitutional lawyer to see that a deepening and a greater democratic process at the core of that deepening are needed if those individual component parts, the member states, as well as the overarching body itself are to function effectively. Croatia and what will follow in its slipstream in coming years, in tandem with the ongoing arguments about the fate of the single currency, mean that there will have to be further European deepening in many respects if the institutions of Europe are to serve their purpose. If the House of Commons passes this Bill, it would show that it supports that purpose, and I would welcome that.
Emma Reynolds
With the leave of the House, Mr Deputy Speaker, I want to reflect briefly on our wide-ranging debate on the Bill. Indeed, it has been so wide ranging that at one point I wondered whether we were going to embark on a full-blown debate about the UK and its constituent parts, but we managed to avoid that.
The hon. Member for North East Somerset (Jacob Rees-Mogg) made a characteristically long speech, while the hon. Member for Stone (Mr Cash) made an uncharacteristically short speech. My hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) stressed the need for conditionality for new accession states and for co-operation between our Government and the Croatian Government on preventing human trafficking. The hon. Member for Moray (Angus Robertson) spoke about his time in the former Yugoslav Republic, as it then was, during the conflict and described the progress in both Slovenia and Croatia, rightly, as breathtaking. My hon. Friends the Members for Glasgow North East (Mr Bain), for West Dunbartonshire (Gemma Doyle) and for Caerphilly (Wayne David) all stressed that the Croatian experience demonstrates that the accession of new member states is by no means a straightforward process. It is lengthy and, rightly, thorough, and that should be borne in mind for future reference. Last but not least, the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) rightly put on record the contribution that Croatia is already making to the international community and to international efforts, not least the 320 troops in Afghanistan and its contribution to peacekeeping in Libya. He also stressed, importantly, the budget neutrality of Croatian accession.
The vast majority of right hon. and hon. Members who have spoken are in favour of Croatia’s accession. It is certainly true that progress needs to be made in some areas, such as those highlighted in the recent European Commission report, but progress has been made in many other areas. For that reason, the Opposition support the Second Reading of the Bill.
Mr Lidington
With the leave of the House, Mr Deputy Speaker, I would like to reply briefly to some of the points that have been made. I thank Members of all parties who have taken part in the debate. Although a number of criticisms have been made of the stage that Croatia has reached in preparing for EU accession, there has been pretty nigh universal support for the principle that Croatia should be welcomed as a full member of the European Union.
Let me deal first with the points that have been made about the Irish protocol. I was asked why no referendum was required under the European Union Act 2011. As my right hon. Friend the Member for Ross, Skye and Lochaber (Mr Kennedy) said just now, the truth is that the protocol is declaratory. It changes neither the content nor the application of the EU treaties. The European Council conclusions of June 2009 said that the protocol was
“fully compatible with the Treaty of Lisbon and will not necessitate any re-ratification of that Treaty”.
That was at the heart of the formal opinion set out by my right hon. Friend the Foreign Secretary in his statement on 2 July this year, in which he explained why, having examined the protocol, as required under the 2011 Act, he had concluded that it fell within one of the exempt categories of legislation.
I should say to the hon. Member for Moray (Angus Robertson) that while I completely accept—and not just in respect of the Irish protocol—that the smaller EU members play a vital and welcome role in the functioning of the European Union, he will also, I am sure, have taken note of the fact that, between Croatia’s application and accession, 10 years elapsed before all the details were sorted out and accession arrangements put in place.
Mr Lidington
The right hon. Gentleman will forgive me; I think the House would want me to make progress.
My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) asked about the lack of action on a police law. In about a week to eight days’ time—well ahead of the proposed Committee stage of the Bill—I will make available to the Committees and in the Library the detailed tables in respect of chapter 23, which was the supporting basis for the report, which the Committees have seen. Those tables are with the Ministry of Justice at the moment. As we did in April, we will make those tables available to the House following the Commission’s October report, and I undertake to do so in good time before the Committee stage.
To deal with the point my hon. Friend made, progress on the police law could be said to have fallen victim to the democratic process. The previous Croatian Government, led by the HDZ, passed a law on the recruitment of police officers shortly before the Croatian general election. After a new Government were elected in Zagreb, they wanted to consider the position and decided that they wished to repeal the law. They have now had detailed discussions with the European Commission and decided to go ahead with the previous law, subject to some amendments. The details of the police law are finalised and we expect everything to be in place well ahead of Croatia’s expected accession date.
The hon. Member for Linlithgow and East Falkirk (Michael Connarty) asked about the risks of trafficking, a subject in which he has taken a long and detailed interest. We have not identified any victims of trafficking from Croatia in the United Kingdom. Indeed, the 2011 report by the US State Department, which ranks countries in terms of their capacity to tackle trafficking and protect victims, designated Croatia as a tier 1 country, alongside the United Kingdom. The evidence suggests that Croatia already has a robust system in place, but clearly we will want to work with the Croatians to ensure that that remains the case. Countries close to Croatia, such as Kosovo and Albania, are indeed source countries for traffickers. The Croatian Government are fully aware of the risks and are committed to strengthening measures to tackle trafficking. For example, Croatia intends to continue training border staff and police. A training programme on trafficking in human beings has been drafted and will be implemented as part of the border police training system. We believe that Croatia is on track to meet its commitment to tackling human trafficking.
The hon. Gentleman also asked about the need for border management. The EU monitoring reports released in April and October highlighted delays in implementing the infrastructure and equipment required for the integrated border management programme. That will be addressed as part of pre-accession monitoring, but in the meantime Croatia continues to make progress. As at August this year, the national border management information system was live at 81 border crossing points, which represents significant progress on 2011, when only 37 were so equipped. In 2011, Croatia apprehended 3,461 illegal migrants, a significant increase on the 1,946 apprehended in 2010. The total number of border officers is now 6,017, of which 4,647 are at the external border. Croatia plans to recruit 406 additional border officers before the end of the year.
The hon. Member for Linlithgow and East Falkirk asked whether Croatia would be obliged to join Schengen. The act of accession provides for much of the Schengen acquis to apply to, and be binding on, Croatia from the date of her accession, but the actual lifting of border controls to other Schengen area member states will not take place at the time of Croatia’s accession. That will take place later, following a separate Council decision, and it will happen only if Croatia meets the requirements of the Schengen evaluation procedures to the satisfaction of the Commission and the existing Schengen area member states.
The hon. Member for Moray asked about the post-accession measures. Articles 38 and 39, relating to safeguards to the single market and to chapters 23 and 24, can indeed be invoked after accession, as well as before it under the special pre-accession monitoring arrangements.
In answer to a further point raised by the hon. Member for Linlithgow and East Falkirk, the conflict of interests commission is in the process of being established, and we expect it to have been established before the end of the year. One reason for the delay is that the Croatian Government have decided to be completely transparent about the process, and they have interviewed every one of the more than 200 applicants for the post involved.
[Official Report, 12 November 2012, Vol. 553, c. 1-2MC.]I shall perhaps have an opportunity to say more about the general issue of anti-corruption measures when we reach the further stages of the Bill. Today, I would simply say that we are now seeing action being taken in high-profile cases, with convictions secured against a former Prime Minister, a former economy Minister and a former defence Minister. At the lower level, too, the Croatian bureau for combating corruption and organised crime has issued indictments against 257 people, secured 209 judgments including 205 convictions, and launched 191 new investigations, all between January and August 2012. Again, that is evidence of the determination of the Croatians to push forward and deliver on their promises to take rigorous measures against corruption.
My right hon. Friend the Member for Ross, Skye and Lochaber rightly referred to the part that Croatia has played in contributing to the international security assistance force operations in Afghanistan. I also look forward to the prospect of Croatia, as a full member of the European Union, serving as a role model for the other countries of the western Balkans and, through her own diplomatic and political activity, leading them towards full integration with the European family of nations, as well as strengthening the institutions that provide for democracy, the rule of law and human rights for everybody. Although there is still work to be done in the months leading up to accession, this Government believe that Croatia has achieved remarkable progress. She is on track to deliver on her promises by the date of accession, and that is why we have brought the Bill to the House and ask the House to support it tonight.
Question put and agreed to.
Bill accordingly read a Second time.
European Union (Croatian Accession and Irish Protocol) Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the European Union (Croatian Accession and Irish Protocol) Bill:
Committal
1. The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on Consideration and Third Reading
2. Proceedings in Committee, any proceedings on Consideration and proceedings on Third Reading shall be taken in one day in accordance with the following provisions of this Order.
3. Proceedings in Committee and any proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
Programming committee
5. Standing Order No. 83B (Programming committees) shall not apply to the proceedings on the Bill in Committee of the whole House, to any proceedings on Consideration or to proceedings on Third Reading.
Other proceedings
6. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Joseph Johnson.)
Question agreed to.
Banking Union and Economic and Monetary Union
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:29 - The House divided: - Ayes: 33 / Noes: 273 - Question accordingly negatived.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I inform the House that Mr Speaker has selected the amendment in the name of Mr William Cash.
The Financial Secretary to the Treasury (Greg Clark)
I beg to move,
That this House takes note of European Union Documents No. 13682/12, a draft Regulation amending Regulation (EC) No. 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards its interaction with Council Regulation (EU) No…/… conferring specific tasks on the European Central 5 Bank concerning policies relating to the prudential supervision of credit institutions, No. 13683/12, a draft Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, No. 13854/12, Commission Communication: A roadmap towards a Banking Union, and an unnumbered Explanatory Memorandum: Towards a Genuine Economic and 10 Monetary Union: Interim report; and welcomes the Government’s decision to remain outside the new supervisory arrangements while protecting the single market in financial services.
I welcome these debates. The subject matter of today’s debate is, if anything, even more important than what we discussed last week. It is essential that proposed developments in the EU are robustly scrutinised by this Parliament. I am grateful for all the work done by the European Scrutiny Committee and its equivalent Committee in the House of Lords, as they applied their attention to the 1,100 European documents that were referred to them last year.
One theme we will come on to is how we can strengthen the scrutiny of sovereign national Parliaments over the institutions and policies of the EU. I believe that that is essential. It is principally Members of this House and our colleagues in the other place who will search for assurance that our national interest is not being blown away by a zeitgeist that is capable of carrying people along in the wrong direction.
This week is a particularly appropriate one in which to recall the value of that questioning voice. It was 15 years ago on 10 November 1997 when the then Leader of the Opposition first stood out against all fashionable opinion at the time and, in a speech to the Confederation of British Industry conference, committed my party to oppose joining the proposed euro. I had a hand in preparing that speech, and I recall one of the lines that I was proud made the cut. It said that
“if the nightmare of our experience in the ERM teaches us anything, it is not to steer by the siren voices of a supposed consensus, but to exercise the independent judgement of a cool head.”
Of course, the two people responsible for that decision and that speech are now our Foreign Secretary and our Chancellor of the Exchequer. They were excoriated at the time for declaring on that day that they intended
“to campaign against British membership of the single currency at the next general election”.
I believe that this caused the brand-new Labour Government of the day to hesitate, and by missing the moment, they spared Britain from a disastrous fate.
Fifteen years on, the documents that we are considering today are a direct consequence of the creation of the euro and, in particular, of the failure to address from the outset some of the inevitable factors. Now, as then, it is imperative that the United Kingdom exercises the independent judgment of a cool head to determine whether the new policies being proposed are consistent with the interests of our own economy.
Let me deal first with the proposals on banking union. The first thing to say is that we and the EU need to tread particularly carefully on matters that affect financial services. The financial services industry, including banking, is not evenly distributed across all member states of the EU. The United Kingdom has a vastly greater strength in the conduct of, and international trade in, financial services than any other member state. Financial services and related areas employ more than 2 million people in this country—two thirds of them outside London—and contribute £1 out of every £8 of Government revenue. That is about £1,000 for every man, woman and child in this country.
We have a £37 billion trade surplus in financial services and Britain accounts for 61% of the whole of the EU’s exports of financial services. Commissioner Barnier said last month:
“It is in our general interest in Europe to have the biggest financial centre in the world. A strong City is good not only for Britain but for Europe.”
That is a welcome recognition. We will never jeopardise an industry of such particular importance to the United Kingdom.
In scrutinising these proposals, we need to have a clear fact in mind. People do not need banking union because they are part of a single market. The appetite for banking union arises solely because of the problems of the single currency. However, although banking union is primarily a matter for members of the eurozone, it strongly engages Britain’s interests in two ways.
Wayne David (Caerphilly) (Lab)
Does the Minister honestly believe that the Prime Minister throwing a tantrum, walking out of a Council meeting and claiming that he exercised a veto when he did not is helpful to Britain’s national interests?
Greg Clark
I and, I think, the country are pleased that the Prime Minister was prepared to stand up for British interests, and I know that he will always do so. It is certainly not a matter of regret.
I think it is desirable from the point of view of the British economy that, since the eurozone exists, it should be successful, rather than a source of economic weakness. Indeed, as the Governor of the Bank of England has said:
“The biggest risk to the recovery”
in this country
“stems from the difficulties facing the euro area, our main trading partner.”
Secondly, we need to be vigilant to ensure that our access to the single market in banking, now and in the future, is not undermined and jeopardised by the creation of a banking union. That means putting in place safeguards to ensure that the UK cannot be discriminated against in the future in single market decision-making processes.
The Commission’s current proposals are not yet acceptable in that respect. For example, the European Banking Authority—which, as Members know, is the organisation that currently ensures that there is a level playing field for banking within the single market—operates on the basis not of unanimity but of majority voting. The European Central Bank regulation specifies that that the ECB would
“coordinate and express a common position of representatives from competent authorities of the participating Member States in… the EBA”.
That effectively requires participating member states in the euro to caucus in adopting positions and voting in the European Banking Authority.
Mr James Clappison (Hertsmere) (Con)
I warmly welcome the approach that my right hon. Friend is taking to the whole issue, and to voting rights in particular. Are not the voting arrangements for the European Banking Authority completely unacceptable to our national interests, as he has described them, in that they will result in a banking authority that is determined by a caucus that has been arranged in advance and in which this country is deprived of its say? The Labour party may think that that is somehow in accordance with our national interests, but it most certainly is not.
Greg Clark
My hon. Friend is entirely right. I do not think that we should be shy about insisting on protecting something that is very important to us. The single market in financial services is essential, and the current proposals would compromise it.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I, too, welcome my right hon. Friend’s approach, but may I caution him about the double-edged invocation of the single market? We are threatened not just by the voting rights in the European Banking Authority, but by those in the Council of Ministers. It is equally possible that the member states of the eurozone that are in the banking union will caucus in the Council and use a single-market measure to create a single market in banking services to reflect the policy already adopted by the banking union. How are we to be protected from that?
Greg Clark
My hon. Friend is right to be alert to those dangers and risks. One of the clear principles on which we have insisted throughout all our negotiations on all the different dossiers is that we will accept nothing that would compromise our ability to participate in the single market.
Let me say a bit more about our stance on the EBA. What is currently proposed would not just require but enable members of the eurozone to caucus and adopt positions, which poses the clear risk that the ECB could dominate EBA decision-making. Given that 17 of the 27 EBA members are in the eurozone, that would constitute a blocking minority on all issues decided by qualified majority voting, and indeed a qualified majority under the new Lisbon rules.
Moreover, such action by the Commission would create an asymmetry of treatment between supervisory bodies. The proposal reflects the legal position that, as an EU institution, the ECB cannot be legally bound by EBA decisions on binding mediation, whereas the Bank of England could be. We have argued since the start of the negotiations that it would be inequitable and unacceptable if the Bank of England could be directed in that way but the ECB could not. We are pleased that our concerns are finally being acknowledged, but the asymmetry must be resolved if there is to be any final agreement.
As is required by both the motion and the amendment tabled by the Chairman of the European Scrutiny Committee, my hon. Friend the Member for Stone (Mr Cash), we will certainly use what the amendment describes as our
“best endeavours to ensure that the proposed changes…in the European Banking Authority are not adopted”.
In fact, that is an uncharacteristically mild form of words from my hon. Friend. We will insist that those changes are not adopted, and we will require full protection for the position of the United Kingdom and the other non-eurozone members in the EBA.
Mr John Baron (Basildon and Billericay) (Con)
I am very pleased to hear what the Minister is saying, but what concrete guarantees would exist if the Government’s proposals were adopted to ensure that the City of London’s interests could not be adversely affected by qualified majority voting by eurozone members, the ECB or anyone else on the continent? That is the key question that concerns us today.
Greg Clark
A number of mechanisms could require that, for example, the requirement for a dual majority. A number of possibilities are being discussed at the moment. What I have set out clearly is a very firm principle that we will not find ourselves in a position where we will be dominated by the ECB. That is what we are taking into the negotiations. We take a firmer view even than we are urged to do by the amendment.
Mr William Cash (Stone) (Con)
Does my right hon. Friend not accept that because this is governed by qualified majority voting, even with our best endeavours the reality is that it is not merely likely but it is as certain as we could imagine, given what we hear from the other side of the European Union, that we will be outvoted? To follow on from the remarks made by my hon. Friend the Member for Basildon and Billericay (Mr Baron), what guarantee can the Minister give, in the light of the fact that this is so important for the City of London?
Greg Clark
As my hon. Friend knows, the ECB aspect of the regulation requires unanimity, and we regard both aspects of this as reinforcing each other. We have made it plain, as I am doing from the Dispatch Box today, that it is an absolute requirement that we will not be dominated by the ECB. After the Prime Minister goes to the Council he will come back to this House. If he has been able to establish agreement, he will set out what that is, and if not, he will set out why it was not possible.
Let me deal with the second part of my hon. Friend’s amendment, where he draws attention to the need to ensure that the powers of the ECB’s governing council are not delegated to the single supervisory function in a way that is unlawful in terms of the treaties. That is a serious matter. It is vital that the weighty responsibilities that the single supervisory mechanism will discharge are vested in a way that is accepted to be legal. His observation in his amendment that it would ultimately be a matter for the European Court of Justice if there were doubts about the legality of the final arrangements is very constructive and accurate, and I hope that he will accept my assurance that our criteria in evaluating the SSM will be as in his amendment. In other words, they will be: first, that it is lawful—we reserve the right to establish that; secondly, that the integrity of the single market is respected, as I said; and, thirdly, that the UK cannot be discriminated against in the way that is proposed.
Mr Cash
Does my right hon. Friend recall that in relation to the fiscal compact our representative at UKRep, Sir Jon Cunliffe, wrote a letter to the Secretary-General of the European Council specifically stating that the UK Government wanted a legal reserve in respect of the illegality of that matter? On this issue, where there is clear evidence from the Council of Ministers’ legal adviser that the matter is regarded as unlawful, will my right hon. Friend guarantee that not only have we received a legal reserve, but, unlike on the previous occasion, we have followed it through with a reference to the European Court? So far, we have got a promise but no completion of it.
Greg Clark
I am grateful to my hon. Friend for that. I am not as familiar as he is with what went on in the previous exchange of correspondence, but I can say that it is essential that the arrangements need to be legal. There is no point marching up a hill of banking union if the whole thing falls apart—I mix my metaphors, but he understands what I mean. There are also other matters on which we will need to be satisfied before any of the proposed measures can be adopted.
Mr Jenkin
My right hon. Friend made an important point when he said that the British Government would reserve their position on the legality of this new instrument and how it might be used. Will he just expand on that? Would it not be sensible for UKRep to write a letter similar to the one written in the case of the fiscal union treaty, at the very least, in order to make that clear?
Greg Clark
I do not think that there is any difference between us on this. It is essential that this arrangement is legally sound. At the moment, the negotiations are continuing and the shape of the regulation is evolving, but the sensible commitment I have given is to make sure not to proceed unless we are satisfied that it is legally robust.
Let me talk about some of the other measures we need to bear in mind. We must make it absolutely clear that both now and in the future there should be no requirement, for example, for clearing houses that handle significant amounts of euro-denominated business to be located geographically in the eurozone, as proposed by the ECB—a proposal against which we have launched legal proceedings. That blatantly undermines the single market and the United Kingdom’s financial services industry. It is a poor indication of the ECB’s attitude if it intends to proceed in such a way. We need to be clear, too, that London is home to more clearing houses than any other EU capital and such proposals are unacceptable.
As the House will see, there is some way to go before the banking union proposals are acceptable to the Government. They will not be agreed by the United Kingdom unless and until we are satisfied that the UK’s position in the single market has been secured.
Let me turn briefly to the document known as the four presidents’ report, which was published on 12 October. It is an interim report that gives a general overview of the measures that the euro area member states might want to consider taking to improve the functioning of the euro. At this stage, there is little detail in the report apart from in the area of banking union and a great deal more discussion will be needed before there is agreement even on which issues should be explored further. The House will have a particular interest, however, in the discussion about democratic legitimacy and accountability.
I emphasise again that although the UK will not be part of the arrangements, it seems to me to be important that when significant decisions are being taken at the eurozone level about national matters, national Parliaments should be able to scrutinise those decisions, just as the Bank of England, the UK regulatory authorities and not least Ministers are accountable to this House and the House of Lords.
Wayne David
I welcome what the Minister has just said, but does he accept that in much of the documentation we are discussing, as the European Scrutiny Committee has pointed out, preference is given to the European Parliament rather than national Parliaments as regards accountability?
Greg Clark
Indeed it is. The point I am making very clearly—perhaps not clearly enough—is that I think there should be a greater role for national Parliaments.
The Chairman of the European Scrutiny Committee, my hon. Friend the Member for Stone, was characteristically eagle-eyed and meticulous in his regard for independence when he baulked at the line in my explanatory memorandum that stated that
“there should be further consideration of how we can use national parliaments to enhance legitimacy and oversight.”
He is absolutely right that “use” is not the mot juste and instead I should have said that the authority of national Parliaments should be respected. It was the very independence and rigour of his and the Committee’s scrutiny that I was commending, and anyone who labours under the misapprehension that his Committee can be used does not know him or his colleagues. I will be more exact in future.
When the document was considered in the October Council, the Prime Minister secured an explicit commitment that the final report and road map in December must include concrete proposals to ensure that the single market’s integrity is respected. I look forward to this afternoon’s debate and tell all hon. Members who will participate that their guidance and advice will be taken seriously by the Government as the detailed negotiations on all these matters proceed in Brussels and across capitals in Europe over the weeks and months ahead.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Before I call the shadow Minister, let me remind the House that the debate is time-limited and will end at 6.29 pm. When the shadow Minister sits down, I will announce the time limit to ensure that all Members who have indicated that they wish to speak get in.
Chris Leslie (Nottingham East) (Lab/Co-op)
No pressure there, then, Mr Deputy Speaker.
I have a lot of sympathy with the Minister today. Let us hope that he is a little luckier than he was last Wednesday, although of course the curse of Tunbridge Wells will have its way. In a way, as he explained, banking union is a natural downstream consequence of monetary union. It would be wrong to resist it for the eurozone, as the eurozone crisis has exposed a series of risks to economic stability, not least of which is the relationship between sovereign debt and banking debt and the need to find credible ways to prevent private banking losses from dragging down sovereign fiscal positions. The UK has its own banking union and our monetary policy sovereignty has given us a measure of protection during the sovereign and bank debt crises that have engulfed the eurozone.
I thought the Minister was perhaps labouring under the impression that his plucky Members of Parliament kept us out of the euro between 1997 and 2010—that is too funny, as of course that was the decision of the previous Labour Administration. It was the right decision.
Chris Leslie
I will not give way yet, as I am conscious of the time.
We were right, too, to bail out the banks in 2008, but that came at a high cost for the taxpayer and for the country’s economic prospects. UK public debt was adversely affected by the purchase of banking assets and the subsequent loss of revenues from financial services. These issues are now affecting countries around the world, especially in the EU. Monetary policy sovereignty has allowed the UK to adopt an active interest rate policy to counteract those economic headwinds—something less available to those in the eurozone.
To save the euro, the eurozone has looked at new rules to grip the fiscal policies of its member states. Fiscal union in the EU is now widely recognised as dependent on banking union. Germany initially insisted on that, and it has asked that the single supervisory mechanism—the eurozone nation state regulators and Governments—be completed before banks can access the European stability mechanism and the European Central Bank’s outright monetary transactions programme, hence the imperative to agree these matters. In recent weeks, however, Germany is rumoured to have lost some enthusiasm for that tougher banking union and its consequences, especially as some of its smaller banks face major regulatory upheaval.
It is right that the ECB’s role in supervisory policy should be triggered, by unanimity if necessary, as required in the Maastricht treaty. Central banks are increasingly in the driving seat in financial regulation, as is the case in the UK, and it is necessary for the ECB to have a clear capability in its role overseeing the operation of the eurozone. The ECB is a full treaty institution, and it must be governed by treaty rules and member state unanimity, as we heard from the Minister. In that process, the rights of non-eurozone members, particularly the UK, must be safeguarded in several ways. We should not be party to any deposit guarantee mechanisms or pre-fund recovery or resolution mechanisms. The UK has undertaken its own measures in that respect, and there are no proposals on the table that would affect our taxpayers directly.
The rules for the single market, including a single rule book for the financial services sector in the EU, should involve all 27 member states. The European Banking Authority—as well as other European supervisory authorities—is the vehicle for preserving the integrity of the single market. The Commission says in its documentation that
“it is proposed that voting arrangements within the EBA should be adapted to ensure EBA decision-making structures continue to be balanced and effective and preserve fully the integrity of the Single Market”.
That is absolutely crucial, but we need far more details about how that will work. The 17 eurozone countries will act en bloc through the ECB in their seats on the EBA, which could represent a permanent majority on all issues, as the Minister explained. The EBA has rule-making powers under qualified majority voting decisions, it mediates between supervisory institutions, and it shares supervisory best practice. There is a real risk of the ECB bloc acting as a permanent caucus to overrule the 10 non-eurozone nation states.
Chris Leslie
As I shall come to, we should seek such key guarantees. I do not think that there is a sufficiency under the proposals on the table. As I said, I am sympathetic to the Government’s situation. However, there is a crucial difference between the Opposition and the Government. We believe that it is really important that we stay in the room somehow so that our voice continues to be heard and we can shape and mould supervisory rules, given the importance of financial services to our economy. How can we continue to be involved while not being at risk of being overridden by the 17 eurozone members? That is the conundrum with which we are trying to grapple, and it is shaping up to be a test case in the two-speed Europe debate.
Mr Clappison
The phrase, “Staying in the room” is one we often hear. However, is it not the reality of the voting arrangements that the hon. Gentleman would be staying in one room and the important decisions would be made in another?
Chris Leslie
It is right for the hon. Gentleman to voice that anxiety. I do not want us to be on the margins, unable to promote the best interests for our nation and our economy. Given that our financial services sector represents approximately 40% of the total of the European Union’s financial services sector, that is absolutely at the core of our vital national interests. It is therefore imperative for us to remain an active driving force in the EU single market in financial services.
Mr Jenkin
It seems to me that the hon. Gentleman is trying to have his cake and eat it. Either he is going to be in the room—in the banking union—or not. If he is not going to be in the banking union, the question that he is failing to grapple with is this: what safeguards and protections do we need given that we will not be in the room because we will not be in the banking union? Perhaps he could provide an answer to that question instead of just waffle.
Chris Leslie
The hon. Gentleman is too kind, as uncharacteristic of him as that may be.
I am afraid that this is a tall order for the Government to negotiate. It is a conundrum. I do not in any way shrink from the mountain that needs to be climbed in squaring this circle, if I may mix my metaphors in that way. I am just concerned that the Government’s approach—perhaps an echo of their approach to the EU budget—is not ambitious enough. I urge hon. Members to talk to institutions across the City of London and to financial services practitioners across the country. They are very worried about their position if they are not able to be part of a single market. They know very well that there are forums in which the rules will be made and shaped, and yet of course they want to reserve our rights from a UK position. Somehow, we have to try to forge a negotiating strategy that manages to do better.
Chris Leslie
I will in a moment, but I am conscious of time.
The motion expresses, in only the most general terms, the Government’s policy to
“remain outside the new supervisory arrangements while protecting the single market in financial services.”
That is necessary, but it is not sufficient. Perhaps it would be better if Ministers found ways to stay outside the scope of the eurozone’s rules—the point made by the hon. Member for Harwich and North Essex (Mr Jenkin)—but somehow still be in the room on EU-wide supervision matters as they develop, and to secure protections in any future settlement on EBA rule-making and mediation.
Mr Cash
Surely the hon. Gentleman is missing one major point, which is that the transfer of the jurisdiction under the single market arrangements that took the City of London away from the United Kingdom and gave it to the European Union was a decision taken by his Government. That is why the problem he is now having to deal with—the anxieties he referred to—has arisen. That the coalition has acquiesced in that is another story. The fact is, however, that the real responsibility lies with those who transferred the jurisdiction, as I pointed out in the Financial Times three years ago.
Chris Leslie
I do not want to get too much into the history of these things. We could go back to the Maastricht treaty, the formation of the eurozone and the inexorable logic of how we have got to where we are today. All I know is that it is important that we try our best and redouble our efforts to ensure that we have a negotiating strategy that secures the best deal possible for the UK.
Chris Leslie
I should like to make a little progress if I may.
I know that hon. Members will say, “How can we manage to secure these particular arrangements? What should our stratagem be?” Government Members will recall Lady Thatcher’s invocation of the Luxembourg compromise—a quiz question for hon. Members who recall that device. It has not been in use in recent times, but it was a way, in certain circumstances for qualified majority voting arrangements, to ensure that there was a capability of promoting vital national interest. There was at one point a recognised device for ensuring that one could stay in the room. If vital national interests were affected, then certain levels of protection were possible. I do not in any way deny that that is a difficult position, but that is the sort of scale of proposition that the Government should be more actively asserting. The Government need to negotiate a clearer and more distinct set of rules that protect our status outside the eurozone while ensuring that we have an ongoing role in how new rules develop across the whole EU. In our view, that must be the Prime Minister’s negotiating objective.
We have other concerns and questions about the SSM. How can it connect with the wider public and be subject to democratic accountability? That is an important point, because the bodies at the heart of the SSM will need to be more transparent. I am not clear whether they will publish their minutes in the same way as the Bank of England or the Federal Reserve, but we need to start addressing some of those transparency questions. Furthermore, what will be the relationship between the ECB’s monetary policy stance and its approach to decisions on financial supervision?
The composition of the SSM is complex and lines of accountability are extremely confused. For example, the European Central Bank is a superior treaty institution, yet the EBA will in theory sit on a junior institution. It is extremely difficult to see lines of accountability and how the legal issues raised in the amendment will be resolved. What will happen in the intervening months and potentially years before this complex constitutional wiring is settled? What if new market pressures force banking crises that require the stability mechanism or outright monetary transactions to be triggered, and what if there is no SSM in place?
How do we prevent City of London institutions and firms, which contribute about one sixth of Britain’s GDP, from changing their opinion about London in the long run as the right place to locate, when there is a risk that we will be marginalised in the decision-making forum for EU banking rules? They will worry about the prospects of operating under a different set of rules from those on the continent. Our vital national and economic interests are at stake, so we need to ensure that we keep involved, do not get pushed out and avoid being marginalised, while of course reserving our rights.
Wayne David
My hon. Friend has set out a precise and appropriate agenda for the country to pursue, but does he agree that for that agenda to be pursued effectively we need the ability to put across arguments and to persuade? What we do not want is rhetoric and empty gestures, which is what we are getting from the Government.
Chris Leslie
I worry that that is the problem with the Government’s approach to the negotiations. I do not deny for a moment that this is a tall order as a negotiating strategy, but it is necessary to protect our national interests. Of all the 10 non-eurozone countries, we have the most at stake. As I said, 40% of the EU financial services sector comes from Britain. We cannot allow ourselves to be treated as an afterthought in these negotiations. Why are the Government letting others shape the thinking and make all the running on EU banking union reform? Our vital national interests are on the line. We need a clearer negotiation strategy from the Government from the one we have seen to date.
Mr Deputy Speaker (Mr Nigel Evans)
Order. We will start with a six-minute limit, but it will have to be lowered. I call Mr Cash to move his amendment.
Mr William Cash (Stone) (Con)
I beg to move amendment (a), in line 10, leave out from ‘and’ to end and add
‘whilst welcoming the Government’s desire to seek safeguards for the UK, calls on the Government in respect of Regulation (EC) No. 1093/2010 to use its best endeavours to ensure that the proposed changes in the voting rights in the European Banking Authority are not adopted, to use its veto in respect of European Union Document No. 13683/12 so as to ensure that the powers of the Governing Council of the European Central Bank are not unlawfully delegated to the Single Supervisory Mechanism without an amendment of the treaties and/or to refer that matter to the European Court of Justice for adjudication of that proposal.’.
I am deeply troubled by the wording of the motion. In my judgment, it simply does not make sense to state that the House should welcome
“the Government’s decision to remain outside the new supervisory arrangements while protecting the single market in financial services.”
We acquiesced in to the Lisbon treaty, the Labour party agreed to the transfer of jurisdiction over the City of London to the EU, which was wrong—the Single European Act was never remotely intended to produce such a result—and, furthermore, views I have received from the City clearly demonstrate that it does not believe that the proposals in the motion will protect the UK or a single market in financial services.
There is another massive issue about the rule of law in Europe. The Foreign Secretary, in his speech to the Körber Foundation conference in Berlin a fortnight ago, said that what bound us together in the EU and the reason for the Government wanting to remain part of it was that it
“has helped to spread and entrench democracy and the rule of law across Europe.”
The tragic reality is that the EU does not subscribe to the rule of law. On 17 December 2010, Madame Lagarde said about the first bail-out fund, the European financial stability mechanism:
“We violated all the rules because we wanted to close ranks and really rescue the euro zone.”
Germany and France themselves broke the stability and growth pact. Furthermore, both the Government and the Attorney-General are clearly of the view that the agreement on the fiscal compact was unlawful, but in reality nothing has been done—hence my call for the legal reserve on this matter, although the legal reserve issued before has never been implemented.
The Government know that the proposals referred to in the second part of my amendment are unlawful. The Council of Ministers’ own legal adviser, in a lengthy opinion which I have seen and which the Government cannot dispute, states that there will have to be an amendment to the treaties if the powers of the governing council of the ECB are to be delegated to the single supervisory mechanism.
The legal opinion says on the proposal amending the EBA regulation, in effect, that in terms of the EBA’s dispute resolution powers there is no justification for treating the ECB differently from banking authorities in non-eurozone member states by exempting it from those powers. To do so would be a clear breach of the principle in law of non-discrimination.
As to the proposal giving the ECB prudential oversight of credit institutions in the eurozone, the legal opinion states that in establishing the single supervisory mechanism the council must respect the legal framework for decision making within the ECB set by primary law—that is, the treaties. This framework does not allow the ECB’s governing council to delegate decision-making functions on banking supervision to a subsidiary body such as the SSM. There is nothing in the legal base for the SSM proposal, in article 127(6) of the treaty on the functioning of the European Union, which would permit secondary law—that is, this draft regulation—amending the rules laid down in primary law. There is no question about it and the Government know that.
Non-eurozone member states are not entitled to participate in the ECB’s decision making, so they can have no formal decision-making role in the SSM as conceived. Furthermore, the law on banking supervision in the EU will be made up of directives to a significant extent. This is a requirement of the treaties. That means that the ECB cannot propose one-size-fits-all legislation on banking union. Rather, it can propose legislation which allows for differences in national transposition.
We simply cannot countenance a situation in which there is a wilful breach of the rule of law and where the dysfunctional European Union vaunts the rule of law, yet deliberately breaks its own rules. This is precisely what led to the kind of constitutional crisis that we have seen in our own history when Governments from the Stuarts onwards claimed a divine right to rule but then broke the common law. This is the primrose path to constitutional disaster not only for the United Kingdom, but for Europe as a whole. I hope the House will understand my concern, as I suggested back in the 1990s that this would happen.
I hear what the Minister says but I cannot understand why and how, given comments that I have received from the City of which I am sure he is aware. Those in the City make it clear that the single market would be put at risk by an imperfect single market in financial services in which rules differed by level of membership of the EU. Furthermore, they say:
“It is essential that voting arrangements within the European Banking Authority are clarified so as to avoid members of the Banking Union voting together en bloc and imposing financial regulation on non-Eurozone members through qualified majority.”
For “clarified”—
Mr Jenkin
Does my hon. Friend agree that for us to invoke the single market is doubled-edged, because in the end it will be the Commission that invokes the single market as a pretext for levelling the playing field which has been unlevelled by measures taken by the banking union? We will therefore finish up with measures that we do not want being imposed on us by qualified majority voting.
Mr Cash
That is precisely right. It was never intended when we voted—and I voted at the time, with a reservation about the sovereignty of the United Kingdom Parliament, which I was not allowed to debate—that we would be in this very position. That was in 1986 when I voted for the measure, but it was with that reservation.
To complete my point, where the comments from the City say “clarified”, I would say changed. We must change the rules, not merely clarify them, but we cannot do so because of QMV. That is the problem and it comes from the Single European Act.
Mr Baron
Does my hon. Friend agree that the Government’s defence that QMV cannot be extended to decisions regarding the City cannot be right, and their defence of the idea that the ECB cannot override non-eurozone members is at least highly questionable when it comes to the legal situation that my hon. Friend is highlighting, and that therefore there is a distinct danger?
Mr Cash
I would go further and say that the Council’s legal adviser knows exactly what the position is, as do the whole European Union and our own Government. The opinion is out there; I have read it and it is crystal clear. The reality is that there is absolutely no question about it.
I have great sympathy for the Minister and pay tribute to him. I will not go into the details, but it was because of him that we got the documents in the first place. He is a man of great integrity, and I think that he is in a very difficult position tonight, stuck between a rock and a hard place. I have to say that I do not believe that what he has told us really gives us the necessary guarantees and satisfaction. This is not about what we think, or about grandstanding or being difficult for its own sake; as he said at the beginning, this is in many respects—I would not say entirely—on a par with the matters on which we rebelled last week. We do not want to have to do this, but it is a matter of fact that we face this situation.
I have another commentary from City analysts stating that the concern is that the UK could
“still lose the ability to prevent a decision from being taken by the EBA to intervene in a UK bank directly under the EBA’s binding mediation powers.”
They make a similar point about the need for amendments to the treaties. The truth is that it would not be right for Members of Parliament not to register their votes against these proposals in the hope—like Mr Micawber—that something would turn up, because I am afraid that what this amounts to is complicity by our own House and our Government in the violation by the EU of its own laws and the avoiding of amending the treaties for reasons of mere expediency. Even if the EU does come up with something, I believe that it will be merely a fix to avoid revealing its real intentions and, of course, the real results, which will cause so much harm to the UK and the City of London. I blame the Labour party for much of this, as I warned of it several years ago.
The so-called remorseless logic of advocating a banking union is more of a remorseless shift away from our own national interests while the banking union moves the eurozone into an ever deeper and blacker hole with money, either invented or printed, pouring into it. That is a recipe for economic disaster.
Kelvin Hopkins (Luton North) (Lab)
I wish to speak briefly in support of the amendment, which I have signed, and to applaud everything the hon. Member for Stone (Mr Cash) said, apart from his comments about the Labour party. I believe strongly that banking regulation should be determined by national Governments and Parliaments and that, if there are to be international agreements, they should be bilateral or multilateral agreements between Governments and not determined by the European Union.
I am certain that my views on banking regulation are very different from those of Government Members, but I agree that we should determine what it is, not the European Union. The most damaging change for Britain was when Mrs Thatcher abandoned exchange controls in 1979, which was the most serious act taken by the Conservative Government in those years. Since then, we have seen all the crises arising from globalisation. We cannot put the genie back in the bottle, although I think that in time we might have to try, but it would take another massive crisis before that happens.
With regard to the euro, I have always been wholly opposed to economic and monetary union and wrote my first paper about it in 1979, when I opposed the European monetary system. I wrote another paper about the exchange rate mechanism and predicted its crash, and I opposed Maastricht. I have written and spoken thousands of words on these matters over many years, and I am afraid that I have been proved right. The crisis now affecting us is quite appalling. In Greece there is now a fascist party infiltrating the police and threatening to undermine democracy while the Greek economy disappears into a black hole, and that is the result of a mad economic policy and strategy. Countries should have their own currencies and should be able to determine their own parities relative to other countries.
The Government ought to go into the negotiating room at any time feeling strong, because the European Union needs Britain much more than we need it. We buy vastly more from the EU than it buys from us. With Germany and France now predicted to be going into recession, they will need our trade even more. Our exports, compared with our imports, are tiny. The German economy is heavily dependent on massive exports to Britain, so we can negotiate from a position of strength and say, “If you make life very difficult for Britain, we could make life very difficult for you as well.” We do not want to do that; we want to be comradely and internationalist. But let us not think of ourselves as a weak country, because we are very strong.
Mr James Clappison (Hertsmere) (Con)
I warmly welcome the approach taken by my right hon. Friend the Minister for Europe and the words that he used to describe the situation. However, I support the amendment tabled by my hon. Friend the Member for Stone (Mr Cash). It is an important amendment, which complements the Government’s motion. It questions the legality of the arrangements and, in particular, the voting arrangements, which I drew attention to in an intervention.
My right hon. Friend spoke entirely correctly—with great conviction and accuracy—about the lawfulness of the delegation of powers. The only comment that I make in addition to what my hon. Friend the Member for Stone said is that it is important, given that the EU is governed by a legal framework and is a treaty organisation, that we should have certainty when it comes to the legal provisions of those treaty arrangements. All too often we have seen not certainty but legal terms and conditions being overridden by political will. The situation that we are discussing looks very much like another case of that type, and in such cases one simply cannot trust the legal arrangements.
On the voting arrangements set out in the regulation on the European Central Bank and their implications for the European Banking Authority, while the single supervisory mechanism in the ECB concerns the eurozone, the European Banking Authority concerns all members of the European Union and the whole single market. It sets the rulebook for the single market and has important supervisory responsibilities. The arrangements in the ECB regulation are breathtaking. It is not just a question of having the political will for nations to cohere together; it is a condition of the EU’s law—a regulation—that the member states of the eurozone work together, co-ordinate their actions and take a common position when it comes to the European Banking Authority. That means that in the European Banking Authority’s arrangements for voting, the eurozone bloc will have the whip hand in each of the decisions taken. They will be determined in advance.
The situation is a bit like those council meetings that we sometimes see in this country in which political groups with a majority decide everything in advance in a caucus. They then go into the council to debate a decision, but everybody knows what it is going to be. The same is happening here—the European Banking Authority is being turned into a sham. All the decisions will have been taken elsewhere and in advance and we will be deprived of our say.
Mr Clappison
I shall give way to the hon. Gentleman if he is able to put a different complexion on the matter.
Martin Horwood
The hon. Gentleman is making an important point, but it surely only emphasises the importance of carefully negotiating the voting rights of the United Kingdom and non-eurozone members within the European Banking Authority. Does not the process advocated by the amendment—a veto and then Court adjudication, effectively—blow that negotiation out of the water and risk damaging this country’s rights within Europe?
Mr Clappison
The proposals are here in black and white. I hope very much that the hon. Gentleman will join us in supporting the Government to take every measure, up to and including a veto if necessary, to preserve our position and to stand up for our interests in the European Banking Authority. We simply cannot have a sham.
It is no use pretending that by talking nicely, going into the room, being at the top table and all the rest of it is going to be the solution. We have heard those warm sentiments so many times in the past. We are discussing a matter of negotiation to protect our interests, and we have to be prepared to take decisions that are unpalatable.
Jacob Rees-Mogg
Further to the point made by our hon. Friend the Member for Cheltenham (Martin Horwood), is it not the case that every member state of the European Union, with the exception of the United Kingdom and Denmark, is obliged to join the euro at some stage? When 25 out of 27 EU members are members of the euro, they will have a majority whatever voting system is cooked up.
Mr Clappison
My hon. Friend pre-empts my next point. I am drawing attention to the voting arrangements laid down as a matter of European law in a regulation that gives the eurozone the whip hand, as matters stand. But of course he is absolutely right that other non-members of the eurozone have the ambition to join the euro and that, along with Denmark, we do not have to join it as a result of the opt-out.
As my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) said, even without the legal obligations we could expect members of the eurozone to cohere together to be a majority, and we can see that it will be a growing majority.
Mr David Ruffley (Bury St Edmunds) (Con)
If the opt-in countries and eurozone members are subject to the ECB rules but are not legally called a caucus because the ECB does not write it down as such, they will nevertheless, de facto, hunt as a pack and outvote us in the European Banking Authority, so it does not matter what the regulation says.
Mr Clappison
My hon. Friend is right. It is quite extraordinary to have a regulation setting out that they must act in a caucus, even though it is probably likely that they will do so anyway of their own free will; they will certainly see a common interest in it.
This sets a very worrying precedent for the future whereby the eurozone is going in one direction in working together as a political, coherent body, and being required to do so as a matter of law. For the avoidance of any doubt, and particularly for the benefit of the hon. Member for Cheltenham (Martin Horwood), I will read out the provision that is in black and white—not up in the air somewhere, subject to negotiation—on page 33 of our documents. It requires member states of the eurozone:
“To co-ordinate and express a common position of representatives from competent authorities of the participating Member States when participating in the Board of Supervisors and the Management Board of the European Banking Authority, for issues relating to the tasks conferred on the ECB by this Regulation.”
That is European law, and if they fail to do what it says they will be breaking it—although they may, of course, choose do it anyway of their own free will.
This is a striking illustration of the fact that the eurozone is going in one direction, seeing its political interests as a whole cohering together, while we stand in a quite different position. This provision, and the nature of the relationship that it seeks to put in place between the ECB and the EBA, should give us all a lot of food for thought, because it has major implications for our future in the European Union.
Mr Deputy Speaker (Mr Nigel Evans)
Order. The time limit has been reduced to five minutes.
Andrea Leadsom (South Northamptonshire) (Con)
Like all Members here, I urge the Government to consider renegotiating Britain’s relationship within the European Union as a full member but using every opportunity that presents itself to get a better deal for British taxpayers. I firmly believe that that is entirely possible and that the establishment of the European Banking Authority may give us one of the greatest opportunities yet to negotiate not just to defend British financial services but to get something back that enables us to expand our financial services activities.
The hon. Member for Nottingham East (Chris Leslie) talked about the Luxembourg compromise, which was proposed in 1966 following General de Gaulle’s refusal to take part in European Council proceedings. It urged the EU to recognise nation states’ vital interests in particular industries. For example, the French have a veto over the common agricultural policy and the Spanish have a veto over fisheries policy. The automotive industry is as important to the Germans as financial services are to the UK, but they are able to use not only qualified majority voting but competition legislation to defend their industry, which is much less flighty than financial services. We in Britain have less protection than any other member state for this strategically vital industry which produces 1 million jobs directly within it and represents 10% of our GDP and 10% of our annual tax take.
I applaud my hon. Friend the Member for Stone (Mr Cash) for his work on looking at the legality of European banking union, but I urge that instead of focusing on that aspect, which is a given—I do not for one moment believe that our Government would sign up to something that is illegal at EU level—we should instead focus on what we can get in return for our consent. Of course, European banking union is in all our interests; it is absolutely crucial for our economic growth because if the eurozone collapses, we are in big trouble too. Nevertheless, financial services are core to us as well. As the Prime Minister showed by using his veto last December, he is not afraid to stand up for this most important sector.
I would like the Government to negotiate three things. The first is a legal safeguard for the single market so that no other eurozone caucusing can put up protectionist barriers and prevent British financial exports from being sent into the rest of the European markets. That is a basic key point. Secondly, I believe that in the culture and honour of the Luxembourg compromise, the rest of the EU needs to recognise the strategic importance of the financial industry to Britain, and give us the ability to impose an emergency break at European Banking Authority level if we believe that a proposal from the EU directly harms that industry.
Under qualified majority voting we have an 8% vote at the EBA, yet Britain represents 36% of EU wholesale financial services markets. We are therefore greatly under-weighted in what we can do to defend our financial services sector, and I urge the Government to make that case strongly in negotiations with the rest of the EU.
The third point is more proactive. The EU focuses its attentions on negotiating free trade agreements mainly for goods, and there is little intra-EU service trading. In spite of British UCITS—undertakings for collective investment in transferable securities—being the most successful financial export ever, that is only within the EU and not externally. The future for growth in financial services lies in big emerging markets such as Brazil and China, and involves not Government bond trading, but basic things such as mortgages, life insurance policies, health insurance and so on. I hope the Government will urge the EU to commit—in return for our consent—to promoting free trade agreements with emerging economies in services, and specifically financial services.
British success in financial services generated more than 1% growth in GDP per annum across all key EU member states during the financial boom. We now need to solve the financial crisis together, but Britain is in the uniquely strong position of being able to gain something back at the same time.
Mr Brian Binley (Northampton South) (Con)
I remember well those long-gone days when we were told that monetary union would bring strength to the EU, be enduring and serve to bring our economies together. By golly, how time does fly, and how truth changes the vision. Recent experience has shown that political ambitions exceeded economic reality, and fault lines were built into the single currency from the start. Structures have been put to the test and, quite frankly, been found wanting.
The problems facing the euro might not have started in financial services, but the crisis has certainly highlighted those fundamental flaws. Sovereign debt might not be limited to the eurozone, but its constraints within the economic and monetary union exacerbated the crisis. Unless Europe gets to grips with those problems, the entire project could disintegrate before our very eyes. That is the situation we are facing. We are debating a desperate attempt to apply sticking plaster to a serious wound. The flaw is inherent; the mistake already made. Membership of the single currency was extended way beyond that initially envisaged, and therein lies the fault, which is not dealt with by any of the measures proposed today. Banking union may sound like a measured response, but the creation of a European banking union is a world away from a co-ordinated international response. President Barroso revealed his agenda in his “State of the Union” speech, raising the issue of banking union in the context of a push towards a federal European state. That is the truth of the matter.
Our first priority must be to resist any financial transaction tax. That is not a new idea; in 1984, Sweden introduced a 0.5% tax on the purchase or sale of shares. By 1990, 30% of all Swedish equity trading had moved offshore—more than half of it to London—and the volume of bond trading had declined by 85%. That is the damage that a financial transactions tax can do to this country. It is vital that the Government have the courage to resist it.
Will the Minister expand on the references to fiscal probity that allow for spending on social fairness? Is that a get-out clause for grossly indebted Governments who want to keep spending they do not have? It sounds very like it to me.
The report on EMU accepts that public opinion is key, but that is another way to justify spending taxpayers’ money on propaganda. Our Government have stopped the money-go-round in local government and quangos. It would be totally inconsistent to allow Eurocrats to deploy hard-earned taxpayers’ money to propagate grand visions that have already proved to be failures.
Earlier comments on the document made it clear that fiscal integration is about a continued movement to a federal Europe. I could quote page after page, but I will not bore the House. The truth of the matter is that we need to be sure that our Government’s promises to us are absolutely watertight, fast and hard-held. If they are not, the House will be doing a massive disservice to our children and grandchildren. That is what this measure is about.
I noticed a slight smile on the face of the Minister when I made a point about social well-being. If he looks into it a little more, he might begin to agree with me. If I had the time, I would explain.
Finally, as my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) said, we need to take this opportunity as a base to renegotiate—
Mr Bernard Jenkin (Harwich and North Essex) (Con)
In some respects, this is a modest debate compared with last week’s, although it is worth reflecting that employment in the City, as reported by City AM, has collapsed by more than 100,000 since the peak of 2007. Some of that was self-inflicted, but much of it was inflicted by increased regulation. The Centre for Economic and Business Research reports that employment in the City is set to fall much lower. Most of the jobs are highly paid, high-taxpaying jobs, on which the economy in general and the economy of London and the south-east in particular depend very deeply.
I commend the sincerity of my right hon. Friend the Minister’s approach. He is in a difficult position. The difficulties he is confronting are a microcosm of the conundrum of the UK’s place in the EU. We are not in the room, so we cannot function as a positively engaged member of the EU on our current terms of membership, but we are also not negotiating the alternative terms of membership that would protect us from the effects of the treaties we have already signed.
It needs to be pointed out that banking union simply was not envisaged in the Lisbon treaty. We now find ourselves confronted with a new institution and a reform that simply was not regarded as necessary when the Lisbon treaty and its predecessors were signed. The treaty is not fit for purpose for a banking union.
The problem is that no arrangements that nibble at those problems will protect the UK’s interests—a wholesale change in our relationship is the only way to protect them. Sadly, the motion represents the Government yet again passing up a substantial opportunity to start laying the foundations of a different relationship and to start leveraging the renegotiation of our terms of membership. That is a matter of great significance.
Andrea Leadsom
I am grateful to my hon. Friend, but I have to challenge him, because I think that the Government are absolutely committed to renegotiating. Why does he think that they are not?
Mr Jenkin
Unfortunately, our party’s leadership does not intend to start substantive renegotiation of our relationship until after 2015, long after this particular opportunity will have passed us by. If we attempt to remediate this measure and its effects on our interests, we will not succeed. This is happening in case after case—the fiscal union treaty is another example.
Mrs Anne Main (St Albans) (Con)
Does my hon. Friend agree that we should use every opportunity and not waste any of them? We have an opportunity to make a difference. If we just keep noting everything and do not use our opportunity, that will be another chance gone and the electorate will not forgive us for it.
Mr Jenkin
I am afraid that my hon. Friend is right that failure to get the maximum leverage out of these opportunities means that they will be forgone for ever. We may well get to 2015 and find that all the major decisions to federate the eurozone will have already been taken and our opportunities to then renegotiate will look slim and incredible.
I will close by picking up on the contribution of my hon. Friend the Member for Stone (Mr Cash), who is the Chairman of the European Scrutiny Committee and whose comments add a Götterdämmerung-like quality to this debate. Hitherto, the architects of European integration have, like the gods in “The Ring”, attempted to construct their Valhalla on the basis of principles and the rule of law, yet they are now compromising those very principles, on which the legitimacy of this structure depends, and, in doing so, sowing the seeds of their own destruction.
If this was being done properly—I invite the House to reflect on this—it would be a treaty change and there would be an intergovernmental conference. There would be a huge amount of debate about what other changes needed to flow from an intergovernmental conference and we would end up with a whole Act of Parliament, which would have to pass through both Houses of Parliament in this great building. The issue, however, is being debated in a mere 90 minutes on a quiet Tuesday afternoon before the Minister is sent—haplessly, perhaps —to the Council of Ministers to either agree or disagree with these momentous changes.
Major changes are being made in a more casual manner as the European Union becomes more desperate to shore up its previous mistakes. “Macbeth” comes to mind: the worse a situation gets, the more rash and irrational the actors become in defence of the indefensible. I hope that right hon. and hon. Friends will remember this debate, because the move from legality to illegality is a very big step, yet that is what we are witnessing as the Government approach this particular decision. I hope yet that they will see sense and veto the proposal.
Jacob Rees-Mogg (North East Somerset) (Con)
I have a feeling that Christmas has come particularly early this year, because I had the opportunity to speak in a European debate just three hours ago, and to speak twice on Europe in one day is almost as joyful as 25 December.
The Government have a problem and I am sympathetic to them. The report of the European Scrutiny Committee—its Chairman, my hon. Friend the Member for Stone (Mr Cash), spoke brilliantly, as always, and has tabled a sensible amendment—shows that the Government’s problem is that, of the two decisions that they face, the one that they support requires unanimity and the one that they oppose will be decided by qualified majority voting. I have quite an easy solution for them— I think they are looking for a solution—namely that they should use the threat of not supporting what they support to get leverage on the decision that they do not support. As we have heard from the Minister, there is widespread agreement across the House on the things that the Government do not support and on concerns about the European Banking Authority, particularly on voting and caucusing in the voting, and the nature of the European Central Bank, as against other central banks, in relation to the European Banking Authority.
When it comes to caucusing, getting a particular voting arrangement in the European Banking Authority will be no good at all. It will be a temporary palliative, because unless a voting system is devised that gives the UK a permanent veto, which personally I would be all in favour of, but which seems unlikely, then as soon as other member states begin to join the euro—which they are under a treaty obligation to do, with the exception of the United Kingdom and Denmark, as I said earlier— the non-euro member states will be easily outvoted. Therefore, we need to look, with the veto we have got, at the whole system of financial regulation and how it affects the United Kingdom. I understand that total renegotiation of the treaties is not currently being considered. I appreciate that in a coalition with the Liberal Democrats—which includes my hon. Friend the Member for Cheltenham (Martin Horwood), who loves the European Union and everything that comes from it—it is difficult to get a renegotiation that would satisfy Conservatives.
Martin Horwood
Just to put the record straight for the benefit of Hansard, I do not love everything that comes out of the European Union. I simply regard it as another level of authority with which we must negotiate gently and carefully, rather than necessarily taking the rather Gaullist approach that the hon. Gentleman and his colleagues are taking today.
Jacob Rees-Mogg
I am enormously grateful to my hon. Friend, who gives me an extra minute every time.
This is an important and good opportunity for the Government to get back powers that should never have been given away. It was a great folly to give away financial regulation to the power of the European Union, because as my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) so wisely said, we have much more financial services in this country—I think she gave the figure of 36% for wholesale financial markets in the whole of the European Union that are in the UK. Therefore, we ought to regulate our own affairs and we ought not have delegated that to the European Union. We need to be careful about what is being proposed when it comes to the regulation of what are substantial international banks based in the United Kingdom in their business—which may be subsidiary business—with eurozone countries, because there is obviously a risk that they will find themselves under the auspices of a European regulator when they ought more appropriately to be under the auspices of a British regulator.
I think the Government’s position is quite strong, and I think the amendment is extremely sensible. It is interesting that we learn only through the Financial Times that the proposals that have come forth from the Commission are illegal. We do not learn it from the Government or the Commission; we learn it from an underhand leak, which comes via a newspaper to inform our debates, which is a pity. It would be nice if we could get such information directly to a sovereign Parliament, so that we knew what was or was not legal. Perhaps the Government will consider releasing the legal advice that will guide them—or perhaps ought to guide them—in their approach to this debate.
I would encourage the Government to accept the amendment tabled by my hon. Friend the Member for Stone. I listened very carefully to the Minister—I always do: he is a great Minister, who is much admired on this side of the House, and I imagine in other parts too. There was nothing he said which in essence contradicted my hon. Friend’s amendment, so I ended up thinking that what we were really debating was which way up an egg should be eaten—whether it should be the big side or the little side up. We are united as egg eaters in this context, and we think it would be “egg-cellent”—if I may carry on with this theme—to support my hon. Friend’s amendment, to which I was pleased to add my name, because it provides us with a solution in our negotiations in Europe and a clear way forward.
Mr Deputy Speaker (Mr Nigel Evans)
Order. I am calling the wind-up at 6.24 and we have two speakers left.
Mr Brooks Newmark (Braintree) (Con)
I am delighted to follow my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), who is perhaps one of the most articulate Members on the Government Benches. I am not going to argue the whys and wherefores of whether we should bring financial regulation back to this country. That is an important question, and I totally agree with my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) on it, but I am going to argue on the narrow question before us—namely, the substantive motion and the amendment.
As a non-eurozone member, we will not be participating in European banking unification. I agree, however, that we need to ensure that the measures taken by our European partners do not adversely affect British interests, particularly in the banking and financial services sector, given its importance to UK plc. The City of London is the pre-eminent financial services centre not only in Europe but in the world, and we want it to remain so. Remaining globally competitive is critical to the United Kingdom and to the eurozone, and it is important that the single supervisory mechanism for the eurozone should function effectively. As long as we remain outside the eurozone, the mechanism will be aimed primarily at eurozone banks and not at our own financial institutions. As many colleagues have pointed out, however, there could be unintended consequences at some future date that could have an impact on us.
The Minister has given us assurances today that the Government will seek to secure sufficient changes to the European Banking Authority voting arrangements to protect the interests of member states, such as the UK, that are not members of the eurozone and that do not choose to enter into the proposed co-operation arrangements. I am therefore happy to support the Government’s substantive motion.
My hon. Friend the Member for Stone (Mr Cash) has tabled an amendment to the motion. I congratulate him on his leadership of the European Scrutiny Committee and on his tenacity, perspicacity and overall determination to protect Britain’s interests. He has always been a strong defender of our interests and I congratulate him on that. In fact, I wholly endorse the opening line of his amendment, in which he welcomes
“the Government’s desire to seek safeguards for the UK”,
and the reasonable tone that he adopts in asking the Government to use their best endeavours. That is reasonable, and it is not didactic. I have a problem with the second part of my hon. Friend’s amendment, however, in which he calls on the Government to use their veto to
“ensure that the powers of the Governing Council of the European Central Bank are not unlawfully delegated to the Single Supervisory Mechanism without an amendment of the treaties”.
We have heard from the Minister’s mouth today that we will not proceed unless the arrangements are legally robust. I have had no insights into the matter, and I agree with my hon. Friend the Member for North East Somerset that it would be good to see the leaked document, but, unlike many others, I have not had the privilege of doing so. I fear, therefore, that the amendment is somewhat tautological, if not unnecessary, in that the Government would neither support an illegal arrangement nor table a motion that was not in order. I will therefore put my faith in the Minister’s assertion that there is nothing illegal about the proposed arrangements and that he would not waste Parliament’s time by proposing anything that was illegal. I will therefore support the Government’s motion and vote against the well meant but unnecessary amendment that my hon. Friend the Member for Stone has put before us today.
Mr Deputy Speaker (Mr Nigel Evans)
Order. I call Mr John Baron, and I ask him to sit down no later than 6.24 pm.
Mr John Baron (Basildon and Billericay) (Con)
Like many other Members, particularly on the Government Benches, I have a healthy respect for the Ministers sitting on the Front Bench this evening—the Financial Secretary to the Treasury, my right hon. Friend the Member for Tunbridge Wells (Greg Clark) and the Minister for Europe, my right hon. Friend the Member for Aylesbury (Mr Lidington)—but I believe that they are trying to defend the indefensible. I find it hard to understand how a Government who are prepared to use the veto, and who have used it in defence of City interests, can be prepared, by passing these regulations unamended, to enter negotiations without being able to assure the House that cast-iron guarantees are in place to ensure that qualified majority voting will not be allowed adversely to affect the City.
I have asked the Minister at the Dispatch Box where those concrete guarantees are. Unfortunately, I have not heard anything to convince me that they actually exist. The idea that the European Central Bank would not be allowed to overrule or override non-members of the eurozone is, I am afraid, not a strong enough guarantee. I do not see where that stands up, particularly given that the legal opinion that has been sought and confirmed brings that sort of red line very much into dispute. There is no guarantee there at all. I very much look forward to hearing what the Minister has to say about what other concrete guarantees exist in defence of the City. Going into negotiations or allowing these regulations to pass without a clear idea of what the guarantees are could, I suggest, turn out to be a fool’s errand.
We all know how the eurozone has got into this mess. The eurozone went for monetary union, courtesy of the single currency, but we all know that there cannot be monetary union without fiscal union, so now it is playing catch-up. Easy credit and easy money have led to Governments borrowing too much, and the eurozone is trying to sort out this mess.
I have to say to the Minister, if he is listening, that having just returned from Germany with the Foreign Affairs Committee and having asked about the possible solution, I know that fiscal union or fiscal compact is definitely on the table—despite the fact that most members of the fiscal compact that is coming into effect next year have already broken the parameters of the financial limits set. The universal answer, whether one spoke to politicians of the left or the right or to trade unions, businesses or lobby groups, was more integration and more political union in order to make the fiscal compact work. We are on a collision course with the proposals that are now coming out of the eurozone.
My suggestion is that that is fine: let the eurozone members get on with it; we wish them well in their endeavour. I doubt whether it will succeed, because the economics do not stand up and time does not allow any further exploration. Let them proceed, but my concern as they do proceed along that journey is what damage they will do to our interests. My deep concern is that, if we are not careful, we are going to walk into negotiations without having the ability to call upon cast-iron guarantees if they are needed, and that our interests will be adversely affected as a result.
We all accept that in this country we perhaps need to rebalance the economy somewhat and to get manufacturing up. We cannot, however, ignore the importance of the City to our economy. We have been prepared to use the veto in the past, and it makes no sense for the Government’s proposals to proceed without those cast-iron guarantees in place. There is little doubt that if we enter into negotiations without those safeguards in place, we will stand a real risk of allowing others adversely to affect the City’s interests and, in the end, our prosperity as well.
I look to hear from the Minister what those concrete guarantees are. If, as I believe, they are not forthcoming, I will have no hesitation, having put my name to the amendment of my hon. Friend the Member for Stone (Mr Cash), in supporting him in the Lobby—[Interruption.]
Mr Deputy Speaker (Mr Nigel Evans)
I am grateful to the Minister for agreeing to cut back his winding-up speech to just five minutes so that every Back Bencher who wanted to could participate in the debate.
The Minister for Europe (Mr David Lidington)
I think that what has united all my hon. Friends who have spoken tonight is their justified anxiety to safeguard a vital strategic interest of the United Kingdom, namely our financial services industry. Let us never forget that most of the jobs in financial services in the United Kingdom are outside London, and that when we talk of the City we are also talking about firms that employ thousands of people in Scotland, Wales, Northern Ireland and the northern and midland cities of England.
The City has thrived through a single market in European financial services. Roughly a third of its business is in Europe, and we should be proud of the fact that it is not just a strategic asset for the UK. The presence in London of a global financial services centre is an asset for Europe as a whole, and we should be prepared to shout loudly about that: about the millions of French workers whose savings are invested through London funds, about the energy companies throughout Europe whose exposure to dollar exchange rates is hedged by funds in London, and about the projects involving privatisation and public-private partnerships in eastern and central Europe that look to London for both expertise and capital. We are standing up for the interests of the British people and, indeed, those of citizens throughout Europe in defending the interests of the financial services sector.
For a single market, we need a common rule book, and we need the EBA to help with the enforcement of common rules. I felt that there was a lot of common ground between the views of my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) and the Government’s position. We do indeed believe that, in negotiating free trade arrangements with the rest of the world, the EU should ensure that services constitute one of the key dossiers, and that is what we are pressing for in every free trade agreement negotiation. I also agreed with the strictures expressed by my hon. Friend the Member for Northampton South (Mr Binley) about the financial transaction tax. We could not have made it clearer that we will not accept such a tax on a European level. If other countries are so foolish as to implement it, that is a matter for them.
We are faced with the reality that our friends in the eurozone are committed to a single currency. We respect their decision and want that currency union to be stable, which must involve a banking union. The package of measures that we have before us groups together some elements on a single market treaty base which will be determined by qualified majority, along with, critically, a key measure which, under article 127(6) of the Lisbon treaty, requires the establishment of a single supervisory mechanism in the European Central Bank that requires unanimity. We have always seen those different elements as a package. I must tell my hon. Friend the Member for Basildon and Billericay (Mr Baron) that we could not have been clearer about the fact that we will not agree to a measure to establish the single supervisory mechanism under article 127 unless the package overall protects our interests.
In his opening speech, my right hon. Friend the Financial Secretary said that we would insist that the proposed changes in the EBA were not acceptable, and would require full protection for the UK and the other non-eurozone members’ positions within the EBA. The documents that we have here are draft texts which do not represent the final position. If they were to represent the final position, we would not agree to them in their current form.
I agree with my hon. Friend the Member for Braintree (Mr Newmark) that the amendment, although well intentioned, misses the point. We are not going to agree to something that is unlawful, and neither is Germany. I ask the House to have confidence in the Government’s determination to defend and advance the interests of the United Kingdom, and in particular to safeguard our financial services sector. I also ask the House to contrast that with the view of Labour’s Front-Bench team, the logic of which was not simply to be in the room, not simply to take part in negotiations, but to follow it through to join—
Business without Debate
Madam Deputy Speaker (Dawn Primarolo)
For the convenience of the House we will take motions 8 to 12 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Constitutional Law
That the draft Forestry Commissioners (Climate Change Functions) (Scotland) Order 2012, (Consequential Modifications) Order 2012, which was laid before this House on 10 July, be approved.
Capital Gains Tax
That the draft Double Taxation Relief and International Tax Enforcement (Bahrain) Order 2012, which was laid before this House on 16 July, be approved.
That the draft Double Taxation Relief and International Tax Enforcement (Barbados) Order 2012, which was laid before this House on 16 July, be approved.
That the draft Double Taxation Relief and International Tax Enforcement (Singapore) Order 2012, which was laid before this House on 16 July, be approved.
That the draft Double Taxation Relief and International Tax Enforcement (Liechtenstein) Order 2012, which was laid before this House on 16 July, be approved.—(Anne Milton.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Taxes
That the draft Double Taxation Relief and International Tax Enforcement (Switzerland) Order 2012, which was laid before this House on 16 July, be approved.—(Anne Milton.)
Question agreed to.
Madam Deputy Speaker (Dawn Primarolo)
With the leave of the House we will take motions 14 and 15 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Delegated Legislation
That the Police and Crime Panels (Precepts and Chief Constable Appointments) Regulations 2012 (S.I., 2012, No. 2271), be referred to a Delegated Legislation Committee.
That the School Premises (England) Regulations 2012 (S.I., 2012, No. 1943), be referred to a Delegated Legislation Committee.— (Anne Milton.)
Question agreed to.
Polycystic Kidneys
(12 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mrs Madeleine Moon (Bridgend) (Lab)
I would like to begin by declaring an interest. I am a joint chair of the all-party parliamentary kidney group. Earlier this year, the group heard a moving presentation from representatives of the Polycystic Kidney Disease charity, led by Tess Harris, its chief executive. I would also like to mention my constituent Judith French, who suffers from polycystic kidney disease. It is the testimony I have heard from those two ladies that brings me to the Chamber today.
We have known about polycystic kidney disease since the 1500s, but in spite of such a long history, significant breakthroughs in research have been achieved only in the past 20 years. King Bathory is regarded as one of Poland’s most successful monarchs. During his short 10-year reign, he reformed the army and judicial system, and notably saw off Ivan the Terrible in 1581. Sadly, he died early because he suffered from polycystic kidney disease. His diagnosis was confirmed only 400 years after his death, when academics analysed his case.
Since King Bathory’s reign, our ability to treat and cure a wide range of complex conditions has developed beyond what many would have thought was possible. Sadly, that progress has not been felt by those diagnosed with polycystic kidney disease, known as PKD. That is all the more surprising because it is not a rare condition. The cause is a mutation in one gene that leads it to function abnormally. The disease is characterised by the progressive enlargement of cysts in both kidneys. There are two types of PKD: autosomal dominant PKD, which affects 85% of patients, and autosomal recessive PKD. The second type is rare, affecting 1 in 20,000 live births. Tragically, newborn babies with that condition have a high mortality rate in the first month of life. Those who survive are likely to have a much reduced life expectancy. I shall focus my remarks on ADPKD.
Tracey Crouch (Chatham and Aylesford) (Con)
I congratulate the hon. Lady on securing this Adjournment debate. Does she agree that although the condition might not be rare, it is relatively unknown, and as a consequence of the lack of awareness, unfortunately mistakes can be made, for example in the assessment of the ability of people with PKD to work? I have had recent experience of such a case involving a constituent of mine.
Mrs Moon
The hon. Lady is absolutely correct. This is a little-known condition, and the horrific nature and impediments caused by the condition as it progresses are little known and little appreciated. Often, people can look quite normal but be suffering tremendously. I commend her work in trying to raise awareness.
For individuals with ADPKD, it is a truly disabling, painful and limiting condition. Kidneys become enlarged, leaving patients disfigured and appearing prematurely pregnant. The kidneys continue to function normally, but eating, sleeping and even breathing can be difficult because of the size of the kidney and the pain experienced. The liver can be affected, too, and many patients are often diagnosed with PKD and liver disease. Besides the effects on the kidneys and the liver, there is a range of other complications: heart disease, bowel problems, hernias, infections and a high risk of intracranial aneurysms.
The kidneys can weigh up to 17 lb—upwards of 10% of a person’s body weight—and in one case a patient was recorded as having kidneys weighing 48 lb. An affected liver can grow more quickly than the kidneys, effectively squashing them. PKD affects people of working age and is characterised by premature mortality. Tragically, end-stage kidney failure is common at an average age of 55—within working age, as the hon. Member for Chatham and Aylesford (Tracey Crouch) mentioned.
PKD affects an estimated 12.5 million people around the world and is the fourth most common cause of kidney failure. It is more common than sickle-cell anaemia, cystic fibrosis, autonomic dystrophy and Down’s syndrome combined. We simply do not know how many people are affected by PKD in the UK. On the one hand is the answer to my parliamentary question in July. The Department of Health said that a total of 1,100 hospital admissions in 2010-11 were identified as resulting from PKD, although I was informed that that might include repeat visits by the same individuals. On the other hand, PKD Charity’s own figures suggest that the number is far higher. On the basis of the number of people requiring a kidney transplant and dialysis as a result of PKD, it estimates that as many as 60,000 to 70,000 people could have the condition in the UK.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Lady on bringing this matter to the Floor of the House. My nephew, Peter Shannon, was born with posterior urethral valves, which meant a kidney transplant for him. Had he not had one, he would be dead. Does she agree that we need a bigger push to get people to sign on to the organ transplant donor list in the interest of those with kidney diseases, and those with PKD specifically, who are currently being kept alive by dialysis treatment? Transplants are important. If Members have not signed up, they should do so and encourage others in their constituency to do the same.
Mrs Moon
I completely endorse the hon. Gentleman’s comments. It is imperative that kidneys be available for these transplant patients. It is the most generous commitment that anyone can make.
I am particularly grateful to Sandra Buckland and her husband for allowing me to quote directly from her remarks at the kidney group meeting. She bravely shared with us her experience of PKD, and I would like to share them with the House. Sandra’s powerful remarks underscore many of the points I want to make about what needs to be put in place to tackle this condition. Sandra was particularly brave in doing so, because she had also recently lost her sister, who died from PKD. She said:
“I suffer from polycystic kidney and liver disease. I am married with two sons, both with polycystic kidney disease and the youngest with polycystic kidney and liver disease. My elder son has an eight-year-old daughter with PKD and my younger son, a four-year-old son with both polycystic kidney and liver disease. My father died at age 39 with heart failure due to side effects of PKD.”
She left the group with the following question:
“Why, when I lost my own father at 17 to this dreadful disease, are lives still being lost and progress appears to be at a standstill? If more successful research could be performed, halting the genes that allow PKD to continue, it would remove the stress, heartache and trauma for many families.”
Sandra Buckland clearly demonstrates the cost of PKD to an individual and her family. It is a long-term, devastating diagnosis. At a national level the costs to the NHS are unknown, although an estimate is possible. The PKD charity believes the annual cost is £330 million. As I said in my opening remarks, PKD is currently incurable and can be managed only with dialysis and transplants, combined with monitoring, all of which are expensive. It was only in 1994 and 1996 that the two ADPKD genes were discovered. The ARPKD gene was characterised only in 2002.
Funding for research is limited. In the US, $360 million has been invested in research over the past 15 years —$45 million in 2009 alone. The House will be shocked to learn that the total investment in research in the UK and the European Union is zero. The PKD charity recently funded a small biobank of PKD kidney cells at the UCL-Royal Free, and together with the US PKD foundation, it has funded one small laboratory study in Sheffield. This funding is all reliant on donations. It is telling that in the past 12 years there has been no improvement in the life expectancy or average age of renal replacement therapy of 55 years for someone diagnosed with ADPKD.
It cannot be acceptable for PKD to remain a neglected condition in terms of research and the development of treatments. Transplants and dialysis are costly. Developing treatments would not only improve the quality of life for patients, but reduce the cost to the NHS. The PKD charity has recently begun work with the UK renal registry to develop an analysis of PKD patients on renal replacement therapy. Would the Minister consider supporting the extension of this work to include pre-dialysis patients by asking the Renal Association to develop quality standards relating to ADPKD? Would she also support changes to governance requirements that would enable the UK renal registry to collect the data, and provide the necessary funding of £500,000 for the analysis and publication of these data?
I appreciate that £500,000 may appear a large sum, but compared with the long-term savings, it is a small investment for a huge return. Funding the registry would overcome a major barrier to understanding ADPKD, support care planning and counselling, and provide cohorts for clinical studies. The information is not available at present, so there is no foundation in place on which to build a meaningful research programme.
New drug treatments are being developed, but getting access to them is not without its challenges. One PKD patient with polycystic liver disease contacted me to describe how she self-funded her involvement in a drugs trial in Italy over three years, travelling back and forth to Italy monthly for three years at her own cost. During the trial, her symptoms improved considerably. The trial has finished and her condition is rapidly deteriorating. Her local PCT refused to fund ongoing treatment. Her long-term survival is being determined by finances.
Last December the Prime Minister announced a package of support for the life science sector, which included an early access scheme for seriously ill patients with limited treatment options to receive promising new drugs in clinical trials. This accurately describes PKD patients. Will the Minister take steps to ensure, as a matter of priority, that PKD patients are included in access to drugs in clinical trials?
Last weekend a drugs trial in the Netherlands reported positive results in altering the progression of ADPKD. The drug will now be presented to the European Medicines Agency for licensing—
Mrs Moon
The drug is not without its limitations, but it does represent progress. I ask the Minister to look at ways of supporting the trails in the UK and helping ADPKD patients to participate.
There is also a lack of clear guidance about the management of ADPKD and ARPKD patients. Guidelines should include regular MRI scans to monitor kidney volume, which is an early predictor of later kidney loss and could guide future treatment decisions. Guidelines should also address access to genetic testing, which is particularly helpful in assessing young living related donors and for atypical or early onset cases. Only two centres will conduct those tests, and in the vast majority of cases PCTs will not fund them. Will the Minister give an undertaking to support with funding, as necessary, the development of guidelines and address the gaps?
There is a need to develop access to specialist services, such as neurology and genetic counselling. One solution would be to establish specialised multi-disciplinary teams or clinics that could help patients be properly assessed, counselled and managed. Those teams or clinics would require a dedicated nephrologist with an interest in ADPKD, support from a specialist nurse and input from a clinical geneticist. Will the Minister work with the NHS to develop such a service?
I have raised many issues in a short space of time. I ask the Minister to meet me and representatives of the PKD Charity at a later date to discuss the problems they face. We cannot wait another 500 years for significant progress in this field.
The Parliamentary Under-Secretary of State for Health (Anna Soubry)
I congratulate the hon. Member for Bridgend (Mrs Moon) on securing the debate; I know that this is an issue she campaigns on regularly. I pay tribute not only to her work, but to the excellent work of the Polycystic Kidney Disease Charity right across the UK in raising awareness of the condition and supporting those with it. I am of course more than willing to meet her and the charity and look forward to doing so. I think it will be a very worthwhile meeting.
I will do all I can to answer the hon. Lady’s many questions and deal with her requests, and not only in my remarks this evening, because, as she knows, I will not be able to respond to everything tonight. It might well be that a letter can deal with her questions, so I will certainly take away all she has said. I hope to give her some assurance about the work that is being done. As I know she understands, I can respond only as the Minister responsible in England, because health is a devolved matter. I am confident that she will raise these matters with the Welsh Assembly.
The Welsh Assembly Government—we have made inquiries—published in April 2007 a national service framework and policy statement, “Designed to Tackle Renal Disease in Wales”. Improving the quality of care for people with renal disease, or at least at risk from it, is the cornerstone of that policy statement and of the national service framework—the NSF.
In 2008, the Welsh Assembly Government issued a further three-year strategic framework, for 2008 to 2011, setting out the key interventions required of the NHS in Wales in implementing NSF standards. In England, we have successfully introduced a number of programmes to change outcomes for people with kidney disease. For example, we have introduced into the quality outcomes frameworks—known as QOF—the identification and management of chronic kidney disease and the inclusion of chronic kidney disease in the NHS health checks programme. Having raised awareness of chronic kidney disease in primary care, we now have 2.3 million people on primary care registers in England, but we want to do still more.
The NHS health checks programme is being rolled out across England this year and next. The programme invites everyone between the ages of 45 and 74 to a vascular health check. It is estimated that up to 20,000 cases of diabetes and kidney disease will be detected earlier every year. Such early identification is key to the better management of people with these conditions and ensuring they receive optimum treatment and improved outcomes.
On the particular issues raised about polycystic kidney disease, unfortunately, as the hon. Lady mentioned, PKD is not preventable; it is a genetic disorder. I pay tribute to how she has relied on the various experiences of her constituents and others connected with her work to explain with great compassion and care how the disease affects so many people and to set out its awful nature.
I am pleased to hear that international studies are currently under way, three of which are being hosted by the National Institute for Health Research, looking at the viability of new drug therapy and disease management to give improved quality of life for those with PKD. I very much heard the hon. Lady’s comments about clinical drug trials and the gathering of data. As she said, the £50,000 cost seems large, but it may be argued that in the overall sum of things it seems like a drop in the ocean, although of course I cannot make any promises. I am sure that somebody somewhere will take that on board and we will explore the matter more when we meet.
The hon. Lady asked for increased access to radiological and ultrasound scanning, and rightly so, and I would welcome the development of guidelines about best practice in that area. I know that a quality standard for chronic kidney disease was published last year by the National Institute for Health and Clinical Excellence. That sets out what high-quality, cost-effective care looks like so that commissioners and providers can assess standards of care and target improvement efforts where they are most needed.
The NICE quality standard clearly states that patients with a genetic family history of PKD over 20 years of age should be referred to secondary specialist care. Chronic kidney disease, or CKD, is associated with reduced quality of life. Quality of life varies depending on the disease stage, medical management and the presence of co-morbidities and complications. It is crucial, therefore, that those diagnosed with PKD have access to specialist care to help them deal with this long-term condition and to support them and their families emotionally. As we have heard, it is a genetic disorder.
Tracey Crouch
The Minister will have heard from my intervention that a constituent of mine suffers from polycystic kidneys. He was recently assessed under the Work programme as fit for work despite suffering from that horrific condition. The decision has been reversed, as there is now proper understanding of the condition and its impact on his ability to work. However, will the Minister work with the Department for Work and Pensions in issuing guidance so that unnecessary pressure is not put on people suffering from this debilitating disease during assessments?
Anna Soubry
I thank my hon. Friend for that helpful intervention; as ever, she makes a good case. I will take the issue up and explore it further. If she will be good enough to put her points in a letter, that will help me in my consultations and discussions with the Department for Work and Pensions.
We estimate that up to one in 1,000 of the population has PKD globally. Based on that estimate, more than 60,000 people in the UK are at risk of developing PKD. However, we do not currently collate centrally the numbers of people with PKD in England, a point raised by the hon. Member for Bridgend. I will ask the national clinical director for kidney disease to see what further action can be taken accurately to determine national incidence in England.
If the hon. Lady is good enough to make the same representations to the Welsh Assembly and indeed the Scottish Assembly, we will have a far better picture of the situation throughout the United Kingdom. [Interruption.] I should also include Northern Ireland, of course, as the hon. Member for Strangford (Jim Shannon) is urging me to do. Looking at the care received by people with polycystic kidney disease, most patients are seen in general renal clinics, and they may receive little or no genetic counselling or specific disease management advice, or a thorough needs assessment. I am aware that in the early stages there may be no symptoms, and sometimes the cysts may not be noticed until adulthood or through family screening. However, some children present early with symptoms that can be confused with another form of PKD called, as the hon. Lady said, autosomal recessive PKD. The common symptoms will vary by individual and may include back or abdominal pain, recurrent urinary infections or blood in the urine, kidney stones, and kidney failure.
People with polycystic kidney disease can require special consideration for dialysis and transplantation due to the nature of their disease and size of the cysts. I welcome all the comments made by the hon. Member for Strangford about transplants and donors and the urgent need to make sure that more people donate their kidneys—indeed, all their organs.
Glyn Davies (Montgomeryshire) (Con)
Does the Minister agree that we have a duty as parliamentarians to do everything in our power to increase the level of organ donation? Does she also agree that we should implement every recommendation of the organ donation taskforce? It is working very well, but we need to move quickly to maximise the number of organs available.
Anna Soubry
I absolutely agree with everything that my hon. Friend says. I was horrified to discover in a recent meeting that unfortunately in England we are not making the progress on organ donation that we should. It is a serious problem. We know that so many lives can be saved or seriously improved if people are good enough to indicate that they are willing, on their death, for their organs to be donated.
Let me go further and say this: of course I understand why, when somebody dies, the family struggle in their bereavement to give permission to allow the loved one’s organs to be donated. However, I urge people to do so, even in those very difficult situations. It is a most wonderful way to create a real legacy by enabling somebody literally to live on through someone else. If more people could, in those dark moments, see that, it would make a profound difference to improving, and indeed prolonging, lives.
Jim Shannon
I thank the Minister for her pertinent words about transplants. I understand that when people renew their driving licence there is a box they can tick if they want to be on a donor register for the rest of their life. It is a painless exercise that commits them for ever and provides the authority for all their bodily items to be transplanted. Given that it is so easy to tick that box, perhaps more of those who are renewing their licence should do so to say, “Yes, I want to be a donor.”
Anna Soubry
The ability to do that is a golden opportunity for people, and I wish they would take it. One of the problems, though, is that someone applying for a licence will think, “Well, I’m applying for a driving licence and I can’t deal with all that now; I’ll come back to it another day”, and unfortunately they do not return to it having got their driving licence.
I would very much welcome a serious look at how we can solve this problem by campaigning harder to ask people to tick the box, make their views known, and speak to their families. Each and every one of us should talk among our families about the things that we want on our death. I know that these are difficult subjects, but this is, as we all know, a wonderful legacy that people can leave which makes a huge difference to the quality and length of the lives that people could lead.
As provision could be improved with the introduction of evidence-based best practice guidance both at diagnosis and for the management of people with polycystic kidney disease, I will ask my officials to raise this with the appropriate agencies to see what further actions can be taken.
I pay tribute to the hon. Lady and all those who have contributed to this debate, and thank them for drawing attention to this specific and important disease area. I also congratulate those at PKD Charity on all their hard work. I look forward to meeting them and the hon. Lady to make sure that we raise the profile of polycystic kidney disease.
Question put and agreed to.
Ministerial Correction
Growth and Infrastructure Bill
Hilary Benn
If my hon. Friend bears with me a moment, I shall come presently to precisely that point. The first question that the House must ask the Government is that if they are to propose such a fundamental change to the way in which planning decisions have been taken since 1947—that is about 60 years of local decision making—the Secretary of State must have had really strong evidence on why such a change is needed, so where is the evidence? I will make this very easy for him, and I will happily give way. Can he name one example of a so-called failing planning authority? Will he name an authority now?
Mr Pickles
As the right hon. Gentleman knows and, more particularly, as other Opposition Members know, I have been more than helpful to those Members who have had trouble with planning authorities and I have done my best to move things along, but I am very happy to name the worst, which is Hackney.
[Official Report, 5 November 2012, Vol. 552, c. 608-09.]
Letter of correction from Eric Pickles:
An error has been identified in the answer given to the right hon. Member for Leeds Central (Hilary Benn) on 5 November 2012.
The correct answer should have been:
Mr Pickles
As the right hon. Gentleman knows and, more particularly, as other Opposition Members know, I have been more than helpful to those Members who have had trouble with planning authorities and I have done my best to move things along, but I am very happy to name the worst, which is Haringey.
Proposed closure of Wellingborough Prison
Westminster Hall
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
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Ford Motor Manufacturing
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Caroline Nokes (Romsey and Southampton North) (Con)
It is, as ever, a pleasure to serve under your chairmanship, Sir Roger. I thank Mr Speaker for his assistance in securing this important and timely debate, as well as the many right hon. and hon. Members present today from the immediate Southampton area and further afield. I am conscious that several other colleagues would also have been present if not for ill health and delegations to other parts of the world.
Two weeks ago, Ford announced a major restructuring of its operations in Europe and confirmed that it would be closing its assembly plant at Swaythling, the factory where the iconic Transit, the world’s most famous van, is assembled. I am sure that the Transit needs no introduction; the name is now synonymous with light industrial vehicles in the same way that the name Hoover is synonymous with vacuum cleaners.
The first Transit, sold in 1965, was manufactured at Langley in Berkshire, before the plant moved to Southampton 40 years ago. The Southampton plant, much bigger than Langley, was able to handle the considerable growth in demand that the Transit enjoyed among tradesmen—and, if Jeremy Clarkson is to be believed, armed robbers. Over the years, the Transit has been made at plants in Belgium and the Netherlands, which, along with the Swaythling plant, have either closed or will now close. The Transit continues to be manufactured in Turkey and China.
I am tempted to focus on the bigger macro-economic issues that have brought about this situation, including globalisation and large corporations’ ability to shift production to countries where the cost base is lower. I could also concentrate on the granting of a European Investment Bank loan in June to the Ford factory at Kocaeli, Turkey, which will now benefit directly from the closure of Swaythling. That £80 million loan, which EIB documents state was for the modernisation of the factory, is guaranteed by the British taxpayer.
I remind hon. Members that the decision does not merely have political implications; nor does it solely impact on the profit and loss forecast. It is not just an accounting decision or an issue simply of where a vehicle is assembled. As community leaders have emphasised, it is a human issue, especially for the approximately 2,000 people in the Southampton area who depend on Ford in one way or another for their livelihoods.
Mark Field (Cities of London and Westminster) (Con)
Does my hon. Friend recognise that it also affects the London economy? The hon. Member for Dagenham and Rainham (Jon Cruddas) will undoubtedly want to speak later. The stamping and tooling operations plant at Dagenham, where Ford began its UK operations in the 1920s, will close next July. Does my hon. Friend agree that we need to work across parties, support the Mayor of London in his plans and, in particular, consolidate all the Ford activities at Dagenham south of the London-Southend railway line to ensure proper regeneration north of that area? I hope that Ford will play an active role in fulfilling its community obligations in the months and years ahead.
Caroline Nokes
My hon. Friend makes an excellent point. I have consistently called for a cross-party, as well as a cross-country, effort. I am conscious of the efforts that the Mayor of London is already making.
The news is devastating to those employed by Ford, especially contractors and those active in the supply chain, who cannot benefit from the redundancy payments available to direct employees. I am thinking particularly of the residents of Mansbridge, in the shadow of the Ford plant. As well as losing a significant economic driver and employer, they now face uncertainty about what will happen to the plant when Ford ceases production. Wherever this debate leads, we must bring ourselves back to the heart of the matter: how can we in the House give practical support to those who have just lost their jobs?
We must be forward-looking and find solutions to the immediate problems faced by the community. Although the decision has been made and will not be reversed, Ford none the less has questions to answer. I am sure that Opposition Members will also pick up on that theme. The fact that Ford is developing a plant in Turkey that will benefit from UK redundancies with a loan guaranteed by the UK taxpayer has caused concern and anger.
It is imperative that Ministers seek to establish from Ford when the decision was made to close Swaythling. Was it before the loan was signed off on 27 June this year? If so, did anyone in Government know of the decision to move production to Turkey before the announcement the week before last? If it is shown that Ford decided to close Swaythling before accepting the loan, serious questions must be asked about the company’s conduct. Indeed, if Ford accepted the loan knowing that it would be used to consign Swaythling to history, then I, like many in my local community, expect Ford either to repay the loan or, better still, make a corresponding payment to the Solent local enterprise partnership that could be used to regenerate Southampton’s economy. Ford had a moral duty to declare its hand before asking UK taxpayers to fund their own redundancies. I seek the Minister’s assistance in helping Ford to understand that and account for its actions.
As I argued last week, the issue is of national significance. Although the net impact of the closure is the loss of 500 direct jobs at the factory and further jobs in the supply chain, Southampton is a key economic driver in the south and south-east and has an important part to play in the national economy. What hits Mansbridge and Swaythling, like a stone thrown into a pond, will send waves across Southampton, the region and the whole country.
This debate should therefore touch on three key issues. First, why and when was Ford’s decision reached? Secondly, what impact will it have? Thirdly and most importantly, what can be done to minimise negative effects on the city and the wider region?
On the first question, the people of Southampton have a right to know whether there was anything the Government could have done to prevent the decision. I look to the Minister for assistance, particularly on the question of the EIB loan, which needs explanation and justification. However, I suspect that the answers can only come from Detroit, not from Ministers.
To some extent, however, it is a moot point. Whether the money signed off in June was granted before or after Ford decided to close Swaythling, the money loaned to assist the Turkish plant could only have disadvantaged Southampton and would never have benefited it. By guaranteeing the loan, the UK taxpayer has helped Turkey to import British jobs at the undoubted expense of the UK taxpayer. It is therefore up to Ford to show some moral responsibility toward those who have just subsidised their own redundancy. The UK taxpayer should not be supporting the dividends of Ford’s shareholders. I could not help but notice that in the hours following Ford’s announcement, its share price jumped from £10.36, itself a considerable improvement on the immediate past, to £11.16. The markets may have reacted well to job losses in Hampshire, but Ford now has a duty to those on whose P45s its future profitability has been built.
We must be assured that another loan granted to Ford—from the regional growth fund, and intended for research and development of low-carbon technologies—did not prejudice the operation in Swaythling or represent Ford’s reneging on any previous commitments to Southampton. It is in Ford’s best interests to demonstrate good faith in both those matters.
Of course Ford’s financial performance must be considered. It is in no one’s interest for a company to risk insolvency that, even after the redundancies in Southampton and Dagenham, employs nearly 14,000 people in the UK. Undoubtedly, there has been a huge fall in demand for the Transit. Sales are down 20% since 2007, and so far this year, Ford Europe has lost $468 million on the back of a 26% decline in revenue. Sales are down 17% from last year.
Ford also states that the Turkish factory offers labour costs that are one third of those in Southampton, and the excess capacity there means that Southampton’s production can easily be absorbed in Turkey. On the face of it, even taking into account the costs of redundancies and site amelioration and disposal, the closure of the Southampton factory may seem a rational, commercially sound decision; but if adopted, that position must be balanced against the fact that Ford globally made an enormous $2.2 billion profit last year, $200 million more than the previous year. Although Ford wishes to act to preserve its commercial viability and profitability, and some of that profit will undoubtedly have been reinvested in plant, research and development and product development, I struggle to see why a subsidiary of a company making $2.2 billion needs cheap loans from UK taxpayers to export UK jobs to a country that is still outside the EU.
Ford has a moral and social responsibility to both the city it is leaving behind, which it once called the home of the Transit, and the supply chain, which will now be broken, to ensure that the economic hole it is creating is filled with sustainable employment and economic activity. Ford should not look to the Government or the taxpayer to subsidise its moral and social responsibilities. It should step up to the plate and work with Government, local business and other agencies to ensure that its exit does not harm the local and regional economy, but benefits it by fuelling economic growth and sustainable, high-skilled, quality jobs, thereby ensuring that Turkey’s gain in the long term might also be Southampton’s gain.
Secondly, on the impact of the decision, Southampton has some of the south-east’s most deprived areas in terms of employment, health, housing and education. It is ranked 81st out of 326 local authorities for deprivation. It has some of the region’s highest levels of young people not in education, employment or training, levels that are comparable to parts of the north-east—a problem that this decision will make worse, given that Ford is my constituency’s single biggest employer. That is why community groups are so concerned and why I am so keen that Ford face up to its responsibilities to the community in which it has co-existed for so long. Rather as Ghandi wished the British to retreat from India as friends, the legacy of Ford’s time in Southampton could be both ongoing and positive for the city and Ford’s reputation.
Thirdly, and for me, most importantly, we must look ahead. This debate must highlight the need for the business community to expand and create new jobs. I have emphasised the need for the Solent region to be successful in its bid for city deal funding, but there are other ways in which the Government can provide support. Hampshire already has a local enterprise zone at HMS Daedalus, but I cannot think of a better location for a second one than at Swaythling, adjacent to the M27 motorway, where significant junction improvements are scheduled to make access to the major road network easier. Additionally, the Government’s Growing Places fund has already provided money to the LEP, but in this situation further specifically targeted support is needed.
I seek Government help in encouraging Ford to augment existing help, particularly for those in the supply chain who will not benefit from generous redundancy payments. Ford must not merely aim to meet its legal minimum requirements; it has a wider responsibility. I was heartened to learn that Ford has a trust fund which, with some modification of its limits, could be used for this purpose. Although the fund makes relatively small grants aimed at education, the trust also aims to
“develop a skilled workforce committed to improving the business whilst maintaining employment opportunities now and for the future “.
Therefore, in line with its own stated social responsibility aims, I call upon Ford to outline how it will fund and work with the local business community, the city and county councils, neighbouring local authorities, and national Government to ensure that the legacy of Ford’s time in Southampton is a highly skilled work force filling high-skilled jobs. The Ford trust states:
“Being a good corporate citizen is an essential part of how we do business. Both globally and locally, we have an ongoing commitment to helping and supporting the communities we operate in “.
I hope that this commitment to communities in which Ford operates is also extended to the communities in which it used to operate.
Ford can do a number of things immediately. It can create a rescue fund to which suppliers can apply for funding to help them develop new markets, and announce how it intends to dispose of a critical 52-acre employment site on the edge of the city. Perhaps Ford will even consider donating an ameliorated site to the city council for the establishment of a business park and local enterprise zone. Much of this could be funded by the reallocation of money received from the European Investment Bank to modernise the factory that will be building the Transit vans once built in Southampton.
This House is where the country looks to in times of trouble. It is where, in times past, some of the greatest words of encouragement have been uttered and where worried people have historically looked for answers. At this sad and worrying time for the people of Southampton, the country will once again be looking to this House to debate their concerns and fears, and for new optimism. I hope that Ford will join with other agencies and heed the calls in this debate for it to leave a legacy that will endure and be a testament to excellent corporate and social responsibility, not one that reflects the unacceptable face of global capitalism.
It is important—I look forward to the Minister’s response on this point particularly—that the local enterprise partnership, BIS Local and other local agencies work together to ensure that retraining opportunities are maximised. I know the Minister is currently looking at that with the local growth White Paper, which sets out the Government’s aspiration for growth to be driven by local communities and businesses. This will, I hope, focus on retraining, which Ford should be a partner in and providing funds for.
Finally, I ask the Minister urgently to consider creating a Southampton local enterprise zone, which would be an engine of growth, job creation and retraining in Southampton. As Ford’s decision to close its factory illustrates, that is now more urgently needed than ever.
Sir Roger Gale (in the Chair)
Order. This is a matter of importance to Members of Parliament in the Southampton area and nationally. It is therefore important that the Opposition and Government Front-Bench spokesmen have a significant amount of time to respond, where ordinarily we might curtail those responses in the interests of Back Benchers. For that reason, I shall exercise my powers to impose a six-minute time limit on speeches, which I hope will allow hon. Members to contribute while at the same time giving the Front-Bench spokesmen an equally adequate time to respond. We have a piece of high technology that will give hon. Members one minute’s warning.
Mr John Denham (Southampton, Itchen) (Lab)
I will work within the time you have allocated, Sir Roger. I congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing the debate.
The Ford Motor Company has behaved shabbily. I have worked with the company over many years, sometimes with good news and sometimes, more recently, with bad news, but the relationship has always been one of openness, transparency and willingness to engage. None of those characteristics have been present in this decision.
I should read into the record a letter I received from John Fleming, then European head of Ford, in February 2009:
“Dear John,
Thank you for making the time for our discussion earlier this week”.
Having set out some of the economic challenges, he continued:
“In November last year I offered my assurances to yourself, Lord Mandelson and to your constituency colleagues in Southampton would receive the necessary investment to manufacture the Chassis Cab version of the next generation Transit. After extensive studies, which were shared with our union colleagues, this was the only investment option that met both the cost and profitability requirements demanded of the business.
I remain committed to the future of Southampton and, as I have stated in my recent letter to all Ford of Britain employees, I can re-confirm that it is our plan to build the next generation Transit Chassis Cab there. The sourcing and Chassis Cabs to Southampton gives the plant a meaningful and profitable manufacturing future and I trust you will continue to share my view that this is a positive development for the plant.”
That is the last official communication that I ever had from Ford about the future of Southampton; at no stage since has there been any indication of doubts about that strategy. It is true that its implementation was delayed because of the investment required to move to the chassis cabs, but the latest that that was to happen was next summer—indeed, the unions at Ford had been discussing with the management how the summer closedown would be handled to enable that shift to take place—but then the decision was announced.
Last spring, with my hon. Friends the Members for Wrexham (Ian Lucas) and for Dagenham and Rainham (Jon Cruddas), I was at a dinner of what could be called Ford’s Labour MPs, where the discussion was not about closure, but about the possibility of winning extra orders. The irony of ironies is that, at that dinner, Ford asked us to lobby the European Union about a trade deal with other countries that was going to be harmful to manufacturing in Europe. Given the outcome of Ford’s decision, that seems extraordinary.
Reputations are hard won and easily lost. I believe that it will be a long time before any Government of any colour in this country will sit down with Ford without wondering whether the people on the other side of the table are telling the truth. It saddens me to say that, but that is where we are today. A parliamentary reply I received on Friday revealed 12 meetings since the last election between Ford and Ministers in the current Government. We cannot fault Ministers for their willingness to meet with the Ford Motor Company over that time. I believe Ministers when they tell us that Ford did not let them in on the plans or share them, which is bad conduct by the company.
I have two or three things to say quickly, because I do not have much time. It is extraordinary that a regional growth fund grant was made to Ford without the Government being aware of the wider Ford strategy. I simply say that that is a weakness of the regional growth fund compared with the old regional development agency structures, which were much more likely to ensure that the bits of government dealing with major companies were aware of the whole of the company strategy. By dividing the regional growth fund into separate grants, there is no sense of engagement with the company.
Similar issues apply to the European Investment Bank. I am grateful to the office of Peter Skinner, MEP, for this information. Yesterday the EIB was claiming that the loan was fine because Turkey is “upstream” of the UK and is an assembly site, not a component manufacturer. Well, Southampton is an assembly site and not a component manufacturer. Those involved in the EIB decision have questions to answer. The Chancellor is a governor of the EIB; Britain was represented by an official, Peter Curwen; and there would also have been an opinion from the European Commission about the loan. We need to know whether the Commission, the EIB and the UK representatives were aware of the situation in Southampton and the likely implication of the loan for the future of that site.
The truth is that it is impossible for Governments to dictate to transnational companies what they do. They can influence to some extent what such companies do, but only if every sinew is strained to ensure that they have the maximum influence on the company.
I had hoped to speak for longer, but let me now turn to the existing work force. As the hon. Member for Romsey and Southampton North said, Ford’s commitment must go way beyond those directly employed by the company. There are more than 200 non-Ford employees on the site; they are not working in logistics or making the seats for the Transits, and they are not covered by the redundancy terms now on offer. Ford must extend its support to far more people.
Finally, I emphasise to the Minister that the taskforce established under the leadership of the city council and the local enterprise partnership will need serious resources. The last time we had such a taskforce, we had RDAs, colleges had money to spend and local government had money to invest, but none of those resources exists now and significant additional funding will be necessary to make any taskforce viable. That will be needed to support not only the individuals affected, but the supply chain companies—81 supply the factory in Southampton—which need help to reorient their businesses to win orders from elsewhere in British manufacturing, other parts of the motor industry, or overseas. We must have resources from the Government, Ford and whoever to make the taskforce viable. Simply recycling some money that might have been coming in Hampshire’s direction anyway as a result of the LEP or other growth strategies will not be good enough.
Chris Huhne (Eastleigh) (LD)
It is a pleasure to serve under your chairmanship, Sir Roger. I thank my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) for securing the debate, with the strong support of the other local MPs.
The most crucial point to make about the closure of the plant at Southampton is that the work force have done absolutely everything in their power to make a success of the plant, with substantial increases in productivity and substantial savings in costs. No fault can conceivably attach to any of the employees. The plant is a key part of our local economy. It is on the southern edge of my Eastleigh constituency and many of the employees come from the town, in particular, Boyatt Wood. As my hon. Friend said, the plant has been manufacturing Transits since 1972; that is an iconic vehicle and the plant is its home.
I have two fundamental concerns about Ford’s decision. The first, which is similar to that expressed by the right hon. Member for Southampton, Itchen (Mr Denham), is that the Ford Motor Company made commitments which it has broken. On 28 November 2008, three local MPs—myself, the then Member for Romsey, Sandra Gidley, and the hon. Member for Southampton, Test (Dr Whitehead)—went to see the head of Ford’s European operations, John Fleming, at the company offices in London. The right hon. Gentleman was a Minister at the time, but was clearly there in spirit. We had all campaigned hard to save the plant and we all came out of that meeting without any doubt about its significance. We all told the local media the same thing—I have a cutting with me. The plant was safe, despite the downturn in the market and despite what might turn out to be the loss of a considerable number of jobs.
Appropriately, the right hon. Gentleman quoted the letter he received from John Fleming in which Ford’s head of European operations made a clear commitment to investment in chassis cab production and to a future for the plant. Those commitments are what make the closure different. Ford is a major multinational and, as my hon. Friend the Member for Romsey and Southampton North has shown, is profitable globally, yet it is flying in the face of its past promises. It has done so in a way that may be difficult to challenge in court, but there was clearly a moral commitment on the part of the company.
Unlike bond holders, employees cannot take the company to court for breach of its promises, but customers will no doubt draw their own conclusions about a company that is prepared to walk away from firm commitments when they consider the value of Ford warranties, for example. In addition, as the right hon. Member for Southampton, Itchen, said, Ministers will, before signing any further cheques for the company, rightly ask for clear understandings, including of why the company considers it appropriate to go back on its commitments. There has been no change in management; John Fleming, the head of European operations at the time, is now the head of global operations, based in Detroit, so it is not a question of the Ford Motor Company changing management and therefore forgetting its commitments.
Furthermore, in 2008 and 2009 two big pieces of material help were available to Ford: a £450 million EIB loan, of which more than £380 million had to be guaranteed by the UK taxpayer as a condition of its extension; and the scrappage scheme introduced by the previous Government, which was designed to boost demand in the car and van market. Indeed, we pressed for the scheme to include the commercial van market, and it was of material help. It beggars belief that such help could have been agreed without commitments being made to Ministers, so we have to ask: what commitments were made to Ministers? That is not advice to Ministers in a previous Government so it is not covered by privilege; any meeting between a Minister and an executive of the Ford Motor Company would have had present a member of the Minister’s private office taking an extensive note of exactly what the Ford executive said, and that will be a matter of record within the Department for Business, Innovation and Skills. I ask the Minister to find out exactly what the record was and what the undertakings were, and to draw the necessary conclusions.
That is crucial to the second big issue about the closure, which is the position of the rest of the work force. As my hon. Friend the Member for Romsey and Southampton North said, it is not only a question of those directly employed by Ford, who have had a commitment that there will be no compulsory redundancies. Although that is a limited commitment, given the absence of alternative Ford workplaces in the area, I have no doubt that the company will do the right thing by its own employees, but what about the subcontractors on site, such as the Penske employees? What about the supply chain? What about the commitment to the whole local economy and to making sure that we survive this hammer blow, as we have survived many other blows in the past? I want the Minister’s assurance that he will make absolutely certain that Ford respects its previous commitments and, if it does not, that he uses that to come away with clear commitments not only to the direct Ford employees, but to the wider work force dependent on the plant.
Dr Alan Whitehead (Southampton, Test) (Lab)
I want immediately to take up where my colleagues who represent south Hampshire left off this morning. An important aspect of this debate is the extent to which, at all stages, hon. Members for the area affected by Ford in Southampton have, in good times and bad, rallied to ensure that Ford was supported as far as it could be. They have ensured jointly that as much information as possible about Ford’s plans was obtained and disseminated, and as the right hon. Member for Eastleigh (Chris Huhne) said, they have taken part in meetings at which Ford gave assurances about how the Southampton plant would operate and its prospects.
As the right hon. Gentleman emphasised, at the meeting with John Fleming in November 2008, the three hon. Members from the area around Ford’s operation who attended obtained cast-iron assurances about the plant’s future, what it would be doing and its development of a chassis cab. The hon. Members present understood that those assurances extended not just to Ford’s central operation, but to its whole operation, including all the ancillary supply chains and the associated arrangements. I recall that that was part of the discussion at that time.
Everything seemed fine with those assurances, as Ford sought to suggest in briefings, until three or four days before it set out its decision. The suggestion that suddenly, on a Thursday afternoon, its international management decided to pull stumps on its plants in Genk and particularly in Swaythling is incredible. That underlines the urgency of obtaining answers to questions about the money that Ford obtained from the regional growth fund and, as importantly, the £80 million loan from the European Investment Bank.
It is difficult to believe that those loans were obtained when the original 2008 assurances stood at the time that the discussions were entered into. Either Ford did not give the information that should have been before both bodies before the loans were agreed, or the people who were responsible for discussing them had information that could and should have caused them to take a more careful view of how those loans should have been set out. That underlines what my right hon. Friend the Member for Southampton, Itchen (Mr Denham) emphasised: the extreme sadness with which some Members of Parliament in the Southampton area feel about the break between past working arrangements with Ford locally and the clear issues that now arise. I like to think that, even at this stage, Ford might consider what that means for its national and international reputation, its responsibilities to Southampton, its past investment in Southampton and, more importantly, Southampton’s investment in Ford’s operation for many years.
I join my colleagues in making three suggestions. First, the work force who are involved not centrally in production but in the supply chain that has supported Ford’s success in Swaythling should be considered on an equal basis with those in the Ford plant as far as future support is concerned. Secondly, any decisions by Ford about the plant’s future should take account of whether it can continue with a presence in the area, in any shape or form. That might provide the opportunity for Ford employees to relocate, as the right hon. Member for Eastleigh said, in not very favourable circumstances, as there are no Ford plants anywhere near Southampton. If there is a continuing presence in Southampton, perhaps some of the work force currently employed at Swaythling could be relocated more locally. Thirdly, Southampton has invested in Ford’s Transit operation for more than 40 years, and the vehicle and the site are iconic. The workers have probably paid for it many times over in the work that has gone into it and the profit that has come out.
If Ford attempts to raise funds by selling that site, in addition to the funds that it obtains by exporting its benefits to Turkey, that will be an additional slap in the face for the local area, which has put so much into Ford in the past. The minimum that I expect Ford to say is that the site will not be sold for development or other purposes, but will be donated to the community and the city that have put so much into Ford and have been such a pivotal part of its success in making that site work for so many years. If that happens, we might at least have the opportunity in Southampton and the surrounding area to bring to that site some of the industry, jobs and prosperity that have been part of it in the past. If Ford would leave that small legacy to the city of Southampton, it would be at least some reparation for what seems to me is a grubby episode.
Jon Cruddas (Dagenham and Rainham) (Lab)
As is the custom, I, too, congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing this debate and those who have made contributions. We share the deep concern for our constituents and their material well-being following the announcement.
The workers who are employed at the Ford Dagenham stamping plant and tool room operations were shocked and bewildered by the hundreds of Ford job losses announced a couple of weeks ago. I have spoken to many of the workers who have been affected by the announcement, and the consistent response was almost disbelief. We were blind-sided on Thursday 25 October, which was a bad day for manufacturing in the UK, in Southampton and in my part of east London.
The Dagenham estate was built in 1929 and has been Ford Motor Company’s centre of production ever since. A couple of weeks before the announcement, I visited the stamping plant, the tool room and the two parts of the engine facility to meet management and workers to discuss bringing more workers to the plant. No one mentioned possible closure; it was not an issue. We knew that announcements were coming, but our concern was to secure more investment in the engine plant by getting the new Panther engine into Dagenham.
The background is that the Dagenham diesel engine plant and diesel centre covers some 2.5 million square feet, and employs approximately 2,000 employees. In 2011, nearly 1 million engine units were shipped from the estate. At present, the Lynx engine operation in Dagenham has an annual capacity of some 320,000 engines. That is scheduled to finish in the second quarter of 2013. The Puma engine capacity is another 400,000 a year. Our emphasis in the discussions was on securing the Panther engine at the Dagenham estate, because there is a natural fit in both the time line and capacity at the estate.
We have been lobbying people at the highest level of the Ford Motor Company internationally and the Government regarding the new engine, to ensure that the investment comes to Dagenham, so guaranteeing future jobs. An application for round 3 of the regional growth fund, covering questions of plant readiness and training requirements, was included in that process.
News of the job losses will worry many local families who are either employed directly by Ford or have a business that relies on trade created by the plant. At a time when the economy is suffering so much and when families are struggling to pay their monthly bills, the announcement is not good. I am sure that there will be generous voluntary redundancy offers from the company, and it has assured us all—I assume—that those who want a job will be redeployed at least across the Dagenham estate. In reality, however, the jobs will be gone for good. Those quality manufacturing jobs will not be available to young people in the borough in future, and the closure will shake down in terms of the supply chain, affecting local families and people’s future job prospects.
However, in the bipartisan spirit of our debate, I add that I am pleased that the Mayor of London has convened an emergency taskforce to deal with the effects of Ford’s announcement in east London. That will include representatives from the London enterprise panel, the London borough of Barking and Dagenham, the Department for Business, Innovation and Skills, the Skills Funding Agency, the Department for Work and Pensions and Jobcentre Plus. It has already met, and some of us will meet Ford’s chairman, Joe Greenwell, over the next couple of days to alert him to the establishment of the taskforce and to ask him for help. The Mayor of London is important for the future of parts of the estate, and the Greater London authority is a significant landowner in the area. The Dagenham stamping and tool room operations site is immediately adjacent to the GLA’s Beam Park and Chequers Corner sites, as well as being within close proximity to the Sanofi site due to close next year.
I urge Ford to investigate how Sanofi has dealt with its exit from my constituency over the last couple of years. Sanofi has worked brilliantly with the local community to redevelop its site and build more jobs and community facilities in the area. I request that Ford enters into similar discussions to ensure that the stamping and tooling operations site is decommissioned with limited detrimental impact to the local area and with an eye on future regenerative potential. The majority of redundancies will not come into effect until mid-2013. The expectation is that the stamping plant building will be decommissioned and shuttered, with all parts stripped and sold, and that that will take nine to 12 months after the closure next July.
As with Sanofi, I would like to think that Ford will release land for regeneration north of the railway line, following both demolition and clearance of the stamping plant and all related buildings, including remediation, decontamination and cleansing of the released land. That should be done with a view to future economic regeneration, perhaps as part of the Ford exit costs, given the benefits that the company has extracted for nearly 100 years from our part of east London.
I must put on record, however, that Ford’s announcement had some positive elements that should not be ignored; by that, I mean the decision to invest in the new two litre, four cylinder, low carbon dioxide Panther diesel engine at the Dagenham engine plant. The combined engine output will remain at approximately 1 million engines a year, and the new engine will support some 3,500 engineering, design, admin and support jobs in nearby Dunton.
Overall, although I welcome the news about the investment in the new Panther engine in my constituency —we have been fighting for that for months—I cannot hide my disappointment about the latest decision. We must do everything that we can to support local residents affected by the closures and those in the broader community. We will raise those points with Mr Greenwell here in Parliament this week.
Ian Lucas (Wrexham) (Lab)
I had not intended to speak, Sir Roger, as I am conscious of the local interest in Dagenham and Southampton in this matter, but I would like to make one point relating to the UK Automotive Council. Will the Minister ask that organisation whether any aspect of Ford’s actions was raised with any officer or individual from the council? The organisation is, of course, jointly chaired by the Secretary of State. Has the issue as a whole been contemplated in discussions of automotive strategy that take place at that organisation? It is an important body, which has been a key part of the renaissance of British manufacturing and the automotive sector in the UK economy.
Much depends on frankness between the parties involved. It means that the Government come to the aid of the industry when it is in trouble. The right hon. Member for Eastleigh (Chris Huhne) mentioned the car scrappage scheme. Ford was extremely vocal to me at that time of great crisis in the UK automotive industry, calling for the introduction of the scrappage scheme. At that difficult time, all political parties supported the scheme’s introduction. If there is no frank relationship between the industry and the Government, it means that should there be a difficult time in future and should a similar call be made, the Government and those who have taken part in this debate will think twice before assisting businesses such as Ford.
Ford must realise the ill will among good people caused by its decision, and in particular by the fact that individuals who had worked hard with the business over the years to improve its prospects and help it in times of need were given no opportunity to try to safeguard the future of the jobs at Southampton and Dagenham. That has a cost. It is unfortunate that we are in this position, but I hope that that message is carried back to Ford at the highest level, because there will be a major impact on the relationship between the automotive sector and the Government, and particularly, between Ford, Members of the House, and the Government.
Mr Denham
While my hon. Friend is on that theme, does he agree that there is a sharp contrast between the way in which companies such as Nissan, Toyota, Honda and BMW responded to the assistance that they were given after the global banking crisis? They worked together through the Automotive Council to build up vehicle assembly in this country, so that it is now one of the success stories of the British economy that we can celebrate. The Ford Motor Company has pursued a very different strategy: although there has been investment in engines, it has run down its vehicle assembly in this country.
Ian Lucas
There is a marked contrast. One of the most disappointing aspects of the announcement was that it followed positive announcements on the automotive industry over the past four years. Britain has become an investment destination of choice as far as the international automotive industry is concerned, so it is very difficult to understand why Ford was not even prepared to engage with the UK Government and MPs to try to address the difficulties that the company had in continuing the manufacturing in Southampton and in those parts of the Dagenham operation that are to cease.
I hope that Ford will listen carefully to the debate, and that it will consider closely its relationship with both the Automotive Council and the Government. I hope, too that it will engage and be open in discussions and ensure that this type of decision—without notice, without partnership—does not happen again.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship again, Sir Roger. I congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing this important and timely debate, and I pay tribute to the Members who have supported her.
My immediate concern, as it has been throughout the course of today’s debate, is about the 1,100 Ford workers who will lose their jobs with the closure of both the Transit factory in Swaythling and the stamping operation in Dagenham, as well as the wider impact that will have on subcontractors, the supply chain, and workers in those areas. The workers at those plants, many of whom have worked either directly or indirectly at Ford for many years, have important skills for our manufacturing base, and naturally they will be anxious about their future and that of their families.
The message from today’s debate is obvious, and the Minister must clearly set out what reassurances he can provide. What precisely will his Government, working with the company, local council leaders, the Mayor’s office and others, do to secure to alternative employment? How will the workers at Southampton and Dagenham be helped? What specific initiatives, whether the formation of an enterprise zone or of a focused taskforce such as the one already set up in east London, are being put in place to help? What is the Minister doing to co-ordinate action across central and local government for the benefit of the workers employed both directly and indirectly and in the wider supply chain who are at risk of redundancy?
As you quite astutely said, Sir Roger, there is a wider and more fundamental issue. The repercussions extend beyond Southampton and Dagenham. Let us be in no doubt: this is a devastating blow to this country’s manufacturing base. Ford is an important global company and we want the company to stay and to prosper in the UK. In that regard, as my hon. Friend the Member for Dagenham and Rainham (Jon Cruddas) said, its £1.5 billion programme of investment in advanced manufacturing and the production of the new low-carbon Panther diesel engine, designed and engineered at Dunton and made in Dagenham, is very welcome. It reinforces the UK’s competitive advantage in Europe’s engine design and manufacturing market, and we need to continue that.
However, the point and the blow remain: this announcement is the end of an era. It brings to an end a century of Ford vehicle manufacturing in Britain. Ford started in Dagenham some 90 years ago—when we think of Ford, we often think of Dagenham, and vice versa. The iconic Ford Transit van, which for 40 years has been the symbol of Britain’s white van man and is the automotive industry’s modern-day equivalent of the workhorse, will no longer be made in this country, but will instead be produced in Turkey, as the hon. Member for Romsey and Southampton North said. At a time when Ministers from the Prime Minister down speak of the need to rebalance the economy towards manufacturing and of the march of the makers, this decision in a sector that is often lauded as a productive and efficient part of the economy shows the need for business and Government to work ever closer together to implement an active industrial strategy.
I have a number of questions to put to the Minister, supplementing much of what has already been discussed in today’s excellent debate. I will speak in very broad terms. I would like to hear the Minister’s assessment of what the volume car market in Europe will look like in the future, and how that assessment affects Government’s approach to the sector. As the hon. Lady pointed out, car and van sales have fallen dramatically on the continent in the past couple of years—by some 20%. There is, let us be honest, overcapacity in car and van production capabilities in Europe. Ford’s decision in the UK a couple of weeks ago must be seen in the wider context of what the company has done with the closure of an assembly plant in Belgium, as well as the closure of a factory near Paris for Peugeot Citroën and the shutting of facilities for Opel.
Mr Denham
My hon. Friend talks of overcapacity in Europe. Does he acknowledge the point made by a number of the Southampton Members present that what Southampton has been up against is not overcapacity in Europe, but overcapacity in Turkey? Ford has pursued a strategy of developing a 300,000-plus vehicle plant in Turkey, with the assistance from the European Investment Bank, and that is what many of us question. That is at the root of Southampton’s problems, so the question is really about the company’s strategy in seeking to locate such a massive proportion of its production for the European market outside the European Union.
Mr Wright
I shall respond to my right hon. Friend in two ways. First, he is absolutely right about overcapacity in Turkey and the extent to which British taxpayers helped to push production away from the UK to Turkey. That will be one of my themes.
Secondly, my right hon. Friend makes an important strategic point about Ford’s direction of travel. Other car makers—Nissan, Honda, Toyota and others—have worked very successfully with the current Government and the previous Government in setting out a clear, long-term strategy to have assembly, design and manufacture here in the UK, but also to expand the markets further afield. Jaguar Land Rover is a very important case in point. As my hon. Friend the Member for Wrexham (Ian Lucas), who was an excellent Minister for the automotive sector, said, that close co-operation between business and Government when it comes to setting out a long-term strategy and expanding export markets has been for the benefit of the car industry. I would like something similar to what we have seen with Nissan, Honda, Toyota, Jaguar Land Rover and others to have been implemented with Ford. Sadly, that has not been the case.
I would like to hear what the Minister thinks the car industry, and particularly volume car makers with European manufacturing capability, will look like in the next few decades. Is the decline and overcapacity cyclical or structural? If it is structural—if the Minister thinks that we are seeing a general movement away from Europe towards new markets in the east and in south America—what impact will that have on other volume car and van manufacturers in the UK? We have talked about the UK automotive industry being a success story—something that, on a cross-party basis, we all want to see continue—so what does the Minister expect other manufacturers to do, given Ford’s decision? What are Government doing, in working closely with business, the Automotive Council and others, to ensure that we can mitigate the risks in this country? What co-ordination is taking place across Europe to ensure that general economic conditions on the continent, and specifically lack of demand, are being addressed? What discussions is the Minister having with his counterparts across Europe to ensure that the European car industry is not lost altogether?
My reference to discussions between Government and business brings me to my next question. Where does Ford’s decision leave the Government’s industrial strategy? The Secretary of State can talk a good game—he has had plenty of practice, having made 16 speeches on the matter since coming to office. In his speech of 11 September at Imperial college, he mentioned how Government
“must plan for the long term. Government must work with business.”
He went on to say:
“The second strand of our industrial strategy is to build a collaborative strategic partnership with key sectors. The examples I often give are aerospace, automotives, and life sciences... What is the starting point for this? We are dealing on a global scale with fierce competition—between companies and countries... Different industrial sectors require varying degrees of government support... At the other end are sectors that require a long-term, strategic partnership with government. We have the institutions to deal with them; the Automotive Council and Aerospace Leaders Group are models of what I have in mind.”
Indeed, the BIS paper entitled “Industrial Strategy: UK Sector Analysis”, which was published at the same time as the Secretary of State’s speech, stated:
“The UK has a strong comparative advantage in the aerospace and automotive industries which, because of their highly innovative nature, are a major source of knowledge and innovation spillovers... Both industries also have very important local economy and rebalancing effects.”
Certainly rebalancing is very important: we need a rebalancing towards manufacturing. On the other point, about local economies, the hon. Member for Romsey and Southampton North and other hon. Members have made very important and pertinent points about the impact that this decision will have on the Southampton economy. My hon. Friend the Member for Dagenham and Rainham mentioned the importance of the Ford plant to the east London economy.
We agree with much of the analysis by BIS. Much of current policy in terms of the setting up of the Automotive Council and the ensuing benefits in terms of increased investment in the likes of Jaguar Land Rover and Nissan began under the previous Labour Government. Continuity of policy, to allow global firms to plan investment in the UK for the long term, is something on which Opposition Members will support the Government. However, in relation to Ford’s announcement, the Secretary of State’s words about an active industrial strategy ring hollow. As I said, he often talks a mean game about assisting and working with productive sectors of the economy to allow them to improve and thrive, and we all want to support the UK automotive industry, but Ford’s decision showed him to be out of the loop, floundering and too weak within Whitehall to be able to offer a constructive solution.
There was no dialogue between Government and the company—indeed, following the announcement, the Secretary of State told The Southern Daily Echo that Ministers had felt “let down” and would have asked Ford
“what on earth was going on”.
So much for open, constructive and honest dialogue between Government and business. Answers to parliamentary questions from my hon. Friend the Member for Streatham (Mr Umunna) further revealed Ministers’ ignorance of the facts and failure to ask the right questions. As my right hon. Friend the Member for Southampton, Itchen (Mr Denham) said, since the coalition came to office in May 2010, Ministers have met Ford executives on—well, I make it 13 separate occasions, but I might not be able to count; my right hon. Friend said 12.
Mr Wright
I welcome my right hon. Friend’s clarification.
Since coming to office, the new Minister has met Ford on two occasions. We welcome such early engagement; that is exactly how it should be for an iconic global manufacturing company in a key industrial sector for the country. In his response today, will he outline what was discussed when he met Ford? Were the company’s future strategic direction and capacity issues within Europe not discussed? Did he not inquire what the company’s response might be to overcapacity on the continent and how that might affect Ford’s manufacturing in the UK relative to the company’s operations in Belgium, Valencia or even Turkey? Has Ford, as has been suggested today, reneged on previously agreed commitments?
Does the Minister agree that joined up, co-ordinated government is part of an effective active industrial strategy? Did he make Ford executives an offer to discuss matters relating to Ford and future investment with other Ministers? Did he speak to Ministers in the Department for Transport about how the competitiveness of Swaythling and Dagenham could be enhanced through infrastructure improvements in logistics or connectivity, improvements to the road network and the M27, or improvements to rail networks in the east end of London? That is what the Secretary of State should have been thinking about when he referred in his speech to the fact that:
“We are dealing on a global scale with fierce competition—between companies and countries.”
Instead, I have to say, with some degree of sadness, Government Ministers have been asleep at the wheel.
Assistance from Government inevitably comes down to finance. I have two questions, both of which were raised in the debate. The European Investment Bank approved the £80 million loan to Ford Otosan, which runs the Turkish plant, as part of a £452 million structuring deal for the production facility to
“support the future manufacturing of the new Ford Transit”.
The 27 EU countries own the EIB, and its board of governors includes the Chancellor of the Exchequer. The role of the governors, as it says on its website, includes deciding
“on the Bank’s participation in financing operations outside the European Union as well as on capital increases”.
Given that, what role did the Chancellor have in fulfilling his duties as a governor of the EIB in signing off the investment? What role did he and officials play in ensuring that the investment went to Turkey? It simply defies belief that British taxpayers, as well as other European taxpayers, have provided funds to a facility in a country outside the EU that undermines the competitiveness of manufacturing in the UK. Will the Minister specifically address that point?
The second aspect of Government funding concerns the award of regional growth fund money to Ford a matter of days before the closure announcements. In answer to a written parliamentary question from my right hon. Friend the Member for Southampton, Itchen, the Minister stated:
“As part of its relationship with Ford UK, the Department’s Automotive Unit has regular and ongoing discussions with the company. Those discussions included understanding the context to Ford’s bid for…(RGF) support… The RGF Secretariat did not have any other discussions with Ford UK about their strategic plans.”—[Official Report, 2 November 2012; Vol. 552, c. 430W.]
As my right hon. Friend said, is that not a huge failing in the RGF process? What did Ministers and their officials know about the wider context of Ford’s strategy in the UK? Did they not inquire about the longer-term view of the company in this country? If not, why not? Does not that show that Ministers are incapable of producing a proper co-ordinated and long-term active industrial strategy?
As my hon. Friend the Member for Wrexham said, we cannot have a productive and honest relationship between business and Government, or rebalance the economy towards manufacturing, by tossing a few grants here and there. As Lord Heseltine said in his growth review published last week, we need a strategic approach to each sector and to ensure that each pound of taxpayers’ money offered to companies gives the best possible long-term, sustainable, competitive deal. Is the Minister suggesting that no such strategic discussion or consideration took place as part of the RGF bid?
Mr Denham
First, does my hon. Friend agree that it would be good to hear the Minister accede to the request from the right hon. Member for Eastleigh (Chris Huhne) to make available any notes on discussions with the company in 2008 and 2009? I believe that they would show that Ministers discussed topics such as the future of Swaythling in discussions about EIB loans and so on. Secondly, it would be helpful, and I mean this in a non-partisan way, if the Minister undertook to review his Department’s and the Treasury’s engagement in the RGF and the EIB to see what lessons can be learned from these two extraordinary events.
Mr Wright
My right hon. Friend makes two important points that I hope the Minister will address. I will sit down now, because right hon. and hon. Members have raised many significant concerns during this important debate. There are huge implications not only for Southampton and Dagenham—I say that with the greatest respect—but for the wider manufacturing base in a key sector that should be productive for the UK economy. Manufacturing must be at the heart of what we do and the automotive industry must be at the heart of manufacturing. Ford’s announcement is a blow. I hope the Minister will address the concerns raised today.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I congratulate my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) on securing this important debate. I thank all of those who have contributed for doing so in a relatively non-partisan way. Hon. Members have spoken frankly and asked some tough questions, but, until the previous contribution, we have approached the issue in a non-party political way.
I will focus on some of the broad areas that I have been asked about, but I am happy to address specific questions, be interrupted or to reply by letter if I have missed anything out. I shall address: what we were told in the Department; the circumstances surrounding the European Investment Bank loan; the support that we are able to offer Southampton and Dagenham now; and Ford’s future in the UK. I hope to wrap up in that most of the points made in the debate.
First, what were we told when? As recently as 7 September, when my officials specifically asked Ford about Southampton, Ford assured us that it would continue to produce the new chassis cab variant in 2013. Ford has invested regularly in Southampton, including significant sums this year. We therefore had no reason to question what we were told. Amid a sharp deterioration in the mainland European vehicle market, Ford’s board decided on Friday 19 October to close the site. Ford contacted my Department the next working day, Monday 22 October, to arrange a discussion between the Secretary of State and the Chairman/CEO of Ford Europe. That phone call took place on the evening of Wednesday 24 October. We did not know of Ford’s plans in advance of that conversation.
We are obviously disappointed that, on this occasion, Ford chose not to engage with us until the day before the announcement. It gave us no opportunity to discuss the decision, which we would have expected and preferred. It made the decision based on a thorough analysis of its commercial operations in Europe.
Last Tuesday, 30 October, Ford published its latest financial results, which revealed a $1.02 billion pre-tax loss for the first nine months of 2012 for its operations in Europe, reinforcing why it has had to take difficult commercial decisions to restructure its European business and place it on a more sustainable footing.
Demand for light commercial vehicles has fallen dramatically in Europe over recent years, with the Transit seeing a sharp fall in sales. The company is clear that it can no longer support two van production facilities in Europe and must seek to consolidate production at one. Unfortunately, the Southampton plant is unable to compete with Ford’s newer factory in Turkey where labour and production costs are significantly cheaper than those in the United Kingdom. The Secretary of State and our officials probed that differential with the company, but we are clear that those differences are too high to bridge.
Let me turn now to the circumstances surrounding the European Investment Bank loan. The loan to Ford for its Turkish Transit van operation was approved as part of the EIB’s support for Turkey’s integration into the European Union economy. The Turkish operation has been in existence since 2001, and since 2009, it has made all versions of the Transit apart from the chassis cab variant, which is made at Southampton. The EIB loan for the Turkish operation was for retooling the Turkish plant for the production of the next model in 2013 and was not based on the cessation of production at Southampton. It is therefore incorrect to imply that the EIB loan is itself responsible for exporting jobs from the UK. Indeed, Ford tells us that it will not be increasing capacity at the Turkish site.
The EIB makes investments in key markets outside and inside the European Union. For instance, Ford UK benefited from up to £400 million of EIB funding back in 2010.
Mr Denham
For the record, I do not think that any Member has suggested that the loan to Turkey was responsible for the closure of the Southampton plant, but rather that it undoubtedly helped Ford to develop Turkey, which therefore helped it to close the plant. The key question is, would British officials involved in that decision have given the go-ahead to that loan—it was a loan rather than a grant—had they been aware of Ford’s plans for Southampton and Dagenham?
Michael Fallon
I do not wholly accept that. Ford was already planning to develop the new model at its Turkish plant. That plant has the capacity to produce more than 100,000 units per year of all types of van. Southampton, as we know, only made 28,000 units of one van variant each year. Even if the Turkish factory had not got the loan from the EIB, it is unrealistic to suggest that the entire new model production would have moved to the smaller Southampton factory, and that is the issue.
On the assistance that we need to make available to those affected by the move, I fully appreciate the concerns that have been expressed for the workers at Southampton and those at the associated stamping plant at Dagenham, along with their families and the wider communities in each area. I accept that it should be the Government’s priority and responsibility to do their very best to help those affected.
In Southampton, both the Secretary of State for Business and I have been in discussion with the chairman of the Solent local enterprise partnership, Doug Morrison, to ask directly what we can do to help. As Members here will know, the local enterprise partnership held an emergency board meeting on Thursday. I discussed the matter with the chairman on Friday, and he told me that a multi-agency taskforce is now being established, including representatives from the local enterprise partnership, Southampton city council, Eastleigh borough council as well as officials from my Department and other agencies, including Jobcentre Plus and the Skills Funding Agency. The taskforce will work in partnership with Ford until the plant closes next summer to ensure support is in place for affected employees and small and medium-sized enterprises in the supply chain.
Caroline Nokes
On that point, the Minister will no doubt be aware that between 2003 and 2008 there was, within the automotive and aerospace sectors, the supply chain group programme, which was funded by the regional development agencies. Has the Minister given any thought to the introduction of a similar scheme, which might be of specific assistance to those companies in the supply chain?
Michael Fallon
I will certainly look at that point. The local enterprise partnership has said that it will try to identify the specific impact on the supply chain. If it has requests to make as a result of that work, we certainly stand ready to assist it. It also asked us for specific assistance in two other respects. First, it asked whether it was possible to accelerate the roll-out of phase 2 of the Bridging the Gap project, which, rather confusingly, was announced under round 3 of the regional growth fund in the middle of October. The project will provide grant support to individuals and small businesses in the Southampton and Isle of Wight area. Secondly, the LEP asked whether it was possible to broaden the remit of the scheme so that Ford employees living outside the specific boundaries of the local enterprise partnership could also benefit from the proposal.
On the first point, I have asked officials to see what can be done to accelerate the due diligence required of the bid. I am confident that we can shorten that process and ensure that money is made available more quickly. Bidding under round 3—the arrangements for the finalisation of the selected bids—is already subject to faster time limits, which were put in place after the experience of rounds 1 and 2. As for the boundaries, I think—I hope that hon. Members will agree—that it would be wrong to discriminate against someone who has worked at the plant simply because they live outside the geographical boundary of the local enterprise partnership area. I have asked officials to look specifically at what we can do to ensure that there is no such discrimination.
The future of the site itself has also been raised today. I can understand that the community and the local enterprise partnership are keen to retain such a prominent and iconic site for manufacturing use, but that will depend on the site’s ownership and planning status, which is, in the first instance, a matter for the planning authority. Let me say though that we, too, are keen to see it remain in industrial use. We have already notified its availability to UK Trade and Investment to ensure that inward investors are aware of the opportunity there, and we are happy to work with the local planning authority to do everything that we can to ensure that the site remains in manufacturing or industrial use.
My hon. Friend the Member for Romsey and Southampton North suggested extending the enterprise zone. There is already an enterprise zone in the area on the Daedalus site, some 15 miles away. I understand her request that we should create another one. Of course we will await advice on that from the Solent local enterprise partnership. The LEP covers Southampton and Portsmouth, and it really is for it to advise us on whether it sees the need to create a specific zone around the site, or whether it wants to enlarge the other zone and so on. We await advice from the local enterprise partnership.
It would be wrong not to touch on the Dagenham area. The hon. Member for Dagenham and Rainham (Jon Cruddas) has spoken eloquently for his constituents, and I know that he is in regular touch with the plant there. Following the Mayor of London’s standing commitment to lead a response to any large-scale redundancies in London, he hosted a constructive meeting of partners, including Jobcentre Plus, the Skills Funding Agency, the London borough of Barking and Dagenham and my officials, last Friday. The Mayor will work with all those partners and with Ford to develop support arrangements for the affected Ford workers and their families.
In partnership with the London enterprise panel, the Greater London assembly and the borough are already considering the long-term impact on the Dagenham area, including how new opportunities to retain a high value-added and high-skills local economy can be realised on the back of the continuing and substantial commitment of Ford to Dagenham, about which the hon. Member for Dagenham and Rainham has spoken and which we should not forget in the circumstances surrounding the regrettable decision to close the Southampton plant.
Ford has indicated that it hopes that the inevitable redundancies will be voluntary. It expects that around 300 people may want to relocate within Ford’s remaining UK operations, rather than take the voluntary redundancy package, and it has hired Lee Hecht Harrison, a global outplacement provider, to work with it at both the affected sites to help individuals. Whatever criticisms we may have about the circumstances in which the decision to close the Southampton plant was made, we should welcome Ford’s commitment to do everything that it can to help its employees after that decision was made.
Chris Huhne
Has the Minister had any contact with Ford executives about extending that package to the subcontractors on site and, indeed, to people in the supply chain, particularly given the availability of an outplacement agency, which can have an important effect on job opportunities in the future?
Michael Fallon
I am very happy to undertake to look at that point. The right hon. Gentleman raised the supply chain in his meeting with the Secretary of State. As I say, we will certainly look at that point. We are waiting for more evidence from the local enterprise partnership about the scale and degree of the supply chain, and exactly where the jobs affected might lie, but I am happy to consider that point and I will get back to him.
As I was saying, we have ensured that the local Jobcentre Plus teams and the Skills Funding Agency are involved in both Southampton and Dagenham. The SFA will work with colleges and training providers in the local areas to ensure that support is available to any employees who are at risk of redundancy, and the national careers service can offer free careers advice on upskilling or retraining for alternative employment.
I will turn shortly to the future of Ford in the UK, but before I do so I will attempt to answer some of the questions that the hon. Member for Hartlepool (Mr Wright) put to me. He asked me to assess the European market. I am not sure whether it is for me to do that, but the manufacturers certainly tell us that there remains significant and structural overcapacity throughout the European marketplace. We have seen that in the closures proposed at Peugeot and in the recent profit warning from Renault. I do not think that there can be any doubt that some quite significant restructuring lies ahead for the European market. Of course, that is a market that the Turkish Ford plant supplies.
The hon. Gentleman asked me more specifically if I had discussed these matters in my discussions with Ford. I met Ford on 5 September—my second day in office—and again on 25 and 26 September, in the meetings that I had with most of the major automotive companies in the margins of the Paris motor show. Yes, we certainly discussed overcapacity, but we were given absolutely no hint that that overcapacity had any implications for Ford’s operations in the UK.
The hon. Gentleman also asked whether we talk to other Departments. Yes, we talk to other Departments, and issues are raised with us by the major investors, not least about the taxation of low-carbon vehicles, and so on. So, as I say, we do talk to other Departments.
The hon. Gentleman finally asked about the strategic approach, and discussing that approach is the point at which I should turn to the future of Ford’s long-term commitment to the UK and to the efforts that we and previous Governments have made to secure that commitment to research and development and, in particular, to engine design and manufacturing operations in the UK.
It is important to remind ourselves that Ford is a very important part of the UK automotive sector and has been for more than a century. Ford employs more than 12,000 people in the UK and invests more than £400 million each year here on high-quality R and D—about a quarter of the total UK automotive R and D spend.
Even more significantly, the UK supplies more than a third of Ford’s total global demand for petrol and diesel engines. As part of that, the UK supplies more than half Ford’s total global diesel engine requirement. These are astonishing statistics, all the more so because the engines are not only built here but designed here. That is why, despite the circumstances that have brought us together this morning, I am delighted that Ford has subsequently confirmed that it will design, engineer and build its brand new low-carbon diesel engine in the UK.
Of course, Ford applied for help from round 3 of the regional growth fund to enable that project to go ahead. On 19 October, we announced our conditional offer of £9.3 million to support Ford’s investment of £156 million into Dagenham to build an all-new engine series at the plant. It may be of no comfort to those in the Southampton area, but that investment will safeguard some 450 jobs and create 50 new jobs, while supporting many more in the supply chain and wider economy. Ford expects to follow that project with a new petrol engine at Bridgend, and together these projects will ensure that the UK retains its crown as Ford’s global centre of powertrain excellence.
I was specifically asked about the circumstances of the regional growth fund bid. Of course, the bid is appraised by an independent panel, chaired by Lord Heseltine, and it is separately appraised by our secretariat, assessing it on its own merits against the fund’s objectives, which include the employment that the bid would create or safeguard, as well as the investment and the benefits to the wider community that it would bring to the UK.
I need to be absolutely straight with colleagues here and say that we look at such bids independently; we do not have discussions with the company about the rest of its strategic plans right across the UK; and we look at each bid on its merits and measure its compliance with our criteria. Of course, all the allocations are then subject to due diligence—an important process that is built in to protect the public purse.
Mr Denham
I am grateful to the Minister for giving way, but perhaps I can just put it on the record that this is where we disagree and that, in the view of many of us, the regional growth fund should engage with a company’s wider strategy and not simply assess the merits of an individual decision.
Michael Fallon
I note that point and I heard the right hon. Gentleman make it in his earlier contribution. I am not sure whether, under the old system, the four regional development agencies that would have been involved—I think that is the number—would have been part of that process, but I will certainly reflect on what he has said.
What is important is that we are capturing this new work in the UK and we are playing to our world-class strengths of design, engineering and advanced manufacturing. That is the direction that we should be moving in, as we seek to rebalance our economy, drive forward growth and secure greater export revenues. That is the front and centre of our industrial strategy. Without our support, the Ford projects that I have mentioned would have gone elsewhere, which would have undermined the UK’s position as the centre of choice for Ford’s engine programme and our ability to bid for and win new work.
In conclusion, a number of points have been made today. Let me re-emphasise that I share the disappointment of every Member who has spoken in the debate at Ford’s decision to close the Swaythling plant. I regret the circumstances in which that decision was made and communicated to the Department and, indeed, to colleagues here in Parliament. Nevertheless, we will commit to work with local partners; we will do all that we can to help those affected by the closures; and we will continue to work with Ford to build on its major and ongoing commitment to the automotive sector in the UK.
Sir Roger Gale (in the Chair)
May I take this opportunity to thank all right hon. and hon. Members who are in Westminster Hall, both for the largely non-partisan manner in which the debate has been conducted and for seeking to accommodate both Front Benchers in the manner that they have been accommodated? As I said earlier, this is an important subject, and I hope and believe that those watching in a wider audience may just have seen a little of the House of Commons at its very best this morning. Thank you all very much indeed.
If the right hon. and hon. Members who are leaving Westminster Hall could do so quietly, in a moment we will proceed to the next debate.
Unmanned Aerial Vehicles
(12 years ago)
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Rehman Chishti (Gillingham and Rainham) (Con)
It is a pleasure to serve under your chairmanship, Sir Roger. May I welcome the Minister to his post? I have great admiration and respect for him in his current role, and the same was true when he was in his previous role. I hope that he has had a chance to read my speech, which I sent over yesterday, and particularly the 10 specific questions I will be asking him to address.
In recent years, we have witnessed the proliferation of the use of unmanned aerial vehicles, better known as drones. These remotely piloted aircraft are predominately used by states to conduct intelligence and surveillance, and, increasingly, to carry out armed strikes. This debate looks at the military use of armed drones by the United Kingdom and the United States.
It appears that the Government see drones as having an ever greater role in our armed forces. According to the vice-chief of the defence staff, General Nicholas Houghton, we may see a tipping point by the mid-2020s, when the UK will
“move away from manned fast jets to Unmanned Combat Aerial Vehicles and missiles”.
The Government recently announced that the number of Reaper drones the UK operates in Afghanistan was to double to 10 and that operations were, for the first time, to be conducted from RAF Waddington, in Lincolnshire. Currently, the UK’s five Reaper drones are operated by British personnel from Creech air base in Nevada, and the latest figures show that those drones have flown 40,000 hours and fired 345 missiles in Afghanistan.
Although drones offer the potential to target insurgents without having to put our armed forces in harm’s way, we need to ensure that all steps are taken to prevent civilian casualties. Despite the growing significance of drones, there has been little debate about this issue, and the time is right for a review into how they are used and how they may be developed and deployed in future.
The first question I would like the Minister to address is, what is the Government’s policy on the use of drones, particularly in Afghanistan and Pakistan? My second question is, how many civilians have been killed by UK drone strikes in Afghanistan? My third question, which is linked to that, is, does he agree that the death of civilians in Afghanistan undermines the aim of winning hearts and minds, and feeds anti-west feeling? If civilians cannot be protected, does he agree that we should consider suspending the use of drones?
Earlier this year, I visited Pakistan, having been a former adviser to Benazir Bhutto, and I met President Zardari, senior Ministers and many local people. Everywhere I went, concerns were raised about the use of drone strikes in Pakistan by foreign countries. There were real concerns that such strikes would feed into the anti-west attitude played on by radical elements.
Although the UK has operated drones only in Afghanistan, the United States has used them as part of its counter-terrorism strategy in Pakistan, Somalia and Yemen. According to reports, that has resulted in hundreds of civilian causalities. The Bureau of Investigative Journalism believes that more than 350 strikes have taken place in Pakistan since 2004, and 3,378 people may have been killed, including 885 civilians. That has fed into anti-west feeling, with 74% of Pakistanis now seeing the US as an enemy, and only 17% supporting its use of unmanned strikes.
One victim was Daud Khan, a local tribal elder from Datta Khel, who was killed in March 2011, along with 40 other people, while attending a jirga, which is a peaceful council of elders. His son, Noor Khan, has launched legal proceedings in the United Kingdom, alleging that the British Government provided locational intelligence to the CIA about individuals of interest to the United States and that this intelligence is then used to direct drone attacks in Pakistan. The legal statement for the case asserts that if Government officials assisted the CIA to direct armed attacks in Pakistan, they are, in principle, liable under domestic criminal law. Such allegations damage our relationship with Pakistan, which will draw its own inferences from the Government’s refusal to confirm or deny whether intelligence has been shared with the United States.
Jim Shannon (Strangford) (DUP)
I thank the hon. Gentleman for bringing this matter to the House. Does he agree that, while we regret the loss of civilian lives, the drones’ military objective of taking on terrorism is vastly important? Is it not better to use them to save British Army lives?
Rehman Chishti
I thank the hon. Gentleman. That is an important point. I am not against the use of drones, but it has been asserted that the United States operates drone strikes not simply against known targets, but against suspects, and that is completely unacceptable when somebody may or may not be an insurgent. Drones have their place; if they can be deployed, and the intelligence is good, of course we have to look at using them. However, in Pakistan, there have been 885 fatalities in 3,330 strikes, which is completely unacceptable. I am therefore asking the Minister for assurances that we will ensure that drones are linked to proper intelligence. If steps can be taken to avoid civilian casualties, drones can, of course, be used to target known militants, as they have been.
Jason McCartney (Colne Valley) (Con)
As a former RAF officer, may I say that a poorly targeted air strike is a poorly targeted air strike, whether it is carried out by a Tornado, a Mirage, an F-15 or a remotely piloted vehicle? I praise my hon. Friend for bringing in the phrase “remotely piloted vehicles”, because drones are not unmanned—they have a pilot, and they are remotely piloted. We must get away from the idea that this technology is flying around, as in “The Terminator”, just destroying targets. Last week, I saw the Reaper squadron combating Somali piracy, and they are really helping to reduce attacks. Does my hon. Friend agree that drones have good uses when used well by allied forces?
Rehman Chishti
I am grateful to my hon. Friend for making that key point about drones being used well. I have seen drone strikes in Pakistan, where Baitullah Mehsud, a known terrorist, was taken out, and drones of course have their uses. The other key element, however, is the huge number of civilians who are losing their lives. That undermines the work being done in Afghanistan, because the hearts and minds that we want to win are lost when we lose so many civilians. Of course drones should be used—absolutely—but there is also the issue of proportionality and of ensuring that drones are used with proper intelligence. I thank my hon. Friend for his expertise. The point I was making—I have touched on it previously—is that the use of drones fosters anti-west sentiments, which could be a danger to our security in this country.
My fourth question is, can the Government make clear whether the UK has shared locational intelligence with the United States, leading to drone strikes in Pakistan? Question No. 5 is, what is the Government’s policy on the circumstances in which intelligence may be lawfully transferred? Question No. 6 is, do the Government believe that there is an armed conflict in Pakistan? If not—this is question No. 7—do they accept that a UK national who carried out a targeted killing in Pakistan could, in principle, be liable under domestic criminal law? My question No. 8 is whether, in that case, the Government accept that if UK officials were to share intelligence with the CIA that they knew or believed would be used to assist in drone strikes they could, in principle, be liable under UK law.
I recently asked the Secretary of State in the House a question about locational intelligence and his reply raised more questions than it answered. He said:
“The United States operates in Afghanistan under a different basis of law from the one under which we operate.”—[Official Report, 22 October 2012; Vol. 551, c. 696.]
As I understand matters, there is only one basis for international law, so my next and ninth question to the Minister is, under what legal basis do the Government believe the United States to operate, and why is that so different from international law?
Drone use by the United States raises several legal questions. It has been argued that drone strikes in Pakistan have been carried out in violation of international humanitarian law. The high number of civilians killed in such attacks who were not participants in armed conflict raises questions about whether their use is proportionate. Christof Heyns, the UN special rapporteur on extra-judicial killings, has even suggested that some of the drone attacks may constitute war crimes. A recent report by Stanford university and New York university called “Living Under Drones” describes the strikes’ effect on cultural, religious and community life in Pakistan, where some families even refuse to send their children to school, in case they are attacked. The authors also detail the use of double tap strikes where the same area is attacked multiple times, deterring humanitarian assistance.
At a time when Pakistan faces severe poverty and one in four live on £1 a day or less, drone strikes threaten to undermine the work achieved through international aid. By 2015, Pakistan will become the UK’s largest recipient of aid. Yet that good will is threatened by such military activity. We need to ensure that Afghanistan and Pakistan are safe, secure countries but drone strikes can undermine the important battle to win hearts and minds. My tenth question to the Minister is whether drones are being used proportionately and whether enough is being done to protect civilians.
The issues that I have raised deserve serious consideration. If drones are to be more widely used, we must ensure that they are deployed so as not to create a risk of civilian deaths and collateral damage, or pose a risk to international relations or a danger to our national security. I urge the Minister to ensure that the United Kingdom’s policy on drones and sharing intelligence that may be used in drone strikes is fully compliant with the relevant national and international law. In answer to the interventions of the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Colne Valley (Jason McCartney), I would say that if drones are used in accordance with our national law, and international law, I do not have a problem with that. However, there are concerns at the moment, linked to the issue of sharing intelligence with the United States, which may lead to attacks in Pakistan, about whether they are being used properly under national and international law.
Those are serious questions that need to be answered, and they damage the excellent work that this country does around the world, in rightly giving international aid and winning hearts and minds. The tragic London bombings of 2005 were linked to the border region of Afghanistan and Pakistan. We need a secure and prosperous Afghanistan and Pakistan, which may be linked to international security.
Sir Roger Gale (in the Chair)
Order. In half-hour Adjournment debates only the sponsoring Member may speak, unless others have the consent of that Member and the Minister. My understanding is that both Yasmin Qureshi and Nick Harvey have sought consent to do that, but the Chair deprecates the fact that a Minister is sometimes left without sufficient time to respond; so I should be grateful if hon. Members kept their contributions very brief.
Yasmin Qureshi (Bolton South East) (Lab)
I congratulate the hon. Member for Gillingham and Rainham (Rehman Chishti) on securing the debate. This issue is incredibly important, especially in Afghanistan and Pakistan. I have constituents of Pakistani Kashmiri and Afghan heritage, and they have several times come to see me, and written many e-mails and letters to me, about drone attacks, especially as some of them have family members living in the relevant parts of Pakistan—Waziristan and other areas. They have told me in person about the effects of drone attacks. They ask, “How would you feel if you were asleep at night and suddenly you heard drone attacks—buildings being destroyed and people being killed: you would not know from day to day what would happen. One minute you are peacefully asleep in bed, and the next an attack is happening.” How would we like that—if people were asleep in Bolton, for example, and that were to happen, with the deaths of young children as well as adults, including old people. Much has been made of the shooting of young Malala, but there are many other young Malalas in that part of the world—and young boys, too, and families being destroyed.
Our argument for using drone attacks in the countries in question has always been that we are trying to get rid of the Taliban or al-Qaeda. According to some statistics—and these were in a recent American study—only 2% of people killed in all drone strikes could possibly have been called al-Qaeda or Taliban; 98% of the people were civilians and not involved in armed conflict. It is fine to protect our country. I live here, and I want to be protected as well; but is it really fair that we should engage in actions that lead to that proportion of deaths of ordinary innocent civilians? I am sorry to say that is not right, and the reason is the way the drones are used. I entirely accept the fact that if they are used properly and targeted at people who are known to be involved in illegal or criminal activities, there could be a justification. Under article 2.4 of the United Nations charter, force can be used if the host nation agrees, and the action is in self-defence. From everything that we have heard from the Pakistan Government, they do not agree to the use of drones in their country. Recently at the UN Human Rights Council in Geneva, the Pakistan Foreign Minister Hina Rabbani Khar said that they object. There is therefore a question of the legality of the weapons.
That issue is coupled with the fact that drones are not targeted properly. It is not the case that there are particular houses or positions, with people known to have committed criminal or terrorist offences. It might just be right to target such positions if it accorded with international law; but the evidence increasingly shows that drones are being targeted not at specific people but randomly, that they are being controlled, in America, not by the army but the CIA, and that there are successive strikes with more than one hit in the same place. That cannot be right. I am sorry if I sound very passionate about this, but thousands of innocent lives have been taken in Pakistan and Afghanistan—and in Yemen and elsewhere, although I do not have many constituents from there. I can talk more about Pakistan and Afghanistan, where the most intensive drone use has been.
There are ways to fight a battle, but we must abide by international law. I am grateful that an investigation is being carried out by the UN rapporteur on counter-terrorism, the British lawyer Ben Emmerson QC, on whether the use of drones is legal, and I wonder whether the Minister will also welcome that. If it is found that they are illegal, will we desist from using them in our campaign?
My final question for the Minister is: if drones are being used legally, are they being used strategically? At this moment in time, the evidence tells us that they are not being used properly, and that they are wrecking the lives of thousands and thousands of innocent people. We would not like it if, when going to a wedding, funeral or procession, we did know whether we might suddenly be attacked. We should put ourselves in the position of the people living in that country.
Sir Nick Harvey (North Devon) (LD)
There is nothing inherently wicked or virtuous about a remotely piloted aircraft. The moral questions that have been raised hinge entirely on what is done with them. In that sense, there is little, if any, valid comparison to make between what the United States does with remotely piloted aircraft in Pakistan, and what we do with them in Afghanistan. It is up to the United States, not to a British Minister, to justify what the US does with them in Pakistan, and we will all have our own view on that.
On our use of remotely piloted aircraft in Afghanistan, we should be very proud of and pleased with the part they are playing in our campaign. I have visited Creech in Nevada, and I have also watched the RAF pilots who remotely pilot aircraft in Afghanistan. They do tours of duty of about a couple of years, so they very often have a more intimate knowledge of the situation on the ground than those sent to patrol on foot, who do a six-month tour of duty.
From what I have seen, I believe that in many instances remotely piloted aircraft have a restraining impact on what actually takes place on the ground. Their ability to hover, loiter and build up an intelligence picture over as much as 24 hours—to use that information and share it with those on the ground—has a civilising effect on the nature of the combat that takes place. To suggest that remotely piloted aircraft are inherently evil and should be discarded from our inventory would be to make a bad mistake. I hope that the vice-chief’s prophecy that they will become increasingly common in years to come will prove true.
The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)
It is a pleasure to serve under your chairmanship today, Sir Roger.
I congratulate my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) on securing this important debate on the Floor of the House. This subject clearly arouses considerable passions, some of which are better informed than others, but all of which are important. This is a good opportunity to place the Ministry of Defence’s use of unmanned aerial vehicles—UAVs—on the record, so I am grateful to my hon. Friend. I shall endeavour to answer as many of his detailed questions as I can in the time available.
I will take a few minutes to explain the context in which UK armed forces operate our fleet of unmanned aerial vehicles. They are often referred to as drones, but that term is misleading, as it implies that there is no human input into the operation of UAVs. As was said by my hon. Friend the Member for Colne Valley (Jason McCartney), who has direct experience, military personnel are intimately involved in the operation of UAVs flown by UK forces, with professional pilots being in control and military and civilian personnel analysing the collected intelligence.
I know that the Chief of the Air Staff, Air Chief Marshal Sir Stephen Dalton, prefers “remotely piloted aircraft”, a term which was mentioned by my hon. Friend. That better reflects the fact that trained personnel are always engaged in the decision-making process. For the sake of clarity, I will use the more widely recognised UAV terminology, although I entirely agree with the Air Chief Marshal’s sentiment.
The UK has a number of UAV systems currently deployed in support of operations in Afghanistan, and they are vital to the success of the mission. I recognise that their use is often emotive, but we can use this debate to dispel some of the misapprehensions that surround their deployment. UAVs are saving the lives of both British and coalition service personnel and Afghan civilians on a daily basis. Their use is predominantly as intelligence, surveillance and reconnaissance—ISR—assets and, when weapons are deployed, the decision-making process leading to the identification and engagement of a target is identical to that for manned aircraft.
The UAV systems being operated in Afghanistan form part of a mix of airborne ISR capabilities. They are but one, albeit an increasingly important, component of those systems. They complement the more traditional manned surveillance capabilities provided by aircraft such as Sentinel or the Sea King helicopter. Uniquely, UAVs provide an unblinking and persistent ISR presence that can be exploited with crews being relieved while the aircraft remain airborne, as was made clear by the hon. Member for North Devon (Sir Nick Harvey). That would be too resource-intensive to provide from manned aircraft alone. Persistent surveillance provides a significantly more complete intelligence picture, which decreases the risk of misidentifying targets of interest. The ability of UAVs to loiter over areas to survey for enemy activity, feeding video and imagery intelligence to commanders in real time, makes them an invaluable asset on the ground in Afghanistan and allows coalition forces to stay one step ahead of the enemy.
As with all our deployed capabilities, UAV capability in Afghanistan is constantly under review. Reaper is the UK’s only medium-altitude, long-endurance ISR platform currently in service, and it has provided ISR capabilities to coalition forces in Afghanistan since October 2007.
Rehman Chishti
On Afghanistan, will the Minister clarify whether he has the facts and figures about how many civilian casualties have occurred as a result of those drones?
Mr Dunne
I will come on to address my hon. Friend’s specific question.
Reaper has provided more than 40,000 hours of persistent intelligence in support of our front-line troops, giving vital situational awareness and helping to save military and civilian lives in Afghanistan. Its success has been such that, in December 2010, the Prime Minister announced an increase in the number that the Royal Air Force operates. The Army also operates unarmed tactical UAVs for ISR purposes, and it has introduced a range of the latest nano-UAV technology to service operations this year. Together, the UK’s fleet of UAVs have carried out well over 100,000 hours of flying in Afghanistan.
Its primary role is ISR, but Reaper is also the UK’s only armed UAV. In its armed configuration, Reaper has been certified for use only in support of ground forces in Afghanistan. For example, it was not used during Operation Ellamy over Libya. In answer to their questions, I assure my hon. Friend the Member for Gillingham and Rainham and the hon. Member for Bolton South East (Yasmin Qureshi) that it has not been operated in Pakistan. Reaper is not used in Somalia either; my hon. Friend the Member for Colne Valley was perhaps thinking of Predator UAVs operated there by the US.
Mr Dunne
I have only a short amount of time, and I must still deal with many of my hon. Friend’s questions.
It is important to note that Reaper does not have the capability to deploy its weapon systems unless commanded to do so by the flight crew. They are trained to operate under the Geneva conventions on the law of armed conflict, which is otherwise known as international humanitarian law. On the rare occasions that weapons are used—349 precision-guided weapons have been employed since Reaper went to Afghanistan—the strict rules of engagement for the use of weapons are the same as those that apply to manned combat aircraft, which have been designed to minimise the risk to civilians. The selection and prosecution of all targets is based on a rigorous scrutiny process that is compliant with international law. Reaper is launched and recovered by crews deployed in Afghanistan, but its missions are exclusively controlled by RAF personnel based outside Afghanistan. That means that, rather than being rotated through a six-month deployment to theatre, operators build up an unsurpassed degree of knowledge and experience.
The weapons carried by Reaper are all precision-guided, and the type is carefully selected in every engagement to ensure the most appropriate munition is used to deliver the required effect, so minimising the risk to civilians and their property. I am aware of only one incident of civilians having been killed by weapons deployed from a UK Reaper. As my hon. Friend the Member for Gillingham and Rainham may know, on 25 March 2011 a strike on two pick-up trucks carrying a significant quantity of explosives resulted in the death of four Afghan civilians, as well as of two insurgents. That incident was highly regrettable, but the subsequent report concluded that the actions of the Reaper crew had been in accordance with extant procedures and UK rules of engagement.
The moral, ethical and legal issues associated with the operation and use of weapons from UAVs are the same as those for manned aircraft. As I said at the beginning, there is always a human in the loop. Although technological advances are likely to increase the level of automation in some systems, just as in other non-military equipment, the Government have no intention of developing systems that operate without human intervention in the weapon command and control chain.
My hon. Friend raised some questions regarding the use of armed UAVs by the United States. I am not going to comment on the operations of our allies and—this is long-standing Government policy—for reasons of operational security, the Ministry of Defence does not comment on its intelligence-sharing arrangements with coalition partners. Countries can, of course, make their own interpretation of what they are permitted to do under international law, and it is a matter for the US Administration, whoever they are after today’s election, to assure themselves that the actions they undertake are lawful.
In Afghanistan, our UAVs are an increasingly important means of providing vital information to our ground forces. They have been proven to provide great military benefit. I can reassure my hon. Friend and the House that I am satisfied that the UK’s policy on UAVs is fully compliant with national and international law.
High Speed Rail (Scotland)
(12 years ago)
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Sheila Gilmore (Edinburgh East) (Lab)
It is a pleasure to speak under your chairmanship, Mr Chope. I sought the debate because of the huge importance that high-speed rail has for us in Scotland—for our economy and for Scotland’s development over a long period into the future. Obviously, like many other Scottish MPs, I have a personal interest: when Parliament is sitting, I spend nearly 10 hours a week sitting in trains. I quite enjoy it and I can get a lot done, but I think we are on the cusp of being able to achieve a modal shift in the way that people travel between Scotland and London. That is important, including for environmental reasons, because at the moment the journey time is such that on some occasions or in some circumstances, flying seems preferable. That adds to the pressure on London airports. If we could make progress on rail, it would help us to meet our environmental targets.
This debate follows a debate earlier this year led by my hon. Friend the Member for Glenrothes (Lindsay Roy). Since then, two things have happened. First, we have a new Secretary of State and a new Minister of State. Secondly, and perhaps even more important, the new Secretary of State made a very important commitment in his speech at the Conservative party conference last month. This is what he said:
“At the start of this year, the government committed to build a new line not just to Birmingham but on to Manchester and Leeds. Soon, I’ll publish detailed plans for the route north of Birmingham, but I want even more parts of our country to benefit. So we’re launching a study on the way to get fast journeys further north still, with the aim of getting the journey from Scotland to London to under three hours and making sure the north-east benefits too, because this will be a scheme for every person in Britain.”
Jim Shannon (Strangford) (DUP)
To follow on from what the hon. Lady is saying, this scheme will benefit everyone in the United Kingdom of Great Britain and Northern Ireland. Does she envisage this high-speed rail having contact with Larne, Cairnryan and Stranraer, thereby ensuring that the people of Northern Ireland can also benefit from the high-speed rail link, which ultimately will take them to London? Based on a very significant business plan—
Mr Christopher Chope (in the Chair)
Order. We must keep interventions short.
Sheila Gilmore
I thank the hon. Member for Strangford (Jim Shannon) for his intervention. I am sorry, but I was reading out a quote; it was the speaker of those words who stopped at Britain and did not talk about the United Kingdom. I think that any options that can be built in for some of these things would be very useful. Anyone who has ever travelled to Stranraer using the current arrangements will know just how difficult that is. It is a big disadvantage for both Northern Ireland and Scotland that we do not have a particularly good rail link down to the ferry ports.
In the debate in April, we talked about getting the journey time down to three and a half hours—that is what the previous Minister said—but a commitment to bring it down to three hours is a welcome further step in the right direction. That would hugely enhance connectivity. It would improve links, not just the Scotland-London link, but links to other parts of England and the major conurbations, which would make Scotland a much more attractive place to do business. It would boost jobs and growth throughout the country.
Lindsay Roy (Glenrothes) (Lab)
In the event of separation, what incentive would there be for the rest-of-the-UK Government to extend high-speed rail beyond Manchester to Carlisle and further north?
Sheila Gilmore
I thank my hon. Friend for his intervention. I shall go into that in a little more depth later. It does reveal the issue that we might be faced with. The importance of the scheme, particularly the northern part, to Scotland is probably greater, at this stage at least, than it might seem to be to what we are tending to refer to as the rest of the UK at that point. I certainly hope that the situation alluded to is not one in which we find ourselves.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I congratulate the hon. Lady on obtaining the debate. Does she agree that it is very important to connect Scotland and England and that it would perhaps be advisable for the Government to consider starting with high-speed rail from Scotland to the north of England, and then finally down to London when the airport policy is decided, not least because that would send a signal to people in Scotland, who will be facing the referendum, that we want them in the United Kingdom?
Sheila Gilmore
I thank the right hon. Lady for her intervention. It would certainly be an interesting prospect if we were to be placed at the forefront of this. I agree that the connection with the debate about air travel and airports is also important. We should have a very clear, unified transport policy, not only for transport reasons but for environmental reasons, yet at times it feels as though there is a disconnect there. When it comes to people’s travel from Scotland, I am sure that if we did achieve high-speed rail in the near, not the very distant, future, we would see a huge transfer of both business and leisure travel to rail. That would be highly beneficial.
If there is to be a study, I have some questions for the Minister. Who is carrying out the study that we were told is to take place? Is it HS2 Ltd, the Department, or another external organisation? When are we likely to get a report with the information? That is important, especially in terms of timing, because it will determine whether the additional sections of line to Edinburgh and Glasgow could be incorporated in phase 2 of the project. Phase 2 is the part that involves the building of the Y network from Birmingham to Leeds and to Manchester. Broadening the scope of phase 2 would be critical in ensuring that the benefits of High Speed 2 are realised sooner rather than later. The alternative is that what I have described becomes phase 3, which would be very disappointing.
The estimated completion date of phase 1 is 2026. For the existing phase 2, it is 2033-34. If building to Scotland were to be a completely separate phase, on that sort of time scale we would not see the network reach Scotland until well into the 2040s. From our perspective, and in terms of growing the Scottish economy, that would be extremely disappointing.
We know that the Secretary of State intends to publish plans for the route between Birmingham and Manchester and Leeds by the end of this year. A recent written answer revealed that the Minister wants to bring forward consultation on phase 2 from 2014 to 2013. I warmly welcome all that, but I argue that the plans to build to Scotland should be published and consulted on, so that, at the very least, that section of the route can be included in the hybrid Bill for phase 2. I acknowledge that planning is likely to be at a fairly early stage, but there some key issues about the route to Scotland on which I hope that the Minister will be able to give us some reply, or at least an undertaking that he and his Department will examine that.
One issue is whether building to Scotland would involve two separate lines—one from Manchester to Glasgow on the west coast and one from Leeds to Edinburgh—or one line, probably from Manchester, that would split into a further Y in southern Scotland and link to both Edinburgh and Glasgow. That is already in place for certain rail journeys, and has been for a long time, as anyone who travels north or south on the sleeper will know. That mechanism enables Edinburgh and Glasgow to link to not only London on conventional-speed rail, but many other parts of the country, and it is a big boon for many people who travel that way.
Will the stations in the existing phase 2 be through-stations or terminuses, as planned for Birmingham? I would argue that through-stations are vastly preferable, because each service to and from Scotland could call at stations on the line, which increases connectivity and reduces the need for additional point-to-point services or people having to change to complete their journey.
At this stage, it is important to acknowledge that regardless of when the high-speed network is extended to Edinburgh and Glasgow, passengers in Scotland will benefit as soon as the first phase of the project is complete. Sometimes, the impression is given that high-speed rail is irrelevant to us at that stage, but if the line from London to Birmingham is connected to existing lines, it will allow trains to continue beyond Birmingham at conventional speeds, which could cut journey times from Scotland to London by half an hour. I hope that Scotland will be part of phase 2, but even without that or a phase 3, journey times could be down to three and half hours. Such reductions in journey times are critical when we are looking at the best methods of travel. To return to the environmental issue, it is the kind of difference that will make people realise that rail is by far the better way to travel. It will also fit in with our business needs, because travel will still be from city centre to city centre.
Will the Minister confirm that, from the completion of phase 1, through-running trains will go to both Glasgow and Edinburgh? HS2 will be linked to the west coast main line at Lichfield, and traditionally trains on that line serve only Glasgow, not Edinburgh. We are aware that there are capacity constraints on the west coast main line, but it would be frustrating if Edinburgh had to wait for the completion of phase 2 to benefit from through-running trains. We are not only talking about Edinburgh, but the entire east coast; people coming from further north would also be able to make use of such a connection.
I promised my hon. Friend the Member for Glenrothes that I would say a little about the circumstances that would arise should the referendum result in independence. The HS2 project, probably more than any other, encapsulates why we are better together. The Union means that Ministers in Westminster have a responsibility to look out for the interests of people in Scotland alongside those of people in England, Wales and Northern Ireland. That is demonstrated by the decision to facilitate through-running to Scotland from the completion of phase 1 and by the Secretary of State’s stated ambition to drive down journey times further in future. Should Scotland separate from the rest of the UK, it is possible that a benevolent Government in Westminster might retain those commitments, but that is not guaranteed. If Ministers decided that they would not fulfil those commitments, there would be no formal means of redress though, for example, voting against governing parties at the next general election. There would not even be forums such as Westminster Hall where Members representing Scotland could directly raise and debate the issues.
On a purely practical level, I cannot envision the Government of a separate Scotland persuading Ministers in the UK to pay for the hundreds of miles of expensive, high-speed track necessary to link Leeds and Manchester to the Scottish border. I believe that that is the point my hon. Friend wanted to make. UK Ministers would probably expect a Scottish Government to pay for that in addition to what would be required in Scotland—a huge additional expense.
Graeme Morrice (Livingston) (Lab)
I congratulate my hon. Friend on securing this important debate. She makes a powerful argument for the completion of the line to Edinburgh and Glasgow. On the latter point, does she take the view that an independent Scottish Government would not have the financial resources to ensure that the high-speed rail link continued to Edinburgh and Glasgow?
Sheila Gilmore
I think that is an extremely likely scenario. We are often faced with proponents of separation suggesting that nothing will change—we can keep the Queen, the pound and all sorts of things—so they will no doubt tell people that they can keep high-speed rail, but that is most unlikely to happen.
Even if the UK Government decided to build the sections between Manchester and the border, or the Scottish Government decided to pay for them, what would happen if there was a concerted campaign against the route and local people decided that they did not want the line to cross their communities? In such circumstances, why should a UK Government expend the political capital necessary to overcome the objections? We could again find ourselves unable to influence the debate.
I do not expect the Minister to say too much about independence, but I would like answers to the questions on the study, the possible route and through-running to Edinburgh. When will the study report? Will any proposed route be incorporated into the hybrid Bill for phase 2? What is the likely route to Scotland? Will the stations in the current phase 2 be through-stations or not? Will there be through-running trains to both Glasgow and Edinburgh when services start after the completion of phase 1 in 2026?
The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I congratulate the hon. Member for Edinburgh East (Sheila Gilmore) on securing the debate and on her sensible approach to it. To pick up on her last point, we have always believed that the aspiration that we should pursue is for a truly national rail network. Our policy is to maintain the United Kingdom as it is. We are confident of winning the referendum, and we are not planning for independence. I personally think that the Scottish people will conclude, for the reasons that the hon. Lady set out, that independence will be yet another gamble as far as high-speed rail is concerned.
Behind all the headline statistics, HS2 is about believing in something better than we have. The coalition Government passionately believes that the public deserve more than just making do with what they have. In the same way that we are not prepared to put up with a fiscal deficit, neither should we put up with an infrastructure deficit. For too long, successive Governments have failed to grasp the nettle on the decisions necessary to achieve our long-term aspirations.
Growing demand for inter-city rail travel is putting increasing pressure on existing infrastructure. Without planning for additional capacity, passengers face the prospect of more crowded and more unreliable services. To be clear, the primary, though not the only, justification for HS2 is a clear need for extra capacity north to south.
Our plans for a high-speed rail network from London to the west midlands and on to Leeds and Manchester will be the backbone of a new transport system for the 21st century. A new national high-speed rail network will deliver massive benefits in terms of rail capacity, connectivity and reliability that will help to underpin prosperity across the UK and leave a lasting legacy for generations to come. HS2 will benefit every type of traveller on not only the new network, but existing lines. It will free up more space and capacity, which will drive competition on the railway, so changing how rail travel can be marketed and sold.
The Government is serious about making the long-term decisions that the country needs to connect our communities better, support the economy and make Britain the best place in the world to do business.
Mrs Gillan
My hon. Friend is reading out the public relations blurb on HS2 very expertly. Does he agree that, given that the north of England and parts of Scotland are far poorer than the rich and often overheated south-east, if one of the Government’s aims is to increase the country’s prosperity, it would have been common sense to have started the project in the north or even in Scotland, as I suggested to the hon. Member for Edinburgh East (Sheila Gilmore)? What consideration did the Department give that idea before embarking on phase 1?
Norman Baker
I personally believe that we are starting at the sensible place, not least because it enables the connection with HS1 to be facilitated, which would not otherwise be the case. Of course if the Scottish Government wants to start building southwards from Edinburgh and Glasgow, there is nothing to stop it from so doing. On the question about what consideration the Department gave, I will have to ask the Minister of State for Transport, my right hon. Friend the Member for Chelmsford (Mr Burns), to write to my right hon. Friend with an answer.
The Department for Transport ministerial team is very much engaged in the question of HS2 as it affects and, indeed, benefits Scotland. I visited Glasgow to discuss the matter in March 2011. The former Secretary of State for Transport, my right hon. Friend the Member for Putney (Justine Greening), went there in March this year, and the current Secretary of State intends to visit later this month. There is no question but that Scotland will benefit from the Y network and even from the existing plans that have been announced.
The hon. Member for Edinburgh East referred to the reduction in journey times from Birmingham in phase 1 and the subsequent journey time reductions when the Y network to Leeds and Manchester is completed. We have already begun work with partners north of the border to ensure that Scotland gets the most from High Speed 2, and we should not underestimate—I know that the hon. Lady does not do that—the extent of the benefits from the Y network when it is completed.
The network is expected to deliver up to £50 billion of business benefits alone, and that will be felt very much in Scotland and the north of England as well as the south. Completion of the Y network to Leeds and Manchester will spread the benefits of high-speed rail across the country, so increasing capacity and enhancing connectivity all the way to Scotland by relieving pressure on the most congested southern end of the line. Seamless transition of trains on to the east coast and west coast main lines will deliver faster journeys to destinations the length of Britain, including to Edinburgh and Glasgow, without the need to change trains.
Cutting journey times is important for the competitiveness of not just Scotland but the whole UK. We want to see the benefits delivered as soon as possible, which is why we are exploring options for bringing forward formal public consultation on phase 2 of the Y network to 2013.
The claim by some opponents of HS2 that better and faster transport links between north and south will pull economic activity into London and away from the UK’s other great cities is defeatist and misguided. Isolation is not the way to ensure that Scotland thrives. Indeed, the campaign for HS2, which has been particularly strong in Scotland and the north, suggests that people in those areas share that view. I have every confidence that bringing Edinburgh and Glasgow closer to London and the cities of the midlands and the north of England will boost growth across our major conurbations. That confidence is based on the evidence from our European neighbours, which began their high-speed rail journey a generation before we had even started arguing about our first 67 mile stretch of high-speed track from the channel tunnel.
Faster journeys will produce more extensive modal shift between rail and air, as the train becomes the mode of choice for more travellers. High-speed rail is already greener than flying, and the gap between the two modes will widen as we make progress in decarbonising the sources of our electricity.
A crucial point to underline is that we are pursuing HS2 not just because of the positive benefits that it will generate but because of the pressing need to head off big problems that are heading down the track towards us, which will affect Scotland as well as the rest of Britain. We welcome the enthusiasm and support for high-speed rail north of the border.
Graeme Morrice
I welcome many of the Minister’s comments. Forgive me for raising independence again—obviously it is something that those north of the border will be focused on for the next two years in the run-up to the referendum—but does he share our view that, in the event of Scotland becoming independent, HS2 would be in serious jeopardy in relation to the rail links continuing to Edinburgh and Glasgow?
Norman Baker
I do not think that the population north of the border will vote for independence, so I hope that that is a hypothetical question. I would say not that HS2 is in serious danger, but that it unnecessarily raises a question mark over something that is not there. That in turn brings an air of uncertainty over HS2, which is also not presently there.
We are working closely with the Scottish Government throughout this year to understand how HS2 might be extended further north. The coalition agreement makes it clear that we want a genuinely national network. We see phases 1 and 2 of the High Speed 2 project as the best way to make progress towards that goal. None the less, there is a real case for examining whether we should go beyond the Y network, as the Secretary of State said at the Conservative party conference last month. The Department is launching a study on ways to get fast journeys further north and to Scotland and to ensure that the north-east benefits, too.
The hon. Member for Edinburgh East asked me a couple of questions about the study and when it would report. The study will involve departmental HS2 officials, who will start a process of work with the Scottish Government and northern English regions better to understand and articulate transport needs north of the Y network. The study will set out a remit for any future work, using as a starting point completion of the Y network. There is likely to be a focus on improvements in capacity and journey time. Once the study is complete early in the new year, we will take stock of the results to ensure that we have a full understanding of the transport needs north of the Y network. We will then have the right base from which we can consider scoping out broad options for bringing high-speed rail further north and to Scotland.
The study will not start with any preconceptions but will be open to all options that offer good value for money to the taxpayer. That may include a full high-speed solution, upgrades to existing infrastructure, or a combination of the two.
The hon. Lady also asked about journeys to Edinburgh, which she of course is interested in given where her constituency is sited. Let me make it clear that as soon as phase 1 is complete, there will be a link on to the west coast main line from the new high-speed line, which will enable services to be run from Glasgow and Edinburgh on the high-speed network using a bifurcation at Carstairs. That is perfectly possible in operational terms as soon as the link to Birmingham is completed in phase 1.
Our plans for HS2 do not mean that we will stop investing in and improving our current transport network. Generally, our investment programme is the biggest since the 19th century. We fully appreciate the need to enhance our network and improve links between England and Scotland. The inter-city express programme will deliver a brand-new fleet of trains for the east coast main line that will start operating in 2018 and offer faster, greener, higher capacity and better quality services well ahead of the Y network being completed. The trains will boost fast-line capacity from Scotland into King’s Cross during peak hours and cut journey times between London and Edinburgh by 12 minutes, with even larger gains for journeys to Dundee, Aberdeen, Perth and Inverness.
A major factor in our decision to press ahead with the IEP was its capacity to enable the continuation of through journeys to and from northerly destinations. On top of that, we have announced a £240 million upgrade of the east coast main line, which will greatly improve journeys between Scotland and England.
On the west coast route, the long-awaited new Pendolino carriages have started serving the Birmingham to Scotland corridor. The route will also benefit from an upgrade to its power systems that will enable more passenger and freight electric trains to operate.
The Manchester to Scotland route is also due to get new trains, with delivery starting in December 2013 and completion by May 2014. On the east coast, a new timetable introduced last May increased the number of through services between Scotland and London—it includes the Flying Scotsman—linking Edinburgh and King’s Cross with a fast service that can bring Scotland’s key business leaders into the heart of London in four hours, arriving before 10 o’clock each day.
We are also investing in stations north of the border. As part of the Department’s sponsored access for all programme, which falls within my portfolio, £41 million has been allocated to making at least 17 stations across the Scottish network accessible to disabled passengers. We are also investing more than £6 million up to 2014 across a wide range of Scottish stations to make smaller access improvements.
In conclusion, fast, reliable connectivity between Scotland, London and the cities of the midlands and the north is a crucial component of a successful economy, and we are investing to bring that about. High-speed rail not only supports thousands of jobs in Scotland and throughout the UK but gives us a once-in-a-generation opportunity to reshape the economic geography of the whole country, by bringing our key cities closer together and helping to bridge an economic divide that has defied solution for decades. This is a national scheme in the national interest being delivered by a national Government.
I warmly welcome the political consensus on HS2 across the three main parties on the basis that it will help to ensure that the planning and construction of this transformational scheme is carried through to completion. Realising the full benefits of high-speed rail for Scotland is crucial to the economic well-being of the whole country, and we will work with our partners in Scotland to achieve that. If there are any outstanding matters that I have not been able to address, I will ensure that my colleague, the Minister of State for Transport, will write to the hon. Lady with the answers.
Onshore Wind Turbines (Lincolnshire)
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Stephen Phillips (Sleaford .and North Hykeham) (Con)
Thank you very much, Mr Chope, for calling me to speak. It is a pleasure and a privilege to serve, for I think the first time, under your chairmanship. It is also a huge pleasure and privilege to be joined today by so many colleagues from throughout Lincolnshire.
In opening, I venture to suggest that this is perhaps a timely debate. I want to make it clear to the House that I applied for it well before the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), made comments on this subject last week with which so many of us agreed. Perhaps the strength of this coalition—not its weakness—has been its ability to allow those of us with different views to come together at a time when the country required strong Government to deal with the appalling legacy that we were bequeathed by our predecessors. That appalling legacy may not be the subject of today’s debate, but it is of course a fact.
The full truth about climate change, which is inescapably taking place, and the role played by mankind in our changing weather patterns, which is less clear, has yet to emerge. What is clear is that the risks are sufficient that, for the sake of future generations, we ought not to ignore them. How we tackle our over-dependence on fossil fuels is another question, however.
Whether one is a believer or a sceptic when it comes to man’s responsibility for climate change, we all ought to be able to agree that moving towards renewable sources of energy is beneficial, not only in reducing emissions but in ensuring our future energy security, particularly when we have passed peak oil and when fossil fuel supplies will inevitably become scarcer in the future. I do not doubt that by diversifying the nation’s energy mix we will move towards a cleaner and more sustainable energy portfolio in the future, with greater security of supply. If correctly placed—I repeat, if correctly placed—onshore wind can perhaps play a part in that process.
However, as hon. Members from all parties will know, many parts of rural Lincolnshire are affected by hugely unpopular decisions and proposals for onshore wind turbines—an issue that all of us here today have been contacted about by constituents on numerous occasions. Lincolnshire MPs are very lucky to live in and represent an area with beautiful countryside, but it also seems, regrettably, to be an area ripe for the construction of turbines, perhaps because of our large open spaces.
Currently, 10 wind projects are in operation in Lincolnshire, comprising 93 turbines in total, with a further three turbines being constructed. Thirteen projects are in the planning stage, with proposals for another 94 turbines.
Mr Edward Leigh (Gainsborough) (Con)
All Lincolnshire MPs are very supportive of my hon. and learned Friend in his endeavours. Does he think it a cruel paradox and irony that while thousands of Lincolnshire folk are being forced into fuel poverty because they have to pay extra on their fuel bills—and we are not a high-wage area—a few very rich farmers are being awarded sums of up to £250,000 by the taxpayer for doing nothing other than irritating their neighbours, and are also making no contribution to the economy?
Stephen Phillips
I have considerable sympathy with the point my hon. Friend makes; indeed, I will come on to the subsidies provided by the Government to those who go forward with these proposals. However, I think we can all agree that it is certainly right that those subsidies have to be kept under constant review.
Karl MᶜCartney (Lincoln) (Con)
I congratulate my hon. and learned Friend, and neighbour, on securing this debate. Does he agree that the point he was making, which has just gone out of my mind, regarding our area of Lincolnshire—I have completely forgotten what I was going to say.
Karl MᶜCartney
Well, many of us in Lincolnshire are against wind farms, and obviously the urban area that I represent—Lincoln—will be affected by any turbines that are put up in the rural areas around Lincoln.
Stephen Phillips
My hon. Friend’s opposition to wind farms that are not supported by local communities is extremely well known, not only in Lincolnshire but in this House. I also oppose such wind farms, and I know that many Conservative colleagues who represent other constituencies in Lincolnshire also oppose them.
The nature of our county inevitably means that turbines have a larger impact on residents in Lincolnshire than they perhaps do in other areas. Quite apart from anything else, these huge structures—some of them greatly overtop the height of Lincoln cathedral, which, I might add, is the most beautiful cathedral in England—can be seen for great distances on all sides around the county. Constituents who live near and far from proposed sites are thus properly concerned that even a small number of turbines have an overwhelming, disproportionate and oppressive visual impact, and they are often understandably worried about the effect of turbines on the value of their properties. That is to leave aside the health concerns about wind farms, which are too often brushed under the carpet. Many people within and outside Lincolnshire are concerned about the possibility of sleep disturbance at night, due to the noise of the blades, and the effects of shadow flicker and strobing during the day. The “whoosh whoosh” noise causes some people even to move home—when, of course, they can find buyers.
Many colleagues in the House representing rural communities will have encountered similar concerns, and there is a lingering doubt in my mind, as there surely is in the minds of others: that onshore wind is yet another example of an urban majority ignoring the concerns of those of us who have chosen to make our lives in rural Britain.
However, like all Members in this House, I have no direct responsibility for planning, and while I am perfectly prepared to support onshore wind where it has the backing of the communities it will most affect, too often I feel unable to protect and represent properly constituents who feel differently. As an MP, and like so many of my constituents, I therefore remain concerned about the planning process for applications for onshore wind developments, and it is on that issue that I primarily wish to focus my remarks today.
As I have already said, although we in this House have no direct influence on the planning process, which is of course perfectly proper, we have a responsibility for the framework within which decisions are taken. It seems to me that that framework is either broken or, at the very least, lacking in transparency. Too often, local concerns are overridden, even when local people are supported by their councils and councillors. Unpopular planning decisions are taken by inspectors with no knowledge of those local concerns, and over the heads of the councillors that local people elected to represent them and, indeed, to take planning decisions.
Like all of us, I always do my best to ensure that constituents’ views are taken into account, but often that is simply not enough. The steady flow of correspondence about these applications is matched only by complaints about feeling powerless to affect decisions that too often simply ignore what local people want.
The crux of the problem, which the Minister needs to engage with, is that I and seemingly most of my constituents are simply unsure where the balance lies between this Government’s laudable commitment to local power over planning, and the commitment to renewable energy targets to which we are bound. Although I join my colleagues from all parties in praising the Government’s efforts to bring the planning process down to a local level to give people more of a voice in development that affects them, it remains entirely unclear to me how this admirable aim fits with the goal of increasing the proportion of electricity we generate by renewable means. Consequently, I would like to hear from the Minister a commitment on behalf of his Department to publish full and accurate guidance on how those competing aims will be reconciled within a much simplified and localised planning system. That guidance cannot come too soon.
It is not just those who oppose development who are confused; even developers are unsure how the balance works in this area. RenewableUK, a representative body for many developers, says there is
“a lack of guidance on how national policies should be applied at the local and neighbourhood level.”
It is in everyone’s interest that such guidance be forthcoming—and soon.
However that may be, the problem remains that many of our constituents who object to wind turbine proposals will continue to feel out-gunned and out-argued by the developers, who have their teams of expensive consultants. I venture to suggest that, so far, the balance has swung in favour of what most of us consider an uneconomic technology—at least, uneconomic without the huge subsidies that are paid—and there is a general suspicion that if energy companies and developers push hard enough and spend enough on appeals, they will always be able to override the objections of local residents.
Martin Vickers (Cleethorpes) (Con)
My hon. and learned friend is making a powerful argument. East Lindsey district council is considering an application for an extension to a wind farm at Newton Marsh, near Tetney, which is just over the border from my constituency. Residents in Humberston and members of the Cleethorpes tourist trade oppose that application. Does he agree that we have a great opportunity in north-east Lincolnshire to attract business to investing in offshore wind, and that all subsidies should be directed to offshore rather than onshore wind?
Stephen Phillips
I agree with my hon. Friend. Far fewer people are opposed to offshore wind, although we need to grapple with the problem of transmission. Offshore wind does not cause the problems for our constituents that onshore wind does. If we are to go down the route of having more wind technology, we need to have most of it offshore.
I appreciate that none of us in this House can do anything about the relative wealth of energy companies compared with that of local residents’ groups. The short and simple point for the Minister is that my constituents too often feel that they are not being listened to, and I share their view. I make it clear that that is not nimbyism, nor should that be suggested. In this debate and previously in the House, I have made clear, as have most of those with whom I correspond on the issue, the importance of diversifying our energy mix both to reduce our impact on the environment and to bolster our energy security. If we are to do that successfully, it is vital to take people with us and not to ride roughshod over the feelings and concerns of those who live near proposed turbine sites.
We run the risk, if the issue is not dealt with, or not dealt with well, of being seen to revert to the kind of centralised planning decisions that the Localism Act 2011, which we all supported, was designed to consign to history. For that reason, if no other, the Minister needs to know that we all want greater clarity than presently exists on how such tensions are to be addressed. Since the problem cannot be ignored, our generation and this Government must ask whether the focus on onshore wind is the right way forward.
Even in a county such as Lincolnshire, the very nature of wind makes it an unpredictable source of power. Technologies to cope with the problems of intermittent supply are under development and are being improved. However, there is no question but that existing turbines have to be supported by other power sources to ensure constancy of supply. Notwithstanding the views of many Liberal Democrat colleagues, to whom I am perfectly prepared to listen, it remains of grave concern to many that there is no short-term solution other than the nuclear one, and that we are failing to devote either resources or political support to making what I regard as an unanswerable case.
The Government must—there are no two ways about it—address properly the subsidies that, in reality, are the only thing making onshore wind sustainable or, for that matter, attractive. Certainly, those subsidies are leading to all the applications for turbines across Lincolnshire. The cut in the relevant subsidy earlier this year was welcome, but I know that many remain concerned that it is too large and the cost too great. From April 2002 to February 2012, the total renewables obligation subsidy amounted to more than £8.2 billion, of which onshore wind received about £2.4 billion.
Yet providing those incentives—paid for through the higher energy bills that are of such concern to many wage earners in Lincolnshire, who do not have the sort of wages that others have—has encouraged developments that are not properly sited and which would plainly be unviable on purely commercial terms. Distorting markets, however laudable the aims, has never been a route to sustainable policy development or policy application. The Minister and his colleagues plainly need to grapple with that, and I urge him to do so.
No one would suggest that wind is the whole solution to our energy needs, but as I hope I have made clear, however much we are concerned, many of us are prepared to see it as part of a sustainable energy mix, provided that we can take with us those most affected by its generation. Future projects need to be in the right location and supported by local residents. If that does not happen, we will have got the approach completely wrong.
Let me clearly tell the Minister what the planning system must ensure. First, it needs to encourage projects in the right locations, which are likely to be where there is minimal impact on people’s lives or on the natural environment. In that regard, surely minimum separation distances are appropriate, and perhaps the Minister can say whether that is the case. Secondly, the planning system needs to ensure sustainability, which it cannot do while huge and uneconomic subsidies remain. Thirdly, it needs to engage with and respect the views of the constituents we are here to represent. Although they all need continuity of power supply, that should not be at the expense of their health and peace of mind.
The Minister may or may not be prepared to accept all of that from me today. Even if he is not, I tell him that the debate is moving in one direction only: the one in which the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Holland and The Deepings, has begun to steer it—a task in which I am, as ever, only too happy to assist.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
I am delighted to serve under your chairmanship, Mr Chope. I am particularly delighted that my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) has secured this debate and that my other hon. Friends have come to show their support for the concerns that he has raised on behalf of, collectively, their constituents in Lincolnshire. He has raised several important issues, including subsidies and the clarity of the current planning system, and he has offered some thoughts about the improvements we need to make. He has also discussed how his constituents and those of my other hon. Friends might benefit more from any wind farms that achieve planning permission and go ahead.
I will address all those points, but first I want to thank my hon. and learned Friend for setting the context of the debate. Not only now but, as I know from having studied the record, in previous discussions, he had made absolutely clear the importance of having a more effective mix of energy sources in this country, of increasing our reliance on renewables and of developing renewable supplies such as onshore wind. It is not necessary for me to detail all the arguments, because he has done that very eloquently. He recognises that to have energy security in this country—to ensure that we can keep the lights on—we must have such developments.
My hon. and learned Friend has raised planning issues, particularly in relation to Lincolnshire. As hon. Members will be aware, the geography of Lincolnshire is such that there is a particular interest in wind farms. People in his and neighbouring constituencies therefore have many concerns about the impact of wind farms on the area in relation to the tourist trade and house prices. Some people even question the effectiveness of wind turbines.
My hon. and learned Friend’s comments about subsidies are crucial. He recognises that action has already been taken to reduce subsidies, and I give him an absolute assurance that as the cost of technologies gradually falls and we become more efficient at developing them, as we expect, the level of subsidy will be kept permanently under review and that I expect to see further reductions over time.
Mr Leigh
Is there not another reason to reduce subsidies? I understand that, with the applications that are in the pipeline, we are en route to fulfilling our commitments. If it is the case that we have already met our obligations, surely it would be ridiculous to load extra money on to people’s fuel bills? Now is the time to plan ahead for reducing subsidies, is it not?
Mr Foster
My hon. Friend makes a good point. I have to tell him that I am not the Minister with expertise in that area, but I will draw his point to the attention of the Energy and Climate Change Ministers, who will perhaps write to him about it. We acknowledge, as I hope my hon. Friend does, that onshore wind is one of the more cost-effective and established renewable technologies. As we move to new and cleaner energy sources, it is important that electricity consumers do not, as he said, have to pay more than is necessary to decarbonise UK electricity supplies, which is why we are reducing the subsidy. We have to ensure energy security so that consumers are not subject to the vagaries of spot market prices or international tensions.
My hon. and learned Friend the Member for Sleaford and North Hykeham raised the issue of the present planning system, so it might be helpful if I set out not only where we are, but where we will be able to go. The energy national policy statements, which were approved by the House on 18 July 2011, set out the national policy against which proposals for major energy projects will be assessed by the national infrastructure directorate in the Planning Inspectorate—PINS—including those for onshore wind farms of more than 50MW in England and Wales.
The crucial point is that PINS must also have regard to any local impact report submitted by the relevant local authority. During the examination period, interested parties, including members of the public, will have an opportunity to comment on the application. Following an application, PINS will report its recommendation to the Secretary of State for Energy and Climate Change, who will take the final decision. The energy national policy statements are also likely to be a material consideration in decision making on relevant smaller renewable energy applications that fall under the Town and Country Planning Act 1990.
None of that, however, gives anyone an excuse for building wind farms in the wrong places, where there are unacceptable impacts on communities. I cannot say it more clearly than that. That is why our national planning policy framework makes it clear that local authorities should design their policies to ensure that adverse impacts from wind farm developments, including cumulative landscape and visual impacts—another point that my hon. and learned Friend made—are addressed satisfactorily, and it is why the framework states that applications for renewable energy developments, such as wind turbines, should be approved only if the impacts are, or can be made, acceptable.
We are committed to safeguarding the natural and local environment, and we have made that clear in the national planning policy framework, which protects valued landscapes. To ensure that the views of local people count, our planning reforms reinforce the importance of local plans. The Government’s aim is for every area to have a clear local plan, consistent with the national planning policy framework, which sets out local people’s views on how they wish their community to develop, against which planning applications and planning appeals will be judged.
Because we are clear in national planning policy that the cumulative impacts of renewable energy development should be considered, planning decisions on wind turbines are not taken in isolation from the local context. Decisions on planning applications for wind farms should take into account the combined impacts of developments and be underpinned by the environmental safeguards set out in the national planning policy framework. My hon. and learned Friend will be well aware that the development of local plans is therefore critical, and the most useful thing we can do is ensure that right across Lincolnshire local plans are put in place, because when they are, the level of protection that he and his colleagues seek is provided. Our approach as set out in the national planning policy framework, which allows local councils to identify suitable areas for renewable energy within those plans, is the one that we think preferable.
Regarding site-by-site decisions, the current approach of considering each proposal on its individual merits within the context of the local council’s development plan is already well established. It enables a flexible and tailored approach to be taken to each proposal. Decisions are made on a site-by-site basis, which means that the impacts of each proposal can be considered in the individual context. That enables impacts such as noise and shadow flicker to have tailor-made assessments using recognised methodologies, rather than being judged against some arbitrary separation distance, for which some people in Lincolnshire have been arguing. We think that a site-by-site approach is preferable because it enables the impact on the surrounding landscape to be considered and topography to be taken into account. It also means that it is possible to take into account such things as ambient noise levels and any future technological advances that further reduce the impact of turbines.
My hon. and learned Friend referred to planning inspectors’ decisions. If applications are refused locally and taken to appeal, they will be judged by an independent planning inspector. Although it is inappropriate for me to comment specifically on any individual development proposal, I appreciate the strength of feeling that wind farm developments can give rise to, and how local residents must feel when a planning inspector’s appeal decision gives the go-ahead to a proposal they have opposed.
As I have said, onshore wind, along with other renewable sources, plays a role in contributing to our energy security and our low-carbon goals, but the Government are clear that meeting our energy goals is no excuse for building wind turbines in the wrong places. I remind my hon. and learned Friend that planning inspectors determine planning appeals in accordance with the development plan for the area, unless material considerations indicate otherwise. In reaching a decision, the inspector will take into account all the relevant material and planning considerations, including local community views and the national planning policy framework. That is why I stress to him and his colleagues that getting local plans in place for the whole of Lincolnshire is crucial, in conjunction, obviously, with local communities.
I want to pick up two other points that my hon. and learned Friend made, first on localism in relation to our renewable energy targets. It is important to remember that through the Localism Act 2011, the Government are placing decision making back in the hands of local communities and their councils. It is the Government’s policy, as set out in the coalition agreement, to revoke the existing regional spatial strategies outside London, and we are making good progress in that respect.
Stephen Phillips
This Government have rightly abolished those disastrous spatial strategies, which were set up by the previous Government. My right hon. Friend represents the constituency of Bath, but does he agree that utter contempt is being demonstrated here for the people of Lincolnshire? Not a single Labour Member is present, nor has the party put up an Opposition spokesman to deal with the concerns of the people of Lincolnshire. Does the Minister agree that that demonstrates that Labour, along with its ridiculous spatial strategies, does not give a brass farthing about the people of Lincolnshire?
Mr Foster
Not only is my hon. and learned Friend here and eloquently representing the concerns of his Lincolnshire constituents, but he is flanked by my hon. Friends the Members for Gainsborough (Mr Leigh) and for Cleethorpes (Martin Vickers), who are doing exactly the same thing, which demonstrates that on this issue, and no doubt on many others, his party is standing up for constituents, and all power to their elbow—with the exception of places where members of my party are standing against them, when I might look for a somewhat different outcome.
I want to pick up one other crucial point that my hon. and learned Friend raised, and that is community benefit. We are as a Government keen to explore how our approach to onshore wind can be more localist. There are many examples, such as Baywind in Cumbria and Westmill farm in Oxfordshire, where local people receive financial returns from wind farms, but in many cases local communities have not so far enjoyed the benefits of the developments. That is why the Government are pursuing proposals for local authorities to be able to benefit by, for example, retaining all the business rates paid by new renewable energy projects such as wind farms. I think that that would bring some comfort to my hon. and learned Friend. Such measures are being taken forward in the Local Government Finance Bill, which is currently before Parliament, and which, subject to Royal Assent, will come into effect in April next year.
My hon. and learned Friend should also be aware that the Department of Energy and Climate Change has recently launched a call for evidence on onshore wind, which will seek, among other things, evidence on how communities can have even more say over hosting onshore wind farms and how wind farms could deliver greater economic benefits to communities. It will consider, for example, how wind farm developers consult with local communities about their plans, how the local economy can gain, and whether there are innovative ways of benefiting local energy consumers, for example, by offsetting electricity bills. Those are all measures on which we are keen to hear the views of the public, and in particular the views of people in Lincolnshire and of my hon. and learned Friend as the representative of his constituents. I urge him to submit his ideas as quickly as possible, because the deadline is 15 November—some nine days away. I hope that he will get his thinking cap on, and get into discussions with his colleagues and the community he represents.
There is an appetite for onshore wind in this country. Two thirds of the public believe that it is a way forward, as part of our energy mix. The Government believe that if we are going to have wind farms they have to be sited correctly, and my hon. and learned Friend is right to raise concerns about cases in which he believes that is not happening. We hope that with increased consultation with the community and increased powers for local people, such cases will not arise in the future.
Question put and agreed to.
Written Ministerial Statements
National Pupil Database
(12 years ago)
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The Secretary of State for Education (Michael Gove)
I am today launching a public consultation on proposals to amend the Education (Individual Pupil Information) (Prescribed Persons) (England) Regulations 2009 to enable the Department for Education to share extracts of data held in the National Pupil Database for a wider range of purposes than currently possible in order to maximise the value of this rich dataset.
The National Pupil Database holds one of the richest educational datasets in the world and forms a significant part of the education evidence base. It is a longitudinal database which holds information on children in schools in England. This includes pupil level data relating to school attended, teacher assessments, test and exam results by subject, prior attainment, progression and pupil characteristics.
We have already significantly expanded the content of school performance tables for primary and secondary schools and were commended in the National Audit Office report “Implementing Transparency” (April 2012) for opening up access to our data. Recently, we have also improved the application arrangements for requesting access to data from the National Pupil Database under our existing regulations for those who need pupil level data for research purposes.
However, we are aware that the existing Prescribed Persons Regulations may prevent some potentially beneficial uses of the data by third-party organisations, as use is currently restricted to “research into educational achievement”. For example, we have had to reject requests to use the data for analysis on sexual exploitation, the impact on the environment of school transport, and demographic modelling, all of which seem to be legitimate and fruitful areas for further research.
We want to give organisations greater freedom to use extracts of the data for wider purposes, while still ensuring its confidentiality and security. Existing arrangements for access to the data would apply to all future requests: all requests to access extracts of data would go through a robust approval process and successful organisations would be subject to strict terms and conditions covering their handling and use of the data, including having appropriate security arrangements in place. Organisations granted access would need to comply with the Data Protection Act, and any reports, statistical tables, or other products published or released, would need to fully protect the identity of individuals.
Amending these regulations should encourage more organisations to use the data for wider research, such as socio-economic analysis, or research into equality issues, including disability, gender or race. It could also help stimulate the market for innovative tools and services which present anonymised versions of the data.
If, having listened to the views expressed in the public consultation and subject to the will of the House, I decide to proceed with the proposed amendments, I expect the revised regulations to come into force in spring 2013.
The public consultation on this proposal will commence today and run for six weeks. A consultation document containing full details of this proposal and how interested parties can respond to the consultation will be published on the Department for Education website. Copies of that document will also be placed in the House Libraries.
Health
NHS Consultation
(12 years ago)
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The Minister of State, Department of Health (Norman Lamb)
I have launched a public consultation on proposals to strengthen the NHS constitution. These changes include:
strengthening patient involvement and shared decision making;
making clear the importance of patient and staff feedback;
setting out a new duty of candour;
emphasising the importance of integrated care;
clarifying patients’ rights for making complaints;
making clear how patient data is protected and used;
emphasising the importance of valued, empowered and supported staff to the delivery of high quality patient care; and
strengthening commitments to dignity, respect and compassion.
In addition, the Department of Health proposes some minor technical changes to the NHS constitution that are necessary to ensure it reflects legislative changes introduced since its launch in January 2009. This includes making clear that the constitution extends to local authorities in the exercise of their public health functions as set out in the Health and Social Care Act 2012.
The changes proposed in the consultation respond to the recent recommendations of the NHS Future Forum working group on the NHS constitution, which was tasked in March 2012 with advising the Secretary of State for Health on whether there was scope for strengthening and reinforcing the constitution. The Government accepts the forum’s recommendations in full.
Following the forum’s conclusion that awareness of the NHS constitution remains too low and should be increased, the consultation document sets out the Department’s commitment to work collaboratively with the NHS Commissioning Board, clinical commissioning groups, and Health Education England to promote and raise awareness of the constitution.
The consultation seeks views on how the NHS constitution can be given greater traction, so that patients, staff and the public know what to do if their expectations are not met. The Department will establish an expert group, which I will chair, to develop proposals to do this. We will consult on these separately in the spring following the report of the public inquiry into the events at Mid Staffordshire NHS foundation trust.
The consultation will run until 28 January 2013. The Government intend to publish the revised NHS constitution, together with updated supporting documents—the Handbook to the Constitution and Statement of NHS Accountability—by 1 April 2013.
“A consultation on strengthening the NHS constitution” 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.
Intelligence and Security Committee Annual Report (Government Response)
(12 years ago)
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The Prime Minister (Mr David Cameron)
The annual report of the Intelligence and Security Committee was laid before Parliament on 12 July 2012 (Cm. 8403). The Government have considered the Committee’s many useful conclusions and recommendations. I have today laid the Government’s response before the House (Cm. 8455).
Copies of the response have been placed in the Libraries of both Houses.
Green Bus Fund
(12 years ago)
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The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I am pleased to announce today that the Department is making a further £20 million available to help bus operators and local authorities in England buy low-carbon emission buses through a fourth round of the green bus fund.
Operators and authorities will be able to bid for a share of this funding to meet the additional up-front cost of purchasing these buses, and we calculate that this will allow for around 300 new low-carbon buses to be bought. This investment will aid the Department’s overarching objectives of helping to create growth and cut carbon, as well as help to support UK manufacturers.
A guidance document will be published later this month giving more details of how bus operators and local authorities can bid for a share of this fund. Copies of this will be placed at the same time in the Libraries of both Houses.
A toolkit has also been published today advising bus operators and local authorities on how quickly they can expect a return from investing in low-carbon emission buses.
Workplace Pension Reform
(12 years ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
Later today I will be publishing a call for evidence: “Supporting automatic enrolment: A call for evidence on the impact of the annual contribution limit and the restrictions on transfers on the National Employment Savings Trust”.
The National Employment Savings Trust (NEST) was established to underpin automatic enrolment and has a key role to play in making the workplace pension reforms a success. We estimate that between two and four million people will be enrolled into NEST by the end of implementation.
This call for evidence explores the questions raised by the Work and Pensions Select Committee about the impact that two of the constraints on NEST—the annual contribution limit and the restrictions on transfers—are having on employer choice and whether they work as the policy intended.
It is critical to the success of automatic enrolment that employer choice leads to individuals getting a good deal when saving for their retirement, provision that is suitable for their savings needs, with charges that offer good value for money. We do not want the achievement of automatic enrolment to be undermined by employers—particularly smaller employers—perceiving the annual contribution limit and the transfer restrictions on NEST as complex and costly to administer, potentially leading to adverse outcomes for individuals. However, evidence currently available to the Department for Work and Pensions is not conclusive that these two constraints are acting as an unintended barrier to employers choosing to use NEST.
This call for evidence seeks views and evidence on whether the annual contribution limit and the transfer restrictions imposed on NEST continue to work as intended or whether the Government should consider alternative approaches, especially as smaller employers start to engage with the reforms.
The document will be available later today on the Department’s website at:
www.dwp.gov.uk/consultations/2012/.
I will also place a copy in the Libraries of both Houses.
Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, if there is a Division in the House, the Grand Committee will adjourn for 10 minutes.
Benefit Cap (Housing Benefit) Regulations 2012
(12 years ago)
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Lord Freud
That the Grand Committee do report to the House that it has considered the Benefit Cap (Housing Benefit) Regulations 2012.
Relevant documents: 7th Report from the Joint Committee on Statutory Instruments, 10th Report from the Secondary Legislation Scrutiny Committee.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, these regulations will allow for the introduction of a benefit cap, as set out in Sections 96 and 97 of the Welfare Reform Act 2012. From October 2013, the benefit cap will form a key part of our plans for universal credit and we will shortly be bringing regulations to the House to support the introduction of this. However, we do not believe that it is right to wait until all existing claimants have migrated to universal credit before taking action. We are, therefore, bringing these regulations forward now, which will enable us to introduce the benefit cap from April 2013 by working with local authorities to reduce the amount of housing benefit in payment. The regulations are regarded as being compatible with rights under the European Convention on Human Rights.
The regulations set out the detail of the cap, including the level that it will be set at; how we will calculate a household’s overall entitlement to welfare benefits for the purpose of applying the cap; what benefits will be taken into account; how any reduction will be applied; exemptions from the cap; the relationship between the cap and benefit sanctions and other deductions; and rules on decision-making and appeals.
The level of the benefit cap will be set with reference to average earnings for working families. On its introduction in 2013, the cap will be set at £500 per week for couples and single parent households and £350 per week for single adult households. For couples and lone parents, that is a weekly income from benefits equivalent to earnings of £26,000 a year net or £35,000 gross. Exempting those entitled to working tax credit and setting the level on an earnings basis ensures that we incentivise work even further by not including in-work benefits in the cap.
This policy was debated at length during the passage of the Welfare Reform Act. On top of that, many noble Lords came to the briefing session that I ran for MPs and Peers before the Summer Recess. I am grateful for their input. Noble Lords will by now be well aware of the Government’s reasons for introducing a benefit cap. It is about incentivising work and promoting fairness. As it is currently designed, we know that we pay some claimants more money when they are out of work than they could reasonably expect to earn from working full time, making it hard for people to see that they are better off in work. We are trying to tackle this with the introduction of universal credit and, alongside it, the benefit cap. The core principle is that the state should not pay more in benefits than the average family earns from work.
We have said from the start that there are certain groups to whom it would not be appropriate to apply the cap. We are exempting households which are in receipt of disability living allowance, personal independence payment, attendance allowance and the support component of employment and support allowance, as well as households entitled to working tax credit and war widows and war widowers. Since the debate on the Welfare Reform Bill, the Government have announced some additional easements: namely, those relating to industrial injuries benefits and war disablement pensions and their equivalents under the Armed Forces Compensation Scheme.
We do not want to penalise those who have recently found themselves out of work and are doing the right thing to find new employment. Therefore, we have put in place a 39-week grace period for those who have been in work for the 12 months previous to losing their job. This will allow people time to find alternative employment or consider alternative options in order to avoid the cap. Following the point raised very helpfully by the noble Lord, Lord McKenzie, during the Welfare Reform Bill debates, we have made sure that this grace period will run from whenever a person’s job comes to an end, whether or not the job finished before or after the introduction of the cap. We have consulted with stakeholders and the Social Security Advisory Committee, which considered the regulations and subsequently consulted on the impact of the cap. This has informed our plans for evaluation. We have already announced that we will publish a review after the first year of operation.
It was inevitable that our proposal for a cap would raise concerns about how it would be delivered and the impacts it might have. Many of the concerns that have arisen around the cap are based on an assumption that people will not change their circumstances. We do not believe that this is right, although sometimes people will need help and encouragement to make these changes. In the run-up to April 2013 we are working with claimants who may be affected by the cap to do exactly that.
Since May this year, those households which may be affected by the cap have been offered support from Jobcentre Plus. To date we have written to over 85,000 claimants potentially affected by the cap. We have followed this up with over 150,000 phone calls to make sure that claimants understand what the benefit cap means for them and to offer them the opportunity to work with Jobcentre Plus for employment support or to speak to their local authority for housing advice. We are also engaging across government and with local authorities to ensure that households are given the assistance they need to avoid the cap or mitigate its impact.
This Government firmly believe that those in the local area are in the best position to make decisions which impact people in their locality. That is why we are providing up to an additional £75 million for discretionary housing payments in 2013-14 and up to a further £45 million in 2014-15. This will be divided among local areas based on which has the greatest need. It will be used by local authorities to support those claimants affected by the benefit cap who, as a result of a number of complex challenges, cannot immediately move into work or more affordable accommodation, providing support to those who need it most, such as those fleeing domestic violence, and to prevent homelessness.
Finally, the Government firmly believe that there has to be a limit on the overall levels of benefit it is appropriate for the state to provide to those who are not working. The benefit cap aims to encourage long-term positive behavioural effects through changed attitudes to welfare, responsible life choices and strong work incentives. I commend these regulations to the Committee.
Lord McKenzie of Luton
My Lords, I thank the Minister for the way in which he introduced these regulations. They will inflict profound hardship on many households—according to the department’s own impact assessment, nearly 60,000 households, including 80,000 adults and 190,000 children. Next year the average reduction in benefit is estimated to be some £91 a week. Our opposition to these regulations should be clear from consideration which took place just this morning in another place. It is clear, and has been since our debates on the Welfare Reform Bill, that a one-size cap never fits all—we believe that people should be better off in work than on benefit, but these regulations are flawed and likely, in our view, to increase homelessness with a likelihood also of the cap costing more than it would save.
Having said that, we welcome the commitment to the 2014 review and, as far as they go, to the categories of persons who are exempt from these and the limited DHP top-up—the loaves and fishes as they will for ever be known as a result of my noble friend Lady Lister. The Minister’s department says that it is giving early notice to all claimants who could be affected by the cap. We have heard that 85,000 claimants have been contacted, with 150,000 phone calls made, so that they can change their circumstances and perhaps move into work. In addressing the inequities of the underoccupation provisions, the Government expect households to cope with this loss of income by starting work, reducing non-rent expenditure, using other income and moving to cheaper accommodation or a cheaper area. Given the work which the department has done to identify those households affected, can the Minister tell us how many households have other income to ameliorate the effect of the cap, what types of income are involved and what the average amounts involved are?
Some 64% of those affected are claiming either ESA or income support; that is, they are not required to be available for or seeking work. Some 50% of the households likely to be affected are lone parents. The criteria under which people are characterised at the moment under the welfare system are stringent. They are not spurious, so on what basis is the department seeking to override these designations? Is the department seeking to differentiate between individuals for this purpose and, if so, on what basis? We know that some 5,200 affected by the cap are in receipt of carer’s allowance because the qualification for carer’s allowance depends, among other things, on a person not being gainfully employed. What advice would the Minister give to these households and what is their route to avoiding the impact of this cap?
So far as reducing non-rent expenditure is concerned, can the Minister tell us what the department’s detailed engagement with those affected has concluded to date? How many households has it assessed as having scope to reduce non-rent expenditure and what are the main types of expenditure involved? So far as moving to cheaper accommodation is concerned, we note that nearly half of the households affected—46%—are in the social rented sector. What cheaper accommodation does the Minister think can be accessed and how does he consider that local authority allocation policies, which would typically have a local connection requirement, will assist in these circumstances? As for uprooting and going to other areas, has any assessment of the impact of this on families been made, especially the consequences of fracturing local support arrangements with the impact on health and educational outcomes? From the work undertaken to identify those families currently likely to be affected by the cap, how many such households have someone with a mental health condition and how many occupy housing that has been the subject of a disabled facilities grant?
We are indebted to the National Housing Federation for its briefing notes and the points that it raises, which I would like to go over. So far as discretionary housing payments are concerned, it says that the announced increase to help people hit by the cap after losing their jobs is welcome but that it is not appropriate to rely upon a discretionary, time-limited scheme to cover ongoing and legitimate higher housing costs. Concerns have also been raised about the levels of DHP available. In its report on the impact of housing benefit changes, published this month, the NAO said:
“It is not clear how the current level of funding for Discretionary Housing Payments has been determined or whether it is likely to be sufficient for local authorities in tackling the impacts of reform”.
Perhaps the Minister can therefore give us a breakdown of those calculations and the assessment.
The issue of temporary accommodation has, I think, exercised a lot of people. The National Housing Federation says:
“Temporary accommodation is a vital part of the homelessness safety net. It saves money by minimising the need for more costly emergency interventions such as housing families in Bed and Breakfast accommodation. However, it is more expensive to procure and manage than mainstream private sector accommodation.
It is for this reason that the Federation has argued for it to be exempted from the benefit cap. Due to these additional costs, without an exemption from the cap, many families will find themselves unable to meet their rent.
Households are placed in temporary accommodation by local authorities and as a result will have little scope to move to reduce their housing costs. These families, who have been made homeless through no fault of their own, could be forced to move long distances or cut back on essentials in order to pay for accommodation which they themselves have not chosen”.
How does the Minister respond to that point? The federation goes on to say:
“The cost of exempting temporary accommodation from the cap is £30 million—a small proportion of the estimated £270 million savings expected to be gained from the imposition of the benefit cap itself”.
What is the Minister’s response to that? It continues:
“While Government has said that under Universal Credit it will fund the management costs, if not the housing costs, of temporary accommodation outside the benefits system—helping some families avoid the cap—this will not protect claimants before they transfer to Universal Credit”.
Lord German
My Lords, I want to examine the two areas of change which took place during the final days of the passage of the Welfare Reform Act. These were, of course, the extra £120 million of discretionary housing payment and the nine-month grace period. However, I start by saying that my party opposes regional pay in this country—as does the Labour Party in Wales—very strongly indeed. Ipso facto, for the same reasons we oppose regional benefits. The reason given by the Welsh Labour Party for the opposition to regional benefits is that they trap people in poverty. In this case, we in my party find ourselves on a similar message: having uniformity of these issues around the country helps to encourage prosperity across the country. I hope that that message will be borne out. However, I recognise that the major difficulties of the benefit cap relate to London, as the impact assessment clearly states.
I do not wish to add to the huge array of all very valuable questions that the noble Lord, Lord McKenzie, has just outlined. However, it is very important that the guidance for local authorities and customers is made available in as open and detailed a manner as possible. I note the very friendly document titled Benefit Cap—Frequently Asked Questions for Local Authorities, in which local authorities would expect to find answers to some of these questions. Nowhere in this document does the DWP reference any information about the discretionary housing payment. Will my noble friend tell me where, when and in what format that detailed guidance to local authorities is going to appear, so that people can be aware of the answers to some of these questions? Perhaps the issue of distribution of discretionary housing payment needs to be well known as well. I presume—although I have not been able to find the exact percentages and figures given—that it is related to the impact of the cap on housing benefit in each local borough and local authority. Perhaps my noble friend could clarify that.
I further note from the impact assessment that the figure of 56,000—considerably less, of course, than the number we were led to believe would be affected by the cap from the earlier impact assessment—takes no account of behavioural change. Could my noble friend tell me how, in his expectation, that behavioural change is likely to play out? Is it likely to reduce the numbers substantially, or just in a minor way? Has any work has been done by the department on that change?
One key issue that my noble friend mentioned was the ability to exempt oneself from the cap by making oneself available for working tax credit. There is always a process in getting oneself into work and into a working tax credit position. I wonder whether that period of transition, which may not take place until such time as the cap actually hits, will be taken into account through some support process by the department. Could my noble friend explain that?
I am also interested in the impact upon London. I would not want to say that it is a very strange place, but it is a very different place in terms of housing. I can only quote my own example. I just renewed my two-year rental on a flat in London, and my rent went up by £2.50 per week after two years of being stable. I just could not understand; I was expecting it to be much larger than that.
Baroness Lister of Burtersett
My Lords, I think that I and the noble Lord, Lord Kirkwood, were the only Members of this House to oppose the benefit cap on principle and I remain opposed to it on principle, but I will not go through all those arguments again, although the Minister put the principled arguments for the cap, except to say that we have rather different views about fairness. I refer to that in relation to what is not yet a proposal but a suggestion mooted by the Secretary of State that a further benefit cap should be imposed on families with three or more children—exactly the same group who stand to lose most from this benefit cap—before this cap has even been applied. What possible basis is there for floating yet further caps until we know the effects of this one? I should be grateful if the Minister could say something about the interaction between the caps and what work has been done in the department on the likely impact on child poverty.
Like my noble friend Lord McKenzie, I read the Guardian and saw yesterday’s report. I followed it up by contacting the Child Poverty Action Group— I declare an interest as its honorary president. It has just, with the London Advice Services’ Alliance, published a study of London local authorities and how they are dealing with the various cuts in housing benefit.
It is clear that one of the common solutions, as evidenced in that Guardian piece, is to move families from inner to outer boroughs, or well beyond. Like the localisation of council tax benefit, it seems that the Government are taking a Pontius Pilate position here—washing their hands of all responsibility and then saying, “It is the local authorities that are responsible”. A Government spokesperson was quoted in the Guardian yesterday as saying:
“It is neither acceptable, fair nor necessary for local authorities to place families far away from their area”.
I agree, but to the extent that it becomes necessary, the blame lies with central government.
The National Audit Office spelled out, in its report last week, the pressure that the combined cuts in housing benefit would put on the supply of affordable local housing in some areas. The National Audit Office also drew attention to one of the findings of the interim report from the evaluation being carried out for the departments:
“Claimants’ reluctance to consider moving to other areas appears to reflect a considerable attachment to their local area as a place to live”.
The evaluation report refers to the importance of proximity to family, friends and schools.
I have heard Ministers—I do not think that this includes the Minister here today—say that people have no right to be able to live in nice areas that other people cannot afford to live in, as if we are talking about posh areas here and it is all about the niceness of the area. Actually, quite a few pieces of research around poverty and place show the importance of local roots and the networks that people have, and the Government seem completely impervious to this. I find it very strange because it seems to me to fly in the face of the whole philosophy of the big society, which is about the support that people give to each other. Yet this and other policies—I will probably say more about this this evening—wilfully destroy, or are happy to countenance the destruction of, these social support networks. One of my hobby-horses is that this is something that we must look at in all the evaluation that is being done. Like my noble friend I welcome the fact that there will be a review of the impact of the cap, but nothing is said in the Explanatory Memorandum about the impact on social networks.
The Minister talked about incentivising work. We have heard this on a number of occasions. I shall quote the Secretary of State, who said, in the House of Commons in an Oral Answer in September:
“When we recently started dipping into the issue and surveying those who were likely to be affected, it was interesting to find out that, already, well in advance of what is going to happen, about a third of people have admitted that they are out looking for work as a result of the oncoming benefit cap”.—[Official Report, Commons, 10/9/12; col. 15.]
I am interested; I keep hearing this. I am sorry to add to the questions the Minister is being asked, but what is this survey? Is this the telephone calls that he mentioned? Does the department ring up and they say, “Oh, yes, I am looking for work because you are about to cap me”, or what?
I have heard a number of social policy academics say that, if it is in terms of people going into work, this is the normal turnover one would expect. How do we know it is because of the forthcoming cap? Even to the extent that it is having this effect, the CPAG/Lasa study confirmed that several local authorities are working actively with residents to help them move into work or increase their hours in order to avoid a cap, and this is obviously very welcome. It stated:
“However, few see this as an approach able to solve the problems of more than a small proportion of families hit by the cap. One authority estimates that there are at least 500 families who would not be able to be supported into employment due to disability, caring or parental issues”.
Many emphasise the high cost of childcare as a barrier.
My noble friend Lord McKenzie and the noble Lord, Lord German, have mentioned carers and the fact that 5,200 of those expected to be hit by the cap are in receipt of carer’s allowance—that is about one in 10 of everyone affected in 2013-14. The mean reduction will be £105 a week, the median £77 a week. That is a lot of money for people to lose.
The Minister talked about the long-term positive behavioural effect. He might recall that in Committee on the Welfare Reform Bill my noble friend Lady Sherlock and I asked the noble Lord—this is a variation on the question asked by my noble friend—what are the positive behavioural effects that the Government are seeking from carers? Presumably they are not to stop caring. I asked the noble Lord and I am glad to say that he confirmed that that was the case. What other behavioural effects are being sought of carers? I am as baffled as I was then.
I turn to the question again raised by my noble friend on supported housing. I am grateful to Crisis for its briefing on this. It estimates that 10% of those affected could be single adults and it is likely that some of them will be living in supported accommodation. Supported accommodation ranges from hostels for homeless people to domestic violence refuges; it is exempt from normal housing benefit rules so it is not subject to LHA restrictions; the rents charged by different accommodation projects vary, depending on a number of factors but particularly the level and range of support provided. Therefore, a hostel that houses, for example, long-term rough sleepers with severe mental health problems will have higher running costs. A small number of people who live in such high-cost accommodation and who receive other benefits will be affected by the cap. They are not in a position to move elsewhere and they pay a lower rent. We are talking possibly about higher-rate ESA or incapacity benefit as was, and they are likely to be some distance away from moving into work so would not be able to avoid being hit by the cap.
I do not believe that it is right, nor do I believe it is the intention of the policy that the cap should impact on people who are extremely vulnerable or who are at a crisis point in their lives and cannot live independently. Supported accommodation providers rely on housing benefit as a source of funding and they would struggle to provide the vital services that they offer if their residents’ housing benefit were to be cut. Although Ministers have stated publicly that there will be no more exemptions to the cap, I understand that there are discussions going on as to how residents in supported accommodation will be treated. Ideally, I would like to see people who live in supported accommodation exempt from the cap but, failing that, I would be very grateful if the Minister could explain to your Lordships how it is intended to protect supported housing residents from the impact of the cap.
Crisis is also concerned that in the worst instances, households that are not able to find alternative accommodation could be left facing homelessness. That is a point made by my noble friend. I would like to read from the CPAG/ Lasa report, which states:
“Applying the benefit cap to families in temporary accommodation effectively means that families who are accepted as homeless, could be made homeless once more due to their inability to pay the costs of temporary accommodation”.
The situation was recognised by the noble Lord, Lord Freud, during the passage of the Welfare Reform Bill. I quote the noble Lord:
“We need to get a solution to this so that we do not have a ludicrous go-round of people moving into expensive temporary accommodation which they can no longer pay for because of the cap. We are absolutely aware of this and have measures in train to get a solution in the round to that issue”.—[Official Report, 23/1/12; col. 893.]
The report continues:
“At present, however, local authorities see themselves pushed into precisely this ‘ludicrous go-round’, with little option for escape”.
Could the Minister please comment on that and explain what measures exactly are in train to solve what he himself described as a ludicrous situation?
Lord Best
My Lords, I thank the Minister again for that period of grace. I had an amendment seeking a 26-week period of grace and this is the first time that I have ever had a Minister exceed my expectations. I knew I should have gone for 52 weeks but I thank him for confirming that that is safely in place.
Although I agree with a great deal of what has already been said, I particularly wanted to pick out the problem faced by those going into temporary accommodation. There are 51,600 households currently in these properties leased from private landlords. The housing association and sometimes the local authority itself stand in the middle. The private landlord charges a rent and on top of the rent that the landlord charges, the housing association, in taking on this commitment, has to agree to return the place to the landlord in pristine condition at the end of the period so there is a need for reinstatement costs. Management costs are also involved in this, so it is unsurprising that rents for these temporary accommodation leases are higher than other rents. In the areas where the other rents are already very high, these are going to be very high rents. However, the £500 per family cap kicks in regardless of the fact that rents in particular places will be very high.
Baroness Sherlock
My Lords, so much wisdom has already been shared with the Committee that I am not going to try to tread over the ground so impressively covered. I would like, however, to ask the Minister to focus on two particular categories of people. I am particularly concerned about families with children, especially vulnerable families with children. The Minister may recall that, among the many amendments that he faced during Committee stage, I moved an amendment that specifically asked that families be exempted from the cap if their household contained a child who was the subject of a child protection plan, a children-in-need assessment or a common assessment framework team. The Minister sadly did not smile on that amendment, but I hope that he has had the opportunity in the mean time to think some more about what happens to particularly vulnerable children. Since the Government now have data about the families who will be affected by the cap, will he tell the Committee today how many of the households that will be affected contain a child who was the subject of any of those protection plans or assessments or a common assessment framework team? If he cannot do so today, would he commit to write before his regulations are considered or, if time does not permit it, to place that in the Library as soon as possible?
I briefly remind the Committee why this matters. I raised this on Report and I am not going to revisit the principle, but I was concerned at that stage because of discussions that we had had in Grand Committee, where I had heard a noble Lord—I shall not name him, because he is not here, but he was someone with great experience—describe having sat in a serious case review of a very serious incident with a child. He described what I have heard over and over again from social workers, which is that when you get to a serious case review, people gather around the table from all the different agencies and, about an hour in, somebody always says: “If only we had talked to each other sooner; if only we had all shared information previously, maybe it would not have come to this”. Reports from one London safeguarding board showed that, in a significantly high proportion of families affected by serious case reviews, rent arrears or impending eviction had been an issue; of them, a significant number were known to more than one authority.
A number of noble Lords from all sides raised throughout our consideration of the Bill the question of what happens to families who are forced to move repeatedly—in particular, what happens if households containing vulnerable children of the kinds that I have described are forced to move some considerable distance. There must be a real danger that these children disappear from the system. Could the noble Lord tell me whether he has considered my proposal to exempt those families from the cap? If he has not, what assurance can he give the Committee as to precisely how those families will be protected and how those children in particular will be protected?
Picking up the point made by various noble Lords about families in temporary accommodation, I am very concerned about the considerable distances that they and other families with children may end up moving. Like other noble Lords, I have been reading the newspapers this week—but I do not read those left-wing communist rags. I shall quote a headline to the noble Lord:
“Homeless families to be kicked out of London and sent as far away as WALES as councils buy up cheap properties to house them”.
The article goes on to state:
“Local authorities say sky-high rental costs in the capital, combined with the incoming benefits cap has forced them to send people miles away from home. Areas as far away as Manchester, Merthyr Tydfil and Hull … ‘It is going to be practically impossible to provide affordable accommodation to meet our homelessness duties in London,’ Dagenham Council say”.
I am sure that the noble Lord recognises that that is from the Daily Mail.
Will the noble Lord tell the Committee whether that is true? Is he expecting significant numbers of homeless or potentially homeless families to be rehoused hundreds of miles away? If not, why are so many of our grand newspapers labouring under such a misapprehension? Perhaps the Minister could put their minds at rest. He might want to write to the editors with a copy of his speech when he has reassured us today.
I would be interested to know whether there is any danger that families could be forced to move, as has just been described by the noble Lord, Lord Best, more than once, either because accommodation for the homeless has become too expensive or simply because, as was raised in Committee, the median rents have gone up over the area. Rents may rise in an area as a result of an influx of families and then they could hit a cap again. Is there any danger that that could happen? I am sure that the noble Lord is aware of the evidence showing the impact of repeated house moves on a child’s achievement in school. If that is the case, will he say how the Government will protect vulnerable children in particular from the damage that could happen to them not only in childhood but in later life as a result of their schooling being impaired?
Finally, turning to the report from the Child Poverty Action Group, to which my noble friend Lady Lister of Burtersett, referred earlier, I should like to draw the noble Lord’s attention to a paragraph on page 40. It states:
“Authorities are also concerned about the impact of the cuts on their ability to meet other government priorities, in particular around the ‘troubled families’ agenda”.
Will the Minister tell the Committee what discussions he has had with the DCLG and other departments about the extent to which this policy may impact on their ability to deal with troubled families? If so, what steps are being taken to address that?
Lord McAvoy
My Lords, I rise to speak briefly because my noble friend Lady Sherlock has spoken with wisdom and analysis, as have my noble friend Lord McKenzie, the noble Lord, Lord Best, and others. I do not think that I could hope to match that. I prefer to speak about the effects of what this Government are doing on families and people. First, I should make it plain that I am not a social liberal or a bleeding-heart liberal with a small “l” or even with a large “L”. As a genuine member still of the honest working class, I am totally opposed to people fiddling the public purse and the benefits system.
I do not think that the Government care so much about that. I am not trying to paint a picture of an uncaring Government, although the effects of what they are doing here are exactly that. Some of the stuff that has come from the Government for dealing with the people who will be affected by this is in the Explanatory Memorandum to the regulations. Paragraph 7.7 states:
“The Government expects different households to have different behavioural responses to the cap but those affected will have a number of options to consider”.
What are the options to consider? The options include,
“reducing their non-rent expenditure”.
I should like to ask the Minister some questions. Under what budget heading should that come? Does he have any suggestions about which item of household expenditure in these poor households should be cut to make up the shortfall in rent? Paragraph 7.7 suggests that they should make up the shortfall,
“using a proportion of their other income or moving to cheaper accommodation or area”.
We will come to that later, because to me that has the biggest impact on families who are being treated in this way.
Baroness Thomas of Winchester
My Lords, I have a very simple question for my noble friend. I think that he probably gave us the answer during the passage of the Welfare Reform Bill, but I am afraid that I have forgotten what it was. Those in receipt of disability living allowance are going to be exempt from the cap. What about those who have appealed against their initial assessment? I declare an interest because, while I have never been on benefits, I have appealed against a decision, which I won, so I feel for those who may not have been successful the first time in their assessment but who have then appealed. There can be a few months between these two events and it would seem very unfortunate if someone or their family was forced to move only to find that they had won an appeal at the tribunal, with all the upheavals that that would amount to. Can my noble friend tell me about that situation?
Lord Freud
My Lords, as I would have expected, we have had a very knowledgeable debate, and a lot of very learned views, which I always listen to very closely, have been put forward. Clearly, I am also aware of the concerns that have been voiced in expressing the anxieties of a number of external organisations and stakeholders, some of which were referred to today. I will try to deal with as many of the questions as I possibly can, although there were a lot of them.
Let me start with support and exempt accommodation. That needs to be looked at in two periods. As I said, once universal credit comes in we are looking to keep the housing costs outside universal credit. I am looking to make some long-term arrangements for people in exempt accommodation. I am particularly concerned about people in refuges and, clearly, in hostels. I acknowledge absolutely the issue of support and exempt accommodation, which needs some quite sophisticated work. Meanwhile, we are writing very specific guidance, as these are the people for whom DHPs really are designed to prevent some effects that we do not want to see.
On temporary accommodation, a point raised by the noble Lord, Lord McKenzie, that is again an area where we will use DHP. I know that the noble Lord, Lord Best, did some sums, but clearly this will be a huge incentive to move people very quickly to something much more permanent rather than staying for the full year in temporary accommodation, which, as he rightly said, is very expensive. Under universal credit, there are likely to be changes. We are looking at how we deal with temporary accommodation—especially the division between the management costs to which he referred and the actual housing payment element. We are out to consultation on that area and there will be more developments.
On the mental health issue that the noble Lord, Lord McKenzie, raised, those who have been assessed as being in the support group under ESA will be exempt, as will those receiving DLA and, later, PIP, so they will not be affected. The reason that PIP is not specifically mentioned in the regulations is that the PIP regulations have not yet been laid, so they will be consequential.
We do not have any information about other types of income that those households have—to answer a question asked by the noble Lord, Lord McKenzie. Where they do not have any other income, a claim for DHP can be made. I have already detailed the funds available.
Several noble Lords asked about stories of local authorities sending people all over the country. I remind noble Lords that it has always been the case that London boroughs have sent people out of borough and, in some cases, many miles away. The reason is that people come from all over the country to London boroughs; it is not always appropriate to house them in those boroughs and they are sent out. There is an important distinction to be made between local people and those who arrive with a homeless obligation in a particular borough. It is important because new regulations come into force later this week, on 9 November.
Lord McAvoy
Sorry, but will the noble Lord let me intervene at this stage? So if there are two families, a recently arrived family and a longer staying family in a borough, somebody would decide that the newer family, for want of a better description, should go and the older residential family should stay?
Lord Freud
I am referring to people who arrive in Euston and turn up homeless in Camden. They do not have the local links. There is a homelessness duty on Camden to do something, but there are not the local links. That has always been the position.
Baroness Lister of Burtersett
I am sorry to interrupt, but those are not the people we are talking about; we are talking about people with local links that matter to them for all sorts of reasons. This policy will destroy many of those local links.
Lord Freud
Perhaps the noble Baroness will let me finish the point. A lot of the stories in the newspapers refer to the former. Councils have had arrangements for many years with other councils some distance away. We have reinforced the point—this is where the regulations coming in on 9 November apply—that where people are local, the council has to consider whether the location is suitable for the household’s individual circumstances, including the significance of any disruption to employment, education and caring responsibilities. Local authorities are required to carry out a full impact assessment before moving people out to other boroughs.
Baroness Lister of Burtersett
I am sorry to push this, but if the stories are referring to the first group, why are local authorities expressing fear that they could be subject to legal challenge for moving families out? We are talking about a different group.
Lord Freud
I am trying to say that if you read the stories carefully, as I have been, you will see that they refer to preparatory moves about what councils may do and what they are preparing for. The stories are fairly evanescent, if you look at them closely. Clearly one reason for that is that these changes have not happened yet. Through this year, we have had the introduction of the LHA reduction from 50% to 30%, which my noble friend Lord German talked about. There has not been a huge flood of changes as a result of that. The stories are about councils being worried and their preparatory plans. They are about plans to move people around councils, but local authorities have always done that, for the reasons that I have given. They have always had this problem in London—people arrive and the councils have had to do something about them. Let me repeat the obligation in the 9 November regulations. Under the regulations, local authorities are required to keep people in the local area whenever they can and to carry out a full impact assessment before moving people out to other boroughs. We have strengthened that localism point in recognition of the same sentiments that are concerning noble Lords today.
Lord McKenzie of Luton
Could the noble Lord just remind us which regulations these are? Is it right that they have already been laid and will come into effect? Under which provisions are they?
Lord Freud
They were DCLG regulations—I cannot remember the exact title, so forgive me. They have been laid and cleared and they are due to come into effect on 9 November. They are under the Localism Act—the noble Lord may be more familiar with them than I am.
On whether people will be treated as intentionally homeless if they are evicted as a result of rent arrears caused by the cap, again, it is for local authorities to make decisions on individual homelessness applications, as they do now. Under the statutory legislation, if the only reason for a person’s homelessness is a reduction in benefit that is outside their control, they should not be considered intentionally homeless by their local authority. The help available includes cases where the reduction is not much; it includes help in renegotiating rent or making up small shortfalls, help with moving to more affordable accommodation, other means of trying to help people back into the workforce, and so on.
There was a group of questions around the delivery process, which I will try to gather up into one. The department will identify cases through scans of analytical data, which will be clerically checked against live IT systems to see whether any exemptions or grace periods are in place, and it will obtain up-to-date benefit amounts. Data will then be transferred electronically to local authorities via ATLAS. The LA will confirm the correct amount of housing benefit and can apply the cap via an automated system. It will issue a notification to the claimant informing them that their housing benefit is being capped and the amount of their new housing benefit award. This notification will also give information on support available and who they should contact if they have a query about the decision.
Lord McKenzie of Luton
Before the Minister leaves that point, I am interested to understand the process, the mechanics. He said that there will be scanning of all the data. Of course, some of that would have to be of benefits that do not currently feature in housing benefit calculation. Will that be an ongoing scanning? I see that the Government are going to do something upfront to try to identify people, but people’s circumstances change. Will it be a real-time scanning?
Lord Freud
When there is a change in circumstance, it is up to the claimant to inform us of that, as it is now. We are still in the old world, or the existing world before universal credit. To ensure that all changes of circumstance are applied in a timely manner, we will use CIS, the customer information system, to report them. I think that the noble Lord is referring to that system, which holds a record of most benefits included in the benefit cap calculation. As the noble Lord pointed out, some of them are not included in CIS—especially child benefit, which will be identified by a further data match with the monthly IGS scans.
Lord McKenzie of Luton
I know that the noble Lord has a lot to get through, but is the obligation to report a change of circumstances an obligation arising from a change of circumstances which would affect the application of the cap, quite apart from obligations in respect of other benefits? Is that what we are talking about here?
Lord Freud
I was referring to the change of circumstance to the individual. Clearly, if we are changing benefit structures in some way, we will know that and be able to make that adjustment and send the new information over to ATLAS, but the important facts are the changes of circumstance of the individual, who will make the application for the benefit in the normal way. It will come through the systems and be scanned, checked, compared and sent over.
Lord McKenzie of Luton
A change of circumstance that would put someone within the benefit cap when they were not currently? Would an individual making a housing benefit claim have to say, not only, “I have applied for a change of circumstances that may change the level of housing benefit”, but, “I think I am therefore liable for the cap? Can you do me for it?”?
Lord Freud
It will not be exactly like that. It will be no change from the present position, where you should inform us of changes in your benefits in the normal way. When that happens, it will work through in the normal way into our systems. There is an obligation on all benefit recipients to inform us of changes in circumstances. There is no obligation on the part of the benefit recipient to inform us in relation to the cap; it is only to inform us in the normal way of changes in circumstance, as applies to the rest of his or her benefits.
Lord McKenzie of Luton
I apologise; I promise not to intervene again after this one, but that obligation, for example in relation to housing benefit, would be to report the change of circumstance to the local authority, not to the DWP. How does that fit with the notion that it is basically the DWP which has to notify the local authority, “We’ve got somebody here who may be subject to the cap”? Seemingly, there is no ongoing separate obligation on the local authority to report back in the opposite direction?
Lord Freud
I will be corrected on this if I am wrong, but ATLAS works both ways, so the information flows both ways, so we will have the information and will be able to notify and go through the normal process. We will know what is happening on housing benefit. That is how it will flow back and forth. There had to be an adaptation to ATLAS to make it a two-way flow. When it started, as the noble Lord probably remembers, I hope with nostalgia, it was a one-way process.
How and when are the guidelines being produced? The local authority Practitioners Operational Group, with a subgroup based on the benefit cap, has been briefed at working level on detailed procedures and guidance. Members have confirmed that people will develop detailed guidance and products which will supplement those to be published via the DWP intranet and the LGA’s knowledge hub.
The way that the benefit cap interacts with financial sanctions is that the benefit cap will apply to the overall level of household benefits. If the sanction is imposed, any reduction will be applied to the sanctioned benefit after the application of the cap. Otherwise, clearly, the impact of the sanction would be negated.
My noble friend Lord German and the noble Lord, Lord McKenzie, raised the issue of ESA. The specific exemption is to do with the people in the support group of ESA, not in the WRAG group. Several noble Lords mentioned carers. The benefits system is designed to provide financial support where caring responsibilities prevent carers working full-time. As such, the carer’s allowance should be treated in the same way, for the purposes of the cap, as other income-maintenance benefits. Clearly, where the carer is in the same household as someone entitled to DLA or ESA support, the whole household, including the carer, will be exempt. Most carers of working age want to retain a foothold in the labour market where possible. We know that more than nine in 10 claimants receiving carer’s allowance are claiming another out-of-work benefit. In other words, they are looking for work. Carers who move into work clearly become eligible for the working tax credit and will be exempt from the cap.
Baroness Lister of Burtersett
I am still unclear what behavioural change the noble Lord seeks from that group of carers. If they are already seeking work anyway, why do they need the cap to spur them on to do it on top of their caring responsibilities?
Lord Freud
Clearly, we are expecting that they will find work at that level.
On the grace period questions from the noble Lord, Lord McKenzie, which really boiled down to the self-employment questions, they are entitled to working tax credit if they meet the other conditions. On the 50 out of 52 weeks, there may be a gap in employment, but my understanding is that SSP, statutory sick pay, which is paid by the employer in the case of the employed, would constitute being in work, for obvious reasons. That actually responds to my noble friend Lord German’s questions.
Lord McKenzie of Luton
Can the Minister help me on one more point on the period of grace? If somebody is employed but falls out of work completely, and would otherwise fall within the benefit cap, the period of grace would operate. One of my questions is to do with circumstances where somebody is outwith the benefit cap because they are fully employed and then they fall below the level at which working tax credit kicks in. They are not unemployed at that stage, but their earnings are lower, their benefits are higher and they are potentially within the cap. Does the period of grace protect them in those circumstances? It would be logical that it should, but I am not sure that it does.
Lord Freud
Yes, effectively, in the current system, going below the 16 hours would take you into the benefit system, so formally out of work. Clearly, under universal credit it would be a very different system, and we would have to have a notional figure of what the equivalent of work is, which we will introduce when we have the universal credit. The noble Lord is absolutely right in his analysis and his conclusion that there is no other way of doing it when you think about it, given our existing system.
My noble friend asked when we will publish our guidance. We had consultation on that guidance in August and we will make it available towards the end of the year. I can confirm that DHP will be allocated on the basis of greatest need. We are consulting with local authority representatives right now—in November—and we will make an announcement at the end of that time.
I am taking a long time, but with the forgiveness of noble Lords I will keep going, because there are a lot of interesting questions to answer. I could end up writing, but I would prefer to deal with them now if noble Lords will indulge me. My noble friend raised the cumulative impact of the changes on the housing market. We are monitoring this really robustly; I think we have one of the best assessments on what happened to housing changes in terms of the LHA changes that we have made. I think the noble Lord, Lord Best, would agree that it is one of the most thorough examinations of what really happens in a housing market when you make these changes and it will be valuable for a lot of the purposes. Clearly there is an overlap when we look at the effects of the benefit cap as well.
On the issue of the calculator not working, we have had stringent availability standards and there were two short periods when it was down for maintenance. There is a lot of help available to use it. On behavioural change, one of the things you can never predict when putting in these pressures is how people’s behaviour will change. However, we really are working with a lot of stakeholders to make sure that decisions are made such that people respond positively to the implication of the cap for them.
I can confirm to my noble friend that we are committed to tackling child poverty, but clearly our focus is on trying to tackle the causes of that poverty and not just moving people around on slightly artificial income lines. One of the things that universal credit will do is to move a lot of adults and children out of poverty. I make the same point to the noble Baroness, Lady Lister. We are looking for better measures and clearly the negative impact on child poverty may be mitigated if affected adults in the family move into work and the benefit cap supports our plans to make work pay. The £500 per week limit for couples and households with children is above the poverty line for a lone parent with up to four children, and broadly equates to the poverty line for a couple with four children; looking at the mechanics, that is where it is.
Baroness Lister of Burtersett
The point I was raising was about the effect on child poverty should the Government introduce a new cap on families who are not in work with three or more children, over and above the benefit cap. What work is being done in the department to look at the effect of the interaction of these two different caps on child poverty? It is possible that the noble Lord was about to go on to this but he seemed to be moving on to another issue.
Lord Freud
We have not done any work on that because it is not agreed government policy, but it is something that we are looking at, clearly. To the extent that we do look at it, it will be done on flow and not on stock. That was very clear in some of the discussions on this particular option. However, it is about people who get more than two children rather than people with more than two children. People will at least be able to plan their families should that become government policy. Regarding local networks, as raised by the noble Baroness, Lady Lister, clearly we acknowledge their importance. That is one reason for the regulations coming in on Friday: to try to ensure that people are not moved without very serious consideration.
There was a question about our early findings. There has not yet been a coherent survey. However, there are some interesting figures from our early findings showing the effect of the cap, and I think we will be able to share those more widely when they are locked down. As the noble Baroness said, it is absolutely essential that we do not confuse things that are happening anyway, and that we try to get analysis of the excess. There is, however, an interesting point: quite a few people dropped out of the benefits system when this started. That is not a surprise. One would expect to find some of the people who feel uncomfortable claiming gathered in the area with the highest numbers of claims—I put that as delicately as I can. I hope to be able to give some more information on that.
The noble Baroness asked about childcare. Jobcentre Plus recognises the importance of childcare as a key enabler, and clearly financial assistance is available for a claimant moving into the labour market. We accept the need for appropriate childcare when we make that judgment.
I think that I have done my best to deal with the point about temporary accommodation. The noble Lord, Lord Best, talked about rent levels and urged a regionalised system, quoting the originator of the welfare state. The rate of increase in rent has slowed down a bit over the past year and local authorities are working with households affected by the cap to ensure that they are able to locate affordable homes. I was just looking at some rental levels, which show a slight slowdown in some months of the year.
I am running out of time. There is a lot of other business and I have to stop now. I will have to write on the other matters, as there was just so much—I counted 40 questions from the noble Lord. I commend the draft Benefit Cap (Housing Benefit) Regulations 2012 to the Committee.
Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations 2012
Baroness Hanham
That the Grand Committee do report to the House that it has considered the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations 2012.
Relevant document: 7th Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, the regulations laid before the House on 17 July 2012 consolidate 12 statutory instruments dating back to 1989 and introduce new levels of planning application fees. The draft regulations have been approved in the other place and, if approved by this House, they will come into effect in the week commencing 19 November.
As noble Lords will know, the planning service is funded from local government grant and from council tax; in addition, the planning application service is also funded by fees for planning applications. The Government’s policy is that, in aggregate across England, the income generated by planning application fees should, as far as possible, cover the estimated total costs incurred by local planning authorities in determining those fee-paying applications. The principle underlying the planning fee regime is that would-be developers and applicants, rather than the council tax payer, should meet the majority of the costs incurred by local planning authorities in determining planning applications.
Planning application fees were last increased in 2008, overall by 23%. The fee increase in 2008 aimed to provide for local authorities to move closer to a position of cost recovery in determining planning applications. Since 2008, there has been a significant fall in the number of planning applications, from 649,000 in 2007-08 to 483,000 in 2010-11. Over the same period, the number of major applications has fallen by 18%. The overall decline is partly as a consequence of the extension of permitted development rights but is also due to the credit crunch under the last Administration.
In 2009, Arup undertook research to consider the effects of the 2008 fee increase and the impact of the decline in planning applications. The research, which was published in 2010, showed that fee income was approximately 10% lower than the cost of the service, based on an average cost of £619 per application and an average fee income of £563. This shortfall is because application fees have remained constant since they were last amended in 2008 while inflation has increased.
In early 2011, we consulted on proposals for planning application fees, which included an option to decentralise fee setting to local authorities. We have also worked closely with the Local Government Group, which undertook a comprehensive benchmark exercise with over 200 authorities to assess the real-time costs of processing different types of planning applications.
Baroness Hanham
My Lords, I remind noble Lords that I was talking about working with the Local Government Group, which undertook a comprehensive benchmark exercise with more than 200 authorities. The results of the benchmark showed that there were potential reductions in some fee categories, but significant increases in others, including for the householder category for which, on average across England, the fee would be more than doubled. It also concluded that the overall increase needed to achieve cost recovery was closer to 26%. That would account for the 10% which Arup identified as the shortfall and inflation since 2008.
The effects of decentralisation are complex and we have had to balance the need to ensure that local authorities have the necessary resources to deliver an effective planning service alongside the effects on applicants and developers, who are key to delivering economic growth. Therefore, on balance, we have decided to continue to set fees centrally for planning applications. In time, decentralisation should be part of a package of measures to make council planning departments more responsive to the needs of business and local residents. The benchmark work has been undertaken by the Planning Advisory Service arm of the Local Government Group, and the Government fund completely the Planning Advisory Service. Please let me assure you that we will continue to support and work with the Planning Advisory Service to develop further the benchmarking work and to understand the costs at the local level. We therefore propose to uprate planning application fees by 15% in line with inflation between 2008 and 2012. This uplift in planning fees will provide additional resources to local authorities of some £32 million per annum.
In addition to the much needed consolidation of the regulations, we have also introduced some new fees as a result of changes to primary legislation. These include fees for applications for urgent Crown development, where the application is made directly to the Secretary of State, and for an application for a certificate of appropriate alternative development. An amendment has also been made to allow for fees in respect of deemed applications—applications as a result of the local authority taking enforcement action—to be paid in full to the local planning authority rather than half to the local planning authority and half to the Secretary of State. This does not change in any way the fee to be paid, but it does mean that the local authority will benefit from receiving the whole fee.
The draft regulations before you are intended to keep planning application fees at a modest level for developers and householders, compared to overall project costs, while providing local authorities with the necessary resources to turn round planning applications efficiently and effectively and while protecting applicants from any significant increase. I commend these regulations to the House.
Lord McKenzie of Luton
My Lords, I start by thanking the noble Baroness, Lady Hanham, for the introduction of the regulations. The Minister will be aware that these were not hotly contested in the other place and that they will not be by us on these Benches. They have our support and we are not seeking to give the Minister any trouble—not very much trouble, anyway. The approximate 15% increase is said to reflect inflation since the last uprating in 2008. Can the Minister let us know what measure of inflation has been used for this purpose?
My colleague in another place asked a question relating to the removal of permitted development rights under Article 4 directions relating to HMOs and whether fees would be applied to planning applications relating to HMOs. Has the department yet had the chance to produce an answer on that? We note the reluctance of Government to go down the path of decentralisation of fee setting, although I think the door is not completely closed on that matter.
The question of resources is a matter of importance and it seemed to be tacitly accepted that the increase in fees would not bridge the current deficit. There are always difficult questions in this area. I remember talking to planning officers in Luton about what goes into the cost base when one is looking at costs and fees. There was some shenanigans around central administration charges and all that. The Minister in the other place was rather broad-brush in suggesting that the new homes bonus could deliver lots of money to help support a range of things, including planning. Clearly, for some it may, but for others it will not, particularly if it is constructed on net rather than gross additions to stock. There will not be a bonanza for already tightly developed areas where new build comes, in large measure, from demolition of old. Surely it must be important for central government that local authorities have access to quality planning capacity, if local authorities are to be leading the charge for growth.
Will the Minister say more about what assessment the department has made of the capacity of planning departments up and down the country in the current environment? Will he say when it is proposed to look at fees again and whether there is merit in having more regular changes, rather than larger step increases? It seems to me to be fairer to those who are developing along the way, but I reiterate that we have no problem with these regulations and are happy to support them.
Lord True
My Lords, I, too, thank my noble friend for what she said and for the change that has been made. I declare an interest as leader of a planning authority. I agree with what the noble Lord, Lord McKenzie, has just said—that it would be desirable, in principle, if changes could be made more regularly, rather than in a stepped arrangement. I think I heard my noble friend say, and I find in the papers, that she recognises the need to go back and examine, at some point, the case for decentralisation. I very much welcome that. In the nature of things the balance of planning applications, the nature of business between one authority and another, will be different. Some will have very large numbers of large construction projects, others will rely mainly on householder projects; but given that the principle that the Government sets down, that it should be possible to recover costs, is accepted, I hope that, over time, we can also move towards decentralisation. I am sure that local authorities would welcome that and work with it.
I note that it is said that there is a need for restraint; that councils should not respond to current reductions in central government grant funding simply by increasing fees to raise lost grant revenue. That is a nice obeisance to Treasury doctrine, but of course the principle is that within the planning framework, planning costs should be met by planning fees, plus whatever grant is available. I hope that that principle is accepted. We are obviously not allowed to charge a commercial rate for part of a function, whereas everybody else who is involved in a planning process is. That is by their nature, whether it is the lawyers indulging in some judicial review or the builders charging a commercial rate, so councils in time should be allowed to do so. With that rider, I welcome the commitment to look again at decentralisation. I thank very much my noble friend for her announcement and give it my warm support.
Baroness Hanham
My Lords, that makes a change from the previous debate, for which I may be extremely thankful. I thank the noble Lord, Lord McKenzie, for his support for these measures, although I appreciate that there was some qualification from both the noble Lord and my noble friend Lord True because of the fact that the 15% does not totally meet the inflation rise. The noble Lord asked what measure of inflation it is. It is CPI. The noble Lord and my noble friend Lord True also asked about passing the planning fee question to local authorities. There has not been a decision on that at the moment. It was part of the consultation, as I said, and it has not been thrown out. In answer to the question from my noble friend, work is continuing with the Local Government Association to look at that and at reviewing fees more regularly.
Another question which the noble Lord, Lord McKenzie, asked was on Article 4 directions and HMOs. I have three pages here—the noble Lord may not want all of that but I am happy to send them to him. The changes made in October 2010 mean that a change in use of a family dwelling to a small HMO is permitted development. Where there are local concerns about concentrations of HMOs, on the other side, authorities can make Article 4 directions to restrict the national permissions after consultation with the local community. We do not believe that councils with substantial HMO problems have been slow in applying for Article 4 directions as a consequence of not being able to charge a planning application fee to determine them. I think that covers the question that the noble Lord asked. He is looking as if the answer is sort of yes. If there is anything further on that, I will of course let him know.
The question of capacity is something that varies from local authority to local authority. I think what was meant by capacity is the number of planning officers available to deal with applications. To some extent, that will be governed by the amount of work that local authorities have. In somewhere like London, there may need to be more than there are. The gap in a local authority’s budget, if there still is one, will have to be borne by that local authority, certainly for the time being, but we do not expect those gaps to be very large. I think that that answers some of the noble Lord’s questions. There were only five on these regulations instead of the 40 on the previous matter. I am very nervous about the noble Lord, Lord McKenzie, because he normally produces whole strings of questions which are usually quite difficult to get a grip on, but I think I have answered him today. I am grateful for the responses from the noble Lord and from my noble friend Lord True.
Schools: Classics
(12 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Aberdare
To ask Her Majesty’s Government what steps they will take to promote the teaching of classics in schools.
Lord Aberdare
My Lords, I did think briefly of making my opening remarks in Latin, but I desisted for two reasons. First, as a distinctly lapsed classicist—despite having studied Latin for at least 15 years and Greek for over 10—I am ashamed to say that my Latin would no longer be up to the task. Secondly, addressing your Lordships as “O Senatores” might take this debate into areas beyond its proper boundaries.
I sought this debate because I myself have benefitted enormously from the opportunities I had to study classics, which I take to include Latin, Greek, ancient history and classical civilisation. I would like to extend such opportunities much more widely. In preparing for the debate, I have been greatly helped by briefing materials provided by Peter Jones, that princeps or primus inter pares of classicists. I nearly said éminence grise, which would have been inappropriate. He is a leading light of the charities Classics for All and Friends of Classics; some of your Lordships might be familiar with his Ancient and Modern column in the Spectator. I was also helped by the excellent briefing pack put together at short notice by Venetia Thompson of the House of Lords Library. I am grateful to noble Lords who plan to speak and much look forward to hearing what they say. I thank them for their patience in coping with the unpredictable timing of business in this place.
I will seek to make three points: that classics is important; that it should be offered in more, preferably most, schools; and that Government should actively support that aim, including by providing for appropriate qualifications and examinations systems and ensuring an adequate supply of trained teachers.
First, to adapt the old Guinness ad, “Classics is good for you”. Surely there can be no other subject area offering such a breadth of learning opportunity and interest encompassing language, literature, history, philosophy, art, technology, culture and others. Latin and Greek are not only helpful in learning languages in general; they can be invaluable aids to improving grammar and vocabulary in our own language, English. Some 60% of English words are estimated to have Greek or Latin roots. In the vocabulary of the sciences, that figure rises to over 90%. As highly inflected languages, with all those conjugations, declensions, cases, tenses, moods, voices and so on—never forgetting the ablative absolute—Latin and Greek are invaluable routes to learning intellectual discipline and logic. My own former skills—in debugging complex programming code as a systems analyst at IBM—owed much to my training in classical languages. The chairman of IBM UK in my later years there, Sir Anthony Cleaver, was himself a classicist.
One only has to list some of those who have gone on from studying classics to distinguished careers to recognise the breadth of opportunities it can open: Mary Beard, Colin Dexter, Stephen Fry, Ian Hislop, JK Rowling, Tom Stoppard, Fay Weldon, and PG Wodehouse. In your Lordships' House—indeed, in this very room in some cases—we have the noble Lord, Lord Butler of Brockwell, the noble Baroness, Lady Greenfield, the noble Lord, Lord Waldegrave of North Hill, the noble Baroness, Lady Warnock, and others. Last year, London was fortunate enough to have both a mayor and a lord mayor who were classicists.
In 2011, Friends of Classics conducted a survey of almost 2,200 people who had studied classics. Well over 80% of them supported classics being taught in schools; over half saw classics as useful or very useful for their own area of work—for example by enhancing language skills, breadth of understanding, and thinking and reasoning skills. Sixty-eight per cent of them thought that studying classics had helped them personally. Perhaps most striking of all, no less than 81% believed their own quality of life had benefited—a view which I wholly endorse.
Secondly, classics is good for schools. Currently, about 70% of independent schools teach classics, but only about 25% of state schools—in many cases mainly to their more talented students. State schools often face problems of timetabling classics lessons and finding staff able or willing to teach it. Despite that, three-quarters of state school classics teachers would like to increase the numbers studying classics and 47% of state schools without any classics teaching would try introducing classics subjects if offered small grants to do so—of the order of £5,000 over three years. The number of state schools which have started Latin in the past 10 years, using the Cambridge Schools Classics Project e-Latin initiative, is over 500.
Burntwood School for Girls in Tooting, despite specialising in science, not only offers Latin to its students, but last year added Ancient Greek as an extended curriculum offering in years 9 and 10. Some 250 girls are doing Latin and 30 girls have now started working towards a GCSE in Greek. This has been achieved largely through the appointment of a single classics teacher, Sarah Brack, and in a school where some 60 languages are spoken at home and 20% of students are eligible for free school meals. Yet its exam performance puts it in the top 10% of non-selective schools in England.
If more schools like Burntwood are to start teaching classics, they need to be confident that appropriate qualifications and examination systems are in place to support them. I congratulate the Government on the fact that Latin, Greek and ancient history are all included in the English baccalaureate, although the number of boards offering them is small. On the GCSE front, the withdrawal of AQA's Latin GCSE exams in 2006 led to a fall in the number of candidates nationally. However, the introduction of a new Latin exam by the Welsh Joint Education Committee in 2010, despite not having full GCSE status, resulted in a significant increase in candidates, from 8,500 to 12,000.
The Government plan to move to a system with only one examination board for any subject. This could present a real challenge for specialist subjects like classics, where there is a wide variation in the needs and attainments of students: for example, between those who study Latin for GCSE for up to 500 hours at independent schools with a long tradition of teaching classics, and those who have no more than 120-140 hours of teaching at a state school new to the subject. If there is to be only one board, the Government should ensure that it can offer examinations with the flexibility to cater for these different needs, without loss of rigour.
Finally, the most crucial factor in successfully teaching classics, as with other subjects, is the quality of the teachers themselves. There must be an adequate supply of properly-trained classics teachers. At present, there is a net loss of something between six and 26 specialist trained classics teachers every year, despite the interest of schools, parents, students and others in increasing the numbers studying the subject.
The various bodies dedicated to promoting classics teaching are actively working on alternative ways of addressing this challenge. For example, they are looking at developing “bolt-on” classical modules for PGCEs, so that someone studying to teach modern languages or history would also receive a month or so of classics training to offer schools employing them the basic skills needed to try out classical subjects. For teachers already in schools, mentoring and support services could be offered to enable them to start classics courses.
Initiatives like these cost money, and the classics bodies have a strong record of coming up with funds to support their subjects. But the Government could help to achieve a great deal more, and to bring the benefits of classics teaching to a much wider range of state students. They might offer small grants to encourage schools to take the first steps into classics teaching: perhaps a few thousand pounds, possibly in the form of matched funding for money raised by the schools themselves. They should ensure that there are suitable exams in place to recognise the achievements of schools and their students in classics subjects; and they must take steps to halt the current downward trend of qualified classics teachers. I look forward to hearing the suggestions of other noble Lords on how the Government could help.
Noble Lords may recall Winston Churchill's statement that,
“I would make them all”—
that is school children, and I am afraid I cannot do Sir Winston’s voice—
“learn English: and then I would let the clever ones learn Latin as an honour, and Greek as a treat”.
I would argue that he was wrong. I prefer to end with a 19th century quote from the Reverend Thomas Gaisford, Dean of Christ Church, Oxford, my own former college:
“Nor can I do better, in conclusion, than impress upon you the study of Greek literature, which not only elevates above the vulgar herd but leads not infrequently to positions of considerable emolument”.
I strongly endorse his recommendation, and would add that even without the considerable emolument, which I regret I have failed to attain, classics teaching offers incalculable benefits not just to those lucky enough to receive it, but to the wider communities in which they live and indeed to the UK as a whole. For that reason the Government should do all that they can to promote, extend and support it.
Baroness Perry of Southwark
My Lords, it is a great pleasure to follow the noble Lord and I thank him for securing this debate and for the delightful speech that he has made to introduce the topic. I, too, am a great lover of Latin, in particular, and I owe a lifetime debt to my big sister, who was a Cambridge classicist. She introduced me to Latin for Today: Book One a year before anyone else in my class had begun to study it, so that I was able to shine throughout my first year. That ensured that Latin has always been one of my favourite subjects.
I agree entirely with the noble Lord in his analysis of what is needed in terms of teaching and the teachers who are capable of inspiring and enthralling the young. However, I want to celebrate our success stories and how good it is that Latin is now increasing in popularity not only in independent schools, as seen by the number of young people who are taking it. As the noble Lord has said, in the past 10 years, more than 500 state secondary schools have started Latin for the first time. The previous Government are greatly to be commended for their e-course initiative with its videoconferencing and mentoring for teachers, which made a great leap forward in the popularity of the subject.
The UK has a world beater in the Cambridge Latin course. It sells more than any other classics course in the world. The Cambridge School Classics Project has given about £1 million of its profits to promote the teaching of Latin in state schools. The coalition initiative put Latin on a par with modern languages and that has helped to fuel the expansion. Secondary schools have, as I said, found that Latin and Greek are increasingly popular and that they help with the understanding of grammar and of English words and spelling. One reason why I believe that classics is so enormously helpful to young people is that it teaches them about sentence structure and so helps them to think much more clearly. It also helps them with their appalling spelling.
Another great success story is the expansion of the teaching of Latin in primary schools, which I wholly support and think is wonderful. In London alone the Iris Project, with the mayor, Boris Johnson, has started the Love Latin project in schools. Already, 200 primary schools in London alone are enjoying that programme. Teachers say that it is engaging children who, in other ways, are quite hard to reach.
For me, Minimus is the real hero of primary school Latin. Minimus is a mouse who lives with a family in Vindolanda in the Roman Britain of 100AD. He lives in the family with the fort commander’s wife and their three children. They also have a cat but, most importantly, they have Minimus who becomes a hero of the primary syllabus. He apparently has won so many friends among young children that the popularity of the Minimus course is spreading to the point where it has sold 140,000 copies throughout the United Kingdom. I am happy to say that the equivalent for ancient Greek—whether it will be a mouse or another animal, I do not know—is now being developed.
I will close with some quotes from teachers and pupils about the Minimus course. One teacher said: “There are such brilliant stories in the classics and it is so good to be able to introduce children to them”. A pupil said: “Latin helps me with writing in literary classes”. Above all, there was the pupil who said, “You learn to deal with words. You can’t talk to an ancient Roman with gestures and smiles. The language is all there is”.
Lord Thomas of Gresford
My Lords, the noble Lord, Lord Aberdare, must be congratulated on introducing this debate. He failed to mention one of the most distinguished classicists in the Room, who was my former law tutor at Cambridge. The noble and learned Lord, Lord Lloyd of Berwick, not only carried away first-class honours in the first part of the tripos but won the ancient and much revered Sir William Browne gold medal in 1951, for, I think, an ode in the style of Sappho. That feat did not prevent him getting first-class honours with distinction in part two of the law tripos. I am afraid that I was a student of baser metal. Indeed, my director of studies, Professor Edward Kenney of Peterhouse, the professor of Latin in the university, advised me at the end of an undistinguished part one to read something else, which is how I came under the control of my noble and learned friend, Lord Lloyd.
It was asked then and still is: what is the point of a classical education? For me, it is the source of those generous liberal values which have from time to time leavened the culture and civilisation of Europe and the West. On common humanity across millennia, I have always been tickled by Homer’s tale that old men love to talk of their deeds of valour in past battles. Anyone who has ever played rugby will know that when two or three old rugby players get together over a pint of beer, they talk about their past battles. As to love, Hector’s farewell to Andromache and his son—to fight a battle that he did not desire but had, for the sake of honour, to endure—touches us to the heart. The fall of sacred Troy, the death of his father and his brothers and his own predicted end at the hands of Achilles meant nothing compared with the pain he felt that his wife would be sold into slavery and that those who saw her would weep and say:
“That woman is Hector’s wife”.
On fidelity, Argus, Odysseus’s dog, was cast out on to a heap of dung. He was covered with fleas and the only creature to recognise Odysseus as he returned to Ithaca from his travels. Argus lifted his ears and wagged his tail but was too weak to get up from the pile of dung. Homer tells us that as Odysseus departed:
“Argos passed into the darkness of death, now that he had fulfilled his destiny of faith and seen his master once more after twenty years”.
We touch people over that period of time—3,000 years—and common humanity is there.
Then there were the beginnings of democracy in Athens in the golden period with an assembly open to all citizens, regardless of wealth or class. It had an executive council chosen by lot, which, as your Lordships know, is a solution sometimes proposed for this House. There was justice by the verdict of one’s peers, the creation of the jury and courts composed of jurors drawn from the older citizens, who heard cases without the intervention of judges or lawyers—those who buzzed, as Aristophanes put it in “The Wasps”. There was the defiance of unjust law, told by Sophocles in the story of Antigone, whose loyalty to her brother led her to defy the edicts of the tyrant Creon. This is where drama was born; not just drama but comedy, poetry, Greek sculpture and architecture, which gave inspiration to the Renaissance and permeates the whole of our own civilisation. There were the philosophers, Socrates and Plato, who laid down the foundations of the philosophy that we share.
Romans were concerned with more mundane matters: belief in their right to rule over a lesser humanity; the exercise of power; law and order; dominion, with the spreading of boundaries “wider still and wider”—there was something of the Conservatives about them, one tends to feel. However, we learn much from the fate of the Roman empire when the Visigoths broke down the gates of Rome.
I heard at the weekend that my grandchild is taking up the study of Latin. The noble Lord, Lord Aberdare, is right: it is all down to inspirational teachers. I was fortunate in having two inspirational teachers in my state school, Frederick Rowlands and Mr Noel Jones. They inspired me to appreciate my place in the world and the fact that humanity is the same now as it was then. These are values that I hope will continue to be maintained.
Baroness Warnock
My Lords, I am sure that I speak for everyone in thanking the noble Lord, Lord Aberdare, for this inspirational occasion to talk about classics. However, I am not going to do that. I am going to talk about Latin and linguistic considerations, but nobody who has heard the noble Lord, Lord Thomas, speak could fail to weep with recognition of the excitements that there are in classical literature.
I am sure that I am not alone in judging our colleagues on the Bishops' Benches by the way that they read the Parliament prayer. The Parliament prayer, as everybody here knows, contains at its core an ablative absolute: “we … laying aside” and then it goes on until the words “partial affections”. The bishops who know Latin properly know that you have to pause after “grant that”; then comes the ablative absolute; then it goes on with what is being asked for, which is that our deliberations should have good effect. If you do not know that it is an ablative absolute, you make absolute nonsense of the grammar and the syntax of the prayer. That is my criterion of what is a good bishop, or archbishop.
I believe that the study of Latin is unique in that it gives one a feeling of the sense of the structure of a sentence, its syntax. I do not think that Greek, although it is a wonderful language, is quite as good as an instrument of learning about language as Latin is. Latin is indescribably clear and moreover small children, youngish children in primary school, love learning Latin because it is in the nature of code-breaking; there are certain rules and you can apply them to the sentence in front of you. You can get it right or you can get it wrong and that is of enormous attraction to children when learning. It is better, in some ways, than a modern language because it can be taught in its purest form—it is formal in the purest sense—and you do not have to be inhibited by pronunciation, accent or keeping up with slang. You do not have to learn how to ask the way to the station or how to get on a bus. It is there without the necessity of speech. It is to do with writing. Of course, that affects the way one speaks but it is essentially the written word. I believe that there is no profession—not just that of journalists and writers—where one does not need to be able to write coherently, clearly and in a way that is persuasive. The utility of learning the structure of sentences and their syntax is therefore without compare.
For about 20 years, I have been setting a paper and examining it for an essay competition for the Girls’ Day School Trust—it covers about 25 schools. There is the most enormous difference in the essays that I read, of which there are about 220 every year, between those girls who can write proper sentences and those who cannot. Even if their ideas are exciting or interesting, if they cannot write proper sentences then I cast away the essay. Over the 20 years, I have noticed a very severe decline in this ability. Largely, it is connected with the way that children communicate with one another through blogs and various kinds of electronic devices, which have changed the language. They can no longer distinguish between informal and formal writing: the kind of writing which they will need if they become civil servants, politicians, lawyers or doctors. They will all need to be able to write, so I recommend very much the use of formal Latin teaching. Also, as I have said, children greatly enjoy that kind of formal teaching.
Although I would hope that many of the people who learnt Latin at school would go on to study classics, ancient history or Greek or even classical studies—although I have never been quite sure what that actually embraces—Latin on its own is nevertheless infinitely worth teaching. I am delighted that there is this movement towards teaching it. As for finding the teachers who are able to do it, there is much to be said for the suggestion of the bolt-on to the modern language training course, as there is for someone who is already in the school—perhaps a modern linguist or an historian—teaching themselves Latin as they go along. If children can learn it, so can the teacher. It would be great fun, when teaching, to go along one step ahead of your class in North and Hillard, or whatever the appropriate Latin book now is. I hope that this will gather weight and that the Minister can assure us that the Government are behind this and see the point of it.
Baroness Coussins
My Lords, I want to draw attention to the common cause between modern and ancient languages. A joint meeting a couple of years ago of the All-Party Group on Modern Languages, which I chair, and the group on classics noted that Latin automatically offers the integration of language, literature and culture that teachers of modern languages are also trying to achieve. I am sure the same goes for Greek. When I started Latin aged 11—in the same class, incidentally, as the noble Baroness, Lady Greenfield, who has been referred to—we had a dynamic young teacher who taught us as though it were a modern language. For the first few weeks, no English was spoken in our classes. We learnt it by speaking it, as well as through the rigours of grammar and by writing. That certainly fuelled my interest in modern languages and when I spent my gap year in Spain, having done no Spanish at school, it was thanks to eight years of Latin much more than to eight years of French that I became fluent in Spanish after only a couple of months. It is generally acknowledged that Latin provides a strong foundation for learning all Romance languages.
I get cross when people say that Latin is dead. We do not go a day without hearing or using words like media, video, referendum or agenda; phrases like quid pro quo, pro bono, bona fides, mea culpa; or even abbreviations like et cetera, eg, or ie. Some people are quite surprised to discover that they are speaking Latin. Some would argue that we do not need to learn a modern language either, as English is enough. This is not true, of course, although this is not the debate in which to explain why. What is relevant is the evidence showing that learning languages, whether classical or modern, improves oracy and literacy in English too. That is one reason why modern languages have been so enthusiastically welcomed by primary school teachers, and why the Minimus resource for primary school Latin has been so popular.
Another criticism of classics is that it is elitist, and the Government should pay special attention to this. Again, there is a parallel with modern languages. In state schools only about 40% of pupils take a modern language GCSE now that they are optional after age 14. In the independent sector, it is about 90%. I am sure that a similar breakdown applies to Latin and Greek. I expect that the Minister will tell us that the EBacc will come riding to the rescue, and I readily acknowledge that it has led to some improvement. However, the Government must do more if they want to achieve their aim of closing what they have called “the vast gulf” between state and independent schools. Nearly half of state schools say that they are not improving their language offer at all as a result of the EBacc. Surely it would be a win-win initiative to complement the EBacc with a languages-for-all policy, effectively restoring compulsory languages, whether ancient or modern, for all children up to age 16. Without this, all languages, but especially the classical ones, will remain the elitist preserve of the independent sector. I hope that the Minister will tell us whether the Government are still open to restoring compulsory languages to age 16.
Languages are not just for the bright ones or the top set. Children of all abilities can learn, love and benefit from doing Latin, just as they can from doing French. They should be doing it in the mainstream timetable, too, and not in the lunch hour or in after-school clubs. There has been an interesting proposal from the charity Classics for All to help boost the supply of teachers, which is that a one-month classical element could be bolted on to all modern language PGCE courses. This is worth looking at and I am interested in the Minister's views.
We risk a lot if we let classics go from schools. In the words of Professor Mary Beard, in a lecture she gave last year,
“it would be impossible now to understand Dante without Virgil, John Stuart Mill without Plato, Donna Tartt without Euripides, Rattigan without Aeschylus …. if we were to amputate the classics from the modern world, it would mean more than closing down some university departments and consigning Latin grammar to the scrap heap. It would mean bleeding wounds in the body of Western culture”.
Lord True
My Lords, I, too, thank the noble Lord, Lord Aberdare, for introducing this debate. It was also a pleasure to hear from a fellow Peterhouse classicist. If Professor Ted Kenney was not happy with him then, he certainly would be now.
It is 53 years since I was introduced to Kennedy’s Latin primer—or Kennedy’s eating primer, since some assiduous boy had altered every front cover at my school. Forbidding though the fruit may have seemed at first, the eating of it ever since has been a pleasure and a delight. As others have said, a classical education needs no other justification than the pleasure it gives. It opens a window into the mindset that has created or informed some of the greatest achievements of art, literature, architecture and music, not just in classical times, but over all the centuries of civil education until, I regret to say, the modern, vandalistic and often deliberate sundering with all that was beautiful and good in the past culture of European nations.
I think it matters, too, at the individual level. If you are in a country church and see the carved memorial of a talented young woman who died from consumption in the neoclassical 1820s or, perhaps, the proud epitaph of a rather unsuccessful Venetian admiral, you can—if you know Latin—cross the wall of death and enter the world of that person. If you know no Latin, they lie dead and cold for ever. Not a week goes by without my reading or using Latin. I regret not a moment of that and I certainly, as the noble Baroness said, do not regret the discipline and precision of expression that comes from it.
Abbott and Mansfield followed a few years later—and the beautifully flexible Greek language has given me equal pleasure. I was probably one of the last who went through the university tripos, translating and writing prose and poetry both ways. I am not going to venture to be torn like Cinna the poet by this intelligent Committee by trying some of my verses on you, my Lords.
We recently did a straw poll of local secondary schools. Almost all the independent schools offer classics; of the state schools, two established academies offer none and the other offers Latin from year 7. Of the maintained schools, one offered no classics; neither did the second. It believed there was no demand for it. Two others do offer extracurricular Latin and each has about 30 takers at key stage 3. The last one sends four year 10s to a local independent school to study Greek.
I am sure that this mixed picture is fairly typical and I make no criticism of those that do not offer classics. Overexpansion of the curriculum did have an impact; I know that my noble friend Lord Hill of Oareford is addressing this and I support him. I urge him, as he reforms what is taught, not to fall under the influence of those with a utilitarian delusion that what is taught is a school for work, not a school for life.
I have one final thought. In taking classics to fresh places, let us please not fight shy of the critical place of grammar, as the noble Baroness said, in the name of accessibility. All my children were offered Latin; the first worked to greats at Oxford; the second to A-level; the third fell by the wayside at GCSE. When I asked her why, she said that she was bored with the discovery method of learning used to try to work out what the ending “amus” meant for herself, when her brothers had learned their “amo, amas, amat” in a day and have remembered it ever since. Ironically, she would have preferred to have been taught like them. Therefore, let us not neglect the essential foundations of grammar, which, as others have said, equip us to confront so many languages, including that poor mauled old thing that is our own language.
Finally, will the Clerk of the Parliaments help us? Can we please have some Latin back on the business of the day?
Lord Stevenson of Coddenham
I thank the noble Lord, Lord Aberdare, and congratulate him on instigating this debate. I join with him in recognising the extraordinary work of Peter Jones, without whom I do not think we would be here. I do not think there would have been a revival of classics without Peter Jones; he is a remarkable human being. I think I am a vice-president of whatever it is he runs and I should declare that interest. I agree with everything that has been said, so I am not going to repeat it. Where else can you learn the basics of comparative philosophy, literature and history in one go—and the basis of our civilisation? It is the only way, so take that as read.
I want to make two much more banal, practical points addressing government. First, this is cheap. My other obsession with schools is reintroducing musical education into schools—that is expensive. I had a modest part to play in the financing of Minimus; that was not expensive. Organising the kind of teacher training and the serving up of Latin and Greek—Mansfield and all in schools—is not expensive in the big scheme of things.
Secondly, I buy everything that the noble Lord, Lord True, has said, but I am unapologetically going to argue the utilitarian, vocational case. I am fed up with people saying, “Well, it’s jolly nice but it’s over there. It’s not very vocational, as though it were nuclear physics or medicine”. From my experience—and I am afraid that I am going to talk about my experience—I found it vocationally very important to me.
Bear with me if I say that most of my life has been spent setting up things—enterprises for profit and a lot not for profit. What do you need if you are going to do that? First, you need rigour, intelligence and the ability to analyse—there are no two ways about it. Secondly, you need resilience. Thirdly, you need creative resourcefulness in a tight corner, because you get into tight corners whether you are in a for-profit business or, as I am at the moment, a large mental health charity. What do you think doing a Latin unseen is about? It is about bashing your head with pure a priori logic against what is happening. I am sure that all previous speakers had no problems in getting Latin unseens out, but when you are up against it, boy, you need resilience—there are 30 minutes to go and you are panicking. Fourthly, when you are five minutes from the end and you have not got it out, you need outstanding intelligent creativity to produce something that might fool the examiner. Many a true word is spoken in jest, but I have found that grounding extremely helpful and useful.
I would argue everything else, but I just look down the Table at the Minister to say that the facts are clear: a revival is going on; it has not cost very much; to keep it going will not cost very much; and it is fundamentally useful for our children. Finally, in the briefing papers I read the astonishing statistic that 70% to 80% of private schools teach classics, whereas the figure for maintained schools is a small minority. The private schools, I regret to say, are not doing it out of cultural wisdom; they are doing it for fundamentally utilitarian reasons.
Lord Butler of Brockwell
My Lords, I, too, thank the noble Lord, Lord Aberdare, for giving your Lordships this chance to speak up for the classics. I am particularly pleased to follow the noble Lord, Lord Stevenson, whose son read classics at my college under my care with great success and distinction.
For years after I ceased to be a classical student, I feared that Latin and Greek were dying as areas of study. It therefore came as a great, but extremely encouraging, surprise to me to be told when I returned to Oxford that—this may surprise your Lordships—more students were studying classical-related studies today than at any time in Oxford’s history. That is extraordinary, especially since during most of its history there was nothing else that you could study. The university is, of course, much bigger today, but even so that is an encouraging statistic.
The truth is that, perhaps surprisingly, the demand for classical studies exceeds the supply, especially, I am afraid, in the state sector. As has been pointed out, although it is greatly to the credit of the Government to have included Latin, Greek and ancient history in their EBacc proposals, they are not making sufficient provision for training teachers in classics to replace those who are retiring. Yet, as has also been said, those state schools that have introduced Latin in particular have found that the children love it.
Last week, I had the great joy of taking a 14 year-old grandson on a tour of the great classical sites of Turkey and of witnessing his reaction—time even better spent than time in this House. My grandson, however, has a great advantage. He is at a private school. He can go where his academic inclinations and talents lead him and he will get the necessary support. In this, as in other areas, we should be working to make sure that all children have similar opportunities.
The eloquence with which noble Lords have spoken in this debate makes a sufficient case for the classics in itself and, like the noble Lord, Lord Stevenson, I will not add to it. However, one other thought occurred to me as I was going round Turkey. It does not need me to remind your Lordships that the Middle East is a crucible where so many of the issues affecting the future peace of our world will be resolved. The history of the Middle East goes very deep—back to classical times and before. I believe that many of the wrong decisions taken in recent years have been taken because of a lack of deep understanding and knowledge of the region—another reason for teaching classical history.
We have every reason to be grateful to organisations such as the Friends of Classics, Classics for All, and, although it goes against the grain for me to praise any Cambridge initiative, the Cambridge School Classics Project. They have done great work in supplementing the Government’s support for the classics. We know that government resources are limited, but I hope that the Minister will tell us that, where it is in the Government’s power to support the classics at little or no cost—with examples of where that can be done and where constraints can be removed—they will remove obstacles in the way of those who seek to promote the learning of classics.
Baroness Hughes of Stretford
My Lords, I, too, thank the noble Lord, Lord Aberdare, for initiating this debate and giving us the opportunity to listen to many interesting and informed contributions this afternoon—all passionately in favour and convinced of the benefits of having the opportunity to learn an ancient language or study classical culture. I share that passion. I was lucky enough to have the opportunity to study Latin, despite going to a state school and coming from a very working-class background in which no one had any idea about the classics. None the less, and despite having a teacher unlike that of the noble Baroness, Lady Coussins, called Mr Durden, who was very much like his name, he did not put me off and I came to love Latin.
I share the views expressed this afternoon about the benefits that spill over into other areas of activity and study. In my case, I have no doubt that the logical thinking, the accurate application of rules and structure, and so on, helped me in my subsequent university-level studies, which were not in the arts but in science. Like the noble Lord, Lord Aberdare, I think that there is great crossover in the skills gained from classical languages into science and technology. As the excellent briefing reminded us, we perhaps all agree with the classic comment by Dawkins that what classics has always done is to teach people fundamentally how to think.
Obviously, over recent years, there have been many impediments to sustaining the teaching of classics. We are all concerned about the disparity that exists between private schools and the state sector, with many children in state education, unlike me, not having the opportunity to study classics. The removal of classics from the matriculation requirement of some of our major universities some years ago was significant, leading to fewer schools teaching the subject, fewer teachers being able to teach the subject and the Training and Development Agency for Schools, I understand—the Minister will correct me if this is not still the case—putting a cap on the number of teachers each year who can be trained for the postgraduate teaching certificate to teach Latin and Greek.
It is remarkable that, despite that rather hostile environment, the classics are clearly having a renaissance. There is clearly demand, including in the state sector, for the opportunity to study classics. The charity Classics for All, as the noble Lords, Lord Aberdare, Lord Stevenson, and others, have said, has played a major role in that. We have seen considerable evidence of some schools being innovative in experimenting with how they can provide classics teaching by joining together, providing after-school tuition and, as the noble Baroness, Lady Perry, said, introducing primary school children to the classics, which is excellent. The stimulation of online resources, the e-course which the noble Baroness mentioned, and the Cambridge School Classics Project have also been very important.
Could the Government do more—arguably, by including ancient languages, at least, in the English baccalaureate? The Government have done more for classics, at least the languages, than they have for some other subjects, but there are still big issues about the supply of teachers, not having a comprehensive examination system and addressing the disparity that we have all mentioned with state schools. However, at least the Government have given their support in that way to the classics. If the Committee will indulge me, I wish that they had also done so for contemporary arts, culture and music, which we are now seeing disappearing from our schools because they are not included in the new performance management system, which is the English baccalaureate.
The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)
My Lords, I should probably start with a declaration of an interest: I am not a classicist. That will become evident as my comments unfold, as I shall clearly not be able to demonstrate all the qualities and attributes that a classical training would have endowed on me had I not been a mere historian.
I am grateful to the noble Lord, Lord Aberdare, for giving us the opportunity for this debate, not least for assembling the formidable brain power which has been assembled here and which has entertained us with a range of observations. He set out a compelling case for teaching classics in schools, a case that other noble Lords endorsed and, in many ways, amplified. We heard how the classics help to develop an understanding of English grammar and vocabulary, as the noble Baroness, Lady Warnock, argued; how they help with mastering modern European languages, as the noble Baroness, Lady Coussins, explained; and how they help to instil more disciplined ways of thinking that benefit children in other subjects.
When I had my own very small business, I was always interested in job applicants who had read classics because I knew that the chances were that they would be able to think logically, to write well, to express themselves clearly and to bring a different perspective. I agree very much with the points made by the noble Lord, Lord Stevenson of Coddenham, about the merits of a classical education from a utilitarian point of view as well. For people who think that the classics are dated, the noble Lord, Lord Aberdare, told us of his experience of debugging programs for IBM. The other day, I read that Mark Zuckerberg, the founder of Facebook, that modern communications phenomenon, was a classicist. The noble Lord, Lord Aberdare, I think, talked about the considerable emolument that would be derived—and he has made more than £10 billion, which constitutes a considerable emolument.
There are good practical reasons for children to study the classics, but we should not rest solely on the utilitarian argument that classics are good because they will help young people to get a job or to do better in other subjects. I agree with my noble friend Lord True on that. We should argue for education as being a good in itself. My noble friend Lord Thomas of Gresford reminded us that the power of the classics is timeless. We should want our children to have a window into a different world, to be thrilled or moved by the Greek myths, to be astonished by the achievements of the Greeks and Romans and to see how much we still owe to them today. Nor do I subscribe to the notion—the noble Baroness, Lady Coussins, made this point forcefully—that classics are somehow elitist and that they cannot have any relevance to children from poor backgrounds. It is patronising in the extreme to suggest that children on free school meals or who live in inner cities are not able to study Latin or that it is not relevant to their lives.
Like other noble Lords, I feel strongly that we should want the benefits of learning classics to be extended more widely. Yet, as we have heard, whereas 60% of independent schools were teaching Latin in 2011, the figure for state secondary schools was only 14%. For Greek, not surprisingly perhaps, the situation was even starker: 37% of independent schools were teaching Greek but only 1% of state schools were. So as my noble friend Lady Perry said, it is excellent news—and I agree with the noble Baroness, Lady Hughes of Stretford, on this—that there is a growing number of examples of state schools, primaries and secondaries, in some of the poorest parts of the country giving their pupils the chance to learn Latin and to learn about the ancient world. The Iris Project, which is led by classics departments in some of our leading universities, is taking Latin into inner-city primary schools in London and Oxford, and I think now in Liverpool and south Wales. Independent schools such as JAGS, Tonbridge, St Paul’s and King’s College, Wimbledon, are working with local primary and secondary schools to inspire an interest in Latin. My noble friend Lady Perry reminded us about the Minimus course and the fact that it has sold some 140,000 copies. We have also heard about the Mayor of London’s Love Latin initiative, which should reach 200 schools this year. Academies such as the ARK-sponsored Burlington Danes offer students the chance to study Latin and two European languages.
I have been particularly struck by the example of the West London Free School, one of our first free schools, which is consciously offering a classical liberal education. This comprehensive school has one-quarter of its children on free school meals. It has decided to make Latin compulsory at key stage 3—that is, up to the age of 14. It has drawn up its own curriculum and hired outstanding teachers from the independent sector to help to deliver it. It has, incidentally, been able to do that by virtue of the freedoms that academy status gives them—namely, freedom over the curriculum and freedom to employ good teachers from a wider range of walks of life. So convinced is it of the benefits of what it is doing and the impact on its pupils that it is setting up a local south-west London branch of its Classical Association. Its approach seems popular with parents, as it has just had nine applicants for every place.
We have heard this afternoon about a number of initiatives, many of which were prompted by the excellent organisation Classics for All, which certainly is reigniting an interest in the classics in state schools. Rightly the question put was: what are the Government doing to help to support that revival? Alternatively, as the noble Lord, Lord Butler of Brockwell, put it, one may ask whether there are any constraints that the Government can help to overcome.
The first point that I should make is that our overall approach is a permissive one. We want schools to have more freedom to decide what they teach. We have pursued that goal in two main ways. First, we are seeking to slim down the national curriculum for all schools, making it less prescriptive and leaving more time for schools to make their own judgments about what and how to teach and, in the context of today’s debate, freeing them up to teach classics.
Secondly, and of growing significance, academies do not have to follow the national curriculum. They have the freedom to develop a curriculum that they think best meets the needs of their pupils. More than half of all secondaries are now academies or on the way to becoming one and they have those freedoms. That number is going up the whole time. As I said, those academies also have greater freedom to employ staff from a variety of backgrounds, thus making it much easier to recruit teachers from independent schools or, as some independent schools are doing, to take a bright young classicist straight from a top university and to train them on the job.
New teacher recruitment was a recurring theme. We are providing bursaries of up to £9,000 for trainees studying to become teachers of Latin and Greek, which are priority secondary subjects. Schools where there is a demand for classics can also bid directly for School Direct places. The Teaching Agency aims to allocate enough teacher training places each year to match the demand for individual subjects. If demand goes up, the number of places that it offers will increase as well. I was asked specifically about the PGCE and the add-on. I will be happy to pursue that point further and to understand the details better. We are encouraging teacher training providers to offer more flexible solutions to the needs of schools and developing new PGCE courses in response to the new primary national curriculum, which is taking modern languages to younger pupils. Developing a love of learning a language means that providers of training are offering wider choices in language training, including Latin as part of a modern foreign languages PGCE.
I have mentioned the work being done by independent schools to support local schools to offer their pupils a taste of the classics. I am prompted by this debate to seek a meeting with independent school representative bodies to explore whether there is any more that we might be able to do together to see whether we can spread that. As has been mentioned, initially by the noble Lord, Lord Aberdare, we have also introduced the EBacc measure, which shines a spotlight on those schools offering the mix of subjects, including Latin and Greek, that are most likely to enable students to be able to go to the top universities. The effect of the introduction of the EBacc on schools seems to be striking. Whereas in 2010 22% of pupils in maintained schools took the EBacc subjects, we estimate that that figure will rise to 49% by 2014, which is quite a marked take-up.
I was asked specifically about having more than one exam board for Latin—the noble Lord, Lord Aberdare, asked me about the Government’s intention to move to one exam board per subject. As he knows, we think that it is necessary to protect the rigour of qualifications and to stop a race to the bottom on standards. That lies behind our thinking in moving to one exam board. We certainly do not want the new EBCs to prevent greater breadth of study and a balanced curriculum that includes time to study other subjects. We are exploring that as part of the current consultation.
By giving schools more freedom around the curriculum and employment, by raising the bar on academic achievement, by re-emphasising the importance of academic subjects through the EBacc, by tackling the culture of low aspiration for children from disadvantaged backgrounds, we are, I contend, helping to create an environment in which the seeds of a classical revival can take root. I will certainly draw some of the points made this afternoon to the attention of my honourable friend Liz Truss, who is the Minister responsible for these matters, and flag them up with her.
Rather than having a top-down approach with a range of new initiatives shooting off in all directions, we are seeking to build a schools-led system in which schools are more in the driving seat. I very much agree with all noble Lords this afternoon that the case for classics is strong. I applaud the work that is being done by its champions. I celebrate the encouraging signs that I think there are of quickening interest in the classics and I thank the noble Lord, Lord Aberdare, for bringing this matter to our attention this afternoon.
Azerbaijan and the South Caucasus
(12 years ago)
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Lord Laird
To ask Her Majesty’s Government what is their assessment of the United Kingdom’s relationship with Azerbaijan and the South Caucasus.
Lord Laird
My Lords, I thank all those who have supported and helped me in securing this debate on Azerbaijan and the south Caucasus. Azerbaijan is a country I know well. I have to declare an interest as a member of the European Azerbaijan Society’s advisory board, for which I receive an honorarium. Also, I have visited Azerbaijan at their expense.
The subject of this debate is the UK’s relations with Azerbaijan and the south Caucasus. These relations go back many years. The UK was one of the first western nations to open an embassy in Azerbaijan after it gained independence in 1991. In 1994, energy Minister Tim Eggar signed the “contract of the century” which installed BP as the lead company in developing Azerbaijan's oil resources, a pivotal position which it maintains to this day.
In common with all those who visit Azerbaijan—not just Baku but also the regional cities and the countryside—I see a country which is benefiting from the proceeds of oil and gas wealth. New infrastructure is being built, and not only in Baku. Evidence of wealth trickling down is provided by the United Nations. Their figures show that poverty levels have been reduced from 49% in 2002 to 11% in 2009. The president is genuinely popular, and people are optimistic about the future of the country.
However, there is one large cloud which hangs over the whole country. That cloud is the 20 year-old conflict with Armenia, which is the continuing illegal military occupation of Nagorno-Karabakh and the seven surrounding Azerbaijani regions. There are also the resultant 875,000 refugees and internally displaced persons who are still unable to return to their homes and lands. This is despite more than 20 years of talks under the auspices of the OSCE Minsk Group, and four UN Security Council resolutions instructing Armenia to withdraw its forces.
This ongoing conflict is far from being frozen, as some commentators describe it. I am sad to say that every week there are casualties along the line of contact, with small arms fire and mortar fire being exchanged. However, the casualties go far beyond the immediate proximity of the combat zone, and even beyond the refugee and the internally displaced persons camps.
There has also been a blurring of the lines, with some Armenians unable to separate Nagorno-Karabakh from their campaign for recognition of the genocide. That campaign has included violent action, spreading from Paris to California. The Armenian terrorists responsible were released as a result of Armenian diplomatic pressure, and on their return home were feted as heroes. Recently Azerbaijan pardoned Ramil Safarov, who was convicted of murdering an Armenian officer in Hungary, and when he, in turn, was feted on his homecoming, this led to increased tensions between Azerbaijan and Armenia, and some bellicose statements by the Armenian Government and Armenian pressure groups.
As in any conflict, there are faults on both sides. It is always tempting for both sides simply to rehearse past wrongs. The inability to forgive and forget previous atrocities is, however, only part of the problem. The make-up of the OSCE Minsk Group means that it is seriously compromised. The three permanent chairs are the United States, France and Russia. These just happen to be the three countries with the largest Armenian diaspora anywhere in the world, and this makes it extremely difficult for the Minsk Group to develop a workable compromise. Has this point been recognised by Her Majesty's Government?
This is where the UK can play a constructive role. The UK's involvement in Azerbaijan goes right back to the first oil boom at the turn of the 20th century. In Baku, I have visited the war memorial to British servicemen who died defending the oil fields during the First World War. More recently, as I mentioned, the UK was quick to recognise Azerbaijan's independence, setting up an embassy very quickly, and positioning itself from the outset to help to develop the second oil boom and the new gas boom. Given the length of our involvement with Azerbaijan and our close involvement in developing the country's energy resources, do the Government think that it is appropriate that they take a more active interest in the plight of the refugees? What proposals do they have to take a more active interest in the search for a resolution to the conflict?
On a more practical level, one of the primary objectives of the coalition Government and of the Foreign and Commonwealth Office is to help the UK economy to grow by fostering trade and investment links. In that context, do the Government consider that it is time that a Cabinet Minister should visit Azerbaijan? During the past year, eight heads of state and heads of government have visited the country. Such a high-level visit would be most meaningful to the Azerbaijan Government and people. What plans do the Government have to send a senior government Minister to Azerbaijan in the near future? I note that many recent contracts for construction and infrastructure have been awarded to non-UK companies. Outside the energy sector, we seem to be missing out on contracts because of our failure to send top-level representation to the country.
I conclude by reminding noble Lords of our long association with Azerbaijan and the huge amount of investment that is at stake. The country is barely 20 years old and is not yet a fully developed democracy by western European standards. However, by the standards of the region, it has a good story to tell and it can only benefit both sides if we engage more closely. The UK can benefit even more from trade and industry. Once a peaceful settlement of the conflict has been achieved and the refugees and the internally displaced persons have returned to their homes, progress towards becoming a fully fledged democracy can be completed. I thank the Minister and noble Lords for listening closely to my remarks and I look forward to the response in due course.
The Earl of Sandwich
My Lords, Shakespeare wrote,
“O, who can hold a fire in his hand,
By thinking on the frosty Caucasus?”.
We should indeed be thinking more about the frosty Caucasus and I thank the noble Lord, Lord Laird, for bringing the region, especially Azerbaijan, to our attention. This is a timely debate, since our EU Select Committee has just embarked on an inquiry into EU enlargement. It is a time when there are doubts even about the viability of fellow member states, let alone our neighbours in the Balkans or others further east. I am thinking, of course, of our economic crisis but also of belated worries about the judiciary in Romania and Bulgaria. I am one of those who would like to see much closer relations with the south Caucasus within a wider European fraternity. The Commission seems to think and act the same, but it does not call it “enlargement”.
As member states, we live in a time of great hesitancy and we, the British, generally do not like to commit ourselves to anything new—especially this Government. But Georgia for me is a good test of the real intentions of the EU over the coming decade. While in the West we are concerned day by day about the inner eurozone and its economic impact on the 27, we seem to lose sight of the enormous political and strategic dimensions of eastern Europe, especially the impacts of the West on the old Cold War frontiers and in the zone of continuing Russian influence. With the recent Nobel Peace Prize quite rightly awarded to the EU, it must be in Europe’s interest to share her experience of the rule of law and fundamental rights as a means of achieving greater freedom and political stability elsewhere.
No one is talking about political union or even a federation; people are talking about a gradual strengthening of relations along the fringes of Europe where enlargement or an enlarged association might take place. Some would say that we are already doing that in Kosovo to secure the border with Serbia—they are both states that seem some way away from full membership, although Kosovo is entering a new stabilisation and association process. We may be undertaking something very similar in the south Caucasus in the future. However, Kosovo has been a whipping boy for a number of states that fear separatist tendencies in other countries—namely, the Basques and the Catalans in Spain and the attempted breakaway of South Ossetia and Abkhazia, now recognised by Russia and only a handful of mainly Pacific and South American sympathisers.
The fragile borders with these territories remind me of the EULEX programme in Kosovo—going nowhere but keeping a fragile peace along the river at Mitrovica. The EU monitoring mission has similarly been critical to the prevention of conflict along the so-called administrative boundary lines on Georgia’s northern border. The mission was established after the war in 2008 to monitor compliance with the 12 August plan and the agreement between Presidents Sarkozy and Medvedev on 8 September. Since the Russian veto closed the UN and OSCE missions in June 2009, it has been the only international monitoring presence in the area and, remarkably, the only CSDP mission to which all 27 member states contribute personnel.
Georgia has also entered an association agreement with the EU. The Minister may well point to the enormous investment that the EU is making in the Caucasus arising from the partnership formed after the August 2008 conflict. This is the EU’s little known Eastern Partnership, which covers Georgia and five other former Soviet Union republics. It is benefiting from a €600 million aid programme in 2010-13 to include reform, institution building and regional development. There are many other examples of aid from the European Union, which make it possible for us to have closed our international development programme.
I have been lucky to keep a group of Georgian friends, some of them dating back to my visit to Tbilisi in 1964. Most are in exile, but they keep me informed of events in Georgia. While wanting improved relations with Europe, they were never enthusiastic about President Saakashvili’s style of government. They are more hopeful of change under Ivanishvili, the new billionaire Prime Minister, while not quite knowing his intentions. He is a rather maverick character but, by all accounts, a benevolent, art-loving oligarch. While his fortune was made in Russia, they do not accept the smear that he will necessarily take a pro-Russian stance. Nevertheless, having just appointed a new special envoy to Russia, he clearly wants to rebuild confidence on both sides and, above all, new trade links.
Let us not forget that Georgia is to Russia a little like Ireland has been to England—romantic, wild, poetic, violent and rebellious. It cannot be culturally cut off from Russia and should not be soldered on to the EU either. It must inevitably now find some modus vivendi with Moscow. Georgia signed the European Convention on Human Rights in 1997 and became a member of the Council of Europe two years later. However, there have been serious concerns about Georgia’s human rights record under President Saakashvili. Excessive force, for example, was used by police against protesters on 26 May last year and, while four officers were dismissed by the Interior Ministry, no independent public investigation took place and allegations against the police were never followed up. That is just one small example of the need for the spreading of the rule of law.
What exactly is the reason for the EU’s deepening engagement with this region? Does the Minister believe there have been substantial internal reforms in Georgia justifying this level of international support or does he think that the EU Commission has an eastern mission to contain the sphere of Russian political, and perhaps military, influence? It is 12 years since the CSDP was developed in Cologne and Nice. According to the EEAS website,
“the EU’s role as a security player is rapidly expanding”.
Is HMG satisfied that this expansion is taking place with the support of the whole international community?
Lord Sheikh
My Lords, I am thankful for the opportunity to speak in the debate this afternoon, not least because of my increasingly close relationship with Azerbaijan following my visit there in June this year. I hold a deep conviction for increasing our ties with the country and I am grateful to the noble Lord, Lord Laird, for securing this debate.
I visited Azerbaijan with my colleagues the noble Lords, Lord Dykes, Lord Risby and Lord Patel of Bradford, and we were privileged to hold a number of successful meetings with senior figures, including the President of Azerbaijan. We learnt a great deal about the modern-day concerns of the country, what we share with them, what our differences are and how we can assist each other and build on our relationship in the future.
As a businessman, perhaps my foremost concern was establishing how we can further our trade and investment opportunities. The UK is already responsible for half of all foreign investment in Azerbaijan, investing nearly £1 billion in 2010. Most of this comes from BP’s investments in oil projects, although we have more than 175 other companies investing in commercial activities over there. The state-owned oil company, SOCAR, has worked closely with BP for many years. I believe that we need to use this as a platform on which to build further on trade and take advantage of opportunities beyond the energy sector.
The Deputy Chairman of Committees (Lord Geddes)
If the noble Lord could avoid hitting the paper on the microphone, that would be helpful.
Lord Sheikh
I am sorry about that.
Azerbaijan has one of the fastest-growing economies in the world and there are a number of sectors within which it is looking to expand, including finance, telecommunications and infrastructure. Other European countries have recently secured a number of high-profile contracts in technology and construction. We must harness our current relationship with Azerbaijan to increase our trade with it before more countries beat us to it.
I understand that the Azeri Government currently hold a surplus of cash and are keen to explore the potential for their investments in foreign businesses and properties. Securing such inward investment in the UK would be of great assistance in these troubled times. In assisting this effort, I would like to see more high-profile trade missions to the region or at least more senior ministerial visits to Azerbaijan. I applaud the Prime Minister’s current tour of the UAE and would like similar action to be taken to acknowledge the potential for future trade and investment with Azerbaijan.
During my visit, I was also struck by the social and cultural reform taking place in the country. I met the Sport and Youth Minister and understand that Azerbaijan has a desire to increase its sporting sector, as it has a new-found appreciation for the social, economic and health benefits gained through team-centred physical activity. I feel that we need to look into providing assistance to develop new sports programmes and summer camps for young people. Such an offer seems particularly timely given our sporting legacy this past summer and the long-term implications for increasing the health and stability of the country.
I attended a meeting chaired by the Minister of Religion, where the discussions related to the new wave of religious moderation spreading across the country, with which young people are increasingly engaging. There were delegates from across the region and I was impressed with their attitude to promote the true message of Islam as a religion of peace. I found that, as well as generally opening up the country to the international community, this was very encouraging for its prospects in combating terrorism, which remains one of its Government’s priorities.
This wide liberal shift in attitudes is also evidenced through SOCAR’s new drive towards corporate social responsibility. As a large state-owned company, it is leading by example by implementing a long-term environmental strategy, with commitments on pollution prevention and waste management, as well as acknowledging the need to address issues of biodiversity and sustainable development. It is simultaneously reducing its carbon emissions and increasing the efficiency with which it uses natural resources. Perhaps more impressively, it is constructing an ecological park to regenerate contaminated land and provide educational facilities for children.
It is safe to say that the international community is already recognising the changes that Azerbaijan has been making, having elected it a non-permanent member of the UN Security Council for 2012-14 and progressing negotiations on the EU-Azerbaijan association agreement. These are historic milestones for the country and represent a more assured and stable relationship with the UK and other countries around the world. Colleagues will be aware of Azerbaijan’s continual state of conflict with the Republic of Armenia over the disputed region of Nagorno-Karabakh, which constitutes 20% of Azeri territory. This issue continues to be Azerbaijan’s largest diplomatic challenge and a source of wider instability throughout the region. It is very important that we continue to pledge our full support to the OSCE Minsk Group peace process and to be very proactive in keeping both sides at the negotiating table.
I hope that my contribution has evidenced not only how proud we should be of our ties with Azerbaijan but also the very substantial potential heading forward. During my visit I noticed that society in Azerbaijan has become freer and more prosperous since gaining independence more than 20 years ago. The Azeri Government appeared highly enthusiastic about advancing international engagements economically, culturally and politically and I would like the UK to play an active part in this.
Baroness Cox
My Lords, I declare an interest as chair of the British-Armenian All-Party Parliamentary Group and as a recipient of awards from the Governments of Armenia and Nagorno-Karabakh. I have visited the region 78 times, many during the war against Karabakh. I regret that my contribution to this debate will be unpopular, because it is critical of Azerbaijan, but it is based on first-hand evidence.
I begin with a brief reference to aspects of recent history relevant to current issues. I visited Azerbaijan in 1991, when I met the then president and political leaders. I was dismayed by the explicit commitment to ethnic cleansing of the Armenians from the enclave of Nagorno-Karabakh. I also visited Karabakh then and met Azeris living in homes which had recently been owned by Armenians who had been evicted by Azerbaijan’s well documented policy, Operation Ring, in which Armenian villagers were surrounded by Azeri troops who killed, tortured and drove villagers off their land.
I tried to follow the example of Andrei Sakharov, who was committed to being on the side of the victim. Clearly, the Armenians were the primary victims as they had already been victims in the massacres in Baku and Sumgait. Then Azerbaijan unleashed full-scale war. I witnessed 400 Grad missiles daily raining onto Karabakh’s capital city, an aerial bombardment of civilian homes with 500 kilogram bombs. I also witnessed war crimes perpetrated by Azerbaijan on Armenian civilians at Karabakh, such as the cold-blooded massacre of villagers in Maragha. I was there hours afterwards and saw corpses whose heads had been sawn off and burnt, mutilated bodies. I visited Khojaly and can testify that the tragic events were not as portrayed by Azerbaijan—a massacre of Azeris by Armenians. Independent journalists and Azerbaijan’s former President Mutalibov have publicly come to the same conclusion.
It is important to understand that the capture of Azeri territories by Armenians was not aggressive land grabbing, but essential for survival, as they were used as bases for constant shelling of towns and villages inside Karabakh. I was there when one ceasefire was broken by Azerbaijan, with renewed bombing from Azeri bases in these lands. Therefore, continued occupation needs to be understood as a necessary buffer zone in any peace agreement.
This recent history is relevant to current concerns as the 1994 ceasefire is precarious. There is an urgent need for peace for the peoples of Azerbaijan and Armenia and because the peoples of the south Caucasus do not want another destabilising regional war. However, Azerbaijan’s continuing hostile policies are detrimental to attempts to reach a solution to this semi-frozen conflict. For example, the noble Lord, Lord Laird, mentioned the case of Ramil Safarov, the Azeri military officer who used an axe to murder an Armenian officer in his sleep while both men were attending a NATO course in Budapest in 2004. Safarov was arrested, convicted and sentenced to a lengthy term of imprisonment. But, when Hungary repatriated Safarov to Azerbaijan, on the understanding that he would continue to serve his prison sentence, he was released from prison and welcomed as a hero. According to the Economist in September 2012, this led to a new war of words in one of the world’s most volatile regions.
Patrick Ventrell, spokesman for the US State Department, said that the United States was extremely troubled by the pardon of Safarov and would be seeking an explanation from both Budapest and Baku. Russia, involved in trying to ease relations between Armenia and Azerbaijan, said that the actions of the Hungarian and Azeri Governments contradicted internationally brokered efforts to bring peace to the region. May I ask the Minister what representations have been made by Her Majesty’s Government to Azerbaijan concerning the release and the honouring of the convicted murderer Safarov?
The Economist also raised questions about the EU’s credibility when it pledged €19.5 million to reform oil-rich Azerbaijan’s justice and migration systems. Since 2006, Azerbaijan’s economy, with its vast oil and gas reserves, has nearly tripled to $62 billion. May I ask the Minister what the EU’s justification was in giving €19.5 million to such a wealthy country? Moreover, there is widely-held concern over Azerbaijan’s massive investment in its military arsenal—a 20-fold increase in seven years. Apart from expenditure on arms, in a nation where many still live in poverty, there is deep anxiety over the propensity to renew war with Nagorno-Karabakh. This danger is exacerbated by Azerbaijan’s constant use of belligerent and hostile propaganda, which is not conducive to confidence-building or effective peace negotiations.
Finally, I refer to Azerbaijan’s disturbing record on human rights, particularly on freedom of the press and religious freedom. Accordingly to an article in Time magazine in April this year:
“Despite Azerbaijan’s post-Soviet economic success, international critics say the country remains an autocracy with little respect for human rights…The Human Rights House Foundation described the country’s most recent elections in 2010 as a farce. Azeri citizens who criticise the political elite face reprisal…Azeri authorities have ignored dozens of assaults on journalists in recent years, including two murders. According to the Norwegian Helsinki Committee, a human rights NGO, about 70 people are in jail for political reasons, where many are allegedly tortured.”.
There have also been frequent reports by Forum 18 of imprisonment of people for their religious beliefs. May I ask the Minister whether Her Majesty’s Government have raised these widely-publicised concerns over violations of fundamental human rights with the Government of Azerbaijan? Or does the situation remain as it did on a previous occasion several years ago, when I raised the issue of Azerbaijan’s violation of international human rights conventions when it was dropping cluster bombs on civilians? I was told by a senior representative from the Foreign Office:
“No country has an interest in other countries, only interests—and we have oil interests in Azerbaijan.”.
Azerbaijan pours massive funds into propaganda, disseminating positive images of its progress while trying to prevent access to Karabakh by intimidating potential visitors who wish to see the situation there for themselves. After one of my visits in recent years, an article appeared in an Azeri newspaper, entitled “Shoot the Cox!”. Parliamentarians visiting Armenia receive letters from Azeri authorities threatening to place them on a blacklist if they visit Karabakh. The British Ambassador is still not allowed to visit Karabakh, although the political and diplomatic representatives of other nations do so. Therefore, it is hard for the Armenians of Karabakh to have their story of Azerbaijan’s policies told.
I deeply regret having had to make such a critical speech. Of course, I can be accused of partiality, but if my contribution is partial, it is accurate, based on first-hand evidence and corroborated by many independent sources. I hope it is helpful to put on record some often untold aspects of the situation, because the search for a just and lasting peace can only be based on an understanding of historic and contemporary reality in all its multi-faceted complexity.
Lord Kilclooney
My Lords, I, too, declare an interest as someone who has visited Azerbaijan many times, although not nearly as often as the noble Baroness, Lady Cox, has visited Armenia. I took an interest in Azerbaijan and Armenia when I was in the European Parliament over 20 years ago and then more recently when I was in the Council of Europe. I was one of those who argued strongly for Azerbaijan and Armenia to join the Council of Europe on the same day, in the hope that by doing so and bringing both in equally, it would lead to a resolution of some of the very sensitive problems that exist. We have heard one extreme example of the problems in that part of the world.
I want to underline very quickly one or two things that have already been mentioned. The noble Lord, Lord Sheikh, mentioned United Kingdom investment. As he said, 50% of the foreign investment in Azerbaijan is by the United Kingdom—mainly in the energy field, of course. As the noble Lord, Lord Laird, mentioned, we must try to get greater British interest in other aspects of investment in Azerbaijan. I congratulate him on securing this debate.
It is a reflection on not only the present Government but earlier Governments that we as a nation, while so heavily involved financially in Azerbaijan, have never sent anyone more senior than a Minister of State to that country. Yet we find that even in the last two years, some 15 top politicians in Europe have visited Azerbaijan. Among them are the Prime Minister of Turkey—naturally, because Turkey and Azerbaijan have very close connections—but also the Foreign Minister of Germany and the French, Austrian, Czech and Polish Presidents. I could continue. These countries do not have as great an investment nor interest in Azerbaijan as we in the United Kingdom have. When one goes to Baku, it feels like little Scotland because there are so many people there from the oil industry. This is why we should be investing more in Azerbaijan and ensuring that the Prime Minister and Foreign Secretary go there in the near future. One thing for which we must pay tribute to the present Foreign Secretary of our nation is that he has been developing contacts with foreign countries right around the world. I would like to see him take a further initiative in Azerbaijan to strengthen the British economic presence there.
As has been mentioned, we need to remember that Azerbaijan is a member of the Security Council of the United Nations and will be an important country over the next two years in terms of foreign affairs. It is a partner of NATO, facilitating what is going on in Afghanistan. However, we must always remember that there are two countries looking very closely at Azerbaijan which could destabilise it. One is Russia and the other is to the south: Iran. When I was there I discovered that Iran is now beginning to influence the mosques in the south of the country, and that is always a threat to stability in a Muslim nation. As for Russia—that pillar of democracy—when I monitored the elections on one of my last visits to Azerbaijan, who had the largest delegation there to ensure that democracy was taking place? Russia. They had even more there than the OSCE or the European Union. That is a warning that these two countries are watching Azerbaijan.
One of my great experiences when I went to Azerbaijan a few years ago was going to the border with Russia near Dagestan. I was monitoring an election in the city of Guba. It is mainly Jewish; I had not realised there were so many Jews living in Azerbaijan. It was a most wonderfully controlled election. The officers in the polling stations were very efficient, and it was a great thing to see in a Muslim nation that Jews were happy and welcomed as equal citizens.
However, as the noble Baroness, Lady Cox, mentioned, there is of course the problem of Nagorno-Karabakh. Twenty per cent of Azerbaijan is now occupied by Armenia. It is supported by Russia, which also has troops based in Armenia: do not ignore that fact. The United Kingdom should join the United Nations, NATO, the European Parliament and the European Commission in supporting Azerbaijan’s right to reassume control over its own sovereign territory.
I underline what the noble Lord, Lord Laird, said about the Minsk partners. Every time I look at who they are, I realise that there is no chance of them settling the problem. I was deputy leader of my own party in Parliament when we negotiated the Anglo-Irish agreement. There were three elements to it. One element was Irish-British relations. Another, of which I was in charge, was Northern Ireland-Republic of Ireland relations. That was a very difficult subject, just like Armenia and Azerbaijan. You had to have an impartial chairman to succeed. Once we have the Minsk process we do not have an impartial organisation. I am sorry to say that it is biased in favour of Armenia.
I am not asking the Minister to reply to any questions tonight. I must apologise because I have to leave quickly. I have a meeting arranged with Christians and Muslims of the Middle East at 7.30 pm. However, one thing we need to look at is how to get someone impartial to help Azerbaijan and Armenia reach a settlement over this very difficult subject of Nagorno-Karabakh, which could explode and destroy stability in that whole region if it is not handled carefully. One thing I ask of the noble Baroness, Lady Cox, is that we join together in opposition to Azerbaijan when it next plays Northern Ireland in the football.
Lord German
My Lords, I am grateful for the opportunity to underline a couple of the points which have been made in this debate. I declare my interest. I have been to Azerbaijan this year, supported by the European Azerbaijan Society. One of the things that has clearly come out of this debate introduced by the noble Lord, Lord Laird, is the huge amount of foreign direct investment that the UK has in that country. What needs underlining is the potential for more. It is a country which has enormous amounts of regeneration prospects and the opportunity for other forms of investment from UK companies. I am afraid that we may be losing out to others, particularly Germany, which is seeking to do better and bigger business there as well.
In his winding up, will the Minister agree that we need a high-level trade delegation from this country led by a senior Minister to promote those new opportunities? After all, this country needs more opportunity to trade, to invest and to gain funding for this country.
The second issue that needs underlining underpinned some of our discussion. The amount of trade and investment that we have enables this country to be a critical friend of Azerbaijan. After all, we must recognise that it is not a perfect democracy—perhaps not even ours is a perfect democracy. It has had 21 years of existence since its life within the Soviet Union but it takes a huge amount of time to make the changes to reach a full democratic status. It is a country leaning towards that and it wants to achieve it.
As a critical friend, it seems that that is a role that the UK is well established to play. I regard investment in human rights and investment in justice systems as a crucial part of that journey, which I think this country wants to move on to. I suggest that justice systems’ support, supporting alternative measures and ways of approaching public order issues are things that this country can achieve. I believe that it is much better to support that from within than to try to complain from without.
We are in a unique position to influence the way in which Azerbaijan moves forward. It wants to move forward in a direction to which this country is sympathetic and I believe that we can undertake that. I have met Opposition MPs in Azerbaijan who have a role in human rights and say that they need support and help. They are not overcritical of the way in which their Government behave but they need the extra help that this Government could provide in the way of support. They need support for a free and open media. They have Opposition-leaning newspapers but we can provide more assistance in that direction.
In summing up, I hope that the Minister will give reassurance to noble Lords that we will be a critical but supportive friend working from within.
Lord Triesman
My Lords, I am grateful to the noble Lord, Lord Laird, for giving us the opportunity to have this discussion. The debate illustrates the difficulties faced by the United Kingdom in balancing, on the one hand, a complex set of concerns which do not always sit comfortably together and, on the other, a very small capability as a single sovereign nation to influence the trajectory of the region. The issues concern us, but it may be more realistic to recognise that it is our work through the European Union and NATO that is likely to have the greatest impact on the country and the region.
I am obviously aware, as noble Lords have been throughout the debate, of the struggles for independence that have taken place in Azerbaijan and the region more generally. I emphasise that history because it appears to me that it is shared to a greater or lesser extent by the whole region. Independence has been fought for in many ways and with diverse allies, each with their own motivations. At the moment, at the heart of all these struggles, one can see the assertion of national identity, but it is based on some very different premises—some national, some subnational, some regional, some ethnic, some religious—in their identity. It is perhaps unsurprising that deep fault lines have appeared and will continue to appear, making it difficult to find simple solutions.
For those reasons, the previous United Kingdom Government and, I believe, the current one, have been consistently concerned about the dangers inherent in conflicts between Azerbaijan and Armenia over the disputed territories, the question of the ethnic Armenians in the enclave and the alliances which have been formed around them. What does the Minister believe are the still current and useful bases of the Madrid principles and the work being done by the Minsk group? Do the Government believe that we can achieve a withdrawal of remaining Armenian forces from the country? How do they see the demilitarisation programme? How do they see the deployment of international peacekeepers? What are the prospects for reconstruction and the return of displaced Azerbaijanis? What programme do the Government have? If that programme is a European one, I make no criticism of that whatever; it may be the right way to go.
As I suggested, this is by no means the only fragile regional problem. The breakaway republics in Georgia, which have been supported by Russia, plainly in response to Georgia’s potential closeness to NATO, have created ongoing tension. David Miliband in another place was right in my view to describe Russia’s actions as aggression. The United Kingdom has been right to call for respect for Georgia and for its territorial integrity under international law. I should like to know that the Government still adhere to that position. Georgia is entitled to know that it retains our broad support. I do not for a moment underestimate the difficulties that would occur in discussing any future developments moving closer to NATO that would occur with Russia but, none the less, I am keen to know what the character of those discussions might be.
Several noble Lords made the point that visits to the region in general, including to Azerbaijan, by prominent politicians give signals. The first signal is one in the interests of the future of the country but it is also an opportunity—Hillary Clinton took that opportunity on 6 June 2012—to give signals about our expectations for a more normal and generous attitude to human rights, as well as to trade opportunities. Of course, there are signals being given all the time by Europe and by the United States; it may very well be that we can add to those. All speakers in this debate will appreciate the importance of energy supplies but, while we cannot ignore that, we need to place it in a context. The impact of having alternative sources of energy supplies to those provided by Russia unquestionably increases the prospects for energy security throughout Europe. I entirely see the arguments for developing the links and the commercial possibilities that BP and others have produced—not just in the extraction of oil and gas but in the construction of the pipelines. All of these are important economic developments.
In the last few moments that I have, I suggest that these interests should not for ever silence us to the issue of the poor human rights records in Azerbaijan. When one looks at how the wealth that has been generated has underpinned the power of just one political entity in Azerbaijan, it should concern us a great deal. The country is rated as not free by international indices; it has a number of political prisoners; its TV channels are controlled by the Government; its journalists are routinely threatened and, of 178 nations ranked in the 2011-12 press freedom index from Reporters Without Borders, the country ranks 162nd. The political opposition has all but been eliminated.
I therefore ask whether the Government have a view on whether the economic measures we have taken through the European Union and the discussions about the potential for NATO membership are, in themselves, having any kind of impact on a recognition of the need for human rights and democracy in that country. Like others, I do not say that out of a spirit of hostility but rather to make this point. If we believe that our influence has been significant, and significant through international bodies including the EU and NATO, how are we making sure that that influence is beginning to change what I believe is a human rights record which needs urgent attention?
Lord Wallace of Saltaire
My Lords, I thank noble Lords for this interesting debate. I am constantly struck by how much diverse expertise we have in this House on the many countries around the world. I can recall the questions that were asked some months ago on the Georgian Government’s reform of public services by a number of Peers who had just returned from Georgia. I recall my first visit to Yerevan in 1995, when the key lady on the floor of the hotel where I was staying said to me, in hushed tones, that I was staying in the very same room that Caroline Cox—the noble Baroness, Lady Cox—had stayed in some months before. I recall some years later in Abkhazia, with Anna Politkovskaya and a number of other journalists, meeting the Foreign Minister of what seemed to me that benighted and unrecognised country. His last words to me as I turned to leave were: “May I ask you, when you return to London, to please give my best regards to Lord Avebury?”.
We all recognise that there are many comings and goings. I enjoyed the pictures on the web that I looked at this morning of the noble Lords, Lord Laird and Lord Kilclooney, on their most recent visit to Azerbaijan. If I may make just one partisan point: when noble Lords demand that Ministers should travel more often and then demand that Ministers are always here at short notice to answer debates, it should be recognised that this coalition Government have visited more countries with more senior Ministers than our predecessors but that the demands of Parliament are one of the things that hold us all back.
The coalition Government are of course keen to promote Britain’s security and prosperity and, at the same time, to influence the Governments with whom we deal to improve the quality of their rule of law, human rights and democracy. None of the three countries in the Caucuses is yet a fully-fledged democracy. All of them have had problems with media freedom and media ownership; all have had problems with the rule of law. We are extremely happy that Georgia has just had an election which was ruled by most observers to be free and fair, and in which there has been a democratic change of Government from one party to another. Azerbaijan has not yet reached that stage, nor is there a fully-fledged opposition in Azerbaijan, but there was not one in George until relatively recently. Armenia has elections next year, which we very much hope will be up to the standard of being assessed as free and fair.
We are working across the region with our partners in the EU, the Council of Europe and the OSCE. I should say to the noble Earl, Lord Sandwich, that our assessment of the EU’s mission is that it is there to strengthen the stability of our neighbourhood. The basis of the European neighbourhood policy—the eastern partnership is part of this—is that we export security or we import insecurity. It is much better to export security. There is no more expansionist mission than that. I have visited Georgia on a number of occasions and talked to the EU and OSCE representatives there, and that is very much what they are attempting to do. He commented that the relationship between Russia and Georgia is very similar to that between Britain and Ireland. I did once say in a discussion in Moscow that it seemed to me that the attitude that the Russians—with whom I was talking—had towards Georgia was very similar to that which the British had towards the Catholic Irish in the middle of the 19th century. That is part of the problem of accepting that these are countries which are entitled to their independence and to be treated as equal partners. I say to the noble Baroness, Lady Cox, who complained about the Azeris acquiring weapons in large quantities from others, that the Russians sell weapons to Azerbaijan and to Armenia. That is one of the problems in trying to resolve that frozen conflict.
We are, as several noble Lords have remarked, the largest foreign investor in Azerbaijan—primarily in the oil industry, but also now spreading to the retail sector and others. I recognise that several noble Lords have commented that they would very much like to see a senior Minister going there. As we speak, the Minister for Culture, Ed Vaizey, is in Baku attending the internet governance forum. The Prime Minister has met the Azerbaijani President twice in the last six months. Other Ministers have visited the country. There are at the present moment no plans for a Cabinet Minister to visit in the near future, but such plans are kept fully under review. I had the great pleasure last night of speaking at the Iraqi-British business commission with the noble Baroness, Lady Nicholson, who was, as always, fully up to speed. It is not simply a matter for the Government: I encourage all noble Lords to be as actively engaged as possible in encouraging further British investment and trade with all these developing countries.
Why are we interested in the region? Of course for all these connections; the transit of oil and gas to Europe via a southern energy corridor is of considerable importance to Europe’s energy security as a whole. The region is important to us in terms of security, and is one of the many transit routes to Afghanistan. Noble Lords have mentioned that Iran is also a neighbour and that the sanctions on Iran have led to an increased Iranian interest in both Azerbaijan and Georgia. The Azeris are always conscious that there are more Azeris living in Iran than in Azerbaijan itself and that to go to Nakhchivan you have to go partly through Iran.
However, our common security means that we are engaged with the region. All three countries have contributed to the ISAF in Afghanistan. There are now two Georgian battalions in Helmand, taking over some tasks from the US Marine Corps and thus actively assisting the British forces in that region. The Eastern Partnership sees this as a collective Western relationship with the region. Georgia is the country which has most openly declared its intentions of joining both the European Union and NATO. This is a long-term process, but deeper relationships are currently being negotiated with Armenia and Georgia, and a deep and comprehensive free-trade area, to use the EU jargon, is now under way in terms of negotiation with both these countries.
We have also talked about the frozen conflicts. In response to the noble Baroness, Lady Cox, what happened across Georgia and between Armenia and Azerbaijan, and in a number of other areas as the Soviet Union broke up, were some very bloody and disorderly conflicts, which have left us with what we have now. There were faults on all sides. Let us also touch on what happened in Moldova, Belarus and Ukraine. We are left, however, with the enormous problem of the Nagorno-Karabakh and with people on both sides of this ethnic conflict who feel deeply aggrieved at each other.
The Minsk process has failed yet to make much progress. We do, however, have only that process to work with. The United Kingdom, which is not a member of the Minsk group, continues to support the Minsk process, difficult as it is. We cannot entirely get rid, for example, of Russia as a major player in all this. Therefore, to rebuild a group which would attempt to negotiate without Russia would not be particularly helpful. If we were to invite China to adjudicate, I am sure that the Chinese Government would be much more impartial than the current chairs of the Minsk group but they might not necessarily be that much more helpful.
The British Government are putting in a certain amount of money themselves in terms of supporting NGOs, British and others, within Azerbaijan and across the region. We also support what the EU is doing in terms of promoting human rights and the rule of law. Of course, we invest as well. We would love the Azeris to fund what we do but we have, across the whole of eastern Europe, invested heavily, as we now are also doing in north Africa, in rule of law missions, in improving the capability of political parties to take part in elections and in looking at the administration of elections. That is very much how we see our democratic mission.
To wind up, we are committed to this region because it is part of the wider European neighbourhood. We are committed with our European partners because we share common interests. We are committed as a country that is an active exporter to compete with our European partners—the Germans, the French and others—for business and investment in the region. So we have a mixture of interests in which we recognise the growing importance of Azerbaijan, the importance of the Caucasus as a whole to our future energy security and the importance of helping the Caucasus to become more stable, more prosperous and more democratic for the peace of that region and of our broader region as a whole.
House of Lords
NHS: Women Doctors
(12 years ago)
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Baroness Deech
To ask Her Majesty’s Government how they propose to facilitate the retention of women doctors in the National Health Service.
Baroness Hollins
My Lords, on behalf of my noble friend Lady Deech, and at her request, I beg leave to ask the Question standing in her name on the Order Paper.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, over the past 10 years, from 2001 to 2011, the number of female doctors in the National Health Service has increased by 75%. Female consultants have increased by 105%, female registrars by 288% and female GPs by 58%. The Government, in partnership with other organisations, including NHS employers, the NHS Leadership Academy and royal colleges, support good working practices, such as flexible working, job sharing and part-time working, which support the retention of female doctors.
Baroness Hollins
Is the Minister aware that part-time training in the NHS is becoming much less available because of workforce pressures and difficulties in filling hospital rotas? Now that the majority of medical students are women, does he agree that the challenge is how to support those doctors who wish to work part time, perhaps while their families are young or while they have other caring responsibilities, and then to support them to move between full-time and part-time work that makes proper use of their talents and training? I declare an interest as president of the BMA and also as someone who worked part time for seven years as a trainee doctor.
Earl Howe
My Lords, I agree with the noble Baroness. I think this is less of a problem with retention of female doctors than a problem with the career progression of female doctors, which is a serious and significant issue. The noble Baroness, Lady Deech, published a very well argued report about three years ago, and a number of worthwhile initiatives have been started as a result of that. I do think that these need greater focus with more support at a higher level. Women are in a significant minority in more senior leadership roles in the NHS, and that is a loss all round.
Baroness Cumberlege
My Lords, I declare an interest, and my interests are in the register. Does my noble friend agree that some of the brightest women in the land choose a medical career and are well equipped to take on positions of leadership? Does he also agree that they are under-represented on the boards of the new clinical commissioning groups? Can he suggest to the national Commissioning Board that it examines this issue before authorising the individual boards?
Earl Howe
My noble friend makes a very important point. There is good evidence that women doctors make safer decisions, are often better at communication than men and understand better the needs of women, and we need them to inspire the next generation of women doctors. Therefore, to fish for clinical leaders from half the talent pool is not a sensible thing to do. As for CCGs, my noble friend makes a very important point. The NHS Leadership Academy has established development opportunities, including action learning sets for female CCG leaders. But we recognise that more work is needed at a system level to aid progress in this area.
Baroness Afshar
My Lords, do we have any details about minority women in high positions in the medical profession? Many minority women, particularly Muslim women, would prefer to be seen by a woman expert if they can possibly do so, and it is a matter of regret that very often they cannot.
Lord Sharkey
Does the Minister agree that monitoring the number of women in leadership roles in the NHS from consultant upwards will be a marker of appropriate career progression?
Earl Howe
Yes, indeed, my Lords. The noble Baroness, Lady Deech, raised that in her report as an action point. It can be done at a trust level or at a higher level in the health service. But it is certainly important to monitor—I understand that the term is “credentialing” —the skill sets of those doctors, who may move out of the health service and want to move back in again, so that jobs can be found for them more easily.
Baroness Wheeler
My Lords, I am sure the Minister will agree that recruiting women into the medical profession is just as vital as retaining them once they are trained and working. Given the high costs of university fees and the burden that these place on young people, particularly those from poorer backgrounds and those with family and caring responsibilities, how will the Government ensure that women are not put off applying to medical school?
Earl Howe
My Lords, there is no evidence that there is a problem with female recruitment into the health service. Indeed, the male-to-female gender balance over the past few years has decreased from 1.83:1 in 2001 to 1.25:1 in 2011. However, I recognise that we should not be complacent. Even with the increased participation of women in medicine, we appreciate that more can be done to improve the selection of senior doctors into senior positions.
Lord Ribeiro
My Lords, I declare an interest as a member of the committee chaired by the noble Baroness, Lady Deech. In 1998, I introduced the first job-sharing scheme for female trainees in London and Essex. This involved two girls who both had children and managed to complete their training before the 48-hour week was introduced. What efforts are the Government making to encourage job-sharing and less than full-time training?
Earl Howe
My Lords, the Government fully support flexible working. We encourage organisations to take account of the recommendation made by the noble Baroness, Lady Deech, on that subject and adopt working arrangements that are amenable both to doctors who are parents and doctors who are carers.
Lord Patel
My Lords, first, I declare an interest. In my family there are four women doctors—I do not call them “girls”. They are all higher achievers than I could ever be. Does the Minister agree that there are in some of the most demanding specialties more women doctors in higher positions than in some of the other specialties and that in the specialties where there are not, it is the attitude of the senior doctors—possibly even male doctors—that is the problem?
Earl Howe
I discussed this subject in my briefing with departmental officials. There are multiple and quite complex barriers to career progression, including a conflict of roles between someone’s clinical responsibilities and their domestic responsibilities. There are structural barriers, as I have mentioned, in relation to part-time work, and in terms of general practice there is the sessional GP contract, which is another barrier to progression. The lack of role models is a factor and we should not overlook individual and organisational mind-sets, to which the noble Lord alluded, which result in lower personal aspiration in this area.
International Development
(12 years ago)
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Lord McConnell of Glenscorrodale
To ask Her Majesty’s Government whether they will seek to include goals in relation to conflict and security in the successor to millennium development goals after 2015.
Baroness Northover
My Lords, conflict-affected and fragile states are the furthest from reaching the current millennium development goals. Conflict and security are also often overriding concerns for poor people. The Government recognise that a post-2015 framework will need to reflect the particular challenges faced by these countries, and address the root causes of poverty in all developing countries.
Lord McConnell of Glenscorrodale
My Lords, I thank the Minister for her Answer, and I understand completely the Government’s commitment to this agenda. The reality is, however, that in conflict-affected and fragile states, children are twice as likely to be undernourished, babies are twice as likely to die before the age of five, and none of these states is likely to reach any of the millennium development goals by 2015. Will the Government use their position of leadership, as a co-chair of the high-level panel on the post-2015 development framework, to take responsibility for the next generation? Will they ensure that, unlike the previous millennium development goals, the next set of goals for the international community reflect the importance of justice, security and peace, without which there cannot be development in these affected states?
Baroness Northover
The noble Lord is right about how the effect of conflict wipes away development gains. He refers to the high-level panel which the UN set up; the Prime Minister is one of its co-chairs, and it met last week. Given that it is seeking to address the causes of poverty, it is acutely aware that, as he says, no fragile and conflict-affected state will reach any of the MDGs.
Lord Chidgey
Is my noble friend aware that the aid effectiveness forum in Busan launched a new deal for fragile states, to give voice to the 1.5 billion people who did not benefit and are not benefiting from the MDGs? What position is the United Kingdom taking on the new deal’s five peacebuilding and state-building goals—the PSGs—which are quite separate from the MDGs?
Baroness Northover
My noble friend will be aware that my right honourable friend the previous Secretary of State for International Development was instrumental in trying to ensure that the peacebuilding and state-building goals were addressed at Busan. The current Secretary of State is taking this forward. We are very strongly in support of what was decided at Busan, and in fact, we are already taking this forward in South Sudan and Afghanistan, and are applying the principles in other countries as well.
Lord Anderson of Swansea
My Lords, do the Government believe that democracy and the rule of law should have a higher role and profile in the new goals?
Baroness Northover
We are at the beginning of working out how to take forward millennium development goals that will be signed up to internationally. However, I note that the UN task team that is considering what might underpin this is looking at social development, inclusive economic development, environmental sustainability, and peace and security. It is well understood that justice, fairness and security are all important in underpinning the relief of poverty.
Lord Hylton
My Lords, are non-recognised entities in the former Soviet Union and other special areas such as the Gaza Strip or ethnic minority regions of such countries as Burma and many others receiving their fair share of aid and technical assistance?
Baroness Northover
I may need to write to the noble Lord with details but I assure him that, as I think he knows, a great deal of United Kingdom assistance goes to support the people in Gaza.
Baroness Nicholson of Winterbourne
Following the Minister’s most helpful answers and given that not one of the conflict-ridden and sensitive countries has reached a single millennium goal, will the Government consider recommending to the United Nations that for those countries the single millennium goals in place now be retained rather than put something more complex in place which they would never reach?
Baroness Northover
There is a strong argument for keeping the current MDGs. They have been a great international focus and have done a great deal to relieve poverty around the world, get children into education and so on. I am somewhat sympathetic to that. However, these are to run until 2015. The important thing now is to build on the progress that has been made, carry forward the things that work well and learn some of the lessons of those MDGs: for example, universal education for children does not necessarily mean that those children in schools are actually learning something. All those things need to be addressed. However, my noble friend is right: we have to build on what has already been set in place.
Baroness Kinnock of Holyhead
My Lords, the Minister will, of course, be aware that women face disproportionate disadvantage and discrimination and that they are behind in all the development goals, especially in conflict-affected and fragile states. Will the Government call for a new post-2015 stand-alone goal on gender inequality and a specific target on violence against women and girls?
Baroness Northover
The noble Baroness is quite right about the disproportionate effect on women and girls. She will know that of the eight current MDGs, gender equality is the third and maternal health is the fifth. Given that the groups are looking at the causes of poverty and noting the disproportionate effect, as she has, I would be astonished if gender equality did not run right the way through any replacement of these MDGs.
Universal Credit
(12 years ago)
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Lord Touhig
To ask Her Majesty’s Government whether the information technology project required for the implementation of universal credit is on schedule.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, the universal credit programme remains on schedule to launch the pathfinder in April 2013 and to go live in October 2013.
Lord Touhig
I regret that I do not share the Minister’s confidence in this matter but, on behalf of those who depend on benefits to survive, I sincerely hope that he will be proved right and I will be proved wrong. In Grand Committee the noble Baroness, Lady Stowell of Beeston, told me that,
“universal credit will be a digitally based process”—[Official Report, 8/10/12; col. GC377],
and confirmed that the Government intend people to claim this benefit online. However, work carried out by the noble Baroness, Lady Grey-Thompson, indicates that 8 million people in this country do not have access to a computer, and that of those, 3.9 million are disabled. What proposals do the Government have to ensure that people who are disabled and do not have access to a computer will be able to claim universal credit?
Lord Freud
My Lords, we did a survey on our complete claimant base and found, somewhat to our surprise, that 78% of them were already online, and, indeed, that 41% of them used online banking. Our target when we start next year is to have 50% of people going online, with others going to our other channels which support the online process. We plan to have a support and exceptions process to help the people who need support in getting their universal credit.
Baroness Sherlock
My Lords, is the Minister aware of the recent report of the Joseph Rowntree Foundation which showed that it will be very difficult for people to claim online because only 20% of people now do so and only 40% are ready and able? What will the Government do if people do not feel able to claim online? How far and for how long are the Government willing to extend paper applications to those who struggle?
Lord Freud
My Lords, I should make clear that we are not entertaining paper applications. We are looking at either face-to-face or telephone support groups. We have looked at pushing JSA online and the figures have gone up from 16% in September last year to 39% this September. We are moving people very rapidly to the online route.
The Countess of Mar
My Lords, the banks have shown us that computer systems are not infallible. Can the Minister tell the House what provision there is for back-up in case something goes wrong? These people are very vulnerable and cannot do without money for a long time.
Lord Freud
My Lords, we have a very substantial contingency prepared if, for instance, a disaster takes down our data centre—we have two data centres for that reason—and particularly if we have a cyberattack. We will have contingency built into the system to make sure that our payments systems do not go down because of these problems.
Lord Stoneham of Droxford
Can the Minister confirm that the Treasury is giving the fullest possible co-operation to his department on the computerisation of the universal credit system? In particular, are employers being sufficiently geared up to provide monthly pay information on their employees?
Lord Freud
My Lords, I am happy to confirm that the Treasury is whole-heartedly in support of this radical transformation of our welfare system. Part of the system relies on real time information through HMRC networks, and HMRC is driving ahead with a series of expanding pathfinders. It currently has 2 million employees or pensioners on the system today and is ramping it up into April and October next year.
Lord McKenzie of Luton
My Lords, the Minister will be aware, no doubt, of the KMPG survey undertaken recently. It concludes that:
“Moving to real-time information (RTI) reporting in which employers send payroll information to HMRC on or before every payday instead of after the end of the tax year is an enormous change. In the main, the larger employers are putting plans in place, or at least thinking about it. But many small and medium-sized businesses are likely to be blissfully unaware of this radical change”.
Is that not a cause for concern?
Lord Freud
My Lords, there is naturally a programme to get employers on board. HMRC has launched a major campaign—for instance, writing to 1.4 million employers so that they are ready in time. Even in the KPMG report, 75% of employers were aware of the change over and that was before this campaign got going.
Baroness Armstrong of Hill Top
Is the Minister content that people currently being moved from one benefit to another frequently have to wait three, four or more weeks because the system cannot cope? How is that meant to give us confidence in what the Minister and the department are proposing for next year?
Lord Freud
The noble Baroness is absolutely right on this particular problem. It is one of the reasons we are sweeping away the existing system—it is simply too complicated for people to operate. The real difference in the new welfare system is that we do not have a distinction between out-of-work benefits and in-work tax credits. You do not have to jump from one system to the other when you move category. You stay on the same system and do not have to suffer awful delays.
Baroness Browning
Will my noble friend confirm that people claiming disability benefits will be reassured that when the Government calculate the minimum amount they need to live on, the cost of maintaining a computer and purchasing internet access will now be part of that computation?
Lord Freud
My Lords, that is not how the benefits system is built up. It is not, and has not been ever under any Government, built up on the basis of needs. It is based on a particular set of payments for people in different categories. That will continue. In fact, under universal credit the gross amount for people who are unemployed will remain more or less unchanged as a direct result. Clearly people can get access to computers. They do not necessarily have to have them at home.
Lord Bach
My Lords, does the Minister accept that when universal credit comes in, an enormous number of wrong decisions are bound to be made? Is he aware that just when universal credit comes in, legal aid for legal help with benefit law will just have been abolished? Are those two facts merely coincidental, or is it a calculated act of policy, whose aim is to punish the vulnerable and the poorest?
Lord Freud
My Lords, when you turn what can be 200 pages of applications for the current suite of benefits into one very much more simplified system, clearly you will dramatically reduce the number of errors that people will make. I therefore think that the complaint is about the existing system and not about the system we are planning.
Justice and Security Bill [HL]
(12 years ago)
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Lord Clinton-Davis
To ask Her Majesty’s Government how they will respond to the view expressed by the Equality and Human Rights Commission that the proposals in the Justice and Security Bill [HL] regarding closed material procedures are incompatible with the Human Rights Act 1998.
The Advocate-General for Scotland (Lord Wallace of Tankerness)
My Lords, Her Majesty’s Government disagree with the EHRC’s analysis. Case law shows that closed material proceedings can occur compatibly with the right to a fair trial in Article 6 and the other rights contained in the convention. CMPs are explicitly made subject to Article 6 in the Bill. The UK Supreme Court affirmed as recently as last year in the case of Tariq that a procedure involving CMPs was compatible with Article 6 of the European Convention on Human Rights.
Lord Clinton-Davis
The proposals regarding CMPs are controversial and difficult, are they not? How do the Government now propose, as they must, to deal with the powerful criticism of the Equality and Human Rights Commission and others that CMPs are incompatible with a fair trial, in breach of Article 6 of the European Convention on Human Rights and fail to define clearly the national security concerns which are claimed to lie at the heart of the Government’s proposals? Are we too late to intervene and discuss the position with this body?
Lord Wallace of Tankerness
My Lords, I certainly agree with the noble Lord that these proposals are controversial, difficult and complex. Indeed, they have already been the subject of much debate in your Lordships’ House. As I indicated, the Government believe that they are compatible with Article 6. Upon introduction of the Bill, I signed a statement that its provisions are compatible, and the Government have published their own summary of the human rights issues in the Bill, which we gave to the Joint Committee on Human Rights and which has been published. The definition of national security was debated in your Lordships’ House in Committee, and there are many reasons as to why national security is not defined in many statutes. The noble Lord asked if there will be a further opportunity for discussion. Indeed, there will be such an opportunity because the future business set down for the House indicates that the Report stage will be held on the 19th and 21st of this month. I anticipate some informed and robust discussions during those debates.
Lord Marks of Henley-on-Thames
My Lords, my noble and learned friend the Advocate-General will no doubt agree that the opinion of John Howell QC obtained by the commission needs to be taken seriously. Have the Government yet had time to consider how far amendment of the Bill might address the thrust of the criticisms he advances—in particular, by ensuring that its impact is strictly limited to material that would otherwise be subject to public interest immunity and to cases where otherwise no trial at all would be possible, and by giving claimants as well as the Government the right to have such material considered by a court, with the assistance of a special advocate?
Lord Wallace of Tankerness
My Lords, I can certainly assure my noble friend that the Government give serious attention to representations from the Equality and Human Rights Commission and to this particular opinion, as I have indicated. There is a good response to the two key concerns that have been raised. It is the Secretary of State who applies for the CMP, but it is nevertheless the courts which decide whether to grant a declaration and, thereafter, which material will be heard in closed proceedings. With regard to criticism of the standard of gisting, we believe, as we said in Committee, that following the judgment in the Tariq case the Supreme Court found that the requirement of fairness can vary from case to case. The Bill states that closed material proceedings must comply with Article 6, when it applies, and we leave it to the courts to decide what Article 6 requires in any case. I am grateful for the constructive proposal of my noble friend. He will be aware that as well as considering seriously the opinion of the ECHRC, we will also consider the comments made in Committee, and I think we will receive before Report stage the report from the Joint Committee on Human Rights. I certainly look forward to giving that the consideration it deserves.
Lord Beecham
My Lords, given the dictum of the late Lord Scarman that public interest immunity is a matter of substantive public law, not private right, and that of the late Lord Bingham, that:
“It is an exclusionary rule, imposed on parties in certain circumstances, even where it is to their disadvantage”,
does the Minister agree with the opinion of leading counsel furnished to the Equalities and Human Rights Commission that,
“it is the duty of courts and tribunals to give effect to such immunity if applicable”—
on their own motion—
“even if the parties do not wish it”?
If so, what are the implications for the proposals in the Bill?
Lord Wallace of Tankerness
My Lords, again the issues regarding public interest immunity have been well aired and were referred to by my noble friend Lord Marks. I am sure that we will return to this on Report. The concern expressed during our earlier debates was that if PII is successfully asserted by the Secretary of State, that material in respect of which PII is successfully claimed has no part to play—it is not admitted to the proceedings. The Government’s concern is that there may well be situations where the Government have an answer to serious allegations made against them but, under the PII system alone, they are not able to bring that material before a judge. We believe that it is better if it is before a judge, subject of course to the proper safeguards in this Bill.
Lord Campbell of Alloway
My Lords, I support what my noble friend has said, having appeared before that court on more than one occasion and set up my own chambers in Brussels, and having had an interest there. However that interest was always in our country, which predominated over that of the interest of Europe.
Lord Wallace of Tankerness
In these debates, my Lords, I very much welcome my noble friend’s support.
Welfare of Wild Animals in Travelling Circuses (England) Regulations 2012
(12 years ago)
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Lord De Mauley
That the draft Welfare of Wild Animals in Travelling Circuses (England) Regulations 2012 laid before the House on 12 July be approved.
Relevant document: 7th Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 24 October.
Baroness Oppenheim-Barnes
My Lords, for many years I have been deeply concerned about all the issues that these regulations deal with. Unfortunately, I was not able to attend the Committee, but I read the reports and in particular the careful Explanatory Note that went with the regulations. I pay tribute to the Government for the work that they have done in a difficult and emotive, although narrow, field. We cannot have a full answer, but they have given us something which I believe to be very acceptable.
North Wales Abuse Allegations
(12 years ago)
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The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)
My Lords, with the leave of the House, I will repeat a Statement made earlier today in another place by my right honourable friend the Home Secretary. It is as follows:
“Mr Speaker, with permission I would like to make a Statement on historic allegations of child abuse in the North Wales Police force area. In 1991, North Wales Police conducted an investigation into allegations that, throughout the 1970s and 1980s, children in homes that were managed and supervised by Clwyd County Council were sexually and physically abused. The result of the police investigation was eight prosecutions and seven convictions of former care workers. Despite the investigation and convictions, it was widely believed that the abuse was in fact on a far greater scale. But a report produced by Clwyd Council’s own inquiry was never published because so much of its content was considered by lawyers to be defamatory.
In 1995, the then Secretary of States for Wales, my right honourable friend the Member for Wokingham, appointed a QC to examine all the relevant documents and recommend whether there should be a public inquiry. The recommendation was that there should be not a public inquiry but an examination of the work of private care homes and the social service departments in Gwynedd and Clwyd councils.
This work revealed not only shortcomings in the protection of vulnerable children, but that the shortcomings had persisted even after the police investigation and subsequent prosecutions. In 1996, my right honourable friend the Foreign Secretary, then the new Secretary of State for Wales, therefore invited Sir Ronald Waterhouse to lead an inquiry into the abuse of children in care in the Gwynedd and Clwyd council areas.
The Waterhouse inquiry sat for 203 days and heard evidence from more than 650 people. Statements made to the inquiry named more than 80 people as child abusers, many of whom were care workers or teachers. In 2000, the inquiry’s report, Lost in Care, made 72 recommendations for changes to the way in which children in care were protected by councils, social services and the police; and, following the report’s publication, 140 compensation claims were settled on behalf of victims. But the report found no evidence of a paedophile ring beyond the care system, which was the basis of the rumours that followed the original police investigation, and indeed one of the allegations that has been made in the past week.
Last Friday, a victim of sexual abuse at one of the homes named in the report, Mr Steve Messham, alleged that the inquiry did not look at abuse outside the care homes, and renewed allegations against the police and several individuals. The Government are treating these allegations with the utmost seriousness. Child abuse is a hateful, abhorrent and disgusting crime, and we must not allow these allegations to go unanswered. I therefore urge anybody who has information relating to these allegations to go to the police.
I can tell the House that Mark Polin, the chief constable of North Wales Police, has invited Keith Bristow, the director-general of the National Crime Agency, to assess the allegations recently received, to review the historic police investigations and to investigate any fresh allegations reported to the police into the alleged historic abuse in north Wales care homes. He will lead a team of officers from the Serious and Organised Crime Agency, and other investigative assets as necessary, and the Child Exploitation and Online Protection Centre will act as the single point of contact for fresh referrals relating to historic abuse in north Wales care homes. He will produce an initial report reviewing the historic investigations and any fresh allegations by April 2013. I have made it clear to Mark Polin and to Keith Bristow that the Home Office is ready to assist with the additional costs of this work.
In addition, as the Prime Minister said yesterday, the Government will ask a senior independent figure to lead an urgent investigation into whether the Waterhouse inquiry was properly constituted and did its job. Given the seriousness of the allegations, we will make sure that this work is completed urgently.
Given that there have also been serious allegations about other historic child sex offences, I should also inform the House of the work being conducted by Her Majesty’s Inspectorate of Constabulary. This will establish a full picture of all forces that have received allegations in relation to Jimmy Savile, examine whether the allegations were investigated properly, and identify wider lessons from the responses of the police forces involved. I have been assured by HMIC that its work will also take into account any lessons that emerge from these latest allegations.
Before I conclude, I would like to warn honourable Members that if they plan to use parliamentary privilege to name any suspects, they risk jeopardising any future trial and therefore the possibility of justice for the victims that I believe the whole House wants to see.
I believe that the whole House will also be united in sending this message to victims of child abuse. If you have suffered and you go to the police about what you have been through, those of us in positions of authority and responsibility will not shirk our duty to support you. We must do everything in our power to do everything we can to help you, and everything we can to get to the bottom of these terrible allegations. I commend this Statement to the House”.
That concludes the Statement.
Baroness Smith of Basildon
My Lords, I am grateful to the Minister for repeating the Statement today because for the past few weeks we have reacted with increasing horror as new details of historic allegations of sexual abuse of children and young people have emerged. Your Lordships’ House will emphatically agree with the noble Lord that these are deeply disturbing allegations. It is not only that the crime itself is so despicable and that many young people’s lives have been deeply affected and in some cases destroyed. It is not just that the very adults who have abused children and young people seem to have enjoyed the protection offered by positions of trust and fame. The most evil and despicable aspect is that these children and young people have been failed by the very institutions charged with protecting them, including the criminal justice system. The noble Lord is right. It is clear that Parliament must act to ensure that justice is done and that the perpetrators are held to account. The Government are right to act and I welcome their swift response and the announcement today.
But I remain to be convinced that this is the most appropriate way forward given what could be the scale of the problem. The whole House will welcome the Government’s Statement that all allegations must be treated with the utmost seriousness. As the noble Lord said, child abuse is a hateful, abhorrent and disgusting crime. We would concur that anyone who has information must go to the police.
As my right honourable friend Yvette Cooper, the shadow Home Secretary, has said, we need to have a full criminal investigation and we also need to examine what further changes are needed in the way in which we protect children and investigate abuse. But we also need to know whether there has been institutional failure to deal with historic allegations, whether by turning a blind eye, by covering up, or by simply failing to get to the bottom of what has happened.
For any child or young person to report physical or sexual abuse takes an enormous degree of courage. Any and every abused child or young person has the right to expect that the authorities will take them seriously, believe them and take action to protect them and deal with the abuser. That is why we must examine whether there is a further, deeper problem, whether in north Wales, in the cases involving Jimmy Savile and the BBC, or in those of grooming and sexual abuse in Rochdale and Rotherham. If children and young people who have been physically and sexually abused have reported their abuse and the authorities have failed to believe them, or even worse have believed them but then failed to act, that is truly shocking. Those who have failed to investigate or have sought to protect abusers or cover up abuse are equally guilty.
Given the scale of this issue, it has become evident that we cannot look at the allegations in north Wales in isolation. I hope that the noble Lord will understand when I express concern that the Government’s response will not address the wider concerns and seek assurances from the Minister.
I welcome the new criminal investigation into the allegations in north Wales. In particular, I very much welcome the involvement of the Child Exploitation and Online Protection Centre, which has considerable expertise. But can the Minister confirm that the inquiry can go wherever the evidence takes it and will not be confined to north Wales?
Also, the Minister may be aware from our debate on the Crime and Courts Bill with his predecessor and the Parliamentary Questions that I have asked on this issue that I remain concerned that the transition to the new National Crime Agency may leave the organisation underfunded. I have raised this now on several occasions. Will the Minister confirm that these investigations will not in any way be hampered by a lack of funding?
On the second point about historic reviews, it is right to look again at the Waterhouse inquiry, but can the Minister explain what is meant by,
“whether the Waterhouse inquiry was properly constituted and did its job”?
Are the Government now questioning the terms of reference or the operation of the inquiry? Can the Minister be more specific about that point?
Does the Minister understand the widespread concerns about there being so many inquiries? I am aware that these have grown rather than being planned in this way, but in addition to the police investigations there are three BBC inquiries into Savile, a Department of Health investigation into Savile’s Broadmoor appointment and several individual hospital inquiries. There is the CPS inquiry into why Savile was not prosecuted; there is the new north Wales inquiry; there is the HMIC inquiry into other forces that may have received information about Jimmy Savile; and there are others.
The Minister will be aware that we have already called for all the Savile inquiries to be held together. Is there not a strong case for a single, overarching, robust inquiry, not just about the abuse itself but also about whether individuals or groups used positions of influence—either their own or that of friends—to evade criminal prosecution? Of course we need to get to the bottom of what happened in each and every case but we also need to see if there are common themes and problems to prevent them happening again. There is a genuine concern that too many individual and specific inquiries is not the proper way to learn the right lessons for effectively and properly safeguarding children and young people. Time and again, evidence of serious institutional failures is presented; a single overarching inquiry into whether these allegations were ignored, or if there was a cover-up to protect abusers from public exposure and prosecution, is now essential.
The Waterhouse report led to, I believe, 72 recommendations and significant changes in child protection. The Children’s Commissioner was introduced, there is the Care Standards Act and the child protection Act, and we saw a strengthening of the law in introducing new measures and policies on safeguarding children and young people in schools and in social services. We saw the creation of the Child Exploitation Online Protection Centre, but yet again we are now presented with evidence that children and young people who came forward to report abuse were not taken seriously. We know that abuse was ignored for far too long against girls and young women in Rochdale and that concerns raised in Rotherham were not acted upon.
The Minister may be aware of previous debates we had with his predecessor about our concerns on the weakening of the vetting and barring system, our concerns about the changes to CEOP as it was merged into the new National Crime Agency, and our concerns about the funding of the new National Crime Agency. PCTs have warned that child safeguarding has been jeopardised by confusion and transitional arrangements in NHS reforms. Is the Minister confident that the fragmented inquiries announced today will give a clear picture of the action that is needed to really protect children from abuse in the future?
It demands enormous courage for a child or young person to speak out and report sexual or physical abuse; if they are not believed or if their reports are not acted on, it only compounds that abuse. I believe the Minister and your Lordships’ House are united in the objective of wanting the most effective and robust inquiry possible for lessons to be learned and for actions that will really make a difference, because only then can we truly provide justice to those who have suffered.
Lord Taylor of Holbeach
I thank the noble Baroness, Lady Smith, for her response to the grave Statement that we have had to make to the House today and for her general welcome for the way in which the Government are responding promptly to the issue. I agree with her that perhaps the most serious issue is whether there has been institutional blindness, if one can put it like that. I absolutely agree that this must be the key to the agenda going forward in order to make sure that the interests of victims are properly recognised, that the police prosecute without fear or favour, and that justice is seen to be done.
The noble Baroness asked whether there would be restrictions on these investigations. Police investigations are police investigations and they go wherever the evidence takes them. She asked, too, about the funding. The Government understand that there will be resource pressures because these investigations will involve all of the authorities engaged in them in additional work. The Home Office will encourage those organisations to apply to it so that any extra additional costs can be considered as part of the funding provided to them by the Home Office.
The thrust of the noble Baroness’s questions was whether it would be better to wait and set up an overarching inquiry in order that the lessons may be learnt. I do not believe that that is the right approach. I believe that these allegations demand immediate investigations. The lessons that will be learnt by these investigations may well require a comprehensive review of child protection in this country—that is a reasonable conclusion to come to—but I do not believe that the House would thank us if we stood by and delayed the investigations involved. I hope that I have the support of the noble Baroness in that. If I have misunderstood the noble Baroness, I apologise. I think the Government are on the right track here and doing what the House would wish of them.
On the question of organisational change and whether it will impede or assist these investigations, as the noble Baroness said, this issue has been debated over time and in all ways. All I can say is that Keith Bristow will be heading up an organisation which has considerable resources available to it through the National Crime Agency. These bodies will be there to do their task, to assist him to achieve our objective of better child protection for all young people.
Baroness Stowell of Beeston
My Lords, perhaps I may assist the many noble Lords who I am sure will want to contribute today by reminding them that the Companion advises that, in order that as many people as possible are able to contribute, today is an opportunity for brief comments and questions only.
Baroness Hamwee
My Lords, one area which has not been mentioned in the Statement is support for the victims. Justice will be one form of reparation, but can the Minister say anything about any other form of support that will be given to individuals?
Quite separately, following the question about what is meant by inquiring,
“whether the Waterhouse inquiry was properly constituted and did its job”,
can the Minister assure the House that for every inquiry—I am not talking only about police inquiries—there will be consultation as to its terms so that the best, most proper terms are put in place? If the remit is not right then the outcome will tend not to be right. In this case, for instance, the involvement of the Children’s Commissioner in the terms of the inquiry seems quite obvious.
Lord Taylor of Holbeach
I thank my noble friend for her questions. Clearly, the victims are at the heart of this inquiry and providing them with the confidence to come forward is one of the most important things that we can do. I hope that we in this House will echo the wishes of the Home Secretary by giving that support.
The terms of reference of inquiries are very important to the outcomes they produce. I am particularly concerned that we make sure that the original inquiry in North Wales, the Waterhouse inquiry, was indeed set up in such a way. The noble Baroness, Lady Smith, asked about that but I did not reply to her. However, my noble friend has given me the opportunity to do so. We must make sure that that inquiry addressed the right issues. We now have an opportunity to revisit the inquiry and to make sure that it was not too restrictive in what it was seeking to do.
Lord Lloyd of Berwick
My Lords, am I right in thinking that Mr Justice Waterhouse was appointed to investigate allegations of abuse within the care system but he in fact investigated allegations of abuse outside the care system? We know that he sat for 203 days and found no evidence at all to support those allegations. Should that not have been an end to the matter? I do not know whether the noble Lord is aware of the principle that there should be an end to litigation; so also there should be a principle that there should be an end to investigations.
Lord Taylor of Holbeach
Were it so easy just to put an end to these things, that would be fine, but we are faced with a situation where it is quite clear that this matter was not at an end. Allegations are still being made that should cause a responsible Government to be prepared to revisit the matter. That is not to cast aspersions on the work that was done at the time, but everybody would expect us to look again to make sure that we know exactly what the scope of child abuse was in those very far-off days.
Lord Roberts of Conwy
My Lords, I have a copy of Lost in Care, the late Sir Ronald Waterhouse’s report—all 937 pages of it. It is a very thorough piece of work, as one would have expected from a High Court judge. The terms of reference are spelled out in this report, as is an explanation of why he ordered that names should not be published, largely for the protection of the victims, as in rape cases. Does my noble friend really think that, after all these years, any new evidence will actually emerge as a result of these further inquiries? I have heard most of the media reports over recent days and, frankly, I have heard nothing new. There is also the further point that the report contains a subsidiary report by Sir Ronald Hadfield, the assessor of the police activity in this context. His report comes right at the very end of the Waterhouse report and is critical of some of the police operations.
Lord Taylor of Holbeach
I am very pleased that my noble friend has made that contribution to the debate. If I disagree with him, it is not because I do not respect his experience and the fact that he was active in politics in that part of the country at the time when this report was being produced. He has a copy and has no doubt studied it. However, if I thought that nothing more was going to come out of this further investigation, all I would say is, “Fine. That is very good”. If there is nothing more to be found, we can rest content that the matter is indeed closed. However, if we find that there is other material, we should know of it. We are right to seek to pursue this matter even though many of the individuals involved may long ago have disappeared.
Lord Campbell-Savours
My Lords, on 17 June 1996 I asked the then Secretary of State, Mr Hague, whether all the cases that have been referred to in the appendices to the Jillings report had led to prosecutions. I was told that that was not the case, and that there were names which were still outstanding. Can we be assured that, as a result of what the Government are planning, those outstanding names will be reconsidered with a view to prosecution if at all possible?
Lord Taylor of Holbeach
I am sure that is the purpose of the further inquiries that are being made.
The Earl of Listowel
My Lords, does the Minister agree that it will be a considerable comfort to those children who were abused in the past to know that children are not abused in this way in the care system today? However, he will know that it is unfortunately still the case that children are being abused; the deputy Children’s Commissioner’s report finds that thousands of children are still being abused and sexually exploited today. Does he hope that this report might contribute to the swell of public feeling to say that we will do better for these children in care, ensure that their staff have the qualifications they need to give the excellent care and protection that these children need and change legislation to ensure that these occurrences will not take place so frequently?
Lord Taylor of Holbeach
The whole House will be awaiting the results of the inquiry from Sue Berelowitz which is likely to come out later this month. However the noble Earl is absolutely right: we have perhaps been complacent in the past. We can no longer be complacent on this issue. I hope that the Government are making it clear that they do not intend to be complacent and will pursue all these matters so that we have a better environment for child protection in this country.
Baroness Walmsley
My Lords, following on from what the noble Earl has just asked, will the reports that the Minister has just announced be free to make recommendations to public services and organisations? It seems likely that recommendations will be made to social services, the criminal justice system and the police. Health services, such as STD clinics where young girls go over and over again, are very often in a position to pick up warning signs, which they do not always pass on. This has recently come out in the report referred to by the Children’s Commissioner. Similarly, in the education service, schools can help to prepare children to understand the dangers and to protect themselves.
Lord Taylor of Holbeach
My noble friend is absolutely right. A multi-agency approach is the way in which this issue needs to be addressed across government. She quite rightly points to the fact that different aspects of government are able to assist in this process. It is certainly the Government’s objective to have a cross-departmental, cross-agency approach in order to make sure that the information that we have gained through these unfortunate events, and the public attention which has been drawn to the exposure of the Jimmy Savile case, can be properly addressed so that we can create a better place for young people in this country.
Lord Touhig
My Lords, I apologise to the Minister and the House. I had to absent myself from the Chamber for the first couple of minutes of the Minister’s Statement, but I did hear it in full in the other place. I have one question for the Minister. Clwyd County Council carried out an inquiry and produced its own report which was never made public, for legal reasons I believe. Can the Minister tell us whether the new inquiry will have access to examine this report?
Lord Taylor of Holbeach
I am sure that any new inquiry will have access to all relevant papers, including that original report.
Lord Bates
I commend my noble friend on the report that he has brought forward. The noble Baroness, Lady Smith, touched on the potential dangers of having multiple inquiries going on at the same time. Will my noble friend reflect on the possibility of consulting the right reverend Prelate the Bishop of Liverpool on the best way forward, the Lord Bishop having delivered a widely respected and thorough investigation into highly complex issues, illuminating a great tragedy and bringing out truth that previous investigations had failed to do?
Lord Taylor of Holbeach
As someone who holds the right reverend Prelate the Bishop of Liverpool in the highest possible regard, I would always be happy to consult him. I am not suggesting for one moment that there are not lessons to be learnt from these different inquiries that will need to be pulled together at some stage, but the House and the broader public would not thank us for failing to deal with the immediate issues facing us in order to get to the bottom of this.
Lord Rowe-Beddoe
My Lords, I express and share the concerns of the noble Baroness, Lady Smith, the noble Lord, Lord Roberts, and indeed the noble and learned Lord, about the characterisation in the Statement about whether the inquiry led by the distinguished jurist and High Court judge was properly constituted and did its job. There is already a commingling in the media between that aspect and new evidence that is contained further on in the Home Secretary’s Statement. For the benefit of people involved here, we should seek further clarity.
Lord Taylor of Holbeach
I have tried to provide a proper balance between my regard for the way in which the original report was undertaken by Sir Ronald Waterhouse and what we are seeking to achieve today. We would be wrong to ignore the terms under which that inquiry was held. It has much to contribute to discovering what went on in the light of the allegations being made today. We would be mistaken if we chose to preserve that inquiry in aspic and say that it did not have lessons to teach us about how to investigate these matters today.
Lord Harris of Haringey
My Lords, I am sure that we all welcome the fact that there is to be a new police inquiry into these matters, but I would be grateful for the Minister’s explanation of the thinking behind this being led by Keith Bristow, who is heading up the new National Crime Agency. I have enormous faith in Keith Bristow himself. However, given that the Serious Organised Crime Agency and the yet-to-be-created National Crime Agency are going through a period of enormous flux and confusion while this happens, and the job of the chief executive of an agency that is being set up is usually pretty highly committed to setting up that agency, how will it be possible for him to lead the sort of inquiry that all noble Lords have said they want—very thorough, potentially extremely lengthy and potentially extremely involved? In practice, where will the resources come from? I am not talking about the money but the individual officers. Who is going to co-ordinate that? How is that going to be practically done when the person you are asking to lead the inquiry is supposed to have a more than full-time job setting up a new government agency?
Lord Taylor of Holbeach
I remind the noble Lord that the Statement made it quite clear that it was the chief constable of North Wales Police, Mark Polin, who actually requested Keith Bristow to head up this investigation, and to do so using the resources that are available to him through SOCA and other assets that are available for serious investigations. Indeed, we will face a new world with the National Crime Agency, but that still has to come before your Lordships’ House and I would not presume on that. This is a recognition that the inquiry itself may well cross police boundaries; it may well be a matter that is quite properly addressed by an agency set up to deal with serious organised crime.
Baroness Uddin
My Lords, I declare my interest as a former child protection worker. Will the inquiry say why 80 people were named in the inquiry, but only eight prosecutions took place and seven convictions were made? It would be interesting to know what the Minister intends to do, not just in supporting and listening to those victims and survivors who are coming forward, but in terms of long-term support, which is critical. If I may echo what my noble friend Lady Smith said, this is a great opportunity to look generally at the level of abuse in different institutions. As the noble Earl also said, this is rampant and still the experience of hundreds and thousands of young people whom we are continuing to fail.
Lord Taylor of Holbeach
I thank the noble Baroness for her contribution, particularly as she speaks from direct experience as a child protection officer. I said earlier that the police will prosecute without fear or favour. The reason why these matters are being reopened is to make sure that the judgments that were made at that time were correct. Further information that the investigations uncover will, I suspect, lead to other prosecutions being brought; certainly, they should do if the investigations discover further evidence of child abuse. I hope that that will be one of the consequences.
A second consequence, to which the noble Baroness alluded, is support for victims. The Government are mindful of the fact that it is victims of crime who need support and we intend to implement policies to provide exactly that.
Financial Services Bill
(12 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
17:16 - Division on Amendment 3A - Ayes: 158 / Noes: 237 - Amendment 3A disagreed.
Lord Sassoon
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, this group of government amendments comprises two straightforward technical concessions, which I signalled in Committee. The first, government Amendment 20, responds to an amendment moved by my noble friend Lady Kramer in Committee. This helpfully highlighted that the legislation does not expressly prohibit the Chancellor from appointing the governor, or one of the deputy governors, of the Bank to be chair or deputy chair of court. As I assured my noble friend at the time, the policy intention—indeed long-standing practice—has always been for non-executives to play these crucial roles. However, Amendment 20 puts this beyond all doubt by explicitly prohibiting the governor and deputy governor from being appointed as chair or deputy chair of court.
The other amendments in the group deal with the terminology around the Court of Directors. In Committee, various noble Lords, including my noble friend Lord Philips of Sudbury and the noble Lord, Lord Burns, commented on the oddity of the Court of Directors being comprised of directors, which refers to the non-executive members only, and the executive members, who are not classified as directors at all. I make a commitment to go away and look at options for clarifying this, and the amendments in this group are the result. The amendments would change all references to “director” to “non-executive director”. This means that all the members of court are now directors, with the legislation distinguishing clearly between non-executive and executive directors. As I have said, these are straightforward concessionary amendments, which usefully tidy up the court arrangements, and I hope that the House will support them. I beg to move.
Lord Eatwell
My Lords, I congratulate the noble Lord on the improvement to the drafting of the Bill that these amendments secure. It is worth pointing out that this is not a mere clarification. A persistent feature in the development of corporate governance in this country in the past several years has been the enhancement of the role and responsibilities of non-executive directors. Clear recognition in the Bill that these are non-executives carries with it the potential for them to play a proper role in the overall oversight of the Bank, a matter which we will come on to later when we discuss the role of the oversight committee. I support the Minister’s amendments.
Lord Sassoon
Lord Eatwell
“(2A) The Directors of the Bank of England shall only be appointed if Her Majesty is satisfied that they have the relevant knowledge and experience, and that their appointment will enhance the mix of skills and experience of the Court.”
Lord Eatwell
My Lords, in Committee my noble friend Lady Hayter and I sought to ensure that the body of what we can now comfortably refer to as “non-executives” was suitably diverse to overcome the dangers of groupthink. Groupthink, combined with a persistent failure to challenge the executive, has been all too evident at the Bank of England over the past five years and, indeed, in the years preceding the economic and financial crisis.
We were criticised at the time for the imprecision of the term “diverse”, which we included in our amendment in Committee. We have taken those criticisms on board. We have gone away and thought about them. In particular, we were very struck by the words of the noble Lord, Lord Sassoon, in criticising our position:
“As the Committee may be aware, the Treasury’s Select Committee report into the accountability of the Bank of England concluded:
‘The new responsibilities of the Bank will require its governing body to have an enhanced mix of skills’.—[Official Report, Commons, Financial Services Bill Committee, 21/2/12; col. 21.]
The Government agree with this conclusion and in their response to the Treasury Committee they committed to take it into consideration in relation to future appointments”.—[Official Report, 26/6/12; col. 176.]
We have decided to assist the noble Lord in taking it into consideration by using exactly those words, to which he has already agreed, in this amendment.
Let me reiterate the main point. Until now, those involved at the Bank in a non-executive capacity have not shown themselves capable of holding the executive to account. That is a serious failing in corporate governance. Until now, those involved in a non-executive committee at the Bank have been seduced by groupthink or overwhelmed by the power of the governor or deputy governors. This is again a serious failing in corporate governance. It is simply not good enough for the Government to say, “Well, we understand and we’ll do better in future”. It is simply not good enough to provide vague assurances. If we are to create a new Bank of England with new major powers and responsibilities, it should be capable of dealing with those responsibilities in a clear structured way with suitable non-executive scrutiny. That is what Amendment 2A would achieve using the words to which the noble Lord, Lord Sassoon, has already agreed.
Amendment 6A, which is also in this group, makes the same point with respect to the mix of skills on the Financial Policy Committee. Of course, the skills mix will be different on the FPC from on the court. There will be a need for more technical expertise. For example, it would be a huge mistake to rely just on people with experience of working in financial services. I notice, for example, that no one appointed to the interim FPC has done any serious economic research into the phenomenon of systemic risk—not a single one. That is exactly the phenomenon on which the FPC is supposed not merely to opine but to take action. Therefore I think that a degree of diversity in the skill set of non-executive directors appointed to the FPC will greatly enhance its effectiveness and indeed its reputation.
I hope, particularly since I used his own words in my amendment, that the Minister will be happy to accept these two constructive amendments. I beg to move.
Lord Sassoon
Noble Lords may be aware that a similar amendment to Amendment 2A was tabled and debated in another place. Then, as now, and as I said in Committee, the Government do not believe that such a legislative provision is necessary or appropriate. Starting with the question of knowledge and experience, the Government have repeatedly confirmed their commitment, as I did in words quoted by the noble Lord, to ensuring the appointment of serious, knowledgeable and experienced candidates who have the appropriate qualifications and skills to carry out the functions of non-executive directors of court. These appointments are fully regulated by the Office of the Commissioner for Public Appointments, which ensures a fair, transparent and competitive process. The code is binding and the Treasury is responsible for ensuring its compliance, thereby ensuring that appointments to court are made openly, transparently and on the basis of merit.
Even without a prescriptive legislative obligation, in order to build an effective court the Treasury is mindful of the need to seek not only an appropriate depth but breadth of skills and experience. Ministers can and do take this into account in forming their recommendation without the need to further impose a duty on Her Majesty to form a view as to the candidate’s knowledge or experience before she makes the appointment.
I turn to the question of diversity, which I understand to mean not only of gender, geography or ethnic background but also of sectoral experience, insight and knowledge, as is suggested by Amendment 6A. Court and, in future, FPC appointments are advertised openly, and applications are welcomed from candidates from a variety of backgrounds. For example, the role profile for the most recent court vacancies sought people with substantial experience as board members, as head of function of major financial organisations and as senior managers in a relevant area of public policy, or in the voluntary sector or a trade union.
The latest iteration of the Government’s code of good practice for corporate governance in central government departments clearly states that,
“a board should have a balance of skills and experience appropriate to fulfilling its responsibilities. Moreover, it stipulates that the membership of the board should be balanced, diverse and manageable in size”.—[Official Report, Commons, Financial Services Bill Committee, 21/2/12; col. 22.]
However, given the size of the non-executive contingent on court and the number of external members of the FPC, it would simply not be possible to prescribe a set of criteria to ensure full diversity—that is, to ensure that each and every different background and characteristic is represented on the board and committee —without severely limiting the potential field of qualified applicants. It is therefore a question of judgment.
I stand by exactly what I said in Committee, which is that the Government are committed to ensuring an appropriate breadth as well as depth of skills; and this is as true of the FPC as it is of the court. While I agree entirely with the sentiments and principles behind these amendments, I do not believe that it is necessary or appropriate to legislate to achieve these aims.
I hope that I have provided sufficient reassurance to the noble Lord and that he will be able to withdraw his amendments.
Lord Peston
Could the Minister confirm that all these appointments will be advertised in appropriate places? I think that he said it but I am not sure that I caught what he said.
Lord Sassoon
That is what I said, and I am sure that it will be clear on the record when the noble Lord reads it.
Lord Flight
Could I ask the Minister whether he feels that the arrangements as they stand, where these posts are advertised and people apply, have actually delivered the sort of Court of the Bank of England that is appropriate to the needs going forward? There has been, I believe, fair criticism of the court for not being a robust enough body, but the court is assembled by the very arrangements that the Minister is talking about.
Lord Sassoon
My Lords, the whole substance of the point here is that we are giving the court a very clear and enhanced mandate, particularly through the oversight committee, which we will come on to. In the context of the new role and mandate for the court, it will increasingly attract the very best people who go with the new mandate. The comparison with the past is not necessarily a fair one.
Lord Eatwell
The Minister in reply says that this amendment is not necessary or appropriate. However, in attempting to substantiate those propositions, he referred to the policy of the Public Appointments Committee, which is not responsible in any way for a mix of skills but simply for the quality of the individuals who come before it. When he referred to the variety of backgrounds, he did exactly the thing that I was afraid he would do: he referred to people with senior board experience in commercial and financial organisations and not to anybody who actually understands systemic risk or how to manage it. If they did, perhaps we would not have got into the mess that we did. So I am surprised—well, I suppose that I am not surprised—but I am disappointed that he finds it neither necessary nor appropriate.
Lord Sassoon
Can I clarify that I was citing the advertisement for the most recent court appointments and not for FPC appointments?
Lord Eatwell
That is very helpful, and I thank the Minister for it, but my point on the FPC is reinforced by what he has just said. I would hope that in FPC appointments some reference would be made to the appropriate skill set, which was not that quoted, although it may be appropriate for the court. Perhaps if I could nudge the Treasury in that direction when making an advertisement, that might be a result. Having said that, I beg leave to withdraw the amendment.
Amendment 2A withdrawn.
Amendment 2B
Lord Eatwell
“(2A) Within one month of the appointment of a person under subsection (2)(a), Her Majesty’s Government must make parliamentary time available for the House of Commons to debate and express a view on that appointment.”
Lord Eatwell
My Lords, this moves us on to a rather serious matter. Everybody in the House will be aware that there is considerable and growing disquiet about the powers heaped on the Governor of the Bank of England; he or she will chair the court, the Monetary Policy Committee, the Financial Policy Committee and the Prudential Regulatory Authority. On top of that, he or she is designated by the Bill to be the sole interlocutor between the Bank and the Treasury in the designated meetings with the Chancellor. On top of that, the governor must guide the Bank’s other activities in policy and research. And on top of that, the governor will continue to represent the Bank in international fora. I suppose that just occasionally he or she will sleep.
This is a ridiculous amount of power in the hands of an unelected official. Kate Barker, a former member of the Monetary Policy Committee, said, in August this year, said that the,
“steady erosion of democratic control over regulation of the financial system would accelerate under proposals by the coalition government”,
and that,
“Mervyn King’s successor will be appointed to an unduly powerful role for an unprecedented eight-year term”.
Kate Barker has great experience in this field and seems to have captured exactly the problem. As noble Lords will be aware, there has been considerable disquiet from serious financial commentators about the future position of the governor.
There is another inevitable downside to this agglomeration of powers. The post of the governor has become—and will become yet more—excessively politicised. That is very unfortunate. However, that is the inevitable consequence of the Government’s proposals. If that is the Government’s wish, they should face up to the consequences, and permit Parliament to debate the appointment, at least after the appointment is made. Even then, the prospect of such a debate will focus the mind, let us say, of the Chancellor in making a recommendation, in the knowledge that he will have to defend it before the House of Commons. I beg to move.
Lord Barnett
My Lords, I strongly agree with much of what my noble friend has said. As I have said before, I have been extremely concerned about the new governor’s huge job. As my noble friend has spelt out, we would be giving enormous powers to that new governor. That is why I have expressed my dissatisfaction, to put it mildly, with the way that this Bill has been drafted. I hope that my noble friend will accept an amendment from me to his amendment; namely, that it should be available not only to the House of Commons but to Parliament. This House has scrutinised this Bill to an enormous extent. To say now that the appointment should be deferred only to the House of Commons is something that I certainly do not like. I hope that my noble friend will rearrange his amendment to accept the word “Parliament” rather than “the House of Commons”.
We will come later to the question of “must” and “may”, but I am very pleased to see that in this amendment my noble friend has put “must” rather than “may”. It is certainly crucial that it should happen, because the appointments are extremely important. Somebody should be doing the job that the current governor is not doing, and which he is not being asked to do. Now we are asking the new governor, whoever that may be, to do such an enormous job that some potential contenders have already withdrawn from the race—and understandably, because the job that will be asked of this man or woman is enormous. I hope to have the opportunity to propose an amendment a little later to reduce some of those powers, but for now I strongly commend my noble friend’s amendment, subject to my suggested draft amendment to his amendment.
Lord Flight
My Lords, I do not particularly see how having a debate about the appointment after the governor has been appointed does very much to improve accountability. Ongoing accountability is needed. The debate is whether or not that should be through the Treasury Select Committee, or whether potentially there should be much greater constitutional development in terms of appearing before one or both Houses of this Parliament, in the sort of way that occurs in the USA. I agree with the principle that there is a great deal of power, which needs to have some accountability. Looking back over the events of the past five years, there was certainly a period between autumn 2007 and summer 2008 when it was very clear that the Governor of the Bank of England was completely unaware that a major banking run was overtaking this country. A bit of accountability and some questions from this House or the other place would perhaps have stirred things up.
Lord Phillips of Sudbury
My Lords, I concur with what the noble Lord, Lord Flight, has said, and I am a bit foxed by the way in which the noble Lord, Lord Eatwell, introduced this amendment. I think I heard him say that these appointments have become more and more politicised, and that he regretted that. It strikes me that to require a debate to be held in the House of Commons after the appointment has been made is an invitation to the utmost politicisation, especially because, as far as I can see, there would be no consequence to that debate, in that the appointment would already have been made.
Lord Sassoon
My Lords, before I turn to the detail of this amendment, I thank the Bill team for dealing with a significant hatful of amendments, this being the first, that turned up from the noble Lord, Lord Eatwell, rather late yesterday evening.
Lord Sassoon
I will give way in a moment. I will do my best to engage in constructive and meaningful debate. As I say, I am very grateful to the team because we did not have much notice of a number of these amendments.
Lord Eatwell
I am sure the noble Lord does not want to mislead the House. The amendments were sent to the Bill team on Friday afternoon and I had a long telephone conversation with it to discuss them. I assure the noble Lord that I had that telephone conversation. He says from a sedentary position, “not on all of them”. All the major items were discussed at that time. For him to suggest that they appeared only yesterday is inaccurate.
Lord Sassoon
My Lords, Amendments 2B, 2C, 3L, 3M, 6B, 6G and 7F, among others—maybe that is the lot—appeared at the Treasury late yesterday and not all the amendments were discussed in the conversation to which the noble Lord refers. However, there are some important and some not so important matters in these amendments and I will do my best to do them justice.
As we have heard, this amendment relates to the role of Parliament in the appointment of the Governor of the Bank of England and has been the subject of much debate both here and in another place. Specifically, Amendment 2B seeks to secure a debate in another place following the appointment of the governor, something which I do not believe is necessary or appropriate. The Government are committed to maintaining an appointments process that is proportionate and attracts candidates of the highest quality. It is important to ensure the credibility of the candidate and safeguard his or her independence. If the appointment was subject to a debate in another place, I suggest that there is a significant risk of politicising the process and undermining the appointment of the new candidate. Of course, it has been argued that such a debate could enhance the credibility of the candidate but previous governors have achieved credibility without being subject to such a debate. Credibility ultimately stems from effective action to meet the Bank’s objectives. If the appointment were subject to a debate in another place, the candidate would not be present to answer questions or defend him or herself.
The noble Lord, Lord Eatwell, has already quoted me in the previous debate. I quote what he had to say on this matter in Committee on 26 June. He said:
“We do not want to politicise appointments to the extent that has occurred in the United States”.
The suggestion that appointments might end up being considered by the whole House made him “nervous” as it would,
“inevitably be whipped and become very political indeed”.—[Official Report, 26/6/12; col. 165.]
I very much agree with that. Therefore, the Government believe that the pre-commencement hearing held by the Treasury Committee strikes the right balance in terms of scrutiny of this executive appointment and allows for a more constructive debate with the candidate in attendance to satisfy the committee’s concerns about his or her personal integrity and professional competence. The Government welcome the Treasury Committee’s ongoing role in holding such hearings and, importantly, as my noble friend Lord Flight reminded us, holding the governor to account throughout his or her tenure. I hope I have provided sufficient reassurance and that the noble Lord feels able to withdraw this amendment.
Lord Peston
I wish to make a comment and ask the Minister a question. My comment is that there are no long words in this amendment. I would have thought that the average person who had been at school could just about understand it in a few minutes of reading it. The idea that the Minister cannot address your Lordships’ House without several days, if not weeks, of Treasury back-up seems to me absolutely preposterous. He should stop bellyaching about this sort of thing.
My question to him is: if this debate took place in both your Lordships’ House and the other place, has it not occurred to him that that debate might be devoted mainly to saying what an excellent appointment has been made in this case, what an extremely good person has been chosen and wishing him well in his very arduous task? Why is the Minister taking it for granted that the debate would be mostly about slagging off whoever the appointed person may be?
Lord Sassoon
My Lords, I am not taking it for granted. I am merely quoting the fears of the noble Lord, Lord Eatwell, when he addressed this issue in Committee. “Inevitably be whipped and become very political indeed,” were his words, not mine. However, I agree that this is the way that these things tend to go. The concept of a congratulatory first is not one that sits easily with another place.
Lord Eatwell
My Lords, I am grateful for the comments that have been made—some accurate, some less so. First, with respect to the issue of being politicised, my concern is motivated primarily by the powers being translated from elected persons to an unelected person. That is what is happening in this Bill. This will inevitably make the position of the governor much more of a political focus rather than the markets and technical focus it has been very much in the past—perhaps not in the 1930s with Montagu Norman, but in recent years. That is where the politicisation has come from. We need to recognise that powers have been transferred from the elected to the unelected by giving the elected some role.
The Minister did me the honour of quoting me, although of course out of context. I was referring—as I am sure he would agree—to pre-appointment hearings as are common in the United States. This is not the intention of this amendment at all. However, a series of important issues is going to come up again and again unless the Government take very seriously the very considerable conglomeration of powers in the hands of the governor, given by this Bill, and the fact that powers are being moved from the elected to the unelected. It is vital that Parliament should consider this crucial issue. I hope that the Minister will take some of these considerations away and think very carefully about them. In the mean time, I beg leave to withdraw the amendment.
Lord Eatwell
“(2A) Any persons appointed under subsection (2)(e) shall be appointed with the consent of the Treasury select committee.”
Lord Eatwell
My Lords, the noble Lord, Lord Sassoon, has made it clear today that the non-executives will play a major role in the governance of the Bank. This amendment seeks to ensure that non-executives, essentially here in the court, are appointed with the consent of the Treasury Select Committee. The point is being reiterated. Given the powers invested in the Bank, including and especially the FPC powers that have previously rested only with the Chancellor or other elected persons, it is appropriate that there should be some political oversight of the appointments. The Treasury Committee is surely the right place.
What are the major arguments against this pre-appointment scrutiny? First, that the procedure will be unduly intrusive and onerous; and, secondly, that it will be too politicised. As a result, suitable persons will not apply. I think that the arguments in the context of what is being done in this Bill are ill founded. The Government decided to politicise the position of the Bank by giving it powers previously reserved for elected persons. The Government decided to load on to the Bank virtually all regulatory functions and control of monetary and credit policy. In this context, the Government should accept that the Treasury Committee’s scrutiny is entirely appropriate. Let us remember that that committee has played a serious non-partisan role for a number of years, both when chaired by my noble friend Lord McFall and now, as chaired by Mr Tyrie. The committee does an excellent, non-partisan, technical and difficult job. In that context, it could play an important role in monitoring those persons to whom the powers previously assigned to elected persons are now to be given.
While Amendment 2C relates to the non-executive directors of the Bank, Amendment 6B in the group extends the same principle to the independent members of the Financial Policy Committee. If anything, the point is even stronger here, because these are people who will be participating in decisions that directly affect individuals’ lives. The members of that committee will be making decisions about your mortgage rate and the availability of credit in general to individuals in society. It is therefore surely right that appointments should be subject to the consent of the political part of national governance, as represented by the Treasury Select Committee, which is handing over these powers.
Sometimes, we in Britain are a bit overly sensitive about appointments procedures. I remember that university appointments used to be totally confidential to appointments committees. Now appointees have to appear before the whole faculty and the students, give lectures to demonstrate how good they would be and defend themselves.
Lord Eatwell
Yes, it is true. They have to do that prior to any form of appointment. Therefore, the sort of sensitivity I mentioned is overdone. Greater transparency and more robust procedures would serve us well. Most important of all, there must not be an abdication of powers that in the past were reserved to elected persons without some substitution of proper political oversight, as provided for in Amendments 2C and 6B. I beg to move.
Lord McFall of Alcluith
My Lords, I agree with my noble friend on this issue. Anyone with experience of the Court of the Bank of England would say that its impact has been less than useful over past years. Given the powers that we have given to this Governor for an eight-year period, it is important that the sentiments expressed in the other place as regards accountability are satisfied, because, paradoxically, if that is not the case, it will make the role of the Governor even more political and members of the court will come under pressure.
I had personal knowledge of this during the height of the financial crisis. My concern at that time was to ensure both the political and the financial stability of the situation. It is therefore important that that is adhered to. There needs to be, as the Treasury Committee said, proper records of the court’s proceedings. If transparency is not available, the accountability element will not be pursued. The Government are making a big mistake by establishing what is, in effect—although some people may disagree—a multinational corporation with one person at its head, with little corporate governance best practice.
There needs to be a stage at which the Government can listen to Parliament on this, make the Bank truly accountable to Parliament and ensure the best outcome for the country. We have the Financial Policy Committee and the Prudential Regulation Authority, but there is no doubt that there will be conflicts of interest there. There will be one individual responsible, while the Government and Parliament are spectators and bit players. That should not be the case, and the Government really need to think very clearly and seriously about this issue.
Baroness Noakes
My Lords, as a former member of the court, I feel slightly under attack this afternoon, but I was long gone before the financial crisis. In the context of the previous amendment, my noble friend Lord Flight pointed out that the important way to express accountability is on an ongoing basis, not at the point of appointment. The most important thing, going forward, is whether or not the new oversight committee will do its job and who will make sure that it is held to account. It seems to me that it should be the Treasury Select Committee in another place and it is not something for which we need to legislate. The Treasury Select Committee is well apprised of the need to ensure that there are proper accountability mechanisms to act as a counterweight against significant additional powers for the Governor of the Bank of England; and that there are proper checks and balances within the Bank of England and then from the Bank to Parliament.
Lord Sassoon
My Lords, I am grateful to the noble Lord, Lord McFall of Alcluith, and to my noble friend Lady Noakes. My noble friend was an estimable member of the court and I am sure that she brought great distinction to its deliberations. As she reminds the House by referring to the oversight committee, the noble Lord, Lord McFall is right to say that the court has not always necessarily done everything that Members of Parliament would have wished in recent years. Critically, that is why the oversight committee that we are introducing changes the way that the court and particularly non-executives on the court will operate. I am grateful to be reminded of this critical background to our discussion. The other background point to make is that the noble Lord, Lord Eatwell, has made a number of references in this and earlier debates about politicisation and transferring powers from elected politicians to the Bank. This is a red herring. I am sure that I should not say it is nonsense, but I simply do not accept this background analysis.
Powers are not somehow being moved from elected politicians to the Bank. The Bank is being granted a range of powers which are regulatory in nature. Financial regulation has been undertaken by independent regulators for over a decade in the UK and before that, of course, large swathes of it were not in any way carried out by elected politicians or even properly constituted regulators. They were done in a self-regulatory way. So this idea that somehow we are transferring stuff from politicians to the Bank, as if some heinous crime was being committed and that we need lots of belts and braces, is the wrong background.
Let me specifically address the amendments here and the role of Parliament in key appointments. As we have heard, they are different in some respects from the previous amendment about appointing the Governor. The appointments of non-executive directors of the court are not currently subject to a pre-commencement hearing by the Treasury Select Committee. As with the Governor, the appointments of non-executive directors are made by Her Majesty and governed by the OCPA code. As I explained earlier, this stipulates certain practices in terms of a robust and fair appointment process, with appointments made principally on merit. Members of the court are accountable to Parliament and it is right that the Treasury Select Committee can and does invite them to give evidence at the appropriate juncture. However, the non-executive directors are not policymakers. Their role is to oversee the running of the Bank and it would be highly unusual to make such appointments subject to the consent of the Treasury Select Committee. The Government therefore believe that the current appointments process for non-executive directors of the court remains the right one. Similarly, the appointment of external FPC members will be subject to a robust process that seeks qualified and experienced candidates. External members of the FPC will be subject to pre-commencement hearings—as was the case with the appointees to the interim FPC. The FPC will be accountable for its actions to the Bank’s oversight committee and directly to the Treasury Select Committee, which we expect to take regular evidence from the external members of the FPC, as it does already from the MPC and the interim FPC.
As with the roles of governor and external members of the MPC, the market-sensitive nature of these roles means that the combination of pre-commencement hearings and Treasury Select Committee scrutiny in-post offers an appropriate balance in terms of parliamentary scrutiny. Again, the Government welcome the ongoing role played by the Treasury Select Committee. I hope that I have provided sufficient reassurance for the noble Lord to withdraw his amendment.
Lord Eatwell
My Lords, I am grateful to everybody who took part in this short debate, and especially for the support of my noble friend Lord McFall, who has such experience in these areas. I always take very seriously indeed the opinions of the noble Baroness, Lady Noakes. I quite understand her concern that accountability should be a phenomenon that is ongoing and not just on appointment. Why not on appointment, too, so to speak?
I was puzzled by the introduction with which the noble Lord, Lord Sassoon, prefaced his remarks. He stated that financial regulation had been going on for a decade. It has been going on at an international level since 1974. The whole point of this legislation is that macroprudential legislation has not been done at all before. That is why the various reports such as the Turner review by the FSA, the report of the US Treasury in 2009, and the report of the high-level committee of the European Union led by Monsieur de Larosière, all identified a new role for financial regulation in dealing with macroeconomic variables, which it had never done before. This is a new area of financial regulation which is specifically the responsibility of the Financial Policy Committee.
The Minister said that there had been no transfer of responsibilities. Was not the control of credit in our economy the responsibility of the Treasury? Has it not been so since the Second World War? Did not the various Acts on the control of credit start as Treasury Bills? Now the availability of credit is predominantly the responsibility of the Financial Policy Committee. That is a transfer of powers. I wonder if the Minister would like to consider that example.
The Minister then said something truly extraordinary. He said that the non-executive members of the court were not policymakers. Perhaps I may refer him to Clause 4 on financial strategy, which states:
“The Court of Directors must … determine the Bank’s strategy in relation to the Financial Stability Objective”.
That sounds to me as if they are policymakers. They must “determine the Bank’s strategy”. Are the non-execs therefore to sit down and keep quiet?
Lord Sassoon
My Lords, will the noble Lord, Lord Eatwell, concede that that is the responsibility of the Court of Directors as a whole, not of the non-executive directors as a group?
Lord Eatwell
Certainly, but that is not what the Minister said. He said that the non-executive directors were not policymakers—but they are to participate as a nine-member majority of the court, including the chair, as he pointed out. However, we now hear that they are to sit silently while the executive directors determine policy. That is nonsense and the Minister knows it. These individuals are policymakers—and rightly so; they should be. That is why we need the right sort of people, and why it is right that there should be suitable hearings preceding their appointment, as suggested by the amendment.
The Minister is getting into a muddle. He should go away and think hard about what the Financial Policy Committee is required to do, recognise that there has been a transfer of powers and that macroprudential regulation is something entirely new that has not been done before; and try to get some of the legislation right. In the mean time, I beg leave to withdraw the amendment.
Lord Sassoon
Lord Eatwell
Lord Eatwell
My Lords, this is a major amendment that I had the pleasure of discussing with the Bill team on Friday. I was going to preface my remarks by saying that there is a developing consensus that the Government are piling responsibilities on the Bank of England. But I hear that consensus is not developing on the other side of this Chamber, since the noble Lord, Lord Sassoon, does not seem to recognise that the Bank and the governor are having these extra responsibilities or indeed that there has been transfer of powers.
Interestingly enough, others do recognise that. Mr Tyrie, just last week, with the oversight committee already in the Bill, referred to the Bank’s defective governance. Then, Mr Bill Winters, a former executive at JP Morgan and author of one of the very tightly constrained reviews into the Bank’s operations that was published last week, concluded that the Bank was too “centralised and hierarchical”. Then Sir John Gieve, a former deputy governor, commented on the same review saying,
“how do you bring more challenge into a hierarchical organisation?”.
That was last week, with the oversight committee in place. Those comments echo criticisms made by a number of former senior Bank of England staff and by serious commentators in the financial press. This is a serious issue.
I have already listed the major issues, but I will list them briefly in the context of this amendment because it may help the House. With respect to the powers assigned to the governor in the Bill, the power of an unelected person will be equivalent almost to that of the Chancellor of the Exchequer. Indeed, it will exceed the Chancellor’s powers in that the Chancellor is under constant scrutiny from Parliament whereas the governor is under less intense and less constant scrutiny.
We have to remember that the governor will not only chair every financial policy committee in the land with the sole exception of the FCA, but will be the lone high-level interlocutor with the Chancellor. He holds these positions while having no statutory responsibility to consult or involve other senior officials at the Bank or non-execs. He may consult and he may delegate, but it is entirely up to him or her. If they do not wish to do so they can ignore them all.
In Committee, the Government took an important step by creating the oversight committee. But noble Lords will notice that within the designations of the responsibilities of the oversight committee, there is one notable oddity. There is a notable absentee. Nowhere does there appear the verb “to oversee”. We have an oversight committee that does not oversee. In fact, a careful reading of the designated activities of the oversight committee reveals that all its key responsibilities are retrospective. It must keep under review. It must monitor. It must review procedures. It must conduct performance reviews. The only thing that it must not do is oversee. This is not an oversight committee, it is a hindsight committee—a valuable role, no doubt, but hardly an activity to moderate the powers of the “Sun King” governor other than by retrospective embarrassment, and governors of the Bank of England seem to be peculiarly impervious to embarrassment.
The amendment introduces the verb “to oversee”. It gives the oversight committee the power of oversight. This will have a number of beneficial consequences. The governor and the executive will, as in all good governance systems, be accountable to the non-executives for their activities and their policies. As in all well run organisations, the non-executives will not design the strategy or tactics of the Bank—that is the job of the executive—but they will be the advisers and the arbiters. They will oversee.
Instead of being either a glorified review committee in the shape of the noble Lord’s hindsight committee, or creatures of the executive, as in the court, the quality of a person likely to be willing to devote a considerable amount of time and effort to the job of non-executive of the Bank will be significantly enhanced because they are getting a real job. The foundations will be laid for the creation of a modern governance structure within the Bank of England, appropriate to the 21st century and to the major powers now vested in the Bank.
In this group there are also Amendments 3B, 3G and 3H, which are a direct consequence of the recognition of the role of the oversight committee in overseeing the activities of the governor in particular, and of the Bank in general. If the oversight committee is to exercise this role effectively it should have the final sign-off to the policies prepared by the court and by other executive institutions. I should be clear that in all well run firms it is the task of the executive to prepare policy and to execute it, but it is the role of the non-executives—of the oversight committee—to scrutinise and sign off the executive’s proposal. The oversight committee should oversee.
Amendment 3K makes clear that the role of the oversight committee in its task of overseeing is to approve the policy prepared by the court; it is the precise role of non-executives in all well run companies. Amendment 6C makes clear that the oversight committee is not to be confined to the impotent ghetto of reviewing procedures of the FPC but can also review the FPC’s policies. After all, if it cannot review policies what will the performance review be about? If it is given the task of performance review, surely it should review policies and not simply procedures.
I quite understand that the Government have not had long to consider this core idea, although they have had a bit longer than the noble Lord earlier suggested. I give credit to the Bill Committee and I understand the pressures it is under; similar pressures are experienced in my office.
Lord Sassoon
I do not want to labour the point but would the noble Lord, Lord Eatwell, accept that I did not list Amendment 3A as one that came late? I fully accept that this is not one of the hatful that I referred to as arriving late. We have indeed had longer to consider this amendment.
Lord Eatwell
Then I am sure that the noble Lord, having given the amendment such mature consideration, will be able to accept it.
I hope that, at the very least, the Government will agree to take this proposal away and think about it. After all, if we are going to have an oversight committee it should oversee; otherwise perhaps the Government should simply change the committee’s name. I beg to move.
Baroness Noakes
My Lords, I am a bit puzzled by these amendments and I should say that while the Minister’s officials may have had them since last Friday, those of us who are trying to take part in this Report stage saw them only first thing this morning, which comes of when the party opposite chose to table its amendments.
The noble Lord says that there is no oversight in the new section dealing with the oversight committee. If I were to define oversight I would say it is about reviewing and monitoring; that is the very nature of what is involved. The noble Lord suggests it means some real-time involvement by the non-executives in what happens on a daily basis within the Bank. That simply cannot be—it seems to me the noble Lord misunderstands the role of non-executive directors.
This group of amendments also contains the concept of the non-executive directors, via the oversight committee, approving the strategy. The oversight committee is a sub-committee of the Court of Directors and is not there to approve what the court should be doing. This is correctly formulated in that it is the court that is preparing the strategy. The oversight committee has no role in relation to that except by virtue of the membership of the individual non-executive directors who are also members of court. I really do not understand this sequence of amendments.
Lord McFall of Alcluith
I support my noble friend’s amendment. It is important to emphasise oversight because we are setting up a more complex body than the one we had before; we are going from a tripartite body to a quadripartite body. There are many interstitial areas and oversight is even more important in those areas.
As I mentioned earlier, there will be many conflicts between the FPC and the PRA. On the relationship between the Prudential Regulatory Authority and the Financial Conduct Authority, will prudential regulation trump conduct of business, which has happened in the past? Will the FCA feel inferior to the PRA as the FSA felt inferior to the Bank of England?
As to the culture, we can have all the rules we like but, within a plethora of rules, there can be a monoculture which reports to the top and a diverse range of opinions do not get listened to. There are many lessons to be learnt there. An oversight committee is very important in order to look at that and ensure that the Bank of England is indeed exercising the best corporate governance and best practice.
Lord Hodgson of Astley Abbotts
My Lords, like my noble friend Lady Noakes I have some difficulty in understanding the thrust of these amendments. I see the issue of the nomenclature, which may be unfortunate, but I have to say, as a director of a company, that keeping under review and overseeing are almost one in the same. I do not see the difference between those two functions. It is absolutely clear that keeping under review and oversight are running on similar tracks.
The dangers behind the noble Lord’s amendments are that we are starting to find a way of dividing responsibilities. We are moving from clear lines of responsibility to a situation where a sub-committee of the board, as appears in the Bill, is starting to dictate the pace of the board itself. That is an unworthy, unnecessary and potentially dangerous development.
Lord Myners
My Lords, I support my noble friend’s amendment. The decisions on the aggregation of power within the Bank of England are now set. The Government are clear in their determination to achieve that.
In my view, no one form of regulatory architecture can be assuredly more successful than others. Looking around the world at what happened with the global financial crisis, we saw many different structures of regulatory architecture come under strain. Some point to the twin peaks system associated with Canada as evidence that the Government’s current thinking in this area is consistent with a model that appeared to work better there than in other jurisdictions. However, if one wishes to understand why Canada did not experience the same harsh consequences of the global financial crisis, as in the United States, Europe and the United Kingdom, one finds the answer in matters other than regulatory architecture—including the nature of the economy and control of lending and leverage—which are inherent in the Canadian system and distinct from those followed elsewhere.
If we are going to aggregate this power in the hands of the Bank of England, we have to ask ourselves questions about checks and balances because we learnt from the failure of individual UK banks and institutions that, in almost all cases, there was an overly dominant individual in charge of the organisation that failed. That is the big lesson, which the FSA has not picked up completely in its reports on the collapse of RBS and HBOS. However, it is a clear lesson, whether it is Sir Fred Goodwin at Royal Bank of Scotland or Mr Adam Applegarth at Northern Rock; and similarly Mr Crawshaw at Bradford & Bingley and Mr Cummings, Mr Hornby and others at HBOS.
Are we creating an architecture here in which we are putting too much power in the hands of one person? I think we are. I was a member of the court for four years and have seen how it and the Bank operate. One must be careful not to extrapolate from the behaviours of the existing incumbents of senior positions in the Bank and members of the court into the future, but a very clear lesson to me was that the court just could not be effective at corporate governance, as both the noble Baroness, Lady Noakes, and the noble Lord, Lord Hodgson, referred to earlier. The court cannot be effective in that way. When I was a member in 2007, three members of the court sought to escalate matters to the Treasury about the Bank’s management of liquidity and of risk. It simply was not possible for my two colleagues and me to register with the Treasury or anyone else, in any meaningful way, our concerns about the Bank’s failure to understand the risks that were accumulating in the system.
Are we creating a structure now in which that could not happen again in the future? I do not think we are. We are not clear as to the role of the court. We give it some responsibilities but very little power to influence the responsibilities that we give it. We must ask important questions about the constitution and membership of the court to ensure that, in future, it is not simply a ceremonial body that is, on the whole, discouraged by the governor from asking questions, but something that at least approaches the independent challenge that one would expect—
Lord Myners
I will give way in a moment to the noble Lord, Lord Hodgson, who has had his opportunity. We must look to create a body that is capable of appropriately challenging the current governor and governors in the future. I am not sure that this is necessarily seriously advanced by the language we are using here. Perhaps I will anticipate the point on which the noble Lord, Lord Hodgson, wishes to intervene by saying that he is quite correct about perhaps dancing on the head of a pin when it comes to whether these are questions about supervisory roles or oversight. However, it is absolutely critical that we ensure, in this Bill, that the court is able to appropriately challenge and check the authority that this Bill places in the hands of the governor. We have learnt painfully in recent years about the consequences of coping with a dysfunctionality between the governor and members of the court. I give way to the noble Lord if he still wants to come in.
Lord Hodgson of Astley Abbotts
The noble Lord was quite right. I understood the force of his polemic and the seriousness of the point he was making but could not see how that is in any way addressed by adding the word “overseeing” to “keeping under review”, which seems to me, as he indicated, to be a distinction without a difference.
Lord Myners
The words proposed by my noble friend take us a little further in the right direction. I would like to go a great deal further but am more than happy to support my noble friend’s amendment.
Lord Blackwell
My Lords, despite the cogent words of the noble Lord, Lord Myners, I share the confusion on this side of the House about what these amendments are intended to do. Everyone agrees that it is vital that there should be strong oversight of the governor and the executives of the Bank by the non-executive directors and that we have proper accountability and scrutiny. But what is proposed here is a court that will have a clear and very sizeable majority of non-executive directors. The amendments proposed by my noble friend earlier made it clear that all the members of that court would be directors, and would be directors in common, sharing responsibility for the decisions of the Bank. However the non-executive directors would be in a majority, and if those non-executive directors disagreed with what the executives proposed, they could make that clear in the court and they would have the majority to hold sway.
According to these amendments, the court, involving all directors, would be able only to propose policies and then a sub-committee of the board of only the non-executives would then go away and approve them. That seems to turn corporate governance on its head. Either we have a supervisory board of non-executives, which is a totally different structure, or we accept that the Court of Directors is indeed the Court of Directors and should, with all its members, accept responsibility. What we have here is a very sensible proposal for an oversight committee of non-executive directors that will play its role in allowing non-executive directors to review and scrutinise offline, but to report to the full court, as is normal in any governance process. All directors must share equal responsibility in the end for the decisions of that organisation.
Lord Nickson
My Lords, I apologise for the fact that I have not taken part in the proceedings and I did not intend to do so today. I am completely out of date in that my experience goes back a long way. When I was the chairman of a Scottish bank, which belonged to an Australian bank, Fred Goodwin, as chief executive, reported to me, before he went to RBS for five years. We got on very well. I am quite thankful that he went to RBS and that I did not have responsibility at the end.
I completely sympathise with the points of view that have been put from the government Benches. The principles are exactly the same. It is impossible to conceive that one would appoint a majority board of non-executive directors along with an executive. They have the responsibility for oversight. You might have a sub-committee, but I would be very surprised if any candidate for the position of governor would actually accept it having power over the non-executives in the Court of the Bank of England. Therefore, I think that the amendment is nonsense in practical terms. Although I may be out of date, I strongly believe that it should be rejected.
Baroness Wheatcroft
My Lords, I share the qualms that have been voiced about this group of amendments. I believe that the court needs to exercise far more power than it has appeared to in the past, although I am intrigued to hear the noble Lord, Lord Myners, say that when three members of the court tried to make their views and their concerns known, they had no impact at all. That would seem to be a failing of the Government rather than the governance of the court.
The amendment that causes me particular concern is Amendment 3B, which proposes that the Bank’s strategy should for the time being be “prepared” by the Court of Directors. It does not seem to me that “preparing” a strategy should be for the non-executives. It may well be, and should be, their right to determine whether that strategy is the right strategy. However, we want them to “determine” rather than “prepare”.
Lord Flight
My Lords, it seems to me that none of these things makes any difference. The real issue is that if a board of directors cannot sack the chief executive if it thinks that he is not doing his job properly, then it is an enfeebled board. That is the fundamental issue. As long as we have the chief executive appointed for a term period and not able to be removed by the board, then there will be an issue about the effectiveness of that board.
Lord Kerr of Kinlochard
My Lords, I did not take part in the Second Reading debate. I should have done so. I support what the noble Baroness, Lady Noakes, said, which seemed to me to be absolutely correct. On the point made by the noble Baroness, Lady Wheatcroft, I find Amendment 3B the most bothersome in this group. If the court is merely preparing, not determining, who is determining? There is a danger here of the decision-taking power moving to this oversight committee.
I cannot see that Amendment 3A has any real effect. Clearly, there is an overseeing role if the committee is called “oversight”, but I think that the noble Baroness, Lady Noakes, is quite right about that.
The amendment that seems to be completely correct and would go some way to meet the point being made from the opposition Benches is Amendment 3C, which proposes that the committee should be entitled to a degree of professional support. That seems sensible to me.
Lord Sassoon
My Lords, I am grateful for this debate. The noble Lord, Lord Eatwell, started by welcoming the creation of the oversight committee as an important step, but then went a leap too far in getting rather confused about what, in his terms, “modern corporate governance” really means. As so many noble Lords have explained, it means that ultimately the governing body as a whole—the board of directors, the Court of the Bank of England—has to take the key decisions. As the noble Lord, Lord McFall of Alcluith, said, the principal role of the oversight committee is for learning lessons. I completely agree with him, and will go on to explain that the role of the oversight committee, as constructed in the Bill before these amendments, is completely in line with what the Treasury Select Committee envisaged.
My noble friends have explained all these things much more clearly than I could. The noble Lord, Lord Nickson, modestly said that he is out of date. I do not believe that he is out of date at all. He and the noble Lord, Lord Kerr of Kinlochard, who has great current experience of corporate governance in one of the UK’s largest multinationals, have got this right. I had been puzzled—I wondered whether I had missed something in all this—but I am grateful that the House shares my concerns.
To address the specifics, Amendment 3A would shift the oversight committee’s functions from a more backward-looking, reviewing role—the lesson-learning role that the noble Lord, Lord McFall, referred to—to a real-time overseeing role, which would involve scrutinising and perhaps second-guessing the Bank’s policy decisions while they are being taken. As my noble friends and other noble Lords have made clear, if that role is taken at the board level, it is taken by the board as a whole. I do not believe that this proposed new role would be at all appropriate.
As I have said, we can look to what the Treasury Select Committee in another place said when it recommended the introduction of ex-post reviews of the Bank’s policy performance. This is worth quoting at some length, from the committee’s 21st report of the Session, Accountability of the Bank of England:
“The Governor stressed to us that ‘the decisions that the PRA, FPC and MPC make on policy are not decisions that the Court needs to second guess’. We agree. The Bank’s governing body should place more emphasis on oversight and ex-post scrutiny. This does not require or authorise it to become involved in second guessing immediate policy decisions. But there is a need to analyse and learn lessons from the actions of the Bank on a routine and consistent basis, drawing on expertise from within the Bank. Ex-post review of the Bank’s decisions would, we believe, be in the interests of good governance of the Bank”.
The report went on to recommend that ex-post reviews of the Bank’s performance be carried out,
“not less than a year after the period to be reviewed”
in order to avoid,
“second guessing at the time of the policy decision”.
The current wording describes one of the functions of the oversight committee as,
“keeping under review the Bank’s performance”,
which is entirely consistent with the Treasury Select Committee’s recommendations and strikes the right balance between ensuring effective retrospective scrutiny of the Bank’s policy decisions and avoiding a situation where the non-executive members of the court would be second-guessing the policy decisions taken by the Bank’s expert policy committees and Bank executives. Of course, in this context my noble friend Lord Blackwell is quite right to point out that when these decisions are for the court as a whole, the non-executives are, as one would expect in any good modern corporate governance structure, in a majority.
I am a little puzzled by Amendments 3B, 3G, 3H and 3K, which seek to make the non-executives of the court solely responsible for determining the Bank’s financial stability strategy. Again, this is completely at odds, as the House has been told, with the way in which model corporate governance operates. Surely the reason for making the governing body as a whole, in this case the court of directors, responsible for the strategy is because it is that body, and in particular the executive members of that body, who will be accountable for delivering the strategy. Like other noble Lords, I struggle to see how the process that is proposed in these amendments could possibly work in practice. The oversight committee is made up of the non-executive directors of the court and those non-executives make up the majority of the court, as my noble friend has suggested.
On the role of the non-executives, I am sure that the noble Lord, Lord Myners, is right when he says he could not get the Treasury to take concerns seriously back in 2007, but I cannot answer for what happened in the Treasury under the previous Administration. All I can say is that if any member of the court of the Bank, whether executive or non-executive, came to the Treasury now, we would take their concerns extremely seriously.
I do not want to belabour the point, but I am not sure whether the noble Lord, Lord Eatwell, is envisaging situations in which the non-executive directors, coming from a court meeting in which they agreed the financial stability strategy, then go into an oversight committee meeting where they decide perhaps that the strategy agreed by the whole court was wrong in some way. We need to distinguish here clearly, as have many noble Lords, between the differing responsibilities of the court and of the non-executives on the court. The court, as the Bank’s governing body, is responsible for setting the Bank’s overall strategy, including its strategy for financial stability. It is the responsibility of the executives of the Bank, with the support of the court, to deliver that strategy. It is the responsibility of the oversight committee to hold the executive to account for how it delivers on the strategy by keeping its performance under review and, again in the words of the noble Lord, Lord McFall, for learning the lessons. This split of responsibilities in the Bill is appropriate and consistent with modern corporate governance.
Finally, Amendment 6C would add policies to the existing requirement in subsection (4) of new Section 9B that the oversight committee keep the procedures of the FPC under review. I can assure the noble Lord, Lord Eatwell, that this amendment is entirely unnecessary. The oversight committee is already responsible for keeping the policy and performance of the FPC under review. Subsection (2)(a) of new Section 3A of the 1998 Act, as inserted by Clause 3 of this Bill, clearly states that the oversight committee is responsible for keeping under review the Bank’s performance in relation to all of its objectives and strategy, including the objectives of the Financial Policy Committee. With the benefit of this useful debate, I hope that the noble Lord will see fit to withdraw his amendment.
Lord Myners
I want to be helpful and pick up one point about the references that have been made by several Peers to models of good corporate governance. The noble Lord, Lord Flight, with considerable experience and great standing in business in the City, has already pointed out one respect in which the court cannot be compared with a conventional board of directors: its ability in the end to remove the executive if it has lost confidence in it.
The point that I raised about our experience in 2007 is another distinct difference from corporate governance; namely, there is no shareholder to whom the non-executives can appeal. What happened in 2007 was that three members of the court had meetings with Treasury officials to raise their concerns about the absence of full challenge and the dominant influence of a single voice in the court. They expressed those views to Treasury officials, who shrugged their shoulders and said that there really was not much that they could do. The governor is ultimately appointed by Her Majesty and members of the court are elected to do their work, and there is nothing that the shareholder—effectively the Treasury—can do. That is another area where we must be very careful not to assume that we are just picking up the corporate model and inserting it into the Bank. The Bank is different by virtue of the very limited powers placed on the court and the absence of a shareholder.
Finally, I question whether the Minister’s constant references to good corporate practice would be reflected in the role of a board in overseeing ex post facto what a company does. My experience of sitting on boards is that boards are very much involved in reviewing the formulation and implementation of strategy on a constant basis, not in carrying out post-implementation exercises. Your Lordships’ House should be careful to recognise that there are limits to the complete applicability of corporate practice to the particular circumstances of the Bank of England, the court and the governor.
Lord Sassoon
My Lords, I know that the custom of this House on Report is that noble Lords do not make second substantive speeches, so the noble Lord will understand if I do not respond to his points—otherwise we will not make much progress. However, I will clarify one point in answer to the question asked by my noble friend Lord Flight about the removal of the governor and the suggestion by the noble Lord, Lord Myners, that the governor cannot be removed. This is of course wrong, as I am sure the noble Lord, Lord Myners, knows. If he would like to refresh his memory of the Bank of England Act 1998, paragraph 8 of Schedule 1 sets out precisely the conditions under which the governor can be removed.
Lord Eatwell
My Lords, I am very grateful for the discussion which I have enjoyed very much. I have been educated and entertained by the remarks made by noble Lords all around the House. The key position that we have to start from is that the Bank of England is different. Its structure is different and the structure of responsibilities is different. When we think about corporate governance, we have to think about the way in which we can maintain a suitable degree of accountability.
In Amendment 3A, I was attempting to nudge the Government a little further on the oversight committee which, as the noble Lord made clear in contradiction to what the noble Baroness, Lady Noakes, said, is entirely retrospective at the moment. In those circumstances, the maintenance of accountability is not really enough, given the degree of responsibility and powers that the Bank will have.
It occurred to me that a non-executive committee often has the final say. When things really go wrong, it is the non-executive committee that has to gather together and deal with what is going wrong in a company. Here the non-executive committee, by nudging it a little further and including the word “oversee”—for an oversight committee—would actually nudge the oversight committee, as conceived by the Government, in a direction in which it could hold to account the executive of the Bank to a greater degree than is the case at the moment. I think that the Government are being excessively complacent about this. We have this massive switch of powers, and we are being told that everything will be all right and that this Committee—which, as the noble Lord says, is entirely retrospective—will somehow create an aura of accountability. I just do not see that happening.
I regret that the noble Lord has not taken a constructive view of what we were trying to achieve. I would have been quite happy to accept some recognition by him that there is a degree of a problem in this particular institution and that we need—in this House and, indeed, in Parliament in general—to address this problem if we are to move forward successfully with the structure of financial regulation and oversight in this country. The noble Lord has given no indication of any sympathy whatever. Instead, he wants to keep the oversight committee purely retrospective, with no ability to take a broad view—not on a daily basis, of course not—and he wants the non-executives to have that specific role. Given that he has shown no interest at all and no understanding of the serious issues involved, I would like to seek the opinion of the House.
Lord Eatwell
“( ) The Bank will ensure that the Oversight Committee has adequate economic, legal and research support.”
Lord Eatwell
My Lords, in the debate that we have just had we heard a lot about the values of the oversight committee and what an important job it has to do. The noble Lord, Lord Sassoon, made some comments about new Section 3C, perhaps inadvertently, while he was reflecting on the group of amendments that we have just looked at. The purpose of this amendment is to ensure that the oversight committee—or hindsight committee, as I think it should be called—has the resources to do its job.
We have to remember that the Bank of England has form in this respect. In the early days of the Monetary Policy Committee, independent members were deliberately starved of resources by the Bank in order to enhance the position of the executive members. We all hope that the Bank has learnt its lesson from the very negative publicity that that incident produced. However, we are now in different territory. The powers are greater, and the responsibilities are wider. Hence it is vital that the oversight committee should be well resourced. New Section 3C refers to the possibility of hiring people to conduct a performance review, but that is one step down the line. The committee needs its own staff to help determine exactly which performances should be reviewed, and who should be asked to do that sort of important secretarial work.
That is the purpose of the amendment before us. It can do nothing but strengthen the Bank of England, making the committee into an effective instrument of retrospective monetary and financial governance. I am sure that that is what the Government would like, so I would like to hear them accept this amendment, or at least give an undertaking to take the idea away and think about it with care. I beg to move.
Lord Peston
My Lords, I support this amendment in substance. The noble Lord will be delighted to hear that I also wish to make a couple of semantic points. My noble friend said that the committee should have its own staff. My view is that it should not only have its own staff but should appoint its own staff, thereby guaranteeing that the staff are its own, work for it and, to use the slang expression, are not “narks” of the governor. Therefore, the noble Lord ought to accept the amendment.
My two semantic points are as follows. First, I find the committee’s name most unattractive. Will the noble Lord ask the Bill team to look up the definition of “oversight” in the dictionary as it has a very definite meaning which I am sure the Government and the Minister do not wish to be associated with this committee. It may not be too late to choose a more felicitous name. I wonder whether I am the only person who has thought what a ridiculous name the committee has.
Secondly, I congratulate my noble friend Lord Eatwell on solving the problem with which, as your Lordships know, the noble Lord, Lord Barnett, and I are obsessed: that is, the “must/may problem”. My noble friend has solved it in a really interesting way. He does not use “must” or “may” but “will”. I would like the Minister to ask the Bill team whether it would consider going down the path of using “will” rather than “must” or “may”.
Lord Sassoon
If the noble Lord, Lord Peston, could persuade his noble friend to rein back to just a couple of amendments a day, I am sure that we could carve out time to look at all sorts of semantics. However, I shall stick to the substance of this amendment, which seeks to place the bank under a statutory duty to ensure that the oversight committee has,
“adequate economic, legal and research support”.
I entirely agree with the sentiment behind this amendment. As we have already discussed this afternoon, the non-executive oversight committee has a very important job to do in reviewing the Bank’s performance and will require access to the information and analytical support that it needs. That is why, for example, the legislation makes it clear that members of the oversight committee have access to the meetings and papers of the MPC and FPC and have a specific remit to commission work and reviews from external bodies and experts.
It is a well established principle that it is the responsibility of the governing body of any organisation to ensure that its members and sub-committees are properly supported. I recognise that the Bank was slow to realise that the external members of the MPC required dedicated resource and support. I am confident that the Bank has learnt its lessons on this. Both the MPC and the FPC members have access to all the analytical and secretariat support that they need. I am wholly confident that the Bank will similarly make support available to the oversight committee to make sure that it is adequately supported without the need for legislation on this point. I hope, therefore, with the further reassurance on that, the noble Lord will see fit to withdraw his amendment.
Lord Eatwell
What the noble Lord has said does not address the important issue here. He said that the oversight committee will have access to papers, be able to commission work and have access to the secretarial and research skills of the Bank. However, the point of this amendment is to give what every non-executive group really needs, which is access to independent advice. Any non-executive group of which I have been a member has always prized its access to independent advice: that is, its ability to seek advice outwith the immediate organisation of which it is a part.
The point has been made around the House this afternoon that the Bank of England is different in a series of ways with respect to its overall organisation. It is also different in terms of the sorts of powers which it will exercise. Therefore, I feel very strongly that it is important that the oversight committee, which is, after all, the committee of non-executives, has access to independent advice. It is regrettable that the Government feel that assurances are enough. I entirely accept that the noble Lord and, indeed, the officials who have looked at this question feel confident in giving their assurances but they cannot bind their successors. The point of this amendment is to ensure that successors who hold this responsibility both within the Treasury and within the Bank recognise the importance of the advice and support that the oversight committee should receive if it is to do its job. I hope that the noble Lord will take that away and think about it although I probably hope in vain. Nevertheless, I beg leave to withdraw the amendment.
Lord Eatwell
Lord Eatwell
My Lords, I am afraid it is me again. These amendments refer to the decision to publish performance reviews. Let me remind the House that the performance reviews referred to in the particular clauses which are to be here amended are reviews that the oversight committee has commissioned or conducted. The amendment removes the Bank’s veto over the oversight committee: a veto which the Bill gives to the Bank—otherwise known as the governor—over the publication of such reviews.
Again, the Bank has form in this respect. As Members of your Lordships’ House will be aware, the Bank of England is the only major public institution directly involved in the financial crisis that has not seen fit to conduct and publish a full assessment of its own activities, procedures and policies during the crisis and to own up to the contribution it made to the crisis. The Financial Services Authority has done that as has the Treasury. The Bank has not seen fit to do that. The three reviews published last week have been very carefully circumscribed in their terms of reference to prevent proper consideration of the Bank’s record. You only have to read the Bank’s tepid response to the reviews—it did not refer at all to the comments on the Bank’s excessively hierarchical structure—to realise there is still a deep-seated cultural failing in this respect in the Bank. Where other organisations review what they have done, think through and learn from their experiences, the Bank seems to be unwilling to do this.
In these circumstances, it would be quite wrong to give the Bank a veto over the publication of the oversight committee’s reports. If this serious committee of non-executives—a majority of the court—put together a report and decide that it should be published, then why should there be a veto over them? The oversight committee is quite capable of taking the advice of the Bank, the governor or whoever on whether the publication is against the public interest. If the Government really want effective performance reviews and not whitewash I am sure they will support these amendments.
Baroness Noakes
My Lords, I share many of the frustrations that the noble Lord, Lord Eatwell, has exposed in relation to the reviews that were commissioned, late and inadequate, and I completely accept that the Bank’s response did not seem fulsome. However, I think we have to give the new Government’s arrangements within the Bank a chance. While the Bill says that the Bank will decide about publication, that should be the Court of Directors and, as we know, the Court of Directors has a majority of non-executives. I hope that they will be invigorated by the new context provided by the separate oversight committee. If we keep trying to make functions of the Bank be carried out by the oversight committee we will undermine the court. We need to ensure that the court is strengthened and takes its responsibilities seriously. I also sincerely hope that the Treasury Select Committee in the other place becomes more active in seeking to engage with the non-executives via the oversight committee on how things work in practice.
Lord Barnett
My Lords, I agree with my noble friend very strongly indeed. He has made a very strong point. I should declare an interest, I suppose. Until very recently I was probably the oldest living non-executive chairman of a plc. I hope I was a very active chairman. However, I know through many experiences of my own that some non-executive directors do not play a very constructive part, they just take their money and go and do very little—so there are two different kinds of non-executive directors.
I hope my noble friend manages to persuade somebody to change the name from the oversight committee. It is, as my noble friend Lord Peston said, a very strange name to have in the Bill, but it is not the only strange thing in the Bill. I hope the officials who advise the noble Lord, Lord Sassoon, will perhaps come up with a new name but on the whole I would like to commend the officials, particularly those headed by Mr Whiting. He has been extremely diligent in the job he has done on all sides of this Bill, sending things and meeting people. He has been excellent.
I wish I could say the same about the Minister. I like him personally but I cannot say the same about his response to the amendments. My noble friend has made a very important point that an important committee here—whatever we call it, it is now called the oversight committee—can be overruled by the governor. I find that quite unacceptable. I do not know whether the noble Lord, Lord Sassoon, shaking his head means he cannot overrule it. I would be glad to hear that, but that is what it seems to be saying. I would like to hear how he puts that given the wording of the Bill, but for the moment I strongly support my noble friend Lord Eatwell.
Lord Kerr of Kinlochard
I think one has to draw a line between the past and the future. I once again found myself very much in agreement with what the noble Baroness, Lady Noakes, said. If a report was made to the oversight committee and it believed it should be published, and the decision goes to the court, as it should because a subset of the court cannot decide that, it seems to me extraordinarily unlikely—almost unthinkable—that the governor, from a position of one or four against nine, would be able to overturn the view of the oversight committee. The decision must be taken in the court, but it will be a very rare occurrence when a decision as to what is the public interest is taken by the executives overturning the majority view of the oversight committee when the issue comes before the court, so I do not understand the amendment.
Lord Peston
My Lords, I do not understand the intervention. Why has the governor been given the power if he cannot use it? If you do not want him to use it you do not give it to him.
Lord Armstrong of Ilminster
My Lords, if I may take the semantic point raised by the noble Lord, Lord Peston, if the word “oversight” is capable of being misinterpreted why not use “supervisory”, which is just the Latin version and means exactly the same without the possible misunderstanding?
Lord Sassoon
My Lords, I am not at this point going to get sidetracked into semantics, fascinating though I find it, as noble Lords know. Let me echo again, because I had said already what a good job the Bill team was doing, that I completely agree about that. I am very sorry that the noble Lord, Lord Peston, thinks—I am sorry; I meant the noble Lord, Lord Barnett. Do forgive me. The noble Lord, Lord Peston, may think that I am doing an excellent job but I know that the noble Lord, Lord Barnett, does not. Anyway, it is entirely my fault and not the fault of my officials, as the noble Lord recognises.
Let me try to be brief on this one. This is not a question of the governor having a power to overrule the oversight committee, as other noble Lords have said. The construction in the Bill is that it is for the Bank as whole—the court of the Bank—to decide and to make an informed judgment whether damage might be caused by the publication of a report on a public interest test. I understand the starting point of the noble Lord, Lord Eatwell, which is some suspicion or concern that the people who commissioned the report—the oversight committee—should be the group of people who decide whether it should be published. However, it is appropriate for the Bank as a whole—that is, the court, with a majority of non-executive directors, as my noble friend has reiterated again—to take the decision.
Lord Sassoon
Perhaps the noble Lord will let me finish. It is a decision of the Bank. The Bank is better placed to make that judgment and the noble Lord, Lord Kerr of Kinlochard, makes the point that it would be only in exceptional extraordinary circumstances —I cannot remember his exact words—that one would envisage this being overturned somehow on the whim, or rather the view, of the governor, when the Court of the Bank of England looks at it.
Let me make one more point before I give way to the noble Lord, Lord Eatwell, because one critical part of this is that the Treasury will receive copies of all reports, regardless of their sensitivity. I would expect the Treasury to come to its own view on whether each report is genuinely unsuitable for publication. If it believes that the public interest carve-out was not justified, it would challenge that decision where appropriate, because the Treasury ultimately has an even wider perspective on the public interest. It is therefore right to remember that there is that further fallback, because the reports in all cases will go to the Treasury. Let me, as well as asking the noble Lord to consider withdrawing his amendment, give way to him.
Lord Eatwell
I just wanted to ask a question of clarification. What particularly disturbed me about subsection (3) of new Section 3D was that it refers to “the Bank”. Can the noble Lord assure me that in that subsection “Bank” means “court”? If he can, I would be happy. That is the point that I was trying to make. I think that I confused the noble Lord, Lord Kerr, slightly in that respect.
Lord Sassoon
Yes, my Lords, the court is the governing authority of the Bank, and that is, I believe, completely the right construction for this particular matter.
Lord Barnett
What the noble Lord said just now seems to provide a new reason to change the name of the oversight committee. We do not need one. He is saying that the governor and the board of the Bank will know better than the oversight committee. Why bother with an oversight committee at all? That would be a simple solution.
Lord Eatwell
My Lords, I must say that I am very happy and I will now read through the Bill with great care and presume that wherever the term “Bank” appears, it means “court”. If that is so, I will check all the various clauses as we go along to ensure that “Bank” means “court” at all stages. If it means “court”, the Bill should say so and be clear—and that is what it is not.
Lord Peston
My noble friend should not really accept this, because no one reading the Bill could conceivably read the word “Bank” to mean “court”. “Bank” means the Bank, and the Bank, in practice, is the governor.
Lord Eatwell
With all due respect to my noble friend, these days, where matters are in dispute about the interpretation of Bills, reference is made to Hansard. The noble Lord has effectively amended this clause in his remarks by saying that “Bank” means “court”. On that basis, we have now clarified this section of the Bill considerably. We have had a successful debate and achieved something valuable.
Given the various comments on the name of the oversight committee, I must confess that until my noble friends pointed it out I had failed to notice the double entendre in that label. I thought that “oversight” meant to oversee or supervise. I take it as meaning “oversee”, and I will not go as far as my noble friends.
I will go through the rest of the Bill, note where it refers to the Bank and either write to the noble Lord or raise in the House those points at which there is ambiguity as to what “Bank” actually means. However, now that we are absolutely clear that in new Section 3D “Bank” means court, I am happy to beg leave to withdraw the amendment.
Lord Eatwell
Lord Eatwell
In Committee, I raised the issue referred to in the amendment and not only argued that should the Treasury be able to make recommendations to the FPC at any time—which it appears not to be able to, given that it is left out here—but proposed to make subsection (3) consistent with subsection (2) of proposed new Section 9A. The amendment would allow the Treasury to approach the FPC at any time.
After the Committee stage, the noble Lord, Lord Sassoon, was good enough to write to me on this matter. I appreciated that. In his letter, he argued that there was no need for specific statutory provision because the Treasury could make recommendations at any time as it already had a common-law power to do so. This was one of those “not necessary” defences. Therefore, the common-law power was the basis for the Treasury being able to make recommendations at any time.
I have considered this matter carefully and, after long reflection, I regret that I find the noble Lord’s argument unsatisfactory for two reasons. First, it is not good enough in the complexity of financial legislation to rely on the common law. There are people who will use this Bill who will not be lawyers and, even if they are, they may be lawyers who are not fully conversant with the common law. For example, many of our European Union partners are not conversant with the common law, and members of the relevant European Union regulatory bodies that will need to understand the Bill will not necessarily have familiarity with the common law that we would expect in common-law jurisdictions. Therefore, relying on the common law is not good enough in this legislation. We need real clarity about who does what to whom and we ought to include the Treasury in the provision so that everyone knows that it can intervene with the FPC at any time. The European authorities in particular, which will have a locus in this respect, would understand that point.
Secondly, a fundamental problem with the regulatory system before the crisis was the lack of communication between the Treasury and the Bank, as the noble Lord himself argued in Committee. I am sure that he will remember saying that a real problem with the tripartite structure was that the Chancellor of the Exchequer and the Governor of the Bank never met. He said:
“One of the major problems leading up to the financial crisis was that the tripartite committee did not meet at principals level”.—[Official Report, 10/7/12; col. 1052.]
The amendment re-emphasises the need for regular communication and co-operation between the Treasury and the Bank in general, and the Treasury and the FPC in particular, given the FPC’s macroeconomic responsibilities.
As I said, there are two reasons for the amendment. First, we should not rely on the common law as there are lots of people who are not conversant with the common law who need to understand this relationship clearly. Secondly, we need to reiterate the importance of regular communication between the Treasury and the Bank, especially the Treasury and the FPC. I beg to move.
Lord Sassoon
My Lords, I find it is bizarre and slightly disappointing to see this amendment again. My noble friend Lord De Mauley explained in Committee why the FPC requires an express power in statute to make recommendations whereas the Treasury does not. As the noble Lord, Lord Eatwell, recognises, I wrote to all interested noble Lords on 2 July setting out that explanation again, so I had rather hoped that the matter was resolved. I fear I should again explain the legal position, which is that the Government are clear that both the Treasury and the FPC should be closely involved in the ongoing development of the Bank’s financial stability strategy. I am happy to put that on the record. I have said a lot of other things which I am happy to be quoted on, such as comparing the practice under the old tripartite regime of people not talking to each other on a regular basis with what I now observe, which is much more regular communication. However, by amending this part of the Bill, I suggest we will not do anything more on that front. The Government are clear on that, which is why subsection (2) of new Section 9A of the Bank of England Act, as inserted by Clause 4 of the Bill, requires the court to consult both the FPC and the Treasury before determining or revising the Bank’s financial stability strategy. We do not need to overlabour the point, but it is a critically important one that the noble Lord raises and it is in there.
Moreover, the Government’s view is that neither the FPC nor the Treasury should have to wait to be formally consulted on the strategy. This should be part of the normal ongoing dialogue. If either body wishes proactively to suggest changes or amendments to the Bank’s strategy for financial stability, it should and will be able to do so. In order to ensure that this is the case, it is necessary to create an express power for the FPC to make recommendations to the court regarding the Bank’s strategy. As I have said before, this is because the FPC is a creation of statute, which means that the FPC’s main functions need to be set out in the legislation. That is why new Section 9A gives the FPC a power to make recommendations to the court on the financial stability strategy. If the provision did not exist, it would be unclear whether the FPC had the power to do so. In contrast, it is not necessary to create specific statutory provision to allow the Treasury to make recommendations. The Treasury already has a common-law power to make recommendations at any time to whoever it wishes.
Of course, the noble Lord, Lord Eatwell, does not challenge that underlying basis, but he makes a huge drama out of European authorities and overseas bodies needing to understand whether the Treasury has authority to do this, that or the other. I find it very unlikely that European bodies would need to do that, but if they did, their lawyers would understand very clearly the common-law construction, which would be explained to them. If we went down the line of not relying on the common law in legislation, I hate to think how a Bill like this would grow like Topsy.
I am genuinely puzzled by all this, but I hope that the explanation of the common-law position is clear and that it can be explained in these unlikely situations that the noble Lord postulates. Of course, these European authorities will have the benefit of reading Hansard as well. It is an important point that the interaction is much better than in some respects it has been in the past. We expect that to be the case. I would like to think that perhaps we have finally put this point to rest and I ask the noble Lord to withdraw his amendment.
Lord Eatwell
My Lords, it would be easier to withdraw the amendment if the noble Lord had actually answered the points. Essentially, all he has done is reiterate the common-law point and make the rather bold assumption that European-trained lawyers on the European Systemic Risk Board would understand the common law. However, if he is confident that that is the case and that a suitable number of British-trained lawyers, or the equivalent, can be seconded to that body, then perhaps things will work out in a satisfactory manner. I am glad to hear that he is confident that the interrelationship between the Bank, the Financial Policy Committee and the Treasury is ongoing and regular today as it was not in the past. That is a considerable improvement and I am pleased to have that assurance. However, there is an important element in financial legislation which the noble Lord overlooks. Financial legislation in a global financial market has to be really clear to all those around that market who read it. Simply saying, “We know because we are trained in the common law,” is really not good enough. I was trying not to change the relationship but to make it clearer. However, given that the Government are apparently not interested in doing that, I beg leave to withdraw the amendment.
Lord Eatwell
Lord Eatwell
My Lords, once again, we return to an issue that we discussed in Committee and I promised at that time to return to it on Report. I am keeping that promise. Subsection (6) of new Section 9A requires the court to review the financial stability strategy once every three years. That is far too long. Let us consider what has happened over the past three years. Since 2009 there has been a fundamental change to the overall economic environment, a radical change in government policy, and a double-dip recession. Really significant things have happened, which should be taken on board in assessing the strategy. The idea that, over that period, the court would not review the financial stability strategy in the light of events is, I believe, inconceivable. If the court really is going to review the strategy in the light of events, the markets need to know that. A regular report once a year would be a significant reassurance, even if that report says no change. Indeed, that would be a significant reassurance to the markets that the financial stability strategy is unchanged.
I quite understand that strategies are not designed to be the creatures of current events, but it is important to learn from events and not plough on regardless when the facts change. An annual review would provide the court with ongoing insights into the systemic risks associated with the financial stability strategy. That is far better than a review which is postponed, as facts change, for three years.
Let us then suppose that something really dramatic happens so that there has to be a review before the three-year time limit is up. What effect will that have on confidence? How much better to pursue the reasonable strategy of an annual review, both to ensure that the financial stability strategy is up to date and to provide appropriate confidence that the Bank’s strategy deals with matters with which the markets are concerned. I beg to move.
Lord Phillips of Sudbury
My Lords, I wonder whether the noble Lord, Lord Eatwell, has taken sufficient account of the provision in proposed new Section 9A(1)(b) that allows the court to review the strategy at any time. There is reference later in the proposed new section to revision of the strategy. I would have thought that those provisions covered precisely the concern that he correctly raised.
Lord Hodgson of Astley Abbotts
My Lords, I am slightly concerned at the proposed obligation to conduct an annual review. The role of directors is constantly to keep a strategy under review and to see whether it is still relevant. However, to impose this would impose a burden. A proper strategy review is an extremely expensive and far-reaching undertaking. It would be far better to have a backstop of a three-year requirement and rely on the good judgment and good sense of the directors, in particular the non-executives, to call for more frequent reviews as and when they are needed. It is inconceivable that we would go through the sorts of events that we have been through since 2008 and that non-executives would sit and say, “We do not need to look at the strategy”. It is part of their role to do that and we should rely on their judgment, not on process, with a backstop of the three years, as proposed.
Lord Myners
My Lords, I will pick up on a term in the final sentence of the contribution of the noble Lord, Lord Hodgson. He referred to relying on the judgment of the non-executives. Many issues around the court will depend on the quality of the people appointed, and how they conduct themselves. A slightly less than perfect structure, superbly implemented, is likely to give a better outcome than a perfect structure that is poorly implemented. The Minister on a number of occasions referred to best corporate practice. Can he envisage any situation in which a corporate board performing effectively would not carry out an annual review of strategy? Every board of which I have been a member has had an annual strategy session to look again at past strategy and in many cases endorse or modify it in the light of circumstances. Regardless of what we say here, court directors seized by their legal responsibilities would almost certainly want to carry out an annual review. Does the Minister agree with that observation?
Lord Sassoon
My Lords, I certainly agree with the construction of my noble friends Lord Phillips of Sudbury and Lord Hodgson of Astley Abbotts. I think that essentially they are agreeing with the noble Lord, Lord Myners, that boards will take sensible views on these matters, and that we do not need to require the court to review the Bank’s stability strategy on an annual basis because a perfectly sensible arrangement will emerge that will to some extent involve a strategy that is set for a longer period than a year. Clearly, to some extent, a strategy needs to look out further—as the noble Lord, Lord Myners, agreed. Equally, of course a board will look to see how a strategy is going on a more frequent basis.
I have not changed my view since Committee on the lack of need for the provision proposed in the amendment. The interventions in this discussion reinforced my view. The legislation does not set out how regularly the Bank’s strategy should be reviewed. In practice the court has revised the financial stability strategy on an annual basis. That is understandable, given the sheer volume of legislative and other changes that there have been in the system of financial regulation in the past three years. On the other hand, as the noble Lord, Lord Myners, agreed, a strategy needs also to be a longer-term, forward-looking document. We do not need to hardwire in an annual review and suggest in any way that we require a short-term, business-plan view to be taken rather than a genuine strategy. That is why new Section 9A will require the court in future to revise the strategy at least every three years—so that it is a longer-term document—but there will also be flexibility for the court to revise the strategy earlier. I continue to believe that a three-year timeframe is the correct requirement for the Bill. It leaves plenty of flexibility.
I will add that I am conscious that in talking about this matter I use “court” and “Bank” to mean different things. I did not want to prolong the earlier debate, but I did not say then that court equals Bank. I am sure that the noble Lord, Lord Eatwell, did not believe that to be the case, or that I suggested it. What I suggested in the earlier context was that there were certain critical issues on which the court would take a decision. The matter that we talked about—the public interest test in connection with publishing reports—was one. Here is a clear example of a case where we are talking about the court setting a strategy for the Bank. There will be many more examples as we go through the Bill of cases where “court” and “Bank” mean different things. We need to look at each instance as it comes up. With that slight digression, I hope that the noble Lord has been comforted by this further discussion of the strategy timeframe issue.
Lord Eatwell
My Lords, we are debating two things at the same time. I will refer first to my amendment dealing with the timing of reviews of the financial stability strategy. Writing into the Bill that there should be a backstop of three years is a major mistake because it creates the possibility—even probability—that a review will have to take place in a shorter timeframe, as the noble Lord, Lord Phillips, pointed out. If that is done, what will be the effect on confidence? It will give the impression that the Bank is panicking and is not willing to go to its three-year period; it has suddenly had to shorten things. The reaction will be: “My gosh, something is really going wrong”. That is why the notion of an annual review has solidity and regularity. It fits in with the publication of the financial stability review, which is twice per year. So every year there would be a review, even if it endorsed a policy of no change to the financial stability strategy. Including the three-year figure is a major mistake because it will tend to excite apprehension when reviews take place more frequently.
Lord Phillips of Sudbury
Is the noble Lord not assuaged by the wording of the Bill, which seems to be extraordinarily wise? It calls for a strategic review, which it later defines as coming every three years. It then states that the court of directors must,
“from time to time review, and if necessary revise, the strategy”.
Surely that is exactly what the noble Lord was talking about. If circumstances take an unexpected and dramatic turn, that stipulation is precisely germane. I do not see why the noble Lord is not satisfied with what seems to be an extremely sensible arrangement: a report every three years, but also a power of review.
Lord Eatwell
I am sorry that I did not make myself clear. I was referring to a review taking place other than at three years and the effect that that might have on the confidence of the markets. They might feel that the Bank is not sticking to its usual three-year timetable but is bringing things forward because something is going badly wrong that it knows about and perhaps the markets are not fully informed about. An annual review is embedded in so many companies. The annual away-day where everybody goes off and does the annual review is such a standard procedure that I think the three-year business is a mistake.
I want to return to the noble Lord’s revisionist comments on the position that he took on the earlier amendment when we were referring to the business of the oversight committee and the public interest notion of publication. I asked the noble Lord whether in this section Bank meant court. I think that I made clear that if it did mean court, the best option would be for it to say so. Therefore, the best option would be for him to come back at Third Reading and say, “Look, the word Bank occurs all the way through the Bill. It is used in different contexts in different places and let us be absolutely clear who is responsible. We will amend this clause at Third Reading to say ‘court’ because that is what I mean. It is not what I say; it is what I mean”. Let us now say that the noble Lord means court.
I was quite deliberately saying that if the noble Lord really wants the word Bank to mean court throughout the Bill I would read through it. I was confident that I would have no difficulty finding a number of cases where he did not want it to mean court. That is why he has now stood up, having received the advice of his officials, to correct what he said earlier.
Lord Eatwell
I am just finishing.
With respect to new Section 3D, it is important that we are clear that Bank means court there. We will take on advisement what the word Bank means elsewhere in the Bill.
Lord Sassoon
I merely wanted to say that I was not standing up to correct anything I said before: I stand exactly by everything that I said before. I wanted to head off the noble Lord, Lord Eatwell, from wasting a lot of time by going through and analysing the precise meaning and the underlined way in which the powers of the Bank would be exercised situation by situation in the Bill. It is up to the court as the governing body of the Bank as to what it takes unto itself and what it delegates to the executive of the Bank. I was merely trying to make a helpful suggestion that perhaps the noble Lord would find himself doing quite a lot of wasted work if we went too literally down this path.
Lord Eatwell
My Lords, I am sorry to prolong this, but now we are told that the court can delegate to the executive of the Bank. Is that the case in new Section 3D, which we discussed before? I am sorry to prolong this but I thought that the noble Lord made absolutely clear that in that section, Bank meant court—not a delegation to the executive or the governor or anyone else. He actually said himself, if I recollect accurately, that the court contains the nine members of the oversight committee, they would be sitting there and therefore they would not contradict themselves. There was no notion of delegation. They had a role. It is very important that legislation, particularly in financial policy, is clear. Can we please be clear on this particular element?
Lord Sassoon
I do think that the noble Lord, Lord Eatwell, is trying to get into semantic games. There is an important point. I was completely clear before and I think it is understood. It would be complete nonsense if a recommendation on such an important matter of the oversight committee, which is a committee of the court of the Bank, was taken by anything other than the court itself. That is plain and completely clear. That is what I said before and that is what I stand by. It would be absurd to suggest that the court would delegate such a matter. That is what I said and that is clear. But there are plenty of other matters throughout the Bill on what the Bank does where, equally, it would be ridiculous to suggest that the court did something itself and did not delegate.
Lord Eatwell
Well I rest on the proposition that I made earlier. If that is what the noble Lord means, why does he not say so instead of leaving this ambiguity on the face of the Bill?
However, returning to the issue of three years, I think that it is unfortunate for the reasons that I have spelt out. Annual reviews are completely usual and normal in the corporate and financial worlds. Everyone knows what they are. Three years leaves too much of a gap for unfortunate and disturbing events to occur that could then be exacerbated by the Bank’s seeming need to change tack at that time.
I hope people go away and think a little about this. I know that I almost certainly hope in vain, but hope springs eternal. In the mean time, I beg leave to withdraw the amendment.
Baroness Noakes
Baroness Noakes
In moving this amendment, I will also speak to Amendment 5 in this group. In so doing, I hope to give the noble Lord, Lord Eatwell, a break from his obsession with the difference between the court and the Bank.
The amendments concern membership of the Financial Policy Committee. In Committee, the noble Lord, Lord McFall of Alcluith, and I tabled an amendment that reflected the conclusion of the Treasury Select Committee in another place that there should be a majority of external members on the FPC to mitigate against groupthink. The Joint Committee that examined the Bill had reached a similar conclusion.
The Bill prescribes 12 members of the FPC in total. There should be six from the Bank, the chief executive of the FCA, four external members and a representative from the Treasury. I will ignore the Treasury in my remarks because the Treasury person cannot vote and his views can be ignored quite a lot of the time according to Schedule 1. I will talk about the 11 active and voting members.
The Government like to portray this composition of the FPC as a 6:5 split, putting the chief executive of the FCA in the external-to-the-Bank category, with six internal to the Bank and five outside. But the chief executive of the FCA, while he is external to the Bank, is not a completely independent member because of the many and varied associations and interactions between the FCA and the PRA which are envisaged in this Bill. While the chief executive of the FCA will have independent responsibilities in relation to the FCA, he will inevitably be susceptible to the kind of groupthink that the Treasury Select Committee warned against. The de facto ratio in the Bill is 7:4, because seven members have custodianship of the financial system as part of their day jobs and only four would be independent of that. I do not believe that that ratio is a healthy one.
In Committee, my noble friend the Minister argued against having external members in the majority because it would interfere with the holding of the Bank of England to account in some way. I think that that is a highly arguable position but my noble friend will be relieved that I am not going to argue with it this evening. Instead, I propose with Amendment 4 a more modest rebalancing of the FPC and I am delighted that my noble friend Lady Wheatcroft and the noble Baroness, Lady Kramer, have added their names to this amendment.
Lord Myners
My Lords, I support the amendment in the name of the noble Baronesses, Lady Noakes, Lady Wheatcroft and Lady Kramer. I, too, have been struck by the potency of the Walker report appendix on group effectiveness, drafted by the Tavistock Institute. My experience leads me to conclude that the larger the group, the less effective it becomes. The R-squared is actually extraordinarily high and making the FPC any larger would not be the right solution, although it would be better than doing nothing.
Amendment 4 is, in my judgment, significantly superior to Amendment 5 and I think the noble Baroness, Lady Noakes, has, as she so often does, put her finger on the issue. It is almost certainly the governor who is insisting on having this right to appoint additional people to the committee. The past culture of the Bank is that it speaks with a single voice and that voice expresses the opinion of the governor. The more people around the committee table who therefore speak with that single voice, the better it is from the perspective of the executive. From the perspective of a functioning committee, that is almost certainly not an optimal outcome. In fact, if the Tavistock Institute had been invited to comment on the existence of a cabal or blocking group within a committee, I am sure it would have been even more powerful in its views about its appropriate constitution.
The central thrust of everything we are doing in helping the Government get this legislation through Parliament is to try to ensure that we have as many checks and balances in place as is appropriate. One of them must be a check on the strength of the voice of the executive of the Bank on these committees and, while both of the amendments put forward by the noble Baroness, Lady Noakes, will achieve that, Amendment 4 is preferable to Amendment 5.
Baroness Wheatcroft
My Lords, Amendment 4 will achieve an improvement in the balance of the FPC and I support the other amendments in this group, tidying-up amendments which would bring the number of extra appointees from the Bank down to one instead of two. It is obviously better to have a balance, if we can, between the Bank team and the outsiders—as they will undoubtedly feel that they are to start with.
We have heard about groupthink. There obviously has been a fair amount of groupthink at the Bank in the past, although it is worth remembering that on the Monetary Policy Committee the Governor of the Bank of England has been outvoted on several occasions, so it is possible for people to disagree with the governor and for the committee to go against him. However, on the basis that a balance would be better, bringing down the level of Bank people represented on the FPC would be an improvement.
Lord Deben
I merely suggest that in these detailed discussions, when we hear mainly from those who are very expert, it is as well to consider views from outside, from business as a whole. A trick which all businessmen know is that there are two ways in which you can control a committee. One is to have a very small committee mainly related to you, and the other is to have a very large committee in which you know very well that you can organise the dynamics. I am much impressed with the arguments of the noble Baroness, Lady Noakes, who has put her finger on a very important issue. I hope that the Government would accept that nowadays there is a good deal of expertise looking at these matters and the Tavistock Institute has much of it. I would be unhappy if we suggested that we knew better than its experience, over a very long time, of how best to do these things. I hope the Government will see this as a perfectly reasonable thing, a balanced situation. The noble Baroness, Lady Noakes, and I do not always agree on matters—indeed, there are lots we disagree on—but on this occasion, coming from my understanding of trying to run boards and companies, this would be a good thing to do and not to do it would seem a little perverse.
Baroness Kramer
My Lords, I cannot pretend to have the expertise on boards that the previous speakers have had and I do not want to repeat the very powerful arguments they have made; I merely add two quick comments. I think that the Minister will have understood from the debate that has gone on for much of today that there is still a general uneasiness over the amount of power that flows to the Governor of the Bank of England under this new framework. Here is a sensible way to put a bit more challenge into the system. I think that we all feel that a bit more challenge would be a good way in which to make sure that the governor has to do the thing that is the greatest check on any individual: to persuade others to go along with him. That is rather more necessary in an absolutely core function, one of financial stability and economic growth.
Secondly, we have all been somewhat concerned about the role of the FCA and the kind of status that the chief executive of the FCA may have in comparison to his peers in the regulatory family that falls more directly under the Bank of England. His role becomes a little more pivotal when you look at Amendment 4 and I suspect that that is no bad thing. It also makes sure that the FCA voice is heard rather more clearly and independently than it might have been without this amendment. I hope that the Minister will take all that on board.
Lord Eatwell
My Lords, I have added my name, as has my noble friend Lady Hayter, to Amendment 5, which is the second-best amendment of the noble Baroness, Lady Noakes. However, even in this second-best version, achieving what the noble Baroness, Lady Kramer, referred to as “a bit more challenge” is an excellent and desirable objective.
Lord Sassoon
My Lords, this is an interesting and important area. The balance of the FPC’s members between the Bank and non-Bank executives is an issue that has been raised a number of times in this House, in another place and in the committees that have scrutinised the Bill. My noble friends who have spoken to this issue have done so with characteristic clarity and eloquence.
There is clearly an important argument about the possibility of rebalancing the membership of the committee away from the Bank executives and towards the external members. The external members will need to provide an outside perspective and challenge function to the deliberations of the FPC and, crucially, Amendment 4 achieves the important objective of enhancing the role of the non-Bank members while avoiding creating a situation where the Bank would be in a minority on the committee, which would make it virtually impossible to hold the Bank accountable for the FPC’s actions.
I see a great deal of sense in the alternative ways of doing this, but in the Amendment 4 approach rather than the Amendment 5 approach—the second best approach, as we now know it. I could not talk in the language of cognitive limits and other good stuff but, in a practical sense, I understand why having only nine voting members, which is comparable with the MPC, is better than having 11 members with a Treasury observer. Making the FPC larger by creating additional members would risk making the group unwieldy, and I now understand—which I did not before—that the Tavistock Institute provides a theoretical underpinning to what I see as a practical argument.
On balance, the proposal put forward by my noble friends to rebalance the committee by removing a Bank member is not only preferable to the one of adding an external member but has some attractions. The tone of my noble friend Lord Deben’s remarks was to assume that of course I would dismiss all this out of hand. However, this is a serious point and the committee has come back to it. We have been here before in a number of respects and it is important.
Amendment 6 would ensure that it is the executive director with responsibility for the analysis of markets who would be removed from the FPC. Although the person in this position may have an important role in providing information relating to financial markets to the committee, it is true that this role could be achieved without that person being a voting member. The executive director who would remain as a voting member on the FPC would be the director with responsibility within the Bank for financial stability, and I agree that that executive director would seem to be the appropriate person.
The remaining amendments are consequential in nature and simply remove a later reference to the executive director with responsibility for the analysis of markets and reduce the quorum of the FPC from seven to six, reflecting its reduced size.
Baroness Noakes
My Lords, I thank all noble Lords who have taken part in this important debate and I thank the Minister for his welcome remarks. I believe the technical response in this situation is “bingo”. With that, I beg leave to withdraw my amendment.
Lord Eatwell
Lord Eatwell
My Lords, my noble friend Lord Peston, who tabled this amendment, had to leave earlier this evening, but he asked me to move it on his behalf. I do so because it is an important and valuable amendment.
In Committee, the Government conceded the arguments made by the Treasury Select Committee and by Members in the other place that the growth and employment objective should be written into the terms of reference of the Financial Policy Committee. However, they have undermined the pursuit of this objective by the way in which it has been incorporated into the Bill. The phrase “subject to that” in proposed new Section 9C(1)(b) makes the growth and employment objective secondary to the stability objective.
Perhaps the Government are over influenced by current events here. Any Government who have presided over the economic policy of the past two-and-a-half years and continually justified their own actions with reference to levels of interest rates and financial stability will undoubtedly be motivated to downplay the growth and employment objective in the Financial Policy Committee’s considerations. However, in the longer view this is surely a mistake. Under the Bill as currently constructed, the Financial Policy Committee could cite the financial stability of a persistent recession as evidence that the objective has been met—stability, but the stability of the economic grave.
How much better that the Financial Policy Committee should take a balanced and mature view of the relationship between financial stability and growth and employment? I am confident that, if we get the right people in place, the committee will be able to take that mature view and would much better serve the overall financial stability strategy of the Bank. My noble friend’s amendment would achieve this and it deserves both serious consideration and support. I beg to move.
Lord Deben
I am distressed that the Minister should feel that on the previous occasion I suggested that he would be other than magnanimous, for he is always magnanimous. I speak in his support because we have to be very careful about constantly adding all the good things that we might like to have taken into account in all circumstances. Financial stability in these circumstances is exactly what we should be saying first and we refer to the other, perfectly rightly, because it is necessary. I find it incredible that any committee, in any circumstance, would get up and say it thinks it is a frightfully good idea to have the stability of total sterility. I do not understand where the noble Lord, Lord Eatwell, really thinks that anybody would come to that conclusion. This seems a totally unnecessary amendment and I hope very much that the Minister will refuse it.
Baroness Kramer
My Lords, I feel positively disturbed by this amendment. I am far more concerned that ultimately we will have to resist the optimism and buy-in to “all is going well, let’s take the leash off”, and the erosion of regulation and structural protection. It is important that financial stability should be the primary objective for the Financial Policy Committee. It was important to add the economic growth objective to sit alongside it, but in a secondary role—to say that if the requirements for financial stability are met, the committee should make sure that, alongside and within that, economic growth has the chance to take place. That is an appropriate balance, which has been achieved by earlier amendments to this Bill.
To pull away that protection now and put us back exactly where we were—perhaps I may say, under the last Labour Government—would suggest that people have not learnt their lessons. That is the great fear: we have a crisis and people immediately react to counter the crisis. However, my goodness, our memory is short. As soon as times become good, it is very hard for a regulator to continue to impose constraint and manage risk. It is absolutely crucial that we make clear that this is meant to be a permanent feature of the Financial Policy Committee, not just a feature for now.
Lord Phillips of Sudbury
My Lords, I will add a rather mundane legal point. I do not believe that the amendment tabled by the noble Lord, Lord Peston, would achieve anything, even if it were accepted. Subsection (1), whose two limbs cover the matters to which the Financial Policy Committee must have regard, is quite clear about the stability objective. However, in a situation where the Government had no objective for growth, it would not bite, even if you took the words “subject to that” out of the clause. That is, as I said, a very mundane lawyer’s point.
Baroness Noakes
My Lords, I recall that when the previous Government set up the Monetary Policy Committee, they formulated its secondary policy objective in precisely this form, “Subject to that”. Can the Benches opposite explain when they had a damascene conversion on this topic?
Lord Eatwell
I am sorry, I will say something. The Monetary Policy Committee has had a damascene conversion. You can see it in the quantitative easing policy. Indeed, the Treasury continuously encourages the Bank to take a more aggressive monetary policy with respect to growth and employment and to ignore the high rate of inflation.
Lord Sassoon
My Lords, first, this is well trodden ground for the House so I will be brief. In any case, my noble friends have all made extremely telling points, which knock this one pretty comprehensively on the head. The FPC’s primary focus must be financial stability. That is its primary purpose, in the same way that the MPC’s primary focus must be price stability. Both financial and monetary stability are necessary prerequisites for stable and sustainable growth, so both committees already contribute to growth by achieving their primary purposes. Subject to doing so, they should act to support the Government’s economic objectives. The result of giving the FPC dual, equally weighted objectives for financial stability and economic growth would be to allow the FPC to take action that would damage financial stability with the aim of encouraging growth. This would take the FPC outside its remit and expertise, and frustrate its primary purpose—which has got to be financial stability.
I do not believe that the model proposed in this amendment is appropriate or workable and I ask the noble Lord to withdraw it.
Lord Eatwell
My Lords, this has been an intriguing discussion, since it appears to ignore the economic history of the last two years. I was struck by the comment from the noble Lord, Lord Deben, that nobody would possibly accept the notion that financial stability was important when growth was absent. He should come more often and listen to the noble Lord, Lord Sassoon, justifying the current policies of the Government. The Minister continuously says it is vital that the policy which has produced zero growth over a year, and leaves us with a level of output about 3.5% lower than the peak in 2008, is entirely justified by the need to secure financial stability. He refers to low interest rates and financial stability all the time. If the noble Lord would like to hear someone justify that position, he can just turn up and listen to the noble Lord, Lord Sassoon, justifying the Government’s policy. He will get that straightaway.
Lord Deben
The noble Lord really must not interpret what I said in a way that is convenient for his argument and then blame the noble Lord, Lord Sassoon, for speeches that I have certainly heard and with which I agree. All I am saying is that the noble Lord’s idea that somehow or other, unless this is in here, nobody will take any notice of growth at all and that everyone will want a kind of sterile system is just not true. Nor is it sensible.
Lord Sassoon
I really do not want to prolong this too long, but the idea that somehow financial stability is the same as a sustainable fiscal position is really stretching the concepts a bit far. However, there we are.
Lord Eatwell
I was merely describing the way that the noble Lord continuously justifies the current squeeze that the Government wish to exert on the economy. The other really intriguing point is that it is the Government’s amendment that has introduced the growth and employment objective here, but he now tells us that it is outwith the committee’s expertise. So he has now introduced an amendment that is outwith the expertise of the committee that he has asked to consider it, even if as a secondary objective. I have been very struck by the debate, which has also failed to recognise, as I suggested earlier, the dramatic change in policy by the Monetary Policy Committee, urged on by the Government. This amendment simply attempted to believe, perhaps naively, that the Government might recognise what is happening in the policy-making of their institutions at the moment might give the FPC some credit for being able to make a mature and balanced judgment, given its overall responsibility for financial stability. However, I was no doubt overly naive there. On that basis, I beg leave to withdraw the amendment.
Lord Eatwell
“( ) factors likely to lead to a loss of confidence in the financial system as a whole”
Lord Eatwell
My Lords, this amendment seeks to include in the list of factors that are to be considered as systemic risks the factors likely to lead to a loss of confidence in the financial system as a whole. I am afraid that this is a significant bugbear among those of us interested in the economic foundations and problems of systemic risk. The list of elements that are included here—
“structural features … distribution of risk … unsustainable levels of leverage, debt or credit growth”—
are all essentially microeconomic. They miss the whole point about macroprudential regulation and the macroeconomics of risk, which the FSA tried to put forward in the Turner review and the US Treasury put forward in its review. They missed all that. The point is that at the macroeconomic level, there can be a transmission of risk which is not observable in the microstructures of the market, and is transmitted through a loss of confidence. Factors which can lead to a loss of confidence may not be identifiable in precise microeconomic connections.
I understand that this list is not intended to be exhaustive. That is why I composed this amendment to be a very general statement. I was not attempting to be precise, just presenting factors which can lead to a general loss of confidence. The point is to recognise that the systemic risk which we encountered in the last four or five years does not derive simply from the observable microeconomic variables listed here, but derives—most importantly, or at least, equally importantly—from the general loss of confidence which can sometimes be associated with these variables, and sometimes with others.
Lord Sassoon
My Lords, again, this was an issue on which there was a comprehensive debate in Committee. As set out in subsections (1) and (2) of proposed new Section 9C of the Bank of England Act, the FPC is tasked with contributing to the Bank’s financial stability objective by identifying and monitoring systemic risks and taking action to reduce or remove those risks.
Subsection (5) defines “systemic risk” to mean,
“a risk to the stability of the UK financial system as a whole or of a significant part of that system”.
That means that any risk to UK financial stability is captured within the FPC’s remit. At the prompting of the Joint Committee that scrutinised the Bill in draft, we added subsection (6) to underline the fact that,
“it is immaterial whether the risk arises in the United Kingdom or elsewhere”.
Let me be clear: the FPC must identify and address any risk that could compromise the stability of the UK financial system regardless of its origin.
The purpose of subsection (3) is to specify certain types of systemic risk which the FPC should look for. This does not limit or restrict the FPC’s remit in any way. In other words, just because a systemic risk is not listed in subsection (3) does not mean that the FPC has any less of an obligation to identify, monitor and address it. There could perhaps be a temptation to continue adding to subsection (3) in an attempt to try to define all possible sources of systemic risk. But this would be a fruitless, and potentially counterproductive, endeavour.
Amendment 6E seeks to add,
“factors likely to lead to a loss of confidence in the financial system as a whole”,
to the list. I agree that a loss of confidence can magnify cross-sectional or structural risks captured in the financial system. But I do not believe it would be appropriate to expand subsection (3) in this way. As I have said, the list is not intended to be exhaustive, rather it is designed to highlight the broad categories of systemic risk that have been identified by academic research, something which the noble Lord is rightly keen that we should factor in. Subsection (3) as it stands already serves this purpose by describing the main categories of cross-sectional and cyclical risk. I hope that, on the basis of this explanation, the noble Lord will withdraw what I continue to see as an unnecessary amendment.
Lord Eatwell
Before the noble Lord sits down, I heard but one argument against the case that I was making, which was that it was not appropriate. Will he explain why it is not appropriate?
Lord Sassoon
My Lords, I thought that was what I had done in the last three minutes. I explained that this is not an exhaustive list. Yes, the factor that the noble Lord identifies is an important consideration, but we have included the much more specific categories of systemic risk which are identified in the research. If we started putting looser considerations in there, it would be difficult to know where the list should stop. Indeed, as one extends lists like this, it risks by implication leaving out other important factors. I do believe that subsection (3) and the whole of proposed new Section 9C as drafted completely embrace the ability and the requirement for the FPC to pick up what the noble Lord is getting at, but does not run the risk of us trying to draft in some of the other things that we all might be able to think of.
Lord Phillips of Sudbury
Before my noble friend sits down, will he comment on the essential point made by the noble Lord, Lord Eatwell, about the risks defined in subsection (3) covering only “micro” rather than “macro” risks? It does seem that the language is actually “macro”. It talks about systemic risks, structural features and so on. Does the Minister agree?
Lord Sassoon
Yes, I agree with my noble friend. He makes an important point.
Lord Eatwell
Well, yes, my Lords, the logic of the noble Lord’s argument is either to accept my amendment or delete proposed new subsection (3) altogether, because one has to ask: what does it do? It says:
“Those systemic risks include, in particular”.
In particular, this is what the committee should be looking at. That is misleading in that it focuses on structural issues of the economy, which are microeconomic —on leverage and on debt, which are microeconomic, and on credit growth, which is moving into the more macroeconomic area. What it fails to do is to take in the general point of the loss of confidence which can come from other sources.
As I pointed out when I introduced this amendment, I deliberately constructed it so as not to get into the trap of attempting to produce a detailed list. It certainly does not do that. It simply alerts the committee. If the committee is to be alerted to deal with a number of factors in particular, it seems that it should also be looking in particular at those factors which might lead to a general loss of confidence in the economy as a whole.
So if the Government really wish to ask the committee to focus in particular on some things, I would like my amendment to be accepted. If, on the other hand, it is quite happy to rely on subsections (5) and (6), I suggest that subsection (3) be deleted, so as not to create this spurious concentration on a particular list of points.
However, given that the argument has made little progress, I beg leave to withdraw the amendment.
Baroness Noakes
“(1A) If the Treasury considers it appropriate to proceed with the making of an order under section 9L, the Treasury may lay before Parliament—
(a) a draft order, and(b) an explanatory document.(1B) The explanatory document laid under subsection (1A) must—
(a) introduce and give reasons for the order,(b) explain why the Treasury considers that the order serves the purpose in section 9L, and(c) be accompanied by a copy of any representations received from the FPC or the Governor of the Bank.(1C) Subject as follows, if after the expiry of the 40-day period the draft order laid under subsection (1A) is approved by a resolution of each House of Parliament, the Minister may make an order in the terms of the draft order.
(1D) The procedure in subsections (1E) to (1H) shall apply to the draft order instead of the procedure in subsection (1C) if—
(a) either House of Parliament so resolves within the 30-day period, or(b) a committee of either House charged with reporting on the draft order so recommends within the 30-day period and the House to which the recommendation is made does not by resolution reject the recommendation within the period.(1E) The Minister must have regard to—
(a) any representations,(b) any resolution of either House of Parliament, and(c) any recommendation of a committee of either House of Parliament charged with reporting on the draft order, made during the 60-day period with regard to the draft order. (1F) If after the expiry of the 60-day period the draft order is approved by a resolution of each House of Parliament, the Minister may make an order in the terms of the draft order.
(1G) If after the expiry of the 60-day period the Minister wishes to proceed with the draft order but with the material changes, the Minister may lay before Parliament—
(a) a revised draft order, and(b) a statement giving a summary of the changes proposed. (1H) If the revised draft order is approved by a resolution of each House of Parliament, the Minister may make an order in the terms of the revised draft order.
(1J) For the purposes of this section, an order is made in the terms of a draft order or revised draft order if it contains no material changes to its provisions.
(1K) In this section, references to the “30-day”, “40-day” and “60-day” period in relation to any draft order are to the periods of 30, 40 and 60 days beginning with the day on which the draft order was laid before Parliament.”
Baroness Noakes
My Lords, this has taken me a little by surprise—I thought I had another few minutes’ rest before we got to my amendment.
Amendment 7 deals with the parliamentary procedure for approving the Treasury’s direction to the FPC setting out the macroprudential measures that the FPC can impose on the PRA and the FCA. Under proposed new Section 9N of FiSMA, as inserted by Clause 4 of the Bill, the procedure is to be the draft affirmative one. My amendment seeks to convert that into a super-affirmative procedure.
The draft affirmative procedure requires parliamentary approval of the draft of an order before the final order is actually made. It gives slightly more opportunity for parliamentary scrutiny than an ordinary affirmative order, but the end result of the parliamentary procedure is binary—it is either approved or not. Such an order is not amendable and the only option available to either House would be to reject the whole order. The political composition of the other place effectively means that an order is always passed, whether draft or not. It does not matter whether the debate is in a Committee Room or, as has been suggested by the Chancellor of the Exchequer, on the Floor of the House. The end result is the same. In this House, technically we can reject an order but by convention we do not do so. It has happened only very rarely and is rightly regarded as a nuclear option.
Like the Joint Committee that scrutinised the draft Bill, the Treasury Select Committee in another place concluded that the content of an order setting out macroprudential measures deserves an enhanced level of parliamentary scrutiny. The Treasury Select Committee believes that the situation satisfies the Erskine May formula that talks of the super-affirmative procedure being used where,
“an exceptionally high degree of scrutiny is thought appropriate”.
The super-affirmative procedure in my amendment would require the Treasury to set out, in some detail, why the order is to be made. It would allow either House of Parliament to make recommendations on the draft order, which the Government would have to have regard to before returning with the final version of the order. Neither House would have any power of amendment but would have the power to recommend amendments, which the Government would have to consider.
It was suggested in Committee that macroprudential measures are very technical and not amenable to amendments—the noble Baroness, Lady Kramer, made this point. That may or may not be correct, depending on the particular measure. It is certainly true that the wider economic impact of the use of macroprudential tools is a proper subject for parliamentary debate, and either House may well want to say to the Government that their chosen tools are perhaps too wide or not wide enough. In contentious cases, Parliament may well say that the tools should be sunsetted or should be subject to additional reporting to Parliament on the impacts of the measures over time. Many important things could come out of a proper parliamentary debate that may or may not represent suggestions for amendment.
I have no particular concerns about the initial macroprudential toolkit. The FPC has been open about what it wants and why, and the Government are consulting transparently on their draft order. However, the initial tools are probably the easy ones because they largely align with international developments, and my amendment is directed at the development of the measures over time. For example, the FPC deliberately held back from asking for loan-to-value or loan-to-income powers, recognising that these should be decided by Parliament and that a full public debate would be necessary before such measures were introduced. If enforced, loan-to-income or loan-to-value rules could have a massive impact on the availability of mortgage credit and therefore raise wider societal issues as well as financial stability ones. Without the backstop of the super-affirmative procedure it is far from clear how Parliament could ensure that its—or anyone else’s—voice would be heard.
Lord Sassoon
My Lords, of course, this is another issue that was discussed at some length in Committee. The Government recognise the importance of proper public and parliamentary scrutiny and accountability for macroprudential tools. That is why the Bill requires that macroprudential orders be subject to the affirmative procedure.
The Government have given a number of undertakings to further demonstrate our commitment to ensure transparency and effective scrutiny of macroprudential orders. In another place the previous Financial Secretary to the Treasury, Mark Hoban, clearly stated the importance that the Treasury places on taking a consultative approach to policy-making, and that he expected this to apply to macroprudential tools. In addition, my right honourable friend the Chancellor of the Exchequer has said that he would be happy for debates on tools to take place on the Floor of the House, subject to arrangement through the usual channels.
The Government have also committed to consult on their proposals for the FPC’s initial toolkit. I note that my noble friend has no complaint on that score. Nevertheless it is important to recognise that the consultation document containing the Government’s proposals, a draft order and an impact assessment on those proposals was published on 18 September. The consultation will run for a full 12 weeks. In Committee a number of noble Lords highlighted the 90-minute restriction on debates and the inability for orders to be amended. However, I believe that consultation and the statement made by the Chancellor address these concerns effectively. I encourage noble Lords to read the consultation and respond if they feel able to improve the drafting of the order. I also hope that the relevant parliamentary committees will make their views on the Government’s proposals known.
Importantly, the Government’s stance on the parliamentary control of these macroprudential orders has been endorsed by the Delegated Powers and Regulatory Reform Committee. Maybe I did not notice it, but I do not think that my noble friend referred to the DPRRC. I know that she regards the committee, in her words, as an early warning system of problems for Parliament to address. In this instance, it has considered our proposed procedure and determined that there is not a problem to address.
As I suspect my noble friend knows, the DPRRC has stated:
“The importance of the power is recognised by the application of the draft affirmative procedure or, in urgent cases, the 28-day ‘made affirmative’ procedure … The Joint Committee on the Draft Bill and the House of Commons Treasury Select Committee have recommended an enhanced affirmative procedure for the non-urgent orders, based on that in the Public Bodies Act 2011. But the affirmative procedure provided for in the Bill should be a sufficient safeguard against inappropriate use of these powers”.
It is also important to remember that orders made under new Section 9K will not always be major pieces of legislation. It could be the case that minor technical amendments need to be made to the tools over time. Under such circumstances, requiring the super-affirmative procedure would be a disproportionate use of parliamentary resources. I note that my noble friend has made some adjustments to the super-affirmative procedure that would make it less onerous, and she has addressed those at some length in her remarks. I still feel that her proposal would require a disproportionate amount of parliamentary time and resource.
The bare minimum amount of time to pass an order under these proposals is 40 days, which can be increased to 60 days by resolution of either House or by recommendation of a committee of either House. The time taken to make an order where the consultation process shows that substantial changes are required is even greater. Even once the 60-day period has elapsed, this amendment would require the Treasury to obtain prior approval to the amended instrument before it could be made. This would introduce a significant amount of uncertainty around the time it would take to amend the FPC’s macroprudential toolkit.
I have stated many times that the Government place great importance on public and parliamentary scrutiny of the macroprudential tools. Given the steps already in the Bill and the commitments made by this Government, I ask my noble friend to withdraw her amendment.
Baroness Noakes
My Lords, I am disappointed with my noble friend’s response on this. He has repeated that in the other place there can be a debate on the Floor of the House, but the location of a debate on a statutory instrument is completely irrelevant. The outcome is exactly the same. He has rested on the full process for the early order but, as I said, those ones, with a high degree of international agreement on what the early phase of macroprudential tools should be, were easy to do. That is not really an issue. My noble friend rightly raises the Delegated Powers and Regulatory Reform Committee, for which I have the highest respect. I have equally the highest respect for the Joint Committee which scrutinised the draft Bill, and high regard in particular for the Treasury Select Committee in another place, which has been tireless in its scrutiny of this legislation. I have two committees to play one.
The best parliamentary procedure would in this instance be the super-affirmative. I can only say that I am extremely disappointed with my Government for hiding behind the easiest option of parliamentary procedure, but I will accede to my noble friend’s request and beg leave to withdraw.
Housing Benefit (Amendment) Regulations 2012
(12 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Freud
That the draft Housing Benefit (Amendment) Regulations 2012 laid before the House on 28 June be approved.
Relevant documents: 6th Report from the Joint Committee on Statutory Instruments, 7th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 15 October.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, we have already conducted a debate on these regulations in Committee and I am under no illusion about the strength of feeling that many noble Lords have on this measure. Clearly we have been through the issue thoroughly as we went through the Bill. We went through that a number of times. The Commons gave us a response and noble Lords will remember that at the conclusion of those debates I proposed undertaking some research to make sure that we understood the impact of this measure. On that basis in the Bill process it was decided not to proceed any further.
Let me summarise some of the main issues. We are not introducing this change lightly. There are a number of important principles behind this reform. There is a major financial imperative behind it; there is a compelling argument for reining in housing benefit expenditure and spending more generally. I know that many noble Lords do not disagree with the need to bring spending under control, but would no doubt wish to find a saving of £500 million a year from somewhere else. The question is, exactly where from? I have not yet heard any clear alternative for finding this kind of saving. That is why it would be quite wrong for the Government to backtrack on this measure now.
Another reason for this reform is that we believe that it will result in more efficient use of social housing stock over time, which in turn should help us to tackle some of the overcrowding. At the very least I hope that noble Lords agree that we need to do everything we can to improve the way that we use our housing stock. Doing nothing is not an option, not when we are paying for something approaching one million extra bedrooms for those affected by this measure and when there are more than a quarter of a million households living in overcrowded conditions in the social rented sector in England. In 2010 we inherited the highest level of overcrowding in the social rented sector since the published data began in 1993, with 7.1% of those households in England living in overcrowded accommodation. That is a fact we cannot ignore.
The noble Lord, Lord McKenzie, has asserted that this measure will risk costing more than it will save. Even if some people move—the Housing Futures Network research suggests that around 25% of people might move—that does not mean that we will not save money.
Where a claimant moves to smaller accommodation, it is important to consider the bigger picture rather than to look at just that one household. Even where a claimant moves into the private rented sector, that frees up accommodation in the social rented sector that can be relet to other families needing that accommodation. The relet may still generate housing benefit savings if, for example, the property is offered to claimants who would otherwise be renting privately or who were currently placed in more expensive temporary accommodation. I beg to move.
Amendment to the Motion
Lord McKenzie of Luton
As an amendment to the above Motion, at end to insert “but this House regrets that the measures under the draft Regulations to introduce size criteria restrictions to the calculation of housing benefit for working age claimants living in the social rented sector are blunt and take no account of whether alternative accommodation is available; will result in cuts to the incomes of some of the poorest in society; fail to provide sufficient safeguards to protect the most vulnerable claimants and ensure that they are not pushed into poverty and homelessness; will not achieve their aim of tackling under-occupancy; and will risk costing more than they will save.”
Lord McKenzie of Luton
My Lords, for many people who are out of work, disabled or on low incomes, housing benefit is a crucial safety net and a vital support to help pay the bills at the end of the month. I am moving this Motion of Regret at the measures to introduce size criteria restrictions in the calculation of housing benefit for working-age claimants living in the social rented sector because we see this as a very important issue.
It is but one of the changes to housing support introduced by the coalition which overall will result in around 2 million households receiving lower benefits. The National Audit Office tabulates the range of losses as running on average from £5 a week for those affected by the CPI uprating of local housing allowance to £91 a week for those affected by the overall benefit cap. The size criteria restrictions—called the bedroom tax by the noble Lord, Lord Best—are estimated by the DWP to affect 660,000 claimants with an average weekly loss of £14. Most underoccupy, as defined, by just one bedroom with the average weekly benefit loss being £12. Half of those affected will lose between £10 and £15 per week. Of those affected, 390,000 will be local authority tenants and 270,000 will be housing association tenants. Alarmingly, 420,000 of the households contain a family member with a disability. Noble Lords will recall the extensive and intense debates on this issue and the strong views expressed by your Lordships’ House in opposing these measures. The Minister referred to them a moment ago.
The overriding issue is fairness. The arguments have not changed and will not go away. Hundreds of thousands of tenants have been penalised for the circumstances in which they find themselves, with no ready means, for most of them, to mitigate what is perceived to be their alleged offence. Of course we recognise the need to deal with the deficit, but it is who you choose to bear the burden that is at issue here. In an era when we are producing tax cuts for millionaires, we are asking 660,000 of the poorest people in our country to bear a cut of £14 a week. Most people deemed to underoccupy will not have a smaller alternative property to which they can move. All housing benefit claimants of working age considered to have spare bedrooms will see their benefit cut by 14% for one extra bedroom and 25% for two or more extra bedrooms. The reality is that this is not a serious attempt to address underoccupancy but is about cutting people’s benefit.
Of course underoccupancy must be addressed. We agree with the Minister on that. Many councils have imaginative schemes to do so for the elderly, who are not affected by these regulations, as well as for working-age tenants. The DWP’s own impact assessment is clear that there is a mismatch between household size and the availability of suitable houses in the social sector for underoccupying claimants to downsize to. The NAO’s report reached the same conclusion, noting that there is a mismatch between need and availability. Modelling by the National Housing Federation found that while 180,000 social tenants in England are underoccupying two-bedroom houses, only 85,000 one-bedroom social homes became available for letting in 2011-12. It concludes that the lack of mobility in the sector is not a product of tenants needlessly underoccupying larger homes but rather of the logjam created by a national shortage of affordable homes.
What choices do tenants have if they are to avoid the benefit hit? The Government say that they can make up the shortfall by using their other income or their savings, which is the same argument we heard in relation to the benefit cap. Is this really living in the real world? What level of savings do the Government think these families may have? An alternative is that tenants can move into work or work longer hours. This is notwithstanding that many are not, under the stringent rules that apply to conditionality, required to be available for or seeking work. For those who are, it presupposes that they are not already trying to, that the current claimant obligations are somehow deficient and that the level of support available via the work programme is not helping them. As for taking in a lodger, for many, this will be an unworkable and unreasonable option putting the safety and privacy of the family at risk.
The alternative is to take the hit or move to accommodation that better suits the current size of the household, assuming that it is a stable size. But where? It is not very likely in the social rented sector, where there is not only a shortage of supply but, as has been identified, a dearth of one and two-bedroom properties. A move to the private rented sector would inevitably lead to higher rents and higher benefits. There would be no certainty of that being cancelled out, as I think the Minister suggested, by a move in the opposite direction to a cheaper area, but given the allocation policies of local authorities, that is likely to be only in the private rented sector.
The Housing Futures Network found that 50% of claimants would not be likely to move home when they were faced with a cut. Over one-third considered that they would be likely to run into arrears, so we have a certain recipe for driving the poor into greater poverty and debt. We have seen the now-familiar tactic of the bit extra in the discretionary housing payment fund each year, albeit funded by bumping up the percentage reductions for underoccupancy. While this will undoubtedly give some help where the properties of disabled claimants have been subject to significant adaptations and to foster carers between placements, it should be compared with the annual cut of half a billion pounds that the Treasury is seeking.
A review of the consequences of this is right, but it will not help with the misery that these provisions will cause in the mean time. The discretionary housing payment fund has a fixed budget and is having to cover an increasing range of circumstances, as we discussed on the benefit cap when my noble friend Lady Lister referred to it as “the loaves and fishes” concept. We challenge whether it is an appropriate or sufficient method to deal with disability issues. The DWP’s equality impact assessment shows the disproportionate effect the size criteria measure will have on the 420,000 sick and disabled tenants. An additional £25 million of discretionary housing payment for tenants whose homes have been adapted will undoubtedly be challenged as being insufficient mitigation, and rightly so. It is not a reliable safeguard against rent arrears, evictions and homelessness for chronically sick and disabled tenants.
True to form, the Government seek to offer some justification for this approach by juxtaposition with some other group, in this case, those in the private rented sector. As we have heard, the argument goes that private rented sector claimants receive housing benefit for accommodation based on the reasonable needs of their household, while in the social rented sector, it is based on the accommodation that they occupy. This is not comparing like with like. The nature of the tenancies is different and, in any event, when tenants are first placed in accommodation in the social rented sector, it would typically have regard to the size of the family. The reality is that household composition and need can change over time. The changes may not be permanent. Families grow with children and reduce as children fly the nest. The logic of underoccupation provision is that each change should drive a change of home; what a nonsense. It is a back-door way of undermining security of tenure in the social rented sector.
The National Housing Federation is deeply concerned that no flexibility has been given to social rented sector landlords to define whether a property is underoccupied. For example, if a home has a double bedroom and two box rooms, according to the regulations it would be underoccupied if a couple and two children were living in it, despite the reality being that the home is fully used. If the landlord reclassifies the property as a two-bedroom unit, it would lose money, which simply does not seem right. This is just another anomaly of the system.
This is a grotesque experiment in behavioural economics. The department has no idea how tenants will react, and the Government do not seem to care. Indeed, they hope that tenants will sit tight and take the hit because that way the Treasury maximises its saving. It is a callous piece of public policy that will put people into debt, drive increased homelessness and fracture communities, and we should have none of it. I beg to move.
Baroness Turner of Camden
My Lords, I rise to support my noble friend in his amendment. I agree with him fully that the new regulations before us are unfair to vulnerable people. They are being introduced at a time of a housing crisis that is particularly acute in places such as London. The situation in London is that rents are too high and wages are too low. The right to buy was fine for some, but it reduced the number of social homes available for rent. The social homes should have been replaced but, of course, that did not happen. Now local authorities are already looking to acquire premises for alternative social housing, often on sites very many miles away from where the individuals concerned are actually living and where they have some sort of support. This would be particularly difficult for people who are disabled, for disabled people require the support services that are often where they happen to live. It is quite unfair that they should be placed in the position of having to worry about future housing.
As far as London is concerned, my own neighbourhood has a particularly acute situation. When I first moved to West Hampstead, the area in which I now live, it adjoined Kilburn and was never regarded as a very posh area. Unfortunately that is no longer the case. The rents now being charged are absolutely enormous, and I do not understand how ordinary working people can be expected to afford them. It is quite common for large houses to be converted into one-bedroom flats, and the landlords charge as much as £500 a week for a one-bedroom flat. That is the kind of area and range of accommodation that is available in the area, and I do not see how working people on very low incomes can possibly afford it.
As for underoccupancy, quite frankly domestic circumstances for people change. Children move away; sometimes, nowadays, they move back because they cannot find anywhere to live. There are people who require support because they are ill. Sometimes they die. Domestically the whole situation changes for people, and it is unfortunate that they should be placed in the position of worrying, every time there is a domestic change, about what is going to happen to their living accommodation. It really is quite unsatisfactory.
As for general housing, I well remember what the situation was like at the end of the war—I am old enough to remember that. There was an acute social housing crisis because a lot of London had been bombed and there was no accommodation available. So what did the then Labour Government and the subsequent Governments do at that time? They had a very bold policy of social housing that was radically put up; we used to call these houses prefabs, and some of them are still in existence. There was a set of regulations that involved rent tribunals. In those days, if you were overcharged, you could go to a rent tribunal and your rent would be reduced. That meant that you could go on living in your accommodation. If you were concerned about it, the rent tribunal had the final say about what the rent should be. That meant that your rent had some relationship to the general level of wages, and therefore people were able to go on living in their homes because they had legislation to support them.
The Lord Bishop of Norwich
My Lords, there is a logic, if a rather cold one, in suggesting that those on housing benefit should not be supported from the public purse if they live in homes larger than they need. However, as we have already heard, it is the lack of availability of alternative accommodation in reasonable proximity that may make this proposal so socially disruptive and prompts me to support this amendment.
If, as we are told, 660,000 households will be affected, a great many people might be on the move. A couple in middle life whose children have left home would be entitled to only one bedroom, although they may have lived in their rented home for many years. There would be no room for an adult child to return after a failed relationship, which then creates a greater burden on much-needed housing. It would be tough on those in their 50s in this situation when their pensioner neighbours would be excluded from the reach of this regulation. Households such as this will be given a stark choice: move to a smaller home or take a substantial cut in housing benefit—on average, £14 a week. Housing associations are telling us that even if people want to move, there is not sufficient housing stock of the right size to enable them to do so. In practice, tenants will mostly have no choice but to remain in their own home and cover the shortfall out of their other income; this on top of reductions in council tax benefit and rising fuel prices.
A significant proportion of those who will be affected have become single because of the breakdown of relationships and, in many cases, the removal of their children elsewhere. They want to see them regularly. What looks like unoccupied space in the house is very important to them. Many single people rely on the local social networks that they have built over the years. That is where they find such stability as they can. A job, even a poorly paid, part-time one, may be lost and not replaced. Depression may set in. Alcohol or drug abuse may compensate for loneliness. Social disruption has economic consequences. While the housing budget may reduce, other budgets may rise. Worst of all, those affected may think that they are not treated as being of much value in our society. A loss of human dignity has a great many social and spiritual consequences. We save a bit of money, perhaps, but we are a lot worse off in all sorts of other ways.
What concerns me is that that will not be simply an urban problem. In rural areas the possibilities of alternative accommodation are even scarcer, the disruption greater, and the harm to diverse social networks larger. The Christian charity Housing Justice estimates that between 25% and 30% of rural social housing tenants will be affected.
One reason why rural deprivation is so hidden in our small villages, hamlets and settlements is that they often have the very wealthy, the vulnerable and those living on benefits living in close proximity, even in small numbers. That is one of the reasons why rural England is comparatively socially healthy. People in rural areas often cope with smaller incomes than their urban counterparts, while the cost of rural living is actually higher. They live more simply, even if their accommodation is a bit larger than seems logical to someone devising a system in a government department. It would be a tragedy to undermine all this, and I believe that the potential cost to our social fabric, especially in rural areas, could be very large indeed.
Baroness Lister of Burtersett
My Lords, we have heard some powerful speeches in support of the amendment. I take us back to the debate in Grand Committee on 15 October and what the Minister had to say:
“A lot of people will decide that they will have enough money or that they will be able to take in a lodger or take extra work. Those are the kind of decisions that we expect to happen in the marketplace”.—[Official Report, 15/10/12; col. GC 485.]
How many of us think of our homes as the marketplace or the decisions that we make around our homes as market decisions? We are not just talking about bricks and mortar; we are talking about the homes that people live in and the local roots that nourish them. The Minister made it sound so simple, saying that people will decide whether they have “enough money”; we are talking by definition about people on a low income, as my noble friend Lord McKenzie said. Or, the Minister says, they can “take in a lodger”; my noble friend has explained why that is not always appropriate. Or, the Minister says, they can find “extra work”; that is not so easy, either to get a job or increase one’s hours.
According to the National Audit Office report, one-third of households surveyed by Housing Future expect to fall into arrears as a result of this policy. According to Citizens Advice, other debts are likely to increase because, initially at least, people will try to prioritise their rent. Yet the Minister made no mention of debt or arrears as a likely solution, if that is a solution, even though debt is identified by the Government as a primary cause of poverty. One thing that we discussed in Grand Committee was the disproportionate impact of this policy on disabled people. There is evidence about the particular effects on disabled people of debt, and how debt can itself create mental health problems.
I come back to a point that I made earlier, and I have made before. I know that I probably sound like a broken record, but I refer to the impact on social networks when people move as a result of this policy—to people’s lives and to their being able to find work. Often lone mothers can use those networks for childcare, and so forth. The Minister mentioned the evaluation that will take place, which I welcome. In our last gasp, when we were discussing the then Welfare Reform Bill and this provision, the Minister committed that the monitoring would include the impact on social networks. In every subsequent reference that I have seen to that monitoring, I have not seen a mention of that, so I would be very grateful if the Minister could recommit this evening that that monitoring will include the impact on social networks.
On discretionary housing payments, I will not labour the loaves and fishes point any further, but I would instead like to quote from the National Audit Office report that came out last week, which says:
“It is not clear how the current level of funding for Discretionary Housing Payments has been determined or whether it is likely to be sufficient for local authorities in tackling the impacts of reforms. The £390 million of funding over the Spending Review period represents around six per cent of the total £6.4 billion savings expected from Housing Benefit reforms during this period. This works out at around £200 per household affected … There is also no established process for reviewing the level of funding for Discretionary Housing Payments over time. For example there is no mechanism to assess whether the overall funding amount should change to reflect higher claimant numbers. Uncertainty about the basis for future funding in part reflects the fact that the Department is still reviewing how to provide support for housing as a result of broader welfare reforms … Monitoring of how payments are made by local authorities would improve the Department’s understanding of local need. At the moment monitoring is limited”.
I would be grateful if the Minister could tell your Lordships’ House what the department’s response is to those observations from the National Audit Office.
Letters have already been going out to people who are likely to be affected by this policy, and it is striking fear into their hearts. It is a mean-minded policy that shows scant concern for the lives of those affected—and, as the right reverend Prelate put it, shows no concern for the dignity of those affected. Human dignity is at the heart of human rights.
Lord Best
My Lords, the noble Lord, Lord McKenzie, attributes the phrase “bedroom tax” to me, so I take responsibility for this—because it is a tax. It is not about trying to ensure that people are allocated to the property that best suits their needs; it is about raising money and reducing the deficit. We all understand about deficit reduction. Where we differ on this is whether people on the lowest incomes should be contributing to that deficit reduction with what is in effect a tax. It is a payment, which the tenant makes out of their benefits—out of the other benefits they receive, such as disability living allowance, income support or child benefits. It goes to government; that is where the payment ends up, and it reduces the deficit. That is a perfectly valid objective, but I and others maintain that it should not be at the expense of people who are living on the very lowest incomes at present.
The noble Baroness, Lady Turner, attributed the underlying problem to the shortage of accommodation, which then means that rents are much higher than one would hope and expect that they should be. It is not the fault of the occupier that they pay a large rent. We say that it is a disgrace that people are paying these enormous rents, but it is not that people wish to pay large sums in rent; that is what the market has determined. It is very different in London, as the noble Baroness pointed out, as it is in so many other places.
I am collecting examples of people who have written to me with their own cases. One after another, they are cases in which any reasonable person would say, “In that particular case, it seems very unfair for people to have to pay a new tax that they didn’t pay before—in that case, I agree that there should not be this tax to be paid”. One such case I can cite comes from the diocese of the right reverend Prelate the Bishop of Norwich. I agreed very much with his words. I apologise to the Minister for repeating the content of an e-mail that I mentioned in Grand Committee, but it is such a typical case. The lady has lived 23 years in her council house and now it contains herself and her husband. It has three bedrooms. They have actually done quite a bit of work to the House; the garden is immaculate—this is their home. But it is a tax, and they will face a bedroom tax of £25 a week unless they can move out. They have been told that there is a place in another Norfolk town. It is 16 miles from where they live, but there will be a place there in due course. It is not available at the moment, but in due course they will be able to get a one-bedroom flat. The absolute last thing that they want to do is to leave the family home where they have been for 23 years, where their children still come back at Christmas and on other occasions, and where she has a base to look after her mother in the village. It will cost the social services an arm and a leg to have to send in carers to look after mum. At the moment she goes in three times a day: once in the morning, briefly at lunchtime, and once in the evening. She will not be there to do that once she has moved away to the town. This is all ridiculous, and anyone would say, “Look, in that case don’t charge them the tax. Leave them where they are”. Anybody can see that that is the sensible thing to do. However, it will be extremely difficult to make those special cases, and to find the resource that will bridge the gap in their rent in those cases.
Lord Smith of Leigh
My Lords, I rise to support my noble friend’s amendments, and express my concern about the impact of this bedroom tax. Before I do so, I declare my interest as leader of Wigan council. I will provide some hard evidence from Wigan about the impact that this would have in Wigan. In terms of council properties in Wigan, some 4,708 properties will be subject to the potential for a bedroom tax: 3,600 of the one-bedroom and over, and just over a thousand of the two-bedroom. In the private sector a further 300 houses will be affected. The financial implications, if the bedroom tax was paid on council properties, would be £2.9 million—an average of between £9 and £29 a week, depending on the property, and a further £250,000 in the private sector.
In introducing the measure, the Minister raised two factors which he said supported this. First, it would help to reduce the cost of the housing benefit budget, and secondly, it would tackle overcrowding. He could have added a third, which he sometimes uses: encouraging return to work. I could not deny those objectives, which many of us would share, but we are saying that this tax will not achieve any of those objectives. Cost reduction will only occur, of course, if tenants do not move, and pay the costs. If they move—and the evidence is that some will do so—different things will happen. I can give the example of a current case in Wigan. A mother aged 51 shares a three-bedroom property with her 26 year-old son. If they choose to move into the private sector, as they have indicated they want to do, they will look for separate properties: the mother for a one-bedroomed flat, and the son probably for a bedsit. In Wigan, the average three-bedroomed council house rent is £74 a week; for a one-bedroomed private sector property it would be £89 a week; and for a bedsit probably a further £75. Rather than saving housing benefit, therefore, the Government would be paying £5,406 more for that particular family, if they choose.
The second issue is about overcrowding. In a letter to one of my local MPs, the Minister said,
“The Government only expect a minority of claimants affected would actually seek to move”.
If that is the case—if very few people move—then how will that help overcrowding? If they are still in the same place, then it will not help overcrowding. The message from my noble friend Lady Turner of Camden was very powerful. She explained the London housing market, but it is not like that in Wigan. The problem is that people will not move because of the lack of suitable properties to move into. An insufficient number of affordable houses has been built in this country by a succession of Governments. We are now beginning to pay the price for that. The current waiting list for a one-bedroom or two-bedroom property in Wigan is five years, so people cannot move into these properties even if they wanted to. We have no shortage of three-bedroom properties in Wigan. You can move into a three-bedroom property more or less straight away. Therefore, there is a geographical imbalance in housing markets and the flat rate bedroom tax will not work. According to the Department for Work and Pensions’ own figures, 42% of families in the north-west of England will be liable for the bedroom tax but only 22% in London and the south-east, so clearly the measure is having a bigger impact on the markets that do not need it.
The third issue is about seeking employment. There are at least four jobseekers for every vacancy in Wigan, and that probably understates the number of people looking for work, so the people we are discussing will be in a very crowded job market. The consequences of this measure are not what the Government think they will be; there will be unintended consequences. Noble Lords have mentioned the impact on rent arrears. I believe the Cambridge study claims that 42% of people may fall into rent arrears. In Wigan that would mean just under 2,000 families getting into arrears. Substantial arrears would lead to a commencement of the legal process. Whether we like it or not, there will be evictions, which cost around £6,000 each. These people will probably largely move out of the public sector into the private rented sector and the cost of housing benefit will rise.
Noble Lords have mentioned the impact that the measure would have on incomes. By definition, people who receive housing benefit are on low incomes. Therefore, if the bedroom tax is introduced on top of all the other things that are to be introduced, poverty will inevitably escalate. As I said when we discussed the Local Government Finance Bill, the likes of Wonga.com and all the other payday lenders will rub their hands at the thought of more and more clients coming their way, seeking to get themselves out of a crisis only to get into a much deeper one. As the right reverend Prelate the Bishop of Norwich indicated, we want families to stay together and fathers to take responsibility for their children, but this tax negates the Government’s claim to be a family-friendly Government.
I am not sure whether people in Wigan would take in lodgers but I certainly remember that when I joined the council some time ago one of the big issues we had to deal with was that of houses in multiple occupation, such as terraced properties that were taken over by a landlord who let every available space to different tenants. Those properties had inadequate kitchen and bathroom facilities and constituted fire and health hazards. They were terrible and the council largely got rid of them. However, I can see these types of properties appearing again in the current situation because people will not be able to afford anything better.
During debates on the Local Government Finance Bill we discussed the single person discount which reduces the amount of council tax payable by individuals living alone. Clearly, that constitutes underoccupation as regards most properties in Britain. It is somewhat ironic that we are keeping the single person discount as a council tax benefit but if you are renting a council house such underoccupation will result in you being charged the bedroom tax. This is an unsafe tax. As I say, I do not disagree with the Government’s objectives but I do not think that this tax will achieve them. I think we will find that it leads to an increase in housing benefit rather than a reduction and increases poverty in this country.
Lord German
My Lords, I apologise to your Lordships’ House for missing the first few minutes of this debate. I was involved in another debate in the Moses Room at the time and it was difficult to shift sufficiently speedily between that Room and the Chamber.
I can well understand why many noble Lords want to reprise our lengthy debates on the Welfare Reform Bill. I also understand why people still have major concerns in this area. I do not think that any noble Lord present would say that these changes will be easy to accommodate. Difficult decisions will have to be made. As we all know, the changes are intended to relieve some of the strain on the housing benefit budget. However, the only fair element is that the benefit we are discussing will be brought into line with the local housing allowance.
Some noble Lords share my concern about the future of housebuilding. As the noble Lord, Lord Smith of Leigh, said, the previous Government did not meet housing demand. I only hope that the present Government will be able to build extremely quickly the number of houses that are needed to cope with society’s demand for them. We await action as regards achieving the number of houses that are needed.
There are two major concerns about the way these regulations will be implemented. The first is the ability of the housing stock to adapt and provide accommodation of the size needed in each area in order to allow those who wish to move to a different sized property to do so. The second issue relates to the changes affecting specific groups of people. I would like to ask some questions in relation to both those issues. I preface my remarks with mention of behavioural change. I have heard it said frequently in your Lordships’ House and in Committee that people’s behaviour in this area is of the worst kind. However, people do not always behave in a way that leads to the worst outcome for them. Some people behave differently.
There are two key issues I would like to ask questions about. My first question to my noble friend is: what assessment has the Department for Work and Pensions made, given the contact it now has had with people who will be affected by this measure, about the likely outcomes and the directions people will take as a result of what is happening? There undoubtedly will be, of course, some people who will wish to move. The issue then is the ability of the housing stock to be adapted very swiftly. Can my noble friend tell us what discussions there have been with housing associations, local authorities and private landlords to see whether adaptations can be made for people to move, probably into smaller properties, where house building has moved onto larger properties? Where are we in readiness for the sort of behavioural changes? I hope my noble friend the Minister can tell us.
I also wanted to ask about the £30 million of DHP—the £25 million for adapted properties and the £5 million for foster carers. This was an issue we pursued at some length during the course of the passage of the Welfare Reform Act. This was a very welcome area but I would like to really understand the Government’s dynamic on adapted properties. Will £25 million be provided over a longer period and what assessment has been made of the need for that length of time? Will £25 million be sufficient to cope with what it is thought will be the behavioural arrangements for people who live in adapted property where it would make no sense whatever for them to be moved on?
The second area I would like to investigate is rurality and rural housing, mentioned by the right reverend Prelate the Bishop of Norwich. Having spent some considerable time as an elected Member trying to get more social housing into rural communities, I do not underestimate the difficulties there have been in building social housing in rural communities. It is very much more difficult if people want to move to have to move away from a rural community into a quite different environment altogether. What estimate has my noble friend the Minister made of the demand and the pressures there will be on rural housing? Has he taken into account the community shift that would have to take place given the shortage of accommodation in rural areas and often the very high price of private sector rented accommodation there?
I also want to examine the issue of redesignation of properties. This is also one of the approaches that some housing associations are looking at. For example is a bedroom really a study or is a partition wall not really a partition wall? Have there been any discussions with housing associations and social landlords about the role and about designation, and about who has the authority to redesignate housing in this area? There is undoubtedly some scope for action for here. There is no national register of what is a room size. It would very difficult and probably a bureaucratic nightmare to try to create such a reference document. However, is it possible to look at the way in which housing associations can define their property differently where the circumstances provide and who would have the authority to undertake the redesignation, which may take some of the pressure off the ability to find appropriate housing? I do not envy the job of the Government and my noble friend the Minister in undertaking this obviously difficult task and I would be grateful if he could give me some answers to those questions.
Lord Freud
My Lords, this has been a powerful debate and I will do my best to answer the questions. We dealt with an enormous number of questions in Grand Committee and so, rather than me going on for a very long time, I would like to suggest that I confine my responses to the new issues that I have not already dealt with and then leave my responses on the other matters that are on the record in Hansard.
The noble Lord, Lord McKenzie, referred to the NAO report and to 2 million households receiving lower benefits. That assumes that claimants will not adjust their behaviour by doing the things that we are hoping they will do, such as taking on work, moving to more affordable or more appropriate accommodation, and so on. We are beginning to see evidence from local housing associations that with the change from 50% to 30% people are changing their behaviour.
As regards the point about the pressure on the supply of affordable housing, the early signs from the LHA are that there is no discernable impact on the levels of homelessness, which have remained steady. The housing benefit claims from people renting in the private rented sector are increasing, which suggests that people are able to find affordable accommodation.
The noble Baroness, Lady Lister, referred to the NAO report and to its observations on the monitoring of discretionary housing payments. We are currently considering the recommendations in the report and will look at how feasible it is to monitor the way that DHPs are used.
I have dealt with the point raised by the noble Lords, Lord McKenzie and Lord Smith, about movements. There are movements of people from underoccupied homes, presumably to smaller homes, which will allow larger families, if they are being supported in the private sector, to have cheaper accommodation and gain from making that exchange.
As regards the issue of room sizes, raised by the noble Lords, Lord McKenzie and Lord Best, and whether there should be an adjustment for single bedrooms, we wanted to keep the system simple and did not want to introduce something that might require landlords to go around measuring rooms. Indeed, the stakeholders, including the National Housing Federation, have welcomed that. It is therefore up to landlords and tenants to decide between them whether a property is appropriate for their needs.
When it comes to designation of what exactly constitutes a property, it is up to landlords to take that decision. They are unlikely to do that on a wholesale basis, but there will be individual properties where it makes sense for landlords to redesignate them as not being appropriate. There may be an individual property for which it is straightforward to do that. To be honest, we are not expecting there to be a massive effect, but there may be some instances of that.
The noble Baroness, Lady Turner, asked about temporary changes of circumstances. There are housing benefit rules to protect households from either temporary absence, such as going into hospital or being on remand, or where the death of a member of the household would result in the reduction of housing benefit. For example, housing benefit provides up to 12 months’ protection from rent restrictions if there is a bereavement in the family.
The right reverend Prelate the Bishop of Norwich asked about non-resident children. Where the tenant has non-resident children, housing benefit may already be paying for a room for the child or children in the place where they usually reside. It would be double provision potentially to fund an additional room in both parents’ properties.
The issue of rural impact was raised by the right reverend Prelate and my noble friend Lord German. The use of the percentage reduction, rather than a flat rate, means that the impact, because it is proportionate, is likely to be lower because rents are likely to be less in rural areas. On the specific question asked by my noble friend Lord German on the approximate amounts, roughly 10% of the impact is likely to be seen in rural areas.
As to my noble friend’s question on what evidence we have received so far, the responses by local authorities and housing associations indicate that there is a lot of activity—whether you are talking about the West Midlands making best use of a stock partnership that brings together seven local authorities and 11 housing associations in finding people the right number of bedrooms, speed dating in the London Borough of Southwark, or the Stockport homes initiative to look for joint tenancies. Indeed, Wigan Council, the council of the noble Lord, Lord Smith of Leigh, and Wigan CAB have developed Wigan Housing Solutions, which acts as a social lettings agency and is a natural progression from the existing bond-guarantee scheme. It is a bridge between the private and social sectors, with Wigan Housing Solutions helping to relieve pressure on the housing waiting list. There is a lot of activity.
Lord McKenzie of Luton
My Lords, I start by thanking all noble Lords who spoke in the debate, particularly those who spoke in support of my amendment. I think that that was all noble Lords apart from—not surprisingly—the Minister, with perhaps a degree of equivocation from his noble friend on the LibDem Benches.
My noble friend Lady Turner spoke movingly about how the measures were unfair to vulnerable people—we heard about the London experience in particular—and about the impact of the right to buy scheme, about which we all too readily forget. The right reverend Prelate the Bishop of Norwich spoke about the changes that take place in family groups over time. He and a number of other noble Lords acknowledged that there is insufficient housing stock. He spoke in particular about the rural dimension and the cost to the social fabric of disrupting the current arrangements.
My noble friend Lady Lister, as ever, spoke movingly, in particular on the point that homes should not be treated as a marketplace; that is not how we should view things. The impact of social networks was a strong theme that she rightly continues to pursue.
My noble friend Lord Smith told us about his practical experience of how these things are playing out in the area for which he has responsibility; about the problems arising from the lack of suitable alternative accommodation; and about the impact on rent arrears. He also gave us some history about HMOs and the drive to get rid of them in the past.
The noble Lord, Lord Best, confirmed our view that this is about raising money, not tackling underoccupation. The noble Lord made the point that it is not the fault of occupiers that they have to pay higher rents; it is the fault of the market. He spoke in particular about the significance of all this to housing associations, which effectively will have to collect the tax, about what it means to their finances, and about how potentially it could restrict the role that they can play and have played in the big society.
The noble Lord, Lord Freud, talked about the NAO figures and said that they did not assume behavioural change. I accept that, but it is exactly the basis on which the Government have costed the savings that they hope to achieve. He said that homelessness appeared to be steady under the current statistics. The reality is that the big impact of the changes that are coming is just about to start. The underoccupation rule will come into effect in April, along with the benefit cap. These will be the big drivers of change and concern, driving people into debt and homelessness. That is yet to come—a point made by the noble Lord, Lord Best.
The Minister said that he was unhappy to see the amendment before us tonight. I certainly do not propose to press it, because it would not change anything. The points that noble Lords raised are already on the record, or will be as a result of this debate. I do not promise the noble Lord that he has seen the last of this. We feel very strongly that the contributions in the Chamber tonight focused predominantly on the problems that the legislation will create. We are getting closer to them as the regulations come towards implementation. I have no doubt that we will have to return to the matter again and again in the hope that we can persuade the Government to change course. The circumstances that will arise when the regulations come into effect will help the Government realise how draconian, unfair and unjust their provisions are. In the mean time, I beg leave to withdraw the amendment.
Financial Services Bill
(12 years ago)
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Lord Eatwell
Lord Eatwell
My Lords, noble Lords will notice that this group includes Amendments 6M and 6Q. I apologise to the House for not moving those amendments at the appropriate time, but as noble Lords may recall, there was considerable confusion between the Deputy Chairman and the clerks and everyone here. The noble Lord, Lord Sassoon, was not confused. He never is. But in the confusion I inadvertently failed to move these amendments. I also apologise that at that time I failed to support the noble Baroness, Lady Noakes, when she presented her arguments for Amendment 7, which I wholeheartedly support, as indicated by the fact that I added my name to hers. With the leave of the House, I will proceed with the remaining amendments in group 19, namely Amendments 7A, 7B and 7C.
The purpose of this group of amendments is to ensure that there is regular consultation between the Treasury and the FPC over the FPC’s directions and its recommendations. Leaving aside—since the time has passed—the question of directions, even though they are more important, Amendments 7A, 7B and 7C serve to emphasise the interest that we all have in requiring that regular consultation takes place. The idea is simply that in making a recommendation the FPC would have a discussion with the Treasury about that to ensure that both sides are, if you like, singing from the same hymn sheet.
This is part of the endeavour that we have on this side of the House to ensure that the whole development of the financial stability analysis, the financial stability strategy and the financial stability actions is co-ordinated effectively between the FPC and the Bank as a whole—whether Bank means court or Bank or whatever—and the Treasury. I beg to move.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, this group of amendments seeks to require the FPC to consult with the Treasury before issuing a recommendation, directing the PRA or FCA to take action or revoking an existing direction. I am certain that not only are these amendments unnecessary, they would damage the independence of the FPC.
As I am sure noble Lords are aware, the Bill provides for a non-voting representative of the Treasury to be a member of the FPC. This Treasury representative will be able to ensure that the views of the Treasury are available to the committee if required. This renders these amendments unnecessary.
Let me explain why, more seriously, I feel that the amendments could be harmful to the work of the FPC. The Government have drafted the Bill so that the FPC will be housed within the independent Bank of England. It is paramount that macroprudential policy decisions are insulated from political considerations. The purpose of the FPC is to “take the punchbowl away” when the party is getting too raucous, something that politicians of any affiliation may be reluctant to do.
By insulating the decisions of the FPC from political considerations, it will be much easier for the committee to be a credible and effective policy-making body. The amendments would risk that credibility by requiring the FPC to consult the Treasury before it makes any policy decision. For that combination of reasons, I ask the noble Lord to withdraw his amendment.
Lord Eatwell
My Lords, the noble Lord has left me somewhat puzzled with his final point. First, as he is well aware, consultation does not necessarily mean acceptance of any argument or the idea that there should be any direct influence of the Treasury on the FPC. All we are trying to do is to ensure that there is effective communication. As I noted earlier, the Minister has in the past raised the fact that communication between the Bank and the Treasury has been very poor. There are other issues about the lack of communication which will be raised on Report.
The Minister says that somehow consultation between the Treasury and the FPC would endanger the credibility of the FPC and of the macroprudential strategy. Yet earlier it was argued that under the common law, as he put it, the Treasury may at any time make recommendations on the provisions of the Bank’s financial strategy. Is the Treasury involved or not? Surely recommendations and discussion are very valuable at all times, but that does not in any way limit independence. Perhaps the failure of the Bank and the Treasury to communicate, which the Minister has referred to in the past, arose from a mistaken idea that independence means non-communication. It does not; communication is important to the development of coherent policy. If he is saying that consultation would undermine independence, this is a very serious matter for an area of macroeconomic policy with which the financial stability strategy and the Financial Policy Committee, as its agent, will be intimately involved.
I find the Minister’s remarks very disturbing indeed. They suggest a fundamental misunderstanding of the way in which we can take forward constructive developments in this novel and important area of economic policy. It is a matter to which we may have to return but for the moment I beg leave to withdraw the amendment.
Lord Eatwell
Lord Eatwell
My Lords, this amendment refers to an oddity in the drafting of new Section 9T(1)(a). The Bill requires the Financial Policy Committee to review each direction that it makes over the relevant period, which is 12 months, other than,
“a direction revoked before the end of the review period”.
I do not understand this business about leaving out directions revoked before the end of the review period. Suppose the direction has been a great success but was enforced for only 11 months. Or suppose the direction was a great failure but lasted for only 11 months. Should not these directions be reviewed? Can lessons not be drawn from them just as much as from directions which are in force for 12 months? Why would you have a direction that has been revoked from which we are not allowed to draw lessons but a direction that has been kept in place from which we are? This is too limiting in a novel area of economic policy from which we should seek to get all the information and draw as many lessons as we possibly can, whether or not a direction has been revoked within the relevant period. I beg to move.
Baroness Noakes
My Lords, what the noble Lord, Lord Eatwell, has said is entirely sensible. I cannot see the distinction between those directions which have been made and continue in force and those which have been made and revoked. This is about public communication, the directions being made and their effect. The information that we gain from a revocation must be at least as good as from the making of a direction.
Lord Sassoon
My Lords, the amendment reflects a slight misunderstanding of the purpose of the reviews that we are talking about in new Section 9T of the Bank of England Act, as inserted by Clause 4. The purpose of these reviews centres around live actions and requiring the FPC regularly to look again at all live actions—in other words, at the directions and recommendations that still have effect—and to review whether or not the action is still needed. That is a rather different matter from the admittedly important question of reviewing past actions and learning lessons, which is not the subject of the clause.
The idea behind the new section is to ensure that FPC actions do not remain in place if the circumstances which originally merited them have disappeared or changed substantially. Of course, we would expect the FPC as a matter of course to keep its past actions under review and revoke them once they are no longer needed, but new Section 9T ensures that this will be the case by creating a formal requirement for the FPC to review regularly all of its live directions and recommendations.
Amendment 7D seeks to remove the wording in subsection (1)(a) which provides that the FPC need not review directions that have already been revoked. The provision is appropriate because once a direction has been revoked there is no need for the FPC to review it to determine whether it is still needed; the direction is already defunct. It is as simple as that.
The concern of the noble Lord, Lord Eatwell, lies clearly in the importance of the FPC evaluating the impact of its actions. I can reassure him that mechanisms already exist elsewhere in the clause to address this issue. First, new Section 9S requires the FPC to set out for each of its actions an explanation of its reasons for believing that the action is compatible with its objectives and associated “have regards”, including where practicable an estimate of the costs and benefits of the action. Secondly, subsection (4)(b) of new Section 9W requires the FPC to include in each financial stability report an assessment of how its actions have succeeded in achieving its objectives. Finally, the new oversight committee of the court has an explicit remit to oversee the FPC’s performance and can undertake or commission a more comprehensive review of the FPC’s past actions or approach where appropriate.
I am confident that the FPC’s actions are already subject to extensive mechanisms of oversight and evaluation and, as I said at the outset, that the amendment reflects, perhaps, a slight misunderstanding of what the purpose of the specific provisions in new Section 9T is all about. I hope that on the basis of that explanation the noble Lord will feel able to withdraw his amendment.
Lord Eatwell
My Lords, my immediate reaction is that if that is what the new section meant, why did it not say so? We persistently have a point where there is a lack of clarity in the Bill and, time and again, the noble Lord says, “That is what we said but it is not what we really meant”. It is truly unsatisfactory.
On the areas which he says cover the issues that I raised, proposed new Section 9S specifically refers, I think—although of course it may not mean this—to a prior explanation of specified purposes. It provides for an explanation of why the FPC is doing something, which seems to be a prior requirement, not an assessment of effect.
The Minister is on stronger ground on new Section 9W(4)(b), which refers to whether the functions of the FPC have succeeded, but it refers generally to its functions rather than to the specific issue in new Section 9T, which refers to the very sensitive and important area of directions.
There is another important point. It is quite possible that a direction would be introduced to deal with a particular set of circumstances and revoked because those circumstances have been mitigated, but then reintroduced some time later because the problem reappears. In those circumstances, all this stuff about live actions is irrelevant. We need to learn from both those actions that are contemporaneous and those that may be introduced from time to time to deal with specific circumstances. I really feel that this is a very unsatisfactory approach to the general issue of review.
I will keep talking so that the Minister can get his note and say why I have got it wrong; he has it now. The issue of keeping matters under review should include those matters that only last for a period within the relevant 12 months, as well as those that go forward. Shall I sit down? No, the Minister did not get a good reply in that note. This is an issue that I want people to think about: either the clause is badly drafted and not clear, or the amendment should be considered appropriate. However, for the moment I beg leave to withdraw the amendment.
Lord Eatwell
Lord Eatwell
I assure the House that this is going to stop soon. First, I draw attention to a drafting error in the amendment as tabled. It refers to the “Chairman of the PRA”, who is of course the Governor of the Bank of England, rather than the chief executive. The objective of the amendment is to widen the group who meet to assess the importance of the Financial Stability Report, a very important document that has been one of the most interesting and creative documents published by the Bank for some years, not least because of the major intellectual influence of the executive responsible for financial stability. Since the FCA and the PRA are the vehicles through which the FPC—I apologise, everything is just three letters—exercises its influence, it is important that informed discussion and assessment between the Treasury and the Bank should include the chief executives of those two bodies and not simply be between the governor and the Chancellor.
The amendments have the added advantage that, should we have a governor who wishes to delegate responsibilities in order to reduce the excessive load placed on his or her shoulders by this Bill, this would in no way reduce the value of the Bank-Treasury meeting and the quality of the assessment of the Financial Stability Report. It seems enormously valuable to have these two individuals—the chief executives of the FCA and PRA—there, because they are the people who implement the proposals of the Financial Policy Committee and will help in the general assessment of the Financial Stability Report. I beg to move.
Lord Sassoon
So it is chief executive. I am not sure whether I heard chairman or chief executive but it should have said, “Chief Executive of the PRA”.
In responding to Amendment 7E it may help if I explain the purpose of the meetings set out in new Section 9X of the 1998 Act. The success of the new regulatory structure will rely heavily on the relationship between the Treasury and the Bank of England. As has already been noted this evening, one of the major problems leading up to the financial crisis was that the tripartite committee established under the previous Government’s regime did not meet at the principals’ level for a decade. The Chancellor and the governor simply did not meet often enough to discuss financial stability. When the crisis hit—I am sorry the noble Lord, Lord Eatwell, thinks this is an amusing matter. Unfortunately, this was one of the most serious issues when it came to handling the crisis.
Lord Eatwell
I agree with the Minister. It is a terribly serious matter. When he adds the phrase “for a decade”, it is such desperately bad news that some degree of amusement is the only relief to the depression that one feels at the failure of this mechanism.
Lord Sassoon
Believe you me, I was on the standing committee of deputies for three years and I saw it at first hand. There we are—we understand the difficulty. At a personal level and in terms of institutional arrangements and practices, the absence of meetings clearly has a very significant impact when it comes to handling a crisis. However, everything is now different and as it should be. The Chancellor and the governor now meet often. Indeed, under the previous Government, once the crisis hit, of course that was also the case. But it was not always the case, as I have said, and as we understand. Without the requirement in new Section 9X, there would be no guarantee that the regular meetings would happen in the future, once the individuals concerned change and memories of the current crisis have faded.
New Section 9X therefore places a legal requirement on the Chancellor and the governor, in his capacity as chair of both the FPC and the PRA, to meet formally at least twice a year, shortly after the publication of the FPC’s twice-yearly Financial Stability Report. I agree that it is a truly creative, in the best sense of the word—which I am sure the noble Lord, Lord Eatwell, meant—and important document.
Of course, both the Chancellor and the governor may invite others to attend the meeting. For example, the Treasury’s Permanent Secretary or another senior official may attend. The Chancellor’s private secretary may also be in the room. On the Bank’s side, the governor may well choose to invite another deputy governor or the executive director responsible for financial stability to attend the meeting with him. However, I believe the approach taken in the Bill—for the legal requirement to meet to be on the Chancellor and governor only, leaving it up to each attendee to decide if others should be present—is the correct one. The governor will be best placed to decide, based on the content particularly of the Financial Stability Report and the wider financial stability context, which, if any, of his senior executives should attend the meeting.
If the chief executive of the PRA were required by statute to attend every meeting, surely there would be an argument for all the other senior Bank officials who had some responsibility for financial stability to also be added to the list. Equally, if the CEO of the FCA were required by legislation to attend every meeting, would there not be an equal argument for the external members of the FPC also to be required in the room? This could go off in all sorts of directions. A small, personal meeting between the Chancellor and governor could easily turn into a large committee if we were to take that approach.
This is an important opportunity to restate our common objective: to make sure that the principals meet. It should not be necessary to have such a meeting in legislation, but regrettably history has shown that it is. That is the purpose of the requirement, as a backstop for those meetings to happen, but it continues to be the Government’s view that the attendance of others should be left to the discretion of the principals. On the basis of that explanation I again ask the noble Lord to withdraw his amendment.
Lord Eatwell
Before the noble Lord sits down, perhaps we could probe the discretion of the principals a little. Supposing the governor wants to turn up alone and the Chancellor wishes the chief executive of the PRA to attend, would that be possible?
Lord Sassoon
That is not then a question of legislation but a question of common sense and how the parties get on with each other, and I am sure that common sense would prevail. For that sort of circumstance, no amount of legislation is going to get around people behaving sensibly. If we put a particular attendee or two into these meetings the same question arises about others who one side or the other might believe would be sensible to have at a particular meeting given the topics that might be under discussion. We have to rely on the good sense of the principals here.
Lord Eatwell
Yes, well, we hoped that we could rely on the good sense of the principals to run the Financial Stability Committee, but they did not meet for a decade so they were not very sensible, were they?
If I may respond to the noble Lord, I feel that his vision of the committee extending to indefinite size is really excessive. We are identifying the chairman of the Financial Policy Committee, namely the governor, and the two operational figures—the chief executive of the FCA and the chief executive of the PRA—to be in this meeting to assess the financial stability position in the light of the financial stability report. I think that would be valuable. I quite understand that others can be invited in but, as we have seen in the past, these matters are not necessarily as well handled as, in retrospect, we would like. I hope that this matter might be reconsidered in due course, but for the moment I beg leave to withdraw the amendment.
Lord Eatwell
“9ZZA Financial Stability Advisory Panel
(1) There will be a Financial Stability Advisory Panel.
(2) The membership of the Panel will be—
(a) the Deputy Governor for Financial Stability;(b) 6 members appointed by the Treasury, subject to approval by the Treasury Committee of the House of Commons; and the members appointed under paragraph (b) will be academics, members of staff of international organisations, practitioners, or others with particular skills in the analysis of systemic risk.
(3) The Financial Stability Advisory Panel will—
(a) provide written advice to the Financial Policy Committee concerning the analysis of systemic risk;(b) once a year prepare a report assessing the analysis of systemic risk by the Financial Policy Committee over the preceding 12 months (the first report to be twelve months after this section comes into force);(c) assess the effectiveness of measures prescribed under section 9K in the attainment of the financial stability objective of the Bank;(d) assess the effectiveness of directions and recommendations of the Financial Policy Committee under sections 9G and 9N in the attainment of the financial stability objective of the Bank;(e) prepare an annual report on matters referred to in section 9ZZA(3) to be presented by the Supervisory Board of the Bank, and subsequently published on the Bank website.”
Lord Eatwell
My Lords, Amendment 7F picks up an amendment that I moved in Committee and promised to return to on Report, concerning the establishment of a financial stability advisory panel.
I will not go through the whole argument of different forms of financial stability arrangements as between this country and the United States and so on, but I will deal with one central issue: we want people of very high quality advising and reflecting on financial stability issues. The appointed members of the Financial Policy Committee are crucial but there is going to be some difficulty in identifying them satisfactorily because there will be a number of conflicts of interest in the financial services industry that will be difficult to manage.
We can overcome that difficulty by creating an advisory panel that does not have powers, as such, to make decisions, but which can advise on a variety of areas, including the success of measures taken and general effectiveness, by presenting a report to the oversight committee—not the “Supervisory Board”, as mistakenly referred to in the amendment as printed on the Marshalled List. We could gather together a wider group of people who felt it to be their responsibility to follow carefully the actions of the Financial Policy Committee and to express their views even if they have significant conflicts of interest, because these could be taken into account in the assessment of their views. Of course, they are distanced from any actual decision-making, unlike the appointed members of the Financial Policy Committee, who are right at the heart of decision-making.
Given that we are dealing with an area of policy which, as I have said already this evening, is novel, we are going to encounter entirely new problems. We will probably make some mistakes. We want to be able to assess a very wide horizon of experience around the world, where the European Union, the United States and other major jurisdictions are introducing financial stability committees of one sort and another to deal with the issue of macroprudential regulation. An advisory committee could be a valuable supplement to the information and assessment to which the Bank and its committees have access. I beg to move.
Baroness Noakes
My Lords, we do not need to hardwire this into legislation. If the FPC thinks that it needs some form of advice from other parties in relation to most of the matters mentioned in subsection (3) of the amendment of the noble Lord, Lord Eatwell, it can arrange it. Similarly, if the oversight committee thinks that it needs any assistance from outside parties in relation to matters mentioned in paragraph (e) of subsection (3) of the amendment of the noble Lord, Lord Eatwell, it can arrange it. I do not see why these matters need to be enshrined in law. If there are gaps within the resources available to the Bank, it can supplement them, or it may have them sufficiently internally. The statute does not need to deal with these matters.
Lord Sassoon
I completely agree with my noble friend Lady Noakes. This amendment was debated in Committee, as the noble Lord, Lord Eatwell says. The gremlins seem to have been getting into one or two of these amendments. He has already pointed out that this has been retabled in the previous form that it was in and should refer to the oversight committee and not the supervisory panel.
Putting that aside, the nub of this is that I am puzzled and disappointed that the noble Lord, Lord Eatwell, does not agree that the oversight committee that we have already created will have responsibility for carrying out the function of performance evaluation referred to in this amendment, and that the oversight committee will have a wider-reaching role looking over the entirety of the Bank’s financial stability remit. That is surely better than an advisory panel with rather limited and specific terms of reference.
I am also disappointed that the noble Lord, Lord Eatwell, feels that an independent oversight committee led by non-executives would be either inadequate or insufficient to hold the Bank to account. I cannot see how it is better to create a committee chaired by an executive of the Bank who would simultaneously be a member of the FPC, responsible for providing advice to the FPC and expected to assess its performance.
Of course, the Bill already creates in the FPC a committee on which the deputy governor for financial stability sits, together with external members, some of whom may indeed be academics. As we have discussed before, there is plenty of provision for either the FPC or the oversight committee to take on any additional expert, academic or other advice that it requires at any point. The FPC will have a statutory responsibility to assess risks to financial stability and to take action to mitigate them. If it wants to take advice it is entirely able to do so, but it should have the autonomy to do so on its own terms if it is to be properly responsible for financial stability.
In conclusion, the effect of the amendment of the noble Lord, Lord Eatwell, would be to create duplication of responsibilities, to blur accountabilities and to diminish focus. As such, there is no way that I could accept such an amendment and I hope that, on reflection, he will withdraw it.
Lord Eatwell
Before the noble Lord sits down, if the FPC wished to seek external advice, would it be suitably resourced to do so?
Lord Eatwell
In that case, I am far more content than I thought I would be, and I beg leave to withdraw the amendment.
Lord Sassoon
Lord Sassoon
My Lords, this is a group of minor and technical amendments. They update the Bill in the light of changes to EU law that have been made since the Bill was introduced to Parliament to reflect the effect of existing law by providing expressly that requirements imposed on firms may have indefinite duration, and to clarify the drafting of some sections of FiSMA. I am happy to discuss in more detail any particular amendment, but I beg to move.
Lord Sassoon
“(a) for “director” substitute “non-executive director”, and(b) ”
“( ) In paragraph 4, for “director” substitute “non-executive director”.”
“(a) in sub-paragraph (1), for “director” substitute “non-executive director”, and(b) ”
“( ) In paragraph 7(2), for “director” substitute “non-executive director”.”
“( ) in that provision, for “director” substitute “non-executive director”,”
“( ) In paragraph 13, after sub-paragraph (3), insert—
“(3A) But a member of the court who is the Governor or a Deputy Governor of the Bank may not be designated under paragraph (a) or (b) of sub-paragraph (3).””
“( ) In paragraph 15, for “director” substitute “non-executive director”.”
Lord Sassoon
“(1) Section 244 of the Banking Act 2009 (immunity) is amended as follows.”
Lord Sassoon
My Lords, like the FSA, the PRA and FCA have statutory immunity from liability in damages for anything done in pursuit of their statutory functions. The Bank has a similar immunity in its capacity as the monetary authority which includes its regulatory functions. This is necessary because it would be very difficult for the regulators to take effective regulatory action if they thought that at any moment they could be bogged down in litigation resulting in multimillion pound awards of damages.
These amendments modify the immunity to ensure that where one regulator or a member of its staff carries out an investigation or produces a formal report for another regulator, that person is also covered by the immunity. This is being done to ensure that, where necessary and appropriate, the PRA can outsource the operational element of its enforcement activities to the FCA—in particular, the work of carrying out investigations into firms.
Prudential regulation involves far less enforcement work than conduct regulation, as it primarily involves the setting and monitoring of prudential standards, rather than, for example, detailed investigations into possible money laundering. It is therefore likely to be a far more efficient approach for the PRA to outsource these functions to the FCA, rather than maintain its own standing expertise. This approach is also likely to ensure that these investigations are well co-ordinated.
Enforcement is a highly litigious area in which the subject of an investigation is likely to cast around for any possible chink in the armour of the regulators’ statutory immunity. There is a risk that vexatious litigation could slow down or undermine the progress of an investigation. These amendments are therefore intended to ensure that when investigations are contracted out to another regulator, they can be undertaken without risk of litigation.
Government Amendments 22 and 23 provide that the Bank of England has statutory immunity if it is appointed to carry out an investigation or to produce a report on behalf of the PRA or the FCA under Sections 97, 166 to 169 and 284 of FiSMA. Government Amendment 63 provides that if the FCA or a member of the FCA’s staff is appointed to carry out an investigation or produce a report, their actions and omissions are treated as actions and omissions of the FCA for the purposes of the immunity. Amendment 69 makes the same provision for the PRA.
I trust that the House will agree that these are sensible provisions which will allow the regulators to take an efficient approach. I beg to move.
Lord Eatwell
My Lords, I agree that these are indeed sensible measures. I have just one question. These days many actions and investigations by regulators are taken on behalf of what are truly other regulators—that is, regulators in other jurisdictions—and that exchange of information and co-operation is a hugely important activity. When the British regulators are taking very sensitive information in an area where there is a great deal of legal activity—for example, the relationship between the FSA and the regulator in Austria is a particular case—would they have immunity in that case as well?
Lord Sassoon
If the situation that the noble Lord is suggesting is one in which the FSA or a successor body was taking an action at the request of the Austrian authorities, I can confirm that in that case the immunity provisions would apply to the actions of the UK regulators.
Lord Sassoon
“( ) After subsection (2) insert—
“(2A) The Bank’s functions under the Financial Services and Markets Act 2000 are to be taken to include any functions that it may exercise as a result of an appointment under any of sections 97, 166 to 169 and 284 of that Act.””
“ In section 4 of the Bank of England Act 1998 (Bank’s annual report), in subsection (4)(a), for “directors” substitute “non-executive directors”.”
“ In Part 3 of Schedule 1 to the House of Commons Disqualification Act 1975 (other disqualifying offices), in the entry relating to the Bank of England, for “Director” substitute “non-executive director”.
In Part 3 of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (other disqualifying offices), in the entry relating to the Bank of England, for “Director” substitute “non-executive director”.”