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Chris White (Warwick and Leamington) (Con)
1. What steps he has taken to increase the amount of information available to people who wish to start their own business.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
In January we launched the Business in You campaign to highlight the support available to start-ups. It gives access to online tools, such as a finance finder to help identify local sources of finance. Since then, we have made simple, easy to use information on starting a business available at the GOV.UK website. New businesses have access to 22,000 mentors offering advice on starting and growing a business.
Chris White
At the start of the year, Leamington Spa set a new record for the number of companies formed in the first quarter, with 164 new start-ups registered—a 10% increase on the previous record. Will the Secretary of State look at how we get information out to our new entrepreneurs and collaborate with important local bodies, such as the Federation of Small Businesses and the chambers of trade, so that we can capitalise on this new wave of entrepreneurship?
Vince Cable
We will do just that and I congratulate the hon. Gentleman on his role in promoting local companies. I was in Leamington Spa recently to meet some video game companies that have started up and he has played a useful role in promoting all that. Last year, encouraged by the overall improvement in the business climate, half a million new companies were established in this country, which is a major indication of the growth of entrepreneurial commitment.
Anas Sarwar (Glasgow Central) (Lab)
The Secretary of State will be aware that with the number of university and college places falling and youth unemployment increasing, now, more than ever, we should be encouraging young people to set up their own businesses. Will the Secretary of State be willing to come and visit the Entrepreneurial-Spark scheme in my constituency and see the innovative ways in which Glasgow is helping to encourage young business people to come forward in the city?
Vince Cable
As the hon. Gentleman knows, I take a particularly close interest in positive news in Glasgow and I would be happy to come and see that project. Suffice it to say that there is a new start-up loan scheme for young entrepreneurs, of which large numbers of young people are taking advantage. I am delighted to see that it is happening in Glasgow, too.
Robert Halfon (Harlow) (Con)
2. What recent steps he has taken to increase the number of apprenticeships.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
More than a million apprenticeships have been started under this Government, 500,000 of them in the last year. As well as this welcome increase in quantity, we are improving the quality of apprenticeships so they are rigorous and provide value for money while being more rewarding to employer and apprentice alike.
Robert Halfon
Since 2011 the Department for Work and Pensions has encouraged its private suppliers through procurement to hire nearly 2,000 apprentices. If this were rolled out across Whitehall, it would create nearly 100,000 new apprenticeships. Will the new Minister with responsibility for apprentices study this pilot scheme to see whether we can make that happen?
Matthew Hancock
As my hon. Friend knows, I am hugely supportive of the DWP pilot and will study its outcomes carefully, in particular the value for money that it generates. I pay tribute to his parliamentary apprentice academy. Getting an apprentice through the academy that he supports is extremely easy and I recommend it to all Members of the House.
David Simpson (Upper Bann) (DUP)
Does the Minister agree that our schools and colleges play a key role in helping to encourage young people who are potential apprentices, and that they need to provide the courses that are relevant to industry today?
Matthew Hancock
I certainly do agree. It is important to include English and maths in apprenticeships for all those who do not have level 2, and we must do more to make sure we inspire young people to look not only at the academic route, but at apprenticeships which combine work and training at the same time.
Nadhim Zahawi (Stratford-on-Avon) (Con)
I commend my hon. Friend and his predecessor for their work on the apprenticeship programme. My hon. Friend will be aware that the Business, Innovation and Skills Committee published its report on apprenticeships. Can he say a little more about the drive for quality, as opposed just to quantity, of apprenticeships?
Matthew Hancock
I welcome the Select Committee’s report. The focus on quality in apprenticeships is important. We have already said that almost all apprenticeships must be longer than a year, and we have taken action to close down some low-quality provision, so this is a direction that I very much want to go in. I will be studying the recommendations of the report extremely carefully.
Mr Gordon Marsden (Blackpool South) (Lab)
After the rhetoric, has the Minister read what the all-party Select Committee said in its report last week about his Department’s handling of apprenticeships? It said that the apprenticeship scheme
“continues to lack clarity and purpose”
and an “overarching strategy” to succeed. Those are the latest in a series of warnings to the Department. There was Jason Holt’s report on small and medium-sized enterprises. Apprenticeship starts over the past year are down for under-19-year-olds in seven out of the nine English regions, down in engineering by 30%, and down in construction by 18%. The Minister’s own officials say that one in five apprenticeships get no training, and, as we heard, the Select Committee has issued strong warnings about quality. When will his Department take practical steps such as those that we have urged for almost a year, requiring big companies that want Government contracts to take on apprentices? If the Minister does not get a grip on this, it is not Pitt or Disraeli that he will have to compare himself to, but being in the bunker in charge of phantom armies.
Matthew Hancock
I am glad the shadow Minister has mined the report for all the negatives. I want to start with the opening sentence of the Select Committee report, which says, “We welcome the commitment of this Government to apprenticeships.” This Government commissioned Jason Holt’s report so of course I welcome it. We have already taken action to improve quality and we will take more action. Not least am I looking forward to the Doug Richard report later this month. The vital thing to do is not only to increase the quantity of apprenticeships, as we have done, but to make sure that they provide excellent value for money, so that all those apprentices throughout the country get a brilliant education as well as training in work, and that is what we will deliver.
Karen Lumley (Redditch) (Con)
3. What assessment he has made of the effect of the business Olympics on exports and inward investment.
The Minister for Universities and Science (Mr David Willetts)
Over 4,000 business leaders and others attended 17 business summits at the British business embassy at Lancaster House. Every one was attended by a BIS Minister. I was very pleased to attend five, which were excellent events. We expect them to generate £1 billion of additional sales by UK companies, and £6 billion of direct investment over the next four years.
Karen Lumley
Wild Automotive, a great company in Redditch, has increased export sales by 73% over the past two years. What more help can this company and others in Worcestershire access to continue this great record of growth?
Mr Willetts
I congratulate that company on its performance. UK Trade & Investment is running export week in the next week, with more than 100 events throughout the UK, which is a great opportunity for businesses to get further advice about exporting. The automotive sector, of which the company in my hon. Friend’s constituency is an example, is now running its first balance of payments surplus since 1975.
Nic Dakin (Scunthorpe) (Lab)
4. What estimate he has made of the proportion of loans for students starting courses in 2012 with fees of £9,000 a year which will not be fully repaid.
The Minister for Universities and Science (Mr David Willetts)
We estimate that around half of all borrowers will have some part of their loan written off, as repayments are contingent on their future income. Our reforms are more progressive than the previous system, because people start to repay only once they are earning over £21,000. The new system helps reduce the deficit and is affordable and sustainable for the Government, while offering protection to those who may not go on to high paid employment.
Mr Willetts
There is no such gap. That report was an eccentric interpretation of the evidence. Our figures have been checked by the independent Office for Budget Responsibility, and the independent Institute for Fiscal Studies has produced its own estimates and reached conclusions that are very similar to ours.
Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)
Well, that eccentric report was produced by the highly respected Higher Education Policy Institute, and one of its arguments is based on the findings of the self-same Institute for Fiscal Studies, even though the Minister has just said that it underestimates the figure. The Government originally assumed 32% non-payment, but the IFS, as quoted in the report he dismisses as an eccentricity, cites 37%, and today he has said it will be up to 50%. That is where the £1 billion figure comes from. How will the Government explain that away?
Mr Willetts
Perhaps it would help my right hon. Friend if I explained that there are two different measures. The answer I gave the hon. Member for Scunthorpe (Nic Dakin) was that we think about half of all borrowers will have some part of their loan written off. There is a separate calculation for the value of the loans that will be written off, which we estimate will be about 30%, so both figures are correct. Nothing can be completely certain in this life, and repayment essentially depends on future earnings, but what is certain is that starting to repay only when one is earning more than £21,000 is a jolly sight better than repaying when one is earning more than £15,000, which was the system left by the Labour party.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
It is clear that the maths supporting the Government’s higher education funding policy is staring to unravel. The Office for Budget Responsibility has shown that tuition fees count towards inflation and will add 0.2 percentage points to the consumer prices index in the fourth quarter of this year, so the impact of the Government’s policies not only will be felt by students, but will have wider implications. Because CPI is the measure by which public pensions and benefits are increased annually, the Government’s welfare bill and civil service pensions will be affected at next year’s annual uprating. Therefore, does the Minister accept that his policies are disastrous not only for students, but for Government finances in general, and what conversations is he having with other Departments about mitigating that?
Mr Willetts
Let us be absolutely clear about what our reforms will do. They will save money for the Exchequer, but at the same time they will ensure that universities have, if anything, an increase in the cash they receive for teaching, and graduates will repay only when they are earning more than £21,000 a year. That is a fair deal for all the partners in the higher education system.
Charlie Elphicke (Dover) (Con)
Is not it the case that costs would be lower if the cost of courses was lower, particularly for the Open university, which was not always supported by the previous Government as fully as it should have been, and for further education that is skills-based? I thank Ministers, in particular, for their recent intervention in Kent college to secure skills-based education in Kent.
Mr Willetts
My hon. Friend is absolutely right. There is, of course, a range of options for access to higher education, and the Open university is an important part of them.
Stephen Mosley (City of Chester) (Con)
5. What support his Department has provided to university and business research partnerships in the last 12 months.
The Minister for Universities and Science (Mr David Willetts)
We want to see the best possible links between universities and businesses. The Chancellor recently tripled public investment in our UK research partnership investment fund, which promotes investment in shared research and development facilities on our campuses. Winning bids must include sponsorship from businesses or charities, so the scheme will deliver more than £1 billion of new R and D investment in total.
Stephen Mosley
I welcome my right hon. Friend’s response and highlight for him the success we are achieving in Chester with the Riverside innovation centre and work between businesses and the university of Chester. May I ask him to visit the innovation centre in the near future?
Mr Willetts
I have happy memories of visiting the university of Chester when Opposition spokesman and so will certainly try to visit as a Minister. My hon. Friend describes just one example of the reason why the World Economic Forum recently placed the UK second out of 144 countries for the quality of university and business collaboration in R and D.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does the Minister agree that there is so much in Lord Heseltine’s review, “No Stone Unturned”, that it shines a light not only on the eyes we see under the rock, but on the policies that affect the relationship between universities and the business and research communities and the entrepreneurship we need in all our regions to make this country economically vibrant?
Mr Willetts
Lord Heseltine’s report was excellent. The message that we need to see growth across the entire country is absolutely correct. It is also correct that universities across the country are crucial drivers of local economic growth, and that is one of the many reasons we are supporting them.
Duncan Hames (Chippenham) (LD)
In past years, Higher Education Funding Council for England letters have never done much for Wiltshire. Will the Minister be flexible in his approach to student number controls on universities seeking to co-locate with high-tech businesses, and so bring university education to our fine county?
Mr Willetts
That is an ingenious piece of local lobbying on which I congratulate my hon. Friend. I will certainly bear that in mind. We are continuing to reduce the number controls that we inherited from the previous Government; we have been able to achieve that successfully through our reforms. Now, one in three students is choosing a university without number controls, and we want that to go further.
Harriett Baldwin (West Worcestershire) (Con)
6. What assessment he has made of the contribution of new start-ups to economic growth.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
One of the main contributions is the number of jobs created. The best estimate that we have is that start-ups are responsible for a third of all jobs created. Start-up activity has remained highly resilient, with Companies House reporting over 450,000 newly registered companies in 2011-12—the highest number since 1997-98.
Harriett Baldwin
I am sure that the Minister will welcome this week’s CBI report showing that small and medium-sized enterprises are very optimistic about adding jobs in the year to come. However, what would he say to a start-up in my constituency, Energetic UK, which builds eco classrooms for schools? It is run by very experienced people, but because it is a start-up they do not have the three years’ annual accounts needed to get local authority contracts. I have written to him about this company and wonder what the Department could do to help.
Michael Fallon
Instructions to contracting authorities emphasise that the assessment of financial risk should be based on a business judgment, not on a purely mechanistic application of financial formulae such as value of turnover or three years’ accounts, which could unreasonably shut out start-up companies.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Small businesses are being held back from expanding and taking on extra workers because they are unable to get the finance they need. This week Dave Fishwick, also known as Bank of Dave, addressed a group of MPs about a model of community banking that has worked in his area. What more could the Government do, particularly given the failure of their Project Merlin scheme, to ensure access to finance and better relationship banking in communities such as mine?
Michael Fallon
I am not sure that we need lectures from a party that introduced six new regulations every working day during its 13 years in office. We have cut red tape and business tax. There is an issue with access to finance. That is why we have set up the business bank, the funding for lending scheme, and a range of other schemes. It is now up to the banks to rebuild their relationship networks to make businesses more aware of the appeals mechanism. We are encouraging the British Bankers Association to do that to make sure that the money that the Government and the taxpayer are providing gets through to the companies that need it.
Richard Fuller (Bedford) (Con)
The Minister understands that every new successful entrepreneur is a new job creator, a new wealth creator, and a new net contributor to paying for our public services. Does he also understand the importance of the intention of people to become entrepreneurs? What is the Department doing to strengthen the entrepreneurial culture in our country?
Michael Fallon
We shall be playing our part in next week’s global entrepreneurship week, with 2,500 events throughout the country. I shall also be promoting a range of other Government schemes such as the CEiS scheme, which encourages more investment by entrepreneurs in start-up companies, and a number of other schemes that encourage enterprise in our schools and colleges to help those who are thinking of starting up companies as soon as they leave further or higher education.
Nick Smith (Blaenau Gwent) (Lab)
On economic growth, does the Minister agree with the National Audit Office’s assessment that a “significant portion” of the regional growth fund has been
“allocated to projects that create or safeguard relatively few jobs for the money invested”?
What steps is he going to take to address this concern?
Michael Fallon
I do not wholly accept that criticism. The regional growth fund has been a key part of creating and safeguarding 500,000 new jobs in rounds 1, 2 and 3. I find the logic of the National Audit Office report somewhat perverse. It argues that we should look only at net jobs. If a plant in the hon. Gentleman’s constituency closed with the loss of 500 jobs and 450 of the people affected were subsequently employed elsewhere, he would not stand up in this House and say that he had only lost 50 jobs.
Sir Nick Harvey (North Devon) (LD)
Does the Minister agree that new start-ups benefit from grant aid in particular? To that end, will he ensure that the UK takes advantage of EU transition zones in the next funding round, and will he structure them in accordance with the Heseltine recommendations of local flexibility to ensure that new start-ups are not put in a straitjacket and are unable to use them?
Michael Fallon
Yes, I will certainly look at that. We are now preparing how we manage and administer the programmes under the new multi-annual financial framework, which will begin in January 2014 and last until 2020. I want to make sure that we have a smaller number of programmes across the United Kingdom and that we therefore minimise the differing costs and start dates under the previous seven-year framework. We need a simpler approach to the cohesion funds, but I certainly take the hon. Gentleman’s point on the importance of the transition regions outside the category A regions.
Mr Russell Brown (Dumfries and Galloway) (Lab)
7. If he will establish an independent body to review the relationship between big pub companies and tied landlords.
Lisa Nandy (Wigan) (Lab)
11. If he will establish an independent body to review the relationship between big pub companies and tied landlords.
Andrew Gwynne (Denton and Reddish) (Lab)
20. If he will establish an independent body to review the relationship between big pub companies and tied landlords.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
The Secretary of State has written to the industry asking for evidence on how the self-regulatory approach announced last November is working. We will make our decisions after considering its response.
Mr Russell Brown
I thank the Minister for that answer, but a broad coalition of organisations as diverse as the Campaign for Real Ale, the Federation of Small Businesses, the Business, Innovation and Skills Committee, which has a majority of coalition members, the all-party save the pub group, Unite and the GMB—the list goes on—all think that the relationship between pubcos and their licensees is unfair. Is the Minister able to name any serious organisation that thinks that self-regulation will work in this sector?
Jo Swinson
I understand that a wide range of organisations have expressed concerns, which is exactly why we have written to the industry to ask for its views on how this is working. We want to proceed on an evidence-based approach and once we receive the evidence we will report back to the House.
Lisa Nandy
In Wigan, we are proud of our small breweries, AllGates and Prospect, whose beer will be in this place very soon. An independent inquiry would allow us to consider the impact of restrictions on their trade and, in particular, the impact on our local economy, given the breweries’ importance to Wigan. A commitment today from the Minister to establish such an inquiry would go a long way to restoring confidence in the industry. Will she make that commitment?
Jo Swinson
I thank the hon. Lady for her question. She does a wonderful job in championing her local breweries and the BIS Committee was very positive about the relationship that family brewers have with tenants. I may have to disappoint her by not giving her the commitment that she asks for today, but the Government are open-minded. As I have said, when we receive the industry’s response, which we have asked for by 23 November, we will consider the matter further.
Andrew Gwynne
On 12 January, this House supported unanimously a motion stating that the Government should commission a review of the self-regulation of the pub industry, to be conducted by an independent body, by the autumn of this year. It is now November and there has been no action. Why does the Minister hold the decision of the House of Commons in such contempt?
Jo Swinson
I do not think that that is an accurate representation of my view. I came into the post just a couple of months ago and I am looking at the issue very seriously. My right hon. Friend the Secretary of State has written to the industry and it is appropriate to proceed on an evidence base. Once we receive the written responses, discussions will be required with the industry and, as I have said, we will return to the House with further information on what has been presented to us.
Bob Stewart (Beckenham) (Con)
Will the Minister outline how she, as the Government’s representative, might help independent freehold houses generate business and, in particular, line up with independent mini-breweries?
Jo Swinson
I thank my hon. Friend for that question. It is certainly interesting that three quarters of the new pubs that have opened in the last year and a bit have been freehold. That says a lot about how people who are looking to set up pubs feel about the business models. The Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon) outlined some of the initiatives of global entrepreneurship week. The Government have a raft of measures to support small businesses. I know that Members from all parts of the House want to support small community businesses in their constituencies, including small breweries.
Toby Perkins (Chesterfield) (Lab)
The Minister says that she wants to hear from the industry. If she has looked into this matter, she will know that the entire industry was united in thinking that the Government’s response last November was too weak. The Secretary of State said in June 2010 that he would support the commitments made by the previous Government, and this House set out its clear view in January 2012. Now, years after all the Select Committee reviews, we have yet another consultation. Why does the Minister not listen to the view of this House, listen to the view of the industry and set up an independent review of whether self-regulation is working? Let us start saving some jobs and pubs before it is too late.
Jo Swinson
I am listening; that is the purpose of asking the industry how the current approach is working. There are positive signs, such as the setting up of the Pubs Advisory Service and the Pubs Independent Conciliation and Arbitration Service. PICAS has started to hear cases and two have been found in favour of the tenants. There has been positive action and we need to assess whether that is sufficient. That is what the gathering of evidence is designed to do.
Glyn Davies (Montgomeryshire) (Con)
8. What assessment he has made of the effect on jobs of the extra costs of energy arising from subsidising wind farm development.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
There are 94,000 people employed in the development and construction of wind farms. We are seeking to develop the supply chain to create more jobs. We are separately preparing a compensation scheme for energy intensive industries to offset the higher electricity costs in order to maintain their competitiveness.
Glyn Davies
Some businesses in Montgomeryshire tell me that the greatest impediment to their growth and job creation is the rapidly rising cost of energy. Does my right hon. Friend agree that controlling energy costs, including by dealing with the unsustainably high subsidies to the onshore wind farm industry, must be the aim of the coalition Government if they are to achieve their ambitions of job creation and economic recovery?
Vince Cable
We do accept that proposition. That is why we have introduced the £250 million programme to provide compensation for energy intensive industries. I may have to disappoint the hon. Gentleman on the wider issue because the coalition Government are absolutely committed to the 30% target for the generation of electricity from renewable sources by 2020. Onshore wind is one of the cheaper renewables and its costs are falling. I notice that a few days ago, the hon. Gentleman tweeted that there is a big lesson here:
“If my party loses in 2015 they’ll say ‘It was wind farms wot done it’”.
All parties in the House, particularly mine, may have to brace themselves for the return of Lembit Öpik.
Wayne David (Caerphilly) (Lab)
It is true to say that there are differences within the Government on the importance of wind power. When will the Government speak with one voice so that there is a clear strategic approach, rather than the alternatives that we have before us today?
Vince Cable
We very much speak with one voice on this subject. I encouraged the Minister of State, Department of Energy and Climate Change, the hon. Member for South Holland and The Deepings (Mr Hayes) aggressively to promote apprenticeships. I am sure that when he has settled into his new job, he will be an enthusiastic advocate of wind farms.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
9. What steps his Department is taking to encourage participants in further and higher education to gain experience and training in business and industry.
The Minister for Universities and Science (Mr David Willetts)
We are supporting students to gain vital work experience by growing high-quality apprenticeships across the economy. We are also supporting the roll-out of student enterprise societies in every university to support the creation of student internship and graduate job opportunities with local enterprises.
Gordon Henderson
In my constituency, the human resources department of our local Morrisons regional distribution centre is working closely with Sittingbourne community college to ensure that school leavers have a better understanding of what employers expect from potential employees. Will the Government encourage human resources departments based in the head offices of large companies to liaise in a similar way with universities, to better equip students for the workplace?
Mr Willetts
That is an excellent and imaginative idea. I think some of that happens already, but we are actively promoting such initiatives in a series of round tables that the Under-Secretary of State for Skills, my hon. Friend the Member for West Suffolk (Matthew Hancock), will be leading. Universities are now obliged to put on their websites key information about graduate employment outcomes from their courses, which will encourage initiatives such as that described by my hon. Friend.
Alex Cunningham (Stockton North) (Lab)
10. What discussions he has had with the Secretary of State for Energy and Climate Change on investment in green manufacturing jobs.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I regularly meet the Secretary of State for Energy and Climate Change to discuss energy and climate change policies, including investment in green manufacturing jobs. We are seeking to exploit opportunities for growth through green technologies, and I have recently announced that the UK Green Investment Bank is operational, which will support investment in green manufacturing.
Alex Cunningham
Companies such as Tag Engineering Services on Teesside, and many others, have invested millions of pounds to create capacity to build monopiles and other components for the offshore wind industry. They have some of the best facilities in the world, yet they see multi-million pound contracts go out to Europe. What is the Secretary of State doing to get British wind farm contracts placed with British firms?
Vince Cable
I share the hon. Gentleman’s frustration that supply chains in that sector are not as well developed as they should be, not just in respect of the components, but also of the steel that contributes to the masts. That is why the Secretary of State for Energy and Climate Change and I are bringing together the renewables supply chain to develop the capacity that the hon. Gentleman wishes to see.
Sir Tony Baldry (Banbury) (Con)
Does my right hon. Friend agree that there is considerable potential for new, green manufacturing jobs in new housing systems? In Bicester, which has an eco-town project and aspires to become a new garden city, we are keen to have a green-collar cluster of companies manufacturing new housing systems.
Vince Cable
That is a very constructive suggestion. To put it in a wider context, there are already something in the order of 1 million green economy jobs, which is about 8% of our economy. The construction sector is potentially an important and big component of that, and I would be happy to talk to and work with the hon. Gentleman to encourage it.
Peter Luff (Mid Worcestershire) (Con)
12. What steps his Department is taking to encourage young people to take up careers in engineering; and if he will make a statement.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
This Government celebrate engineering. World-class engineering is vital for Britain’s future, and world-class engineering needs world-class engineers, so we are supporting engineering in schools, apprenticeships and universities to inspire the engineers of the future.
Peter Luff
That is a pretty positive answer. However, as defence equipment Minister, I saw time and again that the single greatest problem facing British engineering businesses is a shortage of skills. I therefore commend to my hon. Friend a report from the Engineering Employers Federation, “Skills for Growth”, which makes recommendations to ensure that young people have a better understanding of the opportunities in engineering through careers advice and stronger links between businesses and schools.
Matthew Hancock
Yes, I have seen that report, and the Government have taken action. Some 25,000 science, technology, engineering and maths ambassadors are going into schools to inspire pupils, and there are some signs of success. Over the past three years, twice as many pupils have taken triple science, and the proportion of STEM courses in university is no longer falling as it was under Labour, but rising.
Ann McKechin (Glasgow North) (Lab)
The Minister will be aware that the number of women entering the engineering professions is still appallingly low. What actions will he be taking not only to encourage women into those professions, but also, just as importantly, to retain them there as there is a high drop-out rate?
Matthew Hancock
I agree very strongly with the hon. Lady, and in my first week in this job I announced support for a pilot scheme by Rolls-Royce and other engineering companies to expand the number of women in engineering. After all, we cannot possibly believe that we are getting the best people in engineering if almost half the population are excluded.
Chris Williamson (Derby North) (Lab)
13. What assessment he has made of the latest construction output figures; and if he will make a statement.
Pat Glass (North West Durham) (Lab)
15. What assessment he has made of the latest construction output figures; and if he will make a statement.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
The latest figures from the Office for National Statistics show that construction output fell by 2.5% in the last quarter, but overall gross domestic product increased by 1%.
Chris Williamson
Earlier this year, the Secretary of State gave a commitment that the Government were taking steps to address the decline in construction output, but this week’s construction trade survey showed, for the first time ever, a decline in every single construction sector. What has gone wrong?
Michael Fallon
There are various surveys; another construction survey shows that output increased in October. In September, we announced a housing and planning package that will deliver up to 70,000 new homes and 140,000 jobs, with a £40 billion guarantee for infrastructure projects and £10 billion for new homes. We have also introduced the Growth and Infrastructure Bill to speed up the planning system and unlock new investment in housing and infrastructure. I am surprised the hon. Gentleman voted against it on Monday night.
Michael Fallon
It is being so cheerful that keeps you going, isn’t it? I would have hoped that the hon. Lady welcomed the £4.5 billion contract won by Hitachi to build the next generation of inter-city trains, creating 900 new jobs in north-east England. The north-east also did particularly well under round 3 of the regional growth fund, with 29 bids selected, worth £120 million, creating or safeguarding 30,000 jobs. I am looking forward to my visit to the north-east next week to open new factories in Blyth and on Tyneside.
Mr Iain Wright (Hartlepool) (Lab)
The 2.5% quarterly drop in construction output to which the Minister referred is dire enough, but year on year, activity in the construction sector has fallen by a massive 12%, and further decline is predicted through to at least 2014. The sector is crying out for assistance from, and co-operation with, a Government who value construction as an important part of an active industrial strategy. Will the warm words, the excuses, the complacent tone that we have heard this morning, the protestations of just how difficult it is and the bland and vague promises of help in future stop, and will the Minister take decisive action that will help the construction sector now?
Michael Fallon
As I have already said, we are investing £4.5 billion to fund new affordable homes over the spending review period, all of which is committed to be spent in this Parliament. That is leveraging in a further £15 billion of private sector investment. We are on track to deliver 170,000 affordable homes by 2015.
Sir Bob Russell (Colchester) (LD)
14. If he will bring forward legislative proposals to prevent owners of businesses which have failed with debts outstanding from starting new businesses of an identical or similar nature.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
The Government have no current plans to bring forward legislation. We recognise that some businesses will fail, but we do not want to prevent entrepreneurs from learning from an initial business failure. I understand, however, the significant concerns that are expressed about so-called phoenix companies. I know my hon. Friend has worked tirelessly on behalf of his constituents on this issue, and I will keep it under close review.
Sir Bob Russell
Cavendish Conversions Ltd and, in my constituency, Number Nine Restaurant Ltd, have risen phoenix-like to start again in new guises thanks to dodgy financial gymnastics by their owners, leaving innocent citizens and businesses with serious financial losses. I urge the Government to take action against those people. It is unfair that they can rack up losses and start again.
Jo Swinson
I thank my hon. Friend for his question. He highlights the distress that is caused to his constituents—I know from my correspondence that this also applies to constituents across the country—when companies undertake the activities he describes. I look forward to meeting him to discuss this specific issue in a couple of weeks’ time. He has already introduced an Adjournment debate to go into his case in detail. I reiterate that we need to get the balance right between encouraging enterprise and protecting consumers and business, but I look forward to discussing the matter with him further.
Derek Twigg (Halton) (Lab)
I agree with the hon. Member for Colchester (Sir Bob Russell). What happens is that perfectly good businesses get left with bad debts because a contract has not been paid. They then have a cash flow problem and the banks often will not support them. The Minister should look again at this and at the role of the banks in this situation.
Jo Swinson
The hon. Gentleman makes a very good point, because what often happens is that one business goes under and its creditors get into difficulty as a result. We want to make sure that the system works to prevent such situations and provide support to businesses. We need to be wary of unintended consequences, because we also do not want a regime under which people who have had a failure in business cannot start up again, but we need to look at the disqualification regime and check that we have got the balance right.
Mark Pawsey (Rugby) (Con)
16. What recent steps he has taken to encourage business start-ups; and if he will make a statement.
Graham Evans (Weaver Vale) (Con)
19. What recent steps he has taken to encourage business start-ups; and if he will make a statement.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
There were almost 500,000 start-ups last year—the highest number since records began in 1997, up from 360,000 in 2010. We are helping to encourage business start-ups by providing advice and financial support, and confidence that the Government will pay their way.
Mark Pawsey
I recently visited Warwickshire college’s Rugby site to talk to students at the Peter Jones enterprise academy, and I joined them on the “StartUp Britain” bus. Thirty years ago I started a business without any formal training, and it would have been of great value to me if those resources had been available then; I might have made fewer mistakes in the early days of running my business. Does the Minister agree that these schemes are a great way to ensure that our young people get the vital skills they need to help get new businesses started effectively?
Matthew Hancock
Absolutely. I too have visited a Peter Jones academy, and they are a brilliant new innovation. The new start-up loans provide finance and support for young entrepreneurs to help them get a start, and we need to do all that we can to support people who want to start up businesses.
Graham Evans
In addition to making it easier for people to start up their own business, what steps are the Government taking through the tax system to encourage investment in small business?
Matthew Hancock
We have sharply increased the enterprise investment scheme limit and we will do all that we can to support people who work hard and want to get on in life and start their own business. As well as making investment in small companies easier, we also stopped the planned increase in the small business rate and we are cutting business taxes. We are doing everything we can to get Britain working.
Sarah Newton (Truro and Falmouth) (Con)
17. What progress has been made on the EU Commission proposal to impose quotas for women on boards.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
The European Commission is considering what proposals to make to increase the number of women on boards. I expect an announcement shortly, perhaps as early as next week. It is an important issue. I want to see more women on boards on merit. As the House will know, the UK’s voluntary business-led approach is working well, with significant increases in women on boards in FTSE 100 companies.
Sarah Newton
I thank my hon. Friend for her answer, but does she agree that it is also important that we focus on the pipeline of talented women? Does she welcome the pilot initiative by the Mentoring Foundation which offers women at the junior end of senior management mentoring support from senior women executives who themselves have been mentored by FTSE chief executives?
Jo Swinson
My hon. Friend is absolutely right about the pipeline issue. It is vital that we encourage businesses and organisations to develop talented individuals. If an organisation is viewed as a pyramid, there are good numbers of men and women at the base of the pyramid, but higher up the number of women falls away, and mentoring schemes are an excellent way to address that. The Women’s Business Council is also looking at this issue, and the Government’s initiative “Think, Act, Report” encourages companies to put in place schemes to ensure that they develop the talent within their organisations and address the pipeline issue.
Mr Clive Betts (Sheffield South East) (Lab)
18. What recent estimate he has made of the number of jobs that will be created by the regional growth fund.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
The regional growth fund will generate over half a million gross jobs over the period 2011-2021, with 80% of the impact coming in the first five years. Some 300,000 jobs will be delivered by projects and programmes in rounds 1 and 2, and 240,000 from bids selected for round 3. In rounds 1 and 2, eight out of 10 projects and programmes have now started and 149 bidders have now signed final agreements.
Mr Betts
When the regional development agencies were in existence, they provided important match funding to enable European regional development fund money to be properly used. When the Communities and Local Government Committee looked at this, we suggested that a portion of the regional growth fund be earmarked to ensure that all our ERDF money could be properly spent. That suggestion was turned down. If we do not spend all the ERDF money to ensure that we create the maximum number of jobs, will it be the Minister’s responsibility or that of his colleagues in the Department for Communities and Local Government?
Michael Fallon
We are certainly looking at how we can spend money better in the next seven-year framework. There has been underspend, not least because there were so many programmes. I am trying to rationalise and simplify them, working with colleagues in the three other Departments affected. The House will want to note that the regional development agency Yorkshire Forward employed 434 people and spent a large amount of public money, but did not leverage in anything like the amount of private sector money that the new regional growth fund is doing.
Jane Ellison (Battersea) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
My Department has a key role in supporting the rebalancing of the economy and business to deliver growth while increasing skills and learning.
Jane Ellison
Schools routinely measure the number of youngsters going on to higher education, but not necessarily those who go on to apprenticeships—something that was picked up on in the report published this week by the Select Committee on Business, Innovation and Skills. Does the Minister think that more can be done in this area?
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
Yes. As I said earlier, we welcome the thorough and interesting report from the Select Committee. Recommendation 16 said that alongside university admissions, schools should publish apprenticeship starts from their former pupils, and I agree. Through the new destinations measures, which were introduced this summer, we will ensure that that happens.
Mr Chuka Umunna (Streatham) (Lab)
There are more than 1,200 people claiming jobseeker’s allowance in the Secretary of State’s constituency. Under his proposed “shares for rights” scheme, employers in his constituency will be allowed to make the acceptance of job offers conditional on people agreeing to give up their basic rights at work for shares. Can the Secretary of State guarantee that JSA claimants in Twickenham will not lose their benefits for refusing the offer of a job because it is conditional on them giving up their rights for shares?
Vince Cable
In a statement in the Commons a couple of days ago, I think, the Minister in the Treasury who is responsible for taxation made it absolutely clear that the scheme was voluntary. While the hon. Gentleman hunts for the ghost of Beecroft in this proposal, I will put a simple proposition to him. If employers were seriously interested in trying to set up an arrangement that had minimum job protection for employees, why would they go to the trouble of establishing a complex employee ownership scheme when they could do that so much more easily through an agency workers agreement, which would have far lesser employment rights than this proposal?
Mr Umunna
There was no answer to my question in what we have just heard from the Secretary of State. He cannot answer it because this has not been properly thought through. He has said that the scheme has had a mixed reaction. That is a gross understatement: it has been described as “awful” by the National Center for Employee Ownership. He has said that it is not intended for most ordinary businesses. It would be interesting to know which businesses have lobbied him to introduce this nonsense. While we support strongly employee ownership, it is beyond me to think why that must be tied to giving up rights at work. Is it not the case that, just as the Secretary of State was forced to consult on proposals to fire employees at will by the Treasury, he has now been forced to do the same on this crazy proposal? This is a Secretary of State in office but without the power to say no to the Chancellor.
Vince Cable
There is no proposal to fire employees at will, as the hon. Gentleman well knows. I will repeat what I said: the scheme is entirely voluntary. He should perhaps reflect in a little bit more detail on some of the comments of both businesses and trade union stakeholders. Businesses have said that this is an interesting proposal that many are unlikely to take up. The trade unions have said, similarly, that they do not like it, but they do not expect it to have a significant impact on the labour market.
Mr Robin Walker (Worcester) (Con)
T3. Having recently taken a trade delegation of Worcestershire businesses to China, as per my entry in the register, I was impressed by the support from UK Trade & Investment that was available to small and medium-sized enterprises, many of which received sponsorship towards the cost of the trip. What is the Minister doing to ensure that the message gets out about the help that the Government are providing to smaller companies to export to the world’s fastest growing markets?
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I congratulate my hon. Friend, who I think took part himself in a trade mission to China last month. I encourage other hon. Members to follow in his footsteps.
UK Trade & Investment is building relationships with its private sector partners to increase awareness of its services for exporters throughout the networks. UKTI will host export week from 12 to 16 November, when there will be more than 100 events around the UK designed to reach out to small and medium-sized enterprises, including events being organised in the west midlands to promote forthcoming market visits to Austria and Romania.
Jack Dromey (Birmingham, Erdington) (Lab)
T2. Jaguar Land Rover and Tata have committed to Birmingham and Britain, transforming the Jaguar plant in my constituency into a world-class success story. Just when the plant is taking on 1,100 workers, the High Speed 2 route unnecessarily threatens its rail terminal, which would have serious implications for the company and the community. Will the Secretary of State intervene with his counterpart in the Department for Transport and meet me, because nothing must be done to put at risk the success of the biggest plant in Birmingham?
Vince Cable
I am happy to meet the hon. Gentleman and anyone else concerned about this problem. I meet regularly with Jaguar Land Rover, as does the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon). This is not an issue that it has raised with us so far, but we are happy to pursue the matter. I want to reinforce what the hon. Gentleman said, however. This is a magnificent company investing £2 billion over this decade and creating high-level employment. The Government have made a substantial contribution to support it through the regional growth fund, support for the engine plant in Wolverhampton, which is now getting off the ground, and in other respects.
Stephen Mosley (City of Chester) (Con)
T8. Chester has seen record numbers of new businesses being set up in the past year, with 305 being registered during the first six months of the year—a 323% increase on the year before. Does the Minister agree that these and other recent figures show that the work that the Government are doing to encourage private sector growth and redress the north-south imbalance is beginning to deliver results in the north-west of England?
Michael Fallon
That is encouraging news and shows the strength of the small business sector in the north-west in particular. The key to encouraging small businesses is to continue to cut back the burden of red tape imposed by the last Government, to reduce the level of business taxation imposed by the last Government and to ensure that they have full access to finance through the banking system.
Alex Cunningham (Stockton North) (Lab)
T4. I am grateful to the Secretary of State for meeting my hon. Friend the Member for Sedgefield (Phil Wilson) and me to discuss the rejection of the bid for a regional growth fund grant by Durham Tees Valley airport and for his offer to meet representatives from the airport and the local enterprise partnership. Will he reaffirm his support for regional airports as drivers of economic development, and tell the House what he can do to help our Durham Tees Valley airport to deliver on its development plan and ensure that the airport is sustained well into the future?
Vince Cable
Yes, I did indeed meet the hon. Gentleman and his colleagues. It was a good meeting, and they have followed it up with a very good submission explaining the link between the regional airport and the growth fund bid. We are now analysing that. I hope that he would acknowledge that there has also been some good news, however, in the sense that the Tees Valley LEP has just won a substantial programme bid through the regional growth fund, which will contribute to development in his area.
George Freeman (Mid Norfolk) (Con)
Next week is global entrepreneurship week. May I welcome the work that the Government are doing to support entrepreneurship, particularly their support for the national student entrepreneurship union, for silicon valley coming to the UK next week and for the launch of the important Cambridge cluster portal, which highlights that in Cambridge there are now 1,400 technology companies employing 53,000 people and more than 10 billion-dollar companies? Does that not suggest that our policy for an innovation economy is working?
The Minister for Universities and Science (Mr David Willetts)
That is an excellent example of the success of our innovation policies. Like other BIS Ministers, I will be welcoming visitors from silicon valley, who I am sure will be coming to England and Cambridge to see how it is done.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
T5. Every pound invested in the construction industry generates nearly three in economic activity. What support is being given to construction companies, such as Marshalls in Halifax, to get them building, boost the construction industry and protect and create jobs now—before it is too late for these companies?
Michael Fallon
The best way that the hon. Lady can help that company is to support our proposals to unlock new housing, particularly affordable housing, and new infrastructure as set out in the Growth and Infrastructure Bill, which unfortunately the Labour party voted against on Monday night.
David Mowat (Warrington South) (Con)
Earlier the Secretary of State gave us an update on the good progress we are making on the green investment bank. Can he confirm, however, that EU state approval specifically excludes the nuclear supply chain, which is a major low-carbon industry, and that organisations such as Sheffield Forgemasters will be excluded if we do not appeal that?
Vince Cable
We have indeed got state-aid approval for the green investment bank. There are no plans for it to invest in the nuclear supply chain, but we have not ruled that sector out. As it happens, a working party is being assembled to develop a strategy for the nuclear supply chain, which my colleague the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), will be co-chairing, and we expect to give it substantial support.
Mr Clive Betts (Sheffield South East) (Lab)
T6. Polestar, a major printing works in my constituency, has created hundreds of well-paid jobs through its investment in recent years. However, its bid to the regional growth fund to create hundreds more jobs has been turned down. Will the Minister look at how such firms can get good quality feedback, so that hopefully they can submit successful bids in future and create those jobs?
Michael Fallon
I will certainly do that. All unsuccessful bidders are offered feedback from the regional growth fund secretariat, and if that has not happened, I am happy to arrange it for Polestar in the hon. Gentleman’s constituency. There were a number of other successful bids in the Sheffield and Yorkshire region, which I hope he will acknowledge will bring more growth and jobs to Sheffield.
Tim Farron (Westmorland and Lonsdale) (LD)
Perhaps the most valuable long-term economic legacy of the Olympics will be a boost in UK tourism. To achieve that we will need a few high-profile attack brands. London will of course be one of them; another must surely be the Lake district. What plans do the Government have to make the Lake district an attack brand for UK tourism?
Vince Cable
I had an opportunity recently to meet my hon. Friend and his local enterprise partnership, which is one of the most dynamic and is dominated by small business, most of it focused on the tourism industry. He is absolutely right that one of the key legacies of the Olympics is attracting people to come to the UK, and I am happy to talk to him even more frequently than I do at the moment about tourism.
Jenny Chapman (Darlington) (Lab)
The Minister of State has been to Darlington and should be, but probably is not, embarrassed by the decision he made to decline the regional growth fund bid for Durham Tees Valley airport. Is he as shocked and frustrated as we in the north-east are to learn that there is now £1 billion of unallocated RGF money in his Department’s coffers?
Michael Fallon
I have not only been to Darlington, as the hon. Lady knows, but I spent 10 years of my life there—and, in the interests of social mobility, I was happy to give her predecessor a leg up the political ladder. I look forward to my visit to the north-east next week. The Secretary of State has already explained the circumstances in which the bid for the airport was turned down, but I have to tell her that the north-east did extremely well in round 3 of the regional growth fund. I look forward to hearing more about some of the successful projects when I visit next week.
Neil Carmichael (Stroud) (Con)
I welcome the good news that the British Antarctic Survey is to continue as an independent organisation. May I underline the need to ensure that it remains on a firm and sustainable footing, and also add my thanks to the Minister for helping in that matter?
Mr Willetts
My hon. Friend is absolutely right. The decision by the Natural Environment Research Council to continue supporting the British Antarctic Survey has been widely welcomed. At the beginning of this year I had the opportunity to go to Rothera and the Antarctic and can personally confirm the excellence of the research that the British Antarctic Survey does.
Mark Durkan (Foyle) (SDLP)
Ministers tell us that they are well minded against capricious regulation, perverse taxation and over-interpretation of EU judgments. Will one of them therefore listen to the consortium of intermediate alcohol producers and exporters across the UK? They have profound concerns about the impact on their business of HMRC’s changes to notice 163, which go far beyond a one-off adjustment to a marginal tax rate.
Michael Fallon
I am certainly prepared to look at that. One of the purposes of the red tape challenge was to ask businesses themselves what were the issues constraining growth, and I am happy to look into that matter for the hon. Gentleman.
Mr Marcus Jones (Nuneaton) (Con)
I was disappointed that I could not join my right hon. Friend the Secretary of State on his recent visit to the MIRA technology park. Despite my personal disappointment, will he join me in celebrating this world-class project, which will create 2,000 jobs in the midlands region, and does he agree that it has been facilitated by the regional growth fund and the enterprise zone policies of this Government?
Vince Cable
Indeed, I have now been twice to MIRA. It is a magnificent institution and one of the most successful in the UK at promoting advanced technology. MIRA has benefited from the regional growth fund and a successful enterprise zone, and could well expand to become a world-class centre for transport technology.
Barry Gardiner (Brent North) (Lab)
The growth of businesses in rural areas is being constrained by the lack of access to broadband. Even where businesses can achieve the Government’s target of 2 megabits, they are finding that that is the download speed, and they are still constrained by the greatly inferior upload speed. Will the Government consider reassessing the 2015 target of 2 megabits?
Michael Fallon
I will certainly do that. This is an issue for businesses in rural areas across the country. Clause 7 of the Growth and Infrastructure Bill will help to accelerate the roll-out of broadband, not least in rural areas, but the hon. Gentleman joined his party in voting against it on Monday night.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I think that most of us in the House would admit that the Secretary of State is passionate about manufacturing and business, and he exhibited that last Thursday when he came to Huddersfield to visit our textile training centre of excellence. Why cannot we have more all-party agreement on some of the challenges that we face? The recommendations in the Heseltine review give us an opportunity to adopt a common strategy across the House. Is that a challenge that the Secretary of State is willing to take up?
Vince Cable
I am absolutely willing to take up that challenge. There is an enormous amount of wisdom in the Heseltine report and we will of course respond to all 89 of its recommendations in due course. I was particularly enthusiastic about his strong endorsement of the industrial strategy, an important part of which could well be the resuscitation of the textile industry of which the hon. Member for Huddersfield (Mr Sheerman) has been a prominent advocate and which I was happy to visit in Huddersfield a couple of weeks ago.
Business of the House
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Angela Eagle (Wallasey) (Lab)
Will the Leader of the House please give us the business for the House next week?
The Leader of the House of Commons (Mr Andrew Lansley)
The business for next week will be:
Monday 12 November—Opposition Day (9th allotted day). There will be a debate on the Government response to Ash dieback, followed by a further debate on the cost of living. Both debates will arise on an Opposition motion.
Tuesday 13 November—A general debate on child sexual exploitation. The subject for this debate was nominated by the Backbench Business Committee.
Colleagues will wish to be reminded that the House will rise for the November recess on Tuesday 13 November and return on Monday 19 November.
The business for the week commencing 19 November will include:
Monday 19 November—Second Reading of the Groceries Code Adjudicator Bill [Lords].
Tuesday 20 November—Second Reading of the HGV Road User Levy Bill, followed by consideration of Lords amendments to the Civil Aviation Bill, followed by a general debate on autism. The subject for this debate was nominated by the Backbench Business Committee.
Wednesday 21 November—Opposition Day (10th allotted day). There will be a debate on a motion in the name of the Democratic Unionist party.
Thursday 22 November—Motion to approve a statutory instrument relating to terrorism, followed by a debate on a motion relating to life-saving skills in schools, followed by a general debate on industrial policy and UK manufacturing industries. The subjects for these debates have been nominated by the Backbench Business Committee.
The provisional business for the following week will include:
Monday 26 November—Remaining stages of the Small Charitable Donations Bill.
I should also like to inform the House that the business in Westminster Hall for 29 November and 13 December will be:
Thursday 29 November—A debate on the Welsh Affairs Committee report on inward investment in Wales.
Thursday 13 December—A debate on the first joint report of the Committee on Arms Exports Controls.
I would also like to remind the House that the week commencing 19 November will be Parliament week. This is the second year of the initiative that works to build greater awareness and understanding of, and engagement with, parliamentary democracy in the United Kingdom. I would like to encourage all Members to engage with the programme. Of particular interest will be the annual debate of the UK Youth Parliament in this Chamber on Friday 23 November. I look forward to welcoming those taking part, and I am sure that many Members will take an interest in the proceedings.
Ms Eagle
I join the Leader of the House in looking forward to the visit of the Youth Parliament, which it will also be my pleasure to attend. I also thank him for his statement and, ahead of Remembrance day, pay tribute to all those who have died serving this country and those who are now serving. We owe them all a great debt of gratitude.
We welcome the statement by the Home Secretary this week about the inquiry into allegations of sexual abuse in north Wales. The victims of sexual abuse who have come forward have suffered terribly; they should be listened to and supported. There are now, however, 13 separate overlapping inquiries into the various allegations of sexual abuse of children and young people. As I have raised with the Leader of the House before, would it not be more appropriate for a single overarching inquiry to be established that could get at the truth? While we welcome the fact that the Home Secretary did not rule it out in her statement on Monday, surely the victims deserve some clarity, so will the right hon. Gentleman ask the Home Secretary perhaps to look at this again and make a further statement?
Yesterday, my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) asked about the Leveson inquiry. The Deputy Prime Minister agreed that we should work on a cross-party basis, but meanwhile Conservative Cabinet Ministers have been publicly undermining the inquiry ahead of its publication. While some Ministers might want to, this report should not be quietly buried by the Government. Ministers must set out before publication the process for consideration of the report, and there is no need to wait until Lord Justice Leveson has reported to let us know about this process. There should be an opportunity for this House to debate the report in Government time, so may we have a statement from the Culture Secretary on the approach that the Government intend to take?
Is the Leader of the House able to update Members on when we are likely to consider the Electoral Registration and Administration Bill? Last week, in a panic, Government business managers in the House of Lords delayed the Bill; this week, they pulled it altogether from the not exactly packed legislative programme. The reason given by the Leader of the House of Lords was that there needed to be “conversations” at a senior level in government before the Bill could proceed. “Conversations” is one way of putting it; I heard it was a stand-up row at the highest level.
It has been suggested that the reason why the Government pulled the Bill is that Labour peers and our Liberal Democrat colleagues tabled an amendment to delay the implementation of new parliamentary boundaries. The Government are wasting millions of pounds on a partisan review of constituency boundaries when there is not a majority for it in this House. Voters, returning officers and all political parties need clarity about the boundaries on which the next election will be fought—and the sooner, the better. So may we have a statement from the Deputy Prime Minister to confirm that the implementation of the new boundaries will not now go ahead before the next election?
While we all enjoyed the Deputy Prime Minister’s contribution yesterday—[Hon. Members: “Hear, hear”]—the slot is actually Prime Minister’s Questions. Rather conveniently, the Prime Minister managed to avoid Prime Minister’s Questions again this week; he made it back in time for dinner with Mrs Merkel, but not for his appointment with this House. It is not just Prime Minister’s Questions that he has taken to avoiding. He has not held his monthly news conference since July—July 1911—[Laughter.] 2011. Now he has even banned journalists from flying on foreign trips with him. When the going gets tough, this Prime Minister stages his own version of “I’m the Prime Minister, Get me Out of Here!”
In the Prime Minister’s absence, and rather worryingly for him, the Mayor of London decided to sneak in and give the 1922 committee a pep talk—on loyalty. Whatever next? Perhaps they will invite the Deputy Prime Minister to talk to them about honouring manifesto commitments. Tory Back Benchers are at each other’s throats, the Government are divided and the Prime Minister has gone AWOL. Mr Speaker, the country really deserves better than this.
Mr Lansley
Let me join the shadow Leader of the House in saying that Members on both sides of the House will be with their constituents on Sunday morning at the eleventh hour of the eleventh day of the eleventh month, remembering those who have made the ultimate sacrifice for this country, including not only those who did so in the two world wars but, sadly, the many who continue to do so in conflicts on behalf of this country. I agree with her that we want to make very clear our remembrance of them.
The hon. Lady asked about an overarching inquiry in relation to the range of inquiries into the Jimmy Savile allegations, the north Wales care scandals and other such issues. The House will of course be able to debate the subject, not least on Tuesday by virtue of the debate nominated by the Backbench Business Committee. I can say on behalf of the Government that, as was made clear by my right hon. Friend the Home Secretary, we do not rule out such an overarching inquiry, but it must be emphasised that this is not an issue of principle, but an issue of what works best in practice.
That range of inquiries will have the powers and the ability to investigate specifics. If we try to substitute an overarching inquiry, there is a danger that its scope, scale and timetable will impede our progress. Not only must the police investigations be the first priority, but we must consider very carefully how we can make the fastest possible progress on other inquiries.
The hon. Lady asked about Leveson. I must tell her that I will not be asking my right hon. Friend the Secretary of State for Culture, Media and Sport to come and make a statement about Leveson before it reports, because that does not strike me as remotely practical.
Mr Lansley
Let us put substance before process, shall we? Let us wait to find out what Lord Leveson has to say. There is no prospect of its being quietly buried, as the hon. Lady suggested. The Government will respond, and the House will have a chance to discuss Lord Leveson’s conclusions after they have been reported.
We seem to have adopted the curious new convention that the shadow Leader of the House can ask me about the business of not only this place but the other place. However, I have no intention of responding. How it manages its business is a matter for the other place; let us focus on the business here.
When the hon. Lady returned to the business here, it seemed that her principal preoccupation was trying to protect the deputy leader of the Labour party from the monstering that the Deputy Prime Minister gave her yesterday during Prime Minister’s Question Time. The deputy leader does not want to see that happen again. I think that it was a 6-0 victory for the Deputy Prime Minister.
In the business statement, I was able to announce the choices for the Opposition day debates on Monday. I am disappointed to note that, once again, the Opposition have not opted for a debate on employment at a time when there are so many positive aspects of overall employment to mark, and have instead proposed a debate on the cost of living. I must say, however, that I look forward to the opportunity for us to mark the fact that the cost of fuel would be 10p per litre higher if we had followed in government the plans for fuel duty that were set out by the Labour party; the fact that inflation has halved since September last year; the prospect of a freeze in council tax for a third year, cutting people’s bills; the fact that we have funds for lending that are now being taken up; and the fact that historically low interest rates are now available. A 1% increase in interest rates today would add £10 billion to family mortgage bills—£1,000 a year for a typical family. As far as I can see, a debate on the cost of living will only highlight the fact that the people of this country cannot afford a Labour Government again.
Mr Speaker
Order. The question from the shadow Leader of the House was about Government legislation, which is why I judged it to be perfectly orderly, but, equally, it was entirely orderly for the Leader of the House to respond as he did.
Many Members wish to contribute. Let us keep it brief, and then perhaps I shall be able to accommodate all of them.
Andrew Rosindell (Romford) (Con)
I commend Her Majesty’s Government on making history last week by ensuring that, for the first time ever, the flags of each and every one of our British overseas territories and Crown dependencies were flown in Parliament square. The loyal subjects of those territories will be delighted that that decision has finally been made, but will the Leader of the House request a Minister to look into the possibility that our territories and dependencies could lay a wreath at the Cenotaph on Remembrance Sunday? So far, they have been denied the opportunity of doing so.
Mr Lansley
Of course I share my hon. Friend’s pleasure at the opportunity for us to show our continuing affection, respect and attachment to the people of the British overseas territories. I will of course ask my right hon. Friend the Secretary of State for Culture, Media and Sport if she might respond to his question about Remembrance Sunday proceedings.
Ann Clwyd (Cynon Valley) (Lab)
I was heavily involved with the child abuse cases in north Wales because several of my constituents were abused at that home. I took witness statements from four of them, and I cannot adequately describe the horror of what they described to me. It upset me greatly. I would welcome an overarching inquiry, because there have been so many small inquiries. There was the Waterhouse inquiry, and before that there was the Jillings inquiry. I ask that the Jillings report be published. I saw it at the time; I was not supposed to see it, but it was shown to me. It was subsequently pulped by the then Clwyd county council because it was afraid of the attitude of the insurers. I ask for the Jillings report to be published because it highlighted buggery, rape, bestiality, violent assaults and torture, and the effects on the young boys at that time cannot be overestimated. May I also say that I welcome next week’s debate?
Mr Lansley
I share the right hon. Lady’s sense of shock and outrage at what happened, and I know that the whole House does, too. These events took place many years ago, but in a sense that makes the situation even worse; there has not been any recognition of what took place even though so much time has passed. The victims have had to live with the consequences without a satisfactory resolution, and it is therefore all the more important that we take action now.
My right hon. Friend the Home Secretary set out the action we will be taking, and we continue to consider how best to achieve a proper resolution. There are ongoing police investigations into the abuses in north Wales and, as my right hon. Friend said, judicial investigations into what happened in respect of the Waterhouse inquiry, but I will draw her attention to what the right hon. Lady has just said.
Bob Blackman (Harrow East) (Con)
The Hindu festival of Diwali is next week. Will my right hon. Friend join me in wishing Hindus, Sikhs and Jains across the world, and in particular in this country, a very happy Diwali, and may we have a debate on the wonderful contribution the Ugandan Asians have made to this country, and the wisdom of the Conservative Government in admitting them in 1972, when no one else would?
Mr Lansley
Yes, I entirely share every sentiment my hon. Friend has expressed, including those about the tremendous contribution made by the Ugandan Asians. I know from my past responsibilities for the health service what a tremendous contribution they have made to medical services in this country, as well as, as we all know, the contribution they have made over many years in enterprise and business creation.
Festivals such as Diwali play an important role in helping us appreciate and celebrate the cultural diversity of this country. Diwali is a vibrant celebration of the victory of light over darkness, of good over evil, of knowledge over ignorance. It is a time for celebration and reflection about what we have achieved and our ambitions for the future, and I know that Members across the House will extend our best wishes to our constituents for the festival of Diwali.
John McDonnell (Hayes and Harlington) (Lab)
The Government listed that there would be a written ministerial statement today on the future of the Prison Service. They trailed that it would mark the start of the wholesale privatisation of the Prison Service, which would have enormous consequences for the large number of our constituents who work in prisons and for our communities in general. As of 10.30 am that written statement had not emerged, although it might well have done so by now. Will the Leader of the House explain what criteria were used to determine that that should be a written ministerial statement rather than a statement on the Floor of the House, given its enormous consequences for the administration of justice in this country, and if there is no ministerial statement in the future, may we have a debate on the matter?
Mr Lansley
I will, of course, check that that written ministerial statement has been laid, and I have no doubt that it will make clear to the hon. Gentleman and the House the nature of what it is announcing. If outstanding issues arise from its contents, the hon. Gentleman will note that he may have an opportunity to raise them with Justice Ministers, not least at their question session next Tuesday.
Penny Mordaunt (Portsmouth North) (Con)
A supplier can make an informed judgment as to whether it continues to provide goods to a company in difficulty, but most consumers are not similarly aware. May we have a debate on the merits of changing administration law to make those holding gift vouchers or savings preferred creditors?
Mr Lansley
My hon. Friend raises an interesting point. If I may, I will ask my colleagues in the Department for Business, Innovation and Skills to respond on that, as they consider issues relating to consumer rights generally.
Pete Wishart (Perth and North Perthshire) (SNP)
A very important debate on Scotland and the European Union had to be cancelled because the Member sponsoring it could not be bothered to turn up on time. What reprimand did that Member receive? Should there not at least be an apology given to those who had prepared speeches and bothered to turn up on time?
Mr Lansley
I must confess that I should have seen that that had happened; it is my fault that I was not aware of it, and I will certainly look into it. Of course, individual Members are responsible for their attendance at debates, particularly those they have sought, but I am sure that Members from across the House will regret it if debates to which they wish to contribute are available and other hon. Members fail to enable them to take place.
David Tredinnick (Bosworth) (Con)
Will my right hon. Friend update the House on the situation in Parliament square? Despite the welcome clearing of the square, which made it available for the public and tourists during the Olympics and Paralympics. However, one small demonstration remains, which is trying to expand and is clearly breaking the law in using sleeping equipment at night and causing an obstruction. In addition, what is he proposing to do about the fact that the main gates of the House were closed at the 10 o’clock Division on Monday because of demonstrators who were firing fireworks into the Palace?
Mr Lansley
As my hon. Friend knows, the Police Reform and Social Responsibility Act 2011 prohibited the erection of tents and the use of sleeping equipment in Parliament square. The Act also enabled local authorities to attach the power of seizure and retention of property to byelaws. So the powers in the Act allow the police to remove tents and other sleeping equipment from the square. He also raises operational matters relating to the square and its impact on Parliament, which are of course a matter for the Metropolitan police force and its commissioner. To help my hon. Friend, I will ensure that the points he has made in this House are drawn to the Metropolitan Police Commissioner’s attention.
Keith Vaz (Leicester East) (Lab)
I declare my interest as a type 2 diabetic. Has the Leader of the House seen Tuesday’s report from the Public Accounts Committee, which estimates that 4.4 million people in the United Kingdom will have diabetes by 2020? I appreciate what he did as Health Secretary to raise awareness, but may we please have an urgent debate on preventing diabetes?
Mr Lansley
I am grateful to the right hon. Gentleman for his comments about what we are continuing to hope to achieve. I have seen the Public Accounts Committee report. It is important that we recognise that the prevalence of diabetes is rising and that it is important to tackle it. Prevention is, as the cliché goes, better than cure. In that respect, we are making more progress on health checks, which can make an enormous difference in ensuring that the proper management is in place. Although we know that there is significant variation across the country, there is a rising overall level of adherence across the country to the nine principal recommendations for the care and treatment of those with diabetes.
Dr Matthew Offord (Hendon) (Con)
Tomorrow marks the international day of action for the Rohingya people in Burma. Will a Minister from the Department for International Development come to the Dispatch Box to make a statement explaining to the House how the UK Government intend to use their overseas aid programme to help these internally displaced people, given that the Government of Burma fail to recognise them as citizens of the country?
Mr Lansley
My hon. Friend will recall that my right hon. Friend the Secretary of State for International Development did update the House on the situation in Burma in a written ministerial statement last week. Of course we are deeply concerned at the recent violence in Rakhine state in Burma. October saw an increase in communal violence between the de facto stateless, Muslim Rohingya and the majority, Buddhist, Rakhine communities. The United Kingdom is providing £2 million to enable emergency water, sanitation and health care provision to go to more than 58,000 people affected. We are pledging £3 million, subject to the results it will achieve, for short-term peacebuilding initiatives. We will do all we can to support and strengthen the wider peace process in Burma, but I will ask colleagues at the Foreign Office to ensure, as they have done, that the House is continually updated.
Derek Twigg (Halton) (Lab)
Will there be a statement any time soon from the Police Minister to address the increasing problem of poor police morale? I regularly receive letters from constituents who are serving police officers complaining about the policies of this Government, the cuts to the police force and the attacks on their pensions and conditions, and morale is the lowest that I have seen it for some time.
Mr Lansley
With the police and crime commissioner elections coming up next Thursday, there is a great opportunity for us not only to raise the public’s sense of accountability in policing but morale among the police. The police can take pride in what they have achieved in reducing the levels of crime by 10%. That is the measure of what we ask of them and the measure against which they are performing. Additionally, by strengthening the engagement between police services and local communities, the police and crime commissioner elections offer a tremendous opportunity.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Next year, Zimbabwe will face a general election. May we have a debate on how the proceeds from the Marange diamonds are being used by ZANU-PF to intimidate Zimbabweans in the run-up to the general election?
Mr Lansley
I am grateful to my hon. Friend for that question. He will recall that the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), described in a Westminster Hall debate in July how we are approaching the issues relating to the militarisation of diamond finance. We are continuing to work with the non-governmental organisation Global Witness and other partners to consider the evidence prior to discussions with EU partners and, where appropriate, we will seek to retain or add names to the EU targeted measures list if there is a compelling legal justification to do so. I shall ask my hon. Friend the Under-Secretary further to update my hon. Friend.
Nic Dakin (Scunthorpe) (Lab)
I am increasingly being contacted by constituents who are concerned about the impact the bedroom tax will have on their living standards when it comes into effect. That is further compounded by the shortage of one-bedroom accommodation for them to move to. May we have a statement from the appropriate Minister on how the Government intend to increase the supply of one-bedroom accommodation in the rented sector when the bedroom tax comes into effect?
Mr Lansley
I find it astonishing that the hon. Gentleman makes that point three days after he and his party voted against the Growth and Infrastructure Bill, which, among many other things, will enable more social and affordable housing to be built. For example, we will enable sites that are non-viable because of section 106 agreements to enter into new agreements so that that housing can be built. That is what we need to do, among other things, to create new and additional social housing.
Andrew Stephenson (Pendle) (Con)
Last month, construction work commenced on the brand new £9 million urgent care centre at Burnley general hospital that the Leader of the House, as Health Secretary, approved back in March. Work has also commenced on demolishing the derelict Kwik Save building in Colne, which will be the site for the new Colne health centre. May we have a debate on NHS funding and the investments made in the NHS by the Government, as opposed to the Labour party, which downgraded my accident and emergency department when it was in office?
Mr Lansley
My hon. Friend makes an extremely good point, as ever. I absolutely agree and find it astonishing that the Labour party’s objective yesterday was to have a debate on regional pay in the NHS and completely to ignore all the ways in which the NHS is being supported by the Government and is achieving more as a consequence. As he says, there has been investment in Burnley in facilities for those with urgent care requirements, which were downgraded by the previous Government. That shows the commitment on our part. It is now clear that in the past year, we increased the NHS budget in real terms relative to the year before. Under Labour’s plans, it would have gone down and the shadow Secretary of State for Health told us that it would be totally irresponsible to increase the NHS budget in real terms. It is our responsibility, we are doing it and we will defend and support the NHS.
Valerie Vaz (Walsall South) (Lab)
The West Midlands ambulance service has seen an increase of 210 calls a day for 999 emergencies, and refused to pick up a four-year-old constituent of mine who had suffered a head injury. It is now bringing in St John Ambulance to cover front-line services. May we have an urgent debate on why charities are propping up NHS front-line services?
Mr Lansley
The hon. Lady will know that St John Ambulance, like some other ambulance services, has always worked with the NHS ambulance services. She should recall that the latest data published in the summer showed that, for the first time, all the ambulance services across England were meeting the recommended standards for responding to category A calls. There are always individual cases where things go wrong. I know that from my constituency and she will know it from hers, but if she would care to provide me or my right hon. Friend the Secretary of State for Health with details, of course we will ensure that any individual case where things went wrong is investigated.
Richard Fuller (Bedford) (Con)
May we find time for a statement from the Home Secretary about visa applications for people from India coming to the United Kingdom, and in particular for religious workers? I am been approached by Tarsem Paul, the chair of the Ravidassia community in Bedford, with concerns that the process has become unduly bureaucratic.
Mr Lansley
I am sure my hon. Friend the Minister for Immigration will want to respond. We know that we must make sure that we respond sympathetically to religious communities such as the Ravidassia community and their needs to bring people, in this case from India, to this country. My hon. Friend will know that we have not made any changes to the routes for religious workers entering this country. Clearly, I cannot comment on the details of any individual case. Visa applications are considered on a case-by-case basis. We apply firm but fair rules, with the responsibility on the applicant to ensure that they meet the immigration rules. I will be happy to speak to my hon. Friend the Minister for Immigration about whether he can help in any particular case.
Kelvin Hopkins (Luton North) (Lab)
Thousands of babies are still being born every year damaged by alcohol. It is becoming commonplace abroad to see a pregnant woman symbol on all alcoholic drinks containers. Will the Leader of the House intervene with his ministerial colleagues to bring forward legislation as a matter of urgency to provide for a pregnant woman symbol to be displayed on all drinks canisters?
Mr Lansley
I will ask my hon. Friends about that, as the hon. Gentleman asks. It is also important to improve the quality of the antenatal care, advice and support that is given to women in pregnancy, particularly those who may be more vulnerable and some of the youngest pregnant women. That is where, as I know from my direct experience, the expansion of our health visitor programme across the country is showing tremendous progress, with more health visitors who are devoting more time to providing more antenatal education and guidance.
Caroline Dinenage (Gosport) (Con)
I am sure many Members of the House will be surprised to learn that one in six of the UK adult population are functionally illiterate. That figure rises to a staggering almost half of the UK prison population. Does the Leader of the House agree that, because this is a cross-departmental issue affecting so many areas of our life, we should have a chance to discuss it in the House?
Mr Lansley
As my hon. Friend says, some Members may indeed be surprised to hear those figures. Others of us, I know, have been aware of the situation. She is right. It is important and it extends across a number of Departments. She will be aware of the importance that my right hon. Friend the Secretary of State for Education attaches to ensuring that literacy standards are met in schools and the necessity of including additional remedial work for those who are not meeting those standards as they go through school. But we have a legacy of adult illiteracy and we have to tackle it. My hon. Friend, with colleagues across the House, might like to ask the Backbench Business Committee if it will find time to discuss such an important and wide-ranging issue.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
Following Department for Work and Pensions questions this week, Ministers clearly believe that getting work experience for 20 young people in my constituency is a success, when in fact almost 1,000 are looking for a job. May we have a debate about the shocking levels of youth unemployment in this country, in an attempt to drag the Government into the real world?
Mr Lansley
The hon. Lady should remember that it was her right hon. Friend the Member for South Shields (David Miliband) who said frankly and correctly that youth unemployment in this country was rising from 2004. In the midst of a boom, youth unemployment was still rising. In the latest figures, we have seen some amelioration of those trends. The Youth Contract is about making sure that there are work experience places, apprenticeships places and special support for 16 to 19-year-olds who want to get into apprenticeships. As I have said many times, there will be opportunities, and I hope even she might encourage those on her Front Bench to make opportunities available to debate the progress that we are making on employment.
Guto Bebb (Aberconwy) (Con)
May we have a statement from the Home Secretary offering guidance on the appropriate action to take against a police officer who has been accused of using his position to intimidate and harass, a finding that has been recorded by a judge in a family law case? Are the police correct in taking no action as a result of the family court’s refusal to discuss the matter with them?
Mr Lansley
I am grateful to my hon. Friend for raising that serious issue. As he will know, police officers are expected to maintain the highest standards of professional behaviour. In addition to the criminal and civil law, they are subject to the Police (Conduct) Regulations 2008, which set out the standards of professional behaviour they are expected to maintain. When they fail to meet those standards, they can face disciplinary action. Of course, decisions about disciplinary action are a matter for the chief officer of the police force concerned or its police authority. If someone wants to make a complaint about a police officer, however it arises, they should contact the force concerned or its police authority or, if they fail to secure action that way, the Independent Police Complaints Commission.
Jenny Chapman (Darlington) (Lab)
Will the Minister confirm that the Government no longer publish police numbers on a borough-by-borough basis, which makes it very difficult for Members to make like-for-like comparisons? May we have a statement from the Home Secretary?
Mr Lansley
I will ask my right hon. Friend to reply about that specific statistical point. Speaking from experience in my constituency, I know pretty much how many police there are on the streets, and in Cambridgeshire we are recruiting more police.
James Morris (Halesowen and Rowley Regis) (Con)
The Leader of the House might recall visiting Rowley Regis hospital with me before the general election. Since then, working with the local NHS trust and local commissioners, we have secured considerable new investment for a new in-patient re-ablement ward. May we have a debate on the value of local commissioning as a way of getting valuable services into community hospitals?
Mr Lansley
I am grateful to my hon. Friend. Many Members across the House will value the fact that the new clinical commissioning groups, which have been developed to bring together largish groups of GP practices, are rooted in an understanding of how services can best be provided for patients, and often that is through accessible, community-based care, which reduces the demand on hospital services so that patients are admitted to hospital only when they need to be. We understand that in some cases people have to be in hospital, but we do not want them to be there if they do not need to be.
Anas Sarwar (Glasgow Central) (Lab)
The Ministry of Defence has announced that 50 defence specialist jobs will be moved from Kentigern house in my constituency to Abbey Wood in Bristol, at an additional cost of £50,000 a year for the MOD. A leaked MOD value-for-money analysis states in its conclusions:
“The cheapest costed option in any of the comparable timescales is for UKNCB staff to remain in Glasgow… A simple comparison between the levels of benefits (Medium) and risks (High) provides the conclusion that the arguments weigh clearly in favour of the UKNCB remaining in Glasgow.”
May we have a statement on this important issue or, at the very least, an agreement that a Minister will meet the workers in Glasgow?
Mr Lansley
The hon. Gentleman will understand that, having not had notice of that question, I cannot comment specifically on it. I will of course ask my hon. Friends at the Ministry of Defence to respond directly to his questions. I will say, in that context, that over the past two and a half years this Government have resolved for the first time the £38 billion over-commitment––the black hole in the MOD’s future commitments––which we inherited from the previous Government.
John Glen (Salisbury) (Con)
Given that 750 teenagers currently travel out of my constituency to secure their post-16 education, will the Leader of the House find time for a debate on free schools to recognise the fantastic opportunity taken by local parents, teachers and community leaders to set up a free school to meet provision in a better way for local children in Salisbury?
Mr Lansley
I am grateful to my hon. Friend. He rightly draws attention to how the free schools programme is a major success, with 79 free schools already opened. They are popular with parents and pupils. In my constituency, a free school sponsored by one of the academy schools is extending provision in places where parents and pupils most want it. I understand that a group in my hon. Friend’s constituency will shortly make an application to open Salisbury sixth-form college in September 2014; it will focus on science, technology, engineering and maths and address a shortage of such provision in the area. I am sure that my right hon. Friend the Education Secretary will welcome that application and give it very careful consideration.
Mark Durkan (Foyle) (SDLP)
Regarding the Government’s agenda and legislative programme, the Leader of the House has given us another “spot the business” statement. In large part, this Chamber is again reduced to playing keepy-uppy. In that context, how does he think that we can credibly explain, at the Parliament Week events to which he referred, that this Chamber could not afford the time duly to consider the House of Lords Reform Bill, which won such an overwhelming vote on Second Reading?
Mr Lansley
It will not surprise the hon. Gentleman to know that in my view his question is better directed towards Labour Members, who voted for the Bill on Second Reading and made it clear that this House was supportive of the principle of reform of the House of Lords, and then failed to vote to give it the time to be debated.
Nadhim Zahawi (Stratford-on-Avon) (Con)
May we have a debate on dementia? There are nearly 700,000 dementia sufferers in England, but sadly only half of them are diagnosed, and awareness of the condition is shockingly low. The Prime Minister has made this a personal priority and has today announced the dementia friends initiative whereby we will look to recruit 1 million people and train them to spot the signs of dementia early, as well as putting £10 million towards dementia research and £50 million towards making wards more comfortable for dementia sufferers. May we have a debate on this ailment, which is very serious for the nation?
Mr Lansley
I am grateful to my hon. Friend for raising an issue of concern to all Members across this House. Back in March, when the Prime Minister launched the Prime Minister’s challenge, we set a number of very ambitious objectives for ourselves. It is great to see some of those coming through and further, very important measures being put in place. In the west midlands, some of the best work that I have seen is being done in making hospitals understand dementia, identify where patients have dementia, and then provide more appropriate care to look after them. Today’s initiative relating to 1 million volunteers across the country can be a tremendous boost in providing what are known as dementia-friendly communities that people with dementia find accessible and understanding, enabling them to derive the best possible quality of life from a very sad condition.
Jonathan Ashworth (Leicester South) (Lab)
May I reinforce the point made by the hon. Member for Hendon (Dr Offord) on the Rohingya community in Burma? A few weeks ago, we had a Westminster Hall debate on this to which many Members came along. Horrific sectarian violence has unfolded again in recent days. We would welcome a statement from the International Development Secretary to update us on what her Department is doing to provide urgent humanitarian assistance to that part of the world.
Mr Lansley
I am grateful to the hon. Gentleman, who makes an important point. Many Members across this House are very concerned about the situation in Burma. We care deeply about its people, not least because the visit of Aung San Suu Kyi gave us the opportunity to appreciate the prospects for peace and democracy there, which we do not want to be undermined. I will of course speak to my right hon. Friend to see whether she might find an opportunity to make a statement of some description to the House.
Martin Vickers (Cleethorpes) (Con)
Residents in my constituency and, indeed, throughout the country are plagued with endless nuisance calls from people selling payment protection insurance and the like. The Telephone Preference Service is clearly almost entirely ineffective. Will the Government make a statement on what they intend to do about this and how they will overcome the obstacles to achieving a properly working blocking system?
Mr Lansley
We are all grateful to my hon. Friend, who has raised this issue before. I appreciate his continuing concern. In the light of the concerns that he and others have raised, the Minister for culture, communications and the creative industries, my hon. Friend the Member for Wantage (Mr Vaizey), has met representatives from the Information Commissioner’s Office, Ofcom and the Telephone Preference Service to see what can be done to strengthen action in this area. I will, of course, ask him if he could update my hon. Friend the Member for Cleethorpes (Martin Vickers) and, if appropriate, the House.
Barry Gardiner (Brent North) (Lab)
Ten years on from the Commonhold and Leasehold Reform Act 2002, Members throughout the House continue to be concerned about the exploitation of leaseholders through unfair service charges and forfeiture. Will the Government look again at this area, and may we have a debate on it in Government time, so that they can take positive action on this serious issue?
Mr Lansley
I am grateful to the hon. Gentleman for raising this matter. I am aware of such issues and will, of course, talk to my hon. Friends at the Department for Communities and Local Government to see whether they can respond to him and perhaps update us more generally.
Mr Marcus Jones (Nuneaton) (Con)
Over the past two months, 100% of the stroke care patients using the George Eliot hospital have spent 90% or more of their time on a dedicated stroke care ward, which, as my right hon. Friend will know, far exceeds the national target. Will he join me in welcoming the progress that the George Eliot hospital is making in this regard, and may we have a debate on the importance of high-quality stroke care?
Mr Lansley
My hon. Friend is a man after my own heart. I was chairman of the all-party group on stroke for about seven years before the last election. One of the things that we identified that makes a big difference to stroke outcomes is when stroke patients are admitted to a specialist stroke ward. I am happy to congratulate those at the George Eliot hospital on what they are doing. They are part of a general, substantial increase in the latest data on the proportion of patients who are looked after in that multidisciplinary context.
Nick Smith (Blaenau Gwent) (Lab)
The flawed business model of some private car park operators aims to catch out motorists. Over two years, we have seen an eye-watering 63% surge in requests for drivers’ details from the Driver and Vehicle Licensing Agency. May we have a debate on how best to protect the motorist and lift the veil on such predatory practices?
Mr Lansley
From memory, this is the Government who implemented the ban on wheel-clamping, which has given motorists protection against some of the worst excesses, but I will, of course, talk to my hon. Friends at the Department for Transport about what more we can do to give motorists a sense of proper security, rather than exposure to abuses.
Mark Pawsey (Rugby) (Con)
May we have a debate about the procurement of new public buildings? According to the National Audit Office, more than 50% of public buildings are delivered late and cost more than is budgeted. Earlier this week I had the great pleasure of opening a new building at Oakfield primary school in my constituency. It was built using a new Sunesis design solution and was completed at 30% less cost and delivered many weeks earlier than a conventional building. Does the Leader of the House agree that that approach contrasts with the previous Government’s expensive and wasteful Building Schools for the Future project?
Mr Lansley
I congratulate my hon. Friend’s constituents on building the Oakfield primary school—that is really good news—and he is absolutely right that it provides a contrast. We are already procuring schools at 28% less cost than that achieved by the previous Government’s Building Schools for the Future project. As a result of the priority school building programme, we are now targeting spending where there is greatest need, and secondary schools built using the new designs are saving up to £6 million per school compared with the BSF equivalents.
Wayne David (Caerphilly) (Lab)
The Government have put their proposed legislation for recalling MPs on the back burner. Will they bring it forward so that members of the public can hold to account those MPs who ignore their constituents and go on reality shows in Australia?
Mr Lansley
The Government have not put the legislation on the back burner. We responded to the Procedure Committee, which made significant and substantial comments that were not supportive of the proposals that were before it. We will continue to consider what progress is appropriate.
The hon. Gentleman makes a good point about the importance of our adhering to our parliamentary responsibilities, not only by being in this House, but by meeting them elsewhere. He will no doubt be considering the position of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), given the relatively few occasions on which he attends this House on behalf of his constituents. For our part, my right hon. Friend the Chief Whip and his colleagues have taken the action that they should have taken in relation to the hon. Member for Mid Bedfordshire (Nadine Dorries). I am clear that if a Member wishes to engage people in Parliament and convey to them a sense of its relevance, the place to do it is here, not in Australia.
Robert Halfon (Harlow) (Con)
Has my right hon. Friend seen early-day motion 699?
[That this House notes newspaper reports on the auction of the 4G spectrum, which suggest that it could raise around 2 billion to 3 billion in 2013; further notes that this would be enough revenue to scrap the previous administration’s 3p January petrol tax twice over; and therefore calls on the Government to continue its historic freeze in fuel duty, to continue to be the motorist’s friend and to stop the planned 3p fuel duty rise in January 2013.]
Will he find time for a statement on the auction of the 4G spectrum? Newspapers have reported that the spectrum auction could raise £2 billion to £3 billion next year, which is enough revenue to scrap Labour’s petrol tax rise in January twice over.
Mr Lansley
My hon. Friend rightly draws attention to the action that we are taking to ensure that mobile phone operators can meet the rapidly growing demand for mobile internet access and introduce next generation mobile services. That is essential for economic growth and will bring an estimated benefit of £2 billion to £3 billion to the UK economy. My colleagues have instructed Ofcom to auction more spectrum to ensure that we meet the growing demand. The Government are working to ensure that we have the digital infrastructure that businesses need.
My hon. Friend will know that any resources raised for the Exchequer by the auction are a matter for my right hon. Friend the Chancellor of the Exchequer. He will note that the autumn statement is on 5 December.
Alex Cunningham (Stockton North) (Lab)
Metal theft has damaged businesses and the theft of manhole covers has put lives at risk in my Stockton North constituency. Does the Leader of the House agree that metal theft is a serious problem across the UK and that the Scrap Metal Dealers Bill, which is due to be debated this Friday, will be an important measure in tackling it? Will he give a commitment that should Government Back Benchers obstruct the Bill, he will provide Government time to allow this important measure to come into law?
Mr Lansley
Tomorrow is the opportunity for Members to be here to take the Bill forward and I look forward to their doing so. It will be an important step in dealing with a crime that has disturbed many of us in our constituencies, not least—looking towards Remembrance Sunday—through the theft of metal on war memorials.
If I may correct something that I said a moment ago, I talked about the view of the Procedure Committee on recall, but it was the Political and Constitutional Reform Committee that made the recommendations and comments to which the Government responded.
Andrew Jones (Harrogate and Knaresborough) (Con)
Please may we have a debate about access to health care? Such a debate would allow us to explore the impact of new treatments that are becoming available, such as those for cancer; what is happening to waiting lists; what is happening in community care; and increasing access among black and minority ethnic communities.
Mr Lansley
I am grateful to my hon. Friend. Quality and access are at the heart of what patients are looking for from the NHS. Happily, there has been considerable progress on both quality and access under this Government. It is interesting to note the latest figures. The number of patients waiting beyond 18 weeks for treatment was 209,411 at the time of the last election. That has been reduced to 144,650. The number of patients waiting for more than a year for treatment was 18,458 at the time of the last election. That has been reduced to 2,052.
Pat Glass (North West Durham) (Lab)
May we have a debate on participation in higher education, which has fallen by up to 30% in parts of my region? The Institute for Fiscal Studies published a report this week which shows that the gap in participation in higher education between the richest and the poorest students narrowed under the previous Government. We are in danger of losing those gains significantly.
Mr Lansley
The hon. Lady will have to forgive me, but I was not here for the whole of Business, Innovation and Skills questions, when she may have had the opportunity to raise that issue with Ministers in the Department. In any case, we are looking for participation in higher education to be supported. The changes in higher education are focused on delivering the best quality teaching and the best quality research.
Chris White (Warwick and Leamington) (Con)
Last week, Lord Heseltine published his long-awaited report, which contained recommendations that could potentially boost our economy. The report was particularly clear that businesses need long-term strategic direction that could, and should, be provided in a cross-party manner. Given the importance of the issue, will the Leader of the House set aside Government time for that important debate?
Mr Lansley
I am grateful to my hon. Friend. Lord Heseltine presented a significant, helpful report that we very much welcome. Not only does it say that we are on the right track, but it enables us to make more progress more quickly in stimulating and delivering growth. My hon. Friend will be aware that the Backbench Business Committee has tabled a general debate for Thursday 22 November on industrial policy and UK manufacturing industries, which will afford a welcome opportunity to take forward some of the issues raised by Lord Heseltine.
Harriett Baldwin (West Worcestershire) (Con)
May we have a debate on the indignity of mixed-sex accommodation in hospitals? A report last month from the Department of Health highlighted that instances of mixed-sex accommodation have fallen by 98%, from 12,000 to fewer than 200, following measures taken by the Leader of the House when he was Secretary of State for Health. Such a debate would also allow us to highlight a decade of broken promises on that issue from the Labour party.
Mr Lansley
I am grateful to my hon. Friend, who makes an important point very well. Five or six years ago, when I was shadow Health Secretary, Labour Health Ministers regularly claimed to have eliminated mixed-sex wards, although they did no such thing. As my hon. Friend said, when we first measured the situation about 12,000 patients a month were being admitted to mixed-sex accommodation, and that should not have been happening. We have demonstrably changed that situation, and through reducing such cases by 98% have made a great improvement to the care and dignity of patients.
Glyn Davies (Montgomeryshire) (Con)
The Liverpool care pathway is a crucial part of palliative care in our country although it has recently received negative media coverage. Will my right hon. Friend the Leader of the House arrange an opportunity for hon. Members, either in response to a statement or in a debate, to discuss the importance of maintaining the integrity of the Liverpool care pathway, which is such an important part of end-of-life care?
Mr Lansley
My hon. Friend expresses his point well. In many thousands of cases, the Liverpool care pathway has enabled the right care for people at the end of life. We must look at the patient experience—as the national end-of-life care programme is doing with Dying Matters and the Association for Palliative Medicine—and where patients are complaining, we must understand what that tells us. In particular, as my right hon. Friend the Secretary of State for Health made clear, the right treatment is not the only issue and we must ensure that patients and their families understand what treatment has been provided and why, and give it their informed consent.
Future Reserves 2020
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Defence (Mr Philip Hammond)
With permission, Mr Speaker, I would like to make a statement on the Government’s consultation on reserve forces.
On 5 July this year, I announced to the House my intention to publish a consultation paper setting out our detailed proposals for the future of the reserve forces, in response to the recommendations of the Future Reserves 2020 commission. The Green Paper, which I am publishing today, marks the beginning of a formal consultation period, and a significant step forward in our plans to build the reserves of the future.
Reserve forces play a vital role in delivering Britain’s defence capability. In the last 10 years, more than 25,000 reservists have deployed on operations overseas, and more than 2,000 deployed in support of the Olympic games this summer. Sadly, 29 have paid the ultimate price while on operational service over this period. The whole House will want to join me in saluting their sacrifice.
As well as delivering a range of combat capabilities, reservists have provided numerous specialist functions, from nuclear, biological and chemical protection in Iraq, to deployed medical support, saving the lives of our injured troops in Afghanistan. Whether at home or abroad, we should be proud of the dedication, determination and courage with which so many of our reservists serve this country.
Last year, the Future Reserves 2020 commission reported that, in spite of that service and sacrifice, our reserves—particularly the Territorial Army—were in decline. Their numbers were getting smaller, the full range of their capabilities was not being used, and they were not being used in a cost-effective manner. In the Territorial Army, we still have major units configured as they were when the task was to provide mass reinforcements to counter a cold war era Soviet threat, and we remain unable to mobilise reserves to assist our regular forces on their vital standing tasks, such as the defence of the Falkland Islands.
The commission found that those deficiencies, when taken together, were contributing to an erosion of the effectiveness of the reserves and of the links between our armed forces and wider society. We cannot allow that to continue. The 2010 strategic defence and security review called for a transformation of our armed forces to meet the new security challenges and threats of the 21st century while addressing the deficit in the defence budget. In Future Force 2020, we are building an adaptable whole force to meet those challenges and threats, with our Army, Air Force, maritime and marine reserves at the heart of that force. The reserves of the future will be integral to, and fully integrated with, our regular forces, capable of being deployed as formed sub-units and units—as well as continuing to deliver individual augmentees—together providing an agile, high-tech capability, which is able to defend our country, project power abroad and respond to diverse contingencies.
Historically, mobilisation of the reserves has often been seen as indicative of an emerging large-scale crisis for which the numbers of regular forces would be insufficient—a view reinforced by the current legislative framework, under which reservists cannot be mobilised to support standing military tasks—but in future, as an integrated element of our armed forces, the reserves will be a part of almost every type of operation that our armed forces conduct, whether in combat, capacity-building or fulfilling more routine standing commitments. Indeed, some very specialist capabilities, such as cyber, media operations and medical capability, cannot cost-effectively be held in the regular forces, and we will rely upon the reserves to deliver them.
The routine delivery of the nation’s security will broaden from being the sole preserve of the standing regular forces into a responsibility that is shared, through the role of the reserves, much more widely across society. To deliver it, we are investing an additional £1.8 billion in our reserves over the next 10 years, enabling us to increase their size to a trained strength of approximately 35,000. For the first time in 20 years, our reserves will be on an upward and not a downward trajectory. By 2018, we will have grown the trained strength of the Army Reserve to 30,000, the maritime reserve to 3,100, and the Royal Auxiliary Air Force to 1,800.
Reserve units will be paired with, train with, and achieve the same standards as, their regular counterparts. They will use the same equipment and the same vehicles, and wear the same uniforms as the regulars, and they will deploy routinely, together with regular forces, on major overseas exercises. This year alone, reserve units will conduct some 22 overseas exercises, with probably twice that number next year. Integrated regular-reserve overseas training exercises are being developed and will become routine. Already, the additional investment we have put in place is making a difference. As I saw for myself last night at the Royal Yeomanry Territorial Army centre in Fulham, Territorial Army units are taking delivery of WMIK—weapons mount installation kit—light reconnaissance vehicles, Bowman radios and new Regular Army uniforms and weapons.
As by far the largest element of our reserves, the changes will be felt most keenly by the Army. To reflect the significant change in the role of Army reservists, I propose that the name of the Territorial Army should become the Army Reserve. We will consult on that proposal. Vital to delivering this transformation will be offering a new proposition to our reserves: if they make the commitment, turn up regularly to train and are prepared to deploy, in return, we will make the commitment to equip, train and fund them properly. In the future, we will give reservists much better defined, more fulfilling roles, properly resourced and with adequate training, underpinned by a balanced package of remuneration and support for them and their families, much more closely aligned to the pay, allowances and welfare support provided to the regulars. In return, we will expect them to commit to required levels of training, to meet the same exacting standards as the regular forces and, crucially, to be available to deploy alongside them.
National emergencies apart, we will provide greater predictability about periods of liability for deployment for our reserves. That will mean, typically, a deployment of no more than six months in a five-year period for Army reserves, although total mobilisation could be up to a year to cover operation-specific pre-deployment training and post-operation recuperation. This predictability will help those who serve our country, and their families, to plan their lives, and it will also help employers of reservists to plan their work forces, because, crucially, to achieve our aims we need to develop a new relationship with civilian employers. Too often in the past, that relationship has only started at the point at which reserves have been mobilised. That has got to change. It is vital that we create a much more open and collaborative relationship with employers, including: providing greater certainty about reservists’ liability for deployment, with advance warning of when their call-up liability period will be; giving confidence to employers that the skills and aptitudes reservists develop in training and on deployments will be of benefit in their civilian careers; and recognising that the relationship will need to be tailored to different types and size of employers.
I fully accept that it may be large public and private sector organisations that are best able to offer, absorb and manage periods of employee absence, and I am delighted that companies such as BT, the AA and BAE Systems have shown their support to our reserves and this consultation process. With the growth of statutory leave provisions and flexible working practices, however, employers of all sizes are more accustomed than they used to be to managing periods of absence. Further, in a modern, dynamic economy, increasing numbers do not pursue conventional careers, creating a sizeable pool of self-employed people from which to recruit.
I look forward, in the consultation process, to exploring further with businesses of all sizes how we could better recognise the support they give to our armed forces, perhaps through a kitemark-style national recognition scheme for reserve-friendly employers, or possibly through the use of targeted financial incentives for smaller employers.
Taken together, the proposals in the Green Paper point to a new strategic direction for our reserve forces. They are challenging, requiring the support of both reservists and employers to succeed, but they are also deliverable. Reserve numbers in 2018 will still be less than half the size of the Territorial Army in 1990, and recruitment levels are now starting to rise after a long-term downward trend.
Too often in the past, our reserve forces have been neglected and taken for granted—an afterthought when it came to investment and training and a soft target when it came to last-minute in-year budget cuts. That will no longer be the case. Under our proposals, with a balanced defence budget and an additional £1.8 billion of investment, our reserve forces of the future will be better trained, better equipped and better resourced than ever before. Collectively, they will take on greater responsibility, and benefit from greater reward and greater respect.
In the years to come, we will have Army, Navy and Royal Marines reserves, and a Royal Auxiliary Air Force, sitting at the heart of the defence of our national security —reserve forces of which we can be proud, supported by employers to whom we will owe a deep debt of national gratitude. I commend this statement to the House.
Mr Jim Murphy (East Renfrewshire) (Lab)
I thank the Secretary of State for his statement, and for advance sight of it and the Green Paper.
Our reserve forces can make an enhanced contribution to our regular forces and UK force projection capability. In recent years, reservists have operated in the Balkans, Iraq, Afghanistan and, most recently, in Libya. We remember each who has been lost or injured, and pay tribute to their courage and their sacrifice—a comment that is more pertinent in this Remembrance week. We, like the Government, support the modernisation of the reservists and support a name change to reflect their contemporary composition.
Today’s plans build on the last Government’s record of support for reserves, but when the Government announced deep cuts in the regular forces of 30,000 and a doubling of reserve numbers to compensate, many would not have known that the cut in regulars would go ahead regardless of whether the target for reservists is met. Given that it is the Government’s policy to rely on reservists to meet the defence planning assumptions, surely it would make more sense to make the cut in regular capacity contingent on growth in reservist capability. The Secretary of State’s comments today will be checked to some degree by concerns that he has announced a policy without yet having a clear idea of how it will be achieved, and today we have a new list of unanswered questions. Concerns will be heightened by the criticism, made by the Green Paper’s co-author, of a backlog of applicants. Will the Secretary of State reassure the House and others on whether he has increased the number of medical officers and computers available to applicants?
In the limited time available to me, I want to ask specific questions and look for specific answers in five areas. On employment, the Secretary of State announced that three companies are supporting his consultation, and we look forward to more being announced. Support from employers is vital, and we therefore welcome the approach outlined, in particular the consideration of a kitemark. Does the Secretary of State envisage such a kitemark being taken into consideration in decisions on defence procurement? Will he also say what specific incentives there will be for private companies, and whether those already taking on reservists will be recognised? It is vital, in our view, that legislation is now considered to protect reservists against discrimination in employment interviews, pay and career promotion.
On the nature of deployment and integration with regular forces, it is our judgment that reserves should not form stand-alone units on operations, and that the present system of integrating individually into infantry companies should remain. One great strength of the reserve force is its local identity, so will the Secretary of State say a little more and offer clarity on the fate of existing TA units?
On training, an enhanced front-line role must be matched by a proportionate improvement in pre-deployment training. The integrated concept should extend beyond tours of duty to preparation too, so we recommend that reservists train alongside regulars with more advanced equipment. What is the Secretary of State doing specifically, in addition to what he has already commented on, to enable such a change of practice to take place?
On mental health, reservists’ new role comes at a time when medical analysis shows us they are more susceptible than regulars to post-deployment mental health problems and post-traumatic stress disorder. Many reservists return to civilian life without decompression with those who share their experiences, and do not have access to military medical services. What improvements are being made to post-deployment care?
On benefits, our support for reservists should extend to those signing up while they are signing on for benefit. Greater mandatory training requirements for reservists could, it has been reported, lead to individuals not meeting claimant eligibility criteria. A condition of claiming must be about consistent search for employment, but someone who has lost their job should not lose their benefit because they volunteer. I hope the House agrees that no one who fights for their country should be made worse off. I have asked a number of questions of the Secretary of State, but I would like clarity and an absolute guarantee on the record that no one will be affected in that manner.
In conclusion, it is in our nation’s interest that, at a time of enormous uncertainty across the world, a greater degree of clarity is provided on how we recruit and retain a new generation of reservists. We will support and continue to scrutinise the Government’s actions, because it is now clear that our nation’s security will depend on the professionalism of our reservists and on the Government’s ability to get this right. We wish them well in that endeavour.
Mr Hammond
I am grateful to the right hon. Member for East Renfrewshire (Mr Murphy) at least for the very first and very last sentiments he expressed. I am grateful for his broad support for reform of the reserves and for the name change, which might seem trivial but is hugely symbolic of our intentions. I am also grateful for his good wishes at the end.
The right hon. Gentleman tells the House that what we are doing builds on “the last Government’s record of support for the reserve forces”. That would be the proposal to cut their funding by 30%, slash their training days and stop live firing of ammunition, I suppose! He asked me about the balance of regulars and reserves, but he was quoted this morning on the BBC website as saying that we need a smaller but stronger armed forces. That is the first time I have heard him admit that our armed forces have to be smaller, as we cut our coat to fit the budgetary cloth that we have inherited from Labour.
The right hon. Gentleman made a fair point about the backlog of applicants in the system following the move to common selection in April 2012. We are aware that we must deal with this issue before we publish the White Paper next spring. Steps are in hand to deal with his points about medics and computer access. The Army is acutely aware that it has to get people quickly from the point of application into the reserves, and not keep them hanging around, as I am afraid has happened in some cases over the past few months.
The right hon. Gentleman asked me about the kitemark proposal and whether it would be taken into account in the awarding of defence contracts. I do not believe that that is the appropriate way to award contracts. Where those contracts are subject to competition under European competition directives it would be illegal to offer priority to an accreditation that is only available to UK companies.
The right hon. Gentleman asked about specific support for employers. He will see, when he reads the Green Paper, a number of questions about the nature of the support that we should give. Financial support is already available to employers when reservists are called up for deployment. We have not closed our minds to the possibility of further financial support, but there is a fixed pot of money available to support this initiative— £1.8 billion—and, if we use it to pay employers, we cannot use it for kit and equipment for reservists. I want to ensure, therefore, that where we offer financial incentives, they are precisely targeted—at the smallest employers, I would expect—where they will do the most good. We have some excellent large companies supporting the initiative, but, with the greatest respect to them, I do not want to hand them a wodge of taxpayers’ money to recognise the excellent work that they are already doing. However, I am much more open to the idea of financial support for smaller companies.
The right hon. Gentleman asked about discrimination. We make it clear in the Green Paper that if there is evidence of widespread discrimination against reservists and if we cannot find an effective way of dealing with it without legislation, we will not hesitate to legislate.
The right hon. Gentleman asked about the existing basing lay-down. We cannot set out now the future basing lay-down for the Army Reserve, because we have not yet set out to the House the Regular Army basing lay-down. I expect to be able to do that before Christmas so that, when we publish the results of the consultation and our White Paper in the spring, we will be in a position to set out the planned lay-down of TA units around the country. Those will have to reflect the population centres where we expect to be able to recruit in the future, and we must be hard-nosed about ensuring that our limited resources are deployed in the areas where we can expect to recruit reservists.
The right hon. Gentleman asked about training alongside regulars. As the White Paper makes clear, that will be standard practice in the future. He also talked about mental health. I completely accept his point. One issue that the Green Paper raises relates to full access to the military mental health support system, both for serving regulars and reservists, and for regular and reservist veterans, and the assurance that reservists will be offered decompression time after operations. The lessons learned as a result of the Murrison report—the work done by my hon. Friend the Under-Secretary of State, who has responsibility for international security strategy—will be transferred to the reservists.
The right hon. Gentleman also raised the issue of jobseeker’s allowance. I have just asked for this to be checked, and I can confirm to him that jobseeker’s allowance is preserved for reservists and is not removed. That is an important point. People who find themselves facing a period of unemployment have an excellent opportunity to undergo their basic reserve training.
I want to finish by remonstrating with the right hon. Gentleman on one point. I do not know whether he realises the significance of what he said about deployment as formed units and sub-units, but for people in the reserve forces that goes to the very heart of this question. If we cannot support them to be able to deploy in formed sub-units and units, they will regard this as a pyrrhic victory indeed. I urge him to look carefully at what he said on this matter and consider the Opposition’s position, because the Regular Army and the reservists, to a man—
Mr Hammond
Indeed, to a man and a woman, they want to see the reserve forces able not only to continue supplying first-class augmentees, but to deploy where appropriate as formed sub-units and units.
Dr Liam Fox (North Somerset) (Con)
I very much welcome the creative and supportive way in which my right hon. Friend set out the Government’s approach to the reserves. Will any legislative changes be required to guarantee that reservists can be used for the full range of military tasks? As part of the consultation, will the Government make available to the House the experiences of how other countries incentivise employers? Other countries, particularly the United States, have a much better record than most of being able to use reservists in a full range of tasks and ensuring that they have a full range of promotional opportunities.
Mr Speaker
Order. Just before the Secretary of State answers, may I just say to the hon. Member for Truro and Falmouth (Sarah Newton) that she was 23 minutes late for the statement and therefore really has absolutely no business seeking to catch my eye? I am sure she momentarily forgot when she arrived, but she has now been reminded.
Mr Hammond
I can tell my right hon. Friend the Member for North Somerset (Dr Fox) that legislation is already in place to protect the employment position of reservists who are mobilised. He will also see when he reads the Green Paper that we are proposing legislation to extend the circumstances under which we are able to mobilise reservists, so that they can be mobilised not only for operational service overseas, but for homeland resilience and routine operations, such as the crucial defence of the Falkland Islands. He will also see that the Green Paper contains a section setting out some examples of practice in important allied nations. I am sure he already knows this, but what others will learn from that section is that at present we have a disproportionately low percentage of reserves in our total force mix compared with most of our comparable allies. What we are doing will move us back a bit further towards the average force mix of our normal allies.
Andrew Miller (Ellesmere Port and Neston) (Lab)
The medical reserves, such as those from the Territorial Army unit in Ellesmere Port, contain a lot of extremely highly skilled people who are necessary to the advancement of safety in the field. They have done a fantastic job in the recent past under both Administrations and are drawn largely from a much more devolved health service. What discussions is the Secretary of State having with his colleague the Secretary of State for Health to ensure that proper mechanisms are in place for reservists coming from the health service?
Mr Hammond
The Department of Health, along with a number of large companies, is one of our key partners in the current partnering arrangement. Many NHS trusts that I have spoken to are acutely aware of the benefits to them of properly managed reserve service. Those returning from the role 3 hospital in Camp Bastion have without doubt the best trauma training available anywhere in the NHS.
If the hon. Gentleman reads the Green Paper, he will see that, as well as appeals to corporate social responsibility and collective responsibility for the national defence, there is a strong strand of mutual benefit between the reserves, the Army and employers. We need to draw out and develop those mutual benefits, and I am sure that we will be able to do that in the case of NHS trusts.
Mr James Arbuthnot (North East Hampshire) (Con)
I congratulate my right hon. Friend on this statement, and I know that he will agree with me that the House will also wish to congratulate my hon. Friend the Member for Canterbury (Mr Brazier), without whose persistence this statement would not have taken place. I declare an interest, in that my daughter is a reservist second lieutenant.
Will my right hon. Friend confirm that it is so important that this proposal succeeds that it deserves a campaign led by the Prime Minister and, I suggest, the Leader of the Opposition, as well as the Secretary of State for Business, Innovation and Skills and the Secretary of State for Defence, to encourage employers to recognise the enormous benefits that they will get from employing people with the work ethic and the discipline that reservists show every day?
Mr Hammond
I am grateful to my right hon. Friend and I am very happy to acknowledge the role of my hon. Friend the Member for Canterbury (Mr Brazier), who has played a crucial part in developing this agenda.
Yes, my right hon. Friend is right: it is essential that we achieve success in this regard. I do not regard this as a partisan issue, and I hope that the right hon. Member for East Renfrewshire (Mr Murphy) will think carefully about the point about deployed formed units and sub-units. I would be happy to arrange for him to have some briefing on this matter, if necessary, from the relevant people in the Army and Army Reserve. I hope that we can take this forward not only on a cross-government basis but on a cross-party basis.
My right hon. Friend the Member for North East Hampshire (Mr Arbuthnut) has hit the nail on the head in talking about the benefits to employers. If we are going to make this process work, we must draw out the benefits for employers, in the general management and personal skills that reserve service will bring to their work force, and given the specific vocational training that the Army can give to reservists. One proposal in the Green Paper is to use civilian-recognised qualifications in the armed forces, making it easier for members of the armed forces—regular and reservist—to use the skills that they have acquired during service to enhance their careers in the civilian economy.
Lyn Brown (West Ham) (Lab)
What will be the mandatory annual training period for reservists?
Mr Hammond
It will vary between the services, but for the Army, which will be by far the biggest part, it will increase from 35 to 40 days a year, of which it will be expected that 16 days are delivered as a continuous period of training deployment—the same as now. The additional days will be delivered through weekend and evening training sessions, to minimise any additional burden on employers.
Mr Julian Brazier (Canterbury) (Con)
Mr Speaker, may I thank you for the contribution that you are making by giving a party for employers in a fortnight’s time?
I congratulate my right hon. Friend the Secretary of State on his really excellent and thoroughly thought through statement. I should like to underpin what he said by making a further point. The shadow Secretary of State made what was otherwise a rather well thought through response, and it was a pity that the point came up about formed units. The plain fact is that, since 2009, the reserve forces have been used as a part-time personnel unit organisation, and that does not appeal to high-quality leaders. We must have formed units and sub-units in the picture.
Mr Hammond
I know that my hon. Friend commands great respect on this issue across the House and I am sure that the right hon. Member for East Renfrewshire will have noted what he has said, reinforcing the point that I have already made. I genuinely hope that we can build consensus on that issue.
Stewart Hosie (Dundee East) (SNP)
I thank the Secretary of State for giving me early sight of his statement. I welcome the intention to increase the number of reservists. However, the reserve forces will need to be reconfigured to meet his objective of integrating with the regulars. May I ask him about the Royal Marines Reserve in particular? Will he ensure that the reconfiguration is done sensitively, and that the modern, fully equipped bases around which recruitment is now good are protected wherever possible to ensure the broadest possible geographical spread of the specialist skills? This would help to achieve the Government’s objective of an overall increase in numbers.
Mr Hammond
One wonders whether the hon. Gentleman could be referring to any particular base. Yes, he is absolutely right. First of all, we have to fix the lay-down for the regular forces; and then we have to make sure that the location of reservists is appropriate, both from a recruiting and a training point of view. Our intention is that reservist units will be paired with specific regular units, so they will work with them on a routine basis. There are obviously issues of geography that need to be taken into account. We will set out the regular basing plot before the House rises for the Christmas recess—with your permission, Mr Speaker—and I then expect to be able to set out the reserve plot and the pairing pattern when we deliver our response to consultation conclusions and the White Paper in the spring.
Sir Nick Harvey (North Devon) (LD)
I congratulate my right hon. Friend on his statement and commend his approach to this ambitious project—taking it steadily, consulting widely and not looking for a quick fix. Has he, like me, detected great enthusiasm on the part of our reserve forces for this new and ambitious programme, a determination to make it work, and an eager anticipation for what he has promised—equivalent training, equipment and remuneration to the regular Army?
My right hon. Friend talked about rebuilding the relationship particularly with smaller employers. In doing that, will he give consideration to those smaller employers, perhaps paying their national insurance as a way of supporting the ongoing relationship between smaller employers and their employees who are members of reserve forces?
Mr Hammond
I am grateful to my hon. Friend for his comments. It is probably fair to say that we can rely on our hon. Friend the Member for Canterbury to speak for the reserve forces. The response I have heard from reservists has been as enthusiastic as my hon. Friend’s response would suggest.
What we are asking of reservists in the future is a bigger commitment: to turn out for the training on a mandatory basis, and to be available for deployment on a more regular basis than in the past. Perhaps somewhat counter-intuitively, every reservist I have spoken to welcomes that greater rigour and discipline. They want to be part of a serious disciplined military force, and they want also the recognition that will come with that greater level of rigour and discipline. The new kit is already being rolled out. As I said, I saw some of it last night, and some more of it last Friday in Corby—[Interruption] —a random Territorial Army depot that my office chose for me to visit.
My hon. Friend asked me about smaller employers, and he will see when he reads the Green Paper that we looked at the possibility of making some kind of national insurance rebate, but concluded that it would be very complex to administer and that if we are to target financial assistance at smaller employers, it would be better done in the form of cash payments.
Jim McGovern (Dundee West) (Lab)
To follow up the question put by the hon. Member for Dundee East (Stewart Hosie), I will name a detachment. The Royal Marine detachment in my constituency has been the subject of some speculation. Given the new commitment to reservists, can I assure the personnel serving in that Royal Marine detachment that their future is secure?
Mr Hammond
As I have already made clear, I am not in a position at the moment to give specific assurances around individual units, but I can assure the hon. Gentleman that by the spring of next year the lay-down will be clear both for regulars and reservists.
Mr James Gray (North Wiltshire) (Con)
I warmly welcome what the Secretary of State has announced this morning about rebuilding our reserves. I suggest, however, that central to that will be a deal between those who are leaving the regular forces whom we will ask to remain in the Army Reserve, and others thereafter. That demand on them needs to be coupled with a satisfactory financial settlement in order that they will stay for a number of years.
Mr Hammond
Ex-regulars are an important potential source of reinforcement for the reserves. About 18,000 people leave our armed forces every year: that is the normal turnover outwith any specific redundancy programme. At present they are required by statute to be available in the regular reserve for a time-limited period, but in practice that arrangement is defunct. We considered whether we should seek to use the legislative powers to enforce it, but concluded that it would be better for us to approach the matter through incentivisation —incentivising ex-regulars to bring to the reserves the fresh skills and training that they have so recently received. I am confident that we shall be able to reinforce the volunteer reserves significantly with immediate ex-regulars.
Huw Irranca-Davies (Ogmore) (Lab)
I do not want to be parochial, but, while I welcome the broad thrust of the Secretary of State’s announcement, may I ask what it means for squadrons in Cardiff and Swansea? I am thinking of 223 Transport Squadron’s medical unit—which has served on the front line, and on which I served very briefly as a teenager—of 580 Transport Squadron, and of the medical squadron detachment 144. Can the Secretary of State assure me that sensitivity will be applied, and that their historic identity as well as their long-term future will be guaranteed?
Mr Hammond
As I think the hon. Gentleman will understand, I cannot give him specific assurances about individual units, but I can say this to him. We are expanding the reserves. We are experiencing a period in which the trajectory is upward. When units do not have just a nominal strength but are well recruited, with people who turn out regularly for training, they can expect a positive future.
Bob Stewart (Beckenham) (Con)
Mindful of the fact that the Army Reserve—soldiers, sailors and airmen—must be as up to par as regular soldiers, sailors and airmen, can my right hon. Friend assure me that the resources dedicated to training and sustaining the professionalism of the reserve Army and other reserve forces will be roughly equivalent to those that are required to sustain and retain the efficiency of regular soldiers, sailors and airmen?
Mr Hammond
I have set the likely training requirement for the Army Reserve at 40 days a year once basic training has been completed. The experts—the professionals in the Army on whom I must rely when it comes to these matters—tell me that that will be sufficient for the tasks that we will ask reservists to perform. Clearly there will be some tasks that we will not ask them to perform; similarly, there will be some tasks for which we will rely on them entirely. However, I am confident that the training offer, and the funding to support it, will give us a reserve that is capable of deploying effectively with the regular Army, delivering the high-quality military output that we require.
Joan Walley (Stoke-on-Trent North) (Lab)
The key to all this will be recruitment: finding the 30,000 and, subsequently, the 35,000 reservists who will be needed. Can the Secretary of State tell us a little more about the role of the current Territorial Army centres? When I go down to Cobridge barracks, as I will on Remembrance Sunday, what assurances can I give all the people who are based there? Without the necessary recruitment—and given that the Secretary of State is also privatising recruitment—we shall not have the whole of the country and the local centres to produce the 35,000 whom we shall need by 2020.
Mr Hammond
Let me be clear about the numbers. The 30,000 figure represents the total trained strength of the Army Reserve in 2018. We currently have a trained strength of about 17,000. In the other two services, the current numbers are not far short of the targets. The big increase must be in the Army reserves. The challenge is to find about 13,000 more reservists over the next six years. I think that that is achievable, especially bearing in mind that in 1990—just 20-odd years ago—the Territorial Army was 72,500 strong, and that it was even stronger than that in earlier days.
However, the hon. Lady has identified what will constitute a tension. On the one hand, we want reservists to be close to regular Army units, because that facilitates training; on the other hand, we recognise that reserve units will need to be based in the recruiting areas within the centres of population, because the part-time training that reservists undertake requires them to be able to reach TA centres relatively easily. In the spring, we will set out a basing plan which I think will effectively manage that tension.
Penny Mordaunt (Portsmouth North) (Con)
Let me first draw the House’s attention to my interest as a member of the reserve forces.
Does my right hon. Friend agree that the level of awareness and positive attitudes to the reserves among the regular forces is increasing massively, partly owing to the integration of training that has already taken place under the present Government?
Mr Hammond
I congratulate my hon. Friend, who, I believe, has just completed her reserve training. She, at least, is helping me to meet my targets.
My hon. Friend is right to point out that a key measure of success is the attitude of serving regulars to their reservist colleagues. Training together, working together and deploying together is crucial. I have asked regulars in Afghanistan privately, in the canteen, how they work with their reservist colleagues, and the universal answer is “They are no different. When we are out here, we are all doing the same job.” We need to ensure that that ethos is spread throughout the whole force, and I am confident that we shall be able to do so.
Pat Glass (North West Durham) (Lab)
What training and education will be given to employers—small employers, rather than large employers with large personnel departments—to support them when reservists return to employment, particularly when issues involving mental health problems arise?
Mr Hammond
That is a very good question. We want to segment the market, to consider the different needs of different types and sizes of employer, and to tailor the package in order to deliver something usable to them. Our approach to a company with a personnel department will be entirely different from our approach to a small company in which the boss does all the personnel work himself. During our consultation, we shall look for feedback from businesses of all types on how they can best be supported when they employ reservists.
Patrick Mercer (Newark) (Con)
In my experience, when a soldier was made redundant or reached the end of his service, he would be greatly reluctant to become involved with the Territorial Army. Will the Secretary of State expand on the incentives that will be offered to former regular soldiers, male and female? I think that any dependence on large numbers of ex-regulars will be difficult to meet.
Mr Hammond
That may have been my hon. Friend’s experience, but it is not the advice that I have received, including advice from reserve units that already contain significant numbers of ex-regulars. When I visited a reserve unit last night, a significant number of ex-regular officers and NCOs were on parade.
We will, of course, have to ensure that moving to the reserves is not only financially attractive, but a smooth process. I know that there has been a problem with ex-regulars encountering delays and being required to jump through unnecessary hoops, but we should be able to deal with that, given that these are people who, by definition, already have the skills and the training that we are seeking in the reserve forces. The question of how we can deliver financial incentivisation is one of the issues for consultation, and I should welcome my hon. Friend’s input.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The north-east provides a higher proportion of recruits to the armed forces than any other region in England, but all too often they find their return to civvy street very challenging, particularly when it comes to unemployment. Will the Government consider widening the kitemark to include employers’ records on hiring veterans and military spouses?
Mr Hammond
That would be a separate issue, and I do not want to confuse the two issues. It is an important area, however, and, as the hon. Lady will know, the Prime Minister has recently appointed Lord Ashcroft to act as a champion for veterans’ transition, focusing in particular on how we support veterans out of the service and into employment. I would not want the House to have the impression that large numbers of ex-service people are unemployed, however. Some 90% of those service leavers who are seeking work have found employment within six months of leaving. Given the economic backdrop, I think that is quite a reasonable achievement.
Mr Edward Leigh (Gainsborough) (Con)
When I joined the TA, there was no difficulty in getting recruits. There was Monday night in the drill hall with one’s chums, the occasional weekend on Salisbury plain, and two weeks’ camp in Germany. Is there not a real problem now, however, in that the Secretary of State is asking people to devote perhaps one year in five to being in a very challenging and dangerous environment such as Afghanistan? What will happen if we simply do not get the recruits? Does that point not underline the importance of maintaining the standing regular Army, rather than relying on future projections of TA numbers that may not materialise?
Mr Hammond
There are different types of recruits and, to put it frankly, I say with the greatest respect to my hon. Friend that someone who is looking to join up in order to prop up a bar on a Monday night and have an occasional outing on Salisbury plain is probably not the person we are looking for. All the discussions I have had with reservists suggest to me that they want to be taken seriously, and they know that a higher training tariff, a greater focus on skills and much more working together with the regular Army—sharing the burden of routine tasks and routine deployments with it—is the way to increase the esteem in which the reserve is held.
What we are doing on the size of the regular Army is determined by the budgetary envelope we have as a result of the black hole in the defence budget that we inherited. The exercise announced today is about ensuring that, notwithstanding that necessity, we maintain the military capacity we need in the future.
Anas Sarwar (Glasgow Central) (Lab)
This Government are determined to undermine and weaken employee rights. What assurances can the Secretary of State give to reservists that he will protect and strengthen their rights at work?
Mr Hammond
I am not quite sure what that question was all about. Under the Reserve Forces Act 1996, reservists’ employment rights are protected when they are mobilised—employers are required to keep their workplace open for them. As I said in my statement, however, our Green Paper addresses the issue of discrimination. We have not ruled out the use of legislation if there is evidence of systematic or widespread discrimination against reservists, if that cannot be tackled in any other way, just as we have legislation preventing employers from discriminating against someone who might be likely to take maternity leave, for example.
Mark Pritchard (The Wrekin) (Con)
Notwithstanding the bar talk, my hon. Friend the Member for Gainsborough (Mr Leigh) made a serious point about the synchronisation of the draw-down or reduction in regular forces and the uplift in reserve forces. Can the Secretary of State assure the House that there will be enough flexibility in the emerging policy, consultation and Bill—which it is hoped will be introduced before the new Session—for us to be able to take steps to ensure there will be no reduction in regular forces unless we are completely confident that they are back-filled with the new reserve forces?
Mr Hammond
The trajectory for moving to the planned size of the regular Army of 82,000 is set. That is driven by our determination to maintain a balanced budget and to avoid the chaos under the previous Government when every year—sometimes twice a year—and at enormous cost, budgets for equipment had to be reset and projects were cancelled or delayed. A number of levers will be available to us in recruiting reservists, including the recruitment of ex-regular forces reservists. We will retain enough flexibility to be able to use those levers if we are not getting the result we want over the next six years.
Mr Speaker
Order. I am keen to accommodate all colleagues who wish to ask a question about this statement, in which there is clearly heavy interest, but it would be helpful if colleagues could be economical with their questions and answers, as we have two debates under the auspices of the Backbench Business Committee to follow.
Barry Gardiner (Brent North) (Lab)
Given that defence procurement is exempt from the normal rules of preferential treatment, will the Secretary of State expand on why he said he thought it would be illegal to give such preferential treatment to firms kitemarked under the scheme for employing reservists?
Mr Hammond
I specifically said that that was where the procurement is not exempt from European Union procurement rules. Not all defence procurement is exempt; only the procurement of warlike supplies is exempt. Some of the strongest and most effective corporate supporters of the reserve service are the big defence contractors. I therefore think the hon. Gentleman is looking to pursue a contractual solution to a problem that does not exist, because they are already among the best in this regard.
Caroline Dinenage (Gosport) (Con)
I welcome the statement, and in particular the comments about additional engagement with employers. Does my right hon. Friend agree that the best way to get greater backing from employers is to give them greater certainty over the level of reservists’ deployment so that they can plan ahead?
Mr Hammond
That is one of the important steps we are taking. Making mobilisation liability, duration and frequency predictable is one of the tools for making reservist employees more attractive to employers.
Nic Dakin (Scunthorpe) (Lab)
Some communities where bases will close have long-standing historical ties with the military, such as Kirton-in-Lindsey in my constituency. Will the Secretary of State work with such communities to ensure that they can take advantage of the opportunity presented by the new plans for reservists, so that they can maintain their ties even though bases may close?
Mr Hammond
That is an important point. It is important that local employers realise that through supporting the reserve service they can support the retention of Army reserve bases in their area. We will certainly be sensitive to those historical links as we look at the basing lay-down.
Mr Rob Wilson (Reading East) (Con)
I congratulate my right hon. Friend on his statement, as the measures announced should mean that reservists will not again go unprepared into a warzone, as they did in Iraq under the previous Government. I have many ex-Gurkha soldiers and others of Nepalese heritage living in my constituency. Does my right hon. Friend know of any initiatives to raise a Gurkha reservist unit so as to take advantage of the loyalty, courage and skill of these brave men and to protect their proud history and distinct character?
Mr Hammond
My hon. Friend asks an extremely good question, and I shall go away and look into that matter. I have not heard of such an initiative. I suspect it may require legislation, but if there is a pool of talented ex-regular skill that we can tap into, we should certainly look to do so.
Mr Speaker
I was pleased to see the hon. Member for Reading East (Mr Wilson) agreeing that his question was, indeed, a very good one, and it will warrant a reply, but perhaps, like a good wine, it will need to mature.
Jane Ellison (Battersea) (Con)
Battersea has the great honour to be the home of the London Regiment of the TA, and many of its members have given very distinguished service in Afghanistan over the period of our combat operations there. They have told me about the high level of integration between regulars and reserves. Does my right hon. Friend agree that it is vital that we maintain that as we draw towards the end of these combat operations?
Mr Hammond
Yes. Best practice involves a high level of such integration being delivered on operations. I must say that that has probably not been uniformly the case, but it is certainly the model for the future.
Jack Lopresti (Filton and Bradley Stoke) (Con)
Can my right hon. Friend assure the House that the welcome £1.8 billion in increased funding for the reserve forces will be used exclusively for the reserve forces, and will not somehow find its way into the budgets of the regular forces, which has happened in the past?
Mr Hammond
From all the discussions I have been involved in, I can assure my hon. Friend—who I know has deployed as a reservist in Afghanistan—that the traffic is the other way. If anything, the Army is planning to invest rather more in the reserves than the announced budget suggests.
James Morris (Halesowen and Rowley Regis) (Con)
Does the Secretary of State agree that one of the opportunities arising from his plans is to bring into the reserves people who have specific skills in cyber and advanced telecommunications, which are importantly placed in the civilian population? We need to get them into the reserve forces.
Mr Hammond
Yes, my hon. Friend makes a good point. Certain skills needed in modern warfare are found in the civilian sector, with cyber and advanced IT skills being obvious examples. How we use reservists who have those skills does not necessarily require them to undertake the same type or level of training as, for example, an infantry reservist; in practice, their daily civilian job is giving them the on-the-job training they need. We will seek to be flexible in how we use and train reservists who have specialist skills.
Simon Reevell (Dewsbury) (Con)
In 2003, nearly 4,000 Territorial Army soldiers were rushed to Iraq even though their level of training did not qualify them to be sent to rifle ranges in the UK. As a direct consequence of being deployed without being fully trained, one of them died. Will the Secretary of State confirm that under the scheme he has announced there will be no short-cuts on reservists’ training?
Mr Hammond
I take on board entirely what my hon. Friend says. The significance of my statement today is that the training that has become, in effect, optional over the past half a decade will become mandatory once again; people will have to do the training tariff they are required to do, and they will be recognised for doing so. People will not be able to remain in the Army reserve if they do not do the training they are required to do.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
May I use this opportunity to pay tribute to those reservists—and more regulars, especially those from 3 Commando Brigade—who have lost their lives while defending our country? Will my right hon. Friend confirm that the armed forces covenant will certainly cover those people, that we will ensure that we have a structure in place to look after service families when reservists go off on operations and that we share information on the reservists with organisations such as the Royal British Legion, the Soldiers, Sailors, Airmen and Families Association, and Combat Stress, so that they are in a position to deal with those people as and when they come back and need help?
Mr Hammond
As my hon. Friend will see when he reads the Green Paper, it contains a section that talks about extending the armed forces covenant appropriately to cover reserves. On supporting families, he is absolutely right, although we face a different challenge because reservist families, by definition, do not live in military communities and are dispersed, so this has to be done in a different way. Access to the regular military support apparatus, for example, the military health care, dental facilities and mental health facilities, is a crucial part of the package.
John Glen (Salisbury) (Con)
I acknowledge the broad support of the Federation of Small Businesses and the massive contribution made by large employers, but may I ask the Secretary of State to reflect on the situation of micro-businesses and businesses that have between five and 10 employees? It is crucial to develop a realistic package to provide the incentives for business owners to release their staff to participate, particularly in areas such as Salisbury, where there is great enthusiasm to do so.
Mr Hammond
The consultation is designed exactly to explore with different types of employer in different sectors and of different sizes how best we can work with them, recognising that different challenges are faced by different types of business.
Jeremy Lefroy (Stafford) (Con)
Following the question from my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile), does my right hon. Friend agree that welfare support for families is crucial to recruitment and retention in the reserves?
Mr Hammond
Yes, indeed. When my hon. Friend reads the Green Paper, he will see that it has a strong focus on that aspect.
Henry Smith (Crawley) (Con)
My constituents are very proud of the Royal Electrical and Mechanical Engineers Territorial Army units, which will be on parade as part of the Crawley remembrance services taking place this Sunday. Will the Secretary of State tell us what plans he has for the REME units as part of this welcome statement on growing and supporting our reserves?
Mr Hammond
My hon. Friend rightly points out that many of our reserve units will be on parade this Sunday, taking a full and active part in the commemorations. As he will know from comments I have already made, I cannot give unit-specific assurances, but I can say this to him: in the restructuring of the Regular Army, a deliberate decision has been taken to reduce manpower disproportionately in logistics, engineers and REME, which will require a disproportionate growth in the reserve strength in those three areas. I think he can probably work out the rest for himself.
Mark Pawsey (Rugby) (Con)
As someone who ran a small business, I can tell the Secretary of State that there will be strong support on this from small businesses, but they will need to plan for the absence of people, many of whom will be key members of staff. Businesses will be looking for a lengthy period of notice about planned deployments, so can he reassure the House as to his proposals on the matter?
Mr Hammond
I welcome my hon. Friend’s comments. Yes, we are saying the period of liability for deployment will be determined in advance and will be of broadly fixed duration. There will be a broadly fixed period of immunity before deployment again, and there will be longer periods of specific notice of any given deployment.
David Mowat (Warrington South) (Con)
In my previous career, I came across instances where being a reservist did adversely—wrongly—affect someone’s promotion opportunities. One way of balancing that would be to go down the procurement route in respect of the kitemark. I believe that other countries in the EU would do this in terms of local content, so are we not dismissing it too easily?
Mr Hammond
There are a number of ways in which we can address discrimination. As I said, I have not ruled out the use of legislation, but I also believe that the package we have set out today will make it less likely that employers will feel the need to discriminate against reservists, because we are making their liability for service more predictable and more well understood in advance. I do not believe that using things such as the kitemark scheme as a way of conveying a privileged position in a bidding process is compatible with our overall objective of achieving best value for money for the taxpayer in the procurement of military equipment.
Andrew Stephenson (Pendle) (Con)
Our reservists are some of the best informed about what works and what does not work currently, and about the challenges they have faced. So how will the Secretary of State ensure that our reservists, particularly those serving abroad, in Afghanistan and elsewhere—I have a very good friend who is serving with the United Nations in Cyprus—are able to contribute to the consultation?
Mr Hammond
The consultation is being made available online. Indeed, it is being published in electronic form only, apart from the requirement of the House to deliver hard copies here. If it were not for that, this would be an all-electronic consultation. It will be given publicity through the chain of command. Furthermore, the responses that we receive will be processed by an independent contractor and anonymised before we get them, so reservists may feel confident that they can respond anonymously with their views.
Backbench Business
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
House of Commons Administration and Savings Programme
(12 years, 1 month ago)
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15:02 - The House divided: - Ayes: 13 / Noes: 179 - Question accordingly negatived.
Mr Speaker
I should inform the House that I have selected the three amendments standing in the names of Adam Afriyie, Sir Alan Haselhurst and Mr Robert Halfon.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
I beg to move,
That this House notes the medium-term financial plan for the House of Commons Administration as set out in Appendix A to the First Report from the Finance and Services Committee (HC 691); endorses the intention of the Committee to recommend to the House of Commons Commission a House of Commons Administration Estimate 5 for 2013-14 of £220 million; notes the intention of the House of Commons Commission to make savings of 17 per cent in real terms from 2010-11 level by 2014-15 in line with the wider public sector; and endorses the Savings Programme as set out in Appendix B to the report.
May I begin by thanking the Backbench Business Committee for having allowed this debate to proceed and by thanking you, Mr Speaker, for having encouraged me to go ahead and seek it? It might be helpful to say at the outset that I intend to address: first, the reasons for having this debate; secondly, the principles behind the savings plan and the medium-term financial plan; and, thirdly, some of the detailed issues. I will then say something briefly about the amendments. It might be helpful to tell the House that I hope to make progress in the first part of my speech, but will welcome any interventions in the second.
The debate is something of a first, so let me begin by setting out why we are having it and what I hope it might achieve. Its purpose is to set before the House the advice that the Finance and Services Committee will give the House of Commons Commission on the administration estimate, which is the estimate of funding required to operate the House. I stress that it is neither the Members’ estimate, which concerns all the parts that affect us, such as our staffing and other arrangements, nor the capital estimate, which affects the refurbishment of the House. The administration estimate is for the running of the House itself. The Committee will also advise the Commission on the underlying financial plans, including the activities, strategies and principles that have informed the savings programme. This is an opportunity for Members to debate and, if required, to vote on the proposals.
The Finance and Services Committee, which I have the honour of chairing, has scrutinised with considerable care over some period of time the financial plans and savings proposals. Our findings and recommendations are set out in our report to the House. Our terms of reference charge us with advising the Commission, which is the statutory body required to take the decision, so this is the opportunity for Members to debate the advice that the Finance and Services Committee proposes and to amend that advice if they wish. For the first time, they will be taking a full part in the debate about how House services are provided.
I am pleased to see that there are three amendments and that Members wish to engage in the process. I look forward to the contributions that are to come. I believe that this is an important step in wider scrutiny of how we operate internally and it is therefore important to us and our constituents. I also believe that it is an important debate for our staff and the management of the Palace. I want to reiterate the tribute I paid in a recent Westminster Hall debate: we are served by dedicated and loyal staff who take immense trouble to ensure that we are looked after. They undertake their duties with great efficiency and the minimum of fuss and they are led by a team of officials and managers who set out to satisfy us and who usually succeed. I want to place on record my appreciation of all they do, which is, I am sure, shared by Members on both sides of the House.
At a time of financial constraint, it is wholly right and proper that we are seen to be seeking to operate in the most cost-effective way, consistent with our overarching parliamentary duties of scrutiny, legislating and representing our constituents. To achieve this, we have set a savings target of a 17% reduction in the estimate from the baseline estimate of 2010/11, which was £231 million. By 2014-15, the estimate will need to be £210 million to achieve that target. We are on track to achieve that and the estimate of £220 million, which we are advising the Commission to accept, undertakes that task.
From the outset, it was agreed that simply salami slicing 17% of everything across the board would be inconsistent with achieving the targets for quality of service that we require. Each area of activity has therefore been carefully considered and analysis was made of what was required and then of how to achieve it. In management speak, it is called re-engineering, but I was determined to try not to get that in—I have clearly failed. That is at the heart of the plans to deliver an improved service for our parliamentary duties in a more effective and efficient way. I should stress that our goal is as much quality of service as efficiency and the core principle that has informed all the activities is to ensure that parliamentarians can properly, fully and effectively carry out their duties in this place and can do that at the best value.
Now that I have set out the broad principles behind the plan, let me touch on some of the key areas. I preface that by saying that a considerable amount of saving has already been achieved by simply looking at what we do and how we do it and working out how it can be done better. In addition, the House has adopted the same strictures on pay as the civil service and I draw Members’ attention to the appendices that analyse many of these areas. Today’s proposed estimate of £220 million is, as I have said, a stepping stone on the way to £210 million in 2014-15. The proposals for achieving it are set out in appendix B.
The first key area is what is known as market testing. It is completely appropriate for any organisation to consider what it does and how it might best deliver what are known as the non-core activities. In this place, an obvious example is the Travel Office, where we employ travel professionals on a competitive basis to provide the best service for us. At the other end of the scale are core activities, which are the things that our House service does and that we would never expect to be done by anyone else. They are core to delivering the service. In between, there are areas that are vital to us but not necessarily core activities. Those are the areas where it is proper to see whether an in-house service is providing the best value. The concept behind market testing is to ensure that the services we provide internally are benchmarked against outside provision to show that we have the best value for money.
Detailed analysis of the potential to market test in four areas of the House service, including catering, has been completed. We have reached a point where the in-house teams have developed thorough plans for making improvements and reducing costs internally and have conducted market research to provide comparators. Staff in the areas concerned have been closely involved and have come up with imaginative solutions, supported by people with expertise from outside.
Our colleagues on the Administration Committee have considered the internal improvement plans for catering and have welcomed their approach. The decision now is whether to proceed with the improvements in-house or formally to test the market with the possibility of those services being outsourced. I observe that the Chair of that Committee, the right hon. Member for Saffron Walden (Sir Alan Haselhurst), has tabled an amendment based on a meeting the Committee had earlier this week. I would certainly be minded to accept it and I believe that it is acceptable to other Members of the Finance and Services Committee with whom I have been able to have a word. I look forward to hearing his speech in due course.
The second key area is what is known as print to web. The aim is to move to a more digital-first approach to publishing, with less use of paper and hard copy. The printing of the soft-bound weekly Hansard has already ceased. Some while ago, under the previous estimate, we gave up publishing the weekly compendium of early-day motions. We are considering written questions, which will not be published in the daily Hansard from 2014 but will be published far more quickly and accessibly on line. Clearly, in this project it is important that the quality of the digital access is improved to ensure that the quality of the overall service is better as a result. It is a classic example of the quality of service being the more important goal rather than the saving. As a result of the initial work, nearly £2 million was saved. In the last year, about £1 million was saved and in the coming year, more than £1 million will be saved. If this year’s plan is accepted, we will already have achieved a saving in excess of £5 million.
The perhaps slightly contentious part of all this concerns the leather-bound volumes of Hansard. I have written to all those Members who find this a deeply cherished part of their parliamentary experience. Only 14% of Members currently subscribe to the service and, of those, only a small number feel that it would be a gross inconvenience to lose it. We have negotiated a discount and the bound volumes will be available to Members who wish to purchase them, but for the rest, we will be making a saving of some £970,000 a year by discontinuing them.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
May I reassure my hon. Friend that that is a reasonable saving? I discovered early on in my 39-year parliamentary career that the accumulation of bound volumes of Hansard was not very practical from a domestic point of view.
John Thurso
I am grateful to my right hon. Friend. I can tell him that I have had particular praise from the wife of one hon. Friend, who thanked me profusely for having relieved her of the duty of piling those up in the loft. So all in all, it is a wise move but, as I say, for those who wish to continue to receive bound volumes of Hansard, we have made provision for them to be purchased.
The next point that I would like to touch on is the provision of ICT. The aim here is to move to a more cloud-based system. This will allow Members to access all the services they need from virtually any equipment they choose to use. It moves the security aspects—one of the most important points—from their individual pieces of hardware on to the cloud system. So cloud e-mail and office services which are designed to provide flexible access from anywhere and virtually any device should be a truly enabling feature for Members.
Andrew Miller (Ellesmere Port and Neston) (Lab)
As a Member who is trialling the use of iPads in Select Committee—which, by the way, is proving very effective—I can report that we cannot put information on the cloud at present because the servers for Apple products are in the United States and are therefore covered by the Patriot Act. That presents some interesting problems. Has the Committee given any thought to how we can solve them?
John Thurso
I am most grateful to the hon. Gentleman. The Committee is not yet engaged on the Patriot Act. What we are engaged in is ensuring that these questions are asked of Parliamentary ICT. That is the important point. PICT is currently running what is called the cloud-readiness project to look at all these issues. If we want to arrive at the point where all the benefits that I have sought to outline are available to us, ensuring that the system is secure and that storage and transmission facilities are available are clearly prerequisites for any provider of cloud services. If a provider cannot offer that, it will not get the custom.
Ms Angela Eagle (Wallasey) (Lab)
As someone who, when she was a Minister, was responsible for the early stage of planning of the census, where we came across a similar problem with data storage, issues of privacy and the US Patriot Act, may I ask the hon. Gentleman to make sure that he asks the appropriate questions to ensure that when we finally get a cloud, it will be a cloud whose storage is in the UK so that we can avoid the Patriot Act issues?
John Thurso
I am extremely grateful to the hon. Lady. Had I not thought of those questions before, it is now firmly planted in my mind to ensure that they are all properly asked.
The last point that I wanted to touch on is the plans to increase revenue. The Administration Committee has done considerable work on this, and we had a debate in Westminster Hall which featured that topic. I know that my right hon. Friend the Member for Saffron Walden will speak in this debate and I am sure that he will cover this in greater detail. It is also the subject of an amendment tabled by my hon. Friend the Member for Harlow (Robert Halfon). Notwithstanding the fact that I am about to disagree with him, I respect hugely the point that he puts and I am extremely grateful to him for having raised it in the debate. It is one of the core points and it is absolutely right that we as Members should discuss that. He has therefore done us a service by tabling the amendment, and I am grateful that it has been selected. However, I will now proceed to disagree with him, if I may.
The House has operated a number of facilities for staff, visitors and Members, including cafes, restaurants, bars and shops, for a considerable length of time. I hope it will be uncontroversial to affirm that these should be correctly priced and effectively costed. All these are details that the Administration Committee goes into. However, the Palace not only houses Parliament, but is a world-class heritage asset and one of the United Kingdom’s leading visitor attractions. I suggest that as such, we have a duty to make the Palace available to visitors who want to visit it, and an equal duty to ensure that the cost of that does not fall on the taxpayer, but is recovered from those visitors.
The key point is to ensure that there is no conflict between Parliament as a working institution and the Palace as a world-class visitor attraction, so I shall set out my principles in that regard. They are three. First, Parliament is a working institution and while it is sitting, those activities take precedence over any other activity. Secondly, all citizens have the right to visit their Parliament and to engage with their Members of Parliament and the parliamentary process without any charge at any point. Thirdly, subject to those first two principles, the Palace is a world heritage and tourist asset which should be made available for tourist visitors, provided that the costs of such provision are recovered and not passed on to the taxpayer.
I believe—and I think this is where I fundamentally disagree with my hon. Friend the Member for Harlow—that provided we have absolutely ensured that parliamentary proceedings are sacrosanct and that citizens can visit the Palace without a charge and without fear of a charge, we have a duty and a right to open it to wider visits and to charge to recover the costs.
Robert Halfon (Harlow) (Con)
I am grateful to my hon. Friend. In his document he talks about respect for Parliament. This sums up the nub of my argument. The effect of what he proposes is that people who are rich, such as corporates that can pay more money, will have special privileges to get into the Palace of Westminster. That is what I find objectionable. I do not make the distinction between when Parliament is sitting and when it is not sitting.
John Thurso
I am grateful to my hon. Friend and I entirely respect that point of view. I just fundamentally disagree with it, in the nicest possible way. Let us take, for example, the fact that we are putting up the prices for commercial filming in certain parts of the Palace. We have done that for many, many years. All that we are currently doing is making the prices roughly equal to the charges for any other commercial activity. Let us consider another example. My fellow Commissioner, the hon. Member for Aberdeen North (Mr Doran), is Chairman of Mr Speaker’s Advisory Committee on Works of Art and has done a power of work to open up the art work in this building by offering specialist tours in secure areas to people who would not otherwise be able to get there. Those tours mean that members of staff have to be assigned to that duty. The choice, it seems to me, is that we either recover the cost of those members of staff so that we can widen the access, or we do not do it and do not pay the staff so that we can stay within budget. An ever-increasing openness of the Palace that takes no account of the costs is plain wrong.
Mark Tami (Alyn and Deeside) (Lab)
Surely this is about striking the right balance: the costs should not fall totally on the taxpayer, but at the same time the charges must not be so high that only the rich can afford them and people are deterred from coming here.
John Thurso
I completely agree. There is a need for balance. I cannot give an assurance on the part of the Commission, or indeed any sister Committee, but my view is that we should proceed gently and with caution, just as we did when we introduced charging for entry during the summer recess. We opened up the Palace hugely to tourists and charged a fee that was broadly in line with what people pay to access other tourist attractions. That seems to be the right and proper way to do it. It also creates employment, which I think is good news. My view is that we should do it, but let us move at a reasonable, considered and measured pace without rushing into anything. I would certainly advise whoever introduces it that going with the grain of what has been said is the best way forward.
Mr George Howarth (Knowsley) (Lab)
Does the hon. Gentleman agree that his formulation of “cost recovery”, is actually the opposite of the “commercialisation” of facilities that the amendment tabled by the hon. Member for Harlow (Robert Halfon) refers to?
John Thurso
I am most grateful to my right hon. Friend—I call him that because he serves with me on the Finance and Services Committee. I absolutely agree. I read in one of the newspapers that it was proposed that someone from Disney World do something in Westminster Hall. That is not on the agenda and never has been—if it was, I would join my hon. Friend the Member for Harlow in the Lobby like a shot. What we are talking about is the recovery of cost for the proper opening of the Palace to visitors. There will come a moment when it is a matter of judgment in some areas, but I believe that we are capable of making those judgments sensibly when we get there.
Dan Byles (North Warwickshire) (Con)
I find myself in sympathy with both sides of the argument; I very much see the point my hon. Friend is making, but I also sympathise with the concerns expressed by my hon. Friend the Member for Harlow (Robert Halfon). Will my hon. Friend the Member for Caithness, Sunderland and Easter Ross (John Thurso) consider some sort of sunset clause that would allow Parliament, after a period of time, to reflect on how well the changes have operated so that, if some of the concerns that have been raised appear to have been justified, we might consider changing once again?
John Thurso
I am grateful to my hon. Friend for his intervention. I observe in passing that I have managed to attract both sides of the argument—clearly, I am sitting in the right place in the Chamber. I do not think that a sunset clause is necessary, because it is my hope that we will regularly, perhaps annually, have a debate of this kind. If at any time we reach a point where Members clearly feel as our hon. Friend the Member for Harlow feels, that debate would be the time to say that enough is enough. If we reach that point, I am confident that is precisely what the House would do. That is the reassurance I can offer my hon. Friend the Member for North Warwickshire (Dan Byles).
Nigel Mills (Amber Valley) (Con)
Does my hon. Friend agree with the following two points? First, we are privileged to work in a palace, rather than some modern, purpose-built place that would be a lot cheaper to run, so we must find some way of defraying the costs of maintaining and repairing it, and it is right that not all of that cost should fall on the taxpayer. Secondly, we are also privileged to enjoy many services, functions and eating places. Unless we can find a way of generating more revenue to support those facilities, we will lose them, because the public will not stand for ever for that being subsidised to the extent it has been in recent years.
John Thurso
I am grateful to my hon. Friend for those comments. On his point about catering “subsidy”, the actual sale prices in most of our outlets are comparable to either, in the case of the dining rooms, private sector outlets or, in the case of the cafes, a normal work canteen. The prime cost is that of food, which in the trade we used to call the kitchen cost, and that is comparable to similar commercial operations, so the gross profit, or kitchen profit, is comparable. The problem is that we occupy the facilities for only part of the week, so for the remainder of the week they cost money because they are serviced and there are staff. Therefore, the gross profit is insufficient to cover the total fixed cost, and on that basis we have a subsidy. I think that it is an appropriate subsidy, particularly if we are looking at this debate. Equally, his point that we should be reasonably expected to reduce that subsidy by the way we operate in order to give the best value is absolutely correct.
Andrew Miller
Furthermore, the fixed costs are higher here because of the nature of the building.
John Thurso
I am happy to agree with the hon. Gentleman.
I am conscious that I have occupied the crease for far longer than I had intended and do not wish to upset you any further, Madam Deputy Speaker, so I will crack on. My last point regarding the amendment tabled by my hon. Friend the Member for Harlow is that it essentially asks for more time. I say to him, with the greatest respect, that I have spent two years circulating e-mails, writing reports and seeking to consult Members, some of whom have engaged and some have not—he has been a great engager. We have had a Westminster Hall debate on the matter and today we are debating it in the Chamber on an amendable motion. It does not get any better than that, as far as parliamentary time is concerned, so I suggest that now is the time to make the decision, whatever the House chooses.
Two other amendments have been tabled. I have already referred to that tabled by my right hon. Friend the Member for Saffron Walden, who chairs the Administration Committee. I believe that other members of my Committee are content to accept it if the House wishes. The other amendment was tabled by my hon. Friend the Member for Windsor (Adam Afriyie) and relates to an extremely important point about the Parliamentary Office of Science and Technology. I know he is hoping to catch your eye, Madam Deputy Speaker, so I will not go into detail. Suffice it to say, on the basis of the briefing he gave me, I have talked at length with officials and am certain that we will be able to secure the necessary discussions between him, his board and the relevant people to ensure that those points are properly taken on board. I hope that the result will be the correct accommodation.
Members have an historic opportunity to take their destiny in their own hands in considering what services we want and how they should be funded. I am delighted to see so many Members in the Chamber and delighted that there are so many amendments, even though I ask the House to reject at least one of them. Let us have a debate, make a decision and settle the matter. I end by thanking the members of the Finance and Services Committee and the officials who have helped them, both at Management Board level and below, to ensure that the work we have done has been thorough and solid, which has enabled me to lay before the House a report and plans that are well considered, well structured, thoroughly thought through and that, I think, offer a solid way forward. I commend them to the House.
Madam Deputy Speaker (Dawn Primarolo)
Order. For the convenience of the House, I will make it clear that I will call the amendments selected to be moved formally at the end of the debate so that we can deal with each of them in order. I hope that is clear. Given the time constraints on this afternoon’s business, there will be a 10-minute time limit on all Back-Bench speeches.
Mr David Winnick (Walsall North) (Lab)
I would like to thank the Chair of the Finance and Services Committee, the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), for his useful introduction to the debate. I do not particularly want to go into the amendments; I will decide accordingly when the time comes and vote one way or the other.
Mention is made in appendix A of the Committee’s report that by 2015
“The House of Commons will be valued as the central institution in our democracy”.
That is stating the obvious. Whether it is valued or not, or savings are to be made or otherwise, I have always thought that this place is the basis of our country’s democracy; I am unaware of any alternative institution that ensures the democratic process and the rule of law. The appendix also refers to Parliament having
“the accommodation it needs to operate in a modern democracy.”
That subject is my main reason for wanting to speak in this debate.
First, let me say that I entirely accept that savings need to be made. It would be a rather odd situation if we were urging savings everywhere else and ourselves took the view that that would not be appropriate in the Palace of Westminster. That is not necessarily to say, by any means, that I agree with everything that is being suggested.
Aspects of the way in which this place is run and managed sometimes rather surprise me. For instance, I came into my office in late autumn, when there is no necessity for any central heating, and was surprised to find that it was on at full blast and would have been for some days. Obviously, I took appropriate action. I am not suggesting for one moment that central heating should be reduced for those who work day in and day out in this place—Members’ staff, officers, and employees of all kinds—but perhaps some savings could be made in a way that would reduce public expenditure. I certainly would not have liked to pay the heating bill for my office out of my own pocket, nor would I want to claim for my constituency accommodation money that was not justified.
There should be no ambiguity about what I am going to say about cleaning, so let me point out that I am a lifelong trade unionist and a member of the GMB, and I am pleased about that, but, as my hon. Friends will know, I would say it regardless. Conservative Members might take a different view, but be that as it may. On page 18 of the report, there is a recommendation to reduce the number of cleaning staff directly employed by the House and not to renew existing employment contracts. I am concerned about that. Four or five years ago, there was a row about the terms and conditions of service of cleaners not employed by the House of Commons being far inferior to those of cleaners who were directly employed. There was a demonstration, and a lot of pressure applied both inside and outside the House, and the necessary changes were made. The cleaning contract for the House of Commons is with KGB; I am not making that up. Presumably it is not the organisation that became so notorious over 70 years!
When the Leader of the House winds up, I would like him to say whether the same conditions of service for cleaners directly employed by House of Commons apply to those who are on contract with KGB. Is there sickness pay? Is there any pension arrangement? Are their conditions in any way worse than those of directly employed cleaners? I believe that there is no difference in terms of hourly payment, but I am concerned about their conditions of employment.
I now come to my main point. The sum to be saved by 2014-15 is about £20 million, in round terms. However, figures that I have obtained from the Library, and which are in the report, show that spending on the maintenance of the Palace averaged some £30 million in each of the past three years. That, of course, was for both Houses. The contribution made by the House of Commons was, I think, somewhat more than half; in round figures, it was about £54 million, which is a very considerable sum. We know that the maintenance is absolutely essential—it is not done for the sake of it—because this building would not be able to operate on a daily basis if it were not undertaken. That is not in dispute; I am in no way challenging it, and no one else is likely to do so.
Another report, “Restoration and Renewal of the Palace of Westminster”, makes alarming reading and shows why the House of Commons must at some stage, I hope in the near future, make a decision on this building. It says that water penetration is widespread throughout the building, including the House of Commons and the House of Lords, that asbestos is equally widespread, that the building’s mechanical and electrical services are very defective, and that in some areas there is a high fire risk. Another area where essential maintenance is needed is the roof of the Palace, which causes the water penetration and so on. We are not debating that report today, but passing reference is made to it in the report before us.
There is no doubt that we all agree on the savings, but are we going to grasp the real issue that this 19th-century building is not fit in any way for the 21st century? We must recognise that we can keep on spending the money on maintenance year in and year out, but, inevitably, the upshot will still be that a complete overhaul, with all the absolutely essential work that is necessary, will need to be undertaken. Moreover, it will undoubtedly have to be done with Members and everyone else having been evacuated from the Palace; it cannot be done while people are working here, even in the summer recesses—as we all know, if an emergency arises the House is recalled at a moment’s notice. I hope that it will be possible for a decision to be reached in time for the necessary work to begin in the next Parliament. Having known over the years how reluctant the House of Commons is to reach a decision, I very much doubt that that will occur, but I certainly hope that it will be done by 2020.
I am sure that the Leader of the House has read the report to which I referred and will recognise that I am not exaggerating about the overall work that needs to be done. Although I can sometimes be accused of exaggeration by Conservative Members, I do not believe that I am exaggerating now. Yes, it will cost a lot of money, but, as I have illustrated, we are spending money year after year on essential maintenance work. I agree that there must be savings; for the reasons I have stated, I will not oppose the recommendations in the report. However, the House should, as quickly as possible, reach a decision on the bigger, absolutely essential job of making sure that this Palace is fit for purpose.
Sir Alan Haselhurst (Saffron Walden) (Con)
I pay tribute to my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso), because this is the first time that the House has been able to examine, after a considerable degree of preparation and consultation, what is, in effect, its budget. This is an important occasion, and it may well be one that can be repeated on an annual basis.
Some people, when they look at the suggested savings, might think that we are dancing to the Executive’s tune and that that is not what a legislature should do. In fact, one can see from our spending plans that there are ways of making changes and savings that bring us up to date in our operations, even if we are in a 19th-century building. The trouble is that everyone has their own ideas about savings, and what pleases some will not please others, according to their particular pattern of working. At some point, a package needs to be decided. It is not necessarily just a question of cutting or of doing things in a different way; the other ingredient can be to generate income.
We should not over-emphasise the public’s reverence for this building, as my hon. Friend the Member for Harlow (Robert Halfon) has done in the past, because I suspect there is a lot less reverence for the catering deficit, which was £5.9 million at the start of this Parliament and which the proposals will, if carried, bring down to at least £4.4 million for 2012-13. If there is doubt whether we can press ahead with the full programme for the restoration and renewal of this building—a matter to which the hon. Member for Walsall North (Mr Winnick) has just referred—it is because of the fear that the public will be concerned about the costs involved. I think that the public look to us to act in a responsible and, I would hope, business-like way.
I want to concentrate on catering and retail, bearing in mind the thrust of my hon. Friend’s amendment. Clearly, we felt that the catering subsidy could not be ignored. We were not exactly helped by the Commission’s decision to impose a 10% price increase at the start of this Parliament, before the Administration and Finance and Services Committees were in place. That got us off to a difficult start. I wish it had left it a little longer. It has resulted in some perverse effects.
People think of this place as 650 Members of Parliament, but there are in fact 13,000 pass holders, not all of whom have the same income as MPs. A few have higher incomes, but for the most part they are on much lower incomes, and outlets have seen a reduction in footfall. Members of Parliament also entertain their constituents here and are finding that it has become much more costly to do so. We should not create a regime that makes Members hesitate to bring in guests because of the facility costs in certain outlets.
Income generation is an important element in achieving our objectives and we can do it through both catering and retail. I do not think that a considered approach to the issue should be dismissed—as my hon. Friend the Member for Harlow seems to wish—as commercialisation, as though it were a vulgar activity. If, in his own words, this is the people’s palace, I do not see why we should not widen access, especially when our facilities are not needed by us.
Robert Halfon
My right hon. Friend has said that some of the proposals are justified because Members are finding the restaurant prices too high. What he is saying is that it is okay to bring in companies to have special access to our facilities, because that will help Members reduce their bills. How can that be right and how would members of the public react to such a proposal?
Sir Alan Haselhurst
My hon. Friend is both unfair and wrong. I said that one effect of the price increases has been felt by colleagues, but that a much greater effect has been felt by lower-paid pass holders in this Palace—I was more concerned for them. The fact of the matter is that large organisations, be they charitable, private sector or nationalised, have access to this place already, and we take a great deal of revenue from them. All they need is the fig leaf of sponsorship from a Member of Parliament. The proposals simply say that access could be achieved without the presence of a sponsoring MP. There is no actual difference with regard to the ability to access the Palace.
I am worried about the IPSA effect—the Independent Parliamentary Standards Authority—on our budgeting arrangements. I believe that the change to Tuesday’s sitting hours has been effected by those colleagues who have found themselves without support for accommodation in central London. I must not impute motive to them, but 43 out of the 96 people affected by that IPSA regulation voted for the change in hours. I can understand why, but it has a serious effect on revenues. On Tuesday evenings this place is now deserted, and on Tuesday mornings we now have great difficulty in bringing in visitors from our constituencies, which is something that many Members value. That is also a question of access.
The Administration Committee has looked—indeed, it is still looking—at how our facilities can be better used. As a general approach, I honestly do not see what is wrong with that. First, I would like to think that Members themselves would use the facilities more often—that would be a start. The Committee, together with the catering management, is trying to find innovative ways in which we can hold Members here more often to take advantage of the facilities and, therefore, make a contribution to revenue, but allowing public access is the other way. Other Parliaments do it. Indeed, in the Parliament of Quebec, the public are able to book a table in the restaurants not only when Members are not present, but on days when the Parliament is actually sitting. I am not suggesting for a moment that we go that far, but the idea that this is a revolutionary or demeaning move on the part of the Palace of Westminster is entirely wrong.
Is it wrong to host civil ceremonies? Is it wrong to develop specialist tours, such as a works of art tour? Is it especially wrong to hire out the facilities? That is what we already do, but we could do more of it. My amendment to the business improvement plans simply draws attention to the valuable work done by the management in that direction, and I believe that that should be given the fullest opportunity to work before we consider any outside catering or similar. Let us put that to the test first—that is the gravamen of my amendment.
Mr George Howarth
In congratulating the management, does the right hon. Gentleman agree that they have received considerable co-operation from the trade unions in achieving their ends?
Sir Alan Haselhurst
I absolutely endorse what the right hon. Gentleman has said, although I hope that my testimony to the work that has been done was implied in the fact that I said that the business improvement plans should be given a chance.
Turning to the amendment tabled by my hon. Friend the Member for Harlow, I am speaking ahead of him, but he has helpfully sent round an e-mail indicating the thrust of what he intends to say. As I have indicated, I do not believe that “commercialisation” is a dirty word. I think that we should adopt a business-like approach, respect taxpayers and recognise that they are concerned about what this place costs, and, at the same time, widen access for many more of those taxpayers. The fact is that we do not yet have a proper visitors centre. We have talked about it in the past and there is a motion in its favour dating back some years, but we have shied away from the cost of it. We ought not to have people standing in a queue outside in all weathers, waiting to get into this building. It is a serious interference with their rights and, in part, probably, the true business of the House.
My hon. Friend the Member for Caithness, Sutherland and Easter Ross mentioned film crews when responding to an intervention by my hon. Friend the Member for Harlow. There is nothing new about film crews using the Elizabeth Tower—that has happened before. All we are talking about is charging a proper fee. As I have said, rooms can be hired out already—what is wrong with that? The demand for commercial tours is ever greater, so why should we not satisfy it? Of course, if we meet that demand, there is wear and tear and it is reasonable, on the whole, to find the income to deal with that.
If that is wrong or demeaning, would my hon. Friend extend that description to the sale of souvenirs? We could be accused of going down market by doing that. When I first came here a long time ago, the only gifts available were bottles of whisky and packets of cigarettes. Souvenirs have been extended a great deal since then. It gives great pleasure to people to have the opportunity to buy such things. We could certainly sell a lot more of the gifts that we have. We are doing it, revenue is going up, and I do not see why we should not take every single opportunity proposed by the report.
We are talking, as I said at the beginning, about the House’s budget, which has been laid out in detail. If we take out any item, we must consider the alternatives. I say respectfully to my hon. Friend the Member for Harlow that some of the alternatives that he put forward in the debate on the Clock Tower to save £469,000 a year would, if debated individually like the Clock Tower charges on that day, be heartily rejected by a large majority of his colleagues. The idea that we should cut down on parliamentary outreach at a time when we are trying to extend the idea of what this place is throughout the country or that we should cut down further on overseas trips and delegations, which would hit at the very purpose of our Select Committees, let alone other groups in this House, is all wrong.
It is absurd to suggest that there has been no consultation before today’s debate. The Administration Committee consulted, listened and put forward a sensible plan that we would defend to the hilt. We cannot afford to delay. We need to have a budget in place.
Mr Clive Betts (Sheffield South East) (Lab)
It is right that we are looking at a financial plan for the House that makes 17% savings. Given that all our constituents are seeing cuts to the public services that they receive, they would be incredulous if we said that we could not find any way to make savings in the way that this House operates. It is right that we are trying to do so.
It is right that we are having this debate and that Members are being allowed to vote on how much money is spent on the administration of this House and in what way. Having been in this House for 20 years, it seems unbelievable that we have never had this opportunity before. It is right that we have it today and that we should have it in future years.
It is also right that a fundamental principle of the proposals is that any reductions in spending should not reduce the ability of MPs to do their job and to hold the Executive to account. That has been a fundamental principle throughout the discussions of the Finance and Services Committee.
I commend the way in which the Chair of the Finance and Services Committee has conducted this operation. The way in which he has led the discussions, involved members of the Committee, tried to reach consensus, and gone outside the Committee to try to engage Members in a number of forums, both collectively and individually, has been an excellent example. He has alluded to the fact that he has not always received a massive response to those attempts to engage and gain views, but he has certainly done his best to do so. The issues before us are detailed. In general, the way in which we have approached them has been excellent.
We have been assisted by the advice of the management of the House. I put on the record my thanks to them for that. They have come forward with reports, alternatives and detailed analysis. In the past, I have sometimes questioned the way in which the management of the House have operated. Sometimes they have provided alternatives to Members, but sometimes the process has been very opaque. On this occasion, they have been detailed and helpful. They have certainly operated in a very professional manner.
I pay tribute, as did the Chair of the Finance and Services Committee, to the staff of the House as a whole. The service that they give us is excellent. They are thoroughly professional and very committed to supporting our work as Members of Parliament. The way in which they have been involved in the process has been good. I talked to union representatives the other day. They are clearly not happy about every single proposal and they do not necessarily agree with all the reductions, but they are appreciative of the way in which the process has been conducted, both on the part of Members and how management have sought to engage with them.
I draw attention, in particular, to the business improvement plan, which has involved a great deal of discussion with staff representatives to try to get consensus and agreement. That has largely been achieved. I support the amendment tabled by the Chair of the Administration Committee because, given the extent of the commitment from management and staff representatives to that process, if we said today that we would go ahead with market testing without giving those proposals a chance to be implemented to see whether they work, it would be a breach of trust with everyone who has engaged so willingly in the process to try to reach a successful conclusion.
A fundamental principle is that we must not make savings or reductions in expenditure at the expense of the pay and conditions of the lowest paid workers in this building. That would be completely wrong. I worry that we would be doing that if we went to market testing, on top of the savings that can be made through the business improvement plan. Indeed, I hope that at some point we will commit ourselves to a living wage in this place, so that people who face the very high costs of living in London can be paid a little more for the work that they do for us.
Finally, I come to the amendment tabled by the hon. Member for Harlow (Robert Halfon). Like the Chair of the Finance and Services Committee, I understand why he has raised the idea, but I think that he is wrong. I subscribe absolutely to the three principles that the Chair of the Committee laid out. Of course this building has to be open and available for Members of Parliament to do their job. Nothing should be put in the way of that and we obviously have first call on the use of this building. Of course it is right for this building to be open and available for constituents to visit us and see how we work.
However, when people come in simply as visitors, I see no reason why we cannot charge them, just as they can be charged by Westminster abbey or Buckingham palace. I really do not see the difference. This place is expensive because of the nature of the building. It is a world heritage site. People come here just to admire the building or to look at the art collections and other things. It is reasonable that we should ask them to make a contribution. The Chair of the Administration Committee is right that many organisations already pay to use this building. They rightly and properly get the sponsorship of an MP, who signs a form to enable them to do that. Why should they not be able to use the buildings at weekends when the place is empty and contribute towards the costs of running it?
There is a fundamental flaw with the amendment tabled by the hon. Member for Harlow. It would be wrong to agree to a spending plan today without agreeing to the income proposals on the other side. If we did that and the income proposals were rejected in a further debate, we would have agreed a net spending level that was not sustainable. We would then have to increase the level of net spending, in which case we would not make the 17% reductions, or agree to other specific spending reductions to allow for the income that we would not raise. It is important, if we are to have a serious debate about the financial plan and come to a serious conclusion—as I am sure we will—that we agree to the totality of the plan, including the spending proposals and the income proposals. That is why I will vote against the hon. Gentleman’s amendment if he presses it.
However, I support all the provisos put forward by the Chair of the Finance and Services Committee. We must continue to monitor the situation to ensure that the principles that he rightly laid out are adhered to.
Madam Deputy Speaker (Dawn Primarolo)
Order. To allow enough time for the last debate in the House this afternoon, the winding-up speeches are due to start at 2.40 pm. I am reducing the time limit to eight minutes because I can see eight Members standing and I want to finish at a reasonable time.
Adam Afriyie (Windsor) (Con)
I rise to speak to amendment (a), which would insert in the motion after “sector” the words
“agrees that the saving to the annual budget of the Parliamentary Office of Science and Technology (POST) by 2014-15 should be no greater than the 1.4 per cent saving cited in the Savings Programme as set out in Appendix B (Table 3, item 3) to the report”.
The amendment appears on the Order Paper in my name and in those of many colleagues who have a keen interest in and concern for the future of science in Parliament. This debate marks a watershed moment for science in Parliament. Depending on the way in which the budget changes are introduced, there is a danger that they could spell the end of science in Parliament as we know it. I shall elaborate on that in a moment.
I thank the Chair of the Finance and Services Committee for presenting such a well considered report. The report recognises the financial pressures on this place and skilfully manages to identify sensible cost-saving and efficiency measures. It intends not only to reduce expenditure, but to improve the level of the services that are available to Members. It is self-evidently a carefully thought through and well balanced report, and it benefits from a great deal of consideration. I also pay tribute to the House of Commons Commission, which is ably chaired by Mr Speaker. There is no doubt that he and other Members of the House have the best interests of this place in mind.
I commend fellow members of the Parliamentary Office of Science and Technology board on their dedication to science, which I am sure they will make clear later today. I also recognise the hard work and commitment of John Pullinger who heads the Library services, his staff, Chris Tyler, who is the new director of POST, and the expert staff who keep parliamentarians informed on scientific matters. Finally, I say a quick thanks to the Campaign for Science and Engineering, the Royal Society, research councils, many distinguished scientific bodies, and distinguished peers for their input and support.
We have come a long way since the days of the debate on genetic modification, and hon. Members are far more informed than they once were on issues that used to create partisan rivalries and arguments on ideological grounds. Nobody would wish to see science in Parliament undermined in any way, and this debate is a chance to ensure that science and reason prevail in future Parliaments.
As Chair of the POST board, I urge the House of Commons Commission to take note of this debate. We are in danger of sleepwalking into drastically reducing science and technology services for Members at a time when scientific issues are rising up the political agenda and becoming increasingly important in public policy debates, and I therefore draw the attention of the House to my amendment. The third recommendation in table 3 on page 20 of the Finance and Services Committee report refers to a total saving of £98,000 by 2014-15. I am aware of talk behind the scenes about potentially removing a senior position within POST to try to fulfil that reduction in costs, or of moving a member of POST to the Library. In previous, carefully conducted consultations on the matter, the option of removing staff from POST or of reducing POST services came at the bottom of a list of dozens of options. I hope there will be further meetings following this debate, and that we will get to the nub of the issue, but to depart from that careful thinking, consideration and sensible process of prioritisation would be dangerous. I hope that will not be the case.
The Department for Information Services has a budget of about £20 million, £6 million of which is for the Library and research budget. POST has a budget of just £570,000, so to remove £98,000 from its budget seems deeply disproportionate. I am sure that is not the intention, however, and I hope we can resolve the issue. It would be the biggest cut to the smallest body in the Department for Information Services. All hon. Members recognise the economic realities that we face, and I, the POST board, and those who work at POST recognise that we need to make a contribution, which we are happy to make.
POST is vital for many reasons. I do not have time to run through them all, but they include its independence, balance and authority, which are critical to improving the use of science and technology in Parliament. POST never offers policy recommendations; it is non-partisan and its analysis is entirely impartial, while recognising that science and technology has a key role to play in public policy making. It plays a vital horizon-scanning role for Parliament, and identifies topics that will be upcoming in the near future and about which Members of Parliament and peers will need to make decisions. POST is rigorous and professional—that is important—and all its publications are peer-group reviewed. All its events are open to outsiders as well as parliamentarians, and furthermore, it creates a great network and makes connections with other members of the science community in Britain.
Rather than mere assertions, I will provide some facts. More than 1 million POST notes were downloaded from its website over the past year; 80% of Members use POST notes twice a year or more, let alone parliamentary researchers and peers. One thousand people attend POST events each year, and for every POST note written, 15 external contacts are formed, amounting to several hundred new contacts each year. Above all, through its fellowship scheme, POST leverages in a huge amount of external resource that can be used in the Library and to support Committees. At last count, that incoming resource amounted to approximately £300,000, which could be said to substitute the £570,000 taken up by POST’s budget. POST is the golden goose; it is the gateway and platform for leveraging in external scientific support.
The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) has gone some way towards this, but it would be helpful if he could clarify, unambiguously and sooner rather than later, a precise figure or percentage for the future budget, so that the POST director and board can make decisions about work programmes and how to leverage in external support.
I have a couple of observations and then I will draw my remarks to a close. The most important point concerns the removal of a senior post from POST.
Sarah Newton (Truro and Falmouth) (Con)
My hon. Friend is making a compelling and erudite speech. As a member of the Science and Technology Committee, may I say how vital POST’s work is in informing members of that Committee?
Adam Afriyie
I thank my hon. Friend for her intervention; she is absolutely right. The Science and Technology Committee is among many Committees of the House, and the other place, that are supported by the external resource that POST brings in.
Savings could be made to the Library and research budgets in other ways, and I will provide a couple of examples for consideration. The A2 post in the Library is equivalent to a civil service grade 7 post—staff who would normally have people reporting to them. I do not suggest the removal of those posts or that anyone who is currently in that job should see their salary reduced or the grading changed, but by introducing, through natural wastage and replacement, a B1 rather than A2 position, over five or six years one could save up to £0.5 million a year without diminishing the service to Members.
POST is an independent body and provides a very different service to that of other Library research services. POST advisers spend 10% or 20% of their time—between £50,000 and £100,000-worth of resources—working for Select Committees and other bodies within Parliament. Finally, a reduction to POST’s budget contradicts the Government’s position on science and that of the Labour party. We need more science in Parliament, not less, and I look forward to future discussions.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
It is a pleasure to follow the hon. Member for Windsor (Adam Afriyie). I will be mentioning his constituency in my remarks, which were written before I realised that he would be speaking before me, although I am happy to take any credit for the choreography.
I am grateful for the opportunity to contribute to this important debate on mid-term financial planning. Most hon. Members share the view that it is an honour to work in these magnificent buildings and surroundings. I am fortunate because my constituency is only three miles away, and I think that I have personally guided between 5,000 and 10,000 of my constituents round these buildings over the past 15 years. My majority is 7,000 and I do not think those numbers are unconnected. It is a privilege to show people round, and when I tell them that I spent 23 years in the London fire brigade, and say that this is the best fire station I have ever worked in, they all recognise that that must be a matter of fact. I want to keep it that way; I want to keep these buildings here, so I disagree with some of the comments made by my hon. Friend the Member for Walsall North (Mr Winnick).
I wish to speak about fire safety. All hon. Members know the history of fire in this place, and the great fires of 1512 and 1834 were central to these buildings. I speak as a member of the parliamentary fire safety committee, which is chaired by Mr John Borley. I thank him and Ms Charlotte Simmonds, who is also on that committee, for helping me to prepare these remarks.
I wish briefly to raise three issues and ask the Leader of the House, the shadow Leader of the House, and the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) and his colleagues, to respond, or at least to be aware in future discussions of the matters I am about to raise. The Leader of the House will be aware I have tabled three parliamentary questions this week on fire safety. The three issues I want to raise must be dealt with in the financial envelope of the House. They are: first, the evacuation arrangements from Parliament and the Chamber; secondly, the level and lack of take-up of fire safety training by MPs, MPs’ staff and House staff; and thirdly, the overall future fire protection spend.
On evacuation, a number of hon. Members in the Chamber now would have been here during the only evacuation that has taken place in anger, when two chaps hit Tony Blair, the then Prime Minister, from the Gallery with three packets of powder. The Speaker suspended the sitting, and hon. Members walked out of the Chamber into the Lobbies. How wrong that was, although we did not know at the time. I should have remembered that it was wrong from my fire brigade training. I was busily writing Her Majesty’s message for the day as Vice-Chamberlain of Her Majesty’s Household. It is a matter of regret that I did not scream out to the Speaker and tell hon. Members to stop. Had the powder been toxin, hon. Members would have trailed it through central London. Nowadays, the Doorkeepers are trained to lock us in. Many hon. Members might not realise that, but if it happens again, we are not going anywhere.
That is the situation in a bio-terrorist attack, but if there is a fire, we need to evacuate. How many Members of Parliament since 2010 have even thought about evacuation from the Chamber? I propose that we have an evacuation of the Chamber and the Galleries to test our procedures, perhaps on a Thursday afternoon, which is when we debate Back-Bench business. We could extend the debate for 30 minutes to accommodate the evacuation. There would be some cost, but it would not be great.
Such an evacuation needs to be considered. It is not health and safety overkill. Subsequent to the fire at Windsor castle—I said I would mention the constituency of the hon. Member for Windsor—Her Majesty personally participates in evacuations when she is there. If it is good enough for the Head of State, it should be good enough for parliamentarians. We ought to understand the procedures to keep ourselves, members of staff and visitors safe.
On training, the parliamentary intranet home page features an A to Z index, which lists fire safety awareness training for MPs, MPs’ staff and House staff. The training provides simple awareness of whichever building people occupy—exits, muster points, safety procedures and so on. It is simple, useful and effective. It is money saving, but it could also be life saving, and it takes fewer than 10 minutes. The number of MPs who have undertaken the training is three; the number of MPs’ members of staff is 52; and the number of House staff is 714. That is 0.5%, 2.8% and 35% respectively, which is not good enough. To escalate those numbers considerably, I ask all hon. Members in the Chamber to find 10 minutes next week to take the training—it takes no longer than that—but more importantly, they should ask their staff to do it, because they would be looking after their safety.
Evacuation marshals are needed in most parts of the parliamentary estate. There have been several evacuation drills recently—colleagues would have participated in them—and we should thank all the volunteers who undertake those duties on top of their normal work, because they, along with others, look after us. All fire safety legislation has come about because of a tragedy or disaster. Therefore, I appeal to all hon. Members to think about fire safety.
Finally, on future fire safety improvement works, the proposed medium-term financial plan includes £20 million for fire safety improvement works on the parliamentary estate from 2013 to 2017. Key aspects of the works include the fact that work is required in advance and as part of renewal works. In addition, fire safety works in advance of any renewal works will aim to minimise disruption to Members, but they should be aware that some disruption could be necessary. Fire safety works in advance of any renewal work will seek to achieve value for money and avoid nugatory spend. Clearly, the programme has been agreed, and I hope it will be delivered, but if the plan proposed by the hon. Member for Caithness, Sutherland and Easter Ross is not approved, future fire safety improvement works will be in jeopardy and the future of the Palace will be brought into question.
I should say a quick word on the performance of the fire safety section and those who work so assiduously to protect us. Despite ageing infrastructure and systems, improvements to the management of fire safety have resulted in a 94% reduction in fire incidents and a 54% reduction in false alarms on the estate since 2005-06. Parliament experiences in the region of 200 to 300 false alarms per year on the estate. Although they are managed, only about 15% result in evacuation. Colleagues will be aware of the Fire Brigades Union lobby of Parliament yesterday concerning cuts in the fire service throughout the country, some of which—I suspect—are inevitable. One London fire station suggested for closure is Westminster, which will obviously cause concern to those who take an interest in fire safety in Parliament.
In conclusion, we should commend those key members of staff who work so hard to keep us safe. I ask the Leader of the House, the shadow Leader of the House, the hon. Member for Caithness, Sutherland and Easter Ross and his colleagues to keep sight of the fire budget in their financial planning to ensure that these buildings are protected for hon. Members and generations to come. I fully support the report’s recommendations and hope the House does likewise later.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
I congratulate my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) on his work and on how he has brought his business experience to bear for the benefit of the House. I am glad we are having this debate. It has been a long journey from the 1970s, when I was involved in the House of Commons Commission when it was first established. Nobody then had an idea how the House’s money was being spent, but now we are at the point where the House makes its own decisions, assisted by my hon. Friend and the Finance and Services Committee.
As Chair of the Liaison Committee, I need to ensure that the necessary cuts to the House budget—they are necessary to ensure we co-operate with the rest of the system in austerity—do not reduce the effectiveness of Select Committees and hamper us in our efforts to hold the Government to account and engage the public in our work. Subject to the Committee, I make decisions about travel and other expenditure. We try to steward our resources as carefully as we can, but the Committee has looked more broadly at resources, including in a report published today on Select Committee effectiveness, resources and powers.
The report reviews how Committees go about their work and the importance of it. We took a great deal of encouraging evidence. Academic research has indicated that Committees are successful in influencing Government and public debate, and that we play an important part in promoting public engagement with the parliamentary and political process. Of all the work that MPs do, the work of Select Committees is among the most accessible to the public, because we deal with subjects that relate directly to people’s lives, and our inquiries draw constantly on the evidence, and often the oral evidence, of people who experience the laws we pass. My Committee—the Justice Committee—regularly has in front of it victims of crime, ex-offenders and all kinds of people who bring their life experience to bear on the processes of the House. As much as possible, Committees take their inquiries out of Westminster, giving people who feel remote from the House of Commons the opportunity to see that our work is relevant and important to them.
Chapter 6 of the Liaison Committee report states:
“While committees greatly value the service they receive”
from the House service and external advisers,
“there has been concern among some chairs about turnover of staff in the Committee Office, the balance between generalists and specialists among committee staff, and the flexibility of the House Service to respond to the changing requirements of committee members. We have also been concerned to ensure that the current programme of cuts to the overall budget of the House of Commons should not damage our capacity to carry out effective scrutiny.”
Another concern of Committee Chairs is the increasing burdens on their staff and constituency staff that arise from the increased expectations of them—they are now directly elected. Some of those costs should fall on the House budget rather than the budget provided to assist Members in their constituency work. The Liaison Committee report notes that the Committee Office is embarking on a change programme following a review under the savings programme. Its objectives include making oral and written evidence to Committees accessible to the public, so that they can read it quickly and easily online. With that goes an end to the routine printing of written evidence. Some Committees have found that difficult to accept initially, but because of how people access information now, it is a logical and cost-saving way to go.
Another objective is to provide Committee members with easier access to Committee documents so that they can be read any time, anywhere, and that is part of using IT more effectively. Committees, as the hon. Member for Ellesmere Port and Neston (Andrew Miller) indicated earlier, are experimenting with paperless operation—indeed, he has his iPad in front of him now—but not all parts of the parliamentary estate are equipped for this purpose. This presents a real problem, and we may have to spend in order to save, by ensuring that wi-fi is available, for example, and Committees can make the transfer from paper to online.
The programme seeks to make better use of staff resources, for example by reducing the effort now devoted to preparation for printing. These sorts of actions can reduce costs and use resources more effectively. The Liaison Committee welcomes the programme as an opportunity to improve and modernise the service that the Committee Office gives Committees and the public, but we emphasise that it is important that it should be shaped not just by the need to produce savings, but by the longer term goal of increasing Committee effectiveness. Our report recommends more stability in Committee staffing; the ability to recruit some Committee Clerks directly from outside; greater flexibility in bringing in outside experts; and a modest increase in the number of media officers to enable us to have the work of Committees better explained and properly understood in the media.
In the longer term, we would like to see funding for additional staff in Chairs’ offices, for the reason I gave earlier, and we look forward to a positive response from the House of Commons Commission to our recommendations on resources in due course.
We conclude, in chapter 6 of the report:
“Now may not be the best time to argue for increased resources, but it should be the long-term goal of the House to build up the capacity of select committees, to improve their effectiveness and status, to increase their powers and influence, and to improve their efficiency by providing chairs and staffs with accommodation and infrastructure to enable them to hold Government to account.”
When the House decided that the Chairs of Select Committees should be elected in secret ballot by the House as a whole, and that all members of Select Committees should be elected by the Members in their party, again in secret ballots, the House made an important decision about the role that Committees play. That decision has had a real effect on Committees’ self-confidence; on the way the Government treat Committees; how Committees are seen outside; and Committees’ ability to function independently and provide a scrutiny process that is different from the partisan argument about broad political policy issues that dominates the reporting of Prime Minister’s questions and such events. It is increasingly recognised what an important part of the parliamentary process the Select Committee system is, and the way in which we shape and use our resources needs to reflect that importance.
Andrew Miller (Ellesmere Port and Neston) (Lab)
I am happy to support the amendment tabled by the hon. Member for Windsor (Adam Afriyie), but I also congratulate the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) on a thoughtful report and the work of his Committee. He could shave a few pence off the House of Commons print budget by shortening the name of his constituency, but that is not the only inconsistency that I want to bring to his attention. He spoke with some expertise on the issue of generating income. He has now heard the contribution from the hon. Member for Windsor on the role of POST, and I hope to point out the inconsistency of the position that has been adopted in the report in respect of that budget head.
I am the chairman of the Parliamentary and Scientific Committee, which is the oldest all-party group. It was formed in 1939 and its first report was on the role of brown bread in the war effort. I therefore declare an interest. Some of my predecessors had a cross-party discussion with Baroness Thatcher when she was Prime Minister, and from that the Parliamentary Office of Science and Technology was formed. It was originally an external body funded through a charitable organisation, with the Parliamentary and Scientific Committee appointing the trustees. Lord Morris, who was one of the trustees, sadly died recently, and his contribution to that body was exemplary, along with that of others on a cross-party basis.
That charitable body, which has received significant funds over the years from the Wellcome Trust, the Gatsby Charitable Foundation and others, put all the original money into the pot that created POST and still supports some of its activities. Incidentally, I have a responsibility in that regard, because the PSC will appoint the successor to Alf Morris. The project that we conducted through POST in Africa was entirely funded through that process. The point has been made that this House has influence well beyond the shores of the United Kingdom, and when I was in Uganda with the Select Committee, I was delighted to meet a fellow who had been on one of the POST fellowships through that scheme.
The scheme has leverage, but to lose senior posts will do a disservice to that, and that is the point that I want the hon. Member for Caithness, Sutherland and Easter Ross to consider. There are 32 letters in that constituency name—it is even longer than Ellesmere Port and Neston. Every senior post in POST levers in a number of research fellows, and that is a contribution to the House in kind from the wider research community that should not be underestimated.
We have some wonderful people on the Library staff, starting with our chief librarian, John Pullinger. He has just had the honour of becoming president-elect of the Royal Statistical Society, following in the footsteps of the late Harold Wilson. The team John leads have an extremely difficult job, and having the extra leverage from the work done by POST makes a significant difference.
The PSC recently asked Lord Oxburgh to conduct a review of what is happening with science in Parliament. It has just been published and we are working on it. Lord Oxburgh identified the importance of the role of POST in helping to inform Parliament about scientific matters, and I am happy to make that report available to the hon. Gentleman and his Committee.
The hon. Member for Windsor referred to the external views that have been expressed. A letter was sent yesterday to Mr Speaker in his role as Chairman of the House of Commons Commission which is signed by some extraordinarily eminent people, including the director of the Science Museum Group; the managing director of Sense about Science; Lord Krebs, who is my opposite number in the Lords; and Harry Kroto, a Nobel laureate. They all signed a letter pleading with Parliament to think again about how it carries out this work. I urge the Speaker to place a copy of that letter in the Library because it informs this debate in an important way.
David Mowat (Warrington South) (Con)
The hon. Gentleman is making a very rational argument for POST and I am listening to it carefully. Is there not perhaps a more symbolic argument to be made at this juncture of our country’s development and given the need for science and technology? We could learn from the fact that the Government exempted science and technology from their cuts. It would be hugely symbolic if we were to cut POST more than other areas—and it would just be wrong.
Andrew Miller
I could happily have a debate with the hon. Gentleman about whether flat cash is a cut or not, but in the spirit of working together on a collegiate basis on this matter, I am happy to agree with the point he makes.
All parties in this House regard the science base of the nation as critical to our success in the future. It therefore behoves us to have a better understanding of science. If we do not find better ways of engaging with the science, engineering and maths community, we will be doing ourselves a massive disservice. There are some fantastic schemes. The Royal Society pairing scheme got a good airing on the radio last week. A number of projects are run by a wide range of all-party groups to help to inform parliamentarians. For example, the next meeting of the Parliamentary and Scientific Committee, on 27 November at 3 pm, will bring experts into the House to address the issue of ash dieback. Members should put it in their diaries, because that problem will be much wider spread than it is now.
There are hugely important challenges that none of us, whatever our backgrounds, are properly equipped to deal with. Even if one was, in a previous life, working in a STEM background, inevitably one falls behind the times when one spends any time in here. I urge the House to take the matter seriously. I invite colleagues to support the amendment in the name of the hon. Member for Windsor, and adopt what is a very important report.
Sir Paul Beresford (Mole Valley) (Con)
The two Chairs have covered the main points and, with the limit on time, I thought I might touch on some aspects of amendment (b)—not to oppose it, but to provide a tiny warning.
The package coming forward is a general public sector savings package that is in line with the target. The difference this time is that the report, and the thinking behind it, are being discussed in the Chamber. It has also been put together under a new attitude, which is to seek to provide better and more efficient services at less cost to meet the target. As has been mentioned, the officials putting the package together have worked very closely with staff and unions. In fact, many of the ideas for change have been derived from staff undertaking the service. That has enabled staff redeployment within the House of Commons service, rather than redundancies. Although hon. Members may not be aware of it, many services are already contracted out. Many services will come up for renewal, and, in the present atmosphere, they may well bring savings to themselves. In the event of franchising out, staff could of course move to the new provider with TUPE protection, or move within Chamber services themselves by redeployment.
The possibility of market testing has been extensively researched. The team undertaking it have had a free hand to assemble a business development plan. Outside private sector support and advice has been utilised. Market research to provide benchmark information has been undertaken, and that has given the Commission a forward-looking financial information system that it will be able to use to gauge whether it is worth market testing. Obviously, there has to be an in-house bid and the research will give such a bid a competitive edge.
While I understand the thinking behind amendment (b), I suggest caution. First, it seeks to tie the Commission and reduce its flexibility to choose the time of testing, if indeed that appears to be the choice to go for. Secondly, it may well delay savings. Some of the services projections indicate that the private sector could contribute to much lower costs in the latter half of a contract. That means that if tendering was chosen in some cases, the sooner this is undertaken the sooner we will get savings. Thirdly, from my own experience, outside advice on costs or savings always overestimates costs and if the service is tendered and, crucially, if the private sector bid, they have a benchmark that they know they can come in under. Finally, any outside bidder will know from the business improvement plans the bid level they must beat to win if we follow the amendment. I therefore hope there is some caution before we adopt amendment (b). Much credit must be given to the Administration Committee for looking at business improvement plans, efficiency savings and better use of our facilities. The House has already had a debate on this a few weeks ago.
I am concerned about amendment (c), tabled by my hon. Friend the Member for Harlow (Robert Halfon). He appears to have missed the opportunity, but is now asking us for a second time to present this before the House. Most of the areas in which he calls for commercialisation already happen in some way or other, although to a lesser degree, and therefore with less financial advantage to the House, but with no reduction of facilities to hon. Members. I hope he feels able to not press his amendment. The Administration Committee is suggesting careful extensions of our underused facilities to the UK public. Obviously, that would need to be done in a careful way, as indeed it is currently, so as not—if I may use the well-worn phrase—to bring the House into disrepute. I hope he realises that what he is proposing will result in further delay. It will be unsettling to staff. It will reduce the savings, because they would not be brought in earlier in the financial year, and that would mean further savings from other areas to meet the target.
The report comes as a package. That means that if there is any cherry-picking of specific items that reduce savings, they will need to be compensated by savings in other areas. I hope that when my hon. Friend stands up to speak, he thinks about that carefully before he puts his proposal. I hope that the House will approve the motion without amendment, so as to give the Commission a chance to consider points raised while retaining the flexibility to act appropriately on various aspects of the programme to the benefit of the House budgets and of Members’ services and staff.
Andrew Miller
Does the hon. Gentleman not realise that the amendment proposed by the hon. Member for Windsor (Adam Afriyie) has a positive cost benefit, not a negative one, in terms of available staff to the House?
Sir Paul Beresford
The hon. Gentleman has just beaten me to POST. The Commission will look at what was said. The Chair of the Finance and Services Committee, my hon. Friend the Member for Caithness, Sutherland and Easter Ross, has already made it clear that he will look closely at that with the Committee, so I will not comment on the details of that particular amendment. I am concerned about amendment (b); amendment (c) is destructive.
John McDonnell (Hayes and Harlington) (Lab)
I rise to speak in support of amendment (b). We have a responsibility to the colleagues we work alongside who provide such an excellent service: the office keepers, the attendants, the security staff, and the catering, retail and cleaning staff. Many are members of the Public and Commercial Services Union, and I chair the PCS parliamentary group.
We need to acknowledge that there is a problem inherent in the proposals. The cuts are now going beyond efficiency savings and will have an impact and reduce services. That will increase pressure on staff, which, if we continue on this course, will eventually lead to a reduction in morale. The message I am stating is: so far, but no further. There is an excellent industrial relations climate in this building. The staff have worked with management and have avoided compulsory redundancies—any redundancies have been on a voluntary basis. If the proposals go any further, I fear that that industrial relations climate will be damaged severely.
There are a number of questions I would like to pose with regard to staffing that are not contained in the report, but we need to look at them in the future. Some have been raised by my hon. Friends. My hon. Friend the Member for Sheffield South East (Mr Betts) raised the issue of the wages we pay in this building. It would be useful to know how many of our staff, both directly and indirectly employed through contractors, are paid the London living wage. I do not believe that it is morally acceptable for us to pay staff poverty wages, which is what they are if they are below the London living wage. It would be useful if we could have that information. Then the Commission and the various Committees serving it could look at a timetable for achieving the London living wage for all staff we employ, either directly or through contractors, in this building, and that could be reported back to the House.
I am concerned to ensure that our staff have decent working conditions with decent terms of employment. My hon. Friend the Member for Walsall North (Mr Winnick) raised the issue of sickness and pensions. It would be invaluable if we could have a detailed report back on what sickness pay and access to pensions there is for all staff, whether employed directly or through contractors. I fear that there are some who have no access to full pension entitlements and that there is discrimination particularly between those who are directly employed and those who are employed by a contractor.
I want our staff to work in safe and hygienic conditions, whether in work or rest areas. The issue of asbestos has been raised already, but other health and safety issues need to be addressed as well, and Members need to be informed of that. It is important that we commit to ensuring that our staff work suitable and flexible hours so that they can cope with caring and parental responsibilities. The cutbacks and privatisations so far have undermined some of that commitment in the past, so I hope that these cutbacks go no further. The introduction of zero-hours contracts as a result of past privatisations, and now their extension, particularly within the catering sector, is unacceptable. That employers can award contracts with no commitment to minimum hours undermines the security of income for staff employed on that basis. Such contracts should play no role in the employment of staff in the building.
There also have to be sufficient staff numbers in the building to provide the services we need. The business improvement plans might have been worked up by staff and agreed by the unions, but, to be frank, they have been worked up on that basis to avoid market testing. I am concerned that the current reductions are placing an unacceptable burden on existing staff—the attendants, the reception staff team, which will be cut by one third, and some of the security staff and office keepers. Furthermore, there is an equalities issue, because the posts being considered for market testing and some of the cuts are being incurred in areas where there is the highest number of staff from ethnic minority communities. That only increases the problem of a lack of representation from ethnic minority community members within the building.
I will support amendment (b), because it would resist market testing, but I ask Members not to underestimate the sacrifices being made by existing members of staff. Their hours are increasing and their work is more intense. There are fewer members of staff, and they have more duties to cope with. There will come a breaking point, if we pursue this salami-slicing—these cutbacks and privatisations—and it will undermine the morale of our loyal staff who we have all complimented today. At some point, we have to accept that there is a cost to democracy, and instead of arguing out of self-interest, we have to argue for our staff in order to ensure that they are paid well and work in decent conditions. Members of staff serve us well and take pride in their work, and we should take pride in them. We have a responsibility to protect them.
Robert Halfon (Harlow) (Con)
I am pleased to speak in this debate, and I offer my heartfelt congratulations to the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso). He has a thankless task, but he always deals with me with respect and understanding. I greatly admire the work he does; I simply disagree about the emphasis.
I welcome much that is in the report, and it is rare that I disagree with my constituency neighbour, my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst). We have worked together on other matters, but I disagree fundamentally with some of his arguments. As far as I am concerned, there are three issues: first, as I have said, our respect for Parliament; secondly, the precedent that the Commission’s decisions might set; and, thirdly, the need for savings. I am not against savings. I believe that we should have savings; I just dispute where those savings should be made.
The issue of respect is incredibly important, because Parliament is not a stately home or a tourist attraction like many of our other tourist attractions. It is not a hotel or a conference venue. It is a very special place and the foundation of our laws and democracy, and so it needs to be treated differently. Yes, we could make a lot of money by allowing companies to hire out rooms, letting people hold weddings here and allowing film people to use Elizabeth Tower, but, once we set that principle, where do we stop? The hon. Member for Caithness, Sutherland and Easter Ross is incredibly enlightened, and I believe him when he says that these changes will be limited, but who is to say that someone less enlightened will not in years to come extend the principle still further?
My right hon. Friend the Member for Saffron Walden said, “Well, we already have business sponsored by Members”, but most of that is politically related. We reached a compromise: we allow business to enter Parliament when sponsored by Members and when Members are there, and it is usually related to their activities as Members of Parliament. That is different, however, from allowing businesses to hire out rooms or from giving people special access, because they are rich, to see paintings that my constituents, who are not rich, who are on £20,000 a year, cannot see. This is our Parliament, our democracy, and we pay for it through our taxes. It is not like going round a stately home. That is why I feel so passionately about it.
My right hon. Friend the Member for Saffron Walden criticised what I said during the campaign to stop charges for Big Ben tours. I said much of what I said then for the same reasons I say what I say now. He talked about overseas trips. The whole House will recognise the incredible work that he has done in the Commonwealth and elsewhere, but if we asked taxpayers whether we should shave a few percentage points off overseas trips—I will come on to savings in a moment—or give people privileged access to the Houses of Parliament, I know what they would say.
Once we set the precedent, where do we stop? Do we have rollercoasters outside? [Laughter.] Members may laugh at the suggestion, but once we agree the principle that we become nothing more than a theme park, we create a dangerous precedent.
Sir Alan Haselhurst
It does not help the quality of debate to start using terms such as “theme park”. My hon. Friend has a vivid imagination, if he believes that any of us are interested in going in that direction. What is being proposed is an enlargement of what we do already. The logic of what he is saying, particularly about businesses coming in, is that hon. Members should be prevented now from allowing these functions to take place, and that is irrational.
Robert Halfon
This is where the disagreement lies. I think that we have reached a happy compromise and that we should go this far and no further. The Commission is suggesting that businesses will have special privileges to hire out rooms. My right hon. Friend said that if people are rich they should be able to see some special paintings in the House of Commons. That is wrong. This is our Parliament. We should not make a distinction between people with money and people without when deciding who sees which parts of Parliament.
I turn to savings. I have already talked about overseas trips: if a small percentage—20%, for example—was cut, we could save £250,000 a year. Another £50,000 a year is wasted on food waste. Have we ever considered closing one of the dining rooms, for example, because often the dining rooms are not used?
Sir Paul Beresford
My hon. Friend has touched on a key point. He says that the dining rooms are not being used. If he comes in here during recess, he will see people who have bought relatively cheap tickets—compared with other buildings they could visit—and are coming through and enjoying themselves. They are not rich people. If he walks a little further, he will also see empty rooms that could be used—but are not—to the benefit not only of the public but of the House’s finances.
Robert Halfon
The effect of what my hon. Friend says is that rich corporations and rich people would have privileged access.
As I understand it, the report suggests cutting corporate initiatives by 10%. Why not cut further, saving £300,000 a year? Trimming the overseas trips and delegations paid for by the taxpayer, which my right hon. Friend the Member for Saffron Walden is so keen to preserve, would save £250,000 a year and leave 70% of the original budget intact. Trimming parliamentary outreach by just 20% would save £388,000. I welcome the Commission’s massive efforts to reduce the amount spent on printed publications, but why on earth do we continue to spend money printing a daily Order Paper and a daily Hansard, which could easily be done online? A lot more could be done in that area.
As I said, I disagree not with making savings but with how they are made. I suggest that the Commission has gone for the easier option of giving companies special access to Parliament, allowing filming and so on, because it means they can avoid making tough decisions that would hurt Members not the taxpayer. That is why I have objections and why I tabled my amendment (c).
The issue of consultation has been raised. I respect hugely what the Commission has done to keep Members informed, but we should not just have a three-hour debate in one afternoon on a report that has, in essence, become a de facto decision. Rather, Members should be able to consider options for different savings, such as those that I have suggested, and then vote on them.
In conclusion, I have tabled my amendment so that the Commission can come back with more detail and so that the House can be given a vote exclusively on commercialisation. I do not say it should be banned completely—I tried to make my amendment as moderate as possible—but the issue should be considered more carefully, because I believe we are opening a Pandora’s box. I want my constituents to have exactly the same rights to come to Parliament as every other constituent, and not just because they happen to have a big wad of money in their pockets. That is why I make the argument I am making. [Laughter.] The hon. Member for Wallasey (Ms Eagle) laughs. I am absolutely amazed that Labour Members, who believe in equality, want to go down the path of giving big corporations special access to the House of Commons.
Ms Angela Eagle
The hon. Gentleman is using the exaggerated example of big corporates visiting, which is a worst-case scenario that the Commission has been careful to rule out. He really must not caricature something that is far less of a problem than he is making out.
Robert Halfon
I thank the hon. Lady but I disagree, because the thrust of the report will have the effect of allowing companies and people with money to go and see special paintings, or whatever it may be, and will deny people who do not have money from having full access to the House of Commons.
I urge the House to think again so that we can consider the issue carefully, main item by main item, because I believe that, if passed, this budget will fundamentally change the nature of the House of Commons and how people access this Parliament.
Sarah Newton (Truro and Falmouth) (Con)
It gives me great pleasure to follow my hon. Friend the Member for Harlow (Robert Halfon) in this afternoon’s debate.
I think I speak for everyone inside and outside this Chamber when I say that the principle that constituents can visit Members of Parliament freely and have access to their Parliament—this is the people’s Parliament—whenever it is sitting is absolutely sacrosanct. Although I have not entertained as many constituents as the hon. Member for Poplar and Limehouse (Jim Fitzpatrick)—my constituents have to travel some 360 miles to visit me in Parliament—they come on a weekly basis. Indeed, at 5.30 this afternoon I will be meeting another group of constituents. Being able to welcome my constituents is a fundamental part of my job as a Member of Parliament, as it is of all other Members of this House. My constituents can turn up unannounced and demand to see me—and they do; one visited me yesterday from the Fire Brigades Union—or, like the constituents I am seeing later this afternoon, they can make planned visits. They will have free access to me and to this Parliament. Indeed, I am sure that each of us spends considerable amounts of time taking people on tours around this splendid, wonderful building—we all share an immense sense of privilege to be able to work here—and we show them whatever paintings they want to see, which are freely available. [Interruption.] I am so pleased to see that Members are nodding.
I am sorry, but I am very disappointed with my hon. Friend the Member for Harlow, who I feel misrepresented the case entirely. What is being suggested—after a huge amount of tireless, thoughtful, painstaking work over two years by my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) and many other Members from across the House with years of experience and great regard for this place—is a way of responding to the sensible approach of both making efficiency savings and reducing costs, in line with every other part of the public sector, and looking at increased revenue opportunities. Those opportunities are very sensible. When this Parliament is not sitting and is in recess, the building is largely unoccupied.
Frankly, I do not think people will have any objections, especially if we cast our minds back to the splendid opening ceremony of the Olympic games. A highlight of that was seeing our great Queen being prepared to be part of a James Bond film. I think we all enjoyed that moment enormously, so I have no objection if a film maker—one of these rich, nasty corporates, as my hon. Friend the Member for Harlow branded them—wants to spend several hundreds of thousands of pounds filming a James Bond film using Big Ben, a great national icon of which we are all proud. I think nobody would object to that, and we could use the money to reduce the considerable upkeep and running costs of this building without going to the taxpayers. I represent a very poor part of this country, where average incomes are well below the national average. I do not want to have to go to them and say, “Please will you give me more of your hard-won cash in taxes?” to pay for this place when we have perfectly sensible and reasonable means at our disposal to generate some extra income.
I also trust the great consideration of my colleagues who work hard on the Select Committees that scrutinise and come up with such proposals. They will not degrade Parliament; they will consider each opportunity on its own merits. That is the safeguard we have now. The Administration Committee has to consider every request to film in this place or do something extraordinary with it, and it does so very carefully. My hon. Friend the Member for Harlow has every opportunity to come along to the Administration Committee—all the sittings are in public—and make representations if he feels, as he said he did, that creating such opportunities will take Parliament in a direction that he feels uncomfortable with. We have plenty of safeguards in the current structures for arriving at such decisions, so I think he is worrying unnecessarily and, if he does not mind my saying so, rather over-egging the pudding.
Having had the privilege of serving under my right hon. Friend the Member for Saffron Walden on the Administration Committee for two years—I am no longer a member—I can reassure my hon. Friend the Member for Harlow that in our right hon. Friend we have a Chairman of great wisdom who is very balanced and has a huge regard for this place. He would not do anything to turn this place into a Disneyland or a theme park, or any of the other extraordinary allegations that my hon. Friend made.
I would also like to speak in support of amendment (a) tabled by my hon. Friend the Member for Windsor (Adam Afriyie)—under whose chairmanship I have also had the great honour and privilege of serving—on the Parliamentary Office of Science and Technology. Like many other colleagues, I arrived in this place as somebody who had studied humanities. I had little experience in science and technology, yet so much of my work as a Member of Parliament relies on a broad, but sometimes quite detailed, understanding of science and technology and how they inform our decisions in this place. I think we all agree that we want to be evidence-based policy makers, which is why the excellent work that POST does in producing POST notes to inform our work is so important. Being on the board and reading those notes enables me to do my job of representing my constituents so much better than if POST did not exist.
I hope, therefore, that some of the assurances that we have heard this afternoon about continued investment in the Parliamentary Office of Science and Technology are borne out, because if anything we do not spend enough on POST or supporting the Select Committee on Science and Technology in its work with scientists and those involved in technology outside Parliament to bring all that expertise and knowledge to bear on the important work we do as legislators.
I very much hope that we will not have to divide the House this afternoon on amendment (a), and that in the wind-ups we will hear a clear reassurance, on behalf of the Commission, that POST’s budget will not be cut.
Ms Angela Eagle (Wallasey) (Lab)
I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) on occupying the crease in so elegant a fashion, and on presenting this detailed report in such a way that those listening could understand and appreciate it. I should also like to thank whoever is responsible for ensuring that the Chamber is freezing as we are debating cost savings today. I would have brought my fingerless gloves with me had I known it was going to be this cold, but at least no one can accuse us of not practising what we preach.
I welcome this opportunity for the House to debate the House of Commons administration financial plan. We are broadly supportive of the direction that it sets out. Alongside the hon. Member for Caithness, Sutherland and Easter Ross, many other Members are involved in the detailed work of the House Committees, including that of the Finance and Services Committee, the Administration Committee and other behind-the-scenes Committees. Right hon. and hon. Members do a great job, unsung, behind the scenes. When I first came into the House, I had no idea how it ran itself, and it has taken me quite a few years to understand the complex behind-the-scenes nature of how it all works.
Ms Eagle
No; even though I am now on the Commission, I am not at all clear how things work and how things pop up.
It is important that we have managed to have a debate on the Floor of the House about these estimates, and I hope to see such debates repeated in future. I hope that that will give some reassurance to the hon. Member for Harlow (Robert Halfon) that we will have many more opportunities to return to these issues. He will be able to track them as we go through the savings programme.
In the context of any savings programme, however, we must bear in mind the function of this House. The House is here to hold the Government to account, to scrutinise legislation and to challenge Ministers. The work of the Department for Culture, Media and Sport Select Committee during the inquiry into phone hacking was one of many examples of the Select Committee structure enabling Members to hold public and private bodies to account in a way that does our democracy proud. That is an integral part of the scrutiny function of the House, as the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) said. It is essential that that function is not enfeebled by the savings programme.
Therefore, we on the Opposition Benches fully support the principle, which the Committee endorsed, that any cost savings must not adversely affect the ability of the House and its Members to carry out their parliamentary functions. That is a fundamental criterion for the work as it progresses, and we must always bear it in mind as we keep an eye on the programme’s progress. This building is not here to sell guided tours or afternoon tea. It is a working Parliament and we are elected to represent and serve our constituents, and to fulfil our constitutional duties. The House has to be resourced sufficiently to allow Members to discharge their duties to the electorate and to hold the Government to account.
We recognise the need for the House to examine cost savings. Given the cuts that are being imposed across the public service in the rest of the country, it would be folly to do otherwise. Many of the suggestions put forward by the House Committees and authorities are sensible, and, as the hon. Member for Caithness, Sutherland and Easter Ross said, there has been widespread consultation, not least with the staff of the House and with the trade unions that represent them. I believe that a reasonable approach has been adopted to the challenges in making these savings, which is why the Commission has endorsed them.
I recognise that some of the changes to Hansard and the provision of bound volumes concerned some Members, but the print to web programme offers significant savings without impacting on Members’ duties or on their ability to do their job. Better use of IT services offers savings and will enable Members to work more effectively and productively, especially when they are not in their Westminster base. That will, however, depend on a good, secure and reliable delivery of digital services, be it by web or by cloud—the British cloud, as it was described earlier. I receive either intermittent or no wi-fi signal in my office, so I know from personal experience that there is still some way to go before that vision is achieved, and I look forward very much to the proper introduction of the print to web programme. There is some way to go yet.
The House is right to examine options to charge for services—indeed, we have charged for some services for many years—but we should proceed cautiously. I echo the emotional worry expressed by the hon. Member for Harlow in that regard. The Commission has therefore approached this matter very carefully. We have had detailed discussions about how it should be approached. We should not commercialise this place, but that does not mean that we should not open it up and make a reasonable charge to cover the cost of the access that is being given, so long as we do not put in jeopardy the principle that all our constituents should be able to interact with us in Parliament without charge. That view has been expressed strongly on both sides of the House today. I believe that we have got the balance about right. I certainly hope that the hon. Gentleman and other Members will keep a close eye on how things go, and that they will give the Commission their views as the programme proceeds.
The House should not look for savings by cutting wages of low-paid staff or by outsourcing their employment. Too often, when budgets are constrained, the brunt of cost saving is borne by low-paid staff who see their terms and conditions worsened, their employment contracted out, or their wages frozen or cut. I therefore have considerable sympathy with the points made by my hon. Friend the Member for Hayes and Harlington (John McDonnell) and others on both sides of the House who pointed out the debt that we owe to our staff in the Palace of Westminster, and the high standard that we have come to expect of the work that they do. Nor should we forget that the duty of those in this House is to hold the Government to account and to represent our constituents. That is why it is important to ensure that savings do not impact on the ability of Members to fulfil our duties.
One of the big changes introduced during the previous Parliament was to open up this place and expand our educational visits programme in order to improve the experience for visitors. That increased the cost of running the building, but when I was first elected to Parliament 20 years ago, the opportunities for schools to visit and learn about how Parliament worked were much more restricted. At a time when we need to work even harder to engage young people in the political process, spending money to enable school groups to visit Parliament is totally justified. It is a necessary investment in our core democratic purpose. The House must ensure that Members can discharge their duties, but it must also ensure that the public can fully and properly engage with their Parliament.
Given that the House of Commons is making significant savings, it is worrying that the cost savings are not being shared equally between the two Houses. The Committee’s report highlights a number of issues that need to be resolved by discussion with the other place. This democratically elected Chamber is bearing the brunt of the cost savings. It is neither a desirable nor a sustainable position when the unelected House is not putting its shoulder so firmly to the wheel.
It is time that we examined the costs associated with running two different but parallel administrative services for the Commons and the Lords. It is an absurdity that this duplication has persisted for so long, and we should be aiming to end it. I am certain that, with ingenuity and good will, that could be done without impacting on the privileges of either Chamber. It would surely deliver considerable efficiencies. This is urgent work, and we should be proceeding with it as soon as possible. The existence of two separate administration services for both Houses is just one area where modernisation is both overdue and could offer huge efficiency savings.
In the 20 years in which I have been a Member, much has changed and much has improved. I would like to pay tribute to Mr Speaker’s work in driving the modernisation of how we work, but we need to recognise that much can be done to improve the scrutiny of legislation, to strengthen the work of the Select Committee system and to ensure that the Government are held properly to account.
We broadly support the recommendations of the Finance and Services Committee. We welcome the chance to debate and scrutinise the report in the Chamber. The House of Commons is right to be making savings at a time when cuts are being made across the public services, but it is important that Members’ capacity to fulfil their duty is not impeded. We are elected to do a job, and it is important that the House is resourced to enable Members to do so.
The Leader of the House of Commons (Mr Andrew Lansley)
I am grateful for the opportunity to contribute to the debate. I do so on behalf of the Government to make clear our support for the work the House is doing to ensure it meets the necessary savings in the broader context. The hon. Member for Sheffield South East (Mr Betts) and the shadow Leader of the House made that clear, too, recognising the need for financial savings right across the public services. As Leader of the House and on behalf of the Government, I also want to reflect on how the House can best achieve those savings.
I would like to say a few words of thanks to the Backbench Business Committee, not least for scheduling this debate, and I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) on securing it and on the manner in which he introduced it and, as others have said, guided so well the discussion and work to this point. The way in which the Backbench Business Committee has opened up debates in this House has been positive, enabling us, as in this debate, to have a similar impact on House administration. It is not only for us, but for members of the House service and the public more generally, to see how this House is managed and administered in order to deliver something that is not only effective but value for money.
We welcome the level of savings entered into by the House of Commons Commission. Clearly, 17% reductions by 2014-15 relative to 2010-11 are broadly in line with savings across the 2010 spending review, which identified that, other than for protected areas of expenditure, departmental budgets would on average decrease by 19% over four years.
It is important to recognise that this is not the beginning of the process; it is the next stage of it. The House of Commons Administration has already made considerable progress in achieving savings, as Members have said, through voluntary exits, discontinuing printing of documents and improving contract management. We can now see examples of how, as the Commission agreed at the outset, savings should be achieved through detailed analysis of services, and delivered to arrive at something better, not just cheaper. From the Finance and Services Committee report we can see the emergence of more such opportunities, not least if we look at the ICT strategy in the table on page 15. There is clear evidence of how that might make a considerable difference, not just on print to web, but as the Committee’s Chairman said, in relation to such things as cloud computing. That can make a big difference not only in how we access our responsibilities more effectively but by enabling us to rethink the way in which the physical estate is managed in order that we may deliver our responsibilities.
Innovation has to come, too, in respect of visitors to this building, their access and facilities. The Administration Committee set out how to achieve that in its first report of this Session. It was a very good basis on which to proceed. It is not the subject of the report before us, but the income generation associated with it is an integral part of the process of achieving the medium-term financial plan.
I listened carefully to my hon. Friend the Member for Harlow (Robert Halfon). Many Members have illustrated that the risks and concerns that he raised would not be valid on the basis of the way in which the Administration Committee is proceeding. I say gently to my hon. Friend that he underestimates the importance to all of us, and to our constituents, of opportunities for access. We can provide access individually as Members, as the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) has so famously done, but I meet so many constituents who have visited this place without my knowing they had done so. It matters to them that they can access their Houses of Parliament, because so much of their history is here. That is true not just for the people of this country, but for those of many other countries around the world.
I particularly echo the point rightly made by the shadow Leader of the House that as we develop visitor access and facilities, it allows us to boost the opportunities for educational access. Progress has been made, but we all know we want to do more. If we could one day be confident that we could arrive at a position whereby at one point in their educational experience, every young person in this country had had access to their Houses of Parliament on at least one occasion, it would be a dramatic thing to have achieved. We are, however, an order of magnitude away from where we need to be to make that happen.
The hon. Member for Walsall North (Mr Winnick) raised major issues about the repair and renewal of the House. Part of what we are doing in the medium-term financial plan and in achieving savings will help us better to understand what the shape of repair and renewal for the future will look like. Today and for the foreseeable future, however, we are not yet in a position to make decisions about any of those options, other than to have made clear—for this House and the other place—that we do not want the building of a new Houses of Parliament somewhere else, separate from this place. Much more work needs to be done on the question of how we can sustain this House in the long term before we can look at the options ahead of us.
Mr Winnick
Let me make it perfectly clear that I am certainly not in favour of another House of Commons. I want this place to be renewed, so it can be a working place for a long time to come. For that work to be done, however, it seems to me that some evacuation will have to occur.
Mr Lansley
I understand the hon. Gentleman’s point. There are options ahead of us, one of which would entail such a “decant”, as it has been called; the other of which would not. We have a great deal of work to do before we know which of them is the best option for this House to meet its responsibilities and for value-for-money purposes.
It has already been demonstrated that House staff are able to deliver excellent service in challenging times, and that their participation in the savings programme has been instrumental. It is axiomatic in any walk of life that if we want to deliver the best possible service, the people who are best equipped to do it are the people working in that service at the front line: they understand it; they can bring forward some of the best ideas for making it happen. The medium-term financial plan is about showing how the business improvement plans— my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) further illustrated them—can achieve that. We should engage the staff fully, listen to them, and work with them. This is not about Members, intimate though we are with how the House works, deciding everything. It is about our working with the staff in challenging times, and recognising that we can achieve not just financial savings but a re-engineering—to use that unfortunate term—of the way in which we do our business.
I agree with the hon. Member for Ellesmere Port and Neston (Andrew Miller) that staff in the Committee services and others will need to take a positive and constructive approach to new technologies and new ways of working. I think that many of them are already doing that, and that they will all make a great contribution in the future.
Let me finally say, on behalf of all of us on the House of Commons Commission, that this debate has been immensely helpful in enabling us to understand what response we should make to the Finance and Services Committee, and that we will take full account of all the points that have been raised. I find myself thinking of that famous remark by Sir Winston Churchill:
“We shape our buildings and afterwards our buildings shape us.”—[Official Report, 28 October 1943; Vol. 393, c. 403.]
It is tempting to think that very little should change in a building of this character, but change is inevitable, and I think that in this instance it will be positive.
John Thurso
I am extremely grateful to all Members who have spoken. In the short time that is available, I cannot answer all the questions that have been asked, but I undertake to write to every Member.
A very good point about staff contingencies was made by both the hon. Member for Walsall North (Mr Winnick) and the hon. Member for Hayes and Harlington (John McDonnell). I will respond to them fully at a later stage, but I can tell them now that all staff of the House are paid more than the living wage if they are not in apprenticeship or training.
Before the debate, I was asked by a colleague how I thought it would go. I said, “I have not the slightest idea. It could be a damp squib, or it could be a car crash.” It has certainly not been a damp squib—it has been a very constructive debate, which has allowed serious issues to be considered—and it has most certainly not been a car crash, because those issues have been considered very fully.
I urge the House to accept the amendment tabled by my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst). I hope that the reassurance that I gave the hon. Member for Windsor (Adam Afriyie) will persuade him not to press his amendment, and I undertake to ensure that the meetings that I promised will take place.
I am very grateful to the hon. Member for Harlow (Robert Halfon) for raising the issue he did and for allowing it to be debated. He has done the House a very important service. He has told me that he wants to press his amendment, and I ask the House to resist it, but I hope that the motion will be passed.
Madam Deputy Speaker (Dawn Primarolo)
Does the hon. Member for Windsor (Adam Afriyie) wish to press his amendment (a)?
Adam Afriyie
Given the assurances that I have received, I am comfortable with leaving it as it is.
Amendment proposed: (b), after ‘sector;’, insert
‘is of the opinion that proposed business improvement plans for Catering, Print Services, Cleaning and Office Keepers and Attendants should be implemented before further consideration is given to market testing those services;’.—(Sir Alan Haselhurst.)
Amendment agreed to.
Amendment proposed: (c), at the end, after ‘report’, insert
‘, save that proposals under the income generation category be deferred for approval to a future date, so that more detailed information is available to Members, and also to give the House a specific opportunity to vote on whether it accepts the increased commercialisation of Parliament.’.—(Robert Halfon.)
Question put, That the amendment be made.
Prompt Payment Code
(12 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
I beg to move,
That this House has considered the matter of stimulating growth through better use of the Prompt Payment Code.
Thank you, Mr Deputy Speaker, for allowing me to open this debate. I also thank the Backbench Business Committee for seeing the importance of the issue and allowing us to put our concerns on the record. Let me express my gratitude to my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) and the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) for their support in the debate, as well as to the Federation of Small Businesses, the British Chambers of Commerce and the Forum of Private Business for their assistance in preparing for it. I also express my gratitude to the many others who wanted an input but did not want to put their name to the motion for fear that there might be prejudice as regards future business.
Let me digress briefly. Had I not been fortunate enough to obtain the debate, I would have been in Basildon, so I want to pass on my unreserved apologies to Councillor Mo Larkin, mayor of Basildon, who is this afternoon receiving a British Empire medal from the Duke of Gloucester for her good works in the community, and to the Royal Anglian Regiment, who today marched through the town as part of their homecoming celebrations. I am sure that the whole House will join me in paying tribute to them and all other serving personnel who take such great personal risks so that we can enjoy freedoms at home.
Today, I want to draw the House’s attention to the issue of late payments in the public sector and the associated supply chain. It is a problem crippling small and medium-sized enterprises up and down the country and its implications for our economy should not be underestimated. Last year, the amount of money owed to SMEs beyond agreed payment terms reached an all-time high of £33.6 billion. It does not look like it is getting any smaller, either. Only today, I received an e-mail from BACS informing me that that figure has gone up by £2 billion in the last six months.
Some 94% of businesses surveyed by the British Chamber of Commerce have experienced late payment, with 34% stating that they had been paid late by a public sector body. A similar survey conducted by the Federation of Small Businesses found that 70% of businesses believe late payment to be on the increase and a third admitted paying their suppliers late because their clients had withheld payments. The statistics show that late payment is on the up and a recently conducted survey showed that between 2009 and 2011 late payment increased across the board in the public and private sector. Late payment by local authorities went up by 8% to 33%. In schools and universities, there was an increase of 9% to 31%. Similarly, Government agencies and quangos saw a 9% rise from 2009 to 39%. The statistics speak for themselves.
Some say that the main problem lies with big business, not Government. Although big businesses are undoubtedly the worst offenders, the Government clearly have a role as a lead buyer of goods and services. The culture of late payment seems to have become an accepted norm and it has done so at the expense of our small and medium-sized enterprises.
Fiona Bruce (Congleton) (Con)
As someone who has run a small business for 25 years, I commend my hon. Friend for initiating the debate. With regard to public sector contracts, does he agree that one of the problems is that small businesses are so glad if they obtain a contract with the public sector that what I might call the balance of power is so weighted against them that they dare not insist on any payment terms at all and will accept whatever they are given? Is it not a matter of honour that the public sector should lead the way and pay promptly?
Stephen Metcalfe
I could not agree more. Even when there are agreed terms between a supplier and a contractor, those can be changed at the drop of a hat. Businesses are afraid of causing too much trouble because they want to see that repeat business coming back time and again, so we must do something about that. There is an ethical element to it, as well as a business element. The statistics show that. They are shocking and the problem is worsening.
This should be a wake-up call for us all, the Government included, not because the Government are not playing their part, but because we must not forget that behind every statistic and every number are people—people struggling to make ends meet, people desperately trying to keep their businesses afloat, and people losing their livelihoods. I know that this Government want to help people such as Matthew, who is a member of the Federation of Small Businesses. He is finance director for a small company that builds specialist equipment for public works. He entered into a contract with an agreed 60-days term, he invested a large sum of money to prepare for the work, and two days into the contract he received a letter stating that those terms had been changed to 100 days and that he had no right of appeal. As a result, he had to lay off three of his workers, he had to dip in and extend his overdraft, and he is currently owed £200,000.
This case study is not an isolated example. It powerfully demonstrates the devastating impact that late payments can have on small and medium-sized enterprises. Late payment costs business dearly and is an unmoving barrier to growth. Indeed, aside from access to finance, and/or the collapse of its market, late payment and non-payment of invoices is likely to have the biggest impact on a business’s viability and ability to grow. As the numbers show, the problem is not simply going to disappear. It requires concerted action, which must be led by the Government.
Let me be clear. I am not suggesting that we need new legislation. I am sure we all agree that we have enough rules and regulations, some better than others. Rather, as the title of the debate suggests, I am advocating better use and more effective implementation of the prompt payment code as a means of both assisting our SMEs and stimulating growth in our country. The prompt payment code is about encouraging and promoting best practice between organisations and their suppliers. Any organisation can sign up to the code, and those that do so undertake to pay suppliers on time within the terms agreed at the outset of the contract, give clear guidance to suppliers on payment procedures and, to encourage good practice, request that lead suppliers promote the adoption of the code throughout the supply chain.
The principles of the prompt payment code should be applauded. My concern is that its implementation and application are often found wanting. The evidence tells us that it is not enough to encourage a culture of prompt payment. The uptake of the code among large organisations is poor and contractors further down the supply chain are under no obligation to pass on the favourable terms that they receive. In a world in which cash flow is king, it is not sufficient merely to encourage best practice. We need a system in which the reality matches the rhetoric.
The current arrangements also make whistleblowing extremely difficult for small and medium-sized enterprises, particularly in small or narrow supply chains. The mystery shopper arrangement, whereby businesses can report incidents of late payment, is not appropriate for those in particularly narrow chains. If there are only three businesses in a supply chain, it becomes all too easy for the main contractor to identify the whistleblower. The risk of losing business as a result is one that many SMEs cannot afford to take. Many members of the Federation of Small Businesses have attested to that.
Even when SMEs do confront contractors, the result is not always positive, as my hon. Friend the Member for Congleton (Fiona Bruce) pointed out. I was shocked to read about another FSB member who challenged a business that paid him 58 days late, which resulted in him incurring £3,500 in bank charges. He was told by the company that basically he should be grateful for the work. I think that we all agree that that is unacceptable.
I am not suggesting that the PCC is redundant. Indeed, central Government have demonstrated that, when adhered to, it can be very effective at the first-tier level. Having made a staunch commitment to the principle of the PCC, central Government now make between 98% and 99% of all payments to primary contractors on time. But we must not stop there. Promptly paying top-tier contractors is all well and good, but if they are not obliged to pass on those terms to suppliers, and those suppliers are not obliged to pass them on to their suppliers, the benefit of prompt payment can be entirely lost. We need a system in which the favourable terms offered by Whitehall cascade right down the supply chain to the smaller SMEs or individual contractors. We must facilitate the creation of a system that drills all the way down to the bottom of the supply chain.
Unfortunately, late payment is not confined to public sector contractors; the problem also arises in the plethora of public sector organisations outside Westminster. The House might be surprised to learn that not all local authorities and public bodies are signed up to the prompt payment code. Countless examples of late payment, or even non-payment, have been identified in the public sector, and I am sorry to say that the NHS is a particularly bad example. Since 2009, the incidence of late payment in the NHS has increased by at least 8%. I am sure we all agree that that is completely unacceptable.
Mrs Eleanor Laing (Epping Forest) (Con)
I congratulate my hon. Friend on bringing the debate before the House; it will be very popular with small businesses in my constituency, which he knows extremely well. Does he agree that, although it is sometimes difficult to put pressure on commercial organisations to adhere to the prompt payment code, it is absolutely unacceptable for any organisation in receipt of taxpayers’ money, either in the first instance or further down the supply chain, not to adhere to it? The Government already have the power to take action, not by statute or new rules and regulations, but through their buying power as a commercial organisation, and they should do so now.
Stephen Metcalfe
I could not agree more. One of the key things we can do, at virtually no cost to the Government, is ensure that all public sector bodies in receipt of public funds sign up to the code.
Late payments are stifling the ambitions of small and medium-sized companies. Those companies are increasingly becoming embroiled in a vicious cycle of late payment. They are paid late, then they pay their suppliers late, and they in turn pay their suppliers late. Billions of pounds are being withheld from our economy by some of the organisations that have the deepest pockets, as has been mentioned. Why are they withholding payments? I do not know. Whatever the reason—malice, poor practice or inefficiency—it must change.
Anne Marie Morris (Newton Abbot) (Con)
I am sure that my hon. Friend is aware that the Late Payment of Commercial Debts (Interest) Act 1998 provides for statutory interest on unpaid invoices and an administration charge. That could be used against larger companies that do not pay their debts. If it became more public that there was not only outstanding debt, but an additional sum, particularly if it was noted in the auditor’s report, that would give shareholders power to disavow those companies that are not playing properly and fairly.
Stephen Metcalfe
My hon. Friend is entirely right. The danger always is that because small and medium-sized businesses, which rely on these large organisations for their very lifeblood, do not want to end up in discussions about charging them interest and administration fees, they bite their lip and put up with it. That is why it falls to us and to the Government to make sure that such bodies in receipt of public funds pass the money on through their obligations, not through the businesses that are affected by trying to threaten them with interest or administration charges.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
It is important that I declare an interest in that I am not only a member of the FSB but have shareholdings in a business that I set up before I came here; people can read about that in the Register of Members’ Financial Interests. There are two key issues: first, companies can set up special vehicles that make sure that they will not be affected by such provisions; and secondly, people sometimes get scared about losing the contract and the money in the first place.
Stephen Metcalfe
Absolutely; that is key. Small businesses are often fragile at best. They live hand to mouth. They do not, in the main, have huge cash reserves. They rely on the payments that are coming in to be able to pay their staff, pay their suppliers, and pay their bills. They are not big businesses’ banks, but that is how they are being used at the moment. The money is kept in the coffers of larger organisations, and that stifles the growth of the small end of our economy.
Mr Robin Walker (Worcester) (Con)
Given the disproportionate impact of small businesses on employment and on giving people a chance to work, does my hon. Friend agree that it is vital that we free up that cash to flow through to the small businesses that can create many more jobs in all our constituencies?
Stephen Metcalfe
Of course. Small businesses are the lifeblood of this country. One of my favourite statistics is that if every small business employed one extra person, we would have an employment surplus of about 1.5 million people. We need to encourage these businesses and help them to grow, especially where there is a problem accessing reasonable-cost finance, whether that be through overdraft or loan. This money is rightfully theirs, and it could flow back to them to stimulate growth.
We must tackle this problem, and, as I said, we do not need new legislation in order to do so; indeed, it would probably hinder the process. Through better use and implementation of the prompt payment code, we can help to stimulate growth and end the tyranny of late payment. I would like to make some suggestions to the Minister. They come out of discussions with the FSB and other organisations. First, it is imperative that all public sector organisations in receipt of public funds sign up to the prompt payment code. Secondly, there should be a named person within the Department for Business, Innovation and Skills who is responsible and accountable for late payment in the supply chain of all public sector contracts, and their name should be published in all public contracts.
Thirdly, all private sector companies used by the public sector should, without exception, sign up to the prompt payment code, if not in its entirety, then at least when engaged in public sector works. This should form part of all contracts and become accepted practice, and it should be part of any pre-qualification questionnaire. There should be a commitment that any favourable terms received would be passed down the supply chain, and all tender documents must contain a commitment to pay on the same terms throughout the supply chain.
Fourthly, in addition to the above, every public sector primary contractor must have a contract reporting officer enabling small businesses further down the supply chain to report any instance of late payment with a degree of anonymity. The officer must ensure that Government payment terms are adhered to, right down to the end of the supply chain.
Finally, as my hon. Friend the Member for Newton Abbot (Anne Marie Morris) suggested, adherence to the code must be demonstrated through reporting. All companies used by the public sector and all public sector organisations should be required to publish their payment performance, and this should be monitored periodically by their auditing body.
I believe that these proposals are both risk free and relatively cost free for the Government. In this fragile, post-recession period, they are vital if we are serious about stimulating growth. The SMEs at the bottom of the supply chain and, indeed, some of the larger businesses near the top are being strangled by late payment in public sector contracts. Addressing that issue would unleash a wave of opportunity and support SMEs that are flagging under the burden of late payment.
Henry Smith (Crawley) (Con)
I am very pleased to say that one of my local authorities, West Sussex county council, introduced a prompt payment code voluntarily some years ago. It realised that supporting local small enterprises in particular is good for the local economy, which, of course, benefits through business rates.
Stephen Metcalfe
My hon. Friend is entirely right. My concern is based on my experiences. One of my councils, Thurrock, has a 97% target to pay within agreed terms but, unfortunately, a recent cabinet report demonstrated that only four out of five invoices are being paid on time. It assures me that things are getting better, but that demonstrates the challenge. It is great to have a target, but we have to make sure that it happens, because it is the companies’ money—it belongs to them. If we want them to thrive in our local communities and the supply chain, we have to play our part and release the billions of pounds that are locked up back into the economy.
Anne Marie Morris
My hon. Friend’s suggestions are welcome and well received, but may I trouble him to consider some additional help with regard to situations involving private sector companies only? Much of what he is talking about involves relationships with public sector bodies, which makes life easier.
If my hon. Friend agrees, as he has suggested, that reporting is a way forward, does he also agree that, on the requirements for audited accounts, the payment arrangement and any outstanding debt should be published not in the board’s report, but in the auditor’s report, which would carry an awful lot more weight?
Stephen Metcalfe
That is an excellent suggestion and one that should certainly be explored. I am sure that we are all conscious of burdening business with yet more regulation but, because of the impact that late payment has on SMEs, that would be well worth exploring.
Toby Perkins (Chesterfield) (Lab)
I congratulate the hon. Gentleman on securing this debate. He has made a number of sensible points, but it is interesting that his focus seems to be on contracts involving public money, as though people have a responsibility to pay on time only if public money is involved somewhere along the chain. The FSB has identified that 77% of businesses say that the private sector is the main problem, so does he agree that his suggestions for reporting should apply right across business, not just if there is public money involved?
Stephen Metcalfe
I entirely agree—the hon. Gentleman makes a very good point. I am focusing on the public sector because we have most control over it. I did say earlier that the private sector is the worst offender and that we need to address that as well. Following this debate, I hope we will come up with some suggestions in that regard.
I want to focus my final remarks on the public sector. As I have said, the Government have set the tone and provided a model of best practice, but we cannot stop there. This is not just a commercial problem, but an ethical problem. We have to remember that much of the money that is outstanding to our small and medium-sized enterprises is our money. It is collected from us as taxpayers and it is spent on our behalf, so it is only right to expect any organisation to pass on that money as quickly as possible.
I believe that my proposals are entirely necessary and that they would go some way to addressing the problem. I hope that suggestions will be made this afternoon on how we might address other parts of the problem and I look forward to hearing the ideas and experiences of other hon. Members. At the end of the debate, I hope that the Minister will be able to give us some positive news and say that he will pass on some of our suggestions to the Chancellor in advance of his autumn statement. Ultimately, there are billions of pounds locked up in our economy that are owed and could be paid across to stimulate some real growth.
Mr Deputy Speaker (Mr Nigel Evans)
Order. I would like to give Members some guidance on how the debate will be conducted. I am looking to call the Front Benchers no later than 4.30 pm, and I know that the Minister will be keen to give Mr Metcalfe a couple of minutes at the end to wind up. I will try to do that without imposing any time limits, but I ask Members please to show some time restraint, because there are a few who wish to contribute to this debate.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I reiterate my thanks and congratulations to the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) and his colleagues on securing this debate. I also congratulate his constituent on receiving the British Empire medal, which is fantastic.
I am pleased to speak in this debate and to raise the important issue of late payments to small and medium-sized enterprises, and the role that the prompt payment code has in addressing that. The impact of late payments on the cash flow of SMEs and their ability to survive in this difficult economic climate has not received the attention that it deserves. I am glad that this debate has been secured to raise it.
As has been mentioned, sustained growth in the economy ultimately depends on the contribution of SMEs and we need to do everything in our power to support them. As some Members will know, I have campaigned on this issue for 15 or 18 months. I launched a campaign called “Be Fair, Pay On Time” in response to a constituent who came to one of my surgeries shortly after I was elected in January last year. He was a haulier who said that his company was on the brink of folding because of the late payments that he was having to deal with. In some cases, he was having to extend the contracted time for payments to 90 days—three times the period that had originally been in the contracts. I decided to identify how extensive the issue was. A stream of small businesses came to me just from within my constituency, but none of them wanted to speak about the issue on the record because of the fear of reprisals, including being blacklisted.
That was until two brave constituents, Ann and Harry Long, came to see me and said that they would be happy to raise the profile of the problem. At the time, they were still trading, but shortly after they came to see me and said that they would go public, they had to put their company into receivership. After 35 years of trading as a plumbing and heating company, they were feeling the effects of late payments and their company went bust.
Ann told me that larger companies have the buying power to stretch out the time that it takes to pay their bills to smaller companies such as Harry’s and hers. She said that for most of the time that they had been in business, they had worked with many good local companies that, like them, held strong, honest values about paying suppliers on time. Ann believes that that was because their client base was made up of companies like theirs—local SMEs that cared. However, she said that when the recession hit, the only companies that seemed to have work were the larger businesses, so she and Harry had to try to win work with them. By the end of last summer, they had accrued debts of £150,000 because of late payments or payments that were not made at all. With that cash-flow issue, they could not continue.
Fiona Bruce
I want to put on the record my entry in the Register of Members’ Financial Interests. I have been the part-owner of a small business for some 25 years.
The hon. Lady’s point is pertinent. She talked about the impact of late payment on cash flow and referred to her constituents, who are a husband and wife running a small business. There is an enormous impact on the health and well-being of individuals who run small businesses when they come under this kind of pressure, because many small businesses are run by families. Often, both parties are in the business and no other form of income is coming into the home, so the only thing that stands between them and bankruptcy is that home itself. That is why we ought to be concerned that the small businesses in our communities—there are some 4,000 in my constituency alone—are supported properly in the immense work that they do to keep our economy going.
Debbie Abrahams
The hon. Lady makes a very reasonable point, and that was certainly the case with the Longs—indeed, their daughter was also involved in the business. I secured a Westminster Hall debate on this issue to try to raise its profile, and Ann and her daughter came to that. As I have said, however, the story of Ann and Harry is not unique. My constituency has a high level of micro-businesses—more than 85%—a large percentage of which have gone into administration, primarily as a result of late payments.
The hon. Member for South Basildon and East Thurrock has already mentioned some of the data, but I remind hon. Members that according to data from BACS—the bankers’ automated clearing services—£36.4 billion is owed to small and medium-sized enterprises, affecting more than half of SMEs. That figure has increased over the past 12 months from £24 billion owed, which affected one third of companies. To put that into perspective, high street banks lent £56 billion to small businesses last year—this is not an insignificant problem.
According to BACS data, the average SME is owed £36,000 at any one time, and on average waits 58 days for payment—nearly double the contract terms. Over the past year, 158 million hours were lost by SMEs chasing overdue bills. The most recent survey from the Federation of Small Businesses suggests an even worse picture, with 73% of businesses being paid late over the past 12 months, and one in five claiming that half of all invoices are paid late. Interestingly, 70% of businesses say that the problem has worsened over the past 12 months, and that the private sector is the biggest culprit. I re-emphasise the point raised by my hon. Friend the Member for Chesterfield (Toby Perkins), but we should not be pitting private sector against public sector as this goes across the board. There are issues with both sectors, but we must recognise that according to FSB members, the private sector is the largest culprit.
In November 2010, the economy watch panel from the Forum of Private Business said that late payments had shown a “continued decline”. In addition, small businesses reported that payments are now typically made after 50 or 60 days, rather than 30, meaning that more than a third of a company’s turnover is tied up in late payments. The most recent analysis indicates that 42% of SMEs believe that late payment is an attitudinal issue because it is seen as not important.
The FSB survey indicates that manufacturing is the worst industry sector for making late payments, followed by the construction sector. Although the private sector is the worst culprit, as has been mentioned, there are also issues in the public sector about failing to pay promptly. Again, new businesses are those most likely to be affected.
The impact of late payment can be disastrous: it is estimated that 4,000 businesses folded during the 2008 recession as a result of late payments. Small businesses do not have the cash-flow buffers of larger businesses, which often means that they pay their suppliers later than they would like, and a downward spiral develops.
The 2001 barometer from the Department for Business, Innovation and Skills showed that 42% of employers mentioned cash flow as an obstacle to success in their business. Of those who identified cash flow as an issue, 80% mentioned fluctuating income combined with steady outgoings. The next biggest issue was problems with cash flow due to late payments, and more than half of those sampled in that survey claimed that late payments were a particular problem.
The knock-on effects of late payments include the ability of SMEs to access capital from banks and other financial institutions, and in the FSB’s recent survey, nearly one in five businesses cited poor cash flow as the reason their loan application was unsuccessful. Some 13% of businesses refused additional finance said they had had to lay off staff, and a worrying 40% had ongoing financial concerns.
There is growing evidence that late payments to SMEs are hurting our economic recovery. Data from the Office for National Statistics show that SMEs make up 98% of the total number of organisations in the UK economy, providing 59.1% of all private sector jobs, 45% of all employment, and generating 46% of the UK’s income from the private sector—a massive £1,558 billion. If the growth and survival of SMEs is threatened, it is inconceivable that that will not impact on the country’s economic performance as a whole.
The previous Labour Government responded to the needs of SMEs on late payments by introducing legislation that allowed companies to charge interest and obtain compensation on overdue payments. Following the global financial crisis, we worked alongside business organisations and the Institute of Credit Management to launch the prompt payment code that we are debating today. I will not go into the details, because the hon. Member for South Basildon and East Thurrock has described them, but the code is clear on committing businesses and the supply chain to prompt payments, and on businesses applying it reasonably.
Currently, less than a fifth of large firms and only 25% of FTSE 100 companies are signed up to the PPC. The potential impact is clear. Not only does the PPC commit the signatory to pay on time; it also commits the signatory’s supply chain. If major businesses signed up to the code through their supply chains, the business coverage would be huge, so this summer I invited the 75 FTSE 100 companies that had not signed up to the PPC to do so. That was part of a joint campaign with the Institute of Credit Management, the FSB and the Forum of Private Business, and I am very grateful for their support.
Fourteen further FTSE 100 companies have signed up to the PPC, but disappointingly, six have refused to sign, even after they were given a second bite of the cherry—I sent a reminder believing that they had overlooked my first letter. The key reason that non-signers gave was that they were international companies, but many international companies had signed up, so that does not wash. One company said it did not see why it should sign. A major supermarket not only refused to sign, but in more recent weeks has said that it is increasing its contract terms without negotiation by 150% to 75 days, just because it can.
Wayne David (Caerphilly) (Lab)
I am sure the House would like to know the name of the supermarket chain to which my hon. Friend refers.
Debbie Abrahams
It is easy to find out—the company is Sainsbury’s. That has been reported in national press, so I am not telling tales.
Staggeringly, the remaining 55 companies did not bother to reply. It is unacceptable for companies to fail to pay suppliers on time or to jack up the payment terms just because they can and because they have the power to do so. It reflects a selfish, I’m-all-right-Jack attitude. There are direct parallels in such attitudes and behaviours to the culture associated with undeserved bloated bonuses and boardroom pay.
As business leaders, with all the rights and rewards associated with their position, those companies must recognise that they have responsibility, including to our wider society. We are one nation, where rights and responsibilities apply to everyone. The wealthy and powerful are not exempt. They need to lead by example, sign up to the PPC and demonstrate acceptable ethical business practice. The code is corporate social responsibility in action.
Caroline Dinenage (Gosport) (Con)
I congratulate the hon. Lady on her incredible work to support small and medium-sized enterprises on prompt payment. I am a small business owner—I have been since I was just 19 years old, which obviously was not very long ago. When companies complain to the big beasts, they are told, “If you don’t like it, go somewhere else. If we don’t like it, we can take our business elsewhere.” They need to have a slightly more sensitive attitude to small businesses.
Debbie Abrahams
I agree absolutely with the hon. Lady. It is an attitudinal issue, and I hope debates such as this and other action will shift attitudes and the culture to acceptable practice.
We can also take action as individuals. As much as I have enjoyed shopping in Sainsbury’s in the past, I will not be doing so in future. I hope others follow suit. It would be absurd if people went to the checkout and said, “I’ll pay my bill in the next 75 days.” I hope others vote with their feet, but I also hope that shareholders—not just Sainsbury’s shareholders, but shareholders of the 61 FTSE companies that have refused to sign the PPC or failed to respond to the invitation to sign—will show their strength of feeling at their next annual general meeting, in the same way they showed their feelings about boardroom pay. The business community as a whole should put pressure on their peers. We can do a lot collectively.
I am very pleased, as I have said, that we are having this debate today, and I recognise the support for it on both sides of the House. I am also grateful to the Minister for the announcement this morning that he has written to FTSE 100 and 250 companies, but why has it taken until now? I mentioned my Adjournment debate in September last year. All the right responses were given to my recommendations, but I then got a letter from the Minister at the time which said that he was sorry, but that we could not bring forward the EU directive on late payments to 2013. Instead, we would wait until we had to do so in 2014. That does not show support for our SMEs.
I am also concerned by the Prime Minister’s announcement last month that he was supporting a “reverse factoring” scheme. This allows big businesses to notify their bank as soon as a supplier’s invoice has been approved. The bank, reassured the bill will be paid, will then extend a full, immediate advance of the bill to the supplier but they will charge interest. That is interest on money that is already owed to them. It is outrageous, and I really do not understand the Prime Minister’s position on it. The scheme would be redundant if businesses just paid their suppliers on time.
Another area in which the Government have not done as much as I would have liked is the public sector, and I agree with the hon. Member for South Basildon and East Thurrock on that point. There are concerns that public sector cuts are contributing to late payments to contractors. The NHS, local authorities and Government agencies have all increased their late payments by between 4% and 9% since 2009. Labour set standards for Departments with the goal of paying at least 80% of undisputed invoices within five days and to include clauses in contracts with suppliers to ensure that subcontractors were paid at least within 30 days. Unfortunately, it appears that this is not now happening, and it is estimated that £3.7 billion-worth of invoices were not paid within the five-day target and 10% were not paid in 30 days between May 2010 and May 2011.
As the hon. Gentleman mentioned, effective monitoring and reporting is the key and must be put in place. I hope that one of the recommendations that are taken forward is the requirement for an annual report to the House on progress in this area. I also support his suggestion to examine what we can do to ensure that payment terms in contracts include the supply chain. I hope that the Government will commit to that today.
I want to be clear. This is not about pitting private against public, or large against small. It is about doing what is right and fair. It cannot be right that large companies by virtue of their wealth and power can ignore their contractual obligations and put such financial pressure on small companies to the point where they become insolvent. As the FSB has said, this is not just an economic issue, “it is ethically wrong”. The PPC is an important tool. Like a kitemark, it helps identify those companies which recognise their role and responsibilities in paying their suppliers on time. I hope that after today’s debate, the Government will not only tackle late payments by Departments and sort supply contracts out, but will get squarely behind the need to tackle late payments to SMEs and support the PPC.
Mr Deputy Speaker (Mr Nigel Evans)
Order. There are three Members left who wish to contribute and we have 32 minutes left, so please keep the time in mind.
Andrea Leadsom (South Northamptonshire) (Con)
I am delighted to co-sponsor this debate with my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) and the hon. Member for Oldham East and Saddleworth (Debbie Abrahams). They have both made incredibly valuable contributions to this vital debate about how we can ensure that businesses not only survive during a very difficult economic period, but grow. As my hon. Friend said in his opening remarks, if every small business employed an extra person, we would be short of workers in this country to the tune of 1.5 million people. We want to do everything we can to enable them to expand and grow.
I also agree with my hon. Friend and the hon. Lady that this is a matter of culture. It is ethically right, in terms of corporate and social responsibility—not to mention good business practice—that companies should pay each other promptly and with the genuine desire to ensure that they meet their bills. I highlight the fact that approximately half of all small and medium-sized enterprises do not have any agreed payment terms. That goes to the heart of the problem of the power of big companies over small businesses. A small company will often be so grateful for winning a contract that it will not insist on payment terms, so there will be no contractual basis under which it can require a large company to pay up on time. That is a fundamental problem. The Federation of Small Businesses and the CBI could do more to ensure that there are agreed standard payment terms that all businesses should sign up to, so that it becomes much more a matter of course and not a matter of who has the upper hand.
Fiona Bruce
May I commend the Law Society in that respect? Many years ago, it required all lawyers, before embarking on work for a client, to set out in writing what their payment terms would be. That has gone a long way towards clarifying, for all sides, exactly what the expectations are. That practice, which is now embedded in our profession, would be a fine example for other professions and trades to consider.
Andrea Leadsom
I thank my hon. Friend for that interesting point.
Today, I want to give three examples of bad practice to highlight this issue. The previous speakers have done a great job in pointing out some of the very concerning statistics. With the autumn statement fast approaching, they have also made it clear how relatively easy it would be for the Government to take action and insist that all public sector organisations abide by prompt payment terms, and to do more to embed that in the culture of the private sector.
Toby Perkins
Does the hon. Lady agree that there are two facets to the issue? First, big businesses set up unreasonable terms and conditions saying, “We are going to pay you over a very long period of time. If you don’t want that, go and deal with someone else.” Secondly, terms and conditions that might be considered more reasonable are put in place but not adhered to. Companies can string payment out for days and even weeks after the agreed terms. I caution her that different industries and different contracts require different payment terms because of a variety of complexities about how a contract might function. That is why it is difficult to legislate on this matter, but does she recognise that central difference?
Andrea Leadsom
I recognise that absolutely. In fact, last night I was speaking to Philip King, the chief executive of the Institute of Credit Management, which implements the prompt payment code on behalf of the Government. He explained that payment terms of a set number of days are not required for every business employing good practice; it is simply that they should say what their payment terms are and stick to them. Whether those terms are 30 days, 60 days, 90 days or whatever, once they have been agreed they should stick to them—that is key.
Small business trade bodies could have a naming and shaming website to enable their members to report bad practice without the fear of losing business by criticising their creditor. I will go on to give clear examples, because I agree with other hon. Members that it is difficult to get businesses to speak out for fear of losing business. However, I have one constituent who supplies the NHS and he wanted to tell the story of his company, Q Technologies. The company creates specialist medical equipment that enables surgery to take place with a much lower risk of MRSA and other infections. It is, therefore, life-saving medical equipment. The business employs 14 people and supplies a number of NHS trusts and hospitals around the UK. His overdue and late payment situation with those trusts is that he currently has £76,000 outstanding on a 30-day invoice that was raised in April, and was therefore due to be paid in May for the supply of specialist operating theatre equipment at a hospital in the north-west. The equipment enabled the continuation of vital hip, knee and shoulder surgery.
My constituent also has a £36,000 payment over 60 days late on a 30-day invoice for vital operating theatre ventilation equipment. This was supplied at short notice in an emergency to a hospital that specialised in spinal surgery. Q Technologies took the equipment out of another hospital, so that there was no disruption to this vital spinal surgery, yet when the chief executive tried to sort out the delay to the invoice being paid, he was told by the NHS trust that managers of three different NHS departments could not decide whose budget the money should come out of. Rather than sorting it out and paying him, therefore, they just did not pay him. The bill was finally settled only after he threatened the trust with legal action.
The snapshot position of moneys owed to Q Technologies —a company that employs 14 people—by the NHS is £130,000. That is money outstanding over 60 days. The chief executive, Andrew Kemp, writes:
“I am a massive fan of the NHS but a massive critic of the way in which some Trusts manage their work. We try and support the NHS in every way that we can - often delivering equipment at very short notice and often on trust. We always hope that such co-operation and trust will be reciprocated back to us but sadly it often isn’t. Poor cash flow kills businesses, whatever the Balance Sheet might look like. A big debtors’ list doesn’t pay the monthly bills and it forces us to keep more cash in reserve than we would like. It would be so much better if we could use some of it to grow and expand our business and employ two or three more people - but with the NHS being so tardy over payments we just don't feel confident enough to do so… As a taxpayer I cannot understand why the Government…is presiding over such a situation. None of it makes sense”.
That is a pretty appalling indictment of a public sector body that is simply not paying its bills.
A second example was brought to me by a constituent at a drop-in surgery in Brackley in my constituency. She had been commissioned to carry out work by a Fortune 500 company that in turn was commissioned by the Ministry of Defence to deliver a significant IT solution. My constituent runs a small family business with two employees. The contract, which was for £250,000, was a significant sum. She came to me in desperation as the invoice to the Fortune 500 company for work done was six months overdue. Her bank was about to foreclose on the business, as it had run out of patience with her overdraft.
Equally concerning, my constituent was adamant that I should not name her company when dealing with this issue on her behalf, because she was terrified of losing future business. I wrote to the company and made a general point about the Government’s desire for companies to pay on time, and—surprise, surprise!—within a couple of weeks it paid the invoice. That goes to show that the Government can help not through legislation but by changing the culture, pointing out the unfairness of late payment and insisting on the fair application of the prompt payment code.
My third and final example concerns a legal aid firm supplying a public body. This company wrote to me after hearing about today’s debate. It is a small legal aid firm that supplies the Legal Services Commission, an executive non-departmental public body. It reports that the LSC’s payment terms are eight weeks—twice as long as is normal—but even then, it does not stick to them. Invoices are refused for flimsy reasons, so that they can be sent back and be delayed for another eight weeks, and sometimes they are mysteriously lost in the office.
The legal aid firm employs nine people, and last year paid nearly £300,000 in partnership tax, national insurance contributions, rates and VAT. The Government will lose out on this revenue, and the tax paid by the employees, if the LSC’s late payment drives the business to the wall, which it threatens to do. The firm wanted its words to go on the record:
“Although we have explained that we cannot pay the government until the government pays us, that cuts no ice with either the VAT or the PAYE offices, who hound, threaten and fine us if we are a week late in paying.”
Those are three awful examples of how public sector organisations for no good reason are delaying payments to businesses and so existentially threatening their future success and sustainability.
I hope, along with my hon. Friends, that the Government will be prepared to do something dramatic about this issue. It does not require legislation or expensive action by the Government; it simply requires more effort to ensure that the prompt payment code is signed up to by many more companies, and direct action to ensure that all companies in the public sector, whether they are Whitehall Departments or non-governmental departmental organisations, also sign up to prompt payment to small companies on a fair basis.
Alex Cunningham (Stockton North) (Lab)
I, too, congratulate the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), and other colleagues, on securing this debate.
Listening to today’s debate, one cannot fail to be left with the impression that small and medium-sized businesses across the UK are suffering as a result of late payments. In the current economic crisis, that is totally unacceptable. Late payment can cause cash-flow problems, as smaller firms struggle to absorb the impact of late bills, and has the practical effect of making small firms bankroll larger ones. We are reliant on the SME sector thriving, but the current state of affairs threatens to hold back companies that could otherwise be creating jobs and helping our economy to recover.
Mark Tami (Alyn and Deeside) (Lab)
Does my hon. Friend agree that a particular problem for smaller companies is that the Inland Revenue does not allow them time to pay, even though they can demonstrate that they are owed sizable sums of money, before moving against them? Some companies are forced out of business by such action.
Alex Cunningham
That is very much the case: there are plenty of examples in the newspapers of companies going to the wall because they owe the taxman money. Even though somebody else might owe them 10 times as much, they still have to face up to that problem.
From my experience of owning a business before entering this place, I know how difficult it can be for small businesses when clients fail to pay up in reasonable time. Large organisations would have 30, 60 or even 90-day payment periods, and although most kept to their terms, that did not help my cash flow. The nature of my business required me to buy and pay for published materials, printed for my clients, who could then take months to pay me. Sometimes I could be owed as much as £5,000 by one client, or about 3% of my annual turnover. I seemed to spend countless hours chasing cash and monitoring my cash flow, when I should have been working for clients and trying to expand my business. Local businesses on Teesside tell me that they face the same challenges. They just cannot get people to pay up. It never ceases to amaze me that it is the bigger companies that take much longer to pay, with many doing so only after delaying tactics and countless promises that the elusive cheque is in the post.
The statistics are troubling: according to the latest BACS figures, more than 1 million SMEs are currently affected by late payment, and the average amount owed to each SME has reached £36,000. Debts to my former business never reached that level, but as much as £15,000 might be owed at any one time, much of it for up to two months. According to BACS, Britain’s small businesses spend 110 million hours a year chasing late payments, at a cost of £683 million. It is amazing to think of the other ways in which that money could be invested. The average small firm spends more than 13 working days a year chasing late payments. Research by the Federation of Small Businesses last year found that 73% of small firms reported being paid late. According to figures from the Department for Business, Innovation and Skills, 4,000 small businesses failed in 2008 as a direct result of late payment. The statistic that puts the issue into the sharpest possible light is that the outstanding funds now owed to small and medium-sized enterprises total £36.4 billion—or much more, as the hon. Member for South Basildon and East Thurrock said. I am sure that Members on both sides of the House appreciate that that is not a good state of affairs. A great deal more needs to be done.
I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on writing to the FTSE 100 companies about the prompt payment code. I can think of no defensible reason why companies of such size and magnitude should not sign up—60 of them either ignored her or refused to sign up—particularly given the leadership role they are supposed to play in our business community.
Sarah Newton (Truro and Falmouth) (Con)
The hon. Gentleman makes a powerful point about the impact of large companies not paying smaller companies. Does he agree that we should consider extending the scope of the Groceries Code Adjudicator Bill, which comes before the House in the next couple of weeks, beyond the supply chain in food production to other small businesses that provide goods to supermarkets?
Alex Cunningham
The hon. Lady provides us with a good idea, and I hope that the Minister will take it on board.
I would like to see Members put whatever pressure they can on FTSE 100 companies to pay their bills on time. Worryingly, we do not have a high enough number of new signatories to the code to feel confident that the rate is going up fast enough. A recent answer to a parliamentary question showed that there were 683 new signatories in 2009, just 89 in 2011 and 115 so far this year. Research shows that signatories to the code generally undertake to pay suppliers on time within the terms agreed at the outset of the contract, to give clear guidance to suppliers and to encourage good practice.
I wonder, however, whether getting firms to pay on time in line with their agreements is enough. Those agreements often shackle small businesses to long waits for their money. They do the work, deliver the goods and send in their invoice, yet it can take the client company 90 days from receipt of that invoice to pay up. Should those small businesses be obliged to get into such long-term payment plans? I doubt that a company’s energy supplier would offer them such generous terms—mine did not—so perhaps we should think again about the pressure that big firms can put on small ones over payment periods.
For now, I call on the Government to do more to get firms to sign up to the prompt payment code. There needs to be more transparency to encourage prompt payment, including through more onerous reporting requirements such as looking at whether payment times and amounts owing to suppliers could be expressed in firms’ annual reports.
It is in the interests of small and medium-sized enterprises up and down the country to ensure that prompt payment is better enforced down the supply chains of those firms that win Government contracts. That would create more confidence, allow smaller businesses to expand at a quicker rate and bring about a greater degree of fairness in interactions between big businesses and their smaller counterparts. If the Government really take the issue seriously, they should at least put their own house in order. A number of Government contractors have been shirking their responsibility to pay smaller sub-contractors on time, yet there is no defensible reason why large companies should not be obliged to provide details of payment policies to suppliers as part of their reporting requirements. The Government need to do more to ensure that their own contractors do right by the smaller and medium-sized enterprises that supply them with services. I would advise the Minister to take a close look at Government contractors who repeatedly pay slowly or late, and to consider stripping them of public sector contracts. The taxpayer should not be subsiding bad business practice.
The Government have suggested a new system in which big businesses notify a bank as soon as a supplier’s invoice has been approved. The bank would be given the assurance that the bill would be paid, and would then extend a full, immediate advance of the bill to the supplier at a low interest rate. However, a close look at those proposals shows that they would be a win only for the big company. The system would allow the large companies to keep their money, and allow the banks to charge interest, while the small supplier would have to pay interest on money that they should be able to expect in full payment from their customer, without any interference from the bank. Surely the solution to small firms being ripped off should not end up with them being charged more. The scheme also would not deal with the fundamental problem of large firms failing to pay on time, and its existence would not be necessary if all large companies were paying their bills on time and setting fairer payment terms.
Countless businesses are going to the wall, and many are doing so because they are owed substantial sums of money and cannot recover it. The Government must take action to get large employers signed up to the prompt payment code; they have support from across the House to do so. I also hope that they will ensure that their own contractors play their role in helping smaller companies to grow and meet their bills, which will help to get us back on to a sustainable economic footing.
Wayne David (Caerphilly) (Lab)
The importance to our economy of the small and medium-sized enterprises the length and breadth of the country today cannot be doubted. They are particularly important in south Wales, the area that I come from. In the past, the area has traditionally depended on heavy industry, and today it has a large public sector, but even in south Wales there is an increasingly significant small and medium-sized enterprise sector. In fact, it has been calculated that more than half the Welsh working population are now employed in SMEs. It is encouraging that the voice of SMEs is becoming more coherent and more articulate. The Federation of Small Businesses, in particular, has played an important role in ensuring that that has happened.
That process of gaining a voice for SMEs had led to the highlighting of a number of problems that SMEs face. We know that in areas such as south Wales, there is a close relationship between the private and the public sector. The private sector is disproportionately dependent on contracts coming from the public sector, and I think that relationship is sometimes underestimated by central Government in the economic policies they pursue.
SMEs are in some difficulty because of the problems they face in accessing finance—not only start-up finance, but finance to keep expanding their businesses. It is also true, as several Members have said, that late payment is a problem, which has become more acute as the double-dip recession has put more pressures on small businesses.
When I was a Member of the European Parliament for 10 years, I noticed cross-party support—certainly among British MEPs—for European legislation to tackle the growing problem, as it was then, of late payment. We put forward arguments for a directive, which were accepted by the European Commission, but it has taken a long time—from the period when I was there, 1989 to 1999, to the present—for that European directive to be formulated, approved and brought forward. I am concerned that even after that long period the Government seem determined to delay the directive’s implementation for as long as possible. Small businesses are often critical of European legislation and regulations, but this is one example of which small businesses are in favour. The Government indicated that the European directive would be transposed into British law by the first half of 2012, but I am concerned to note that the transposition will not happen until March 2013—the latest moment it could be done under the law.
The directive is an important piece of legislation because it provides for a 30-day period in which bills must be paid, and if they are not paid, compensation can be provided to the small businesses. As other Members have stressed, however, it is a question not simply of legislation but of establishing good practice. The prompt payment code is, therefore, a significant step forward.
I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on her effective campaign for companies in the FTSE 100 to sign up to the code. I share her concern at the relatively poor and disappointing response from many companies. She cited the example of Sainsbury’s, and as I regularly shop there, I am now having second thoughts about whether, as a matter of principle, I should do so, given the lack of a positive response from that very significant company.
Another important aspect of the campaign is that my hon. Friend did not conduct it by herself; she had good support from the Institute of Credit Management, the Federation of Small Businesses and the Forum of Private Business. That is indicative of the widespread concern about the issue and the effective way in which the campaign has developed. It is, therefore, all the more disappointing that a significant number of large companies have effectively said no to the campaign. I very much hope that they will have second thoughts.
It is vital for the issue to assume importance, and for us to adopt as bipartisan an approach as humanly possible. Supporting small businesses means supporting the lifeblood of our economy, and it is incumbent on all of us to support and encourage them as much as we can. If we are to pull ourselves out of our present economic malaise, we must recognise that small and medium-sized businesses will be at the cutting edge of our economic recovery. Today’s debate has illustrated that Members on both sides of the House can unite in supporting such practical measures.
We should not pretend that legislation and regulation are irrelevant. There is work to be done on the implementation of the European directive in particular. As the single market develops, as it surely will, more and more small and medium-sized enterprises will be concerned not just with the domestic British market, but with the European market. We must, if necessary, name and shame people who have eschewed the prompt payment code, but we must also send the clear message from this Chamber that all good companies should give the code their wholehearted support.
Toby Perkins (Chesterfield) (Lab)
It is a tremendous pleasure to respond to this welcome, timely and constructive Back-Bench debate on behalf of Her Majesty’s Opposition. I congratulate the hon. Members for South Basildon and East Thurrock (Stephen Metcalfe) and for South Northamptonshire (Andrea Leadsom) on securing the debate. I also join others in recognising the contribution of my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams). She has pursued this issue tirelessly through her “Be Fair, Pay on Time” campaign, for which she has rightly been nominated for a “Grassroot Diplomat” award by the Federation of Small Businesses. She was too modest to mention that, but I wanted to put on record the gratitude of the whole House for the work that she has done.
I welcome the Government’s announcement of the potential naming and shaming in the new year of FTSE 100 and FTSE 250 firms that do not sign up to the prompt payment code, in an attempt—for which Labour had called—to change the culture on late payment. I am pleased that Members’ collective efforts have finally forced the Government to act. When researching the Twitter feed of the hon. Member for South Basildon and East Thurrock—it is @SMetcalfeMP, in case anyone is interested; the hon. Gentleman appears to have last taken to the Twittersphere almost exactly a year ago, to inform the world—
Stephen Metcalfe
May I intervene to reassure the House that that is not my Twitter feed? It is a fake, which is why there are only six tweets on it. It was never me in the first place.
Toby Perkins
They say that impersonation is the sincerest form of flattery. I hope that the hon. Gentleman is flattered that people have taken the time to fake a Twitter account for him, if that is indeed what happened. The person who claimed to be him was proud to be the hon. Member for South Basildon and East Thurrock. In any event, I hope that at the end of the debate someone will be able to announce to the Twittersphere that the Government have listened to the voice of tens of thousands of small businesses, and to business organisations such as the Institute of Credit Management, the Institute of Chartered Accountants in England and Wales and BACS which have been calling for leadership from the Government.
While the contribution to Twitter of the hon. Member for South Basildon and East Thurrock may be a matter of some dispute, his contribution to the debate was consistently constructive, and I agree with much of what he said. I agree with him that late payment is on the increase—although welcome steps were taken in an attempt to reduce it, the Government’s efforts have fallen back in recent years—and I agree with him about the circular effect whereby companies that receive payment late become late payers themselves. It becomes a culture. Businesses see it as part of the overall negotiation with their suppliers: not only do they negotiate on how much they will pay and for how much they will sell, but they try to extend the time that they have in which to pay and bring forward the time at which they will be paid. It is a completely unconstructive way of operating. I agree with the hon. Gentleman on that issue, therefore.
In pursuing this theme, the hon. Gentleman is very much in tune with my right hon. Friend the Member for Doncaster North (Edward Miliband), who has said that if we are to be one nation, we must have more responsibility at the top and at the bottom. I am delighted that my right hon. Friend has expressed his determination to address the unfair—and, frankly, anti-business—relationship between some big businesses and small firms, and his determination that a one-nation Labour Government will not simply walk by on the other side of the road when confronted by such issues.
This debate has provided stark examples of the sorts of unfairness to which my right hon. Friend has been referring. My hon. Friend the Member for Oldham East and Saddleworth focused on the fact that, as the Federation of Small Businesses has revealed, the private sector is the biggest culprit in this regard. She also referred to her letter to the FTSE 100 companies. The fact that she got 14 FTSE 100 businesses to sign up to the code shows that Members of Parliament can influence business practices without always having to legislate. She has taken direct action and it has changed the way 14 of our FTSE 100 businesses operate.
The hon. Member for South Northamptonshire said the Government need to make more effort to ensure that Government organisations pay on time. That point could go across the agenda. She also rightly said that this is not just a legislative but a cultural issue. She also spoke about stipulating fair terms, as did my hon. Friend the Member for Caerphilly (Wayne David) in respect of those which might apply when the new EU late payment directive comes into force. My hon. Friend mentioned the Government’s lack of urgency in the implementation of that directive, and after hearing about the record of one of our major supermarkets, he referred to the possibility of consumers using the performance of major businesses as a factor in deciding where to shop.
My hon. Friend the Member for Stockton North (Alex Cunningham) rightly said that big firms need to play their part in putting the country on a stable economic footing, not only through their contribution to the economy, but in their relationship with their suppliers. The Government have a role to play in bringing big firms to book and in ensuring that fair terms are agreed in the first place and subsequently adhered to.
The latest BACS research shows that more than 1 million small and medium-sized enterprises are currently being affected by late payment. Britain’s small businesses spend a total of 110 million hours every year chasing late payments, at a cost of £683 million.
The FSB has also been very vocal about this issue. A recent FSB study found that 73% of small businesses had experienced late payment for the supply of goods and services in the past year. Some 77% of its members say private sector organisations are the most likely to make late payments, and two thirds of members report having written off invoices in the previous 12 months, a fifth of which have been for more than £5,000, which is a significant sum for a small business to have to write off.
Mid-size firms can usually employ credit control staff whose daily task is to try to extract from businesses payments that have already been agreed. I remember once, as a fledgling salesperson, having to go down to my company’s credit control office to inquire whether a customer of mine might be able to come off “stop” because they wanted to make a purchase. For me as a young man, that was a terrifying ordeal, because those credit control ladies take no prisoners. I had a tough job persuading Sheila and Gladys in particular that, although the nationwide banks might be a bit slow, they did have the wherewithal to honour our £5,000 invoice. The benefit of history might suggest that Sheila and Gladys were nearer to the truth than I was, but when I had my own business a few years later I soon understood why it took a certain type of person to be a credit controller. I rued the fact that I did not have a Sheila at my side to do the chasing.
The truth is that for small firms the end of the sale is often the beginning of the problems, which is why this debate is so important. The average small firm is spending 13 working days chasing money owed. This time is not being spent on developing sales or marketing strategies, buying more efficiently, training staff, taking on apprentices or developing new product lines; it is simply being spent pursuing money that they are owed for goods or services they have provided. This is not just about the weighted activity that small firms could be doing if they were not chasing money, because some late repayments mean the difference between life and death for firms which, although successful, simply run out of cash. Department for Business, Innovation and Skills figures tell us that 4,000 businesses failed in 2008 simply as a result of late payments. Those businesses were successful in their own right, but were brought down by a lack of cash flow because of not being paid.
The previous Labour Government worked with the Institute of Directors, the British Chambers of Commerce and the Institute of Credit Management to set up the prompt payment code in 2008. Is it transparent, but it is under-publicised. It is certainly not a silver bullet, but it is one of the weapons in the Government’s portfolio. To put the environment in context, there are 4.5 million small businesses in the UK and just under 6,500 large firms. All of us know that small and medium-sized enterprises are very much the lifeblood of the British economy, through their contribution to our tax revenues and to growth, so when we see an issue that is so desperately holding back our small businesses, it is only natural that this House should want to act.
In 2009, Labour’s last full year in office, there were 683 new signatories to the PPC, whereas, as has been said, in the first full year of this Government there were just 89. Even now, less than one fifth of all large firms are signed up, so the Government would be right to push for culture change, which is of course a part of the solution. The fact is that under this Government the situation has got worse. Intrum, Europe’s leading credit management services provider, says that in the past two years the UK’s payment index score has been progressively getting worse; in 2010, British and German performance was pretty much neck and neck, but in the past two years Britain’s score worsened, going from 150 to 161, whereas the Germans’ score went down to 147. German businesses have a known advantage: German small firms now know they will get paid earlier, giving them a clear commercial advantage over British firms.
In this period, too little progress has been made. Progress has been faltering on the PPC and, as has been said, on the EU late payment directive, a key weapon in Government’s armoury, we have seen U-turns and obfuscation. In September 2011, the previous but one Minister, the right hon. Member for Sutton and Cheam (Paul Burstow), said in answer to Labour calls for action that he would transpose these rules into UK law early. He then performed what many hon. Members will feel was a deeply unhelpful U-turn and wrote to MPs to clarify his earlier statement, saying that this would happen at some point by March 2013. Since then, we have had it confirmed that it will not happen a single day early and, as my hon. Friend the Member for Caerphilly said, some are sceptical about whether it will be properly in place by the date when it should be. The directive should now be in place by March 2013—the latest possible date. That sends a negative message from the Government about the importance they place on this issue, about which hon. Members have spoken so powerfully in this debate.
The supply chain finance scheme potentially reinforces the problem; it could positively institutionalise late payment as an acceptable business practice. Under the scheme, a bank is notified by a large company that an invoice has been approved for payment. The bank is then able to offer a 100% immediate advance to the supplier at lower than normal interest rates—but none the less, with interest—knowing that the invoice will ultimately be paid by the large company. That could exacerbate the problem, because large companies could further extend their payment terms as a result, potentially affecting suppliers outside the agreement and exacerbating an existing culture of slow and late payment.
It is not just Labour saying that. Janet Barton, a freelance credit controller and specialist in helping businesses manage their cash flow, has said:
“I have no idea why the Prime Minister thinks this is such a good idea. The large companies get to hold on to their money.”
Phillip King, chief executive of the Institute of Credit Management, said that his preference would simply be for people to pay on time.
One-nation Labour believes that everyone should play by the rules. It is unfair that local family firms should be threatened because large companies effectively use SMEs’ money to bankroll themselves. In government, we passed the Late Payment of Commercial Debts (Interest) Act 1998, which enables firms to charge interest and obtain compensation on overdue payments from customers. We set targets in the March 2010 Budget, tightening rules on late payment by the public sector and setting Departments the goal of paying 80% of undisputed invoices within five days and requiring them to do so within 10 days.
We realise that the problem cannot be resolved by legislation alone and that is why we set up the prompt payment code to make a moral case for large businesses to pay their suppliers on time and in a fair and responsible way. We worked alongside business bodies such as the Institute of Directors, the British Chambers of Commerce and the Institute of Credit Management to launch the code and to get 650 companies signed up. The code does not lay down specific tight deadlines on when payments must be made or place undue burdens on businesses. For large businesses with huge cash flows, it is not an onerous measure to sign up to. That is why we entirely support the spirit of the motion.
One nation Labour’s approach would be about much more. We have a small business taskforce that is informed by people throughout the business environment who consider how all Labour’s policies impact on small businesses. We want to see more transparency to encourage prompt payment, including in reporting requirements such as payment performance and through policies in firms’ annual reports and accounts. We will encourage Labour MPs to champion the prompt payment code on behalf of SMEs in their constituencies and to try to ensure that as many companies as possible in their constituencies are signed up. We are calling on Ministers to ensure that prompt payment is better enforced down the supply chains of all those firms that win Government contracts. Government contractors who repeatedly pay slowly or late should be stripped of public sector contracts.
We recognise that legislation alone is not the answer to the problem and we need the Government to demonstrate real leadership, making it clear to big businesses that late payment is not acceptable. We do not feel that Ministers have done enough to sign firms up to the prompt payment code.
A push on the prompt payment code is overdue but it is just the tip of the iceberg. The Government ultimately must decide whose side they are on. Will they send a one-nation message that they will support British firms in accessing their own money or will the collective voices of those small firms have to harry them along every small step on the way? The time for action is now.
The Minister for Universities and Science (Mr David Willetts)
On behalf of what I guess we must now call the one nation coalition Government, I welcome this excellent Back-Bench debate, which has raised a very important issue of great concern to businesses, especially small businesses. I particularly congratulate my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) on his opening speech, in which he set out some important policy challenges, which I would like to touch on in my remarks. He spoke with passion and was right to do so, because when we talk about finance for business we must understand that despite our endless ingenious schemes to encourage bank lending and access to finance from the City, one of the best forms of financing for businesses is for them to win contracts and get paid for them. That is an extremely effective form of financing for small businesses and we strongly support it.
There was a slight theme in today’s debate about confusion of identity. It is good to know that the person who has tweeted in my hon. Friend’s name is not him—I hope the Chief Whip knows that, too. We then heard from the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), who is no longer in her place—perhaps she has gone off to tweet. She spoke very well and correctly made the point that although the intention of this debate was to discuss the public sector, we should not forget the importance of improving the performance of the private sector. There is a lot to do in that sector and we are committed to doing it.
We then heard an excellent speech by my hon. Friend the Member for South Northamptonshire (Andrea Leadsom), which included some powerful examples of the kind of problems that small businesses face. I thought, to be honest, that her examples, from Q Technologies and its experiences of dealing with the NHS to experiences of being paid for legal aid, were, quite simply, shocking and indefensible. I do not think that any Minister with responsibility for this sector would wish to defend that. It is very important that the message goes out loud and clear from the debate today that public agencies are expected to pay bills promptly. It is minimum good practice, which we expect across the public sector.
The hon. Member for Stockton North (Alex Cunningham) also drew attention, rightly, to the importance of the performance of the private sector. We heard from the hon. Member for Caerphilly (Wayne David) and I hope, if time permits, to touch on the EU directive and what we are doing about it. Finally, we heard from the Opposition spokesman, the hon. Member for Chesterfield (Toby Perkins), whose recollections of his experiences with Gladys and Sheila brought the House to life.
Let me make it clear where the Government stand on this important issue. We understand that we are committed to supporting small business by ensuring that businesses get prompt payment. Small and medium-sized businesses are responsible for almost half of the £900 billion private sector output of this economy and 60% of private sector jobs. Cash flow is critical for them. That is why, as the British Chambers of Commerce recently set out in their prompt payment report, there are two main challenges, which we are determined to address—first, payment terms which are too long, and secondly, payment terms which are not adhered to. The estimate from the BCC is that UK SMEs are owed almost £36.4 billion in overdue payments, mainly by large companies. This is unacceptable and it needs to improve.
Opening the debate, my hon. Friend the Member for South Basildon and East Thurrock said that the position was deteriorating. There are different ways in which it could be measured. The latest late payment index from Experian shows that UK businesses paid their bills approximately 1.3 days earlier in the third quarter of 2012, compared with the same period last year, but we are not complacent. We know that we still have to do a lot better.
We already have in the UK legislation that gives businesses a statutory right to claim interest from other businesses for the late payment of commercial debt, and we would encourage companies experiencing late payment to use those legal powers that exist. Part of the problem is that many businesses fail to agree payment and invoicing terms before entering into a transaction. That is an area where business practice can improve. But businesses overwhelmingly tell us that they do not want new legislation. We heard that in many of the contributions from hon. Members in all parts of the House this afternoon, so the challenge for the Government, which we accept, is to take positive action, leading by example as a payment exemplar and working to educate businesses and change the culture of late payment.
We entirely accept that the Government must set a good example. Central Government Departments now aim to pay 80% of undisputed invoices within five days. Indeed, in September this year my Department, BIS, paid more than 90% of invoices within this deadline.
Andrea Leadsom
It suddenly occurred to me that I would never be forgiven if I did not mention at this point that my district council, South Northamptonshire, is among the top 10 best payers in the country.
Mr Willetts
Excellent. I join my hon. Friend in congratulating her council on that excellent performance.
We need to go further. This is a point that was made in several interventions. Let me make it clear. To ensure that the benefits of prompt payment are felt throughout the supply chain and reach small businesses, all Departments have included a clause in their contracts that requires main contractors in turn to pay their suppliers within 30 days. That is a major step forward, but they now have to deliver on it.
To ensure that is delivered, on 9 March this year the Minister for the Cabinet Office and Paymaster General, my right hon. Friend the Member for Horsham (Mr Maude) announced that the Government’s mystery shopper service would be extended to include issues relating to unfair practices in the supply chain. Suppliers can use the service anonymously to escalate concerns about problems in Government supply chains to the Cabinet Office.
My hon. Friend the Member for South Basildon and East Thurrock asked what the Government could do and whether we should identify individual officials and their Departments. We think that the mystery shopper service, which has a direct e-mail connection to the Cabinet Office, where concerns can be pursued, is an effective way we can hold individual Departments, their suppliers and linked public service organisations to account.
In addition, we are committed to ensuring that the prompt payment code is adopted by as many organisations as possible. Signatories to the code commit to paying suppliers within agreed and clearly defined terms and to ensuring that there is a proper process for dealing with any issues that arise.
We are coming up to the fourth anniversary of the code and continue to work with industry bodies to encourage their members to sign up. Only this week, the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), who has responsibility for business and enterprise, wrote to the FTSE 350 chief executives to encourage those that have not yet signed up to do so. I commend his excellent letter to the House. If it has not already been placed in the Library, I will ensure that it is. It contains a real sting in the tail because it says that there is significant public interest in the issue of late payment, and that in order to recognise companies’ efforts, he intends to publicise the names of all FTSE 300 companies that have signed up to the code, and to acknowledge those that have not, early in the new year. That is an important step forward.
Debbie Abrahams
I welcome what the Government are doing, but will the Minister explain why they have taken so long to respond in that way?
Mr Willetts
Frankly, I do not know the exact history, but I can say that we are taking this action now. We have already taken other actions, such as the intervention by my right hon. Friend the Minister for the Cabinet Office and a steady increase in payments in line with the prompt payment code. As I was so generous to the hon. Lady, in her admittedly brief absence from the Chamber, I hope that she will not be too grudging about the actions we are now taking.
Let me refer briefly—I think it is important to allow my hon. Friend the Member for South Basildon and East Thurrock time to speak at the end—to the EU late payment directive, which a few hon. Members have mentioned. We support the revision of the directive because it seeks to introduce a number of improvements to the original. That will save business money and help create a level playing field for UK suppliers trading across the single market. We believe that the recast directive essentially recognises current UK legislation and practice as an exemplar and mirrors existing UK provisions. Indeed, we have introduced across the public sector targets that are in many ways more onerous than those set out in the directive.
Toby Perkins
The Minister is basically saying that the directive will make relatively little difference because the Government are already doing that, broadly speaking, so I am confused about why there has been such resistance to implementing it and why they will not do so until March 2013.
Mr Willetts
Let me explain that point. Our intention is to transpose the directive by 16 March 2013. That is a commitment I can give the House. However, it is a long-standing commitment of this Government not to gold-plate EU legislation. We do not implement early or rush to implement EU legislation. We comply with the legal requirements. We have confirmed many times our intention to transpose the 2011 EU late payment directive by 16 March. However, our approach, learning from the process in many other countries, is that we do not feel obliged to rush to implement any EU directive before the deadline by which it has to come into force. We in BIS try consistently to apply that approach, which I commend to the House.
I congratulate hon. Members on leading this debate. We recognise that changing the culture of late payment is a challenge that requires both Government and business to play their part. We expect business to do so, and we expect Government and all public sector bodies to do so too.
Stephen Metcalfe
I thank all hon. Members for their contributions to the debate, which has been very interesting and enlightening. It is rewarding to see such support for addressing this problem from Members on both sides of the House.
I congratulate the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on her valuable campaign. I very much wanted to quote a lot of her statistics in my opening remarks, but felt that that would be stealing her thunder. I wanted to allow her to talk about that aspect. It is shocking that so many large companies have not signed up, and we must encourage them to do more. She was right to point out that it is an attitudinal problem that we somehow have to break. I am conscious that I spent a lot of time talking about the public sector, but of course the public sector is a large buyer from the private sector, and that is where the problems start.
My hon. Friend the Member for South Northamptonshire (Andrea Leadsom) made some excellent points and highlighted particular cases in her constituency that well demonstrate the problems we are facing. The hon. Member for Stockton North (Alex Cunningham) stressed that small businesses should not be acting as the banks for big business, thereby payrolling them.
The hon. Member for Caerphilly (Wayne David) talked about legislation that he would like to be implemented soon. The problem with legislation is that, regardless of whether it is on the statute book, if suppliers are too afraid to utilise it, then it will not necessarily solve the problem. Suppliers will be afraid of rocking the boat, biting the hand that feeds them, or whichever metaphor one wants to use. Instead, therefore, we need to change the culture. The hon. Member for Chesterfield (Toby Perkins) talked about one nation. In fact, this is about one notion, “Pay up and pay now”, because that is what will release the funds into our economy.
I thank the Minister for his very constructive remarks. I hope that he will look back at the debate to see whether there is anything further we can do. I was pleased to hear that he agrees that the public sector should pay—that is always a good start. He said that payment terms have got better and that people are now paying 1.3 days earlier, but it is also the case that the amount owed has increased above the agreed terms. The problem with the mystery shopper system, as I have heard from some people who did not wish to be named, is that in very short or narrow supply chains it is very easy to identify who phoned in and made the complaint.
Whether in the public or the private sector, people need to change the culture; they need to pay their invoices and pay up, because that will release billions of pounds into the economy and deliver what we want. Change the culture, release the funds, let us drive some growth. I thank everyone very much for their constructive comments.
Question put and agreed to.
Resolved,
That this House has considered the matter of stimulating growth through better use of the Prompt Payment Code.
Katrice Lee
(12 years, 1 month ago)
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Mr Iain Wright (Hartlepool) (Lab)
I am honoured to have been able to secure this debate on behalf of my constituent, Mr Richard Lee, on the disappearance of his daughter, Katrice, although extremely saddened that I have had to secure such a debate. I am grateful to Mr Speaker for granting me permission to speak on behalf of Mr Lee on the Floor of the House and to set out his concerns regarding the handling of this distressing case. I hope, Mr Deputy Speaker, that you will pass on my thanks to Mr Speaker for allowing me to do so. I also pay tribute to the great, unstinting and diligent work carried out by the hon. Member for Gosport (Caroline Dinenage)—Mrs Lee and her daughter are constituents of hers—who, I believe, will want to catch your eye later, Mr Deputy Speaker.
Mr Lee served in the British Army for 34 years and was considered to have provided exemplary service to Queen and county. The facts of the case, as they are known, are simple to relay and yet horrifyingly tragic. On 28 November 1981—her second birthday—Katrice Lee went missing from a NAAFI supermarket in Schloss Neuhaus, near Paderborn, Germany. Katrice and her mother had gone to the supermarket to buy things for Katrice’s birthday party. It is every parent’s worst nightmare: after turning her back for a moment to pick up some crisps for her daughter’s party, Katrice’s mother found that she had vanished. In the 31 years since then, no trace of Katrice or what became of her has ever been discovered.
As a father, I know the nauseating feeling people get when their child is out of their sight for just a moment in a public place. Every parent has experienced it, if only fleetingly. Mr Lee has told me that he has held on to that feeling for more than 30 years. I cannot think of anything worse.
The investigation to find Katrice was botched from the very start. It appears that, because Katrice was the daughter of a serving British soldier stationed in Germany, there was considerable uncertainty as to who should take the lead in the investigation—whether it should be the Royal Military Police or the German authorities—and that valuable time, resources and evidence were either wasted or lost as this tussle over territorial jurisdiction and responsibility was debated. As a result, border staff were not notified of Katrice’s disappearance immediately, despite the fact that Paderborn is only two hours’ drive from the borders of the Netherlands and Belgium, as well as the northern ports of West Germany. No road blocks or checks were put in place, even though autobahn 33 cuts through Paderborn. Staff in the NAAFI supermarket on the shop floor and the tills where Katrice was last seen were not interviewed until six weeks after she went missing. Almost even worse, a sergeant-major at the base, who was close to the family and who had even looked after Katrice’s sister the week after she went missing, has only in the past month— 31 years after the disappearance—been identified as a key witness and interviewed by the authorities. How many other key witnesses and how much vital evidence have been lost due to the inadequate and incompetent handling of this case in the early days and weeks after Katrice went missing?
The family believe that the Royal Military Police were led quickly to an early conclusion by the German police inquiry that Katrice had wandered off out of the supermarket and had tragically drowned in the nearby river. However, the family strongly believe that that is simply implausible. It is difficult to believe that a two-year-old could wander out of a busy supermarket, past a crowd of shoppers, down a ramp, past a female ticket seller, across a crowded car park and then walk alone and undetected for more than 200 metres before somehow falling into the river.
Katrice had a real phobia of water, and the family strongly believe that, even if one could accept that she could emerge undetected at the water’s edge, she would have gone nowhere near the river. In addition, the river at that point had storm grates attached to it, but no evidence, such as a piece of clothing, has ever been found to have been captured by the grates in the river. The river has never given up any evidence that Katrice fell in, and yet that has been the authorities’ accepted scenario, without any tangible evidence, for many months and years.
The investigation has been subject to a catalogue of errors for decades. At the time of her disappearance, Katrice had a turn in her left eye—as did her sister—that would need corrective surgery at some point when she turned nine or 10. The Lee family raised that point personally with the officer heading the investigation, as they believed that it was a relatively unusual characteristic that could be used as part of the case and identified as a potential line of inquiry. Six months after informing the head of the investigation about the matter, the family asked the investigating officer whether progress had been made, only to be told by the officer in charge that he denied all knowledge of the information and informed that it was a “figment of the Lees’ imagination”. It does not seem unreasonable or particularly onerous for Interpol to have carried out a check of any medical procedures on a turn in a 10-year-old’s left eye in Germany or elsewhere on the continent in about 1989 or 1990, but no such lines of inquiry were pursued.
In February 2001, police and Army investigators took blood samples from Mr Lee and the whole family in the hope that advances in DNA analysis and technology would provide fresh leads. The DNA samples were to be placed on an Interpol database. However, earlier this year, some 30 years after Katrice went missing and more than a decade after the original samples had been provided, my constituent and the rest of the family were asked once again for samples. Despite the requests from Mr Lee, no explanation has ever been given for the second request. My constituent does not know whether the original DNA samples have been lost, degraded, used or checked against criminal evidence or hospital records.
It is little wonder, given what the family have been put through by the sheer incompetence of the investigation, which, let us not forget, came on top of their distress over their missing Katrice, that trust has broken down.
In a letter to me dated 6 July 2012, the Minister for the Armed Forces, the right hon. Member for South Leicestershire (Mr Robathan), who at that time had responsibility for defence personnel, welfare and veterans, stated:
“the Royal Military Police are conducting a thorough reinvestigation of the circumstances surrounding Katrice’s disappearance, and it is hoped that the application of modern investigative techniques may bring new information to light. However, this is a sizable task which initially involves the review of thousands of documents, and will understandably take some time.”
Although I welcome the reinvestigation of the case, that comment from the Minister worries me greatly. It sounds like a classic case of kicking the matter into the long grass to get the Lee family off the Royal Military Police’s back for a while and to keep the embarrassments relating to the initial handling of the case out of the public domain. That is why it is vital that we have transparency in this case.
Will the Minister, who is a decent and honourable man, resolve tonight to undertake a number of things? Will he provide, here and now on the Floor of the House, a firm commitment on when precisely the reinvestigation will be completed? The family want not a vague promise, but a definite date for its conclusion in the next few weeks or months.
Will the Minister go further and pledge to commission an independent investigation or inquiry into the Royal Military Police’s handling of the case? I am concerned that embarrassments about the way that the case was initially dealt with and subsequently handled over many years have led to a cover up of the facts. A reinvestigation by the Royal Military Police of a case handled by the Royal Military Police does not fill me with confidence that all possible criticisms and flaws will be brought to light. Only an impartial and independent review will do that. Will the Minister pledge to have one?
Will the Minister also pledge to give the family access to the case files? I understand the point fully that such access may hamper the independence of a future trial, but for goodness’ sake, this case is 31 years old. The family holds more experience and expert knowledge on this matter than any other group. In looking at the files, they might see holes, discrepancies or potential lines of inquiry that might not otherwise be apparent. Will the Minister ensure that access to the case files is granted to the family?
The family would also like to meet the Prime Minister. He has met the families of other missing children, but not the Lees. He stated in a letter to the hon. Member for Gosport that he is too busy. I want the Prime Minister to meet Mr Lee, father to father, and for him to pledge that all the necessary resources of his Administration will be made available to help the Lee family receive answers. Will the Minister facilitate such a meeting?
My constituent has suffered the anguish of his daughter going missing every single day for 31 years. That anguish is deeper with the knowledge that the investigation was botched from the start, that the incompetence continued for many years and that we are no further forward in finding out what happened to little Katrice. Thirty-one years is far too long. The Minister needs to pledge firm action to reassure Mr Lee tonight.
Caroline Dinenage (Gosport) (Con)
I am grateful for the chance to contribute to this debate and thank the hon. Member for Hartlepool (Mr Wright) for giving me time to speak. I pay tribute to his consistently effective and diligent support of Mr Lee and the family in this terrible and tragic case.
The hon. Gentleman has more than adequately summed up our shared concerns about the failures of the initial investigation and the subsequent handling of the case, so I will not go into that any further. However, I want to speak briefly on behalf of my constituents, Katrice’s mum, Sharon Lee, and sister, Natasha. Like Katrice’s father, they have endured three decades of suffering, not knowing what happened to this much-loved little girl on that awful day in 1981. It is vital that their voices are now heard after decades of frustration, that appropriate empathy is shown after years of disregard, and that action is taken to show that we care equally about the life of every missing child and every grief stricken parent.
Katrice’s mum, Sharon, first contacted me over a year ago as we approached the 30th anniversary of her daughter’s disappearance. She spoke of the anguish she felt when she realised that Katrice was no longer in sight in that busy NAAFI supermarket in Germany. It is a feeling of rising panic and horror which nearly every parent will be familiar with and, as the hon. Member for Hartlepool pointed out, will have experienced in a shop or public space at some point. Sharon and Mr Lee have lived with that feeling for more than 30 years.
As a mother, I can only begin to imagine the horror of losing a child, let alone never discovering what happened to them. The tragedy of this case, however, was cruelly compounded by the incompetence and insensitivity of the Royal Military Police. In an investigation seemingly plagued by failings, sources were overlooked and potential leads neglected, while the family were left without adequate support. The Royal Military Police, and the Army, let down a British soldier and his family when they were most in need of help and support. I hope that the Minister will offer his firm assurances that lessons were learnt from that inglorious time, and that service personnel and their families today would never face such an insensitive instance of neglect.
Let me turn our attention to the future. Despite the heartbreak that both Sharon and Natasha have endured, I have been struck by their quiet determination to carry on fighting to discover what happened to Katrice. That shows courage and strength that I am sure we all greatly admire. Although I welcome the resources and manpower that have recently been committed to the renewed investigation, may I respectfully ask the Minister why it took 30 years for an appropriate level of gravity to be attached to this case, and call on him to confirm that that effort will be maintained regardless of whether the case remains in the media spotlight?
Will the Minister give the family a clear indication about the time frame of the investigation, as I am sure he will agree that they have waited long enough for that to be concluded? When the current investigation is complete, I urge the MOD to release the initial case files to the family. At a time when we are thankfully starting to accept that past mistakes cannot be brushed under the carpet, there can be no attempt to cover up the failings of the original investigation.
Finally, the Minister knows that I respect him enormously, and to my mind there is no one better to be trusted with a responsibility as vital as the welfare of defence personnel. Will he reflect on how this family have been treated over the years at the hands of the Royal Military Police, the Army and the Government? In truth, I was disappointed that the Prime Minister declined to meet the family when I raised this issue at Prime Minister’s questions earlier this year. Surely it is not right to cherry-pick which desperate, grief-stricken family of a lost child is more worthy than others of face time with the Prime Minister.
With that in mind, I plead with the Minister to commit to meet the family, so that he may better understand how to take this case forward to personally address their concerns and ensure that the cruel mistakes of the past are never repeated.
The Minister of State, Ministry of Defence (Mr Mark Francois)
I congratulate the hon. Member for Hartlepool (Mr Wright) on securing this important debate on the case of his constituent, Mr Richard Lee, whose daughter, Katrice, went missing from a British Army shopping complex in Germany in 1981. I am also aware of the interest shown by my hon. Friend the Member for Gosport (Caroline Dinenage) as constituency MP for Katrice’s mother, and I welcome her contribution to the debate. We have heard two earnest and passionate contributions from both sides of the House; this is a completely bipartisan matter, which is exactly as it should be.
Briefly, may I pay tribute to the hon. Member for Hartlepool for his comments yesterday during Prime Minister’s questions? He asked the first question to the Deputy Prime Minister, and echoed effectively his tribute to our recently fallen personnel in Afghanistan. That was appreciated in the Ministry of Defence, and, I am sure, by the families of those personnel as well.
The Royal Anglian Regiment recently lost Corporal Alex Guy during its tour of Helmand province. Its homecoming was held in Basildon, Essex, this afternoon, and I represented the Government. I pay tribute to that regiment for a fine and well-conducted tour, and thank Mo Larkin, BEM, the mayor of Basildon, and all her staff, for giving it such a wonderfully warm homecoming that was supported by thousands of people in Basildon town centre. I wanted to get that on the record.
The Katrice Lee case is very distressing, and I should like to extend my heartfelt sympathy to the Lee family, who must have suffered terribly since the disappearance of their daughter some 30 years ago. Both hon. Members who have spoken have corresponded with my predecessor on a number of occasions, and they will understand that there are areas of the case that I cannot discuss in detail on the Floor of the House, not least because they relate to an ongoing police investigation. However, I should like to reassure them that the Royal Military Police are currently going to every length to try to discover the truth about what happened to Katrice. I will try and give at least some indication of that in my remarks.
As the hon. Gentleman has outlined, his constituent was a British soldier serving in Germany at the time of his daughter’s disappearance, a posting on which he was accompanied by his then wife, Sharon, Katrice’s mother. On the morning of Saturday 28 November 1981, the Lee family were visited by other family members. It appears that a group of them, including Katrice, went out shopping for provisions for Katrice’s second birthday party, which was planned for that afternoon. The family were shopping in a busy NAAFI shopping complex one mile from the family’s married quarter. This was the day after the last payday before Christmas and, as hon. Members would expect, the shop was therefore understandably very busy. At approximately 11 am, while the family were queuing to pay for their shopping, Katrice was lost from sight, and despite the frantic efforts of the family and staff, could not be found.
Under the NATO status of forces agreement, jurisdiction for the case rested with the Royal Military Police. Area searches were conducted on the ground, by helicopter and by diving teams in the nearby River Lippe. Large numbers of Royal Military Police, German police, British troops and volunteers—large numbers of people—worked tirelessly to try to find Katrice, but sadly, as we know, to no avail.
In February 2000, following a review by the then National Crime Faculty, the Royal Military Police again looked at the investigation and developed new lines of inquiry, which included the arrest and questioning of a former soldier, but ultimately, the case remained unsolved, partly owing to a lack of conclusive evidence, and the investigation was suspended in 2003.
In January 2012 the Royal Military Police reopened the investigation under the name Operation BUTE, and decided to go back to first principles to reinvestigate the case. Essentially, there is now a new police investigation using the very latest techniques and methodologies to explore all possible explanations for Katrice’s disappearance. The investigation team consists of military police personnel supported by experienced civilian investigators—all are trained to national policing standards. Investigators are using the latest Home Office large major inquiry system—the HOLMES 2 computer system—to provide a greater level of analysis of the available investigative material than was previously possible.
Expert advice has also been sought from the Serious Organised Crime Agency operational support team, specialists from the child abduction unit with the US Federal Bureau of Investigation at Quantico, and a range of other leading experts. Where evidence is available, the latest forensic techniques are being used, including DNA, offender profiling and facial age progression techniques. Investigators are also attempting to trace and re-interview the nearly 2,000 people who visited the NAAFI supermarket on the day that Katrice disappeared. We should bear in mind what a busy day it was, as I have explained.
All opportunities, including a planned further appeal on the BBC’s “Crimewatch” programme, which is due to take place later this month, are being pursued. I am advised that in cases of this type, an appeal even many years on can sometimes spark someone to come forward. We can only hope that that will happen in this instance.
Since the launch of Operation BUTE, the Royal Military Police have been engaged with the family using specialist family liaison officers, and every effort has been made to keep them informed of developments. That support to the Lee family will, of course, continue for as long as it needs to. I am conscious that the family, for perfectly understandable reasons, has sought access to files from the original investigation. However, as the hon. Gentleman has acknowledged, this is a live police investigation, and it is not appropriate to release that information at this stage, not least because we would risk prejudicing any potential criminal proceedings that may arise. However, there may be something that we can do, and I will come to that in a moment. All police forces also have a duty to protect the identity of anyone who comes to their attention during an investigation but against whom no further action was either possible or appropriate. The rules of natural justice must still apply.
I understand, and support, the unwavering determination of Katrice’s parents to uncover the truth of what happened, and I can assure them that there will be no attempt to cover up any past failings. I am happy to repeat previous assurances given to the family that the Royal Military Police will be open about any failings that are identified and that, when the time is right, we will look again at the issue of disclosure. I also know that Brigadier Bill Warren, the Provost Marshal (Army) and the chief officer of the Royal Military Police, has indicated that, at an appropriate point in his team’s work, he will ask a civilian police force to review the entire investigation. The outcome of that review will be shared with Katrice’s parents as far as it is possible to do so. I hope that, at least in part, addresses one of the points that the hon. Member for Hartlepool has put to the House.
As everyone will know, we do not have a time machine and we cannot go back to the events of that day in 1981 when Katrice tragically disappeared. But what the Royal Military Police are doing is rigorously applying all available modern investigative techniques and seeking the advice of leading international colleagues. In other words, they are doing everything practically possible, given the time that has elapsed, to get to the bottom of what happened to Katrice.
I have only come to this case recently, having been in post for some two months, but I have looked at the details and I fully appreciate that this has been a long torment for the Lee family. I know that they have concerns about how the case was handled at the time, as both hon. Members have reflected in the debate. I would therefore be happy to meet the hon. Member for Hartlepool and his constituent in order to discuss the case in more detail. I am also happy to meet my hon. Friend the Member for Gosport and her constituent. We can either do this in one meeting or two, depending on the family’s preference.
I propose that before Christmas, or early in the new year at the latest, we meet at the headquarters of the Royal Military Police’s Special Investigation Branch in Bulford, where the Provost Marshal (Army) and his investigative team will be available to discuss the current investigation with the Lee family personally and to answer any questions they may have. If the hon. Members and the family are content, I will also be present at those meetings and discussions so that I can hear the questions and answers for myself. As the Minister directly responsible for this issue, I hope that I have been able to make an offer to both hon. Members this evening, the spirit of which I hope they will understand. Once they have discussed this issue with the family, if our three offices can co-ordinate promptly and we can all sort our diaries out, I hope that we can all meet in Bulford. I think that that would be the most useful place to meet, ideally in the run-up to Christmas, but if for whatever reason that is not possible, then as early as we can in January.
I will also be happy to meet again with the hon. Members and their constituents, either collectively or individually, once the investigation has concluded to discuss its conclusions at that time. I cannot give a guarantee this evening at the Dispatch Box for when the investigation will conclude. I completely and utterly understand why hon. Members and the family would like me to do that. I do get it, if I can put it like that, but the investigation must be allowed to run its proper course. If the family have frustrations about that, which I can understand, then I suggest that the best thing would be if they put those to the Provost Marshal (Army) directly when we meet. Perhaps he can update them fully at that time on where the investigation has got to and at least try to give them some idea of when matters might be brought to a conclusion. I hope the House can appreciate the spirit in which we are now attempting to address this matter.
This has been a tragic case. It has gone on for more than 30 years. The two hon. Members have done exactly the right thing in bringing it to the attention of the House. I hope they might feel that I, on behalf of the Department, have tried to do the right thing to take this as seriously as the matter obviously warrants. Perhaps we can all continue this discussion in Bulford and do our best to get to the bottom of what happened to Katrice. I hope that we can try to help the family with what must have been an almost unbearable burden for more than three decades.
Question put and agreed to.
Westminster Hall
(12 years, 1 month ago)
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Backbench business
(12 years, 1 month ago)
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Claims Management Companies
(12 years, 1 month ago)
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Jackie Doyle-Price (Thurrock) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan. I am pleased to have secured this debate, which is particularly timely given the Government’s recent consultation on reforms to the regulatory system affecting claims management companies.
As we all know, the Ministry of Justice has been regulating claims management companies since 2007, but the industry has grown significantly during the intervening years, and many firms have become much more aggressive in chasing up new business leads and opportunities, to the detriment of consumer interests and the insurance industry more generally.
Since securing this debate, I have been contacted by numerous organisations. Claims management companies have achieved a unique feat in uniting the consumer lobby and the financial services industry lobby. I have heard from the British Bankers Association, Which?, the Association of British Insurers, the Building Societies Association and the Finance and Leasing Association, all of which endorse the call for stronger regulation of the sector. There is general support for the measures in the Government’s consultation, but the consensus view is that those proposals do not go far enough.
We are witnessing practices that cause considerable consumer detriment. The cost to the insurance industry, often from questionable claims, is inflating insurance premiums considerably. We have debated the increasing volume of whiplash claims and the disproportionate legal costs they generate. Those costs will inevitably be passed on to the consumer.
In the case of payment protection insurance claims, consumers are often charged high fees by the claims manager, who has done absolutely nothing for them. As we all know, following the High Court judgment, banks are required to pay refunds and have set aside billions of pounds for that purpose. All the consumer needs to do is fill in a form; they do not need the intervention of a claims management company. I believe that many consumers have been misled into entering into contracts with claims management companies, as they have been falsely led to believe that they need such companies to do it for them or that they will receive a higher refund by doing so. That appears to be a breach of existing rules, which state that claims management companies should advise clients to pursue a case only if it is in the client’s best interests. Clearly, in the case of PPI refunds, that is not the case. In addition to implementing the recent proposals for regulatory reform, the MOJ could also consider whether it is properly enforcing existing rules when claims managers have clearly been overly aggressive in securing a consumer contract, in contravention of the rule that they should act in clients’ best interests.
I should acknowledge that there is a role for claims management companies in securing appropriate settlement for consumers. However, as I said, the industry has grown significantly, and we must ensure that the regulatory firm that takes action against wrongdoers is fit for purpose. Good, responsible claims managers have nothing to fear from tighter regulation. In the last 48 hours, I have received a number of representations from reasonable and well-behaved claims managers supporting the proposals for regulation and drawing attention to rogue operators. They all have much to gain from a tighter system of regulation, which will improve the industry’s current ambulance-chasing reputation.
I broadly welcome the Government’s proposals, but they were modest in sneaking out the consultation over the summer. Hitherto, the Ministry has done a reasonably good job, although I qualify that by saying that the industry has grown more quickly than the regulatory team can reasonably manage. I am not arguing for a bigger regulator, but for tighter rules and for the regulator to have the tools to do the job expected of it.
Currently, approximately 3,000 claims management companies are authorised by the Ministry, which has been active in trying to weed out rogue operators. This year, 50 have had their authorisation cancelled; last year it was 96, and the year before that it was 115. It is evidence that the Ministry is taking appropriate action. None the less, the scale of the problem is bigger than the current team can reasonably manage. I draw attention particularly to the PPI claims industry, which will be the focus of my remarks. Other colleagues might wish to refer to other types of claim, but PPI highlights most of all where the real consumer detriment is taking place.
I would like to set the scene by describing what the Ministry is up against before addressing whether the Government’s proposals go far enough and what other actions I would like them to take. The Sunday Times reports that the industry is earning £1 billion from PPI claims alone. That estimate actually appears rather conservative to me when the issue is examined in detail. We are also witnessing a period of much more aggressive business-seeking. I am aware of an exchange in the other place during which Justice Minister Lord McNally revealed that he received five or six such texts a day. If the Minister responsible is being chased in that way, it shows what a challenge less able and more vulnerable consumers face in keeping such people at bay.
Jonathan Evans (Cardiff North) (Con)
I congratulate my hon. Friend on drawing attention to this important issue. On her £1 billion estimate of the income from PPI claims management companies, she will be aware that the latest indications from the banks are that some £15 billion may have been set aside for PPI, yet some claims management companies charge more than 25% of compensation in fees. Does that not make her point about the £1 billion being a severe underestimate of the industry’s likely income?
Jackie Doyle-Price
My hon. Friend has articulated the point far better than I have. The evidence shows that the average cost of a claim through a company is 30% of the refund plus VAT. That is a significant bill. His other point is that the banks have set aside a particular figure to settle PPI claims. Able and savvy consumers who realise their rights have already filed their claims directly, but a significant pot of money remains. The companies know that it is sitting there, and they will go out and get as big a share of that income as they can. I completely endorse his view that £1 billion in fees is a considerable underestimate.
As I said, PPI claims management companies are totally superfluous. Consumers are simply being ripped off. Citizens Advice has also highlighted the detriment caused by such companies; in fact, it goes out of its way to say that such companies deliberately prey on the elderly and those out of work. I do not know whether hon. Members have much opportunity to watch daytime television, but if they do, they will see the advertising behaviour in which such companies engage. During a typical morning TV show, the commercial breaks generally consist of ads for debt consolidation companies, personal injury claims companies and one or two PPI claims companies. Clearly, consumers watching TV at that time will often be the very vulnerable, including the elderly and those out of work. They provide easy prey. They are being sold a product on the premise, “You don’t have to do anything; we’ll just send you a cheque.”
In pursuit of such easy money, claims management companies are engaging in very aggressive marketing practices based on misleading consumers. I am afraid I have a rogues’ gallery. Gladstone Brookes took £25 million in fees during the first half of this year. Gladstone Brookes has been reprimanded by the Advertising Standards Authority on more than one occasion for misleading advertising on PPI claims.
A complaint was made about a TV ad which stated:
“Reclaiming PPI takes up your time—Fact”,
next to a ticking clock. The Advertising Standards Authority ruled that, while the ad did not state that reclaiming PPI takes a lot of time, the ticking clock was designed to imply that that was the case, so it ruled that the ad could no longer be used. Gladstone Brookes, however, did not let the subject drop there, and it continues to use advertising that leads consumers to believe that they have only a limited amount of time in which to submit their claim. Frankly, that is misleading. Another company, Mitchell Farrar has earned £50 million so far this year and is currently spending £1 million a month on advertising, which shows how lucrative the business is to such companies, because they are prepared to spend that amount of money chasing up such opportunities.
People are being hounded daily by text and e-mail. Which? has found that a staggering 74% of people in this country have been contacted directly by claims management companies. I am sure that everyone in the Chamber has received at least one tiresome text message. In the past week I have received two, one of which read:
“We have been trying to contact you regarding your PPI claim, we now have details of how much you are due, just reply POST and we will post you a pack out”.
That statement is clearly untrue. The second text read:
“Records passed to us show you’re entitled to a refund of approximately £2,130 in compensation from mis-selling of PPI on your credit card or loan”.
Such a tactic is common among those companies. They use a four-figure sum in a text message that is clearly designed to seduce the recipient into replying, because who would not reply to the offer of free money? [Interruption.] I see that the hon. Member for Dumfries and Galloway (Mr Brown) has just received one—good evidence that the firms are being aggressive in chasing business leads. In fact, the ability to use text messages is a cheap and risk-free way of doing it, particularly if intermediaries are used to dispense the texts. The Government need to look at the whole area, which I am aware goes beyond the narrow scope of the Ministry’s interest and involves regulators such as Ofcom and the Information Commissioner. We need to join up their activity to ensure that consumers are protected.
That is the marketing, but those practices are nothing compared with what happens to consumers who actually jump at the bait and engage with a claims manager. Which? tells me that it is regularly contacted by consumers who have had negative experiences when dealing with claims management companies to retrieve mis-sold PPI. One case involved a company called We Fight Any Claim, which approached a consumer about claiming back mis-sold PPI on his credit cards, and asked for £420 as an up-front fee. He agreed to the payment, but it then proceeded to take up to £10,000 from his credit cards. It later transpired that he had never had PPI in the first place, but We Fight Any Claim retained his money. Only when the Ministry of Justice intervened was most of his money refunded, although We Fight Any Claim still retained a £735 admin fee, which he has been unable to get refunded, and he had never been compensated for the financial difficulty caused by the removal of £10,000 from his cards. It is shocking that companies have the audacity to behave in such a way, and we need to ensure that we have the regulatory system to prevent it from happening.
The industry is less than transparent about fees and charges when engaging with clients, so consumers are approached aggressively, told that they can get hold of some money and left in ignorance about the potential costs they are incurring. I have a constituent who was approached about PPI, and that led her to initiate a claim with the Halifax, netting her a refund of approximately £2,000. She was staggered to receive an invoice for more than £700, when all the company had done was send her the form, while she had engaged with the Halifax directly. That is not unusual, as I said, and the fees are typically 30% of the refund plus VAT.
The time is certainly right to revise the rules. The existing rules predate the PPI claims industry and have been shown by it to be deficient. I am pleased that the Ministry has now proposed that all contracts need to be signed physically by the consumer, which hopefully will deal with the issue of consumers suddenly being faced with massive, unanticipated bills. I encourage the Government to enact that provision without delay. Also, claims management companies need to be clearer about their fees, so that people are not faced with a bill they were not expecting. The Government should go further and ban up-front fees across the board. Which? and some industry bodies have called for that. I referred earlier to a consumer who was cold-called and then charged £8,000 up front. In no way could a regulated system that protects consumers allow that to happen.
As I said, the industry preys on the vulnerable. Which? told me of the case of an elderly gentleman who is 87 years old, deaf, housebound, frail, on the telephone preference register and with no PPI or debts. He was cold-called by a claims management company and persuaded to give his credit card details; it then proceeded to take £250. I call that theft, and I hope the Government will consider banning up-front fees across the board.
The Government have also proposed to improve consumers’ ability to get redress and have their complaints managed effectively by passing responsibility to the legal services ombudsman—a move that I understand was intended to take effect next April, although there is concern that the timetable might have slipped. Can the Minister give us some clarity and a firm reassurance as to when that will occur, so that the ombudsman can prepare to take on such complaints? Clearly, the volume of such cases, which we have all witnessed, has resource implications for the ombudsman. At present, the ombudsman expects to investigate 4,000 claims a year, of which 95% are likely to be PPI-related, as well as a spike in claims at the beginning of its responsibility as consumers become aware that there is somewhere to go with a complaint. The ombudsman needs to make plans so that the right resources are in place. I am told that it needs to know this month, for planning and recruitment purposes, if it is to take responsibility from April. I therefore invite the Minister to confirm whether that will be the case.
It is also important that claims management companies make consumers aware of their debt recovery procedures before entering into a contract. Obviously, they are dealing with people who are taking on substantial volumes of credit and have debt issues. We have seen examples of lenders that have refunded customers’ PPI but, rather than send a cheque, have offset the amount against outstanding debt liabilities. That is sensible and in the interests of the consumer, but then, the management company still sends an invoice to the customer demanding a significant refund, which can add to debt problems. We encourage the Government to oblige claims management companies to fall under the terms of Office of Fair Trading debt collection guidance, so that such aggressive behaviour towards consumers is not tolerated by the regulatory regime.
Other agencies have an interest in the better regulation of claims management companies. The key responsibility falls to the Ministry of Justice, but Ofcom and the Information Commissioner have an interest in how the companies are marketing, while the financial ombudsman service is challenged by the often vexatious claims. I am told that of the more than 5,500 groundless claims brought to the FOS—only 2.5% of the total complaints it deals with, but nevertheless generating resource implications for the industry as well as the FOS—the majority were from claims management companies and 99% were about PPI policies that had never been sold. The companies have a risk-free opportunity to seek a refund. All they need to do is to submit a form to the FOS, for which the industry bears the cost, and if they get lucky they earn some commission, and if they do not there is no cost.
I want the Government to consider whether the companies should be faced with a bill for pursuing vexatious claims. The normal fee for a case handled by the FOS is £500. If it was clear that the companies would bear the cost of submitting those claims, they might try a little harder to ascertain whether customers had PPI in the first place. That is important, not least to ensure that all the agencies involved in regulating the sector have recourse to funds from the industry to deal with the malpractice that it is causing.
I encourage the Minister to join up with other agencies to ensure that everything is covered when regulation is tightened. I also encourage her to look more closely at what more can be done to tackle the problem of unsolicited text messages and uninvited phone calls. The companies’ actions are risk free, and they often use intermediaries so they can distance themselves from activities falling outside the scope of their regulators. We must make them more responsible for the partner organisations they deal with and the detrimental behaviour they undertake.
I am pleased to have had the opportunity to raise this matter now. I know the Government are considering action shortly, and I hope this debate will encourage them in the right direction, and to do more. I look forward to hon. Members’ contributions.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I congratulate the hon. Member for Thurrock (Jackie Doyle-Price) on bringing this matter to the attention of the House. Yes, she saw me with my BlackBerry. Like most hon. Members here, I receive three or four text messages a month stating that I can claim PPI back. My good lady keeps me in check, so I know fine well that I am entitled to nothing and I have never had any claim for PPI.
I want to draw attention to a different element of claim management companies. I will not beat about the bush: I want to expose a company that is, thankfully, now defunct. It was licensed through the Ministry of Justice and used that licensing as a selling point to commit fraud and rip people off. The company Kerobo Claims, was initially based in Sale, Cheshire, and rented office space through Ravenstone UK. It advertised in local newspapers and on radio programmes and, unfortunately, one morning a constituent of mine heard an advertisement on local radio asking people if they had a loan of any description, and were they sure it would be enforceable in a magistrates court, because if not, Kerobo Claims were the people to deal with it—they could cancel that loan.
That is how my constituent was hooked. He approached the company, and said that he had a loan from Barclays. However, because it was not taken out prior to April 2007, the company could not handle it. He engaged in discussion with it and revealed that he had another loan, which was taken out prior to April 2007, and the company said that it thought it could help. Unfortunately for my constituent and his brother-in-law, as I will divulge, he did not have a credit card that predated April 2007 either, so his brother-in-law offered to help. He did that because the company said that when it had sorted the matter out, instead of sending out a cheque and asking my constituent for reimbursement, that would deal with it more quickly. Alarm bells should have rung, but they did not.
My constituent engaged his brother-in-law, who granted permission for my constituent to use his credit card. Kerobo then contacted the owner of the credit card, and said, “By the way, we think we could help you with any balance on your credit card.” He said that he had a balance of only £20, and asked what help the company could offer. Within 72 hours of the contact and the credit card details being given, Kerobo put a charge of £2,200 against the credit card for my constituent who had originally contacted it. Then, because the balance on the credit card had crept up to over £2,200, it put a charge against the credit card owner. All in all, within 72 or 96 hours, it had a charge of some £3,000. Hon. Members will understand that such a situation is embarrassing for people, so I will not divulge my constituent’s name, but I wonder how many people out there have suffered the same problem, accepted it as a bad experience, and said nothing.
I tried to contact the company by phone and e-mail, but nothing came back. I then saw a copy of the credit card statement and, surprisingly, the amount that had been taken out had gone to an account in the name of Ravenstone UK, the company renting the office accommodation to Kerobo Claims. That was somewhat strange. Some months later, I discovered that the money was being transacted through that account. The credit card company, MBNA, wanted nothing to do with it. I became suspicious, because soon afterwards the company moved to another address—Atlantic street, Altrincham. I was incensed by that and when I happened to be in the area three or four months after I had first been contacted, I went to the company’s so-called premises, which were nothing more than a mailing address. The lady there was helpful to the extent that she was apologetic, but I was only one of probably several hundred people who had called. I explained who I was and what was happening but although she was apologetic, she could do nothing.
I made further inquiries at other locations, and it became more and more obvious that the chances of getting the money back for my constituent and his brother-in-law were extremely limited. I had the names of a number of people, but they had not responded to my telephone calls and e-mails. I also had the name of Kevin Rogers-Davison, and his address and telephone number. I telephoned him and, strangely, during the whole conversation lasting seven or eight minutes he never once asked who I was. I merely said that I was phoning on behalf of the owner of the credit card. He said that he no longer had anything to do with the company and that it no longer existed. I had taken the opportunity to check his address on Google Earth, which showed a splendid, brand new, three-storey townhouse with a superb blue, two-seater Porsche outside the door. I congratulated Mr Rogers-Davison on his house and his car, and he immediately asked me whether I was threatening him. I told him that if he could see who was on the other end of the phone, he would realise that I am of no size to threaten anyone.
People like that should not get away with such activities, but I know that Kevin Rogers-Davison has gone on to other things. The hon. Lady has given clear indication of some of those who have been caught up—all sorts of people—and the tragedy is that those who ripped people off have gone on to PPI claims, and will move from that to something else. All I want to do today is draw attention to the sort of activity that has been going on.
I do not blame the Minister or the Ministry of Justice, but it needs to be recognised that all this has gone on in the name of the Ministry. The wider public out there see that as some kind of guarantee and think, “If this goes badly wrong, there is a Government Department there to back me up,” but that is not the case. When I first became involved in the case, the company had already been suspended and it had been given a period of time to put its house in order. It did not do so, and eventually it lost its licence. I will say to the Minister that the Ministry was as helpful as it possibly could be. I was in touch with the monitoring and compliance unit in Burton upon Trent. People there tried to help, but they were as frustrated as I was, and probably not half as frustrated as my constituents.
Jackie Doyle-Price
The hon. Gentleman is giving a powerful example of how some of these companies are deliberately set up to get rich quick and move in and out of the industry swiftly. We have a regulatory regime that allows them to set up something that is nothing more than profiteering. Would he, as I would, like to see more powers for the Ministry to suspend and de-authorise firms more quickly, because the difference is blatant when somebody is legitimate and when someone is preying on consumers?
Mr Brown
Absolutely, and I thank the hon. Lady for that intervention. If it were at all possible, when such companies need a licence, I would give them one for a short time in order to test the water and see how good they are. I would ask them to supply details to the Ministry of Justice of some of their customers and whether those people have been satisfied with the contact they have had. It is, however, undoubtedly a get-rich-quick system and unfortunately it has left distraught families in its wake.
On this occasion, the two brothers-in-law involved had to go to another member of the family and borrow the money to pay off the credit card balance. It is a salutary tale of sheer exploitation and people who have no conscience, no mercy and who are not interested in what they do to others. I suspect that people out there will have got into such a state that they have done something untoward—perhaps a crime to get the situation dealt with and get the money back. I even suspect that, in some cases, a person may have taken their own life. I have heard of examples of that without being able to verify whether it was true. It is a sad situation, and one that I hope the Government can do something about.
Heather Wheeler (South Derbyshire) (Con)
Thank you for calling me to speak, Sir Alan. I thank my hon. Friend the Member for Thurrock (Jackie Doyle-Price) for securing this debate on the activities and regulation of claims management companies, and I apologise that I cannot stay until the end. I have students from Pingle school coming to see me at 4 o’clock, so I must leave, although perhaps we will have finished before then—I certainly hope so. This subject is of particular interest to me, as an officer of the all-party group on insurance and financial services. Our group has held many meetings with people involved in such issues, and I am delighted that my hon. Friend has secured the debate.
Claims management companies have grown considerably over the last five years. As we heard, in 2007, it was estimated that there were 400 CMCs, and today, there are over 3,000 subject to Ministry of Justice regulation. Such companies serve a purpose: people who have little time and have a claim can pay CMCs to work on their behalf to pursue claims for them. The huge number of PPI claims has been interesting, as PPI clearly has been one of the biggest financial mis-selling scandals ever. CMCs can now be used for personal injury claims, too. If people are time-poor, they should absolutely use a good claims management company. However, it is the hard sell, the rogue traders, and the targeting of the vulnerable by some companies that makes both our debate and reform in this area so necessary.
Citizens advice bureaux in my constituency do excellent work to support constituents who have been targeted by claims management companies, and to raise awareness of fraudulent and rogue traders. It is clear, however, that the Government need to do more to stamp out such practices altogether. Who here has not received one of those messages reading, “There is £2,167 waiting to be claimed in your name for the mis-selling of PPI on your loans and credit cards. To get this as soon as possible, reply to this message quickly.”? Three in four people continue to receive unsolicited texts or phone calls from claims management companies offering them the chance to claim compensation, and nine in 10 people who receive such a message say that it is not relevant to them at all. Although that issue was addressed in the House of Lords on Monday, it is also worth mentioning today in Westminster Hall. Some of the companies pursue a range of communications such as cold-calls, text messages and even e-mails to encourage individuals to make a claim. The Government need to look at what can be done to stop the selling of personal information to be used by such companies.
However annoying those text messages are, they are only part of the problem. I was recently contacted by a constituent, Mr Prince, who has given me permission to use his story. He was a victim of an unscrupulous claims management company called Lifestyle Money from Swansea, a little down the road from my hon. Friend the Member for Cardiff North (Jonathan Evans). Lifestyle Money called Mr Prince emphasising that they were acting on behalf of ordinary folk like him who may have been mis-sold PPI by the banks. They kept plugging the fact that they were registered by the Ministry of Justice and the Financial Services Authority to act on their behalf in collecting money owed to individuals that were mis-sold PPI. They told him that no money was to be paid up front to them, but that they required credit card details to hold on file, so that once a claim was successful, they could take a percentage, but would forward the rest to him. They also promised to send him an information pack with further details about how to proceed with making a claim.
That all seemed very fair to my constituent. No money was required up front. If the company was successful in winning him back compensation for his mis-sold PPI claim, only then would money be taken from his account. Some 10 days later, his information pack duly arrived. Lifestyle Money had gone to the trouble to mark pages to be signed and returned if he wanted to continue with the claim. However, Mr Prince decided not to proceed, and he thought that that would be the end of it. A phone call, an information pack received but not signed, and no money passed on—case closed.
Unfortunately, that was not the case. Several weeks later, Mr Prince received his credit card statement, which showed that Lifestyle Money had taken £359.98 from his account. He was completely shocked and confused about why that money had been taken out. On the phone, the company said that no money would be taken, and in the information pack, £359.89 was not mentioned at all. Following further investigation, he found that the sum was taken as an admin fee, but he was told that it would be returned in full should his claim prove unsuccessful.
Mr Prince was rightly annoyed and angered by that. To add to his anger, by the time he received his credit card statement, he was, of course, outside the 14-day cooling-off period, and he was told by Lifestyle Money that it would not return his money until he had made a claim. How was Mr Prince to act within the 14-day cooling-off period when the first he knew about the money being taken out was upon receiving his monthly statement, a good three weeks after that had happened? That money had, in fact, been taken on the day of the cold-call, even before he had received the information pack and before he could decide whether he wanted to pursue a claim with the company.
Luckily for Mr Prince, he was able to get the money back, after the intervention of the previous Minister, my hon. Friend the Member for Huntingdon (Mr Djanogly), who kindly got his officials in the claims management regulation unit to conduct an investigation on behalf of Mr Prince into the specific complaint. They proved successful in getting Lifestyle Money to pay Mr Prince back his money. Burton upon Trent is next door to my constituency, and I praise the hard work of the officials who work in the unit there, as well as the previous Minister, of course.
All that shows that greater regulation is needed. How can it be that a company can take over £300 based on one cold-call and on sending out one information pack, which was not signed? Even if Mr Prince had decided to go ahead and make the claim, the chances are that Lifestyle Money would not have been successful in winning him compensation. A recent web-based public survey undertaken by Citizens Advice showed that only 5% of respondents reported that the claims management company that had engaged them had managed to obtain any compensation for them. Rogue traders pursue everyone, regardless of whether they have a legitimate claim or not, taking fees up front to ensure payment even if they do little or no work, as in the case of Mr Prince.
In 2010-11, the MOJ received 12,504 complaints about companies offering financial products and services. Most of them did so by cold-calling and taking up-front fees. It is a pleasure to welcome my hon. Friend the Minister to her position. I ask her to continue work on strengthening the regulation in this industry. In particular, we need to consider banning up-front fees, so that there is no longer an incentive to pursue individuals who do not have a legitimate claim. We need a more effective cooling-off period, so that clients do not have to pay anything up front until after that period has ended, and in no circumstances should a company be able to take money from someone’s account without explicit consent to do so. More should be done to ensure that people know that they do not have to go through a claims management company to make a claim; they can do it themselves and for free. Perhaps the Minister will consider imposing a levy on companies that use unsolicited calls and text messages in order to discourage them from doing so. I am sure that if we tighten up the regulation, the Minister will find that many of the rogue traders will be stamped out, leaving genuine claims management companies to go on providing a legitimate service that helps many people who do not want to pursue a claim on their own to do so.
I again thank my hon. Friend the Member for Thurrock for initiating the debate and I thank you, Sir Alan, for the way in which it has been conducted. I hope that I might be able to hear the Minister’s words at the end.
Yvonne Fovargue (Makerfield) (Lab)
It is a pleasure to speak under your chairmanship, Sir Alan. I, too, congratulate the hon. Member for Thurrock (Jackie Doyle-Price) on securing the debate. Ironically, it was a super-complaint by Citizens Advice that partly led to the establishment of a whole new industry—claims management companies—in which the practices are almost as bad as those that the complaint was intended to redress. .
Which?, the consumer organisation, has found widespread rule breaches by claims management companies and the use of misleading statements and unfair contract terms by a significant number of companies. Initially, however, I want to deal with an issue that I now know has affected all of us in this room—I am pleased that noble Lords are not exempt from it, either. I am referring to the aggressive marketing techniques of claims management companies. I myself have received a number of calls and texts promising me large sums of money. Actually, I was promised £3,251—more than most people here—by one company that phoned me. I found that very strange, for two reasons. First, I had never had payment protection insurance, and secondly, I am registered with the Telephone Preference Service and have been for a very long time—I was one of the first people to register with it.
However, on investigating, I was horrified to find out that the Telephone Preference Service has no enforcement powers. They are the responsibility of the Information Commissioner, and only recently has the Information Commissioner acquired the power to impose fines of up to £500,000. Therefore, consumers have not only to opt in to the Telephone Preference Service, but to complain to a different body. Although the Telephone Preference Service will pass on the complaints and has been doing so in ever-increasing numbers, the situation is still confusing for consumers. I and quite a number of other consumers would prefer an opt-out rather than an opt-in service in this regard, but I believe that there is sufficient evidence of abuse for the regulator to consider banning claims management companies from cold-calling. The consumer can find them if they want them. There are plenty of adverts on daytime television, as we have heard. I believe that those people who need them will know where to go.
I come now to my other pet hate—unsolicited texts. That form of communication is not covered by the Telephone Preference Service. I wonder whether we should consider widening the scope of the service to cover it. The Information Commissioner’s Office surveyed the public in 201, and out of more than 1,000 respondents, 681 said that receiving a text caused them concern; 205 said that it was inconvenient; and 61 said that it had caused them substantial damage or distress. That is a huge majority who dislike unsolicited texts even without including me—I get into an irrational rage over them at times. I would also like to see an opt-in for that form of communication and a single point of complaint. I do not want to forward spam texts to my mobile provider.
Jackie Doyle-Price
One difficulty with unsolicited texts is that they come from an anonymous source and if people try to ring the number that they have come from, it rings off. Surely we need to find a way of regulating that, so that someone can be held responsible for sending the text.
Yvonne Fovargue
I agree. Quite often, the texts are from abroad from what is almost a harvesting service. Although companies should not be sending unsolicited texts and making unsolicited phone calls, they will go back years and years and say, “Well, you gave us your details. You didn’t tick the box years ago to say that you didn’t want to receive marketing texts.” It is very hard to disprove that. There is a system whereby people can forward spam texts to their mobile provider to get them blocked, but there are different numbers for different mobile providers, and people have to remember the code to forward them and actually take action to do that. I do not want to do that; I just do not want to get the texts in the first place.
Jonathan Evans
Analogous to unsolicited texts are unsolicited e-mails. One can see that many such e-mails come from abroad—in my case, from New York, curiously enough. Surely, though, what we should look for in terms of regulation is where those introductions end up. In other words, if anyone takes up cases that have been harvested in that way, should there not be some regulation to try to tackle the people who are then accepting the reference?
Yvonne Fovargue
I agree. In this new world of electronic communications, there need to be new regulations to stop people being bombarded with texts, phone calls and e-mails that they spend their time deleting.
Let me move on. The consumer has contacted the claims management company; they have had the text and believe that they might get some money. As we have heard, some companies immediately demand an up-front fee in addition to a win fee. I have spoken many times in other debates of the detriment that up-front fees cause in the area of debt management plans. That applies equally in the claims management area. People are being persuaded—I hesitate to use the word “conned”, but it could well be appropriate—to give their credit and debit card details, as we have heard, and deductions are being made before any agreement has been signed and before people even know what they are signing up for. Indeed, the agreement is often vague to the point of misrepresentation.
Citizens Advice has seen clients who signed documents stating unequivocally that the service was free, but when they queried a service charge of 25% plus VAT on the award, they were sent a second, unsigned document that set out the service charge, which they had never seen before. The claims management company has then started court action to recover the service charge of about £300 from the award of approximately £1,000. The person in question believed, according to the document that they had seen, that it was a free service. I repeat that they had never seen the document that said that there was a service charge. It is obvious that all contracts should be written in clear English, be displayed on any websites and be valid only if signed by the consumer. I agree with the 81% of consumers in the Which? survey who say that up-front fees should be banned.
Some people do choose to use the services of a claims management company rather than claim themselves, despite the fact that it is an easy process. At this point, I would like to put in a plug for the MoneySavingExpert website, which has a very clear guide to claiming. It is completely free and very quick to do.
However, people should not be bullied and harassed into signing up. They should understand the terms of the contract that they are signing and be happy to accept them. They should not be subject to up-front fees and they should be able to complain if the service that they receive is not satisfactory, which it is not in a number of cases. I hope that the legal ombudsman will be able to take such complaints very soon.
Those of us who do not wish to take out a payday loan, a debt management plan or a claim against mis-sold PPI, and hopefully never will wish to, and those who have not had an accident should not be harassed by unsolicited phone calls and texts and should not need to take action to avoid them. We should simply be able to opt in to receive texts and calls if we want them. The default position should be the status quo: no call, unless requested.
The claims management industry is out of control. It preys on vulnerable people by promising large sums of money and often failing to deliver. At the moment, it is operating to the detriment of the consumer by charging up-front fees and unwarranted service charges for providing very little service. Claims management companies are getting money for old rope, as my mother would have said. It is our job to ensure that they are strictly bound and tied up in regulation.
Jonathan Evans (Cardiff North) (Con)
I draw hon. Members’ attention to the Register of Members’ Financial Interests. I am chairman of a large life insurance consolidator. It is not open to new business, so is not directly involved in the claims management sphere, because much of its business comes from many years ago. Hon. Members should be aware of my position, because it sets some context for the remarks I will make. I am also chair of the all-party group on insurance and financial services, and, as my hon. Friend the Member for South Derbyshire (Heather Wheeler) said, the group has been heavily engaged in looking at claims management companies. Over the past year or so, we have heard from representatives from the Ministry of Justice, the legal ombudsman and claims management companies. It is important that hon. Members are aware that I speak from that perspective.
When we engage in a debate about such issues, it is important to remember the context. We heard a great deal about the actions of claims management companies in pursuit of payment protection insurance claims. In my remarks, I will add to those criticisms and suggest ways that practice can be improved. Let us not lose sight of the fact that bankers engaged in selling PPI to a lot of people who did not need it. The hon. Member for Makerfield (Yvonne Fovargue), who had a long career in Citizens Advice, drew attention to the fact that people’s rights needed to be identified. That is the context. The banking industry did not respond quickly or adequately enough. Too often, it dismissed the claims made by wronged consumers, and we must focus on the impact on consumers.
I say to the Claims Standards Council and those who represent claims management companies that we are on the side of consumers and we want people to have access to justice. We are not protecting the insurance or banking industries from having to compensate properly. If people have been wronged, it is surely unacceptable that they should be wronged a second time and that people who want to get rich quick can siphon off up to 30% of their compensation.
Jackie Doyle-Price
My hon. Friend will be aware that widespread mis-selling of PPI was identified as far back as 2004, but it took until 2010 for a regulatory intervention, which provided redress to consumers, to be enforced. Does that not make the case for being much fleeter of foot in dealing with such wrongdoing and underline the case for dealing with claims management companies now?
Jonathan Evans
That is absolutely right, but my hon. Friend’s point also endorses what I have said, because if the banks had been quick enough post-2004, the problems with claims management companies would not have developed. In a sense, the companies are taking advantage of the banks’ recognition of the liability, and the recognition more generally, to siphon away as much of the money as they possibly can.
Hon. Members have already drawn attention to some misgivings. Mr Kevin Rousell from the Ministry of Justice, who has responsibility for the relevant portfolio, addressed our all-party group. He said that the Government intended to change the rules on advertising on television because they recognised that many of these companies used the label “Regulated by the Ministry of Justice”, as though it were some sort of Government endorsement. Many companies that have had complaints raised against them, including some that my hon. Friend the Member for Thurrock referred to, use the fact that they are regulated by the Ministry of Justice as a badge of honour. The Ministry of Justice recognises that it is used misleadingly: people think that the Ministry of Justice in a sense endorses the activities of such companies, whereas the reality is that it is in the process of getting a grip on their activities.
The hon. Member for Makerfield referred to the Which? survey, which I was also going to draw attention to, primarily because it was undertaken more than a year ago, so we have known for 13 months that up to 60% of claims management companies were probably completely ignoring the rules. I reiterate that this is not an attack on claims management companies. I wish that the 40% who obeyed the rules had been the example for the whole industry. It is not good enough for the Claims Standards Council to say that debating the problems would withdraw access to justice, because it places itself in the position of excusing the failure of 60% of its members to comply with the rules.
Yvonne Fovargue
Does the hon. Gentleman agree that the fact that 60% of companies are failing demonstrates that there should be powers to suspend companies that act to severe consumer detriment? We should not allow them to have a business plan predicated on being able to carry on for a couple of years, then drop and start up again with another name.
Jonathan Evans
I not only agree with that point but think that it makes the case for taking much more severe action. The flow of PPI cases will undoubtedly work its way through the system and people will look for other sources of revenue, so by the time we catch up, I fear that the horse will have bolted. For that reason, we must have firm regulation.
The problem is that there is confusion about who regulates this field. We have a claims management regulator within the Ministry of Justice, but that was set up to approve, as it were, or otherwise, people engaged in the business. It has been responsible for the industry increasing from 40 companies to 3,007, according to its last annual report. As my hon. Friend the Member for Thurrock indicated, the regulator’s powers are limited, which is why the Government have been rightly looking at how they can firm up the process, including introducing an independent complaints process and placing the responsibility for it with the legal ombudsman. The chief ombudsman, Adam Sampson, also appeared before the all-party group. Hon. Members who were present will know that he is enthusiastically looking forward to looking at such complaints.
David Mowat (Warrington South) (Con)
My hon. Friend is making good points about regulatory failure and the Ministry of Justice “kitemark”. A large part of this shoddy industry is in effect administered by solicitors, who are supposed to be regulated by the Law Society. The Government have given it particular powers, including monopoly powers, so it should be in a good position. Does he agree that the Law Society has failed to manage its people effectively in respect of this shoddy industry?
Jonathan Evans
My hon. Friend puts me in a difficult position. Although I am no longer a member of the Law Society, I am a solicitor of the Supreme Court, albeit no longer in practice. As I will go on to say, people in this area should be regulated. His complaint about the effectiveness of the regulation in relation to the legal profession is one thing; the difficulty about claims management companies is that, for the most part, many people introducing the business are not regulated at all.
I move on to the point that I raised with the hon. Member for Makerfield, whose support I am grateful for.
David Mowat
I did not realise that my hon. Friend was a member of the Law Society. I apologise for putting him on the spot.
David Mowat
My hon. Friend makes the point that some regulation is better than none whatever, but I am not sure that that is true: if regulation is so weak and ineffective and the public think that responsible, professional people are acting in this shoddy way, I simply do not think that that is good enough.
Jonathan Evans
I am not sure that the legal profession figures as highly in the activities of claims management companies as it might in other cases. For instance, in the context of the position of solicitors in injury claims and such things, he and I may well have a more productive exchange, but I am not aware that they figure so heavily in the context of claims management companies.
I return to my earlier point, which I intend to develop. For cases to come through and claims to be made, a body of introductions has to be generated, which is done through texts and e-mails. The Minister in the Lords said that he had received a number of texts, and our e-mail accounts are full of such unregulated approaches from outside the United Kingdom. It is very difficult to know how on earth people can try to stem that flow of unsolicited approaches, without the removal of the financial incentive. The all-party group heard from a representative of the claims management companies, and I challenged him on that by suggesting that those companies accept batches of introductions that may well come through illegal routes. His response was, “Well, we are in a market. If we do not buy those introductions, somebody else will.”
This is an area in which I, as a Conservative, might favour regulation. Claims management companies putting forward such claims must not only be regulated by the Ministry of Justice, but should not take on claims introduced by those who are not regulated, for instance by a professional body or the Ministry of Justice. I am absolutely sure that the outcome of that would be no more need for the Information Commissioner. The texts would dry up, because people would not send them if there was no financial return. The reason why we have all the texts is, of course, because there is a return.
Consumers’ heads must be spinning with all this: we have the Ministry of Justice, the legal ombudsman, the Information Commissioner—we have talked about his responsibilities—and the Financial Ombudsman Service, to which all PPI claims have to go, as we know. I have looked at the various representations: The Government have now proposed a process whereby complaints go to the Legal Ombudsman, while the Association of British Insurers has suggested that they should go to the Financial Conduct Authority of the Financial Services Authority. I know that the hon. Member for Makerfield understands that wealth of complication. I will only say that if we are looking for effective regulation, I have much more faith in the FCA, which is being set up under Martin Wheatley. That would send a certain message, if I may use that expression, to the industry.
Let me turn to some areas where we need to see progress. The first is that, as has been mentioned by nearly every speaker, we should not have up-front fees. The Government are in a position to regulate on that, which would very swiftly remove one of the serious concerns raised by several colleagues. My hon. Friend the Member for Thurrock, whom I again congratulate on raising this important issue, gave a clear constituency example. The second is the introduction of a cooling-off period. That would clearly be helpful in the case that the hon. Member for Dumfries and Galloway (Mr Brown) talked about—he spoke earlier, but has now had to go elsewhere—and in others that have been cited in this debate.
One area that has not been mentioned, but which I believe would be appropriate, is the introduction of a sector-wide compensation scheme. Something that is not widely understood in the world of financial services is that a whole range of financial companies that are regulated within the United Kingdom maintain funds for paying to the Financial Services Compensation Scheme. In the past, I have criticised the scheme because the people who administer it like to suggest that the money it pays out is somehow provided by the Government. A former Chancellor of the Exchequer boasted about funds being made available through the scheme, which he had ensured were paid, as though that was central Government spending.
In reality, whether they are insurance companies, insurance brokers, bankers or financial intermediaries, all such companies, as a condition of their being regulated, have to take their place in the Financial Services Compensation Scheme, so that if someone goes bust, they can stand behind the liabilities of that individual and ensure that a fund of money is available in the scheme to meet such liabilities. One can imagine, in the context of what has happened in financial services in the past few years, that that is a real liability, to which people must give a lot of attention.
Yet an industry of claims management companies has developed. My hon. Friend the Member for Thurrock rightly indicated that, at £1 billion, its income is a massive understatement. She is right because, annually, it is likely to be two or three times that figure. Surely, we have the opportunity at the moment to ensure a sector-wide compensation scheme, so that people who want to get rich quick and disappear tomorrow are not in a position to do so, because a fund will have been created to meet the liabilities that they leave behind.
To return to the sourcing of introductions, which I mentioned earlier, it would be very simple to impose a requirement not only that all claims management companies must be regulated, but that they can accept introductions only from those that are similarly regulated.
Finally, we must see claims management companies conform to regulatory requirements. I return to the point made by the hon. Member for Makerfield about the Which? report, which I referred to earlier. We already have very clear rules in place, but 12 or 14 months ago, 60% of claims management companies were clearly ignoring them. On that basis, there must be a consequence—that is not only my view—about seeking redress: we should put such people out of business and, at the same time, ensure that they have the funds to meet any liabilities they may have to wronged individuals. My view is that it is quite right that those who have failed in financial services, be they bankers, insurers or insurance intermediaries, must compensate consumers. Here we have a real scandal, in which our constituents are today seeing up to 30% of their compensation being sliced away. In my view, action is urgently necessary by the Government, and I have great confidence in the Minister’s ability to tell us what that action will be.
Mr Andy Slaughter (Hammersmith) (Lab)
It is a great pleasure to be here under your chairmanship this afternoon, Sir Alan. It has been an interesting and well informed debate, and I thank the hon. Member for Thurrock (Jackie Doyle-Price) for securing it. We have heard some eloquent speeches on this substantial problem that have called on both professional expertise and personal experience—either directly or through constituents. The hon. Lady was right to concentrate her comments on payment protection insurance because the legal ombudsman brief for this debate says that when it takes over responsibility for dealing with consumer complaints, it expects 95% of them to be related to PPI. I was alarmed to hear that that transfer may be delayed, and I hope the Minister will deal with that and tell us when it will take place.
PPI is not the only area of concern, and I will go on to mention some other worrying aspects of CMCs and their operations. There have been other abuses in the financial services sector, such as endowment mis-selling and bank charges. My hon. Friend the Member for Makerfield (Yvonne Fovargue), who has huge experience in this area and in consumer protection through her role with the Citizens Advice service, alluded to the fact that CMCs have been let in thanks to the appalling performance of the financial services sector in this country over the past few years. If the banks had not mis-sold PPI and overcharged, and if insurance companies had not mis-sold endowment policies, there would have been no opportunities for the CMCs.
In the informative briefing that we had this afternoon, the building societies pointed out that they were responsible for a mere £200 million of mis-selling, whereas the banks have set aside £12 billion for mis-selling one financial product. That fact alone shows the extraordinary depth to which this country’s banking industry has sunk over the past few years. Effectively, the opportunity for CMCs was created by the poor regulation—and, more importantly, by the poor performance—of the financial services sector. Furthermore, the problem was also encouraged by the poor performance of the Ministry of Justice, which has not taken these matters seriously.
At the back of the debate pack are a whole series of questions that I asked in 2011 and earlier this year. In reply to one, the Minister’s predecessor, the hon. Member for Huntingdon (Mr Djanogly), said:
“At the end of July 2011, eight employees and 39 contracted staff work in the Department's claims management regulation unit. Three employees and seven contracted staff handle consumer advice matters, including complaints.”—[Official Report, 5 September 2011; Vol. 532, c. 273W.]
That is not an adequate provision for the degree of mis-selling and abuse that has taken place. That position has now changed, and the Minister will update us on current staffing and operational levels. None the less, those previous levels reflected, at the very least, complacency on the part of all those involved.
Two consultations are under way—only one is still open—on claims management companies. The second one relates to fees, and the Government are quite properly consulting on whether regulation fees should be raised, so that the costs of regulation are better covered by the CMCs, which theoretically make substantial profits. I am also pleased that the legal ombudsman will be taking over responsibility for the matter, and I hope it will do a good job.
We have an interesting brief from the legal ombudsman laying out the various considerations and concerns. The common theme among the concerned parties who lobbied Members before today’s debate is that the Government’s consultation on the regulation of CMCs is not going far enough. It is right, as the August consultation asked, that contracts should be in writing and that CMCs should be required to inform clients of any supervisional variation to the business authorisation once in effect. It is also right that when CMCs refer to their regulatory status, they should say that they are regulated by the Claims Management Regulation unit rather than the Ministry of Justice; many have been suggesting that they have Ministry of Justice endorsement.
Although all those points are welcome, they do not, however, deal with fraudulent claims or the recycling of claims. I should like to see a requirement that claimants must disclose whether they have previously interacted with other law firms or CMCs. More importantly, the whole area of cold-calling, SMS texting and so on, is not dealt with. The main problems that have been raised this afternoon, such as the 25% to 30% that CMCs are raking off from claims—the no-sale claims—have not been addressed. In any other walk of life, it would be extraordinary for a major industry to establish itself on the back of pursuing non-existent claims. In many cases, the parties who receive the texts or respond to the adverts are not fully aware of all the issues. Part of the problem with mis-selling to people who are vulnerable—both in an orthodox and a financial sense—is that they do not have the financial education or skills to deal with the hard sell in the first place, or indeed the hard sell of the CMCs in the second place.
Jonathan Evans
Lest it be thought that one is against those people who are unsure whether they have PPI, the Financial Ombudsman Service has made it clear that there is an obligation on all financial services companies to respond to a request to find out whether someone had a PPI contract. Therefore, all those CMCs could easily make that inquiry first before submitting a claim.
Mr Slaughter
They could, but they clearly do not. CMCs see a lucrative industry, because there is relatively little cost to them. I am not quite sure what they hope to get out of it in the end, other than perhaps nuisance payments both to make the claim and to make the reference to the financial ombudsman. Given the sharp practice that is clearly involved in the sector, I am not sure whether the Ministry of Justice’s proposals are up to the mark in dealing with it. We have heard some good examples of companies that simply disappear overnight and reappear in another guise. I am not sure whether enforcement is dealt with sufficiently in the current proposals.
Jackie Doyle-Price
That goes to the crux of the matter. What we have before us is a tighter system of rules, but the problem is the behaviour of firms which are just going out of their way to profiteer. What does the hon. Gentleman think about the view expressed by some in the industry that responsibility should pass to the Financial Conduct Authority, which will be empowered to tackle firms’ behaviour?
Mr Slaughter
I am certainly happy to look at that. It is a constructive proposal that combats the sharp practice and cleverness of such firms on their own level, and that is not happening at the moment. I am afraid that those firms will always be one step ahead of the regulation unit. I hope the legal ombudsman will address that point. We need to look at these companies’ approach to advertisements, text messages and such things. I am somewhat at a loss as to why the Government have been reluctant to tackle this area more cogently. Again, I refer to a question that I asked in February, which is in the debate pack:
“How many claims management companies have had their authorisations revoked as a consequence of telephone or text message spamming since May 2010?”—[Official Report, 27 February 2012; Vol. 541, c. 75W.]
The answer is none, and yet we know that telephone or text message spamming is not only one of the most irritating ways of hooking clients in the first place but one of the most productive; clearly it is productive, or the companies would not use it.
The legal ombudsman makes the point that they should have a significant role to play in unsolicited contacts, whether it is cold-calling or text messaging, but it is not quite clear to me at the moment what that role will be. The legal ombudsman also raises another issue. Once a client is hooked and then effectively milked by the claims management company, how does one deal with enforcement if the company is to be brought to account but simply changes its name and directors, then disappears before appearing under a new guise? I ask the Minister to address those points and consider whether a more comprehensive legislative regime to counter abuses by claims management companies should be introduced.
My right hon. Friend the Member for Blackburn (Mr Straw) has done an extraordinary amount of work in this area and introduced a private Member’s Bill on it. When we were discussing the Legal Aid, Sentencing and Punishment of Offenders Act 2012 last year and earlier this year, both in the main Chamber and in the other place we tabled a comprehensive series of amendments to deal with the type of abuses I have been describing. I understand that the Minister was not in her current role then, but I know she took an interest in the Act. I was at a loss to see why the Government were not happy to adopt—other than that they came from us—what were very stringent restrictions on unsolicited cold-calling and SMS texting, the regulation of claims management companies and other areas to do with data selling. They were primarily restrictions on the abuse of road traffic claims, but they equally apply to the mis-selling of financial products. It does not matter whose legislation it is: again, I advise the Government to go back and look at those restrictions.
There is a myth around that there is a whole industry, including lawyers and other practitioners, that is somehow encouraging the abuses of the system, but nothing could be further from the truth. I should say that I have had representations from the Association of Personal Injury Lawyers, the Bar Council, the Law Society, as well as from major solicitors’ firms dealing with claims on this subject. I urge the Minister, having recently taken on her new role, to listen to the voices in the claimant sector belonging to some of the best informed and most knowledgeable people, who are also very angry about the abuses that take place. Perhaps she should listen to those voices more and listen a little less to the Association of British Insurers and the rest of the insurance industry, whose fingers are all over the claims management industry. Many insurance companies own or co-own claims management companies, and many indulge in practices that are just as suspect in terms of third-party capture, and which manipulate the claimant market in that way. What I hope all Members wish to see is something that protects the consumer and allows genuine and honest claims to be made.
I was grateful to receive the various briefings for today’s debate—except possibly that from the ABI. After a nod towards claims management companies, it suddenly got on to the idea of the compensation culture again. I fear that, in their legislation so far, the Government have been seduced by that argument, despite all the evidence in their own reports and reports by the Better Regulation Task Force, Lord Young of Graffham and Professor Löfstedt. All those reports found that there may be a perception of a “compensation culture” in this country, but there is no reality, and what is needed is the regulation of abuse, not of honest claims.
The Government have pushed forward very enthusiastically in LASPO with a restriction on the ability of claimants with meritorious claims to bring their cases before the courts, across the whole area of civil litigation.
David Mowat
I am listening very carefully to what the shadow Minister is saying about compensation culture. To pick one issue, we appear to have a massively bigger incidence of whiplash than other European countries. What is his position on that situation; why does it arise?
Mr Slaughter
That is a good point. We have not spent a lot of time discussing whiplash today; I had thought that we might spend a little more. The situation is exactly the same: there is fraud in the area of whiplash claims, particularly soft tissue injury claims. The figures compiled by APIL show that 80% of sufferers of such injuries either report their symptoms accurately or underplay them. That means that 20% are perhaps not reporting their symptoms accurately or are exaggerating them. That puts things into perspective. I do not believe that a massive amount of fraud is going on, but a significant amount is going on and it needs to be tackled.
Jonathan Evans
The hon. Gentleman gives the view of APIL, but its briefing also says that 80% of these victims have an accurate medical diagnosis. Yet the all-party group on insurance and financial services, which I chair, heard evidence from doctors saying, “You can’t diagnose whiplash. It’s actually impossible.”
Mr Slaughter
Some of us may have qualifications in some areas, but I have to say that I have no medical qualification and I do not know whether the hon. Gentleman has one to add to his other distinguished qualifications. We will not resolve the issue of whiplash this afternoon, but to write off soft tissue injury and say that there is no such thing is taking matters too far the other way.
I will quote one other statistic. As we know, almost 30% of claims are encouraged by insurers. I have one or two examples here from constituents of mine who had minor road traffic accidents, and who then had their details sold on by their insurers. So we have insurance companies that—presumably to make a profit—either own or co-own claims management companies, and that are selling on details and engaging in third-party capture, which of course means they are paying out money without any medical evidence whatsoever.
I am not saying this is a black and white issue. I am saying, “Let us identify who the rogues are, crack down on them and not be distracted by them from our other purposes.”
David Mowat
We got into this discussion because of the point the shadow Minister was making about compensation culture. Of course nobody is minimising soft tissue injuries—that would be awful—but we seem to have five times as many of them as other countries in Europe. Surely that statistic should at least have given him pause for thought before he read out the brief from the APIL.
Mr Slaughter
As I always do, I read out briefs from everybody, even from the ABI; I have very catholic tastes in the sources I use. Also, I think I said that fraud in relation to road traffic is an area that we need to crack down on. I am always a little suspicious when the ABI and others say, “Well, look how many road accidents and whiplash accidents we are having in the UK,” or, “Look at the concentration of where they are.” One tends to find that there is a higher incidence of road traffic accidents in congested urban areas than in rural areas, and there are more claims management companies in conurbations than in shire counties. That is probably just a truism, but there we are.
David Mowat
In terms of the hon. Gentleman’s brief from the personal injury lawyers, Germany also has built-up areas, and we would not necessarily expect the incidence in our country and other countries to be so massively different.
Mr Slaughter
I am glad the hon. Gentleman mentions Germany, because one provision in German law is that one cannot make a soft tissue injury claim—a whiplash claim—if one’s vehicle is travelling at below 8 kph. That was the subject of another of the amendments that we tabled to the Legal Aid, Sentencing and Punishment of Offenders Act but the Government chose not to accept.
[Mr Charles Walker in the Chair]
I am not speaking on behalf of, or indeed against, any sectional interests; they are all entitled to make their points, and, on the whole, professional organisations do a very good job in this country. What I am saying, however, is that it is easy to be distracted—often when there is a political agenda on the table—from addressing the real problems and to start addressing what are not the real problems. Where the Government have clearly got things wrong—we could spend until the end of the debate arguing about road traffic claims and probably about PPI claims as well—is in extending the attack on claimants across the board into areas such as employers’ liability and public liability insurance. Some of the changes being introduced in the Enterprise and Regulatory Reform Bill—again, at the behest of insurers and employers—are appalling in the way they balance, or unbalance, power in the legal system in favour of employers and away from employees, turning back the clock, in some cases, more than 100 years. However, I may be going beyond the subject of the debate.
I will not detain hon. Members any further, because there is a reasonable degree of consensus on the problems we need to address. I suspect there is also a reasonable degree of consensus—Government Back Benchers may be slightly less confrontational about the way they express this—about the fact that the MOJ needs to do more to tackle what is a very common problem for all our constituents.
Mr Slaughter
With a short suspension of the sitting and the luxury of having another hour of the debate to go, there is always the temptation to expound more fully some of the points one is making, but I shall resist it, particularly as I am keen to hear what ideas the Minister will put forward, and I know that other hon. Members are too.
There appears to be a consensus among the parties represented here, the media and many respected and trusted organisations such as Which? and Citizens Advice that there is a substantial problem to be dealt with. Some unscrupulous companies—clearly not all or even the majority of CMCs are unscrupulous—take opportunities provided by crises or abuses in sectors such as insurance, financial services or the personal injury market to profiteer. The question for us is how we should deal with that. My contention is that the Government have dragged their feet so far, and that where they have identified targets they have sometimes been the wrong ones. It is not just a matter of regulating the way contracts are drawn up. Many of the companies are sophisticated and will find ways around that, and they often deal, as many hon. Members have said, with vulnerable people who lack sufficient expertise in such things. Which? has made several sensible recommendations, such as the ban on up-front fees. I ask the Minister to go further than that and to examine the whole process that CMCs use to engage consumers, from the initial scatter-gun approaches—the adverts and text messages—through the process of signing up, the contracts, the way people are engaged, the terms and conditions and fees, to the point when redress is sought and the ways people can escape.
I was given an example earlier today—it is an industrial injury claim, but it is just as good—in which, effectively, the CMC that had decided to deal with the claim was negligent in not arranging for issue before the limitation period expired. That might have given rise to a claim against the company for professional negligence, but by the time competent solicitors were engaged to deal with the matter, the company had decided to disappear; it deregistered and was simply not there for a claim to be made against it. That is common, and organisations guilty of one type of abuse will often be guilty of other types, which is why the Minister needs to consider how such companies operate across the piece.
I urge the Minister to look where the real villains are and not, as the Government tend to do at the moment, simply to attack lawyers because they are an easy target, or claimants because substantial lobby groups such as the insurance industry contribute funds to the Conservative party and daily whisper in its ear. She should not make decisions on that basis, but should base them on the real harm and damage that is being done to millions of people.
I have one further example, involving a constituent of mine. Normally I would be happy to name and shame the bank involved, but as I am speaking to the senior partner of its City law firm tomorrow to try to resolve the matter, I shall give it one chance and, if it does not work out, perhaps I will do it next week. My constituent had been mis-sold not just one but serial PPI policies over time, and she made a claim herself rather than using a CMC. She got judgment and enforcement, but on the advice of the bailiffs acting, she perhaps made the mistake of saying that she would go down to the bank’s headquarters in Canary Wharf and seize goods to the value of the claim. She now finds that the bank has started satellite litigation, and Queen’s counsel are employed effectively to intimidate and say, “You can’t take on the big boys and win in that way.”
I end on the point on which I began. If there was more responsibility in the financial sector and less willingness by the Government constantly to attack those who seek to represent through legal aid, through no win, no fee agreements, or simply through the advice sector, which does such a good job in this country, those who genuinely advise people in need—not the dodgy CMCs, but the people all our constituents rely on—we would not be in this mess. This is a triple whammy: there is a problem in the financial services sector with which the Government have not come to terms; there are problems in the advice and legal aid sectors, which the Government have created; and there are problems with CMCs, which the Government are going some way, but not sufficiently, towards resolving.
Although the Minister has time, she might not wish to respond to all my points today. I am sure we will take them up in later debates. As she is coming fresh into the job and is not encumbered by some of the rather foolish statements made by her predecessor, I hope that she will look at the matter openly, in the interests of all our constituents and all those consumers who are faced with the bleak prospect of either not recovering funds to which they are entitled, or being fleeced by organisations that recover the moneys and take 25% to 30%, or simply do not recover them at all.
The Parliamentary Under-Secretary of State for Justice (Mrs Helen Grant)
It is a great pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend the Member for Thurrock (Jackie Doyle-Price) on securing this debate on the regulation of claims management companies, or CMCs.
I acknowledge at the outset that some CMCs can provide a useful service for some consumers, by alerting them to circumstances in which there might be a justified complaint, and by supporting them in obtaining redress. Nevertheless, a notable minority fail to comply with many of the simple requirements placed on them. As my hon. Friend the Member for Thurrock, the hon. Member for Dumfries and Galloway (Mr Brown), my hon. Friend the Member for South Derbyshire (Heather Wheeler), the hon. Member for Makerfield (Yvonne Fovargue) and my hon. Friends the Cardiff North (Jonathan Evans) and for Warrington South (David Mowat) have made clear today, malpractice continues, including in such areas as lack of transparency about fees; unfair contract terms; encouraging frivolous claims; insurance fraud; using aggressive marketing techniques; accepting leads or claims from unsolicited text messages; and malpractice in the handling of PPI claims. That is the type of behaviour that we are committed to eradicating. We all want a stable and robust regulatory system on which the public can depend, and we also want consumers to get claims services that meet their needs, from CMCs they really can trust.
Although substantial progress has been made since regulation began, there is clearly more to be done. I have listened carefully to the various thoughts and ideas that have been raised today in an informed and considered manner, and I would like to reassure the shadow Minister, the hon. Member for Hammersmith (Mr Slaughter), that I will listen carefully to everything and everyone I need to, including claimants and all other stakeholders. I am glad he has indicated that there is consensus on many of the issues that we need to address.
Providing consumer protection by driving out malpractice remains the primary objective of the Ministry of Justice’s claims management regulation unit, and we support that approach. Most CMCs want to comply, which is why the CMR unit uses a range of measures to help them to do so. For example, about a year ago the unit formed a specialist compliance team to focus on tackling the mishandling of PPI claims. The team has conducted a comprehensive programme of audits, and has issued warnings and taken other forms of enforcement action where problems have been found. That work continues, and includes targeting CMCs that submit claims where no PPI sale exists, those that charge up-front fees—we have heard a lot about that today—and those that operate call centres, to ensure that sales calls are compliant.
Within the personal injury sector, most of the issues relate to businesses or organised groups attempting to defraud the insurance industry. The CMR unit contributes valuable information and expertise, and has worked with a range of organisations and agencies to tackle fraud. Its operations have resulted in arrests, charges and convictions.
On unsolicited text messages, notably raised by Lord McNally of Blackpool on Monday in the House of Lords, and by my hon. Friend the Member for Thurrock and other Members today, I recognise that the growth in the practice has caused a nuisance to the general public, particularly as the content of the messages is often misleading. The problem presents big challenges, and we fully support the work of the Information Commissioner’s Office, or ICO, in enforcing the legislation that protects individuals from unsolicited text messages and other forms of direct marketing. It is important to point out that such messages are generally sent not by CMCs but by others, to generate leads for others businesses including CMCs. The CMR unit is actively working with the ICO to investigate and take enforcement action against CMCs that accept leads or claims from that type of marketing.
Jackie Doyle-Price
The Information Commissioner has said that unsolicited texts are a breach of the EU regulations on electronic communication. Will my hon. Friend investigate, with the Information Commissioner, whether there is a resource issue regarding his tackling this activity, which is such a nuisance to consumers?
Mrs Grant
We are working hard with the Information Commissioner, and I am happy to write to my hon. Friend on that point.
At a time when resources are scarce, much has been achieved. Regulatory enforcement action has increased year on year, with 150 audits of CMCs carried out, and 409 CMCs warned, suspended or cancelled over the past year. The CMR unit has also removed the licences of more than 800 CMCs, across sectors, since the start of regulation in 2007, and many others have left the market after the commencement of investigations and enforcement action.
That is where we are at, but where do we go from here? There have been calls over the years to consider transferring the claims management regulation regime to another regulator, but now is not the time for such a fundamental change. We have a big programme of reforms under way, and its central objective is to address CMC bad practices and strengthen the regulatory and complaints regimes to provide better protection for consumers and the public. Our reform agenda includes four main measures.
Following a review of the CMC conduct rules and an informal consultation with key stakeholders, we recently ran a public consultation on proposals to tighten those rules. We intend to issue a response by the end of this year. Most critically, we propose that, first, contract agreements between CMCs and consumers will have to be made in writing before any up-front fees may be taken. That concern was raised by my hon. Friend the Member for Thurrock and others.
Secondly, as highlighted by my hon. Friend the Member for Cardiff North, CMCs will have to refer to being regulated by the claims management regulator rather than the Ministry of Justice. The shadow Minister welcomed that proposal.
Thirdly, CMCs will have to inform their contracted client of any variation in or suspension of their authorisation; and, finally, CMCs that operate websites will be required to publish their terms and conditions online as standard, including examples of how their various costs are calculated in a specific format.
On the delay to the rules review consultation, which was raised by my hon. Friend the Member for Thurrock, I can confirm that the consultation was launched as soon as possible after internal clearance of the intention to consult and the release of the initial impact assessment.
Last year, we also ran a public consultation on imposing a ban on CMCs offering financial rewards or similar benefits as an inducement to make a claim. That proposal was made in response to the recommendation contained in Lord Young’s report “Common Sense, Common Safety”. The ban will come into effect along with other amendments to the conduct rules from April 2013.
From next year, we intend to commence powers under the Legal Services Act 2007 to extend the legal ombudsman’s jurisdiction to provide an independent complaints and redress scheme for clients who are dissatisfied with the service provided by CMCs that they have contacted. Consumers will benefit because the legal ombudsman has wider powers of redress, including the ability to award compensation.
Lastly, we are implementing the primary recommendations contained in Lord Justice Jackson’s “Review of Civil Litigation Costs,” including in particular a fundamental reform of no win, no fee conditional-fee agreements and a ban on the payment and receipt of referral fees in personal injury cases.
Mr Slaughter
How will restricting the ability of claimants to obtain proper legal representation restrict the operation of CMCs that either make unmeritorious claims or make meritorious claims incompetently?
Mrs Grant
We are not restricting access to justice in any way. That is another argument I have had with the hon. Gentleman in other debates over the past year and a half. Access to justice will still be possible and meritorious claims will continue to be made.
I have sought to cover a lot of ground in a relatively short space of time, and I have talked through improvements in the way the CMR unit does its day-to-day job and its work in preparation for next year’s reforms. We remain focused on delivering a successful and strong regulatory regime. To give consumers and defendants more confidence in the system, it is important that CMCs ensure that they comply with the rules.
I reassure all hon. Members here today that there will be no let up in the CMR unit’s compliance and enforcement work, and it will do what is essential to strengthen the regulatory and complaints regimes to provide better protection for consumers and the public.
Jackie Doyle-Price
I began this debate by saying that the industry has pulled off an amazing feat by uniting consumer groups and trade associations, and I can now say that it has pulled off another one by uniting both sides of the House. As the hon. Member for Hammersmith (Mr Slaughter) says, there is clearly a consensus on what needs to be done to reform the regulation of the sector. The Government are taking a step in the right direction, but I think we all recognise that much more needs to be done.
I want to home in on a number of common themes in the speeches of all participants in the debate. I hope the Government will consider what more they can do to strengthen the regulatory powers in this area.
Obviously, the Government are reforming the way in which firms refer to their regulatory status, because the association with the Ministry of Justice has clearly been a marketing tool. It is important that all regulators are alive to the fact that, quite often, firms with dubious motives use their regulatory status as a kitemark, rather than as what it is—a statement of who is the regulator.
All regulatory agencies could learn a lot from being more fleet of foot in dealing with rogue operators in whatever sector. The reason why we are all here discussing the matter is, as my hon. Friend the Member for Cardiff North (Jonathan Evans) said, because of the banks’ practice of mis-selling payment protection insurance over a sustained number of years. As parliamentarians, we all need to play a very active role in ensuring that established practices that are detrimental to consumers are nipped in the bud. We have to be fleet of foot in doing that.
Everyone has shown their irritation with the incessant text traffic that we are all receiving. I remind the Minister that the Information Commissioner says that such activities are outside the EU regulations on electronic communication. We need to ensure that, when we have regulations, the regulators have teeth to enforce them. Otherwise, those regulations are meaningless red tape for legitimate operators and will not stop the rogues.
I encourage the Minister to keep alive to whether the regulatory tools are sufficient, because we are talking about rogue firms that deliberately set themselves up to profiteer at the expense of consumers. As the hon. Member for Hammersmith said, such firms will always be one step ahead of regulation, so we need regulators that will tackle such behaviour and come down on the rogue operators, leaving those who behave appropriately to get on with their business. We need to look more closely at the financial penalties for rogue operators, such as for when they refer bogus cases to the Financial Ombudsman Service. One thing that fuels the business is that it is a risk-free operation to send out loads of texts and to follow every lead. Sometimes they will hit the lottery and get a good pay-out, of which they may take a third. They do not have to pay anything out, because the burden of bogus claims is shared by the industry. I encourage the Government to consider closely whether there is more that can be done in that direction, perhaps bearing in mind the suggestion of my hon. Friend the Member for Cardiff North for a sector-wide compensation scheme, or perhaps engaging the expertise of the Financial Conduct Authority.
I thank colleagues for participating in this debate. There is clearly consensus that consumers are being fleeced. We need to find the villains and ensure that we have a regulatory system that is fit for purpose.
Question put and agreed to.
Written Ministerial Statements
(12 years, 1 month ago)
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Regulatory Enforcement and Sanctions Act 2008
(12 years, 1 month ago)
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The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I am announcing today that when considering whether to make orders under the Regulatory Enforcement and Sanctions Act 2008 to provide a regulator with powers to impose certain civil sanctions as an alternative to prosecution the Government will, in general, observe the following principles:
Powers to impose fixed monetary penalties, variable monetary penalties and restoration notices will, as a general rule, only be granted where their use is restricted to undertakings with more than 250 employees; and
Powers to impose enforcement undertakings, stop notices and compliance notices may be granted without restriction as to the size of undertaking against whom they might be used.
I believe that this approach should enable Departments to introduce orders under the Act that provide for a more flexible enforcement system and reduce the burdens on criminal courts. Safeguards on the use of civil sanctions are already contained in the Act.
This policy will provide a further safeguard as regards new orders under the Act namely that, as a general rule, fixed monetary penalties, variable monetary penalties and restoration notices will only be applied to larger companies rather than to small and medium enterprises who might feel less equipped to challenge the basis for such sanctions.
Any future plans by Departments to introduce these orders will be announced by them in line with usual practice.
ECOFIN (Budget)
(12 years, 1 month ago)
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The Financial Secretary to the Treasury (Greg Clark)
The Economic and Financial Affairs Council—Budget will be held in Brussels on 9 November 2012. The following items are on the agenda to be discussed (as of 7 November 2012):
Preparation of the meeting of the Conciliation Committee with the European Parliament
The Council will aim to agree a final position on the draft budget for 2013, as part of negotiations with the European Parliament via a concurrent Conciliation Committee meeting. The Government will seek a final budget that delivers real budgetary restraint at EU level, supporting ongoing efforts to consolidate public finances across many member states, and that respects the principles of sound financial management.
As part of this process, the Government expect Ministers to be invited to discuss the Letter of Amendment No. 1 to the Preliminary Draft Budget for 2013, which concerns an overall reduction for the estimated funding needs for agricultural expenditure and international fisheries agreements. The Government are supportive of these technical amendments.
Ministers are also expected to be invited to discuss the Draft Amending Budget No. 5 for 2012, which would amend the 2012 budget to reflect the mobilisation of the EU solidarity fund, relating to a series of earthquakes in Italy in May 2012. The Government believe that any extra funding needs should be met fully via re-deployments within existing budgets.
Finally, Ministers may be invited to discuss this Preliminary Draft Amending Budget No. 6 for 2012, which would amend the 2012 EU budget to cover additional funding needs for structural and cohesion funds, rural development and research programmes. In addition, Draft Amending Budget No. 6 includes changes to the estimates of own resources and documents increased revenues from fines. The Government believe that any extra funding needs should be met fully via re-deployments within existing budgets.
Results of the meeting of the Conciliation Committee with the European Parliament
The Council will seek to agree to the outcome of the Conciliation Committee conciliation.
Any other business
At this time, the Government do not expect any issues to be raised under this agenda item.
Waterhouse Inquiry
(12 years, 1 month ago)
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The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
Following the Prime Minister’s statement on 5 November, I am announcing today a review of Sir Ronald Waterhouse’s inquiry into the abuse of children in care in the Gwynedd and Clwyd council areas.
The review will be chaired by Mrs Justice Macur DBE, a High Court Judge of the Family Division.
The review’s terms of reference are:
“To review the scope of the Waterhouse inquiry, and whether any specific allegations of child abuse falling within the terms of reference were not investigated by the Inquiry, and to make recommendations to the Secretary of State for Justice and the Secretary of State for Wales”.
The arrangements for the review will be a matter for Mrs Justice Macur. The Ministry of Justice and the Wales Office will provide support to her, and all relevant material will be made available to support the investigation.
I am very grateful to Mrs Justice Macur for assuming this important role.
Prison Competition and Efficiency
(12 years, 1 month ago)
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The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
In July 2011 the Government announced the start of a new programme of competition for the management of nine prisons: Acklington and Castington (now together known as Northumberland), Coldingley, Durham, Hatfield, Lindholme, Moorland and Onley, all currently managed by the public sector, and Wolds, currently managed by G4S.
I have already signalled that I intend to reform community sentences and that most offenders on court orders and on licence will be managed on a payment by results basis by the end of 2015.
In prisons we must reduce costs further and faster without compromising public safety and I am determined to do so. I can therefore provide an update on this competition programme and outline how I will build on its success to drive down costs quickly across the whole system to improve outcomes and deliver value for money for the taxpayer.
HMP Northumberland and the South Yorkshire group of Moorland, Hatfield and Lindholme prisons will proceed to the next stage with three remaining bidders, Sodexo, Serco and MTC/Amey before contracts are awarded next year. This competition process produced a compelling package of reforms for delivering cost reduction, improvements to regimes and a working prisons model in these prisons.
This was not the case for HMPs Coldingley, Durham and Onley, so the competition for these prisons is not proceeding and they will remain in the public sector. For the Wolds—currently managed by G4S—the benefits of the competition when compared to the option of clustering the Wolds with the nearby prison Everthorpe, did not represent best value to the public. I have therefore decided not to progress with the competition. This means that when the current contract expires in July 2013, the prison will move to public sector management.
This current competition process has identified the means to accelerate cost reductions. It has set a new benchmark for running prisons which we will now apply to all public sector prisons to maximise savings over the next two spending review periods.
In response to the competition, a model was proposed that would retain direct delivery of core custodial functions by the public sector at considerably lower cost, with ancillary and “through-the-gate” resettlement services provided through market competition. When applied to the whole public sector prison estate, this option enables us to utilise the market to drive down costs and provides the potential to rapidly expand the payment-by-results approach to improve rehabilitation outcomes. I have decided that this is the right thing to do.
We estimate an additional £450 million savings will be generated over the next six years by applying this new public sector benchmark and by competing ancillary and through-the-gate resettlement services across all public sector prisons. This is a challenge the public sector must rise to. The approach I am announcing today does not rule out further prison-by-prison competitions in the future.
I am determined that we will provide enough prison places to accommodate all those committed by the courts. However, prisons must cost less and do more to prevent offenders coming back and we will continue to use competition to drive down costs and improve outcomes.
The approach I have set out today provides the most effective and intelligent way to achieve this. It is not an end to competition, but rather sets a very clear challenge to the public sector to respond at pace and deliver the reforms required to reduce unit costs across the whole system whilst utilising the market to transform rehabilitation for offenders.