House of Commons

Tuesday 4th December 2012 Commons Chamber

Tuesday 4 December 2012

The House met at half-past Eleven o’clock

Prayers

Tuesday 4th December 2012 Commons Chamber

[Mr Speaker in the Chair]

Business before Questions

City of London (Various Powers) Bill [Lords] (By Order)

Second Reading opposed and deferred until Tuesday 11 December (Standing Order No. 20).

Oral Answers to Questions

Tuesday 4th December 2012 Commons Chamber

The Secretary of State was asked—

[Mr David Burrowes (Enfield, Southgate) (Con)]

1. What representations he has made to the Burmese Government on resolving the situation in Rakhine state.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

6. What steps he is taking to promote peace and reconciliation in Burma.

[Richard Fuller (Bedford) (Con)]

10. What steps he is taking with the Burmese and Bangladeshi Governments to assist the Rohingya Muslim community.

[The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)]

We continue to raise our concerns about the recent violence in Rakhine state, as well as the conflict in Kachin and Shan states, with Burmese Ministers and Aung San Suu Kyi. My right hon. Friend the Foreign Secretary raised the plight of the Rohingya community in recent discussions with the Burmese President, stressing the need to resolve their citizenship status. Officials continue to emphasise the importance of our humanitarian aid programmes in Bangladesh and Rakhine with the Bangladeshi and Burmese Governments.

[Mr Burrowes]

I thank the Minister for that response. Does it not surprise him that Aung San Suu Kyi, the most respected and peaceable person in Burma, has been in effect excluded from steps to resolve the situation in Rakhine? Will he urge the Burmese Government to invite Aung San Suu Kyi to visit Rakhine state as soon as possible to help to calm the situation?

[Mr Swire]

We very much welcome the statement that Aung San Suu Kyi made on 9 November, as chairman of the parliamentary committee on the rule of law, on the situation in Rakhine state. The issue was raised with her by my right hon. Friends the Prime Minister and the Foreign Secretary when she was here in June, and our ambassador has raised it with her since. I will travel to that part of the world shortly and I will certainly discuss the issue with her, because I believe she has a role in resolving it and, indeed, all the problems facing Burma today.

[Mr Sheerman]

We hear what the Minister says, but the situation is of great concern to all of us who care about minorities. I have been a critic in this House of the way in which Christians have been treated by Muslims in Pakistan—that is on the record—but this is a question of Muslims being persecuted in Burma. Can the United Nations and this country’s leadership and Government not do something about it?

[Mr Swire]

Of course we remain extremely concerned about the situation in Burma, but we believe that it is moving in the right direction. We welcome President Obama’s recent visit there and I shall be taking a trade delegation on my visit. We believe that engaging with the Government commercially as well as politically is the right way to proceed. We are concerned about the ethnic violence and issues of religion, and we remain concerned—I shall raise these points forcefully when I am there—about the issue of the remaining political prisoners.

[Richard Fuller]

The Minister has rightly focused on issues regarding the Rohingya community in Burma, but equally there are hundreds of thousands of Rohingya Muslim refugees in Bangladesh and 20,000 or 30,000 of them in refugee camps. What steps can the Minister take to persuade the Bangladesh Government to begin the registration of undocumented Rohingya refugees and to provide access for non-governmental organisations to the refugee camps?

[Mr Swire]

My hon. Friend makes a good point. The issue was raised by my right hon. Friend the Foreign Secretary during a meeting with the Bangladeshi Prime Minister, Sheikh Hasina, on 28 July. The former Secretary of State for International Development, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), raised it with Prime Minister Hasina on 12 August. My noble friend Baroness Warsi raised it with the Bangladesh Foreign Minister, Dipu Moni, in October 2012 and the British high commissioner has also raised it in Bangladesh. It is important that we get aid to that part of Rakhine and that the Bangladeshis make it possible for that aid to reach the people.

[Meg Munn (Sheffield, Heeley) (Lab/Co-op)]

The development of democracy in Burma will be successful only if it is pluralistic—a position that has long been held by the British Government. Is the Minister satisfied with the position that is being taken within the European Union, and what discussions has he had with his counterparts about ensuring that the common position does not move too quickly towards removing all sanctions and developing trade with Burma until all ethnic groupings are properly involved in its democracy?

[Mr Swire]

As I have said, we have taken the view that the best way to encourage Burma on the path that we believe the President has set is to engage with them. We have taken a number of trade delegations there and I shall be taking one myself shortly. I have written to the chairman of the all-party group on Burma, the noble Baroness Kinnock, and, when I return from that part of the world—this will be in the new year—I am prepared happily to talk through what I will have learnt on the ground. I think I will be one of the few Ministers to have been to that area, so I will be able to give the hon. Lady a first-hand account of what I think is going on there.

[Roger Williams (Brecon and Radnorshire) (LD)]

While the focus has been on the Rohingya people and the atrocities that they have faced, including the destruction of a mosque recently, everybody in the area is suffering as a result of these problems. Will the Minister tell us how the humanitarian aid that we are providing will encourage a resolution to the difficulties?

[Mr Swire]

I am pleased to say that we have an extremely good track record in that respect. We are one of the largest aid donors to Burma and have allocated £187 million to it over four years, which includes support for the process of ethnic reconciliation. We announced another £27 million in November for the humanitarian support of refugees and internally displaced people and for peace-building activities, drawing on our experiences in Northern Ireland. We have provided a further £2 million to Kachin, where there are 27,500 internally displaced people. We have a record that is second to none in providing the aid that is sorely needed in that part of the world.

[Kerry McCarthy (Bristol East) (Lab)]

I know from my visit to Burma in July that the country will welcome the trade delegation that the Minister is leading. However, I am concerned that, from feedback I have had and questions I have asked about other trade delegations that have been led by the Foreign Office in recent months, it seems that very little has been said about human rights on those trips. Will the Minister assure me that the plight of the Rohingya, the fate of political prisoners and other human rights issues in Burma will be very much on his agenda when he goes to Burma?

[Mr Swire]

I can certainly give the hon. Lady that assurance. Trade is one part of what we are doing, as I have attempted to outline this morning. We believe in trade because, by engaging in it, we can form relationships and show the people of Burma what future they can have. However, that we are trying to increase our bilateral trade does not mean for a moment that we will ignore our drive for increased human rights and the recognition of different ethnic groups in Burma. I shall make those points to all the politicians I meet there. Indeed, I have made those points to the Burmese politicians I have already met.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

2. What his Department’s priorities for the middle east are in 2013.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

My priority for the middle east is to support peace and stability by urging the United States, with the strong and active support of the EU, to take a decisive lead in pushing the peace process forward; ending the violence in Syria; securing a diplomatic solution to the Iranian nuclear question; and supporting democratic transitions in Egypt, Tunisia and Libya.

[Simon Hughes]

I thank the Foreign Secretary for his commitment to those matters. Those of us who for the whole of our adult lives have been supporters of the state of Israel and of a state for Palestine were pleased by the decision of the United Nations last week, but dismayed by the response of the Israeli Government, who suggested that settlements should be built to the east of Jerusalem, effectively separating the two parts of the west bank. What does the Foreign Secretary think is the best way of getting the message through to the Israeli Government that that is neither the way to win friends nor the way to win peace?

[Mr Hague]

My right hon. Friend is absolutely right in everything that he has just said. We summoned the Israeli ambassador to the Foreign Office yesterday to hear exactly that message from the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire (Alistair Burt), who has responsibility for the middle east. If implemented, the plans that were announced on Friday would alter the situation on the ground on a scale that would make the two-state solution with Jerusalem as a shared capital almost inconceivable, or certainly very difficult to implement. Much as we had misgivings, for some of the same reasons, about pressing for a resolution at the United Nations, we think that that was the wrong way for Israel to react. That message is coming loud and clear from all around Europe and the United States.

[Ian Austin (Dudley North) (Lab)]

Summoning the Israeli ambassador for a stage-managed dressing down will achieve nothing and nor, quite frankly, will the isolation of Israel at the United Nations. Should Ministers not be redoubling their efforts to get Palestinians and Israelis who are prepared to talk to each other and who want to see peace to work together, because that is the only way we will achieve any progress towards a stable, two-state solution with a secure and safe Israel living peacefully alongside a viable and democratic Palestinian state?

[Mr Hague]

I agree with the main point of the hon. Gentleman’s question, although I assure him that nothing that the my hon. Friend the Under-Secretary does is stage-managed. He imparted very clearly indeed the message that I think the whole House would agree with. The main point of the hon. Gentleman’s question is what I have expressed in all our discussions in the House over the past two weeks. Despite all the events of the past week, we have to achieve a return to negotiations and we particularly need the United States to play its necessary role in that. That is the only way in which we will secure a Palestinian state alongside a secure Israel.

[Sir Malcolm Rifkind (Kensington) (Con)]

Does the Foreign Secretary agree that one urgent priority must be for his Department to do whatever it can to help to end the indiscriminate carnage of tens of thousands of Syrian civilians by their own regime? May I commend him for persuading his European colleagues that reviews of the current arms embargo must be held every three months and not every year, and will he give urgent consideration to persuading his European colleagues—and, indeed, the Government—at least to allow air defence equipment to be made available to those trying to protect civilian communities throughout Syria?

[Mr Hague]

I am grateful to my right hon. and learned Friend. He is right: last week the Government persuaded colleagues in the European Union that rather than roll over all sanctions on Syria for 12 months, including the arms embargo, we should do so for three months to allow ourselves flexibility to respond to a changing situation. As he knows, I do not follow him all the way in saying that we should supply air defence equipment, although opposition groups in Syria are clearly acquiring a variety of anti-aircraft weapons. The Government will be intensifying further not only our humanitarian assistance but our diplomatic efforts—including with Russia—to try to find a way forward on Syria.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

Is not the building of additional illegal settlements, in addition to settlements that already house 500,000 people, a blatant breach of international law, together with the theft by the Israeli Government of huge sums of tax revenues belonging to the Palestinians? When will we take action such as economic sanctions or an arms embargo against this rogue state that is committing criminal acts?

[Mr Hague]

The settlements are illegal and on occupied land, and the latest announcement undermines Israel’s international reputation and creates doubts about its stated commitment to achieving peace with the Palestinians. The Government have, of course, strongly advised Israel to reverse that decision. I spoke to the Israeli Foreign and Defence Ministers over the weekend, in addition to what the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North East Bedfordshire, has done. We must remember, however, the point made by the hon. Member for Dudley North (Ian Austin): only successful negotiation will resolve this issue, and that will require the willing participation of Israel as well as the Palestinians.

[Martin Horwood (Cheltenham) (LD)]

What discussions has the Foreign Secretary had with our European partners following the General Assembly vote and Israel’s extremely regrettable response, bearing in mind the fact that the European Union is Israel’s most important trading and economic partner?

[Mr Hague]

I am working closely with the French Foreign Minister, Laurent Fabius, with whom I spoke over the weekend. That was why the UK and France together summoned the Israeli ambassadors yesterday, and other EU partners then did the same. I have also been talking to the French and German Foreign Ministers about how we can more actively support a US initiative in the area over the coming month, with European states contributing to incentives and disincentives for both sides to return to negotiations.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

The Foreign Secretary has shared with the House a number of calls that he has made to Ministers over recent days on the middle east. Given the announcement by the Israeli Government about further expansion of settlements, which we have already discussed, and the summoning of the Israeli ambassador to King Charles street yesterday, will the Foreign Secretary explain how abstaining in last week’s vote at the United Nations enhanced the UK’s influence with either Israel or the Palestinians?

[Mr Hague]

The United Kingdom is in exactly the same position as before regarding influence with the Palestinians and Israel. We have frank but warm relations with the Palestinians and, of course, we are always able to speak to the Israelis. Countries that voted no or yes or abstained were all in the same position over the weekend in disapproving of the Israeli decision and placing pressure on Israel to reverse it. I do not believe that the different ways in which we voted in the General Assembly made any difference to that.

[Mr Alexander]

Let me ask a practical question. In the light of the decision by the Israeli Government to withhold £75 million of Palestinian customs duties, what conversations have Ministers had in recent days with international partners on how to sustain a functioning Palestinian authority? In the immediate term, that would ensure the continuing operation of Palestinian security forces on the west bank, but in the medium term it holds out the prospect of credible negotiating partners for the Israelis.

[Mr Hague]

Of course we are in discussions with other countries on this matter. We must assess exactly what the financial implications are. As the right hon. Gentleman knows, we are already a major donor to the Palestinian Authority and the fourth biggest donor to the United Nations Relief and Works Agency. The immediate action has been that the consul general in Jerusalem and a Department for International Development team have visited Gaza to assess the situation there, but we must see how we can further assist if there is a deepening financial crisis in the Palestinian Authority.

[David Mowat (Warrington South) (Con)]

3. What discussions his Department has had with the Libyan Government on reparations for previous victims of Libyan Semtex.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

The Gaddafi regime left a terrible legacy, with many victims both in Libya and in the UK. My right hon. Friends the Prime Minister and the Foreign Secretary and I have consistently raised Gaddafi’s relationship with the IRA when we have seen the Libyan authorities.

[David Mowat]

It is now accepted that Libya provided the Semtex used both at Lockerbie and at the Warrington bombing in 1993. The US Government are vigorously pursuing a claim on behalf of the Lockerbie victims, whereas the UK is more passive in its support for the equivalent McCue case. Will the Minister review our position and undertake to go the extra mile for the UK victims, including those living in Warrington?

[Alistair Burt]

I know my hon. Friend’s position and his close relationship with those who suffered in Warrington, not least Colin Parry and his family. It has not been the UK’s position specifically to support individual compensation claims—that has been done privately—but the UK has offered facilitation and support to those making such claims. More important, the UK has also been able to support a process of reconciliation with the new Libyan authorities to make good the comment of President Magarief at the UN in September—he apologised for the crimes of the despot and is looking to try to ensure that things are repaired. We are working continually with the Libyan authorities on that. I am going there next week to help in that process.

[Mr Speaker]

We are obliged to the Minister.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

5. What recent discussions he has had with his EU counterparts on protecting the integrity of the single market.

[The Minister for Europe (Mr David Lidington)]

I regularly discuss the single market with my counterparts both at bilateral meetings and in formal sessions of the Council.

[Gordon Banks]

With the Prime Minister increasingly marginalised and nobody believing a word that comes out of the Scottish First Minister’s mouth, what can the Minister do to protect the £9.7 billion of exports from Scotland to the EU, and to ensure that there is a credible single market in future?

[Mr Lidington]

I fear that the hon. Gentleman wrote his question before he saw the outcome of the European Council at the end of last month. Given the emphasis he places on trade, I am sure he will have warmly welcomed our Prime Minister’s intervention to secure the free trade agreement between the EU and South Korea, which is already delivering opportunities for British businesses. I am sure he will also welcome the British Government’s strong support for the opening of trade negotiations between Europe and Japan, which was agreed last week.

[Mr John Baron (Basildon and Billericay) (Con)]

Now that the penny has finally dropped within the eurozone that it cannot have monetary union without fiscal union, which in turn leads to closer political and economic union, what guarantees can the Government give that a caucus within the eurozone will not override UK interests within the single market?

[Mr Lidington]

This is something to which we are giving priority both in the immediate discussions on banking union and in all future negotiations on the future of the EU. I can give some reassurance to my hon. Friend. The requirements of the single market are written into the treaties and the terms of numerous items of EU legislation. On top of that, all 27 Heads of State and Government have made repeated commitments at European Councils that they are committed to defend the integrity of the single market.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

But the Minister knows how important access to the single market is to our ability to attract foreign investment in, for example, car manufacturing. Surely he admits that there is a growing resistance in Europe to what is seen as the Government’s à la carte approach to their membership. Does he accept that that is becoming dangerous to our economic interests?

[Mr Lidington]

Our colleagues in the EU fully accept that we have taken a sovereign decision, which I thought was supported on both sides of the House, to stay out of the euro. It therefore follows that we do not take part in certain arrangements. However, I also find that my European counterparts are eager to work closely with us on measures to develop free trade further; to strengthen the single market—for example, to cover the digital economy, transport and energy—and to find ways to cut the cost and complexity of regulation, which applies to all European businesses.

[Sir Tony Baldry (Banbury) (Con)]

There appear to be a number of siren voices now starting to question the value of the single market to the United Kingdom. Will the Foreign and Commonwealth Office, together with the Treasury and the Department for Business, Innovation and Skills, do some detailed work to set out the exact value to the UK of our being part of the single market, and put that work in the Library?

[Mr Lidington]

A lot of this type of information is likely to emerge from submissions by businesses and their representative organisations to the balance of competences review which is now under way. To take one example, British car manufacturers would probably face tariffs of just under £1 billion a year were we to be outside the single market and paying the 10% tariff to export to the EU. Membership of the single market directly sustains jobs and prosperity in places such as Swindon, Solihull and Washington New Town.

[Ann McKechin (Glasgow North) (Lab)]

7. What steps he is taking to encourage Israel to avoid civilian casualties in Gaza.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

During the recent Gaza conflict, I underlined to Israel the need to abide by international humanitarian law and avoid civilian casualties. I welcome the ceasefire reached on 21 November, and I am urging all parties to fulfil their commitments under that agreement.

[Ann McKechin]

Although I welcome the ceasefire, does the Foreign Secretary share my concerns that UN figures show that since 2003 as many Gazans have died during periods of calm as they have during periods of conflict? That appears to show that there has been systemic failure by the Israelis in protecting civilians in Gaza. What he is going to do about that?

[Mr Hague]

Of course we are concerned about the wider situation, including the humanitarian situation—I spoke a moment ago about the visit of the Department for International Development and the consul general. It is why we urge all parties concerned to take the opportunity that might arise from the tragic events of the past few weeks not only to observe the ceasefire but to go on to make agreements that will open up Gaza to trade and to development more effectively, and to end the smuggling of weapons into Gaza. If those things could be achieved, the situation would be much brighter for all the people of Gaza.

[Bob Blackman (Harrow East) (Con)]

During the recent conflict, many of the rockets fired from Gaza never actually left Gaza and injured large numbers of Palestinians. At the same time, the tunnels between Gaza and Egypt appear to have reopened, allowing the Iranian-supplied missiles to be restocked in Hamas’s arsenal. What action is my right hon. Friend taking to stop that practice, so that conflict does not arise again?

[Mr Hague]

My hon. Friend is quite right to draw attention to those factors. The answer is connected to the answer I gave a moment ago to the hon. Member for Glasgow North (Ann McKechin). There is an opportunity for Egyptian-led negotiations to bring the smuggling of weapons to an end, and to open up access into Gaza. That is an opportunity that all concerned must seize. We have strongly encouraged the Egyptian Foreign Minister in that work. I congratulated him on the night of the ceasefire on achieving that. The Under-Secretary, my hon. Friend the Member for North East Bedfordshire, who has responsibility for the middle east, has spoken to the Egyptians to encourage this—it is the way forward.

[Mr Frank Roy (Motherwell and Wishaw) (Lab)]

Will the Foreign Secretary tell the House what recent discussions he has had with the Russian Government in relation to Gaza and Syria?

[Mr Hague]

I will be with the Russian Foreign Minister on several occasions this week, including in Dublin on Thursday at the Organisation for Security and Co-operation in Europe summit, so I anticipate holding discussions with the Russians during the course of this week.

[Keith Vaz (Leicester East) (Lab)]

8. What steps he is taking to support political transition in Yemen.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

The United Kingdom plays a leading role in supporting the political transition efforts in Yemen. My right hon. Friend the Foreign Secretary chairs the Friends of Yemen ministerial group, and our ambassador is in regular contact with Government, the opposition and civil society in Yemen.

[Keith Vaz]

I thank the Minister and the Foreign Secretary for giving Yemen their personal attention. I draw his attention to the publication today of the Amnesty International report showing that Ansar al-Sharia might be resurgent in the southern part of Yemen. They were responsible for extra-judicial killings, crucifixions and torture. What support can the Government give to President Hadi to deal with this terrible group?

[Alistair Burt]

In return, I thank the right hon. Gentleman for his unfailing attention to this, his courtesy in dealing with us and our officials, and the work of his all-party group.

The circumstances in the south continue to cause great concern. I am aware of the Amnesty International report, and we will continue to work in the south to bring the parties together and resolve the political difficulties that are now part of the national political dialogue. However, the re-entry into the area of such an unpleasant and dangerous group will be a focus of a visit to Yemen that I hope to make in the not-too-distant future, when I hope to be able to raise the subject directly with the authorities there.

[Rory Stewart (Penrith and The Border) (Con)]

Will the Minister please ensure that the political settlement process remains as genuinely inclusive as possible? In particular, will he ensure that the temptation to exclude the Houthi group, for being pro-Iranian, or parts of the Hirak, because of their extremism, is resisted and that as many people as possible are at the table?

[Alistair Burt]

As my hon. Friend knows from his own recent activities there, the Yemeni process manages to bring together people who, in other circumstances, it might be difficult to get round the table. I have not yet experienced a sense of exclusion of certain parties, but it is always a danger. If there is to be an answer in Yemen—among the many difficulties in the region, the process in Yemen towards a political transition has been more successful than most—it is essential that it comprises all those with a role to play. Certainly, his concerns will be borne in mind by the ambassador and all the rest of us.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

9. What recent assessment he has made of the security situation in Israel and Gaza.

[Stephen Timms (East Ham) (Lab)]

14. What his latest assessment is of the prospects for a two-state solution to the conflict between Israel and Palestine.

[Duncan Hames (Chippenham) (LD)]

15. What recent assessment he has made of the political situation in Israel and Palestine.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

We welcome the agreed ceasefire following the crisis in Gaza. The recent violence only highlights the urgent need for the United States, supported by the UK and other partners, to launch a new initiative to push the peace process forward in 2013 to achieve a two-state solution.

[Chi Onwurah]

Like many MPs, I am sure, I have been overwhelmed by messages from constituents asking me to express their horror and despair at the violence and the casualties in Gaza. What reassurances can the Foreign Secretary offer them regarding the security of civilians in Gaza, and does he agree that there cannot be a two-state solution without secure and viable borders for both states?

[Mr Hague]

Yes, absolutely. The way forward is what we discussed a few moments ago: to make a success of the second stage of the ceasefire negotiations. Egypt did a very good job, supported by the UN Secretary-General and the United States, in bringing about the ceasefire. Now it is important to conclude the second stage, which will bring—we hope—improved access and an end to the smuggling of weapons. The hon. Lady is right to say that secure borders are necessary for Israel, as, too, is having a viable, sovereign state of Palestine. That is what we want for Palestinians.

[Stephen Timms]

The Foreign Secretary told the House earlier that the additional settlement building in the E1 area of East Jerusalem announced last week would clearly be unlawful. What prospect is there of prevailing on Israel to comply instead with the requirements of international law?

[Mr Hague]

That is the point that the world is stressing to Israel—that those settlements are illegal, that they are on occupied land and, in particular, that the unfreezing of development in what is known as the E1 block threatens the prospect of a future Palestinian state being able to operate on contiguous land. This point is being made strongly, not only by us and our European partners but by the US and the whole Arab world. I hope that despite the election campaign in Israel—election campaigns affect the politics of any country—it will listen carefully to those points.

[Duncan Hames]

I welcome those comments from the Foreign Secretary, but we have been here before, and he must grow weary of repeating to the Israeli Government his condemnation of illegal settlement activity. Given the importance of Europe as a market for Israeli goods and services, which European Ministers shy away from putting economic muscle behind our protestations, and can he assure the House that he is not one of them?

[Mr Hague]

I do not think there is enthusiasm around the European Union for that. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) talked earlier about economic sanctions in Europe against Israel, but I do not believe there would be anywhere near a consensus on that, nor is it our approach. We continue to try to bring both sides back into negotiations. Nevertheless, if there is no reversal of the decision that has been announced, we will want to consider what further steps European countries can take and I will discuss that with my counterparts in other EU nations.

[Nicholas Soames (Mid Sussex) (Con)]

Does my right hon. Friend agree that peace talks would bring added security to Israel and Gaza? What steps does he intend to take to get the parties to the table again? Indeed, what steps would need to be taken to introduce a sanctions regime, as outlined by my hon. Friend the Member for Chippenham (Duncan Hames)?

[Mr Hague]

On the latter point, my reaction is the one I have already given. On the steps that are necessary to resume negotiations, of course this will require all sides to draw back from steps that make entering into negotiations more difficult. We have seen a sequence over the last week that has taken us further away from negotiations, rather than closer to them. This will require the decisive involvement of the United States. Indeed, I have said to Secretary Clinton that it will require from the United States the greatest efforts since the Oslo peace accords—a level of that intensity—to carry forward and restart the negotiation process.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

Further to the Foreign Secretary’s earlier reply, now that Iranian-manufactured weapons have been fired from Gaza and have landed in Jerusalem and Tel Aviv, what urgent action is he taking to stop the transportation of such weapons and how concerned is he about Iran’s role in fomenting conflict in the region?

[Mr Hague]

I am very concerned about Iran’s role, as I think I have said before in the House. Indeed, there is substantial evidence of Iranian involvement and Iranian weapons being supplied, including those fired against Israel. The hon. Lady is quite right about that. Of course, the solution to that is ending the smuggling of weapons in Gaza from wherever they come—from Iran or anywhere else. It is now possible to reach such an agreement, with good will and further effort after the ceasefire agreement on all sides, so our main effort will be supporting that diplomatic initiative.

[Sir Menzies Campbell (North East Fife) (LD)]

Is not one of the most offensive features of recent days the fact that the exercise of a legal right by the Palestinians at the United Nations has been met by illegal retaliation by the Israeli Government? Does my right hon. Friend accept that such illegal action serves only to undermine the authority of Mahmoud Abbas—and indeed of the Palestinian National Authority, which he leads—and in addition encourages those Palestinians, particularly in Gaza, who wrongly believe that violence is justified?

[Mr Hague]

The announcement of additional housing units and the unfreezing of development in the E1 block undermines Israel’s reputation, as I said earlier, but it also undermines the Palestinian Authority in its efforts to bring about a two-state solution and could therefore embolden more extreme elements. These are among the reasons why it is an unwise policy and why we will look to Israel to reverse it.

[Richard Burden (Birmingham, Northfield) (Lab)]

The Foreign Secretary has told us of the representations that he and his hon. Friend the Under-Secretary of State, the hon. Member for North East Bedfordshire (Alistair Burt), have made to the Israeli Government. Will he tell us something of Israel’s response to those representations? What assessment has he made of the growing legal opinion internationally that anyone who trades with an illegal entity is themselves complicit in an illegal act?

[Mr Hague]

Clearly the Israeli Government have not yet changed or reversed their decision. Ambassadors in these situations take back the representations of the host Government, which the Israeli ambassador committed himself to do at the meeting with the Under-Secretary, my hon. Friend the Member for North East Bedfordshire. We will continue to make such representations, as will so many other countries, but Sunday’s cabinet did not reverse the decision that was announced on Friday, so we will need to continue with this work.

The answer on trade and sanctions is really the one I gave earlier. Arms exports are covered by our consolidated criteria—we look at those strictly—but it is highly unlikely that wider economic measures in any direction will contribute to peace in the middle east.

[Mr Speaker]

I cannot fault the comprehensiveness of the right hon. Gentleman’s reply. We are genuinely grateful; he is trying to help the House.

[Robert Halfon (Harlow) (Con)]

Does my right hon. Friend agree that it would be a retrograde step to break off diplomatic relations with Israel, especially given that successive Israeli Governments have said that they would withdraw from most of the west bank under a properly negotiated treaty?

[Mr Hague]

We hope of course that that will happen in due course. Diplomacy is what is needed most of all in this situation, so I do not think that we would contemplate breaking off diplomatic relations with any of those involved, but we are going to have to ramp up our diplomatic efforts in various ways. I am not going to rule out any diplomatic options over the coming weeks.

[Chris Ruane (Vale of Clwyd) (Lab)]

11. What discussions he has had with his EU counterparts on the UK’s position at the December 2012 European Council meeting on the development of a banking union.

[Mr William Bain (Glasgow North East) (Lab)]

13. What discussions he has had with his EU counterparts on the UK’s position at the December 2012 European Council meeting on the development of a banking union.

[The Minister for Europe (Mr David Lidington)]

I have made it clear to my colleagues in the European Union that while we accept that the eurozone needs a banking union, the detailed arrangements need to safeguard the interests of those member states that will not be part of the eurozone or of the banking union.

[Chris Ruane]

This Government are relatively friendless in Europe in this regard. How will they ensure that any agreement on a banking union will continue to allow the UK to stay in the room during negotiations on shaping the supervisory rules?

[Mr Lidington]

I reject the hon. Gentleman’s caricature of our position. We are playing an extremely active and constructive part in the negotiations. We recognise that getting the arrangements for a banking union sorted out is of real importance to our friends and partners who have committed themselves to the single currency, and that their financial stability will be of great benefit to the United Kingdom’s economic interests.

[Mr Bain]

The International Monetary Fund’s Christine Lagarde said at the weekend that a banking union was the first priority in saving the eurozone. If the Minister agrees with that, will he tell us precisely how many EU states agree with his plan for double majority voting to ensure that rules applying to banks in Britain are not dictated by a banking union bloc through the European Banking Authority?

[Mr Lidington]

All 27 EU Heads of State and Government said in the conclusions to the October European Council that, in the arrangements for a banking union, there needed to be a “level playing field” between the ins and the outs, as well as safeguards

“in full respect of the integrity of the single market in financial services.”

[Mr William Cash (Stone) (Con)]

Has my right hon. Friend had an opportunity to read the blueprint published over the weekend by Mr Barroso, which contains 50 pages of detailed proposals for a full banking, fiscal and, ultimately, political union? Does he think that any of the proposals that this country has made have the remotest chance of being listened to in the context of that document, and of what Mr Noyer said the other day? Lastly, will my right hon. Friend ensure that the European Scrutiny Committee receives an early explanatory memorandum from the Government on those proposals?

[Mr Speaker]

I know that the legendary intellectual agility of the Minister of State will enable him to provide one pithy reply to the three questions that have just been posed.

[Mr Lidington]

I read President Barroso’s comments with interest. He was of course talking not about the immediate negotiations on a banking union but about the longer-term development of the eurozone and how to safeguard its stability. That objective is in the interests of the United Kingdom, but it is true to say that at some stage there needs to be a sensible, grown-up conversation between all members of the EU to work out the right architecture for a future Europe in which some will be members of the single currency and others will remain outside it.

[Angus Robertson (Moray) (SNP)]

At the recent European Union Council, the UK held a quadrilateral meeting with the Danes, the Dutch, the Swedes and the Finns. Will the Minister take this opportunity to outline the areas of common interest with those nations, and to underscore the importance of joint working with our northern European neighbours?

[Mr Lidington]

We talk to our northern European neighbours and, indeed, to other member states about the whole range of issues on the agenda of any particular European Council meeting. The countries that are not in the single currency certainly have a common interest in ensuring that whatever arrangements the eurozone may agree—they are some distance from agreeing among themselves about the right design at the moment—they take proper account of the integrity of the single market and the interests of those who are not part of the euro.

[Emma Reynolds (Wolverhampton North East) (Lab)]

Following the failure of the Government’s too little, too late approach to the recent EU budget negotiations and given the Government’s isolation in Europe, there are now indications that the Prime Minister is preparing to cede powers and influence over the eurozone banking union in return for minor tweaks to the EU budget. Is there not now a real risk that the Government will neither secure a good deal for British taxpayers nor deliver safeguards to British business on the banking union?

[Mr Lidington]

That was another script written before the European Council concluded. I have to say to the hon. Lady not only that this Government have a confirmed commitment and record of working to secure the national interest of the United Kingdom, but that that record sits in stark contrast with the record of the shadow Foreign Secretary, who gave away £7 billion of the United Kingdom’s rebate when he held this office.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I gently say to the hon. Member for Stone (Mr Cash), who has now left the Chamber and for whom I have the highest regard, that it is a courtesy to remain within the Chamber until all exchanges on the question posed have been completed. I feel sure that the hon. Member for Stone is as interested in everybody else’s opinions as he undoubtedly is in his own.

[Mike Gapes (Ilford South) (Lab/Co-op)]

12. What recent reports he has received on the humanitarian situation in Syria.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

The humanitarian situation in Syria is dire. We have provided £53.5 million of assistance so far and are urging others to increase donations to the UN appeal.

[Mike Gapes]

Forty thousand dead, 2.5 million internally displaced, 200,000 refugees and, yesterday, more people killed in Syria by the Ba’athist regime than were killed in the whole of the Gaza conflict. President Obama has talked about “serious consequences” if Assad uses chemical weapons. Why are there no serious consequences already from the international community about what is going on in Syria, and what does President Obama mean by “serious consequences”?

[Mr Hague]

The hon. Gentleman is familiar with the policy we have pursued towards Syria. There is no military solution in Syria; we are seeking a peaceful, political and diplomatic solution. We continue to do that, while recognising the new national coalition of the opposition, giving it increased but non-lethal assistance and delivering humanitarian aid on the scale I have described. I want to reiterate what President Obama has said—that any use of chemical or biological weapons would be even more abhorrent than anything we have seen so far. We have made it clear that this would draw a serious response from the international community. We have made that very clear to representatives of the Syrian regime and have said that we would seek to hold them responsible for such actions.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

I welcome the Foreign Secretary’s statement a few minutes ago that he will shortly have further discussions with Russia. How will he respond if the Russians make it clear that they are not going to allow a western-backed Sunni rebellion to overthrow the Alawite regime?

[Mr Hague]

My right hon. Friend’s question poses a number of questions. As we have discussed before, the motivations of the opposition in Syria are very complex. Yes, there is of course a lot of Sunni influence, but people of many different religious affiliations are involved in the opposition. They are not merely western-backed—they are particularly Arab-backed, so I would not want to define them as a western-backed opposition. It is in Russia’s interest to agree to a diplomatic solution for a transitional Government in Syria, and I hope the Russians will see the arguments for that at the meetings this week and subsequently.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

16. What recent discussions he has had with the Government of Rwanda on violence in the eastern Democratic Republic of the Congo.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)]

My right hon. Friend the Prime Minister and I have pressed Presidents Kagame and Kabila to work together to end the crisis. When I spoke at the United Nations in September, I made it clear that external support for the M23 rebels must stop. We welcome the communiqués that were issued recently by the Presidents of the DRC, Rwanda and Uganda, but it is crucial that they are translated into action to achieve sustainable stability in the eastern DRC.

[Tom Blenkinsop]

The final report from the United Nations group of experts on M23 and the DRC has been publicly released, and the Prime Minister himself has said that the international community cannot ignore evidence of Rwandan involvement with M23. In view of the report, does the Secretary of State think that the decision of the former Secretary of State for International Development to reinstate budget support was wise?

[Mark Simmonds]

The hon. Gentleman is right to raise the subject of the report from the UN group of experts, which has formed part of the information that the International Development Secretary has considered in reaching a decision about the aid budget and direct support for the Rwandan Government. However, the communiqués issued by the Ugandan, Rwandan and DRC Presidents stipulate that there must be a solution to the problem in the eastern DRC, which means not just a resolution of the conflict now but longer-term measures to ensure that the cycle of conflict is broken.

[Mr John Spellar (Warley) (Lab)]

In September, when the former International Development Secretary gave £21 million of aid to Rwanda, what advice did the Department offer ahead of his decision? What advice did it offer last week, when the current Secretary of State cancelled the money? Was it different from the advice that was given in September?

[Mark Simmonds]

Before the decision made in September by the former Secretary of State and the decisions made by the current Secretary of State, the Foreign Office and other relevant Departments were consulted, and the decisions were made across Government with the full agreement of those Departments.

[Sheila Gilmore (Edinburgh East) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

Today I shall attend the NATO Foreign Ministers’ meeting in Brussels, where I shall support Turkey’s request for NATO to deploy Patriot missiles in Turkey. Tomorrow I shall host a trilateral meeting with the Foreign Ministers of Afghanistan and Pakistan to discuss Pakistan’s support for the stabilisation of Afghanistan.

[Sheila Gilmore]

I have listened carefully to the Foreign Secretary’s responses in relation to Israel and Palestine, but can he explain to us clearly what advantage was gained by Britain’s abstention in the recent UN vote on Palestinian recognition?

[Mr Hague]

I think that we were right to argue that pressing a resolution at the United Nations at this juncture—at this very moment—could lead to fresh complications, that we were right to argue that its amendment would have mitigated the consequences, and that we are right to argue now that Israel should not expand settlements on occupied land. All those positions are, I believe, correct.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

T4. Do Ministers consider it a possibility that next year it could be a UK Government priority and a European Union priority to seek to end the division of Cyprus once its new President has been elected in February, given the good will that I understand exists in both communities in Cyprus—in part—in Turkey, and, I hope, in Greece?

[The Minister for Europe (Mr David Lidington)]

I certainly hope that that will prove possible, but clearly a major new initiative must await the outcome of the Cypriot presidential election in February. I hope that whoever is elected will set ambitious goals, working with Turkish Cypriot leaders, the guarantor powers, the United Nations and others to bring about a settlement that would be profoundly in the interests of all communities on the island.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

In view of heightened international anxiety about the possible use of chemical weapons in Syria, the United States has indicated that it is preparing contingency plans. Can the Foreign Secretary say whether the British Government’s assessment of that potential threat has been heightened in recent days, and whether the United Kingdom is contributing, or has already contributed, to international contingency planning?

[Mr Hague]

Yes, our understanding of the threat has been heightened in recent days. We have seen some of the same evidence as the United States. I cannot give any more details, but I can say that we have already reacted diplomatically. We have expressed in no uncertain terms, directly to the Syrian regime, the gravity of any use of chemical weapons. In our view, as the Prime Minister has said before, that would require us to revisit our approach to Syria. I cannot, of course, discuss contingency plans in any detail, but we in the UK, including those of us in the Ministry of Defence, are always ready with a wide range of such plans.

[Christopher Pincher (Tamworth) (Con)]

T5. As chairman of the all-party group on Azerbaijan, yesterday I met representatives of the Azerbaijan Foundation of Democracy Development and Human Rights Protection. They made clear to me their strong desire to see the development of a free press in Azerbaijan. What can Britain and the British Government do to promote a free and unregulated press in Azerbaijan and the south Caucasus?

[Mr Lidington]

I share my hon. Friend’s view that a free press is integral to democracy in any country. The British Government have provided funding for professional training for journalists in Azerbaijan, and we support vigorously the work of the Council of Europe, the European Union and the Organisation for Security and Co-operation in Europe to encourage and promote media freedom both in Azerbaijan and more widely in the southern Caucasus region.

[Jenny Chapman (Darlington) (Lab)]

T3. On trade with the middle east, what discussions have been held with the European Commission on the labelling of settlement goods?

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

The EU is actively considering whether the voluntary labelling scheme that has been in existence in the United Kingdom for some time might be extended to other countries. This matter is frequently taken up by our representatives, and discussions are ongoing.

[Richard Ottaway (Croydon South) (Con)]

The alarm bells are ringing over President Morsi of Egypt’s vast expansion of powers by presidential decree. A generous interpretation is that he is trying, by hook or by crook, to get the constitution on to the statute book; less charitably, it could be seen as a path to an Islamic state without the involvement of, or consultation with, Christians, liberals or women. What is the Secretary of State’s assessment?

[Mr Hague]

My hon. Friend’s question illustrates the arguments on both sides in Egypt, and we have taken the view that it is not helpful for us to give a day-to-day commentary on a political controversy or struggle within that country. We are, of course, calling for effective dialogue between all the parties involved in Egypt, and we have expressed our concerns about a democratic constitution not being agreed that is satisfactory to most of the country, but there will be a referendum, now scheduled for 15 December, and it is interesting to note that as of yesterday the Salafists, who are on the more strongly Islamic wing of Egyptian politics, are threatening to boycott the referendum because the proposal is not Islamic enough.

[Mr Ben Bradshaw (Exeter) (Lab)]

T6. Is it not clear that the Netanyahu Government are completely impervious to words of condemnation or even the summoning of ambassadors, and that the time has come for action? Uncharacteristically, the Secretary of State dodged earlier questions about trade with the illegal settlements. Will he now take the lead in Europe by implementing a ban on all trade with the settlements, which, as he himself has repeated again in this House, are illegal?

[Mr Hague]

My reaction to calls for economic sanctions of various kinds has not changed, but I also want to stress another point I made earlier: we will be discussing with other EU nations what our next steps will be, because the Israeli Government have not yet responded favourably to the representations we and other countries have made. We will be discussing that with other European Governments, therefore, but I would not want to raise the right hon. Gentleman’s hopes that there would be enthusiasm around the EU for such economic measures.

[Andrew Rosindell (Romford) (Con)]

I know the Minister will join me in welcoming the premiers, chief ministers and Heads of Government of the British overseas territories, who are in London this week for the first overseas territories ministerial council. Will he update the House on the progress the Government are making with our overseas territories following the publication of this year’s White Paper?

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)]

I am grateful to my hon. Friend for raising this important matter, and I congratulate him on the important work he has done in ensuring there are strengthening ties between the UK and the overseas territories. As he said, most, if not all, the overseas territories leaders are in London this week for the first joint ministerial council, at which we will be exploring how the UK Government, and most of the UK Government Departments, can strengthen ties in respect of financial and fiscal responsibility, building capacity in the Governments of the overseas territories and, importantly, strengthening environmental and economic and trade ties.

[Grahame M. Morris (Easington) (Lab)]

T7. In the light of the increasing instability in the middle east and concerns about a possible nuclear arms race in the region, will the Foreign Secretary tell us what pressure the British Government are exerting on Israel to sign the nuclear non-proliferation treaty?

[Mr Hague]

This is a long-running issue, on top of all the other issues concerning Israel and the middle east that we have discussed today. Israel has maintained a position over decades of not signing the NPT. In the last review conference of the NPT we strongly encouraged the idea that there should be a conference dedicated to the middle east, and a Finnish facilitator of that conference has now been appointed. Disappointingly, the conference is not taking place this year, but we hope it will take place soon.

[George Freeman (Mid Norfolk) (Con)]

May I support the Government’s work towards an arms trade treaty? Does the Minister agree that as we seek to build a more sustainable economic model, we would do well to think about selling to the fastest-emerging nations our leadership in science—in agriculture and medicine—rather than arms?

[Alistair Burt]

I welcome my hon. Friend’s support for our work on an arms trade treaty, and we head towards a final conference at the UN next March seeking a robust, effective and legally binding one. His point about extending our opportunities through life sciences to growing economies—the USA, Canada, Brazil and India—is well taken. UK Trade and Investment is working hard on this matter and has already supported life science conferences in Abu Dhabi, Brazil and Germany this year.

[Kevin Brennan (Cardiff West) (Lab)]

T8. Why was the Foreign Secretary unsuccessful in stopping the former International Development Secretary’s decision to restore aid to Rwanda, despite the breach of the memorandum of understanding between the UK and Rwanda—or was he fully in favour of that decision?

[Mark Simmonds]

The hon. Gentleman is trying to rewrite history. The previous Secretary of State for International Development first suspended direct budgetary support to Rwanda in July. He then, through detailed consultation with the Foreign Office and other Departments, partially restored it in September. The report by the group of experts, whose evidence we find compelling and credible, came out and we analysed it. As the partnership agreements between DFID and the Rwandan Government were also clearly not being honoured, the decision was made by the International Development Secretary, in consultation with Departments, to suspend direct budgetary support to Rwanda.

[Mr Brooks Newmark (Braintree) (Con)]

Rape is a pernicious weapon of war. Given the violence inflicted on women in the eastern Democratic Republic of the Congo by the M23, what conversations is the Minister having with his counterparts in Rwanda to get them to use their influence to end such violence?

[Mark Simmonds]

My hon. Friend is right to raise this very important issue. He will be aware that my right hon. Friend the Foreign Secretary has instigated a policy and a determination to instil a preventing sexual violence in conflict initiative to end immunity. I have had discussions in the region with senior Ministers in the Rwandan Government and with the President of the DRC to try to encourage them to engage with this very important initiative, to stop not just the rapes, but having child soldiers in the eastern DRC.

[Jonathan Ashworth (Leicester South) (Lab)]

Ministers have been careful not to accuse the Burmese Government of orchestrating the violence towards the Rohingya. Last night, al-Jazeera released new evidence to suggest that the Burmese authorities, the military, the security services and local government officials have been involved in that sectarian violence towards the Rohingya. Will the Minister examine that evidence? If he finds it compelling, will he make the strongest possible representations to the Burmese Government that this violence has to end and that the Rohingya should be granted citizenship?

[The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)]

Of course the Burmese Government have set up an internal review into what has gone on in Rakhine, and we await the outcome of that. I can say to the hon. Gentleman only what I said earlier in the House: I shall travel to the area shortly and on my return I shall make myself available to the all-party group on Burma, when I will be able to pass on first-hand experience of what I have found on the ground, rather than some of these stories coming out of Burma at the moment.

[Margot James (Stourbridge) (Con)]

There are substantial opportunities for trade with Brazil as it prepares for the Olympics and World cup. Being able to speak Portuguese is a big advantage in doing business in Brazil, so will my right hon. Friend outline what progress is being made in improving foreign language skills for the purpose of boosting trade?

[Mr Swire]

We are very keen to improve foreign language skills, not least in Brazil. I was there on a visit with my right hon. Friend the Prime Minister a few months ago, and one of the things we discussed was getting more people to learn English in Brazil. We have had some extremely successful visits to Brazil by the sports Minister and others in the run-up to the Rio Olympics. As my hon. Friend says, our bilateral relations with Brazil are extremely good, and we hope that we can look forward to a period of increased trade.

[Anas Sarwar (Glasgow Central) (Lab)]

Actions speak louder than words and despite the Foreign Secretary’s comments that our vote last week at the UN made no difference to our negotiation position, I can assure him that the UK’s failure to back the Palestinian resolution has severely undermined our credibility in the middle east. What actions are the UK Government taking to end the growth of illegal settlements and end the siege and blockade on Gaza?

[Mr Hague]

I do not agree with the hon. Gentleman. I will visit the Gulf over the weekend and I think that we will find that UK influence is as strong as it was. It has grown considerably in recent years, and that will continue. We are making efforts, which I have described throughout this Question Time, to support the work of the Egyptian Government on Gaza, to deliver an unequivocal message to Israel and to encourage all back into negotiations, including Palestinians, without preconditions.

[Mr David Ward (Bradford East) (LD)]

The Secretary of State constantly confirms that the occupation of Palestinian land is illegal under international law. What does he think the difference is in the mind of the Israeli Government between something lawful and something unlawful but unenforced by the international community? What is the difference?

[Mr Hague]

I think the hon. Gentleman would have to direct that question to the Israeli Government. We are clear that the settlements are illegal and on occupied land, but we are also clear, as we have discussed in this House several times over the past few weeks, that we will resolve that only through a successful negotiation. I have not heard anybody argue that there is any other way to resolve it other than Israelis and Palestinians succeeding in negotiation together. We must encourage that process, which of course constrains us in many other things that people advocate that we do.

[Several hon. Members]

rose—

[Mr Speaker]

I am sorry to disappoint colleagues, including some who have been trying hard, but I am afraid that demand has massively exceeded supply today. I hope that that is understood.

Points of Order

Tuesday 4th December 2012 Commons Chamber

12:36

[Mark Reckless (Rochester and Strood) (Con)]

On a point of order, Mr Speaker. Yesterday, the Home Secretary met the deadline for appeal to the Court of Appeal in respect of Abu Qatada. She also wrote to me that rather than seeking to uphold the test confirmed by our own highest court, under which she could deport Qatada:

“A decision was taken to adopt the test laid down in January by the Strasbourg court, essentially because we considered the domestic courts were bound to follow it”.

Is it not the duty of Ministers to uphold the law as passed by this House and interpreted by our highest court rather than to surrender to Strasbourg?

[Mr Speaker]

Although I understand the hon. Gentleman’s extreme strength of feeling on this matter, I do not see a point of order there. I also think he is in some danger of veering or trending into areas that are essentially sub judice and I would urge him to be cautious about that. I know that he will find other ways in which to pursue his concerns on this matter and I am sure that will happen.

[Mr David Winnick (Walsall North) (Lab)]

On a point of order, Mr Speaker. You said that owing to the limitations of time a number of Members could not be called and we all understand that. We cannot change time. You will have heard the strength of feeling, however, on the Palestinian/Israeli issue that was expressed from Members on both sides of the House about what the Israelis intend to do, which is totally unacceptable. Will there be an opportunity before the Christmas recess to raise that question, as the next Foreign and Commonwealth Office questions will take place well into next year?

[Mr Speaker]

I am grateful to the hon. Gentleman for his point of order. There are various possibilities. First, there is the business question on Thursday morning, at which Members can seek an assurance from the Leader of the House about debating time before Christmas. Secondly, it is open to any hon. Member to apply to the Backbench Business Committee for a debate in short order. Thirdly, there are other mechanisms open to Members if they seek to engage Ministers in further exchanges on such matters. I say that without prejudice, but I hope that it is a helpful reply to the hon. Gentleman. I am certainly conscious of his strength of feeling and a wider sense of it within the House.

Human Rights Act 1998 (Repeal)

Tuesday 4th December 2012 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

12:39

[Mr Richard Bacon (South Norfolk) (Con)]

I beg to move,

That leave be given to bring in a Bill to repeal the Human Rights Act 1998; and for connected purposes.

The Human Rights Act 1998 gives effect in UK law to the rights and freedoms under the European convention on human rights and makes available in UK courts a remedy for breach of a convention right. Under section 2 of the Act, a court or tribunal in the UK determining a question that has arisen in connection with a convention right must take into account any judgment, decision, declaration or advisory opinion of the European Court of Human Rights. Under section 3, primary and subordinate legislation must, so far as it is possible to do so, be read and given effect in a way that is compatible with the convention rights. This applies to any primary and subordinate legislation whenever it was enacted.

Section 3 also states that this provision does not affect the validity of any incompatible legislation, although it is also true under section 6 that it is unlawful for a public authority to act in a way that is incompatible with a convention right. As we have seen, the view of successive Governments over the years has been that when a UK law is found to be incompatible with the European convention, it is the UK law that gives way to secure compliance with the convention.

Indeed, the Human Rights Act conveniently supplies a fast-track procedure to facilitate this happening quickly. Under section 10, a Minister of the Crown may make such amendments to primary legislation as are considered necessary to enable the incompatibility to be removed by the simple expedient of making an order. In effect, because the accepted practice is that the United Kingdom observes its international obligations, a supranational court can impose its will against ours. In my view this is fundamentally undemocratic.

However, there is no point in belonging to a club if one is not prepared to obey its rules. The solution is therefore not to defy judgments of the Court, but rather to remove the power of the Court over us. The fundamental point is that one cannot alter the political nature of a decision by changing the location where the decision is made. Judges do not have access to a tablet of stone not available to the rest of us which enables them to discern what our people need better than we can possibly do as their elected, fallible, corrigible representatives. There is no set of values that are so universally agreed that we can appeal to them as a useful final arbiter. In the end they will always be shown up as either uselessly vague or controversially specific. Questions of major social policy, whether on abortion, capital punishment, the right to bear firearms or workers rights, should ultimately be decided by elected representatives and not by unelected judges.

Let us take the recent example of prisoner voting. The view of the Court is that, although the Council of Europe member states has a margin of appreciation in deciding how far prisoners should be enfranchised, a complete ban on voting was outside that margin. The fact that we do not have a blanket ban on prisoners voting does not seem to have troubled the Court, even though the Attorney-General went out of his way to point this out in person when he appeared before the Court. There are several categories of prisoner who have the vote now—prisoners who are on remand, prisoners who are sentenced but not convicted, and prisoners who are in prison for defaulting on fines. But the Court is in effect saying, “Sorry, we don’t like your arrangements. We prefer ours.”

Although I personally object to the idea of prisoners having the vote, my much more fundamental objection is to the idea that a court sitting overseas, composed of judges from among other countries Latvia, Liechtenstein and Azerbaijan, however fine they may be as people, should have more say over what laws should apply in the United Kingdom than our constituents do through their elected Members of Parliament. Some may say that that is what the UK signed up to, to which I would only reply, “Precisely.” That is why we need to repeal the Human Rights Act and resile from the convention.

The idea that that would make us a pariah state is simply nonsense. For example, Canada is a member of the Organisation of American States, the equivalent of the Council of Europe for the Americas, but has not signed up to the jurisdiction of the Inter-American Court, without becoming in any sense a pariah state.

Some might say that it would raise all kinds of other legal problems, that everything from the United Nations convention against torture to the Good Friday agreement is predicated upon our membership of the European convention so that it would be impossibly difficult to change things. I do not find that persuasive. It was not that many years ago that people said that a Bill of Rights of any kind would be impossible in the United Kingdom because of parliamentary sovereignty. The truth is that if one wants to do something badly enough, one can find a way to do it, and to do it legally—that is precisely what one keeps clever lawyers for. Goodness, if one wants something badly enough, it turns out one can even go to war in defiance of both world opinion and international law and find a lawyer to say that it is perfectly lawful.

I particularly commend the second Kingsland memorial lecture, given by my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), who is a sponsor of the Bill, in which he set out the argument at much greater length. His central point, with which I agree, is that on prisoner voting, as on so much else, we should not defy the ECHR, but resile from it altogether.

I will end by reflecting on the comment of Judge Learned Hand:

“I often wonder whether we do not rest our hopes too much upon constitutions, upon laws and upon courts. These are false hopes; believe me, these are false hopes. Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no constitution, no law, no court can even do much to help it… What is this liberty that must lie in the hearts of men and women? It is not the ruthless, the unbridled will; it is not the freedom to do as one likes. That is the denial of liberty and leads straight to its overthrow. A society in which men recognize no check on their freedom soon becomes a society where freedom is the possession of only a savage few”.

In my view, our best check is not unelected judges, but the spirit of liberty in the hearts of the elected representatives in this House. I commend the Bill to the House.

12:46

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I am most grateful for the opportunity to respond to the motion. The Human Rights Act is a statute that rarely receives a good word and is subject to more than its fair share of the bad, yet it is one of the most important pieces of legislation passed by the previous Labour Government. Here I pay tribute to my right hon. Friend the Member for Blackburn (Mr Straw), who was instrumental in the formulation and implementation of the policy and remains one of the most coherent voices on the role and, crucially, limitations of the Act. I am also incredibly grateful to him for his advice in preparing for this speech; he has been generous with his time and counsel.

Despite what some newspapers and, it appears, some Government Members claim, the Human Rights Act is not some badly drafted and rushed piece of legislation, a Dangerous Dogs Act for civil liberties. Rather, the opposite is true. The legislation benefited from three years of development in the mid-’90s while Labour was in opposition, on a cross-party basis and with the assistance of the Liberal Democrats. It was further improved by careful consideration in this Chamber and the other place.

The Act is noticeable as a piece of legislation by the very fact that, although my right hon. Friend the Member for Blackburn and Lord Irvine are rightly known as its midwives, its DNA draws from a far wider and deeper genetic pool. That is an incredible strength of the Act and undoubtedly one of the reasons why it has not been seriously challenged in the 14 years since it received Royal Assent.

It is interesting that in the eight years since Michael Howard first declared that the Tories wanted to repeal the Act and replace it with a British Bill of Rights, not one significant step of progress has been made by the Conservative party in developing a coherent alternative. That is testament to those parliamentary draftsmen working at the end of the last century.

The Act itself can be seen as a key plank of the constitutional framework built by the Labour Government alongside devolution. It sets out in clear and unambiguous language those human rights that our nation holds to be dear and that we rightly regard as vital in any modern free society: the right to life; the prohibition of torture, slavery and forced labour; the right to liberty, security and a fair trial; no punishment without law; the right to respect for family and private life; freedom of thought, conscience and religion; freedom of speech; the right to marry; the freedom of assembly and association; and the prohibition of discrimination.

The Act also does something profoundly important for our democratic system—it writes into law the supremacy of Parliament over the courts and the Executive. It places limitations on how far the Executive can interpret their powers without the consent of Parliament. In essence, it requires the Executive to seek and obtain the agreement of Parliament before they may implement new policies. It is therefore no surprise that many Secretaries of State on both sides of the House have expressed irritation at the Act or bridled at the limitations imposed on their authority. Equally, though, the Act is clear that it does not prevent a Secretary of State from ultimately achieving their goal, provided that the Government are prepared to seek parliamentary approval through legislation; it merely prevents a Government from unilaterally setting a new policy without the endorsement of the people through their elected representatives or without due regard for the law. It is bizarre that in our modern democratic system some politicians, particularly one as well regarded as the hon. Member for South Norfolk (Mr Bacon), would seriously propose to repeal this safeguard.

Moreover, the Act places limitations on the power of the courts. My right hon. Friend the Member for Blackburn was careful in his drafting so that it merely requires that the legislature should be “mindful of”, not “bound by”, court decisions. The Act has provision for Parliament to set aside court rulings if it sees fit. For example, in 2005 British courts, through the Law Lords, ruled that it was inhumane and degrading to deny some asylum seekers the right to earn a wage to support themselves and simultaneously deny them the right to receive any benefits from the state—in effect, to place them in destitution without any support apart from charities and churches. As my right hon. Friend has said, this was one of those decisions of our courts which could be classed as inconvenient to the Executive, and I recall that it caused quite a stir at the time. However, if we, as the then Executive, had decided to ask Parliament to pass primary legislation that said in plain, unambiguous terms that certain categories of asylum seeker were indeed to be rendered destitute, and Parliament had agreed, that would have been it—the end of the matter—as far as the British courts were concerned.

Some argue, legitimately, that Parliament should not seek to overturn court decisions. Others argue, erroneously, that in the United States the Supreme Court is indeed supreme and the defender of its constitution. However, the US Congress, with the support of states and the White House, may overturn the Supreme Court through constitutional amendments, as has already happened 27 times in that nation’s history.

On prisoner voting, which the hon. Member for South Norfolk mentioned, the Human Rights Act is perfectly compatible with the principled decision taken by this House. The House voted—and voted overwhelmingly—to remove from convicted prisoners the right to vote in elections, and thus they have no recourse under the Act. Our membership of the European convention on human rights has forced this issue to the European courts. Indeed, another strength of the Act is that it has provided a mechanism whereby British courts may seek to influence the working of the European courts.

As we have seen again today, one of the greatest challenges that the Act must constantly overcome is urban myths and misconceptions. No one could forget the powerful speech delivered by the current Home Secretary to last year’s Conservative party conference when she said:

“We all know the stories about the Human Rights Act...about the illegal immigrant who cannot be deported because, and I am not making this up, he had a pet cat.”

Unfortunately for the Home Secretary, whoever wrote her speech had in fact made it up. In the case of the cat, it appears that the Home Office lost a reconsideration case after the initial verdict was successfully appealed because it failed to meet the requirements set out in the UK Border Agency guidelines, not because of the Human Rights Act. So the hon. Gentleman might have been better served by introducing a human rights education Bill which would involve mandatory attendance by the Cabinet.

In the final analysis, the single strongest argument against repeal is that this is the decade in which we hope to welcome more countries, particularly our neighbours to the east of Europe and Asia, and to the south of Europe, into the family of democratic, civilised nations. To turn our back on, tear up and cast aside the Act that enshrines in law the fundamental human rights that we ask others to respect would remove the legitimacy of our position. How can we ask developing countries—the new democracies—to respect human rights when we seek to remove them from our statute book? I urge the House to reject this Bill.

Question put (Standing Order No. 23).

12:55

Division 110

Ayes: 72

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Conservative: 69
Democratic Unionist Party: 3

Noes: 195

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Labour: 161
Liberal Democrat: 21
Scottish National Party: 5
Conservative: 3
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Independent: 1
Green Party: 1

Public Service Pensions Bill

Tuesday 4th December 2012 Commons Chamber

Consideration of Bill, as amended in Public Bill Committee

[Mr Speaker]

Before I call the Opposition Front Bencher to move new clause 2, I should tell the House that I have revised my provisional selection of amendments and moved amendments 29 to 31 and amendment 33, tabled by Dr Eilidh Whiteford, to the third group from the first group. A revised list will be circulated shortly. I hope that that information is helpful, not only to the hon. Lady, but, indeed, to the House.

New Clause 2

Member communications

‘(1) Scheme regulations for a scheme under section 1 shall provide for the provision of annual benefit statements to all members of the scheme.

(2) Benefit statements under subsection 1 shall show the following information—

(a) the member’s pension benefits earned to date;

(b) the projected annual pension and lump sum payments if the member retires at his normal pension age; and

(c) the member’s and employer’s current contribution rates.’.—(Chris Leslie.)

Brought up, and read the First time.

13:06

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 3—Fair deal—

‘A member of a public service pension scheme is entitled to remain an active member of that scheme following—

(a) the compulsory transfer of his contract of employment to an independent contractor; and

(b) any subsequent compulsory transfer of his contract of employment.’.

Amendment 11, in clause 3, page 2, line 25, at end insert—

‘(5A) This Act shall not apply to scheme regulations relating to local government workers in Scotland unless the Scottish Parliament approves its application.’.

Amendment 12, in clause 7, page 4, line 29, at end insert—

‘(3A) A scheme under section 1 which replaces a final salary scheme may only be established as a career average revalued earnings scheme or a defined benefits scheme of such other description as Treasury regulations may specify.’.

Amendment 4, in clause 12, page 8, line 9, after ‘scheme manager’, insert ‘and employee representatives’.

Amendment 19, in clause 16, page 9, line 36, leave out subsection (1) and insert—

‘(1) New scheme regulations made under section 1 and 3 shall replace existing schemes’ current regulations and shall take effect on the amendment date.

(1A) Following the implementation of new scheme regulations under subsection (1), benefits shall only be provided in accordance with those new regulations.’.

Amendment 20,  page 10, line 5, leave out ‘closing’ and insert ‘amendment’.

Amendment 21,  page 10, line 6, leave out ‘1 April’ and insert ‘2 April’.

Amendment 32,  page 10, line 7, after ‘scheme,’, insert—

‘(aa) 1 April 2016 for a Scottish scheme,’.

Amendment 22,  page 10, line 8, leave out ‘5 April’ and insert ‘6 April’.

Amendment 23,  page 10, line 10, leave out ‘(1)’ and insert ‘(1A)’.

Amendment 24,  page 10, line 21, leave out ‘(1)’ and insert ‘(1A)’.

Amendment 25,  page 10, line 23, leave out ‘closing’ and insert ‘amendment’.

Amendment 26, page 10, line 27, at end insert ‘regulations’.

Amendment 27,  page 10, line 28, leave out ‘(1)’ and insert ‘(1A)’.

Amendment 28,  page 10, line 28, leave out from ‘benefits’ to ‘includes’.

Government amendment 35.

Amendment 7, in clause 28, page 15, line 12, leave out ‘may’ and insert ‘must’.

Amendment 8,  page 15, line 12, after ‘new’, insert ‘defined benefit’.

Government amendments 36 to 39.

[Chris Leslie]

Having spent a considerable number of weeks serving on the Bill Committee, I am pleased that we now have the opportunity to press the Government on questions that remain unanswered and largely unaddressed. Considerable changes are being made to many of the public service pension schemes as a result of Lord Hutton’s report on the future shape of those schemes. The report was largely welcomed throughout the House and that has contributed greatly to the improvement of the reforms. However, a number of the report’s aspects have not been adopted in full by the Government in this Bill, and we are concerned about that.

New clause 2, the first in a considerable group of suggested changes specifically to pension schemes, would implement recommendation 18 on page 132 of the Hutton report that

“public service pension schemes should issue regular benefit statements to active scheme members, at least annually and without being requested”.

At present, defined benefit public service schemes are obliged to provide such information only if they are requested to do so. That limited obligation is set out in the Occupational Pension Schemes (Disclosure of Information) Regulations 1996, but normal occupational pension schemes that do not have an arrangement for either a final salary or career average payment at the end of the scheme are obviously a different state of affairs from defined contribution schemes. New clause 2 would simply implement Lord Hutton’s recommendation and ensure that public service workers have a better understanding of the benefits that they have accumulated to date and what they stand to receive if they continue working until their normal retirement age.

We had a very healthy debate on this matter in Committee, where the exchange of views did not follow the usual to-ing and fro-ing of partisan speechmaking. A number of Members agreed that it would be very healthy if we improved the information and transparency for employees to enable them to make more informed decisions in planning for their savings and their financial future. For example, members of the schemes would be better able to judge whether they were saving enough for their retirement. The new clause is therefore compatible with the aim of reducing people’s need for state benefits in retirement—something that many Members across the House want to achieve.

When we tabled a similar amendment in Committee, it gained quite a degree of vocal support. The hon. Members for Bedford (Richard Fuller) and for Finchley and Golders Green (Mike Freer), who are in the Chamber today, helpfully pressed the Minister to resist his usual logic, which says in big block capital letters, “This is an Opposition amendment; thou shalt resist this devious device by Labour Members to do something nasty in the legislation.” That was not our intention. We actually wanted to implement Lord Hutton’s recommendation and bring defined benefit schemes into the modern age, especially in respect of communicating more regularly and effectively with scheme members. I live in hope that those hon. Gentlemen will chip in and offer their support again, because surely the goal of improving people’s understanding of their pension and helping them to plan more effectively for their retirement should find favour on both sides of the House.

[Mike Freer (Finchley and Golders Green) (Con)]

Will the hon. Gentleman give way?

[Chris Leslie]

I will give way. In fact, I was just about the quote the hon. Gentleman. He said:

“If we want people genuinely to prepare for their pensions, we need to give them the maximum amount of information. Just suggesting that it is good practice without putting in place any requirement is the wrong thing to do.”––[Official Report, Public Service Pensions Public Bill Committee, 22 November 2012; c. 455.]

It gives me great pleasure to give way to the hon. Gentleman.

[Mike Freer]

I am flattered that the shadow Minister should pay such attention to my words. Does he agree that it is rather perverse that when taking out a pension, particularly a private pension, a customer has to read reams of documentation about the risks, the forecasts, the potential growth rates and what might or might not happen, but when one has a public service pension, that level of detail is not provided and, most importantly, the annual statement provides scant information, even if it is requested?

[Chris Leslie]

That is an anachronism that has to change. The hon. Gentleman is correct that just because somebody is in a public service scheme or a defined benefit scheme does not mean that they should not think through carefully what the financial consequences will be for them on retirement. This Bill is the perfect opportunity to take that small but significant step forward.

In Committee, the Minister initially went into rebuttal mode and said that we could not have the new clause for a number of reasons. At first, he said that there were different ways of providing information to members of the scheme, that we did not want to be too prescriptive and that legislation was not necessary. However, the new clause does not prescribe the manner in which the information is provided; it would merely ensure that annual statements were provided in some form.

The Minister’s other objection in Committee was that defined benefit schemes in the private sector are not obliged to provide annual statements, so it would not be right for public sector schemes to do so. However, Government Members again disagreed. I cannot do better than to quote again the hon. Member for Finchley and Golders Green:

“We have a pensions problem in this country, and saying that private sector schemes are not required to provide statements—though many do…—is not a good enough reason for not requiring public sector schemes to provide them.”––[Official Report, Public Service Pensions Public Bill Committee, 22 November 2012; c. 455.]

Amen to that excellent argument. The Minister said at the time that he would consider the issue further.

Last week, I wrote to the Minister saying that it was our intention to table new clause 2. I rather hoped that he would table his own variant. Usually, there are accusations that the Opposition have not thought through the drafting of the phraseology of an amendment and there is some technical reason why it cannot be accepted. However, we have offered the Minister the chance to correct that. It is a matter of great regret that the Minister did not come forward with his own new clause. Perhaps I should be more optimistic and assume that that means that the Minister will stand up and accept new clause 2 straight away. That would be fantastic.

It is worth noting that all defined contribution pension schemes are required by the 1996 occupational pension schemes regulations to provide much more detailed statements than those proposed in the new clause. There is therefore no reason to think that there would be any problem in implementing the arrangements.

It would be helpful if the Minister made this change. If he wants to do it in the House of Lords when the Bill gets down there, we could probably accept that, but I think that most Members would accept the change.

13:15

[Richard Fuller (Bedford) (Con)]

In Committee, we also talked about the risk of people with public sector pensions making the perverse decision not to contribute to their pension because they feel that the contribution rate is going up significantly, missing the fact that a significant contribution is being made to their pension scheme by the taxpayer. Does the hon. Gentleman feel that the new clause would assist members of public sector pension schemes in identifying what a large contribution the taxpayer is making, and therefore help to reduce the number of people who take the irrational step of opting out of the pension scheme?

[Chris Leslie]

Even though the quality of the scheme has been eroded, as we saw with the unilateral imposition of the average 3% increase in employee contributions—that might even have been before Lord Hutton reported—they are still good defined benefit schemes and we encourage public sector members to stay in them. We have debated our concerns elsewhere over whether the viability of the schemes will be jeopardised by employees being deterred from joining or deciding to opt out. However, we encourage members to stay in the schemes. Unfortunately, the 3% additional contribution is not part of this legislation, so it would be outwith the scope of the Bill to table amendments on that or to debate it. That is a great shame.

It is important that annual benefit statements include not only the employee’s contribution, but the employer’s contribution, as set out in the new clause. If the defined benefit schemes are good, there is no reason not to have that level of clarity and transparency. I have no problem with accepting that that should be part of the information that is given to scheme members. I hope that the Minister will accept that.

New clause 3 is one of the most important proposals in this group. The Government promised to implement what is known as the new fair deal, which is one of the most important aspects of the agreement that was reached in the negotiations between the employee side and Government or employer side of the scheme. The new fair deal would ensure that all public service workers who were compulsorily transferred to an independent contractor, be it a private company, a charity or another third sector body, would be entitled to remain an active member of their public service pension scheme. That is a basic requirement and it was a core part of the agreement. We were glad that the Government committed to it.

The Chief Secretary to the Treasury confirmed the Government’s commitment to the new fair deal in a written statement in July, which stated that

“the Government have reviewed the fair deal policy and agreed to maintain the overall approach, but deliver this by offering access to public service pension schemes for transferring staff. When implemented, this means that all staff whose employment is compulsorily transferred from the public service under TUPE, including subsequent TUPE transfers, to independent providers of public services will retain membership of their current employer’s pension arrangements.”—[Official Report, 4 July 2012; Vol. 547, c. 54WS.]

That is an improvement on the current fair deal arrangements, which ensure that outsourced staff receive broadly comparable arrangements to those under the public service schemes. The Government’s promise to implement the new fair deal was central to the rationale and at the heart of why many public service workers agreed to support the new proposed pensions reform, even though aspects of it were detrimental to them.

[Sheila Gilmore (Edinburgh East) (Lab)]

A few months ago in the Open Public Services White Paper, the Government expressed enthusiasm for transferring services to voluntary organisations and social enterprise—we have not heard so much about that recently. If that is to work, however, is it not particularly important to have the proposed provision on pensions?

[Chris Leslie]

Many public service workers whose services have been transferred to independent providers, whether they have been outsourced, find themselves in the voluntary sector or wherever, still want to ensure that their deferred wages—that is what pensions are—will be protected in a particular way. That was a positive development in the negotiations, but to what extent has such protection found its way into the Bill? That is why the Opposition are concerned and have tabled new clause 3.

[Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)]

The hon. Gentleman will know that the fair deal arrangements introduced in 1999 by the Labour Government were not statutory. Why was he happy to support and serve in a Government who had a non-statutory approach to the fair deal, but in opposition he seeks to make that approach statutory?

[Chris Leslie]

The situation now is different because of the level of trust on which public service employees feel tested when looking at significant changes by the Government. Employee contributions were unilaterally increased by 3% without consultation or discussion—that was simply imposed, even though Lord Hutton was putting measures through. The evaluation arrangement was unilaterally changed from the retail prices index to the consumer prices index. A typical public service employee must have said, “Hold on a minute. Are we supposed to just take this on faith? We are glad that the Government are in negotiations, but as we know, Ministers are here today and gone tomorrow.” In no way do I cast aspersion on the Economic Secretary who I am sure will remain on the Front Bench in days to come. However, we cannot simply rely on statements from particular Ministers at a particular point in time.

[John Healey (Wentworth and Dearne) (Lab)]

My hon. Friend is absolutely right about trust, which is critical following the experience of many public service workers and Government decisions on pensions. Does he not underplay the importance of the fair deal? He described it as a positive development in the negotiations, but for many public service workers and their unions it was not just a positive development but a deal maker that allowed them to accept a package which, as he said, was detrimental in other areas. It was important that people took that provision as a clear guarantee, but doubt has now been cast on it, which underlines the importance of including it in the Bill and therefore the importance of new clause 3.

[Chris Leslie]

My right hon. Friend is correct. When we get a sense of the Government pulling the odd thread here or there or watering down elements of the provision—if I may mix my metaphors—it is no wonder that people start to question whether the words of Ministers at a particular point in time will carry through into what should be a 25-year commitment as set out in legislation. The provision was part of those negotiations but it has not found its way into the Bill.

Even more worryingly, the Economic Secretary made some peculiar statements in Committee about something that we thought was a done deal. He said:

“it is important that we consider in full the views of all stakeholders, including of course those who will be affected, through further consultation before making a final decision on the issue. It would therefore be inappropriate to include the fair deal policy in the Bill.”––[Official Report, Public Service Pensions Public Bill Committee, 22 November 2012; c. 459.]

It is as though negotiations had not been completed or decisions reached. Indeed, it sounded very much as if the Government were reneging on their commitment.

The Government need to lay to rest any suggestion that they are going back on their promise, and the only way to do that is to accept new clause 3. Failure to do so risks reopening debates and potential disputes with public service workers who will—justifiably—feel they have been misled.

[John McDonnell (Hayes and Harlington) (Lab)]

Part of the concern and need to write such provisions into the Bill comes from the fact that no one predicted clause 3. It has been described as a Henry VIII clause, as it gives sweeping powers to Ministers to legislate on schemes through statutory instruments or even retrospectively.

[Chris Leslie]

Indeed; we will debate some of the worst aspects of clause 3 later. It feels as though when writing the Bill Ministers did not consider it as enshrining an arrangement involving give and take on both sides. They have included certain things to the advantage of the employer, but there are scant—if any—safeguards of sufficiency and longevity for the employee, and that is causing anxiety.

[John Healey]

My hon. Friend is making an important argument in response to the intervention by my hon. Friend the Member for Hayes and Harlington (John McDonnell). It is not just that the Bill includes certain things that advantage employers; the measures are principally to the advantage of the Treasury, which is given the whip hand and ultimate say over schemes that should be run by their members and managers accountable to them.

My hon. Friend quoted the Economic Secretary in Committee. When the Minister rises to his feet, is it not important that he explain the discrepancy between what he said in Committee and what the Chief Secretary to the Treasury said to this House in December last year? He said:

“Because we have agreed to establish new schemes on a career average basis, I can tell the House that we have agreed to retain the fair deal provision and extend access for transferring staff.”—[Official Report, 20 December 2011; Vol. 537, c. 1203.]

There is a big difference between those two statements and the Economic Secretary needs to explain himself on that point.

[Mr Speaker]

Order. Before the hon. Member for Nottingham East (Chris Leslie) replies, let me say that although I have indulged the right hon. Member for Wentworth and Dearne (John Healey) on this occasion I hope he will not repeat such a long intervention. I do not want him to induce the hon. Member for Corby (Andy Sawford) into following bad habits. That would be a very undesirable state of affairs.

[Chris Leslie]

It may be a bad habit but it was a jolly good intervention. I do not often do this, but I commend my right hon. Friend for quoting the Chief Secretary to the Treasury. What is the difference between the Chief Secretary and the Economic Secretary? Well, one is a Liberal Democrat and the other a Conservative. However, my right hon. Friend should take that with a pinch of salt, as I too have a quote from the Chief Secretary, who said that

“establishing a relationship of trust and confidence between the Government and public service workers is critical to the success of these reforms.”

How long will this coalition Government persist? What we need is not just a commitment from a Liberal Democrat Chief Secretary to the Treasury whose parliamentary and ministerial career might not endure. We need to know what would happen should there be the dreadful set of circumstances of a Conservative majority Administration. Would a promise on the new fair deal, given only verbally by Ministers, endure in such circumstances?

Given the Minister’s trajectory and career momentum, I want to hear a commitment from him to the new fair deal on behalf of the Conservative party. That might mean something, although I would still prefer to see it in the Bill. It would be invidious for the Government to speak against new clause 3, let alone vote against it if we decided to test the opinion of the House. I am conscious of the time so I will move on.

Amendment 11 relates to issues of local government workers in Scotland and would exclude the Scottish local government pension scheme from the Bill, unless agreed to by the Scottish Parliament. Primary legislation on public service pension schemes has always been reserved to the UK Parliament. Scottish Ministers have had responsibility for regulations for public service schemes but those have been subject to Treasury approval and have tended to mirror arrangements for England and Wales. The exception is the Scottish local government pension scheme, which is a funded scheme that has not been subject to Treasury approval in the past. The Bill extends certain prescriptions to the design of the Scottish local government pension scheme that, in practice, have previously been left to Scottish Ministers to negotiate and decide—most importantly, they negotiated and decided on normal pension age; that benefits should be based on career-average revalued earnings and not final salary; on the cost cap, as it is known; and on rules for governance and fund valuations.

13:30

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Does the hon. Gentleman agree that, if the Scottish Government can find the ways and means to fund their pensions, they should be free from penalties from the Treasury at Westminster?

[Chris Leslie]

That comes down to how the legislation is drafted. There are different financial consequences for local government pension schemes than for other public service pension schemes. That is why we need clarity in the legislation. I am conscious that the Scottish National party Government in Scotland have argued that there is no need for a legislative consent motion to cover the matter because, in theory, the UK Parliament always had primary legislative power over the local government pension scheme in Scotland but has hitherto chosen not to use it. The Government in Scotland have been quick to accept the UK’s proposals, which is unusual, because they normally argue that more power should sit with Holyrood. The movement of the regulation-making powers means that the Scottish Government will not need to grapple with difficult decisions on the reform of certain pensions, but the Opposition feel it would be better for Members of the Scottish Parliament to have an opportunity to scrutinise and debate the application of the legislation to the local government pension scheme in Scotland. Amendment 11 to clause 3 would mean that the Bill would not apply to the local government pension scheme in Scotland unless that is explicitly approved by the Scottish Parliament. The hon. Member for Banff and Buchan (Dr Whiteford) and others have tabled parallel amendments—I gather they are in the third group, so we will probably return to this debate later.

Amendment 12, which is in my name and that of my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson), relates to another key Government promise made to public service workers. It seeks to enshrine in the legislation another Government promise made to public service workers—the Government promised that their final salary schemes would be replaced with career-average revalued earnings schemes. That would ensure that public service workers continue to receive a defined benefit pension.

The Bill does not explicitly honour that promise, and clause 7 provides that schemes created under the Bill can be defined benefit or defined contribution schemes, or any scheme of any other description. That is fundamental to the arguments on the Bill, but it is also fundamental to the arguments that Hutton made and the agreements that were reached. All schemes were supposed to be succeeded by career-average defined benefit schemes. In some cases, the Government might like to continue small defined contribution schemes, but the amendment would not affect those; it would apply only to final salary schemes and ensure that they are replaced with another defined benefit arrangement. The amendment therefore simply seeks to put the Government’s promise to public service workers on a statutory footing.

A similar amendment was opposed in Committee, but the reasons given by the Minister were concerning. He claimed that the Government intended to replace the final salary schemes with career-average schemes, but that “the flexibility embedded in” the Bill

“could be helpful to scheme members in future.”

He added that

“it would not be appropriate for this Government to tie the hands of future generations and pension scheme members who might decide that, subject to the protection offered by the enhanced consultation and reporting obligations of clause 20, defined benefit schemes were no longer the most appropriate for public service workers.”––[Official Report, Public Service Pensions Public Bill Committee, 13 November 2012; c. 291-92.]

That is not the first time we have heard the Minister’s bizarre argument that legislation could bind the hands of future Governments. No Government can bind the hands of their successors in that way. Unless the Minister has an insight into changes in the democratic process of which we are unaware, that remains absolutely the case.

Therefore, the argument that clause 7 provides welcome flexibility to scheme members now or in future is, in the Opposition’s view, potentially misleading. In the rare circumstances that a defined contribution scheme is better than the defined benefit one, and scheme members and the Government wish to change schemes to defined contributions schemes, clauses 19 and 20 allow that to happen. Clause 7 provides no flexibility that does not exist in clauses 19 and 20. If we do not make the amendment, we allow the Government to go back on their promises. We seek to keep them to their word on those arrangements.

I know that many hon. Members wish to speak to proposals in this large group, so I shall make my final point on the question of closing local government pension schemes. My hon. Friend the Member for Corby (Andy Sawford) and the hon. Member for Finchley and Golders Green (Mike Freer), among others, have had extensive experience of local government schemes. In Committee, there was anxiety that the Bill mentions closing existing LGP schemes and beginning new ones. The problem with closing schemes is that there can be unintended and adverse consequences. We heard in Committee about triggering debts which might need to be crystallised on closure. Of course, not just big local authorities but small academies, charities and others are members of such schemes. They might find that they suddenly need to shell out one great lump of money simply because an existing scheme closes and the deficit needs to be dealt with there and then.

The Minister assured us that regulatory provisions did not require such crystallisation, and that there could be protections. The Opposition are not massively happy with that, but even if we accept the Minister’s word that closure does not mean closure, thousands of employers in the local government pension fund have individual admission agreements governing the terms of their participation—the agreements are not necessarily in a standard form, meaning that there could be thousands of different admissions contracts for the schemes. It is likely that at least some of the agreements will set out various powers for local authorities in the event of closure, including the power to collect a debt from the employer equal to its share of the scheme’s deficit. That would put a massive strain on participating employers and could put some of them out of business.

The Minister gave assurances on some of those points in Committee, but he missed the problem that the Bill allows local authorities to close their funds. The Government cannot prevent them from doing so under the Bill. The problem of triggering debts therefore remains substantive. There is also the question of whether closure means closure or continuing a scheme. The Opposition believe that a different approach is needed and that the Bill needs better drafting, which is why we have tabled amendments 20 to 28. We are not trying to add costs to the public purse and are keeping the Government’s proposals, but we are saying that it would be better to amend an existing scheme rather than to close and reopen it. They are in some ways technical proposals, but it would be better to err on the side of caution and provide that new regulations can amend scheme rules to ensure that all future benefits are accrued according to the provisions of the Bill and negotiated arrangements.

Those are essentially my comments on the Opposition’s proposals. My hon. Friends and others have tabled amendments in this group, but I shall let them make the case for them.

[Mr Gibb]

I rise to speak briefly to Opposition new clause 3, which is on fair deal arrangements. Hon. Members will be aware that fair deal arrangements were originally addressed by Lord Hutton in his interim report in October 2010. Hutton was concerned that the arrangements at that time created barriers to the plurality of public service provision. He said:

“At present, when employees are transferred to non-public service bodies, the organisation they move to is required to ensure that there is ‘broadly comparable’ pension provision for future service, through the Fair Deal provisions…This arrangement has maintained the level of pension provision for those compulsorily transferred out of the public sector. However…this can make it harder for private sector and third sector organisations to provide public services because providing a ‘broadly comparable’ defined benefit pension scheme can be significantly more expensive and risky for private sector organisations than for public sector employers.”

That was the starting point of the debate. In box 1.A—a shaded box, the hon. Member for Nottingham East (Chris Leslie) will be intrigued to know—Lord Hutton concluded:

“Ultimately, it is for the Government to consider carefully the best way of moving forward with Fair Deal in a way that delivers its wider objective of encouraging a broader range of public service providers while remaining consistent with good employment practices.”

[Andy Sawford (Corby) (Lab/Co-op)]

My principal concern, fresh from the doorsteps of Corby, is for the many individual members of the pension scheme. In his extensive piece of work, Lord Hutton considered the future of public service reform and the relationships between the public and private sectors. What I am most concerned about in the debate today and in supporting the amendment tabled by my hon. Friend the Member for Nottingham East (Chris Leslie) on the fair deal, is giving an assurance to those individuals in Corby and East Northamptonshire—cleaners and nurses and so on—that the goalposts will not be constantly shifted away from what they expect from their pension. From the 3p in the pound change to the RPI to CPI change, they feel buffeted by huge changes that are really affecting them at the moment. That is why we need the assurance in the Bill.

[Mr Gibb]

I congratulate the hon. Member for Corby (Andy Sawford) on his election to the House. His intervention indicates the seriousness with which he takes his new role. I am grateful for that and I take his point. All of us on the Government Benches want to ensure that we have sustainable, good-quality defined benefit pensions in the public sector, but to achieve that there has to be major reform to public service pensions for a raft of reasons to do with longevity, cost, poor performance of the stock market in the past 12 years and tax changes that occurred in 1997. For all those reasons, if we are to have good-quality, defined benefit pensions for public service employees, there have to be major reforms.

The Government have been clear, open and transparent in the negotiating process, and an ample number of documents are circulating that set out precisely the conclusion to the negotiations, not least the proposed final agreements. The idea that without changing primary legislation the Government can somehow slip through major changes to the quality of benefits to the employees, which the hon. Gentleman is talking about, is just not in the real world. All Governments have to behave reasonably, and this Government are no different from any other. Not only have they behaved reasonably in these negotiations, but, I believe, they have given rise to high-quality public service pension arrangements that offer benefits way beyond the arrangements in the private sector. That is a sign that the Government recognise the important contribution that public sector employees make to our society.

I point the hon. Gentleman to the consultation on the new deal that took place between March and June 2011. That was a broad consultation, to which there were more than 100 responses. In July this year, in a written ministerial statement, the Chief Secretary to the Treasury stated:

“the Government have reviewed the fair deal policy and agreed to maintain the overall approach, but deliver this by offering access to public service pension schemes for transferring staff…this means that all staff whose employment is compulsorily transferred from the public service under TUPE…to independent providers of public services will retain membership of their current employer’s pension arrangements.”—[Official Report, 4 July 2012; Vol. 547, c. 54WS.]

That is on the record and should provide the hon. Gentleman and the rest of the House with the assurance they need.

[Chris Leslie]

We hear what the Liberal Democrat Chief Secretary to the Treasury says, but can the hon. Gentleman, as a Conservative MP, give us a guarantee that that would also be the case under a future Conservative Government?

13:45

[Mr Gibb]

Alas, I no longer speak on behalf of the Government, but that is a commitment given by Ministers of this coalition Government. The hon. Gentleman is trying to create a division between the Conservative party and the Liberal Democrats in our approach to public service pension reform, and there is no such division. There is no such difference in attitude between the two parties on public service reform.

[John Healey]

I rise to support the hon. Gentleman. Unlike my hon. Friend the Member for Nottingham East, the House and the public have a right to take at face value the words of a Chief Secretary—a Chief Secretary is a Chief Secretary is a Chief Secretary. That is a statement of Government policy and of coalition Government intent. Therefore, I think the onus is not on the hon. Gentleman, but on the Economic Secretary to the Treasury to explain why his statement is different from the Chief Secretary’s statement.

[Mr Gibb]

I listened carefully to my hon. Friend and to the Chief Secretary and I did not find any difference. My hon. Friend was addressing whether particular matters should be in primary legislation; the Chief Secretary was setting out the case for the policy.

On teachers’ pensions, there was anxiety that the current arrangements, under which teachers in the independent sector can be members of the teachers’ pension scheme if their employer signs up to the scheme, might be put in jeopardy by the words of Lord Hutton’s interim report, so the Chief Secretary’s statement was welcome news to teachers. Paragraph 8 of the proposed final agreement states:

“the Government agrees to retain Fair Deal provision and extend access to public service pension schemes for transferring staff. This means that all staff whose employment is compulsorily transferred from maintained schools (including academies)…under TUPE…will…be able to retain membership of the Teachers’ Pension Scheme when transferred.”

That is welcome news. The agreement goes on to state:

“The Government’s decision on Fair deal means that…independent schools which already have access to the Teachers’ Pension Scheme will continue to do so (for existing and new teachers); and new teachers and independent schools will continue to be able to join the scheme under the existing qualifying criteria.”

When we debated the issue in Committee, the hon. Member for Nottingham East conceded that the new fair deal

“is an improvement on the current fair deal arrangements”,

but, as he has just now, he complained that

“the promise does not appear in the Bill.”––[Official Report, Public Services Pensions Public Bill Committee, 22 November 2012; c. 458.]

He will be aware, however, that the fair deal arrangements were non-statutory when they were introduced in 1999, and that they remained non-statutory when they were revised in 2004. Notwithstanding the fact that the new fair deal arrangements are an improvement on the old ones, if it is good enough for a Labour Government for the policy to be non-statutory, it ought to be good enough for the hon. Gentleman. As my hon. Friend the Minister made clear in Committee, the recently published Government response to the fair deal consultation included draft guidance setting out how the new policy would work in practice. Given all the public statements by my hon. Friend the Chief Secretary and the published guidance and consultation documents, the hon. Gentleman should be assured by the commitments given.

[Chris Leslie]

Does the hon. Gentleman not understand the sense of anxiety that many public sector employees feel? Their trust was shattered because of the unilateral decisions on RPI to CPI and the 3%. They are saying, “Don’t we need more safeguards?” Can he understand why they would want safeguards now that might not have been necessary in the past?

[Mr Gibb]

Of course, that is an assertion by the hon. Gentleman. I do not recognise that crushing of confidence. What the Government had to do when they came into office was tackle a huge public sector deficit of £156 billion, and they have done that. As a consequence of the difficult decisions the Government have taken, the capital markets have been assured that the Government are getting the public finances under control. That itself should assure beneficiaries of public service pensions that the Government will put the public finances in a stable condition and so avoid the need for the sort of draconian changes to public service pensions being implemented in other European countries as they seek, rather belatedly, to tackle their public deficits.

[Sheila Gilmore]

Why does the hon. Gentleman think that that is a comfort, given that, as far as we can see, the Government’s deficit reduction plans are failing and debt is rising? In the light of that, many public service workers might well expect another bite at the cherry.

[Mr Gibb]

I fear that we are straying slightly from new clause 3 and the group of amendments, but I believe that the Government’s economic strategy is right. It is a judgment call, but one that I believe has been proven right by the fact that the Government’s borrowing cost for 10-year bonds, as they seek to fund the deficit, which has been reduced by a quarter over the last two and a half years, is 1.8%. That is a tribute to the difficult judgments Treasury Ministers have made, and they should be given credit for their achievements. As a consequence, however, there have had to be increases in the contribution rates of active members of public service pension schemes. In addition, Lord Hutton believes that even if there was not a deficit, major reform of public service pensions would still be needed, if they are to be sustainable in the long run.

The Government’s commitment to sustainable public finances is of more concrete value than a proposal from a party with a track record of undermining the public finances. Ultimately, in a pay-as-you-go public service pension scheme, the quality and assurance that members want will depend on the ability of the Government to maintain stable public finances.

[John McDonnell]

I rise to speak to the amendments in my name: amendments 4, 7 and 8.

Throughout the progress of the Bill, I have tabled a series of amendments with a central thrust—the same one raised by my hon. Friend the Member for Nottingham East (Chris Leslie)—which is about trust. The amendments would ensure that at each stage and for each grouping, there would be full consultation with and the full involvement of representatives of employees and scheme members. I apologise: I should have declared an interest as a member of the local government pension scheme. Nevertheless, each amendment would address the issue of confidence and secure a recognition, as promised by the Government, that employees will be fully consulted and represented and kept fully informed of changes to their pension schemes, which has not been the case up to now.

It is worth remembering that the pension deal was not a deal for a large number of unions; for more than 1 million workers, it was imposed. The Northern Ireland Public Service Alliance, the National Union of Teachers, the Public and Commercial Services Union, the Prison Officers Association, the University and College Union and Unite did not agree to the deal or the heads of agreement; instead, the deal was imposed upon them. There is deep scepticism amongst workers, and if Government Members do not recognise that, they are not living in the real world, or encountering the same constituents I am, or receiving the letters I get from police officers, teachers and local government workers across the piece.

Even organisations that signed up to the heads of the deal are now expressing concerns. The British Medical Association, whose briefing Members will have received, thought it had signed up to an assurance from the Government, which I remember being made, that there would be a 25-year guarantee of no change around a number of protected issues. The Government said:

“This means that no changes to scheme design, benefits or contribution rates should be necessary for 25 years outside of the processes agreed for the cost cap. To give substance to this, the Government intends to include provisions on the face of the forthcoming Public Service Pensions Bill to ensure a high bar is set for future Governments to change the design of the schemes. The Chief Secretary to the Treasury will also give a commitment to Parliament of no more reform for 25 years.”

Yet clause 3, described in briefings by the Royal College of Nursing, the BMA and others as a Henry VIII clause, gives extraordinary powers to the Secretary of State to return to these issues, introduce further reforms and make fairly significant changes through statutory instruments, not primary legislation to be debated in the House. Consequently, there is a lack of confidence in the words of Ministers, particularly given that, as my hon. Friend the Member for Nottingham East said, those words are contradictory, not just across Government, but within the same Department. It is extraordinary.

Others also signed the deal. The RCN wrote to us explaining its concerns:

“Clause 3(3) is a Henry VIII clause which enables the Government to amend the Act at a later date through the use of secondary legislation. The RCN is concerned that, as a result, the Bill gives powers to the UK Government to amend and make retrospective provisions to any other related legislation without sufficient member consultation or scrutiny by Parliament.”

I also received a letter from Mary Bousted of the Association of Teachers and Lecturers, which also signed up to the deal. She wrote:

“As you may know, the ATL accepted the Government’s proposed final agreement on changes to the teachers pension scheme as the best that could be achieved through negotiations. We now find the Bill contains additional elements that go beyond what was agreed in March 2012 and believe that the proposed changes could adversely and unfairly affect the quality of education that the nation’s children receive in our schools.”

[Andy Sawford]

Is my hon. Friend aware of the concern among police officers, highlighted last week in an excellent Westminster Hall debate led by our right hon. Friend the Member for Leicester East (Keith Vaz)? Many police officers feel that the arrangements they have made for their later life and approach to retirement—for doing things such as helping their children to get into housing or paying their university fees—have been completely undermined by changes that have pulled the rug from under them right at the end of their working life, after they have made an incredible contribution to keeping our communities safe. It is those kinds of people we must think about today as we make these changes. As my hon. Friend says, we must give them much greater confidence and assurance.

[John McDonnell]

I fully concur with my hon. Friend. I received—perhaps he did too—an e-mail from Inspector Nick Smart, who wrote:

“I am a serving police inspector in West Yorkshire of 17 years. I am about to see my life plans thrown into chaos with the proposed pension changes, with my retirement age extended by at least two years plus a 20% cut in my lump sum—about £40,000—and a significantly worse annual pension.”

It is no wonder that people are demoralised and do not trust the Government. They thought there was at least a 25-year guarantee, but we now know that that is not the case, because the Government are giving themselves the power to change schemes at will in the future.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman, like other hon. Members, will be aware of the indication that teachers will be asked to pay 50% of their contributions up until 2015, and they are not even safeguarded beyond 2015. Does he agree that, if the Government are not careful, they will create a breeding ground for discontent among teachers?

[John McDonnell]

Exactly, but I think it is across the piece. Whether or not we agreed with the last negotiations, or whether they were imposed or signed up to, at least some people felt there was some security for the future. People are becoming demoralised, which is why it is important that we insert in the Bill provisions for full consultation and agreement with organisations representing employees and for full openness and transparency. That is why new clause 3, moved by my hon. Friend the Member for Nottingham East, is critical. As has been said, at least in the private sector there is full display and transparency in what people sign up to, but there is no display or transparency in the public sector, particularly now that the Government have given themselves these powers.

[Mr MacNeil]

Given the comments about the police pension scheme, I am sure the hon. Gentleman understands the wish of the Scottish Police Federation that police pensions be controlled independently in Scotland. For England and Wales, however, does he feel that in future Governments should act more morally in relation to the terms of agreements that were made years before and under which police officers expect to retire, while also understanding, of course, that in Scotland they want clear of the system?

[John McDonnell]

I can fully understand the feelings of police officers in Scotland, as I can those of officers across England and Wales. People now just want safety and security in their pensions, which are theirs—they have paid for them and contributed to them. As my hon. Friend the Member for Nottingham East said from the Front Bench, they are nothing more than deferred wages.

13:59

[Richard Fuller]

I am intrigued by the hon. Gentleman’s point. He is absolutely right that firefighters, prison workers, doctors and nurses contribute to their pensions, but so do taxpayers. Indeed, a considerable amount of most public pensions is paid for by the taxpayer. If he wishes to push the point about certainty, does he agree that the Government should have considered a fully funded pension scheme, rather than rely on future taxpayers to pay for future pensions, with all the uncertainty about whether they will be able to afford it? Should the Government not have grasped the nettle and gone for a fully funded pension scheme now?

[John McDonnell]

The local government scheme is fully funded, yet the Government seek to interfere with that, too. If we are to open up the debate, let us do so; however, the Government seem to be making piecemeal reforms for their own economic objectives and then not even standing by them. The problem is the uncertainty.

Let me turn to the detail of amendment 4. As those of us who have been involved in pension negotiations will know, one of the most important elements is ensuring that the valuation process is right, because that is what determines not just the future payouts from the scheme, but its future security; there are also probity issues. I am concerned that the legislation as drafted would give no role to employees or their representatives in the revaluation system. My amendment 4 is a mild-mannered amendment to provide that the valuation report should be sent not just to the scheme manager and the employer, but to the employees’ representatives. That would promote at least some openness and transparency, which might reassure participants in the scheme.

Few pension decisions are more important to employees than the contribution levels, which stem from the valuation process. We have seen a unilateral change in contribution rates, which I think, to be frank, will deter many people from participating in those schemes and may throw the long-term future of those schemes into jeopardy. If there has been a valuation, the report should be sent to the employees’ representatives. It should be open and transparent, and it should then be possible to have a discussion about the valuation. That is what amendment 4 seeks to do. It simply says that the report should be sent not just to the scheme manager, but to the employee representatives, and that the terms of the revaluation should be mutually agreed. It is simply about participation.

[Richard Fuller]

Would the hon. Gentleman, like me, put this issue in the same area as transparency and giving information to people in pension schemes, which will help people to make better judgments? Just as we heard when new clause 2 was being moved, the provision of information about what is in their pension or how that is assessed helps people to make rational decisions.

[John McDonnell]

That is exactly right. There has to be openness and transparency. The point has already been made, but some of us will now have to go out there and campaign to keep people in these schemes. The way to do that is by having openness and transparency about what they are paying in, the benefits being made and, I agree, the overall contribution made by taxpayers.

I fear for the future. We have seen the Fire Brigades Union survey of what would happen if there were increases in pension contributions to those workers’ scheme and also a reduction in benefits. Some 30% told the survey that they would question whether they wished to continue in the scheme. A 30% withdrawal rate would undermine some of those schemes. That is why openness and transparency are important. One of the key areas for openness and transparency is in the valuation process, with the terminology and methodology agreed with the employee representatives, so that they have confidence that the process is being conducted fairly, openly and, to be frank, professionally. In addition, once the revaluation is done, the report should be provided to the employee representatives. I can see nothing in that with which the Government could disagree.

[Mark Durkan (Foyle) (SDLP)]

The hon. Gentleman is right that many of us might well have to campaign to ensure that people invest in and stick with these schemes, but even if we get valuation and transparency right, is there not a “There’s a hole in the bucket, dear Liza” syndrome with these Henry VIII powers? People will say, “You can say all that, but you can’t promise that it will be so when I reach pension age.”

[John McDonnell]

I fully agree. What concerns me is that the Henry VIII powers in clause 3 are retrospective. This is another reason why the valuation process is so critical: if there is not full openness, transparency and consultation, in particular with employee representatives, the Government could in future use the valuation process to withdraw some of the benefits of the scheme or increase the contributions retrospectively. People can sign up to a scheme and pay into it for 20 years, but then be told that the benefits are different—although I think that will be tested in law, because I believe that legally we are talking about accrued rights that are protected under European legislation. The Government do not accept that argument, but it is a critical point. That is why I have tabled my amendments. The Government underestimate the anxiety and fears out there—particularly among trade unions, but also in other organisations—which arise from the lack of confidence in the future management of the schemes in the best interests of employees and members.

Let me turn to my amendments 7 and 8. The Government’s reform was meant to change the nature of the schemes, so that they would be based on career averages, exactly as my hon. Friend the Member for Nottingham East said from the Front Bench. However, that is for a defined benefit scheme, not a defined contribution scheme, yet the Government have not committed themselves to that in the legislation. That is why I have tabled amendments 7 and 8, so that where a scheme is rearranged or staff are transferred into a new scheme, they must be defined benefit schemes, because that is what was promised in the negotiations with the trade unions. It is argued that we are binding future Governments, but all legislation is meant to bind future Governments, and any future Government could revisit this matter. At the same time, we need to try to give at least some security and ensure that the promises given by the present Government are adhered to. That is not much to ask, and it is all my amendments are designed to do.

[Mr MacNeil]

The hon. Gentleman puts his finger exactly on the issue: insecurity for future pensioners. That, combined with ever-growing inequality in our society and the economic multipliers that we might see operating, means that people who are now living quite comfortably might be facing penury in their old age, due to the root insecurity at the base of this Bill, which he is doing a good job of exposing.

[John McDonnell]

In part, this is linked to other reforms that the Government are introducing—my hon. Friend the shadow Minister touched on this. Where changes have been made to the delivery of public services—some of this relates to outsourcing, reorganising government or delivering direct services through new Government agencies or public bodies—people understood that there would be a commitment from the Government that they would be transferred into the same scheme they are in now, which would be a defined benefit scheme. That is not in this Bill, which is why I have tabled my amendments.

The amendments put the onus on whatever bodies are established—non-departmental public bodies or whatever—to ensure that they offer a defined benefit scheme. If they do not, they are breaking the commitment that the Government gave. In addition, it will create a disincentive. When staff transfer, they transfer into the new scheme that will be established. Many people now in a defined benefit scheme—whatever its nature, whether final or average salary, although we are moving towards average salary—fear that if at some stage they move, they will be offered only a defined contribution scheme. That is why I want more certainty in the legislation. The amendments propose that whatever happens in the future, whatever restructuring the Government bring in and whatever new schemes are established, the Government will adhere to their promise that there must be a defined benefit scheme. I do not want to be cataclysmic about this, but if that does not happen, the legislation could undermine the whole provision of public service pensions. People could start to withdraw from the schemes because they did not have the certainty that they thought they had when they entered them.

The amendments might seem relatively minor, but they are absolutely key. If we do not bring the employees with us, if we do not consult their representatives, if we do not involve them in the valuation process and if we do not stand by the guarantee of a defined benefit scheme that they have been given, we will break down people’s confidence in the public sector pensions system overall, and we will certainly break down their confidence in this Government’s ability to adhere to their promises. This is not the 25-year guarantee of no further reform that we were given from the Dispatch Box only a matter of weeks ago.

[Robert Neill (Bromley and Chislehurst) (Con)]

I am always delighted to follow the hon. Member for Hayes and Harlington (John McDonnell). He and I have been circling around issues of local government finance and pensions for—

[John McDonnell]

For more years than I can remember.

[Robert Neill]

I have worked it out; it must be well over 30 years in chambers of one kind or another around London. We do not always come to the same conclusions, but I take on board the expertise that he brings to this topic. I agree with his point that it is important, when dealing with the schemes that he and I have been involved with, to give the members of the schemes an assurance that they will have a secure pension in future.

I have spent most of my life dealing with the local government pension scheme, and I am going to talk about that today. Indeed, I should declare an interest as a member of that scheme. I recognise that change often raises concern and creates a measure of insecurity, and it is the job of those of us who have governance of these schemes, locally and nationally, to deal with that. As my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb) pointed out, however, the biggest cause of insecurity and the biggest risk to scheme members would be the lack of a secure financial basis for the future of the scheme. That is why the Government’s reforms are necessary; that is the most important reassurance that we can give to people.

There are other important points that we can take on board in the context of the amendments, and I want to talk about the local government schemes in particular. It has already been recognised in the House that they fall into a different category because of their substantially funded nature, which places them in a different position, and because of the considerable diversity within the sector. There are a number of schemes involved, and they generally have a good management track record and a system of management that creates transparency and democratic accountability. I hope that we can ensure that the regulations that will finally embody the schemes will recognise those differences.

I agree with the right hon. Member for Wentworth and Dearne (John Healey) that we should take at face value the assurances given by those on the Treasury Bench, and I have no hesitation in doing so. I put it as gently as possible when I say that there has been a degree of needless raising of concern among scheme members, perhaps—dare I say it?—for partisan reasons. That is unhelpful.

[John Healey]

The hon. Gentleman is urging us to take at face value the statements from those on his Front Bench. Let me tell him what the Economic Secretary to the Treasury said in Committee about the concerns over the fair deal. He said that

“it is important that we consider in full the views of all stakeholders, including of course those who will be affected, through further consultation before making a final decision on the issue.”––[Official Report, Public Services Pensions Public Bill Committee, 22 November 2012; c. 459.]

I put it to the hon. Gentleman that, taken at face value, that suggests that the final decision has not yet been taken, contrary to the agreements reached with the trade unions on pensions reform.

[Robert Neill]

The right hon. Gentleman will know, as a former local government Minister, that there has already been considerable consultation and discussion on the shape of the local government schemes. In any event, there is to be a formal consultation as well. I do not read the same connotations into the Minister’s words as the right hon. Gentleman does. That is not my reading of the discussions to which I was party when I was a Minister. However, the right hon. Gentleman is right to suggest that we should be as transparent and upfront as possible in our discussions with scheme members.

14:15

We need to move from our previous position, which was not financially sustainable, towards a better place. It is perfectly reasonable for my hon. Friend the Minister and his colleagues to be doing precisely that. I hope that, in so doing, they will recognise that the local government employers and unions have come to an agreement that meets the Government’s cost parameters. In my judgment, it also broadly reflects the particular circumstances and differences of the scheme.

I hope that the Minister will be able to reassure us that, even though the scheme will, for perfectly legitimate public policy reasons, require the sign-off of the Treasury, the ultimate shape of the scheme will be strongly informed by the particular expertise that exists in the local government world and among those who advised me in the Department for Communities and Local Government on the particular nature of these pension schemes and the best way to take these matters forward. I am prepared to accept that that can be done, and it is important that it should be done. I am sure that my hon. Friend will be able to reassure us on that point.

The other short points that I want to make involve technical issues. There is still time for us to consider some potential unintended consequences of the legislation, which it would not be inconsistent with the objectives of the Bill to resolve.

[Andy Sawford]

I should have declared my interest as a member of the local government pension scheme when I first intervened. Does the hon. Gentleman acknowledge that one of the technical issues, as those on our Front Bench have pointed out, is that the language we use should allude to the amendment of the schemes rather than to their closure? If the local government pension schemes that are currently in deficit were to be closed, the employers involved would immediately become liable to pay those deficits. That could have a hugely disruptive effect not only on the people receiving pensions now and in the future but on the local authorities themselves and the public services that they provide.

[Robert Neill]

I congratulate the hon. Gentleman on his arrival in the House. I have been dealing with him in the local government world for many years. I did my best to prevent him from coming here, but it clearly was not quite enough! He anticipates one of the technical issues that I was going to mention, and it is perhaps the most substantial one. Chronologically, it is not the first in relation to the Bill, but I might as well deal with it now for the sake of completeness.

I read with care the assurance that my hon. Friend the Minister gave in Committee. I entirely accept that it is not the Government’s intention to create crystallisation. However, I note that the finer details of the proposals are being considered, and we should look carefully at that. The Minister said that there was no requirement for the funds to be wound up, and I accept that, but I hope that he will consider the issues that have been raised by the Local Government Association about legal ambiguity.

I do not doubt that the Minister has no intention of creating a closure that would crystallise the debts of a scheme. That was always the basis on which I approached such negotiations when I was a Minister, and I am certain that nothing has changed in that regard. However, this was one area in which some of the nuttiest legal advice needed to be obtained—[Interruption.] I should have said “knottiest”. There is sometimes a risk of legal ambiguity, and that must be avoided at all costs. I would therefore urge my hon. Friend and his advisers at the Treasury to take on board the work that has been done in the DCLG and other Departments to find a means of resolving this issue. We all know where we want to end up, and I am sure that there is a means of achieving that. I know that the Minister’s skills and abilities will get us there. It is right to point out that some issues still need to be addressed, but they are not insurmountable in the context of where the Government want to get to. It is an important area to clarify to the maximum extent.

The other issue I want to touch on is governance. I hope that the Minister will consider the concerns raised by the Local Government Association and the unions about the lack of segregation between the scheme manager and the scheme board. Again, I do not think there is any dispute between us about where we want to end up, but it is a fact that the local government schemes have a good record in their management and a good record on transparency. When experienced representatives of local government employers raise concerns that the two functions of the scheme manager and the scheme board are difficult to reconcile within the same body, those concerns should not, in my judgment, be lightly dismissed. I note that the Minister sensibly and properly took on board the fact that there are still developments going on here and that proposals are still being developed. I hope that that will continue to be the case, and when he responds to the debate, he may be able to update us and reassure us that continuing discussions will take place with the experts in the local government sector to make sure that we get the best possible design for those matters.

Finally and more generally, I ask the Minister not to be deterred by undue reference to Henry VIII clauses. When I was taking the Localism Bill and the Local Government Finance Bill through the House, if I had £5 for every time I was criticised about Henry VIII clauses, I would have retired to some tax haven as a very rich man. [Interruption.] I probably would not have not done that actually as I enjoy being here so much. However, it is part of the knockabout banter we get here that Oppositions always say that there are excessive Henry VIII clauses, but when one looks back, one finds that when the Opposition move into government, they construct Bills with exactly the same sort of clauses. That is why I urge the Minister not to be put off by that; it is necessary to build in the flexibility that such clauses provide in any piece of legislation of this kind. What are important are the statements of intent about the manner in which those clauses should be used. I am sure that the Minister will be able to reassure us on that.

[Mr MacNeil]

What the hon. Gentleman said gives me the opportunity to peg in as a general point the fact that this debate is set against a backdrop of mood music that pensions are spiralling and are actually increasing, but the effect of the Bill is not to arrest pensions, but to cut them and to cut net contributions to pension schemes by 0.1% of gross domestic product, which is what the Government are saving. That, of course, is taken out of the pockets of many people who have worked hard for many years in our public services.

[Robert Neill]

The hon. Gentleman and I once worked out that we might have a very, very, very—however many “verys” we put into it—distant relative in common, but with every gentleness and respect, I would have to tell him that we do no good service at all to our public services by being unrealistic about the affordability of pension arrangements.

I talked about the intent with which we approach these matters and about honesty, transparency and being frank about the financial realities that underpin the schemes. This measure is a critical part of that. The most important service we can provide is to be frank and to produce a scheme, which I am satisfied the Bill does, that is financially sustainable for the future. We have talked about the technical issues, but the overall thrust of being financially honest about the affordability of our public sector pension schemes is absolutely critical—and the Government have got that right.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I begin by expressing my gratitude to the Clerks and to Mr Speaker for their forbearance in ensuring that the amendment tabled in my name is debated in the most appropriate group this afternoon. That said, there is but one lonely little amendment—amendment 32, which would amend clause 16—in my name in this group. In some ways, it is a very technical and practical amendment, but it would allow for the closure of existing Scottish schemes by 1 April 2016 instead of 2015. It would put these reforms on a much more realistic time scale.

I am sure Members will be aware that the Scottish Government have devolved executive competence for a number of aspects of a number of Scottish public sector pension schemes. There have been considerable delays in establishing exactly what flexibilities are open to the Scottish Government in those areas for which they have responsibility, and it has been difficult to gain clarity over what that process might look like. That has obviously had an impact on the negotiating process.

Gaining clarity has happened in an extremely piecemeal fashion. Back in March 2012, Ministers initiated partnership negotiations with employers and trade unions about the pension schemes of the NHS, teachers, police and firefighters. On 28 March, a letter arrived from the Chief Secretary to the Treasury—I am sorry he is not with us for this debate—setting out some new constraints regarding the links between normal pension age and state pension age, which we will debate later. In May, there was more communication from the Chief Secretary, who informed the Scottish Government that they would require explicit Treasury consent for cost-sensitive changes to the teachers or the NHS schemes, and in July the Scottish Government were informed that the UK Government wanted to extend the Bill to non-departmental public bodies and Scottish judicial offices. At that stage, there was still no clarity on flexibilities relating to the pension age requirements, which everyone knows is a key sticking point in the negotiations.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I understand the hon. Lady’s point and I know that some of the trade unions have commented on the matter. Is she aware of the correspondence between the Chief Secretary to the Treasury and the Scottish Government in October, in which the Scottish Government were invited to suggest some amendments to the Bill? Is her amendment one of those that the Scottish Government suggested to the Chief Secretary or to other Ministers?

[Dr Whiteford]

I am afraid that I am not privy to the Scottish Government’s processes on this, so I cannot answer the hon. Lady’s question with any certainty whatever. What I can say is that the Scottish Government got clarity only a few weeks ago on the extent to which they can deviate from the proposals for England and Wales, and that the degree is quite limited indeed. I think the Scottish Government will have some flexibilities on accrual rates and some revaluation bases.

[Mr MacNeil]

Will my hon. Friend give way?

[Dr Whiteford]

I will not give way to my hon. Friend at the moment because I want to make some short remarks in this part of the debate, and save my fuller comments for later.

The Scottish Government also require explicit consent from the Treasury for any cost-sensitive changes to the NHS or teachers schemes.

Will the Minister accept my amendment and recognise how tight the time scales are, given the complex range of responsibilities—varying responsibilities relating to different schemes—and how tough the negotiations are? Not all partners to the negotiations even accept the need for this set of reforms. In 28 months’ time, when the provisions would otherwise commence, the Scottish Government would have had not only to complete the negotiations and prepare and pass legislation, but ensure that the employers and scheme administrators could prepare their systems and processes before the 2015 deadline.

This is a very technical amendment in some respects, but it is a very important one. I hope that the Minister will have listened carefully and will be pragmatic in his response to it later.

[John Healey]

I rise to support my hon. Friend the Member for Nottingham East (Chris Leslie) in the amendments he has tabled. Each and every one of them is important. Given that we are having a reflective debate on Report, I hope we will get a reflective response from the Economic Secretary at the end of our debate on this group.

Let me start where it seems to me that there has been a strong measure of agreement across the House—on the importance of having good, regular and accurate pensions information for scheme members. I think we could all agree that what should underpin our pension schemes—this relates to new clause 2—are higher standards of governance, openness and administration. Such underpinning, then, should be provided in this Bill’s provisions for those public service pension schemes in the future. There is bound to be greater confidence and trust in the schemes, along with better understanding of them, if members are given more information.

14:30

We have all used Lord Hutton’s report as our starting point for the purposes of the Bill. Lord Hutton pointed out:

“Not all public service pension schemes communicate with members on a regular basis. Currently it is a requirement of defined contribution schemes in the private sector that they provide members with an annual benefit statement: this is not the case for defined benefit schemes”—

which, of course, the majority of public service pension schemes are. Lord Hutton also proposed, in his recommendation 18, precisely what my hon. Friend has advocated in new clause 2:

“All public service pension schemes should issue regular benefit statements to active scheme members, at least annually and without being requested”.

I must say that I thought my hon. Friend let the Economic Secretary off a little lightly when he said that he was not expecting the Government to accept the new clause, but was merely seeking an indication that they would table an amendment of their own in the House of Lords. That would certainly be satisfactory, but it would be desirable if the Government said “We accept the principle and we want the practice, so we will legislate accordingly by adopting the new clause.” It must surely be a matter of common sense and consensus that members being kept informed about their schemes so that they can plan for their retirement must be a good thing; and that good thing can be guaranteed in the Bill. I see no serious case against new clause 2.

I think that Lord Hutton’s proposal for a national board for the local government pension scheme is consistent with the bid for better standards and for better information and better understanding among scheme members. The employers’ side, the Local Government Association, the union side, and members of unions such as the GMB all agree that Lord Hutton was right to make that recommendation, but we are still waiting to see it enshrined in the Bill. I hope that the provision for better standards and information for scheme members that we hope the Government will introduce will include provision for a national board.

[Andy Sawford]

One of my worries about the pension scheme changes relates to the different impacts that they will have on different communities. Sadly, as my right hon. Friend may know, Corby has one of the 10 lowest life expectancy rates in the country. As we review the schemes, and, in particular, as we seek to give people information about the future benefits that they may expect, we should recognise that there are huge regional variations in life expectancy, and that it is important for people and their families to be able to plan for their future.

[John Healey]

My hon. Friend’s constituency is in Northamptonshire and mine is in south Yorkshire, but we share an industrial heritage and a strong tradition of steel-making, and I entirely understand the point that he has made. It is as relevant to Corby and to east Northamptonshire as it is to Wentworth and Dearne and parts of Rotherham and Barnsley.

New clause 3 is simply intended to ensure that the undertaking given to the House by the Chief Secretary to the Treasury, and given to the unions that have been negotiating about pension schemes changes on behalf of their members, is guaranteed, and that Ministers will not be able to change their minds and change the schemes in the future. This must be legislation for a 25-year deal, which is what the Government originally promised us.

The question of access to public service pension schemes for public service workers who may face compulsory transfer to non-public service employers and organisations is critical. As has already been pointed out, the Government’s commitment to an extension was a deal-maker for many unions and for many of their members, particularly on the local government side. It would have been a deal-breaker for those unions and members if the guarantee had not been in place, or if what the Economic Secretary said in Committee—which I have quoted—had been on the table instead. We had a clear and principled commitment. That commitment ought to be included in the Bill, and then, as is appropriate in the case of enabling legislation of this sort, the details of the mechanism for how it is to be implemented can be provided in further regulation or scheme rules.

I must say to the Economic Secretary—as some of my hon. Friends have already said—that trust is a problem for the Government in the public services, particularly when it comes to public service pensions. That should come as no surprise to them. After all, they commissioned Hutton to produce the report, and before the publication of the final version, they hit public service workers with a 3% tax surcharge on their pension payments, and with not just a temporary but a permanent switching of the link with pensions from the retail to the consumer prices index. A commitment in the Bill will serve as a confirmation and a reassurance for public service workers that the Government do indeed mean what they say in this regard.

Let me say something about amendments 19 and 20, and about the Bill’s use of the concept of “closure”. During this debate and in Committee, the terms “closure” and “winding up” have been used almost synonymously, but they are not, of course, synonymous. The winding-up provisions in the Pensions Act 1995 apply principally to occupational pension schemes. Those schemes are different from local government pension schemes, which are funded and have the quasi-constitutional backing of local government.

As my hon. Friend the Member for Nottingham East pointed out, the Economic Secretary has said that that it is not the intention to close local government pension schemes. If, as the Government seem to be arguing, closure does not mean closure and there is no intention to legislate for closure of any of the funds, this change should be straightforward. It is evidently needed, especially given that the concern of employers, scheme members, trustees, and unions representing many of the members has been consistent and clear. Why risk uncertainty, why risk a legal challenge, why risk financial jeopardy for some funds, by allowing debts to be triggered in the particular circumstances of a funded scheme for local government?

It may not be the Government’s intention at present to reduce people’s benefits that they have already accrued. It may not be their intention to end any flexibility in the link between the normal pension age and the state pension age. It may not be their intention to make further and sweeping radical changes or cuts in people’s pension provision. As it stands, however, the Bill allows all those things to happen. That is why the new clauses and amendments are so important. They will reassure pension scheme members, now and in the future, that this is a settlement for the long term, that the Government mean what they say, and that the Government can, in the longer run, be trusted with public service pensions. Scheme members have seen little evidence since 2010 that that is really the case.

[Mike Freer]

Members have discussed the technical definition of “closure”, and I ask the Economic Secretary to make it clear in his response that closure does not mean closure, but instead means the scheme is frozen while a new scheme is run alongside and in parallel. Members have talked about the effects of closing a scheme and the crystallisation of outstanding liabilities. In respect of the local government pension scheme, the council tax payer would then be forced to meet those liabilities in one fell swoop. That runs contrary to all the other efforts the Treasury is making to keep council taxes down, so if closure is, indeed, what is intended, there would appear to be a lack of joined-up thinking in the Treasury.

[John Healey]

I support the hon. Gentleman’s remarks, and I hope the Economic Secretary will, too. For clarity’s sake, will the hon. Gentleman confirm that this does not only affect local councils, as schools that are academies, charities and a number of non-government organisations also use the local government pension scheme?

[Mike Freer]

The right hon. Gentleman makes a good point. Having chaired the London borough of Barnet pension fund committee for several years, I know that while the council is by far the largest fund, there are also many admitted bodies for which it administers funds, such as Middlesex university, academies and various charities. The crystallisation of debt that may arise if there is any vagueness in the legislation could therefore have massive impacts not only on councils, which could, perhaps, withstand the financial shock by using reserves and spreading the effects over many years, but on smaller admitted bodies, who certainly could not do that.

As we have seen in respect of Equitable Life, once a fund closes and becomes a zombie fund, all the good fund managers flee. No decent fund manager worth their salt wants to manage a zombie fund. Therefore, because of the performance of the zombie fund, the liability grows still further. The implications of crystallisation of liabilities in this context must be taken into account. I urge the Economic Secretary to explain precisely what he means when referring to closing a fund. I believe he means that one fund would remain but would have no new contributions and no new members, and a new fund would run in parallel. I urge him to make that clear.

On the issues addressed in new clause 2, I urge the Government to go further, because best practice in the public sector in respect of providing information is not enough. It is my hon. Friend the Economic Secretary’s birthday tomorrow; I think he will turn 43 years of age. I calculate that by the time he reaches the normal pensionable age of the parliamentary scheme he will have contributed some 24 years of accrued service, presuming that he is in a one fortieth, one fiftieth or one sixtieth scheme with the various contribution rates that attach to them. My hon. Friend the Economic Secretary is a man of finance and has a head for figures, so I have no doubt that he understands the pension choices he has made, but I spend a surprisingly large amount of my time explaining to teachers and others—on Saturday I spoke to a police officer—exactly how their pension works, because they do not know and do not understand.

Further requirements in terms of transparency and quantity of information are needed, therefore, because people need to make rational decisions. If we want to defuse the pension time bomb, people have to make a rational decision based on information, not supposition. A constituent of mine who is a doctor has been trying for six months to get information from the NHS about his pension contributions and likely benefits. That is simply not good enough. The Government must go further in this regard.

14:45

[Mr MacNeil]

In respect of this Bill and the commitment to public sector pensions, what change in GDP are we likely to see?

[Mike Freer]

I am not qualified to judge that. I am not an economist, so I do not have information about the impact on GDP. It might be appropriate to ask the Economic Secretary that question, however.

[David T. C. Davies (Monmouth) (Con)]

I am not an economist either, but the issue is not the predicted rise in GDP; rather, it is the predicted fall in the working population who will be available to pay the pensions of a growing number of older people.

[Mike Freer]

My hon. Friend makes a good point. The pensions time bomb is not only to do with the fact that people are making insufficient provision; it is also about there being insufficient taxpayers to make up the gap between the contributions made by employer and employee and that gap having to be made up from general taxation. There are two parts of the time bomb, therefore. Unless accurate information is provided on pensions, people will not be able to make the appropriate decisions.

[Mr MacNeil]

Will the hon. Gentleman give way again?

[Mike Freer]

As long as the intervention is not a question about GDP.

[Mr MacNeil]

In terms of the provisions in the Bill, the House of Commons Library informs us that this time bomb will be cut from 1.6% of GDP to 1.5% of GDP.

[Mike Freer]

I am not sure what point the hon. Gentleman is making. After our debate, I may have to check whether I have said something that I cannot remember saying, and I apologise that I cannot respond to that point at present.

The House spends a huge amount of time regulating. The Food Labelling (Nutrition Information) (England) Regulations 2009 spell out in considerable detail the information that must be on food labels. The labels specify for consumers the fibre content, edible carbohydrate polymers, synthetic carbohydrates, salt content, kilojoules and calories, sugar content, fatty acids of trans fatty acids, yet when we ask people to make choices about their pensions, which is one of the biggest decisions of their life, we give them no information at all. I urge the Economic Secretary to go further by ensuring accurate information is included in our pension statements.

[Sheila Gilmore]

At least with regard to new clause 2 and the need for good communication and good information, it appears that there is a fair degree of cross-House agreement. Members may have different motives for wanting such information to be given, and may hold different views about what behavioural change that might drive. Some Members might also hint that they want this information to be given so that public sector workers are properly and humbly grateful for retaining better pensions than the absolutely dreadful pensions of many in the private sector. I hope the Economic Secretary will respond positively, however, and agree that this is an important step. It will be deeply ironic if better and more thorough information is given to people with private sector pensions than to those with public sector pensions.

We all want to avoid too much information being given, of course, with people receiving many pages of information, much of it hard to understand. We do not want to over-egg that pudding. There is a parallel debate happening in the world of private sector pensions on giving good, accurate but still efficient information, so that people can look at a single page of information—that is preferable—and understand what their likely pensions are going to be. On that matter I hope that the Minister, having heard the debate in Committee and again today, will be happy to make some changes to the provisions. I cannot see why new clause 2 should not be in the Bill, as it deals with such a major issue.

I wish briefly to discuss new clause 3, which deals with the issue of a fair deal. Again, there would appear to be a substantial degree of agreement across the House on the substance of the issue. Nobody is saying, “We don’t think these should be the provisions.” The question that has been raised is whether they should be in the Bill. Some Government Members have suggested that accepting what the clearly stated view of Ministers has been at various points should be good enough, because it is on the record and we should be confident that that is sufficient. However, as far as I am aware, it is not possible to litigate on the basis of what people simply said, rather than what is in legislation. People have attempted to say in the past, “But that was the intention”, even doing so in respect of debates in this House. However, legal disputes about rights or obligations turn on the much narrower construction of what is written in the Bill.

I am not suggesting, in any way, that those who have spoken during our consideration of the Bill do not intend what they have said, but many public sector workers are genuinely concerned. As I said in my earlier intervention, the matter becomes a great deal more important if the Government continue, as they presumably will, over the next two years to do what they say they want to do: outsource more of what we would regard, or have traditionally regarded, as public sector activities. That has already happened to some extent. Some people have explained how this could be very positive, with employee mutuals and all kinds of social enterprises springing up to provide public services. If the Government are genuinely serious about wanting current public sector employees not just to have to do this, but to be enthusiastic about doing it, these safeguards have to be in place. If this is the road that is to be pursued, it is even more important to have these provisions than it may have been in the past. Saying, “You didn’t do it before so we don’t need to do it now” is not a particularly good argument; some of us might disagree about what had been done previously. Even if we do not, the argument is still not particularly good, as we have also to learn from experience. I hope that the Government will seriously consider legislation on this matter, because if they genuinely have no intention of departing from the promised arrangement I cannot see what the problem is. When people begin to say there is a problem, that is when those paying into these schemes—the employees likely to be affected—begin to smell a rat. There may be no rat there, but why not make things absolutely clear?

That is also true of what we are trying to achieve in amendment 12, which deals with an apparent possibility arising from clause 7. Again we were given assurances in Committee that we should not be reading into this something that the Government do not intend. Clause 7 says:

“Scheme regulations may establish a scheme…as

(a) a defined benefits scheme”.

It then goes on to talk about

“a scheme of any other description”.

It is not at all clear what is actually meant. We were told that one or two specialist defined contribution schemes are in existence, but people are clear that the promise that was made as part of this negotiation is that the defined benefits schemes would remain in place. They will, however, be changed, and during the negotiation employees in various parts of the public sector accepted substantial changes in the kind of pension because they accepted the imperatives. In moving from final salary pension schemes to career average schemes, changes are being made in accrual rates. All sorts of changes have been made—for example, the forthcoming changes to pension age—but they were made on the basis that the scheme will remain as a defined benefit scheme.

[John Healey]

My hon. Friend is making a powerful case and sounding a clear warning. She mentions that clause 7(1) refers to

“a defined contributions scheme, or

( c) a scheme of any other description.”

Would she like to point out to the House that this potential change in clause 7 could in theory, under subsection (5), be brought in by way of a negative resolution—by a statutory instrument that would not allow a debate in this Chamber or even a 90-minute debate in a Committee upstairs?

[Sheila Gilmore]

I thank my right hon. Friend for his intervention, because that is an important point. If the rest of the clause did not give rise to the possibility of substantial changes, that provision might be acceptable. However, where we are talking about much greater changes, it is particularly important that the full debate takes place.

Again, there appears to be a difference between giving an assurance and a reluctance to see that assurance embedded in the Bill. Various people have mentioned that the whole debate we have had, particularly since 2010, has eroded some of the public sector workers’ trust. I do not generally seek to be overly alarmist in these matters, but even in Committee—I am pleased to say that this has not happened today—there were points when we could see exactly why many public sector workers are apprehensive, There were those, admittedly not at ministerial level but on the Government Back Benches, who clearly still feel that public sector pensions are too generous. The underlying thinking is that at some point, perhaps in the not-too-distant future, further attempts will be made in that regard.

I fully accept that even with the changes that come through this Bill and through other negotiations that have taken place, public sector pensions remain far better than private sector pensions. However, we always have to remember that the comparator we now have is absolutely dreadful private sector pensions, regardless of where we place the blame and how that has happened. One thing that politicians should be doing in the next few months and years is trying to improve private sector pensions.

Finally, I wish to discuss amendment 11, which relates to the local government scheme in Scotland. Generally, the arrangements for many public sector schemes in Scotland have been that Scottish Ministers could make regulations, but that they were subject to Treasury approval. For the most part, whether because of that need for Treasury approval or because until relatively recently there has been no reason to depart from the UK-wide arrangements as doing so might create various anomalies that would not always be helpful, the regulations for schemes—all those that are not funded, at least—have lain with Scottish Ministers but have been made in the same way.

15:00

The exception is the local government pension scheme and the difference is that that is a funded scheme. It has been regulated in a way that has not normally had Treasury approval. The purpose of our amendment is to exclude the Scottish local government pension scheme from the Bill, which would enable matters relating to that scheme to be dealt with by Scottish Ministers. The amendment would perhaps add clarity to the devolution of power, but, more importantly, it would embed the practice as regards that scheme and safeguard it. Otherwise, the Bill would mean that the Treasury would be involved in setting aspects of the Scottish local government scheme and, for the first time, local government workers in Scotland might find that changes can be made to their pensions by the UK Government.

[John Healey]

My hon. Friend is making another powerful point about amendment 11. She is right that the Scottish Government are not normally backward in coming forward to demand new powers and for decisions to be taken in Scotland for Scotland. Would she care to speculate about why they have not chosen to apply for a legislative consent motion that would allow them to make these decisions in Scotland? Could it be that they are looking to allow the broad shoulders of the Economic Secretary to take the blame and responsibility for the changes to the local government pension scheme in Scotland?

[Sheila Gilmore]

I was going to come to that point, because I am surprised that that opportunity has not been taken, given the context. As my right hon. Friend will know, this is a difficult and sensitive subject, but—this point might well be speculative and I am sure that people will wish to deny that it is the case—it is no secret that we are in a particular stage of politics in Scotland, and it would—

[Dr Whiteford]

I think I might be rescuing the hon. Lady from the point she was trying to make. Earlier, she stressed the importance of considering what is actually in the legislation rather than the world as we would like it to be. Does she welcome the fact that John Swinney has not exercised his flexibility to increase contributions to the local government pension scheme?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Member for Edinburgh East (Sheila Gilmore) will comment on that point only if it is relevant to the amendments we are considering. I remind hon. Members that we are not yet on Third Reading. The debate is going rather wide of the new clauses and amendments, so perhaps the hon. Lady could return to them.

[Sheila Gilmore]

I am more than happy to do so, Madam Deputy Speaker. Perhaps we will have further debate on that topic.

If amendment 11 were agreed to, considerable and greater power would be available for the Scottish Parliament than the current Scottish Government appear to want. Within the context of the politics at present, I do not think it would be idle speculation to suggest that that might be convenient.

[Cathy Jamieson]

With reference to the amendment mentioned by the hon. Member for Banff and Buchan (Dr Whiteford) earlier, notwithstanding the comments I made at that stage, does my hon. Friend agree that it is rather strange that the Cabinet Secretary for Finance, Employment and Sustainable Growth in the Scottish Government is complaining that there are only some 28 months to conclude negotiations on pensions when a great deal of the Scottish Government’s effort appears to be going on other things at the moment? Perhaps some of that resource could be used to resolve these issues.

[Sheila Gilmore]

I thank my hon. Friend for her intervention, but I suspect that it might also be outwith the terms of the new clause, so I shall refrain from commenting.

Finally, there is a risk that we are missing something in Scotland and are not getting—or even trying to get—the powers we could have. That decision might be for purely party political reasons, so that people can lay blame, saying, “There is nothing we can do; we cannot make life better for you because we do not have the power to do so. It is all because of that nasty Government down in London and your only way out of this is to make that amazing leap so that with one bound we are free. Then, everything will suddenly be wonderful,” in the hope that that will persuade the people of Scotland that they should vote for separation. I am confident that the level-headedness of the Scottish people will mean that they will not be taken in by such proceedings.

[The Economic Secretary to the Treasury (Sajid Javid)]

I thank the hon. Member for Edinburgh East (Sheila Gilmore) for her speech. For the short time for which I have been a Minister so far, in every debate and in every Bill Committee in which I have been involved, no matter what the subject, she has spoken. I can always rely on her to quiz me and keep me on my toes, so I thank her for that.

Let me also thank all other hon. Members who have contributed to the discussions we have just had: the shadow Financial Secretary, the hon. Members for Hayes and Harlington (John McDonnell) and for Banff and Buchan (Dr Whiteford), the right hon. Member for Wentworth and Dearne (John Healey) and my hon. Friends the Members for Bognor Regis and Littlehampton (Mr Gibb), for Bromley and Chislehurst (Robert Neill) and for Finchley and Golders Green (Mike Freer). I shall try to deal with all the points that were raised.

I am glad that we are starting with new clause 2 and that we have started our debate discussing annual benefit statements. It is right that scheme members should be kept informed of their pension rights and provided with an annual update. I fully understand the case for doing more in that area and find myself in agreement with the arguments that Members on both sides of the House raised today and in Committee.

I agree that information should be provided for some members, without request, in one format or another. However, I cannot support the precise wording of the new clause. For example, it does not distinguish between active, pensioner and deferred members but we would need to take that distinction into account. I would also wish to ensure that any change was future-proof—for example, we should not inadvertently mandate paper statements when it might be easier and cheaper for schemes to implement online and perhaps mobile technologies in the future.

Although I respect and understand the spirit in which the new clause was tabled, and although I have listened carefully to what hon. Members have said, I would not propose to use its exact wording. I am now persuaded that there is a case for going the extra mile to ensure regular updates are provided for scheme members. That is why we will consider the matter further and propose an amendment in the other place to deal with annual benefit statements.

[Stephen Williams (Bristol West) (LD)]

I welcome the Minister’s statement. I had quite a lot of sympathy with the Opposition’s case, simply because many of the representations made to me as a constituency MP while the negotiations were taking place contained a mixture of misinformation that came, perhaps, from the trade unions or from a basic misunderstanding of the scheme. The Government and all the scheme employers definitely have a role to play in clarifying the terms and conditions of the scheme so that we do not have these misunderstandings again.

[Sajid Javid]

My hon. Friend makes a good point and I hope that he is also reassured by the commitment I have just given.

I also want to thank my hon. Friends the Members for Finchley and Golders Green and for Bedford (Richard Fuller) for their input on this issue in Committee.

[John Healey]

I welcome that commitment. The Minister said that the information should be provided “to some scheme members”. May I urge him to take a maximalist approach and make sure that the maximum reasonable number of members get the most regular and at least annual information that will allow them to understand the scheme better and to plan for retirement and manage it better as well?

[Sajid Javid]

I agree. All scheme members, one way or the other, should receive annual information. That is the type of amendment we will table in the other place. However, there are different types of members of schemes, such as deferred members and active members. That needs to be taken into account when they receive that information.

[Jim Shannon]

I seek clarification and perhaps also reassurance in relation to those who are members of small public bodies. They have been informed that their pensions will transfer to larger schemes where they feel that they will lose out more than anyone else. What assurance can the Minister give the House and people in small public bodies that their pension rights will be guaranteed or assured?

[Sajid Javid]

I thank the hon. Gentleman for the question. We will come to a related issue later, which may be a better point at which to discuss that.

We had a robust discussion of new clause 3. The Government have set out their commitment to retaining the fair deal, but reforming it. Staff who are transferred from the public sector to an independent provider will be provided with continued access to the public sector pension scheme. This commitment has been made on numerous occasions by my right hon. Friend the Chief Secretary, as my hon. Friend the Member for Bognor Regis and Littlehampton rightly mentioned in his contribution. It was announced on 20 December 2011 and confirmed in the Chief Secretary’s announcement on 4 July this year. We also reaffirmed this in our response to the fair deal consultation which was published on 19 November this year.

The Opposition say that the Government have not made a commitment to the fair deal in the Bill. That is not entirely correct. Both clauses 22 and 26 allow for the new fair deal policy to be implemented. The Bill has been deliberately crafted so that the new fair deal can be delivered under these provisions. Let me be clear. The current fair deal, which Members are rightly keen to retain, has never been statutory. The new fair deal does not need to be statutory to bind non-public sector providers to the policy. The contracts that independent contractors enter into when tendering will ensure that the fair deal is applied.

The right hon. Member for Wentworth and Dearne referred to my comments in Committee, and it is important to be clear. We are consulting on how the fair deal should apply to those employees who have already been transferred out under the existing fair deal, but we are not consulting on the commitment that we have already made, which is that public sector workers who are transferred out under the new fair deal will retain a right to public sector pensions. We are also consulting on what to do when an existing contract that has already been tendered out is retendered under the new fair deal. There is work to be done to determine how and when the new policy will be implemented. We want to be sure that the contracts put in place will safeguard the legal rights of employees and employers. As the Government, rather than the independent providers of the services, will be retaining the risk of providing these pensions, we need to get this right.

The amendment would also bind the local government pension scheme. However, the fair deal does not apply to staff transferred out of local government. It would not be appropriate to accept the amendment as the implications for local government and the LGPS need to be fully explored. This is work that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), is already doing. For all these reasons, we believe the amendment is unnecessary and would pre-empt the ongoing work on the local government scheme.

On amendment 11, we will no doubt look at Scotland in more detail later in the debate, but let me try to set hon. Members’ minds at rest on the issues raised in the amendment. Legislative competence for the local government pension scheme in Scotland sits with this Parliament. The approval of the Scottish Parliament is therefore not needed under the Sewel convention or the Scotland Act 1998 for primary legislation on Scottish local government pensions. This is a position accepted by the Scottish Government and emphasised by the Scottish Finance Minister on 28 November. He told the Scottish Parliament that the Bill does not contain any provisions

“over pensions for local government, the national health service, teachers or police and fire staff—that would trigger the Sewel convention.”—[Scottish Parliament Official Report, 28 November 2012; c. 14014.]

15:15

I am aware of how pressing the question of devolution is for some of our colleagues in Scotland, but I am sure that the hon. Member for Nottingham East (Chris Leslie) would agree that the Bill is not an appropriate place to rework the devolution settlement put in place by the 1998 Act or the long-standing Sewel convention by making this House’s ability to legislate for local government pensions in Scotland subject to the Scottish Parliament’s consent.

[Cathy Jamieson]

The reason why we tabled the amendment is important. Notwithstanding the Minister’s comments on what the Cabinet Secretary for Finance said, concern has been expressed by the trade unions that the ability to make some of the regulations relating to the local government pension scheme in Scotland might change the relationship that had previously existed. We want to ensure that the existing practice is in the Bill and that there would be no change. That is what the amendment seeks to do.

[Sajid Javid]

I respect the hon. Lady’s intentions, but for the reasons that I set out, I do not believe the amendment is necessary. The situation as it stands is quite clear.

[Cathy Jamieson]

I thank the Minister for giving way once again. In all the correspondence that has gone back and forth between the Scottish Government and the Chief Secretary to the Treasury, did the Scottish Government at any stage ask for any amendments to be made to the Bill, either to clarify it or to give them further flexibility?

[Sajid Javid]

I have not seen all that correspondence, but to my knowledge the Scottish Government have not asked for any such amendments.

On amendment 12, I welcome the opportunity to reaffirm the Government’s commitment to the defined benefit structure of the new schemes. I would hate to think that the hon. Member for Nottingham East is unaware of the 85,000 or so public service workers who are already members of the current career average schemes. His amendment, which he says is designed to reassure public service workers about the nature of their pensions, refers only to final salary schemes. I can reassure all public sector workers, including those currently in career average schemes, that the Government are fully committed to implementing the defined benefit schemes that have been negotiated. I assure the House, just as I assured the Committee, that the Government have no intention of replacing these defined benefit schemes with different types of scheme designs.

There is no secret plot here. We have spent a long time in discussions with trade unions and member representatives to get where we are today. It would be foolhardy to throw away 18 months of work and do something entirely different. We do not intend to move away from defined benefit schemes in public services. Defined contribution schemes would not be the right kind of pension provision for many public servants.

[John McDonnell]

Will the Minister therefore meet with the War Graves Commission, because that looks as if it is planning to move from a defined benefit to a defined contribution scheme?

[Sajid Javid]

If the commission would like to have a meeting with me, I would be happy to do so.

However, we must not vilify defined contribution schemes either. There might be a small group of individuals who consider that their needs are better served by defined contribution schemes—for example, those spending a short time in public service roles who would prefer to use their employer contributions to maintain their existing defined contribution schemes. Approximately 7,000 people are already in that type of scheme by choice. There is nothing wrong with giving people such a choice. The Government believe that clause 7 already provides the right powers to allow the new defined benefit schemes to be set up while allowing alternatives types of scheme for those who want them.

I turn to amendments 19 to 28 to clause 16. I understand the concerns raised by the hon. Member for Nottingham East and others in Committee and this afternoon. We have provided reassurances on some of those concerns in correspondence. I hope that all hon. Members are now assured that the effect of the clause will not be to crystallise liabilities or to wind up any of the funded schemes. The amendments highlight those issues over which there are lingering doubts. As the hon. Gentleman set out, those relate to the extent and effect of the closure of the current schemes and the dates on which the changeover will take place.

[Ian Paisley (North Antrim) (DUP)]

I would like to thank the Minister for the clarity his letters provided on clause 16, which was helpful, because there was originally some confusion about that in the Bill.

[Sajid Javid]

I thank the hon. Gentleman for his kind remarks and hope that I can provide further such reassurance on the clause this afternoon.

Amendments 19 to 21 seek to provide that the reforms are made by replacing the existing regulations. The scheme regulations made under the Bill would therefore have to provide for both accrued rights and new service, which we do not believe is sensible. The hon. Member for Nottingham East has expressed concerns that the Bill, as drafted, could create two separate schemes and that that could create extra costs. The Local Government Association has further clarified its outstanding concern that members of existing schemes are treated as deferred members of the existing schemes when the new schemes are introduced. That is not our intention. We will look closely at that, with the Local Government Association and others, to see whether any changes are desirable or needed to put that beyond doubt.

With regard to amendments 22 to 28, the purpose of clause 16 is to prevent benefits from being provided under existing terms in respect of a member’s service after the schemes are reformed. It closes the existing schemes, but only by closing them to future accrual. Clauses 4 and 5 already provide for existing and new arrangements for each work force to be managed and administered together. The old and new schemes will be administered by the same scheme manager, who will be assisted by the same pension board. From a member’s perspective, the transition between their old and new pension rights and the administration of their pensions will be seamless.

The dates proposed in amendments 21 and 22 do not fit with the dates agreed for the reform of the schemes: 1 April 2014 for the local government schemes in England and Wales and 1 April 2015 for the other public service pension schemes. I appreciate that the date set out in clause 16(4)(b) might also look a little odd. It allows schemes that want to reform at the start of the public sector’s financial year—1 April—to do so while leaving the option open to make reforms at the start of the tax year instead.

Although I remain convinced that the Bill will deliver what we want, I am aware that others believe that the dates are confusing. It is a concern that I will continue to consider. I regret to say that we cannot accept these amendments, because I am afraid that they would not work. However, they are clearly well intentioned and we can see what they are trying to achieve. As I said in Committee, we will continue to work through the outstanding concerns. I will reflect further on the amendments and we might return to the matter in the other place.

I turn now to amendment 4, tabled by the hon. Member for Hayes and Harlington and others. I thank the hon. Gentleman for the amendment; its purpose is clear but the practical effects would be fraught with problems. First, in England and Wales the appointed person will be reviewing the valuation and employer contribution rates of 89 separate pension funds. The appointed person will not know who the employee representatives are for each of those funds. The clause already requires the appointed person’s report to be published. That is the appropriate course of action. We envisage that the appointed person will publish a single report covering each and every one of the local authority funds. The Bill rightly requires that a copy is sent to the relevant authority and to the scheme managers, because those persons might need to take action as a result of the report.

If the appointed person identifies a problem in a pension fund, under the Bill the scheme manager would be required to take remedial action. The Bill also allows the relevant authority to intervene if necessary. However, members and their representatives will not need to take any action. The management of local authority pension funds needs to be more transparent, and the clause achieves that. The information will be published and members, local authority residents, Parliament and others will be able to see and consider it. The amendment would add no value, but it would create unnecessary costs and burdens.

I will now speak to amendments 7 and 8. I have already reassured the House that the Government have no intention of replacing the current defined benefit schemes with different scheme designs. Clause 7 allows the necessary flexibility for future Parliaments and pension scheme members to decide on the most appropriate pension scheme design for future generations of public service workers in the largest schemes. Clause 28 allows the same flexibility for the smaller public body schemes made under clause 28(7) or other powers. The Government expect that in most cases employees of the bodies listed in schedule 10 will join the reformed civil service pension scheme and have the same choice that civil servants have now: whether to join a defined benefit or a defined contribution scheme. The amendments would deny the employees of the other public bodies listed in schedule 10 that choice.

[John McDonnell]

The Minister, as ever, is being generous with his time. On amendments 7 and 8, his response will have a chilling effect for trade unions representing members across the piece, because the Government are not adhering to the direction of travel indicated in their assurances on the 25-year guarantee—that we were moving to defined benefit, not defined contribution schemes. Will the Government at least monitor the process and report back to the House, because I do not think that it is their will—it is certainly not the will they have displayed up to now—that there should be a flourishing of defined contribution schemes which would undermine defined benefit schemes?

[Sajid Javid]

I hope that I have made the Government’s commitment to defined benefit schemes very clear; I do not think I can make it any clearer than I have already from the Dispatch Box today. That commitment clearly has not changed.

Finally, on amendment 32, I am confident that the Scottish Government can achieve the 2015 timetable. Even more importantly, I have no reason to believe that the Scottish Government share the concerns expressed by the hon. Member for Banff and Buchan (Dr Whiteford). The Scottish Government’s Finance Minister, Mr John Swinney, has not requested that the Bill be amended to allow for a delay for implementation in Scotland. Indeed, such a delay would disadvantage lower and middle-income public service workers, who often benefit from a move to career average schemes. Furthermore, a delay in implementing the reforms would result in additional liabilities being built up in those schemes. These additional costs, running to hundreds of millions of pounds, would have to be paid for through the Scottish budget.

[Dr Whiteford]

Let me reiterate that I have no problem whatsoever with the move to career average schemes. Does the Minister accept, though, that this process has been subject to unnecessary prevarication and lack of clarity? In relation to amendment 11, tabled by the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), does he accept that these proposals will roll back the existing provisions of the devolution settlement?

[Sajid Javid]

No, I do not. The Scottish Government have had plenty of time to look at the proposals, which originated with Lord Hutton’s report. They may feel that they should have acted earlier, but they clearly had control over that.

[Cathy Jamieson]

I heard the Minister say that the Scottish Government had not made any formal request to change the time scale, but the Finance Secretary referred to that in his speech in the Scottish Parliament when he indicated that he was not bringing forward a legislative consent motion. If the Scottish Government were to make such a formal approach, would the Minister, even at this late stage, be willing to consider amendments once the Bill moves elsewhere?

15:30

[Sajid Javid]

If the Scottish Government wanted to suggest any amendments, we would of course have a sensible discussion with them about that.

Over the past year the Chief Secretary has written on a monthly basis to the Scottish Government about the public service pension reforms, and we have asked many times whether they would like to consider amending the Bill. They have not requested any such changes so far, and it would therefore be inappropriate to accept the amendment now.

[Dr Whiteford]

Does the Minister think that nine days’ notice is sufficient time for the Scottish Government to be able to make those plans before the First Reading of the Bill?

[Sajid Javid]

As I said, virtually every month the Chief Secretary has written to the Scottish Government, and they have had plenty of opportunity to respond. As I said to the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), if, even at this stage, the Scottish Government wanted to suggest amendments, those amendments would be given serious thought in the other place.

I commend Government amendments 35 to 39 to the House.

[Chris Leslie]

I will start with the good news that the Minister is willing to concede the principle, if not the words, of new clause 2 on member communications. That is an important change of heart. We wanted annual benefit statements to be sent out proactively to members of defined benefit public service pension schemes, as they are for defined contribution schemes. We encountered a bit of resistance in Committee, but the Minister has thought again, particularly in the light of the views of the hon. Members for Bedford and for Finchley and Golders Green, and of many of my hon. Friends who made the same argument. I welcome the fact that the Minister has been persuaded of the spirit of the amendment. We do not get many victories for common sense in legislation, but this is one of them, and I pay tribute to him. It is a mark of distinction for him that we have managed to have him think afresh about the argument, reflect on it, and bring matters forward in the House of Lords. When our constituents receive these annual letters in the post, they can thank him for that extra information, as well as the hon. Members who have argued for it. [Interruption.] The letters may of course arrive online as well.

The Minister did not say much about Government amendment 35, but that also feels like a famous victory. It means that existing members of final salary schemes in public bodies will definitely be able to stay in those schemes. We are sometimes grateful for small mercies in these legislative processes.

I turn now to the less good news. I heard what the Minister said about our amendment 12, which would ensure that defined benefit schemes that have ended are superseded by new defined benefit schemes. It is a moot point, and we have our disagreements about it. I shall not press the amendment to a vote at this stage, although I am sure that the issue will be revisited in the other place.

Amendments 19 to 22 relate to the closure of local government pension schemes and whether that means that they are really being closed or merely amended. We are worried about the potential for unintended adverse consequences in how the legislation is drafted. However, the Minister said that our amendments were well-intentioned, and that is good enough for me at this stage. They were, indeed, well intentioned and that is another issue that we will want to revisit in the other place.

We have debated the question of devolved responsibilities and amendment 11, which would clear up some of the confusion, particularly in relation to applications by the Scottish Government for legislative consent motions. We feel strongly that there needs to be some clarification on the issue, but the Minister was helpful in saying that the Government want to consider it, so I shall not press that question, although it is very important.

The new fair deal is a promise whereby existing members of public sector pension schemes will be allowed to retain their membership even if they are transferred or outsourced to the private sector, but we have still not received a commitment to that beyond Ministers’ verbal promises. The Minister has said that more work needs to be done, that they need to explore further the issues and that they do not want to pre-empt ongoing work, but that does not sound like the decision that we and many on the employee side thought had been made for a clear and unequivocal commitment to the new fair deal. It is integral to the deals that were agreed in the process leading up to this Bill. I cannot see what harm can be done by including the new fair deal in statute. It is a question of trust, so I want to press new clause 3 to a Division. With those words, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 3

Fair deal

‘A member of a public service pension scheme is entitled to remain an active member of that scheme following—

(a) the compulsory transfer of his contract of employment to an independent contractor; and

(b) any subsequent compulsory transfer of his contract of employment.’.—(Chris Leslie.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

15:36

Division 111

Ayes: 229

---

Labour: 215
Scottish National Party: 5
Democratic Unionist Party: 3
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 2
Alliance: 1
Green Party: 1

Noes: 288

---

Conservative: 241
Liberal Democrat: 46

Clause 3

Scheme regulations

[Chris Leslie]

I beg to move amendment 10, page 2, line 16, at end insert—

‘(3A) Scheme regulations shall not make any provision which would have the effect of reducing the amount of any pension, allowance or gratuity, insofar as that amount is directly or indirectly referable to rights which have accrued (whether by virtue of service rendered, contributions paid or any other thing done) before the coming into operation of the scheme, unless the persons specified in subsection (3B) have agreed to the inclusion of that provision.

(3B) The persons referred to in subsection (3A) are the persons or representatives of the persons who appear to the responsible authority to be likely to be affected by the regulations if they were made.’.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 3, page 6, line 27, in clause 10, at end insert—

‘to be agreed with employee representatives’.

Amendment 5, page 11, line 8, in clause 19, at end insert—

‘with a view to reaching agreement’.

Amendment 34, page 11, line 24, in clause 20, leave out from ‘—’ to ‘(b)’ in line 27 and insert—

‘reach an agreement through consultation with the persons specified in subsection (3), and’.

[Chris Leslie]

Clause 3 is an important part of the Bill, as it makes a series of arrangements for scheme regulations. Hon. Members will now be turning to page 2 in their copies; when they merrily flick through to it, they will discover that subsection (3)(c) states:

“Scheme regulations may…make retrospective provision.”

The theme of retrospectivity gives the Opposition great concern. Essentially, the Bill allows the reduction of accrued pension benefits.

The measure is not qualified in any way: it allows all retrospective provisions, including, essentially, the reduction of the savings that people have put aside, which many regard as sacrosanct—the contributions from their monthly salaries or income into a pensions pot that is supposed to safeguard their financial future in retirement. We now discover that the Bill contains a provision that allows the Government to dip their hand into what are normally regarded as safe amounts of money—the accrued benefits for which people have paid in over their years of service. The Opposition believe that that breaches a central tenet of pension provision. Benefits that have been accrued are deferred earnings and should not be reduced. Retrospectively reducing accrued rights is essentially akin to taking back a portion of an employees’ wage that has already been paid; there is very little difference.

Many hon. Members and many of my constituents find it difficult to resist the grey mist that descends and the heaviness of the eyelids that pensions law tends to bring about, but hon. Members should wake up and realise what is in the legislation. They should recognise that we are talking about the Government’s ability retrospectively to reduce the amounts that ordinary employees have saved for their retirement, which they believe are safe.

Public sector workers and their representatives are extremely concerned about the retrospective powers that the Bill gives to this and any future Government. Understandably, they believe that as long as the Bill contains those powers, the pensions of ordinary working people—public sector employees—are not safe. On 29 October, the Chief Secretary to the Treasury was asked about the retrospective provisions in subsection (3) by the hon. Member for Foyle (Mark Durkan). The right hon. Gentleman replied that there was no need to be concerned about the reduction of accrued benefits, because the Bill mirrored the Superannuation Act 1972 in that respect. It is important to read out his exact words:

“The hon. Gentleman will know that the provisions in the clause to which he refers mirror directly those in the Superannuation Act 1972, which this Bill in many cases replaces. It was passed in the year I was born,”—

in the year I was born too, but let me not digress—

“and it has been used by a number of Governments to make adjustments to public service pensions.”—[Official Report, 29 October 2012; Vol. 552, c. 60.]

The Chief Secretary went further than that when he gave one of those famous quotes—a bit like the George Bush “read my lips” quote—in a speech to the Institute for Public Policy Research on 20 June 2011. He said:

“We will honour, in full, the benefits earned through years of service. No ifs, no buts.”

Well, it turns out that the Bill does not mirror the Superannuation Act 1972 in relation to accrued benefits. The 1972 Act provides that accrued benefits can be reduced only with the consent of scheme members—in other words, only if members of those schemes, employees, agree to such retrospective arrangements—whereas the Bill allows for retrospective reductions without the consent of scheme members.

Given that the Bill does not mirror the Superannuation Act protections in the way the Chief Secretary said it would, we can only assume that it must have been a drafting error by the Minister—perhaps some sort of oversight or typo. We are not sure why the Government did that. We tabled an identical amendment in Committee to ensure that the protections for accrued benefits in the 1972 Act were retained, but, surprisingly, our amendment was rejected. The Economic Secretary said that there was no need to mirror the protections in the 1972 Act, which prompts the question: why on earth did the Chief Secretary to the Treasury say that the Bill contained certain protections when it obviously does not? It may be, as we have said, because the Chief Secretary is from a different political party from the Economic Secretary. We are not quite sure why the Chief Secretary said that it mirrors the Superannuation Act provisions, but this Minister, the Economic Secretary, resisted that arrangement.

As we have said time and again, when employees in the public sector find themselves facing changes, without any consultation, to their contribution rates and radical changes to the valuation arrangements for their pensions, the question of trust comes up again and again. This Minister says, “Oh, don’t worry, we’re not going to use this provision on retrospectivity,” but when employees voice their doubts and say, “Hang on a minute. Why on earth are you putting it in the Bill?” we have to sympathise with them. They will be extremely sceptical of the Government’s motivations.

We tabled the amendment to give the Minister another chance to include the protections that the Government—or at least one Minister—said were already in the Bill. When accrued benefits and retrospective changes were raised in Committee, the Minister did not dispute that the Bill allowed the Government unilaterally to reduce members’ accrued benefits, but he said repeatedly that the Government had promised not to reduce those accrued benefits. He said that that promise—a verbal promise—offered adequate protection to public service workers and that legislative protection was therefore unnecessary. That is an extraordinary argument. Even if this Government intend to keep their promise—that is a big “if”—their words will have no effect on a future Government, particularly a Conservative Administration. Surely the Government appreciate that, among the public, the level of trust in politicians and Ministers is low and that our request that they enshrine this protection in statute is a basic one.

16:00

The Minister has previously spoken about not wanting to include certain commitments in legislation because to do so would bind future Governments. As I said, that is a specious argument, because future Governments can change laws if they so wish. They would not be bound by previous Government legislation, but they would have to make any changes openly and democratically through Parliament. That is the level of protection that public service workers rightly seek. This goes to the heart of trust and confidence. How can public service workers have any security in their future retirement if the Government at any point can retrospectively reduce the benefits they have already earned?

[Lady Hermon (North Down) (Ind)]

The Bill must, of course, be compatible with the European convention on human rights and the jurisprudence of the Strasbourg Court. Will the hon. Gentleman reflect on whether this retrospective provision on accrued property rights is compatible with the convention? Would it be in keeping with our commitments under the convention to take away property rights retrospectively and without compensation?

[Chris Leslie]

The hon. Lady has hit upon an important point. There are questions about whether it impinges on basic human rights to claw back retrospectively property—assets—that has been legitimately accrued, yet there is a provision here in the Bill to allow that to happen. Of course, Ministers could say, “Well, even though we’ve allowed for the possibility of retrospectivity, we’re not actually legislating for it now, although we might want to leave open the door to do it in the future.” That would be the point when it would impinge on the convention. She makes an incredibly important point. That is the extent of the possible outrage being left open in the Bill. All legislation is supposed to be signed off as being compatible with the ECHR, but that is a moot point and a matter of interpretation. She has focused on a crucial point.

The explanatory notes state that clause 3(3) has been included to facilitate the necessary adjustments to

“pension schemes to accommodate changes in law or where the government does not want to delay the benefit of a particular change but needs time to work out the consequences and appropriate method of making the change.”

Amendment 10 would not necessarily hinder those technical operational issues. Given that it would retain clause 3’s intended purpose, as set out by the Minister, and that the Government have promised not to reduce accrued benefits, there can surely be no legitimate grounds for opposing the amendment.

This is not an Opposition whim. We are cutting and pasting text from the Superannuation Act 1972: for 40 years, those provisions have protected the accrued benefits and rights of ordinary working people, and we are seeking to replicate those protections in the Bill. The amendment would not hinder or adversely affect the Government’s intentions, but would be of enormous benefit and reassurance to millions of public service workers. As the Minister knows, that concern arose extensively in Committee, where we debated the issue at length. I shall be grateful, therefore, if he reflects seriously on the strength of opinion voiced so far from across the spectrum—from employee representatives and others who want those safeguards enshrined in the Bill.

[John McDonnell]

Let me follow on from what my hon. Friend the Member for Nottingham East (Chris Leslie) has just said, which relates to the previous debate. The running theme is trust. Every one of the trade union organisations that signed up to the deal or had it imposed upon them in the pensions dispute has expressed reservations about clause 3. That is why amendment 10 from our Front-Bench team seeks to address that matter.

The logic is fairly straightforward, but let us get it on the record again. The Government promised a 25-year deal—a once-in-a-generation commitment that there would be no further reform of public sector pensions and that this would be guaranteed in legislation. However, clause 3—we had a discussion earlier about Henry VIII clauses—gives the Government extremely wide-ranging discretion, through the use of statutory instruments and all forms of delegated legislation, which, more importantly, includes the discretion to act retrospectively on what are clearly accrued pension rights over a long period. The saving grace, as presented by the Chief Secretary to the Treasury, was that the same protection would be written into this Bill as is in the Superannuation Act 1972—as my hon. Friend the Member for Nottingham East (Chris Leslie) said—which is that no changes would be made without the consent of the employees’ representatives. Again, that provision, which was promised, is not in the Bill.

What we now have in the Bill is the exercise of discretion, which breaks the commitment of the 25-year guarantee and does not even go as far as past legislative protection. The argument is that in future the Government will need the flexibility to introduce minor changes in legislation, without being impeded from making minor reforms or tidying things up. However, minor reforms or measures to tidy up the legislation—to reflect changed circumstances or change minor details of a scheme or pension arrangements—should be introduced by consent. Unions have never withheld that consent in past discussions about minor changes in pension provision. That has been the nature of the relationship between the Government and employee representatives up until now. This Bill breaks all that and undermines confidence not just in the Government’s commitments to date, but in their good will on this matter for the long term.

My amendments 3, 5 and 34 relate to exactly the same issue of trust. I am trying in some way to establish further transparency and openness in the management of the future pension schemes that will be established. Amendment 3 relates to valuations, which we discussed in the previous batch of amendments. As I have said, valuations are critical to all those involved in a pension scheme, and certainly to employees who have contributed over the years. They will want to ensure that the valuation is done effectively, on professional terms and with their agreement. That is why my amendment 3 would amend subsection (3)(c) of clause 10, which deals with valuations. As set out in subsections (3)(a) to (3)(f), the Treasury directions under which valuations will take place will include

“how and when a valuation is to be carried out”

and

“the time in relation to which a valuation is to be carried out”

but more importantly,

“the data, methodology and assumptions to be used in a valuation”.

If we are to have real employee participation in a scheme, which involves the management of their money—their deferred pay—it is critical that they are fully involved in the valuation process and therefore that they are consulted and agree to the data, methodology and assumptions to be used. Otherwise, we will yet again undermine members’ confidence in the process of evaluating their own schemes. I do not understand why that is not in the legislation throughout. I hope that the Minister can assure us either that I have missed the mention of full employee involvement in the Bill or that he is willing to amend it accordingly.

Let me turn to my amendments 5 and 34. Again, I just do not understand the drafting of the Bill. These proposals refer to the consultations that will be undertaken before scheme regulations are made. Again, this might seem like an esoteric point, but the scheme regulations are critical because they will determine the nature of the scheme under which the funds will be managed, contributions will be made and benefits will be paid. It is therefore critical that the regulations should be made following full consultation.

In legislation of this kind, when consultations take place and schemes are drafted that are likely to affect their members, the form of words that is normally used includes

“with a view to reaching agreement”.

That intention is always set out in the legislation. Indeed, those exact words are used in clauses 20 and 22 of this Bill. Clause 20(2) states:

“The responsible authority must…consult the persons specified in subsection (3) with a view to reaching agreement with them”.

My amendment 5 would simply put that form of words into clause 19, so that when consultation took place, it would be done with the intent of reaching agreement. I do not understand why it was deleted from that clause in the first place. This is just another way of seeking to reassure the employees, the members of the pension schemes, that they will be fully involved in the process, and that the aim, in introducing any changes to the scheme, is to reach agreement and secure their consent whenever possible. This is not a contentious matter.

I have also tabled amendment 34. An assurance has been given that there will be no further changes for a generation, or 25 years, that new schemes will come into force and that the vast bulk of them will, we hope, be defined benefit schemes, but the whole process involves the security of the elements of the schemes that the Government have guaranteed not to change. Those arrangements must be secured by agreement in the future. If those protected areas of the schemes, which the Government have until now guaranteed, are to change, there should not just be consultation with the employee representatives; there should be consultation with a view to reaching agreement. That consultation should have to secure that agreement. That would give the employees, the members of the pension scheme, the protection that they need, and the reassurance that nothing would be done to those protected areas of their pension without their agreement. Those areas include contributions and benefits.

The whole ethos of the Bill fails to recognise that pensions are not solely in the ownership of the Government or the employing organisation, and that they are paid for by the employees over the years. Those who have paid into the schemes should therefore have a role in managing them. It is interesting that the Bill does not mention the representation of employees on the pension boards that are to be established. We should at least have a proper consultation process, and that process should involve some security that any changes, particularly to those guaranteed areas, should be achieved by agreement.

I do not know of any other walk of life in which people contribute towards the funding of an organisation or a benefit without having a role to play in the management of it, or at least in the direction of policy. The Government are saying in the Bill that those who have paid vast sums into their pensions should have no say, no role and no entitlement to have their views sought or to have agreement reached. I hope that the Government will take on board some of the amendments and send out a message to the trade unions that represent the members of the pension schemes that yes, they do recognise their rights and they do want them to be fully involved. That full involvement would reassure those members of the Government’s good will and willingness to adhere to their commitment to a 25-year guarantee.

16:15

I come back to the point made by the hon. Member for North Down (Lady Hermon). On the interpretation of the law as it stands and on the basis of the legal advice we have been given over some time, my view is that pension contributions develop accrued rights and that they are protected in European law. My view is that when the Government proceed at some time in the future to interfere or tamper with those accrued rights, there will be a legal challenge. I believe that the Government will lose it, and then—four, five or 10 years down the line—legislative changes resulting from the European Court decision would have to be brought back to Parliament. At that point in time, there will be a cost burden on the Exchequer to compensate those people who will have lost out as a result of the proposed Government changes.

I believe that we should seek to avoid that, and the way to do so, as my hon. Friend the Member for Nottingham East has said through his amendment, is to ensure that those accrued rights are protected and that the Government do not have a vast array of powers retrospectively to interfere in people’s pensions. We can also protect pensions by ensuring that employees are, through their trade unions, properly represented and consulted—and, yes, their consent sought—on any changes that the Government might want to make in the future.

[Sajid Javid]

I thank the hon. Member for Nottingham East (Chris Leslie) for tabling amendment 10, which gives us the opportunity to discuss member protections again. This is a serious issue, and although we had some long debates in Committee, it definitely bears revisiting. We have a duty to consider how best to protect the interests of scheme members.

The Government have made a clear public commitment to protect the rights that people have built up in their current schemes. We have said clearly and on several occasions that past service in final salary schemes will not be affected by pension reform. The commitment to honour rights in old schemes is built into the Bill. The power in clause 3, to which the amendment pertains, could be used only for the purpose of setting up new schemes in scheme regulations or for transitional or consequential purposes.

Secondly, there is the umbrella protection in UK general legislation that restricts state interference with personal possessions such as pension rights, unless such interference is lawful and proportionate. This protection of property rights is also an area of the European convention on human rights. This Bill is compatible with that convention. Of course, Ministers and others making scheme regulations are always bound to act in a way that is compatible with the law. This will prevent scheme regulations from proposing unlawful changes to protected pension rights.

[Lady Hermon]

I am sorry to interrupt the Minister so early, but would he kindly explain for the benefit of the House the jurisprudence of the Court of Strasbourg that allows him to say with such confidence that this Bill is compatible with the European convention on human rights? What is the jurisprudence to support that contention?

[Sajid Javid]

I am pleased that the hon. Lady is asking for clarity on this important question. When the Government put this Bill together, it was important, as with any measure, to make sure that it was compatible with existing legislation, including the European convention on human rights. I mentioned it here not to raise the issue of compatibility—of that I have no doubt—but to say that the convention provides protection for property rights. It represents another layer of protection that should reassure people that high hurdles would exist if any future Government tried for whatever reason not to honour the commitments made by this Government.

[Chris Leslie]

I simply do not understand why the Minister refuses to put clearer unambiguous clarifications, protections and safeguards directly into the Bill. What is the purpose of leaving this as some sort of moot issue about whether there is sufficient jurisprudence to prove compatibility with umbrella protections in the European convention of human rights? That is not strong enough. The Minister must understand that people will be very anxious about this issue; why not clarify it and put it on the face of the Bill?

[Sajid Javid]

If the shadow Minister will allow me to continue my comments on this important issue, I shall, I hope, be able to give him some reassurance, but first I want to explain the reasons for the Government’s approach.

Since the courts could set aside unlawful scheme regulations, responsible authorities have strong reasons to respect pension protection rights.

There is a third reason for our approach. In order to provide the statutory protections that underpin our commitment on accrued rights, the Bill establishes a common set of member consent and consultation requirements. In the case of the new schemes set up under the Bill, any change in scheme regulations will require a prior, statutory consultation with all who are likely to be affected, or with their representatives.

Clause 20 provides that if any changes are made that could have “significant adverse effects” on members, consultation must be conducted with a view to the reaching of an agreement, and preceded by a report to Parliament or the relevant legislature. Any such changes will require explicit approval by that legislature under the affirmative procedure. They cannot simply be nodded through under the nose of Parliament. Taken together, the rule of law and the specific provisions in the Bill should give members the strong reassurance that there is already a very high hurdle against unlawful interference with pension benefits that have been built up.

As I have said, this is an important issue, and we must get it right. We are adamant that the application of universal consent locks is not an avenue that we intend to investigate. As a matter of principle, we do not believe that members, employers or anyone else should be given a ticket unreasonably to hold each other, or the Government, to ransom and to inhibit changes that are for the greater good. The Government feel strongly that it is right to prevent that scenario from occurring in the future, and that is why we cannot support the amendment.

Most retrospective changes in accrued rights are either minor and technical, or in the interests of the vast majority of scheme members. As I have said, however, it is vital that we strike the appropriate balance between member protections and the efficient operation of public service schemes. Although I firmly believe that the provisions in the Bill achieve that balance, I can tell the House that the Government do not have a closed mind on this serious issue, which has been raised thoughtfully by Members on both sides of the House, both today and in Committee. I can only reiterate that we are listening and do not have a closed mind. I am sure that the issue will be discussed in the other place, and we shall listen carefully then as well. I hope that, in the light of the reassurances that I have tried to give, the shadow Minister will consider withdrawing his amendment.

Amendment 3 would place a statutory requirement on the Government to seek the agreement of employee representatives when the data, methodology and assumptions to be used in pension scheme valuations is set. I agree that we must get those elements of the valuations right. We must be sure that a valuation accurately calculates the scheme’s costs. I understand that Members want to be certain that the Government will honour their commitment to ensure that stakeholders are involved in the process, and I can tell the House that they will be so involved.

I believe that the amendment is both unnecessary and unworkable. It is unnecessary because we have already made it clear that the Government will engage with stakeholders over the directions on valuations. Transparency and consultation are extremely important principles, and it is important for everyone to have a say in how the valuation process works, but that does not mean that we will allow the whole process to be stymied by a very small group of people. That would hardly be democratic, let alone a rational way in which to proceed, and it would mean that the employer contributions would not be set at the correct rate. I am sure that that was not the intention of Members when they tabled these amendments, but we think it right for discussions about the valuation process to take place within the normal scheme governance procedures. I am also sure that in the normal course of events the vast majority of the discussions will prove to be sensible and constructive, resulting in broad consensus between all parties. I hope Opposition Members recognise that if the worst happens and the talks break down without a full meeting of minds, it is important that, where necessary, the Government can make the final decisions.

On amendment 5, I understand why Opposition Members want to ensure there is meaningful consultation with scheme members before scheme regulations are made, and clause 19 requires precisely that. All scheme consultations on regulations will be conducted in line with the Government’s consultation principles, as set out by the Cabinet Office. As they make clear, the Government are committed to consulting on our proposals and to ensuring consultations are carried out proportionately. Clause 19 as currently drafted provides for a good and comprehensive consultation standard. It also recognises the genuine interests of the members and employers in how their scheme is run.

The clause ensures that whenever a change is proposed to the scheme regulations, the responsible authority must consult everyone whom the authority considers to be affected. Since this will be a statutory consultation, the authority must set out clearly on each occasion the matters on which it is consulting. It must provide enough information and time to allow for considered responses. The authority also needs to keep an open mind until the consultation has closed, and must give fair and proper consideration to those responses before making its final decision. It is worth setting all of that out in detail in order to reassure those who might feel clause 19 does not provide for meaningful consultation; on the contrary, it does precisely that.

Moreover, there are many reasons why the Government may wish to consult scheme members and other stakeholders when making scheme regulations. In many cases the Government will consult with a view to reaching an agreement for proposed changes. Clause 19 as drafted does not prevent that. As the Government have made clear, the enhanced consultation standard should apply to some elements of the scheme, and they are specified in clause 20. It is not necessary to extend this provision to cover every other possible element of scheme design.

[John McDonnell]

I am not trying to be obstreperous, but in a former life I drafted this stuff, so I would be grateful if the Economic Secretary clarified why the phrase

“with a view to reaching agreement”

is in clause 20 but not in clause 19, because I consider the scheme regulations and the aspects addressed in clause 20 to be of equal importance?

[Sajid Javid]

The hon. Gentleman has approached this issue in a very thoughtful way. We consider that the high hurdle of

“with a view to reaching agreement”

should not apply to every scheme change that might need to be made. I appreciate that the hon. Gentleman has a different view about when it should apply, but I think I have made the Government’s case clear.

[Lady Hermon]

The Economic Secretary has elaborated at great length on clause 19. My concern, however, is that clause 20 refers to consultation

“with a view to reaching agreement”,

rather than until consultation is reached. If agreement is not reached, what will happen? Will the changes be imposed on workers, in which case consultation will merely be an exercise and a formality?

[Sajid Javid]

The requirement of

“with a view to reaching agreement”

is a high hurdle. I cannot remember the phrase the hon. Lady used, but I can say that the requirement is not a tokenism of any kind—it is a genuine commitment. It is in clause 20, so where this is required it is a clear commitment that the Government will have to honour. The second part of her question was about what would happen if an agreement was not reached. I hope that such situations would be rare, but it is clear that if an agreement could not be reached the Government would have to make the final decision, as is absolutely right.

16:30

Amendment 34 gives me the opportunity to discuss the rationale for the inclusion of the provisions in clause 20. On a number of occasions the Government have stated their belief that the package of pension reforms that the Bill helps to implement represents a settlement for a generation—a deal that should last 25 years or more. The provisions in clause 20 are intended to deliver on that promise by putting in place a high bar for any future Government who might wish to amend any of the core elements of the new schemes. The clause also extends these protections to instances where the responsible authority proposes to make retrospective changes that will have significant adverse effects in relation to members of the schemes.

As we have discussed, the clause requires consultation

“with a view to reaching agreement”.

Such a provision goes further than the already thorough consultation requirements set out in clause 19, which we have just discussed. Clause 19 requires consultation on every change to scheme regulations with all interested parties. That consultation must be carried out in good faith and with an open mind. The courts have shown no hesitation in holding the Government to the high standards required by a statutory consultation of the kind required in clause 19.

By making it clear that the consultation under clause 20 should be undertaken

“with a view to reaching agreement”,

the Government are making a legislative commitment about how such consultations should be carried out. The clause requires consultation to be conducted in a manner conducive to reaching an agreement. A Government will also have to report to Parliament on the actions they wish to take, having due regard to the desirability of not making changes to the protected elements. The amendment seeks to go further than that, by making it compulsory for the Government to obtain agreement from members or their representatives before such a change could be made—the very scenario that the hon. Member for North Down (Lady Hermon) just raised. On the very rare occasions that these elements may require amendment, it is important that the Government should consult and work with members to ensure that the best outcomes for all involved can be achieved. However, it would be entirely wrong for individual trade unions or members to be able to prevent reform should it be in the interest of the vast majority of members.

[Chris Leslie]

I have great sympathy with many of the arguments that my hon. Friend the Member for Hayes and Harlington (John McDonnell) made. He has tabled a series of amendments and has highlighted a couple of appropriate points. He seeks to pin down what happens in respect of changes that affect data, methodology, assumptions and valuations. Those are the long-grass details that many people often put in the box marked, “Too difficult to handle”. However, it is really important that people realise that a tweak here or a change there to the way in which some pension metrics are defined can seriously affect the retirement incomes of hard-working public sector employees, so he is right to shine a bit of a spotlight on those areas. I am not necessarily sure about his drafting, but he has brought an important proposition to the House’s attention. Similarly, he raised some issues we debated in Committee, such as why certain parts of the Bill talk about consultation being done in the way that many of our constituents have become used to—as a cynical box-ticking exercise. There is consultation, but most people have, sadly, grown used to the notion that consultation in that context means a form being sent out that they can send back if they want to, which Ministers will just ignore when it comes back.

Ministers then say that they will have a special enhanced consultation process, which means that it is done with a view to reaching agreement. As the hon. Member for North Down (Lady Hermon) pointed out, even in an enhanced consultation process there is no guarantee that agreement will be reached. It is difficult to know how anybody participating in that consultation would enforce the process, but that consultation is the so-called protection in the protected elements of the Bill. In a sense, my hon. Friend the Member for Hayes and Harlington is debunking a lot of the differentiation between consultation and enhanced consultation.

[John McDonnell]

I have not seen this before, but we now have two types of consultation. The first is, “We’re consulting you because we hope you agree with us,” and the other is, “ We’re consulting you but we couldn’t care what you say to us.” Amendment 34 is simply trying to protect the Government, so that they can demonstrate that they are adhering to their promised level of consultation.

[Chris Leslie]

I suppose it is a case of diet consultation—or consultation-lite—versus full-fat consultation, which I know that my hon. Friend would be far more keen to see. I think he has done the House a service by casting some light on those issues, but I hope he will forgive me if I focus mostly on amendment 10 and the issue of retrospectivity, which is, ultimately, to me one of the worst aspects of the Bill.

I am glad that the Minister said that the Government have an open mind on retrospectivity—at least, he said that they do not have a closed mind, which is a similar thing. We hope for great things in the other place when the question is considered. He gave a set of reasons: a court might come along and set aside scheme regulations or there might be technical reasons for raiding people’s accrued savings and pension benefits retrospectively. I must say to the Minister, however, that when the Chief Secretary to the Treasury—for it was he—promised “No ifs, no buts” and said that he did not want that retrospectivity, not to have put that particular provision clearly and explicitly in the Bill is a major failing that will leave many employees with a sour taste in their mouths. They want some pretty basic protections to stop the notion of clawback and the ability of Ministers to sequester savings that they thought were safe—the deferred wages they have set aside for their long-term well-being.

We need to ensure that we focus on the confidence of employees in the scheme, as this is their property too, as my hon. Friend pointed out. It is not just the preserve of the Government; they are not simply giving out a pension as though it were a state pension scheme or however they wish to characterise it. These pensions are a joint endeavour between employees and employers and that is why we have said that the Superannuation Act 1972 protections need to be transposed into the Bill. The provision, derived from that Act, states:

“Scheme regulations shall not make any provision which would have the effect of reducing the amount of any pension, allowance or gratuity, insofar as that amount is directly or indirectly referable to rights which have accrued”.

The protection we need is very straightforward and we wanted to put it into our amendment. The Minister needs to go back and think about this again, as it is a signal issue that is at the core of the trust we need to have in the scheme. We want the scheme to work and we want members to stick with it and not opt out, but they need to know that their money and their savings are safe. That is why I would like to test the opinion of the House on amendment 10 by pressing it to a Division.

Question put, That the amendment be made.

16:39

Division 112

Ayes: 223

---

Labour: 208
Scottish National Party: 5
Democratic Unionist Party: 3
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 2
Alliance: 1
Green Party: 1

Noes: 281

---

Conservative: 234
Liberal Democrat: 46

Clause 9

Pension age

[Chris Leslie]

I beg to move amendment 13, page 5, line 21, after ‘age’, insert ‘or deferred pension age’.

[Mr Speaker]

With this it will be convenient to discuss the following:

Amendment 29, page 5, line 21,after ‘section 1’, insert

‘(other than a Scottish scheme)’.

Amendment 2, page 5, leave out lines 22 and 23 and insert

‘65, or current pension scheme age if lower’.

Amendment 1, page 5, line 27, at end insert—

‘(d) prison officers and psychiatric nurses.’.

Amendment 14, page 5, line 28, after ‘age’, insert ‘or deferred pension age’.

Amendment 30, page 5, line 28, after ‘section 1’, insert

‘(other than a Scottish scheme)’.

Amendment 9, page 5, line 28, leave out ‘must be 60’ and insert ‘shall be set out in scheme regulations but must be no more than 60’.

Amendment 16, page 5, line 29, at end insert—

‘(2A) Subsections (1) and (2) shall not apply in relation to any category of public service worker as the Secretary of State may by order specify following the publication of a scheme specific capability review.’.

Amendment 15, page 5, line 30, leave out subsection (3).

Amendment 31, page 5, line 30, after ‘section 1’, insert

‘(other than a Scottish scheme)’.

Amendment 33, in clause 33, page 19, line 25, clause 33, at end insert—

‘“Scottish scheme” means a scheme for the payment of pensions to persons specified in paragraphs (c) to (g) of section 1(2) in respect of service in Scotland;’.

[Chris Leslie]

We turn now to the part of the Bill relating to pension age. Let me first deal with what we think are drafting anomalies, with which we deal in amendments 13 to 15. Following our further scrutiny of the Bill after the Committee stage, we have noticed a potential anomaly on which we hope the Minister can reflect. There are to be some exemptions in the link between the retirement ages set out in public sector pension schemes and the state pension age arrangements. They are set out in clause 9(2) on page 5 of the Bill—I know that hon. Members are following this avidly—and relate to a person’s normal pension age under the scheme. The clause does not refer, however, to their deferred pension age, which means that the exemptions apply only to active members of pension schemes and not to those who have moved on from their occupation and are classified as deferred members.

The Bill will introduce increased pension ages, but clause 9 as drafted could lead to significant unfairness for some members of the fire brigade, the police and the armed forces, because, under the state pension age arrangement, those specified protected occupations will not be tied to the normal pension age. For example, a firefighter might decide to leave the fire brigade at the age of 58 because he or she feels physically unable to continue until 60, not necessarily due to any specific health problem, but simply due to their increasing age. They will then become a deferred member of the pension scheme, so they will not be entitled to receive the full pension until they reach the state pension age. That is a significant gap, so we think that the amendments are necessary to prevent unintended unfairness. Any extra costs resulting from such changes would need to be fully managed as part of the cost-cap mechanism. Our proposal would not add a burden to the Exchequer, but it would address a potential anomaly in the Bill. The Minister will, therefore, understand why we have tabled amendments 13, 14 and 15. I hope that this is a drafting error and I invite him to reflect further on it.

The Minister will not be surprised to learn that it is amendment 16 that most represents our ongoing anxieties about clause 9 and the problems with the link between the state pension age and an array of public sector employees whom we are asking to work for a considerable length of time. It needs to be said that, with life expectancies increasing, it is right to ask public sector employees to work longer before drawing their pensions. We do not disagree with that. Reforms of the age at which public sector workers retire are necessary if pension schemes are to remain sustainable, which, of course, is in everybody’s best interests. As such, we broadly agree that the normal retirement age for public sector workers should be linked to the state pension age. However, we have serious concerns about the inflexible way in which the Bill has been drafted and how it deals with exemptions to the state pension age.

The Government have understood that certain workers in physically demanding professions are not able to work past a certain age, regardless of their increasing life expectancy. As such, the Bill fixes the retirement age at 60 for fire and rescue workers and for members of the police force and the armed services. So far, so good, but my point is that those are not the only public sector workers with physically demanding jobs, and that is where the debate now takes us.

[Richard Fuller]

To press the hon. Gentleman on his point, he has made the assertion—it may be a fact—that the sole criterion for the exemption of these professions from the normal retirement age is the physicality of the job, but does he accept that there are other differences between those types of public sector workers and others and that that might be why they have been given a different retirement age?

[Chris Leslie]

I wonder what the hon. Gentleman is alluding to; perhaps he should elaborate. The Minister has not said that there are considerations other than the physically demanding nature of being a firefighter, a police officer or a member of the armed forces. Is the hon. Gentleman suggesting that there are different categories of public sector workers beyond some of those physical issues?

[Richard Fuller]

I will clarify my view, although I cannot speak for the Government. One criterion that differentiates these workers, other than physicality, is that they put themselves in danger in their public service, perhaps not routinely, but as an important aspect of their work. A firefighter will run into a burning building to rescue someone, a member of the police force will stop altercations and put themselves in physical danger, and members of our armed forces routinely put their lives on the line for our country. Does the hon. Gentleman not accept that that is an important point of differentiation and that it is not just to do with physicality, which is the basis for amendment 16?

17:00

[Chris Leslie]

While I do not disagree about the bravery of those in the professions listed in the Bill, I counsel the hon. Gentleman against taking the prescriptive view that only those categories of employee are engaged in brave acts or in risky professions. I accept that there are risks that go beyond the question of physicality, but there are other professions where the distinction is not as black and white as the Bill makes out. Mental health workers often take significant risks in the course of their duties, for example if they have to restrain patients. Prison officers are often in dangerous situations. Paramedics, hospital porters and others also have very physically demanding duties. There are gradations of physicality and risk.

My point is that there is an anomaly in the legislation, because one cannot be quite as prescriptive as to set out in the Bill particular classes of job and suddenly regard all others as not involving the same level of physicality or risk. I will not say that there are 50 shades of grey, but there are certainly gradations.

[Mr Gibb]

Perhaps I may help the hon. Gentleman to address the conundrum with which he is challenging himself by referring him to the Hutton report, which the Bill is implementing. I refer him to one of the shaded boxes that I know he is very keen on. Recommendation 14 states that the exception to linking the normal pension age to the state pension age should be

“in the case of the uniformed services where the Normal Pension Age should be set to reflect the unique characteristics of the work involved.”

Hutton also states that the uniformed services are in a different position because their current pension age is 55 or less. That is another key reason why there is a different normal pension age for the uniformed services, which Hutton specifically lists as

“the armed forces, police and firefighters”.

[Chris Leslie]

I do not deny the important role that is played by the professions listed in the Bill. What I am saying is that it is not as simple as saying that all other professions should therefore be exempt from considerations about the physicality of their endeavours. One could argue that prison officers, being a sort of uniformed service, have cause to have such protections. My point is that it is inconsistent and unfair to make exceptions for some workers in physical roles and not others. It is by no means clear that 60 is the appropriate age for all firefighters, police and Army personnel, when some of them undertake such demanding physical activity. There is no room in the Bill to make further exceptions to the state pension age link or to respond to any review that makes recommendations about the appropriate retirement age for firefighters, the police or Army personnel. Members who served on the Committee will recall that we cited the working longer review in the national health service, which was set up by Government Members. There is also an ongoing review of the working age in the fire service.

[Mark Reckless (Rochester and Strood) (Con)]

Is the hon. Gentleman’s argument on the basis of physicality collapsing? As my hon. Friend the Member for Bedford (Richard Fuller) said, three professions routinely place themselves in danger much more significantly than other professions. They currently have significantly lower pension ages, so it would be hugely unfair, a cliff edge and very disproportionate, to seek to increase their pension age to 65 or 68 as in other professions.

[Chris Leslie]

That is why amendment 16, which I urge the hon. Gentleman to look at, does not prescribe different pension ages for different categories of worker. We are looking only to give power to the Secretary of State, who

“may by order specify following the publication of a scheme specific capability review”,

to allow disapplication in relation to categories of public service worker for provisions in clause 9(1).

If reviews are ongoing—the Government have undertaken the working longer review in the national health service, and the fire service review—we must ensure almost as an issue of drafting that any conclusions of those reviews can be enacted and reflected in legislation, if the Secretary of State agrees. That is the extent of the amendment; it would simply ensure that if there are technical reviews of the capability of certain classes of employee, the Government will be able to create exemptions from any arrangement. That is why the amendment is narrowly defined. I accept there is a theoretical or philosophical argument about risk and physicality, but to return to the practicalities of our arrangements, we must look at how the legislation is drafted. That is our duty as a loyal Opposition.

[Richard Fuller]

The hon. Gentleman is being generous in giving way. He may regard the amendment as narrow, but I regard it as a broad generalisation that seeks to introduce uncertainty in an otherwise specific Bill. If his principle of physicality is an important test for public sector pensions, is it also an important test for private sector pensions or the state retirement age?

[Chris Leslie]

If a private sector scheme rules to make its own arrangements, it has the flexibility to do so. We are simply saying that in future, some degree of latitude and flexibility should be placed in statute to allow Secretaries of State to take account of the outcome of any reviews. We are not saying there should be a requirement for exemptions to be made; we want to give the Secretary of State the power to implement the findings of any reviews should that be deemed fit.

[Mike Freer]

I sometimes feel as if I am on the wrong side of the Chamber for this Bill, but perhaps I may help regarding the intervention from my hon. Friend the Member for Bedford (Richard Fuller). The private sector does recognise physicality for those such as steeplejacks, chimney sweeps and jockeys who have a significantly lower retirement age. I hope that is helpful to the shadow Minister.

[Chris Leslie]

If only we had been talking about jockeys when the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock) was in the Chamber; he would have found that helpful intervention most interesting. My respect for the hon. Member for Finchley and Golders Green (Mike Freer) grows by the minute and I am grateful for that interjection.

The key point is whether the reviews can find their course into effect. In Committee, the Minister repeatedly stressed that the working longer review for NHS staff was

“not in any way looking at the link between the normal pension age and the state one.”

Instead he said that it was

“considering the implications of working longer for NHS staff,”––[Official Report, Public Service Pensions Public Bill Committee, 13 November 2012; c. 327-28.]

That seems a slightly contradictory statement. Linking the normal pension age to the state pension age means that people will work longer, and therefore the review will look at the effect on the state pension age link for NHS workers.

The terms contained in the Department of Health document “Reforming the NHS Pension Scheme for England and Wales” include the following objectives for the working longer review:

“Identify any categories of worker for whom an increase in Normal Pension Age would be a particular challenge in respect of safe and effective service delivery and consider how this may be addressed;

Identify any categories of worker for whom an increase in Normal Pension Age would be a particular challenge in respect of their health and wellbeing.”

If that NHS review concludes that a higher normal pension age is inappropriate for certain categories of worker, either because working longer would be physically damaging or because it could lead to unsafe practices in the NHS, the current Bill would not allow those workers to be exempt from the state pension age link in clause 9. I therefore contend that it is irresponsible to make legislation before the findings of the Government’s review are published, without allowing the legislation to accommodate some or all of that review’s recommendations. Given that the working longer review was a key component of the agreement reached between health service workers and their employers, it is unfair to fetter the recommendations that the review can realistically make. It is similarly inappropriate and unfair to fix the retirement age for firefighters at 60 when the working longer review in the fire service is yet to report.

This is an incredibly important issue. I accept that we must note that the cost-cap mechanism in the Bill would ensure that any extra costs of the extra exemptions to the state pension age link will need to be met by the scheme—the Opposition are not saying that the additional costs should fall on the shoulders of the taxpayer—but bearing that in mind and the fact that the clause does not require the Secretary of State to make exemptions, the amendment simply allows flexibility. I cannot see how the Government can object to it.

[Mr Gibb]

Before hon. Members speak to other amendments in the group, may I refer the hon. Gentleman to the proposed final agreements? I have in front of me the one that applies to teachers pensions, but it is similar to other schemes. It states:

“Actuarially fair early/late retirement factors on a cost-neutral basis”

will apply in the agreement. That means that teachers can take early retirement if they wish. If the normal pension age is above 65, they will have an early retirement factor of 3% per year for up to three years. People can therefore take early retirement with a small actuarial reduction in the pension. That deals with the problems the hon. Gentleman describes.

[Chris Leslie]

With the greatest respect, that does not deal with the problems, because there is a difference between the early retirement benefits to which an employee is entitled and those they can get at the normal pension age as defined in scheme regulations. The Government set up working groups and committees in the NHS, fire services and services throughout the country. Those groups have been given terms of reference, but now discover that they cannot implement their findings because of a drafting anomaly in this Bill. All the Opposition are asking is that the Government think again about how the scheme capability reviews come to fruition. This ought not to be a partisan point. I am simply seeking to ensure that we have flexibility in the legislation.

Others will want to speak to the amendments in the group that they have tabled, but I strongly urge the House to support amendment 16.

[Mike Freer]

I said in an intervention that I had some interesting views on the Opposition’s stance. I have sympathy with the thrust of the amendments, but I assure the Minister that it does not extend to voting for them.

Our starting point on the retirement age must be the demographic pressures we face. UK National Statistics data show that in 2008, males were expected to live to 78.1 years and females to 82.1 years, yet by 2011, life expectancy had jumped to 90.3 years for men and to 93.8 years for women, and we could expect to pay almost as many pension cheques as pay cheques. One of my reasons for supporting the linkage—in the main— between public sector pension schemes and the state retirement age is that there is a huge gap between the contribution rates of the employer and employee and what is drawn out as a pension.

The NHS pension scheme tiered employee contributions data, which are published by the NHS, show that the employer pays about 14% and the employee about 8.5%. My rudimentary maths leads me to conclude that 22.5% goes in. Members who took part in the Bill Committee evidence sessions will remember the British Medical Association’s interesting contribution, not least because the BMA said that doctors should pay less and the lowest-paid should pay more for their pensions. The BMA confirmed that the average pension out in the NHS was 49%, so if the contribution rates are putting in only 22.5%, but 49% is coming out, that 26.5% gap has to be covered from somewhere, and it is being funded by the taxpayer. If that taxpayer gap is going to grow because of the demographic time bomb—people are retiring at the same age, but living longer and drawing pensions longer—it will start to be completely unsustainable, undermining the public sector pension schemes in total. That is why the Government are right to link the normal pension age with the state retirement age.

17:15

As I said, I have some sympathy with the thrust of the amendments. I acknowledge that the Government have gone some way to recognise the physicality of the work of the police, the fire service and the armed forces by having a lower retirement age of 60. However, I gently ask the Minister to revisit the impact of the physical nature of some of the roles within those categories, although not all the roles, because there is a huge difference between a police officer on the beat, in a territorial support group or in the computer-aided dispatch call centre.

On Saturday, I met one of my constituents, who is a sergeant in the local territorial support group. He is 42 years old and physically very fit. He explained that his job involves being the guy at the sharp end outside the gates of Parliament when we have serious disorder. He is the guy in full riot gear who has to wade into civil disobedience. He is the guy who goes in the front door when the police have to go in and arrest a violent criminal. The physicality of that job requires him and his colleagues to pass tests to ensure that they are physically up to the job. There are two tests in particular, and one is called the bleep test. Anybody who goes to a gym may know that this is where one has to run faster and faster to get between two points before the bleep cuts one off. On top of that, the sergeant explained that he has to do a shield test, which is where he and his colleagues, in full riot gear, have to be able to run 1 km in not more than six minutes. He explained to me that that, at his age, he is getting towards the limit of his physicality. Expecting a sergeant in the TSG to be able to pass the bleep test or a riot shield run in six minutes or less for 1 km at the age of 59 is perhaps asking too much.

I am reasonably fit, but I have 10 years on the sergeant. I have accepted the challenge of doing the shield run—of trying to run 1 km in not more than six minutes in full riot gear. Perhaps the Government and Opposition Front Benchers would like to join me. If they are keen to take up the challenge, I will happily arrange it. Both the Minister and the shadow Minister have 10 years on me as well. [Interruption.] Whips, of course, are entitled to take part—they might enjoy dressing up with the truncheon.

On the question of physicality, I am not suggesting that the Government have got it wholly wrong. I am suggesting that if, at some point in the future, we have empirical evidence that such physicality has an impact on those particular jobs, the Minister—I am sure he is rushing off to check the data—might revisit the rules to see if that physicality can be reflected in those specific roles within those specific categories.

[Bill Esterson (Sefton Central) (Lab)]

Many years ago I took the bleep test and I can only describe its physical demands as a form of hell. The hon. Gentleman is right about the demands on the police, but what about other public sector workers? It has been put to me by nursery staff, school staff who work with small children, nurses and other NHS staff that they have very physically demanding jobs. Their jobs are not as potentially violent as the job he has just described, but they are demanding. Does he accept that we need to look carefully at the impact on those people too?

[Mike Freer]

The hon. Gentleman makes a good point. I do not rule out the possibility where there is empirical evidence that people’s ability to work and progress is affected by the physicality of that profession. One difficulty is that those in some of the roles described in the Bill will have limited opportunities to move into other less physical roles. That is another consideration. If there are roles in the NHS where the physicality affects people’s ability to perform that role and where no other avenues are available to them, that is a fair point, but in most roles there will be opportunities to move into less physically demanding roles. Unfortunately, in the armed forces, police and fire service, there are limited opportunities to move out of front-line roles. It is the House’s duty to protect those who protect us.

[Mark Reckless]

People are living longer and many, albeit not all, are remaining fitter for longer. It is suggested that we amend the Bill to enlarge those categories in the public sector, but what about those in the private sector—people who work in private sector nurseries, for example—who face exactly the same issues as the hon. Member for Sefton Central (Bill Esterson) just raised?

[Mike Freer]

My hon. Friend makes a good point, but if he revisits some of the private sector schemes, he will find that they rely on actuarial and physical evidence provided by various medical boards, and that the retirement age in certain private sector schemes already reflects the physical demands of certain roles. In an intervention, I mentioned, rather light-heartedly, people such as steeplejacks and jockeys, but there are other roles whose physical demands are reflected in certain private sector pension schemes, which already have mechanisms in place.

[Richard Fuller]

Does my hon. Friend not accept that those pension schemes are fundamentally different from the types we are debating? The former tend to be defined contribution schemes rather than defined benefit schemes. Does that not have an impact on the flexibility of those schemes and their ability to take account of those issues?

[Mike Freer]

My hon. Friend makes a good point. He knows my views and is tempting me down the path of debating the future of defined benefit schemes. I have been entirely consistent on this point: for many years, I have said that all defined benefit schemes are no longer sustainable, whether in the private sector or public sector. That is a debate for another time and is certainly not pertinent to the amendment, but I share his view that perhaps we need more wholesale change and a larger debate.

In supporting specific exemptions where physical demands can be proven, I am not undermining the broad thrust of ensuring that our public sector pensions are sustainable. I have long argued that the contribution rates of both employee and employer do not match: what goes in does not match what comes out. That has driven my long-held view that defined benefit schemes are no longer fit for purpose. Having said that, this Bill is a major step forward in making sure that our public sector pensions are sustainable. We have a duty, however, to protect those who protect us and we ought to revisit this point where there is hard empirical evidence that physicality, in certain roles within those categories, can be proven to be detrimental to people’s health after retirement. I am not suggesting that I will support the amendment, but I am urging my ministerial colleagues to revisit the matter.

I have rehearsed at length the point about physicality. I am sad that the Minister is no longer with us, but I hope that he will address that point when he winds up. Should empirical evidence emerge, I hope that we can revisit this subject.

[Ian Lavery (Wansbeck) (Lab)]

I want to refer, in particular, to my amendment 1. I found the contribution from the hon. Member for Finchley and Golders Green (Mike Freer) very interesting indeed. I certainly agree with a range of points he made.

The amendment seeks to place two additional occupations into the Bill, and they have been mentioned on both sides of the Chamber. They are those of prison officer and psychiatric nurse. Clause 9(2) lists the three occupations to be enshrined in the legislation as exemptions from subsection (1)—they have been discussed by various Members and there seems to be some agreement—which are

“fire and rescue workers who are firefighters…members of a police force, and…members of the armed forces.”

I fully support people working in those occupations and the courageous work they do on a regular basis. I fully understand why they are included in the Bill and support their inclusion, but for the very same reasons I wish to amend the Bill to include prison officers and psychiatric nurses.

It is widely accepted that prison officers and psychiatric nurses have to deal with some of the most dangerous, dysfunctional and disruptive people in society on an almost daily basis. Expecting these categories of worker to work above the age 65 is totally and utterly unjustified; in fact, when we look at it in great detail, the decision seems absolutely outrageous. The hon. Member for Finchley and Golders Green mentioned a constituent of his, a very fit police officer from the territorial support unit who explained exactly how he kept himself in peak fitness to do his job. We cannot expect people in the Prison Service to be grappling with prisoners at the age of 65 and above, but the Bill as it stands would allow that.

Currently, prison officers regularly have to take five different tests: a grip strength test, an endurance and fitness test, a dynamic strength test, an agility test and a static shield hold test. If a prison officer fails any of those tests, they fail the entire health and fitness test. The current regime is therefore rather stringent. If clause 9 is agreed to unamended, it will mean many prison officers and psychiatric nurses either dying in service or retiring on ill health grounds and not having a very healthy lifestyle thereafter.

[Bill Esterson]

My hon. Friend is doing a fine job of explaining the concern of people who work in the Prison Service or in psychiatric health. Ashworth hospital and HM Prison Kennet are in my constituency, and people working at both have expressed exactly those concerns to me. Does he think that, as well as potentially leading to damaged health and increased disability, the Bill will discourage people from entering the Prison Service and that part of the NHS?

[Ian Lavery]

That is absolutely right. When anybody looks to take up a new employment opportunity, they look at a whole array of things. The public sector is changing by the day—although the Prison Service and the NHS now involve not just the public sector, but the private sector. People look at how their pensions will end up and what the pensionable age is, which we have also been discussing this afternoon. That is a huge consideration for many people who want to choose their profession early on in life. This measure will put people off becoming prison officers.

17:30

I know a lot of prison officers and psychiatric nurses, and they are very committed people. They come to see me in my surgery and they say, “Mr Lavery, I am 50. How am in going to manage to do this job in 15 years’ time?” The measures in the Bill mean that they would have to do just that. We need to scrutinise this. We cannot have people over 65 years of age doing that kind of work. It is absolutely nonsensical. I really hope that we can reach an agreement today to look at that situation again.

An added problem in the prison service is that the work force are growing older, because the prospect of doing the job does not excite people any more, and the prison population is getting not only younger but more dangerous. Violence is on the increase, and an average of eight prison officers are assaulted every day of every week. Not long ago, it was recognised that prison staff had a life expectancy of only 18 months after retirement, yet the Bill gives them no consideration. The Government have still not provided any evidence that front-line prison staff could work in an operational role over the age of 65, yet they are still considering that option.

[Lady Hermon]

May I gently ask the hon. Gentleman to remind the House that prison officers in Northern Ireland also run a particularly grim risk? After a gap of almost 30 years, a prison officer, David Black, was murdered recently in rush-hour traffic on a busy motorway on his way to work. Prison officers in Northern Ireland run an additional risk. It is an absolute disgrace that prison officers are not exempted in clause 9.

[Ian Lavery]

The hon. Lady makes a powerful point. Prison officers in Northern Ireland have had a particular problem with security for decades. They have the same security problem here, although it is definitely not as bad as the problem experienced during the troubles in Northern Ireland. Nevertheless, prison officers put their neck on the block at all times. I have been out socialising with members of the Prison Officers Association when they have been approached by ex-convicts. They were out having a decent time, and those people were coming up to them. They addressed the prison officers very politely, but I have to say that they looked rather strange. I would not want them coming to talk to me. We need to look at the security of the people who work in the Prison Service. As I have said, we need to protect those people.

The hon. Member for Finchley and Golders Green said that members of the police force were highly trained, and that they needed shields and other forms of protection. He said that they were out on the front line when there were problems, and that they would get stuck in to try to resolve them. Prison officers and psychiatric nurses do that on almost a daily basis, and it is not very pleasant for them. There are also problems in the Prison Service and the health service, when prisoners are not only violent but spit in people’s faces and when blood is thrown at people’s faces causing all sorts of distress.

It is common sense to try to ensure that prison officers and psychiatric nurses are added as part of the exemption under clause 9(2), just as we rightly wish to protect police officers in their daily duties. Our brave armed forces and our firefighters are other examples, so we should look to protect the prison officers and psychiatric nurses, whose duty is solely to protect us, in the same way.

I will not press my amendment to the vote, as I do not want to divide the House. Should I say that we are too conciliatory on this issue, and should I say that Members of all parties seem to agree—albeit to different degrees—on it? Rather than split the House on it, I gently ask the Minister at least to consider the amendment to ensure that psychiatric nurses and prison officers are included in the provisions of clause 9(2).

[Mr Gibb]

I shall make a brief contribution and oppose amendment 2, tabled by Opposition Members, which would leave out lines 22 and 23 of clause 9— essentially subsection (1)(a) and (b)—and insert in its place

“65, or current pension scheme age if lower”.

That would drive a coach and horses in many ways through one of the Bill’s key provisions, which is to have a link between the normal pension age and the state pension age. I think that is an important way to minimise the risk of longevity to the taxpayer.

Paragraph 4.5 of the final report of Lord Hutton says:

“It is generally assumed that longevity will continue to increase in the future, but there is significant uncertainty about the scale of any future changes.”

He goes on to say:

“Increases in life expectancy have historically been… underestimated”

when the calculations have been made.

In paragraph 1.2 on page 22, Hutton says:

“As a result”

of this underestimation,

“pension costs…have been much higher than originally expected.”

He cites the example of a female pensioner in the NHS scheme who would retire at the age of 60 in 2010, and says that she would be expected to spend around 45% of her adult life in retirement, compared with about 30% for pensioners who retired in the 1950s. That is the issue that Hutton is trying to address. Spending 45% of one’s life in retirement is simply not sustainable for any pension scheme—even one backed up by the vast coffers of the state sector.

Page 9 of the Hutton report states:

“The main risks within defined benefit schemes are: investment; inflation; salary”—

because salaries can be put up without actuaries being aware of the rises—

“and longevity risk. While government, as a large employer, is capable of bearing the majority of the risk associated with pension saving…present schemes involve too much risk for government and the taxpayer.”

He went on to say:

“There should be a fairer sharing of risk between government”

and scheme members. It is that risk that amendment 2 would push back to the taxpayer.

Hutton says that the increases in life expectancy have been recognised within the state pension scheme, and he therefore recommends that we should follow that lead when it comes to helping members bear pre-retirement longevity risk. That is why he recommends the link between the state retirement pension age and the normal pension age. Recommendation 11—it is in a shaded box, which will please the shadow Minister—states:

“The Government should increase the member’s Normal Pension Age in the new schemes so that it is in line with their State Pension Age.”

Lord Hutton also says:

“The introduction of the link to the State Pension Age, which will initially move Normal Pension Ages to 65, will move the proportion of adult life in retirement for public service pension scheme members back to about a third: roughly where it was in the 1980s. The current State Pension Age of 65 is already the Normal Pension Age for most new entrants to public service pension schemes.”

Teachers, for instance, have a 2007 scheme and a pre-2007 scheme. For those who joined before 2007 the normal pension age is 60, while for those who joined after that date it is 65. Lord Hutton goes on to say:

“In the long term, the timetabled increases in State Pension Age should help to keep the proportion of adult life in retirement for members around this level”—

that is, a third—

“on current life expectancy projections.”

I believe that amendment 2 is a mistake, and would increase risk disproportionately for the taxpayer.

[Dr Whiteford]

I am glad to have an opportunity to speak briefly about amendments 29, 30 and 31, which stand in my name and which would exempt Scottish schemes from the requirement that new schemes should link pension age with state pension age. Amendment 33 is simply a definition of what is meant by “Scottish scheme”—namely a scheme relating to those in local government, teachers, NHS workers, firefighters or the police—for the purpose of clarifying the other amendments.

On Second Reading, it was clear that the linking of normal pension age to state pension age was a central bone of contention. It has certainly been the main topic of concern mentioned to me by constituents who will be affected by the proposed changes, including teachers, NHS workers and prison officers. It has also been the top priority for unions and other staff representatives taking part in negotiations. It has been the key sticking point in those negotiations, and has caused a great deal of anxiety and uncertainty among employers.

As has been pointed out by other Members, many people who do physically demanding and stressful jobs will struggle to work into their late 60s. The change will create real difficulties and hardships for those who develop health conditions as they age. It will also make life much more complicated for employers who will have to work around and adapt to the physical limitations of employees who should really have retired.

The reason this is such an acute issue in Scotland is very simple: our life expectancy is almost two years lower than the UK average. In fact, ours is among the lowest life expectancy levels in Europe. Even given recent improvements and an upward trajectory, male life expectancy in Scotland is only 76 years and female life expectancy just over 80. We also have an unenviable health record. I have previously referred to the widening gap between rising life expectancy and what is defined as “healthy life expectancy”—the years before the average age at which people develop serious physical health problems that impair their normal day-to-day life. At present, women in Scotland have a healthy life expectancy of only 61.9 years, while for men the figure drops to 59.5. In other words, people are already having to work beyond the age at which they can expect to be in reasonably good health.

[Sheila Gilmore]

Will the hon. Lady give way?

[Dr Whiteford]

I am sorry, but Mr. Speaker has asked me to keep my remarks brief. I hope that the hon. Lady will bear with me.

A large number of people end up taking early retirement or receiving disability benefit in later middle age. The TUC has done some sterling work in highlighting the large proportion of people who are in that position. Many are having to retire early on reduced pensions, in some cases at a significant cost to their employers. When workplace pressures have contributed to the premature collapse of an employee’s health, that becomes a very costly exercise for everyone involved. I am thinking particularly of prison officers.

We know that people in physically demanding occupations and those on lower incomes die significantly earlier than affluent people in white-collar jobs. The new hon. Member for Corby (Andy Sawford) mentioned that earlier. Our public sector encompasses a range of occupations, from civil service desk and office jobs to the work done by people such as prison officers, paramedics and nurses, which places intense physical demands on them.

Although the Bill has acknowledged the physical strain that is placed on some workers, such as firefighters and police officers, it does not take proper account of the human limitations of our work force as a whole. In applying such a broad brush to changing demographics, it takes no account of occupational and geographic variances that cut across other aspects of social class. We can legislate on paper as much as we like, but forcing people to work until their health caves in is not a sustainable long-term solution for pensioners. A little more pragmatism from the Government would go a long way, not only in enabling meaningful negotiations to progress, but in designing genuinely sustainable public sector pension provision in the Scottish context for the longer term. If we do not get the design of schemes right, public sector employees are likely to lose confidence in the process, and we will run the risk of individuals choosing to opt out, with all the negative unintended consequences that entails, with additional cost to the state through means-tested benefits.

17:45

My amendments would allow the Scottish schemes to reflect the realities of Scottish circumstances, such as the persistently low life expectancy, and would provide a key flexibility in negotiations with employers, unions, and others. They would exempt Scottish schemes for which the Scottish Government have devolved responsibility from the link to the state pension age and enable meaningful negotiations to proceed with employers and unions, in the interests of not only public sector pensioners but all of us who use and value public services. I shall test the view of the House on amendment 29 and, given the debate we have had on this subject, I hope Members on both sides of the House, including Members representing Scottish constituencies, will support the amendment.

[Richard Fuller]

It is a pleasure to follow the hon. Member for Banff and Buchan (Dr Whiteford), who made some important points about Scotland.

I oppose Opposition amendments 15 and 16. It was absolutely right for the Government to continue to recognise the specific nature of the roles played by our fire and rescue workers who are firefighters and members of our police forces and armed forces, and it is right that that is reflected through having a lower retirement age. I pay tribute to the Government for recognising that and for pursuing it through legislation.

Members have talked about the issue of physicality. I agree that it is an important issue, but we should not have a specific provision on it in this Bill. In setting pensions, we have a hope that masquerades as a realistic assumption: people are living longer and we are increasing the retirement age, and we hope that people will perform their work as easily in their later years as in their younger years. We hope that is the case, but it cannot be assumed. If people do not save, they run the risk of having a period of poverty, because they might not be able to continue their work until their pensionable age, so there will be a gap in their earnings. As a nation, we have indebted ourselves over the past 20 years far more than any other country. People in this country have not saved to protect themselves financially.

I do not think this specific issue is pertinent to the Bill, however, as it covers all types of employment and all regions—not only Scotland, but the rest of the United Kingdom, too. I therefore ask the Opposition not to push their amendment to a vote as I believe a broader debate would be more appropriate.

[Lady Hermon]

What justification does the hon. Gentleman think there could possibly be for excluding from clause 9(2) prison officers, and in particular those in Northern Ireland, who live daily with a deadly threat from a brutal enemy called dissident republicans?

[Richard Fuller]

The hon. Lady has spoken eloquently and passionately about that point. I do not know whether she was present earlier when I expressed my personal view, but her point may fit in with it. In addition to the issue of physicality, in undertaking their work the people employed in the careers identified in clause 9(2) put their lives at risk. If that is the case for prison officers in Northern Ireland, too, they should be included, and I would be interested to hear what my hon. Friend the Economic Secretary has to say about that.

[Bill Esterson]

rose—

[Richard Fuller]

Other Members want to contribute to the debate, so I will not give way to the hon. Gentleman. He might have an opportunity to speak later.

If we are to change the retirement age for the careers in question, we must undertake those physical tests as well. My hon. Friend the Member for Finchley and Golders Green (Mike Freer), who is of a similar age to me, has said that he is going to do the police test, and I have agreed that I will do the firefighter test. I reiterate his challenge to the shadow Minister and to the Minister, both of whom are at least a decade younger than us, to sign up to do those tests if we are to proceed with the Bill at the end of Third Reading. I would be very grateful to hear them accept that challenge, and indeed to hear the Government Whip, the hon. Member for Chelsea and Fulham (Greg Hands), do so.

[John McDonnell]

I wish to speak in support of amendments 1, 2 and 9. Amendment 2 is straightforward: it seeks to ensure that people are not forced to retire beyond the age of 65, as most of our work force have planned to retire then. On the argument that the amendment is unaffordable, let me remind hon. Members of what Hutton said about the 2007-08 changes. He said that they are likely to reduce costs to taxpayers of the pension schemes by £67 billion over 50 years, with costs stabilising at around 1% of GDP or 2% of public expenditure.

The other issue involved here is what our priorities are. The last figure I had for how much the unfunded public sector pension schemes were costing us was for 2009-10, when it was less than £4 billion. Some 60% of gross tax relief on pensions goes to higher rate taxpayers—that is £22 billion. The cost of providing tax relief to the 1% of our population who earn more than £150,000 was double the amount we are funding with regard to the public sector unfunded pensions—that is £8 billion. So the fact that we are willing to subsidise the higher paid—the rich—while forcing others to work longer and cutting their pensions at the same time reflects our priorities. That is why I have tabled the amendment: I do not accept the settlement or the Government’s rationale for these proposals.

Amendment 1 was eloquently discussed by my hon. Friend the Member for Wansbeck (Ian Lavery), and I must declare an interest at this point: I am an honorary life member of the Prison Officers Association. One point that the POA made, which we made on Second Reading, is that if we increase the pension age for prison officers, we lose money because more of them will become injured and more will go off sick, and more cost will be incurred in compensation. The actuarial figures are there almost to prove it, so it is anomalous not to include prison officers. The point about psychiatric nurses is the role they play, particularly in institutions such as Broadmoor, where they are dealing with the most difficult cases—physical challenges—within the NHS. I find it bizarre that we are expecting police officers to retire “early” at 60—I hope we do not go to that—because of the physical nature of their jobs in dealing with criminals, yet when those criminals go into prison it appears that they no longer provide a physical challenge to the officers dealing with them then. The situation is anomalous, which is why I support the amendment to include psychiatric nurses.

I also tabled amendment 9, and this is specifically for the Fire Brigades Union. As my hon. Friend the Member for Nottingham East (Chris Leslie) has said from the Front Bench, the Government have set up, in agreement with the unions, the working longer review in the NHS and the physical assessment in respect of the fire service. Evidence is piling in to those reviews—independent academic evidence, and details of physical tests that have been undertaken—to demonstrate that it is tough to do the job at 55, let alone at 60. I have seen some of the evidence put forward in the fire service review. When the previous Government increased the retirement age to 55 it was on the basis that there would be more firefighters doing preventive work and people could be redeployed into that work. This year, only 15 posts nationally have been available for redeployment, so redeployment is not an option. These people are still out there doing that physical job, and it is unacceptable to push the retirement age to 60. That is why amendment 9 would ensure that the pension schemes would be able to take into account the reviews currently taking place and that we would be able to adhere to a lower retirement age, particularly for firefighters and others as they are justified.

I am interested to hear what the Government’s responses will be, so I shall finish on this next point. Overall we seek to ensure that there is justice in the Bill, and that is certainly not the case at the moment. I reiterate that the Bill is increasing the contributions and increasing the length of time that people will be working. Given the life expectancy in my constituency, a large number of my constituents will not reach retirement age. Already, a third of all members across the schemes retire within three years of when they should normally do so because they cannot physically continue in the job. They therefore live on reduced pensions and in some poverty. My constituents will contribute more, work longer, most probably have a reduced pension at the end of it and have to retire early. That is an unjust deal when we are subsidising the wealthy through tax relief on their pensions.

[Sheila Gilmore]

I want to address a couple of issues and reinforce some of the points made in Committee. It is not good enough to say that the normal retirement age does not matter because people can retire early if they need to, as they will retire on much lower pensions—that is what actuarial reduction means. Those with many chronic conditions might have several years of suffering with the condition that has made them retire. That is not good enough.

The way in which the Bill is formulated fixes the retirement age in a way that makes it very difficult to introduce the flexibility that might be required by some scheme reviews. There will be a battle every time a review shows that there should be a lower retirement age, as the Government will be able to point to the Bill and say that that age cannot be moved as that is what Parliament voted for. However, amendment 16, for example, would allow the degree of flexibility required. Many people already do not work in the years running up to the normal retirement ages, not just across the public sector but in the private sector, too. As many are living on reduced incomes and having to dip into any savings they might have put aside for retirement, they are much more likely to become dependent on other state support in older age.

We have the big issue of longevity, but underneath that lies the fact that a substantial proportion of the population cannot even work until the normal retirement age, particularly men between 60 and 65 in many private sector jobs. Those people are already living on reduced incomes, so if we keep increasing the retirement age more and more people will be in that position.

[Sajid Javid]

We have had a good debate on this set of amendments, but I am afraid that for reasons of time that are beyond my control I will not have an opportunity to respond on all of them. The main theme in this group is the link between the new normal and deferred pension ages and the members’ state pension age. That will help manage the financial uncertainties associated with longevity changes over the long term. It was a key recommendation of Lord Hutton’s report and is one of the foundations of the Bill.

The average 60-year-old is now living 10 years longer than in the 1970s. Although that is to be celebrated, it would be irresponsible not to react accordingly to ensure that pension provision is sustainable. Clearly, no Government can allow such a trend to continue unchecked.

In the short time I have, I shall deal with the amendments in the order in which they have been selected and I will start with 13, 14 and 15. The deferred pension age in the new schemes is vital given the vast number of public servants who claim deferred pensions. That is why the Bill sets the deferred pension age in all schemes as equal to the state pension age, including in the police, firefighters and armed forces schemes. As Members are aware, a normal pension age of 60 in the police, firefighters and armed forces schemes is in line with Lord Hutton’s recommendations and recognises the unique nature of the work involved.

The amendments proposed by the hon. Member for Nottingham East (Chris Leslie) cannot be accepted by the Government, for two reasons. First, it would be unfair to other hard-working public servants, both those in active service and deferred members whose pension ages would be the state pension age. Of course we value the work of all our police, firefighters and armed forces, but once those people stop doing those jobs, there is no reason for them to be able to take their deferred benefits earlier than everyone else.

[Lady Hermon]

Will the Minister give way?

[Sajid Javid]

I am sorry, I do not have time.

There is no reason for those workers to be able to take their deferred benefits earlier than everyone else because they are no longer exposed to the unique characteristics of their former employment and no longer need an earlier pension age in respect of them.

Secondly, we must consider the cost. As we are all aware, the costs of pensions are increasing owing to increases in life expectancy. The state pension age link for deferred benefits is a crucial means of getting those costs under control. For example, if a firefighter leaves service at the age of 30 to work, say, as a civil servant in an office for the rest of his career, should his pension still be available unreduced at the age of 60?

00:00

Debate interrupted (Programme Order, 29 October).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the amendment be made.

Question negatived.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

Amendment proposed: 29, page 5, line 21, after ‘section 1’, insert

‘(other than a Scottish scheme)’.—(Dr Whiteford.)

Question put, That the amendment be made.

18:00

Division 113

Ayes: 14

---

Democratic Unionist Party: 5
Scottish National Party: 3
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Green Party: 1

Noes: 299

---

Conservative: 249
Liberal Democrat: 47
Independent: 1
Labour: 1

Amendment proposed: 16, page 5, line 29, at end insert—

‘(2A) Subsections (1) and (2) shall not apply in relation to any category of public service worker as the Secretary of State may by order specify following the publication of a scheme specific capability review.’.—(Chris Leslie.)

Question put, That the amendment be made.

18:14

Division 114

Ayes: 232

---

Labour: 215
Democratic Unionist Party: 5
Scottish National Party: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 2
Alliance: 1
Green Party: 1

Noes: 294

---

Conservative: 246
Liberal Democrat: 46
Independent: 1

Clause 18

Final salary link

Amendment made: 35, page 11, line 3, at end insert ‘(and see section 28(14))’.—(Sajid Javid.)

Clause 33

General interpretation

Amendments made: 36, page 18, line 28, after ‘person’s’ insert ‘pensionable’.

Amendment 37,  page 18, line 29, after ‘representative’ insert ‘pensionable’.—(Sajid Javid.)

Schedule 5

Existing pension schemes

Amendment made: 38, page 41, line 17, at end insert—

‘(2) For the purposes of sub-paragraph (1), “compensation benefits” includes benefits by way of payments for resettlement or retraining.’.—(Sajid Javid.)

Schedule 6

Existing injury and compensation schemes

Amendment made: 39, page 43, line 3, at end insert—

‘(2) For the purposes of sub-paragraph (1), “compensation benefits” includes benefits by way of payments for resettlement or retraining.’.—(Sajid Javid.)

Schedule 11

Prime Minister, Lord Chancellor and Commons Speaker

Amendments made: 40, page 57, line 20, at the beginning insert ‘Subject to sub-paragraph (2)’.

Amendment 41, page 57, line 23, at end insert—

‘(2) In relation to a term of service as Lord Chancellor beginning on or after 4 September 2012 (but before the day on which section 30 comes into force), the amendments made by paragraph 1 have effect from—

(a) the day on which section 30 comes into force, or

(b) if later, the day after that on which the term of service ceases.’.—(Sajid Javid.)

Third Reading

18:27

[Sajid Javid]

I beg to move, That the Bill be now read the Third time.

I would like to reflect on the importance of this Bill. First, I reiterate the debt of gratitude that this House owes to Lord Hutton of Furness for his comprehensive and adept work with the independent public service pensions commission. The consensus that his report and recommendations have engendered is testament to the care and thoroughness with which he and his team carried out that critical work.

For decades, successive Governments have failed to address the fact that the existing framework for public service pensions is unresponsive to work force and demographic changes. The simple and fundamental truth is that current schemes are not fit for purpose, and they have not responded effectively to the unprecedented improvements in longevity that we have seen over the last 50 years. Largely as a result of people living longer, the cost of providing public service pensions has increased by 40% over that period. At the same time, the number of active, deferred and pensioner members of schemes has risen significantly.

Since 1971 the number of active members has increased by 23% to 5.3 million. At the same time, pensioner member numbers increased by more than 260%, from 1.6 million to 4.2 million. Deferred member data are available only from 1991, when there were 1.2 million preserved public service pensions. There are 3.4 million today. Most of the people who entered public service when the schemes were last fundamentally assessed have now retired.

[Mike Freer]

I apologise for interrupting my hon. Friend’s flow, but will he clarify the application of the fair deal policy to the local government pension scheme?

[Sajid Javid]

We discussed that earlier. Transfers from local government are currently covered by an equivalent policy to fair deal. The Government are considering how most appropriately to apply the principles of the new fair deal policy to the LGPS, but our commitment on fair access to transferred staff stands and applies, including to members of the LGPS.

People are now expected to live significantly longer than the generation that went before them—an average of 10 years more than someone retiring in the 1970s. The increasing numbers of people with public service pensions and improvements in longevity have led to significant increases in the number of pensions that are being paid. Consequently, the cost of paying pensions has increased to £32 billion per year—an increase of a third in the past decade.

[Kelvin Hopkins (Luton North) (Lab)]

Other, similar European countries have a younger retirement age and more generous pensions. Why are we so different?

[Sajid Javid]

The hon. Gentleman perhaps has Greece in mind. Many countries that fit his description are suffering significant problems. To take another example, retirement ages in Germany, which is one of the largest countries in Europe, are in many cases higher than those in Britain.

The employer, and therefore the taxpayer, has borne nearly all the additional cost, which has led to an imbalance in the sharing of costs between members and other taxpayers. The imbalance will be corrected only by the reforms we have introduced.

[Richard Fuller]

The Minister makes an important point on tax, but this is the largest bill for the taxpayer that this Parliament will pass—we are passing a £1 trillion bill on to current and future taxpayers. I applaud him and the Government for protecting lower-paid public sector workers from pension changes, for protecting the retirement age, and for career-average schemes, but does he accept that we are still asking taxpayers working in both the public and private sectors to pay an enormous bill for public sector pensions?

[Sajid Javid]

My hon. Friend made passionate contributions in Committee, where he made that same point. I will say the same thing in reply. The Bill and other changes we have made to public sector pensions deliver significant cost savings for the Government and future taxpayers, but maintain our commitment to generous, fair pensions that are sustainable in the long term for people who serve in the public sector.

The Bill is not simply about bringing costs under control and ensuring that schemes are sustainable. We are also seeking to address issues of unfairness that exist within the current scheme designs.

[Andrea Leadsom (South Northamptonshire) (Con)]

The Minister mentions unfairness. Does he agree that one of the greatest unfairnesses was when the previous Government got rid of advance corporation tax relief on pension funds, which destroyed the private sector pensions industry and left many private sector workers much worse off than this excellent Bill?

[Sajid Javid]

My hon. Friend is absolutely right—the change to which she refers had a dramatically negative impact on private sector pensions.

The benefit structure of many existing schemes has led to benefits being disproportionately directed towards higher earners.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

Further to the point made by the hon. Member for South Northamptonshire (Andrea Leadsom) on previous Governments, is the Minister aware that the previous Conservative Government’s decision to ensure that employers could no longer mandate their employees to be in occupational schemes had one of the single biggest impacts on the quality of occupational pensions in the round in this country? The Thatcher Government put that measure through in the 1980s.

[Sajid Javid]

The hon. Gentleman will know that this Government have introduced changes to private sector pensions that will help to increase take-up. I am glad that he has raised the policies of previous Governments, because I was about to come on to them.

Belated changes by the previous Government in the previous decade exacerbated the unequal treatment of members within schemes by introducing reforms that only applied to those who joined from a given date. Those same belated and limited changes also sought to limit costs increasing further in the future. It has often been stated—without foundation, I may add—that those reforms were sufficient to return public pensions to a sustainable footing. They were not. The reforms did not address the historic increases in the cost of providing public service pensions that had taken place in the preceding decades. Instead, they provided for any further increases from that point to be shared between employees and employers. That was simply not enough, and is why Lord Hutton concluded that the status quo is not tenable. His report states:

“Future costs are inherently uncertain”

and that

“the general public cannot be sure that schemes will remain sustainable in the future.”

Through the Bill, our reforms to public service pensions will make a difference. Through the framework we have set out, we will ensure that public service workers get a good quality pension that is among the very best available. Members will continue to receive guaranteed benefits with no exposure to investment risk or fluctuating annuity rates, unlike in many private sector schemes. We will also ensure that the taxpayer gets a fair deal by rebalancing the costs between the beneficiaries and other taxpayers, and by capping their contribution to the schemes, so that costs cannot again spiral out of control.

Until now, pensions have failed to keep pace with changes in longevity. This is without doubt the single greatest risk to the affordability of schemes in the future. The Bill will ensure that members continue to receive defined benefit pensions, and we will ensure that longevity changes are managed by linking scheme retirement ages to the state pension age.

[Lady Hermon]

Will the Minister give a commitment to revisit clause 9(2) to ensure that prison officers do not have to work to 65, particularly in the light of the brutal murder of prison officer David Black by dissident republicans on 1 November in Northern Ireland? Will he give that commitment this evening?

[Sajid Javid]

The hon. Lady spoke passionately in the debate about this issue and I am sorry that we ran out of time to deal with it. I will respond to it now, but I am sure that she will not be surprised to learn that I cannot give that commitment. There are exceptions to the link to the state retirement age for certain services—Lord Hutton mentioned the police, firemen and others—and that is what we have taken on board. If she will allow me, I will move on.

As Lord Hutton and others have sought, we have committed to review the appropriateness of that link as changes are made to the state pension age in the future. That commitment is important in ensuring not only that the link continues to remain appropriate in terms of members’ capacity to work, but that the costs of schemes are appropriately managed.

The Bill will introduce stronger governance, administration and transparency frameworks so that Parliament, the public and scheme members can be assured that the schemes are being run and managed properly. Taken together, the key changes will put public service pensions back on to an affordable and sustainable footing—a sound foundation that can prevail for the next 25 years, a deal that can endure for a generation.

Throughout the Committee’s consideration of the Bill and earlier in this Chamber, it has been clear that both sides recognise the urgent case for reform. The Opposition have set out their support on occasion. It is, of course, fair to say that there remain a few areas—we have discussed some today—where matters are not yet resolved to all parties’ satisfaction. However, I suggest that those areas of disagreement are few and do not detract in any way from what the Government are seeking to achieve with the reforms. We have committed to considering further how members and their representatives are engaged in the administration and future change to their schemes.

[Mr Gibb]

I am listening carefully to my hon. Friend. From the evidence session, he will be aware that even Kevin Courtney, deputy general secretary of the National Union of Teachers, which has not signed up to the agreement, said:

“We are strongly advising our members to opt in and stay with the pension scheme. It will still be a good scheme”––[Official Report, Public Service Pensions Public Bill Committee, 6 November 2012; c. 205, Q115.]—

even after the reforms.

[Sajid Javid]

My hon. Friend makes an excellent point. I thank him for the excellent contributions he made in Committee and the tremendous experience he brought to it. His point about opt-in is absolutely right. We all heard it in the evidence session. There has been barely any change to participation in public sector pensions, despite some of the changes the Government have already introduced.

We have committed to ensuring that scheme regulations provide for members to be regularly informed of their pension benefits, so that they understand their value and can better plan for their retirement.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Given that these changes will reduce the average value of the benefit for all scheme members by more than one third and that many individuals’ contributions will increase, is he not concerned that many will consider opting out, whatever the advice given by people here and by trade unions?

[Sajid Javid]

As I said, in many cases, increased contributions have already taken place, and there is no evidence of increased opting out. As my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb) said, one very good reason given for that in the evidence session was that, despite the changes the Government have had to make in order to put public sector pensions on a sustainable footing, they remain among the best pensions available. That will ensure that people continue to take part.

Although we have not managed to reach a shared view on the exact protections that should be extended to members’ rights, all sides have recognised the common objective that rights should not be allowed to be unlawfully eroded. I strongly believe that the Bill we are sending to the other place is in very good shape. I give a commitment that the Government will return to each of the issues on which I have given assurances, and I commend the Bill to the House.

18:42

[Chris Leslie]

In an era of increasing life expectancy, it is right and necessary to reform public service pensions in order to ensure that they are affordable and sustainable in the long term. That is why Labour made significant changes to public service provisions when in office, including through increasing the normal pension age from 60 to 65, introducing a cap-and-share mechanism to protect taxpayers from increasing costs and reforming contribution levels. According to the Public Accounts Committee, those reforms, implemented by the previous Government, will save the taxpayer £67 billion over 50 years.

Unfortunately, instead of building on those reforms, the Government ripped up many of them, making sensible reform harder: they have imposed, without negotiation, a steep 3% rise in contributions and a permanent switch in the indexation of future pension income from RPI to CPI. Announcing those changes before the Hutton report on pensions was even published was unfair and needlessly provocative. Those changes are not in the Bill, however, so we did not have a chance to address them in amendments and in Committee and on Report.

Conversely, the main aims of the Hutton reforms in the Bill are ones with which we broadly agree, most notably the shift from final salary to career average defined benefit schemes, the increase in pension age to take account of increasing longevity, and a mechanism to ensure that increasing costs are contained within schemes and do not fall squarely on the taxpayer. It is important for the sustainability of public service pension schemes that those changes are implemented properly, which is why we do not wish to oppose the Bill this evening. However, as we said on Second Reading, we have serious concerns about the detail of the Bill. We said that we hoped the Government would work constructively with us in Committee and the other place to improve it. There was some movement from the Government, but in our view it was not sufficient.

[Andrea Leadsom]

Can the hon. Gentleman therefore confirm that his party would not change the future pensions link from CPI back to RPI?

[Chris Leslie]

I do not think it would be sensible to make a permanent “no review” announcement when it comes to indexation, particularly when some of the projections have been showing that the future burden on the taxpayer might not be as great as the Government have made out. For the time being, we have not been able to make propositions on that, because the scope of the Bill did not allow it.

However, we proposed amendments in a number of other crucial areas in seeking to improve the Bill, focusing particularly on the questions of trust and confidence. We sought to improve the Government’s proposals in a number of ways, most notably in implementing the fair deal—a commitment that was integral to the agreements that had been reached. I am glad that the Minister had the opportunity to correct his words on the local government pension scheme aspect of that, because there were some ripples emanating through the Chamber from some of the previous words he uttered. There is also the question of the Government’s ability to reduce accrued benefits retrospectively. They should have been stronger on that and firmer commitments should have been given as guarantees on replacing defined benefit schemes with new career average defined benefit schemes.

[Richard Fuller]

There is one other amendment, which I tabled in Committee, but which we did not push to a vote. Perhaps the shadow Minister can say whether he would be interested in having it proposed in another place. Constituents of mine in Bedford and Kempston are being asked to cough up to pay for the pensions of judges and others on salaries of £150,000. It seems particularly unfair that those on £24,000, which is the average income in Bedford—they are also on a pretty high tax rate—should be asked to contribute to a pension scheme for a judge who will retire on a pension that is two or three times larger than such an income. That has not been changed in the Bill so far. I was not sure in Committee whether the Labour party thought it was fair for my constituents to pay for judges’ pensions. Perhaps the shadow Minister can clarify whether he would like that amendment to be moved in another place.

[Chris Leslie]

We did not table any amendments on judicial pensions. I suspect that the question of relative taxpayer support for private pensions might come up tomorrow in the autumn statement. I am intrigued that hon. Members have castigated previous Governments for changes that have affected private sector schemes. It will be interesting to see what the effect will be on the sustainability of some of those pension pots, but we can only speculate at this stage and see what happens. However, this question is certainly of the moment. It is only a matter of hours before the Chancellor stands up and—undoubtedly—makes his announcement on pensions tax relief. We will see what happens at that point, but we felt that some significant proposals needed to be made.

[Andrea Leadsom]

rose—

[Chris Leslie]

I am conscious of the time. I would be grateful if the hon. Lady let me conclude my remarks.

It was argued that we must not bind future Governments by amending the Bill. That was not a very strong argument, given that legislation can be introduced at any time. We also felt that safeguards were needed to address people’s concerns about the effective sequestration of their deferred wages—their pension savings—by retrospective changes. At no point did we propose amendments that contradicted the Hutton principles. We sought to be constructive, and I am grateful that the Minister recognised the constructive changes that we proposed.

We had some significant victories, and I am grateful to the Minister for at least keeping an open mind on some of these points. In particular, I am pleased that we managed to get a guarantee—it is due in the other place—that future members of defined benefit schemes will receive an annual benefits statement setting out full information on changes to their pensions. That is a big step forward, and I am grateful that the Minister moved on that point.

We will want to come back to some of those questions in the other place, particularly those on scheme capability reviews and the working longer review in the NHS, and to ask why the Government are irrationally not letting those arrangements come to fruition in the drafting of legislation. I am still not fully convinced that the issue of the closure of local government pension schemes has been adequately dealt with, but I know that the Minister has said that he is happy to look into it.

Many colleagues will naturally have serious doubts about the Bill. That is entirely understandable, given the differences between it and the Hutton proposals. However, pensions reform is important both for the taxpayer and for scheme members themselves. Our hope is that the other place will see the strength of our arguments and make the changes that this House has been unable to secure. We hope that their lordships will appreciate that only through changes to the Bill will we achieve successful and sustainable pension reform. It is with that hope in mind that we shall not oppose the Bill at this stage, but we hope for further improvements in the other place.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. This debate will finish at 7 pm, so short contributions will allow more Members to get in.

18:50

[Mr Gibb]

I support the Bill, because I want to see good-quality defined benefit pensions maintained in the public sector, even at a time when the private sector is experiencing a wholesale shift away from final salary and defined benefit schemes. In the mid-1990s, 5.5 million private sector employees were in some form of defined benefit scheme, yet membership of such schemes had fallen to 2.1 million by 2010, with only 1 million in schemes that were still open to the public. Longevity, low stock market returns and accounting rules have been blamed for the switch, but the last Labour Government’s decision to end the repayment of dividend tax credits also had a huge impact, taking £3.5 billion a year from the income of the pension funds. From a total asset value of £650 billion, that represents a significant drop in income.

Treasury papers from 1997 that were published in 2007 under the Freedom of Information Act revealed civil service concerns about the impact of that decision on private sector pensions and a fear that it might accelerate the shift towards defined contribution schemes. The Labour Government believed that the stock market would continue to rise, and therefore make up any loss to pension funds caused by the loss of the dividend tax credits. The FTSE index stood at 6,900 in 1999, whereas last night it stood at 5,876. It is still more than 1,000 points below its peak in 1999.

I believe that the proposed final agreement negotiated by the Government will result in public service pensions that are still the best available. They will be defined benefit pensions and will still be regarded as good schemes by the trade unions, even those that have still to accept the negotiated settlement. Chris Keates, the general secretary of NASUWT, has said:

“Our advice to our members…has to be that they must opt into the scheme.”

This is a very good Bill. It reflects a good outcome to the negotiations on the reform of public service pensions, and it means that the public sector can be assured of good-quality defined benefit pension schemes that are sustainable in the long run and that address the main concerns raised in Lord Hutton’s report.

18:53

[Dr Whiteford]

Most people in Scotland, whether they work in the public sector or not, recognise that these pension reforms—particularly the increase in contributions and the requirement to work for longer—have little to do with designing better pension schemes and everything to do with the short-term aim of deficit reduction. I do not think that public sector employees should be picking up that tab.

Ministers have relentlessly pursued affordability while abandoning sustainability and fairness. That is the wrong approach at this time. Most public sector workers have faced a pay freeze for the past three years. Their wages have fallen in real terms while they have experienced substantial increases in their cost of living, through increases in the price of food, petrol and domestic heating bills. They are being asked to pay more, to work longer and to accept significantly lower pensions thereafter. To me, that is just not a reasonable proposition. Public sector employees do demanding jobs, often under pressure and in difficult circumstances.

[Mr Alan Reid (Argyll and Bute) (LD)]

Will the hon. Lady give way?

[Dr Whiteford]

I will not; I am conscious that other Members want to speak.

Many of those public sector workers are already on quite modest wages, and they deserve measured and proportionate schemes that will give them confidence that they are saving adequately for their old age. They want to know that the goalposts will not be shifted yet again as they approach an ever-increasing retirement age. The Bill fails those tests, which is why I will oppose it this evening.

18:54

[Andrea Leadsom]

I welcome this Bill for three particular reasons. First, I welcome the move to career average rather than final salary, which is absolutely key. Secondly, linking eligibility to normal pension age to the state pension age is very important. Thirdly, transitional relief for people with 10 years to go before they retire is vital. I commend the Government for their work.

I have two further points. First, it is a shocking indictment of the last Government that in 1995 there were 4.1 million public sector workers in a defined benefit scheme, while in 2011 there were 5.3 million—an increase of more than a million public sector workers on defined benefit schemes. Surely it is the legacy of the last Government’s spending money we simply could not afford that has put us in a position where we have had severely to curtail some of the benefits that public sector workers enjoyed in the past.

Finally, 79% of workers in the public sector have defined benefit pensions as against 9.4% in the private sector. Again, it is a complete indictment of the last Government that they have taken what was one of the best private sector pension arrangements in Europe and made it one of the worst. It will be a great pity if the Opposition do not welcome the attempt in this Bill to sort out the mess that they left us.

18:56

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

On Second Reading, I fully recognised the views expressed on the Opposition Benches about public sector pensions being some of the poorest pensions, but I want to return briefly to the point I made about police pensions.

There will be some bitterly disappointed police officers out there this evening. We have heard in the past few minutes about goalposts shifting, while we have also heard about the physically demanding work of prison officers, but it is the exactly the same for our police officers and firefighters. On Second Reading, I commented on the massive changes and pointed out that there is no time for some police officers to recover when the computation is reduced to something like a 30% figure and they are having to work an extra seven years. The projected pension when they first joined the force is now reduced to around 70%. The decisions made in this House have been life-changing ones.

[Mark Durkan]

On the subject of the implications of pension changes for the police, does my hon. Friend recognise that a far bigger cohort of the Police Service of Northern Ireland is affected, because there has been such a turnover since the Patten commission? These people and their families are still facing targeting by dissidents, and they feel mugged by the Government.

[Mr Brown]

I thank my hon. Friend for that intervention. Yes, I fully recognise the difficulties faced across the water in Northern Ireland.

I shall finish now because I know my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) wants to contribute to the debate. As I was saying, what has been determined in this place this evening and over the past few weeks amounts to life-changing issues. Let us hope that there is a chance for some of it to be corrected in the other place.

18:58

[Gregg McClymont]

I want to make a couple of points about pensions in the round as we come to the end of the debate. We are talking about public sector pensions, but it is worth remembering that our state pension is one of the lowest in Europe; the replacement rate it provides is very low by European standards, so we cannot talk about public sector pensions on their own in that context.

Equally, we have to be very careful that we do not get into a race to the bottom in respect of private sector pensions. There are real problems with private provision in the UK—not caused, of course, by the previous Government. I had to laugh at some of the contributions from Government Members. The single biggest negative impact on private sector pensions in the UK was the Thatcher Government’s removal of employers’ ability to mandate the work force to be in an occupational pension scheme. That was the beginning of the slippery slope, alongside holidays in pension contributions taken by employers. This rewriting of history by Government Members is ludicrous.

18:59

[Mr Alan Reid]

I just want to put it on record that the hon. Member for Banff and Buchan (Dr Whiteford) attacked her own Scottish Government. It is the Scottish Government who decide the level of contributions made to pension schemes in Scotland and how generous those schemes are. Under the Bill, that decision is devolved to them.

Question put, That the Bill be now read the Third time.

18:59

Division 115

Ayes: 278

---

Conservative: 233
Liberal Democrat: 43
Independent: 1

Noes: 29

---

Labour: 16
Scottish National Party: 5
Democratic Unionist Party: 3
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Alliance: 1
Green Party: 1

Bill read the Third time and passed.

Independent Parliamentary Standards Authority

Tuesday 4th December 2012 Commons Chamber

19:09

[The Leader of the House of Commons (Mr Andrew Lansley)]

I beg to move,

That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint the Hon. Sir Alexander Neil Logie Butterfield, Elizabeth Jane Padmore, Miss Anne Whitaker and Professor Anthony Wayland Wright to the office of ordinary member of the Independent Parliamentary Standards Authority with effect from 11 January 2013.

The motion provides for the fixed-term appointment to the Independent Parliamentary Standards Authority of four ordinary members of the board, having effect from 11 January 2013, following the expiry of the existing board members’ term of office on 10 January 2013. I do not intend to detain the House for too long, but it may be helpful to the House if I briefly set out the process of these appointments and introduce the candidates. I should point out at this point that Professor Sir Ian Kennedy was appointed for a fixed term of five years, which does not expire until 3 November 2014. He will remain chair of the board.

The Parliamentary Standards Act 2009, which established IPSA, states that the board of IPSA consists of the chair and four ordinary members, and establishes certain qualifications for some of those members: at least one must have held, but no longer hold, high judicial office; at least one must be eligible for appointment as a statutory auditor, by virtue of chapter 2 of part 42 of the Companies Act 2006; one must be a person who has been, but is no longer, a Member of the House of Commons; and there must be one other member, for whom no qualification has been specified.

In 2009, Her Majesty, on an Humble Address from this House, appointed the right hon. Justice Scott Baker, Jackie Ballard, Ken Olisa and Professor Isobel Sharp to be the four ordinary members of the board of IPSA, following its establishment. As I said, their terms of office expire on 10 January 2013, three years after their appointment. May I take this opportunity to thank them for their work over the past three years? Nobody in the House will need reminding that the past three years have not been easy, as was somewhat inevitable given what was being asked of IPSA and the time scale it was working to. The National Audit Office, in 2011, recognised that it was a “major achievement” for IPSA to establish itself

“as a functioning organisation in a very short time”.

The Office of Government Commerce said that the “impossible” was “delivered”. I am in no doubt that the fact of an independent, transparent, regulator has made a significant contribution to increasing public confidence on the issue of MPs’ expenses, and will continue to do so into the future. Indeed, IPSA is now consulting on the important issue of a long-term proposal for Members’ pay and pensions, which I am sure will further reassure the public that there will be no return to the problems of the past.

Earlier this year Mr Speaker, recognising that four of the five initial appointments were reaching their end, sought legal advice on the interpretation of the Act as it related to reappointments. The advice was that although the Act permits board members to serve a second fixed term, whether consecutive or not, that is subject to the requirement that the names appearing on a motion before this House must have been selected by the Speaker on merit on the basis of fair and open competition: in other words, the posts have to be opened to competition at the end of each fixed term. The four members whose terms of office were expiring did not seek reappointment on that basis. That is a matter for them.

Following the precedent established in 2009, Mr Speaker appointed an independent panel to run the competition and to report to him with recommendations. The panel was chaired by Dame Denise Platt, a member of the Committee on Standards in Public Life. Professor Sir Ian Kennedy, chair of IPSA, also sat on the panel, as did Dame Janet Gaymer, a former commissioner for public appointments and lay member of the Speaker’s Committee for the Independent Parliamentary Standards Authority.

The panel was assisted in its deliberations by the right hon. Sir Anthony May QC, who was nominated to the panel by the Lord Chief Justice; Martin Sinclair, assistant auditor general of the National Audit Office, who was nominated to the panel by the Comptroller and Auditor General; and Peter Atkinson, former MP for Hexham, who was nominated to the panel by Mr Speaker. Those individuals were able to provide insights into the statutory qualifications for IPSA required of board members, as I set out previously.

Mr Speaker provided the panel with a role and person specification for the board posts, which he had agreed with Professor Sir Ian Kennedy. The recruitment process involved stages of advertisement, longlisting, shortlisting and final interview. The panel’s recommendations to the Speaker were made in the form of a ranked list, with reasons, to support selection on the basis of merit. The names on the motion were selected by Mr Speaker, with the agreement of the Speaker’s Committee for the Independent Parliamentary Standards Authority, as required by the statute.

The candidates before the House are the hon. Sir Neil Butterfield, who has held high judicial office as a High Court judge sitting in the Queen’s bench division from 1995 to 2012; Liz Padmore, for the post to which no specific qualifications apply, who has a wide range of public and private sector experience, most recently as chair of Hampshire Hospitals NHS Foundation Trust; Miss Anne Whitaker MA ACA, proposed for appointment as the auditor member of IPSA; and Professor Tony Wright, formerly Member for Cannock Chase, who is proposed as the parliamentary member of IPSA. A short career profile for each has been made available to Members as part of the explanatory memorandum supporting this debate. I do not intend to detain the House by going through their extensive résumés, but I can assure the House that each candidate would bring a wealth of relevant experience to their respective posts.

Under paragraph 3 of schedule 1 to the Parliamentary Standards Act 2009, the terms and conditions for each appointment are determined by the Speaker. Clearly, it is better for IPSA if appointments to its board expire over a period, not all together, providing greater continuity of governance. Mr Speaker therefore asked the independent panel, as part of its assessment, to consider and recommend varying lengths of appointment for the candidates. The panel recommended that two candidates be appointed for three years and two for five years. Sir Neil Butterfield has been recommended for a three-year appointment, reflecting his own preference, and Professor Tony Wright has been recommended for a three-year appointment, so that the next competition for a parliamentary member of IPSA can take place shortly after the general election that is due in 2015.

It is a matter of public record that Sir Ian Kennedy wrote to Mr Speaker to express concerns about the process before the independent panel was appointed. Members might wish to note, however, that after the independent panel had reported, Sir Ian Kennedy issued a statement saying that that the independent panel was

“chaired impeccably by Dame Denise Platt and proceeded in a thoroughly proper manner”,

and that his “fears were not realised”. He has also issued a statement describing the nominees as “impressive individuals” giving him “great confidence” for IPSA’s work.

In this debate it is important that we should keep in mind the reasons why IPSA was created and the importance of the work it has still to do. It was established at great speed and in difficult circumstances and we should recognise that under Sir Ian Kennedy’s leadership the board of IPSA has made a significant contribution to the task of establishing the authority and ensuring there is transparency about Members’ business costs and expenses. These steps are essential to the restoration of the public’s confidence in their Parliament.

It is of great importance, in my view, that we uphold the independence of IPSA. This enables us to refute any implication that Members of Parliament can seek to manipulate the system to their advantage. As we have seen, it is not proof against the interpretation of the media, but for any reasonable person an MP’s adherence to the rules set by IPSA should be a sufficient defence.

The four individuals named in the motion have been through a rigorous and independent recruitment process to be considered by the House today. If appointed, they will bring to IPSA not only the experience required by the statute, but a considerable range of skills and knowledge acquired in both the public and private sectors.

I commend the motion to the House.

19:20

[Ms Angela Eagle (Wallasey) (Lab)]

As the Leader of the House has just pointed out, the proceedings before us today are required under the Parliamentary Standards Act 2009. As I am sure Members in all parts of the House will recall, this is the statute which set up the Independent Parliamentary Standards Authority. It requires that the board of IPSA consist of four ordinary members and a chair. The chair, Professor Sir Ian Kennedy, was appointed for a fixed term of five years, which runs out in November 2014, but the board members all have appointments which expire on 10 January 2013, so it has been necessary to hold a selection process to find a successor board. It is the result of this process that the House is considering today.

Again as the Leader of the House pointed out in his remarks, the IPSA board has to meet certain very particular specifications. Under the Act, one board member must have held high judicial office, one must be eligible for appointment as a statutory auditor, and one must have served in the House of Commons. The appointments panel convened by the Speaker has done a very thorough job and come forward with four candidates who more than fulfil the statutory requirements of the 2009 Act. On behalf of Her Majesty’s Opposition, may I endorse the candidates who have been selected and the scrupulously fair and independent process by which that was achieved?

It is only right that I endorse the thanks that the Leader of the House has already put on record to Dame Denise Platt, a member of the Committee on Standards in Public Life, to Professor Sir Ian Kennedy, chair of IPSA, and to Dame Janet Gaymer, a former commissioner for public appointments and a lay member of the Speaker’s Committee for IPSA, who sat on the appointments panel. I also join the Leader of the House in thanking those who assisted them in their considerations: the right hon. Sir Anthony May QC, who was nominated to the panel by the Lord Chief Justice; Martin Sinclair, who was nominated to the panel by the Comptroller and Auditor General; and Peter Atkinson, who was nominated by the Speaker.

It is crystal clear from the form of the appointments panel and those who assisted it that this was a scrupulously fair and independent process, and I hope that no one will seek to cast any aspersions on it at any time in the future. I was grateful to the Leader of the House for putting a few things straight in his remarks about the nature of this process and the reason for conducting it in that particular way. It is also sensible to put on record Sir Ian Kennedy’s evident satisfaction with both the process and the outcome of the appointments panel, despite his initial unhappiness.

I agree that the Speaker’s decision to stagger future appointments so that the board members’ terms of office do not all expire at the same time is sensible. It is an obvious improvement on the current arrangements, which I hope the House will endorse tonight.

IPSA needs to demonstrate its robust independence from both Parliament and the Government of the day. It needs to do this by the process and in the content of the decisions that it reaches. Part of IPSA’s job is to communicate and explain any decisions that it makes to the public and to defend Parliament as an institution from unfair criticism on costs and expenses, which are now clearly decided independently by IPSA.

It only remains for me to thank the outgoing members of the IPSA board for the work they have done, and to welcome their successors and wish them well in their job for the future.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I point out that the motion—I am sure that every Member has read it—is a narrow motion.

19:24

[Sir Bob Russell (Colchester) (LD)]

I welcome the appointment of the four new board members and trust that they will bring a commitment to the job that I think, on occasion, was sadly lacking on the part of the four departing. I refer to the fact that attendance at board meetings was not always their top priority. On one famous occasion, only one of the five board members—the chairman—was present and the other four conducted the business down the phone. I am confident that the four new members will not follow that procedure, which is why I welcome them.

The Leader of the House referred to the National Audit Office in his introduction. He could have added that it estimates that 92% of Members of Parliament now subsidise their work. I trust that is something the new board members will address, along with the fact that 38% of claims cost more to process than the amount claimed.

The new board members have a job to do that the previous board did not. As a member of the Speaker’s Committee for the Independent Parliamentary Standards Authority, I feel that the manner in which two of the departing four—incidentally, not one of them sought reappointment, which speaks volumes—launched what can only be described as a personal attack on Mr Speaker was unfair and simply unacceptable. I look forward to their apologising to Mr Speaker at some point, because it was the Committee that made the decisions; Mr Speaker acted in the name of the Committee. I welcome the four individuals, but I am not at all sorry to see the previous four go.

19:26

[John Mann (Bassetlaw) (Lab)]

I find it quite extraordinary that Parliament feels it appropriate to debate or comment on people who are appointed to public office without their having some kind of right of reply here. I think that is regrettable. I am certain that the individuals who have been put forward are excellent people who will do an excellent job, in precisely the same way that those who served the public previously did an excellent job in establishing the organisation.

My concern and regret—this is not a criticism of the Leader of the House, who is bound by what Parliament has previously agreed—is that the motion is in front of Parliament at all, and indeed that SCIPSA exists at all. In the three years since IPSA was set up, Parliament has had the opportunity to separate out properly and entirely all matters relating to pay and conditions, rather than have any semblance of control, influence or direction, however distant, over such matters. The fact that the appointments have been made with parliamentary involvement demonstrates that we have not yet gone far enough in isolating pay and expenses entirely from everything else we do. That is the fundamental error that was made before.

I therefore ask the Leader of the House to consider, with the four new board members, establishing a dialogue to determine whether they could bring forward and recommend to us a better system in which we would have no involvement whatever in future appointments, whether ratification or anything else, so that there is a complete separation between Parliament and those who decide our pay and expenses. It seems to me that the public would support that. Equally important, I think that would strengthen our position as legislators. I hope that the Leader of the House will consider it.

19:29

[Mr Christopher Chope (Christchurch) (Con)]

I wish to say a little about what the new board members are going to do in terms of getting trained and educated about what we do in this House. Their statutory responsibility is to determine Members’ pay and allowances—I emphasise the word “allowances” because that is the expression in the statute, although that is not how it has been interpreted by the current board and its chairman.

It is surely important that anybody who is looking at terms of pay and conditions should understand a bit about the job of the people whose pay and conditions they are sitting in judgment over. As you may know, Mr Deputy Speaker, on the morning of 22 November this year the current chairman of IPSA, who sat on the board that selected the four candidates whose names are before the House tonight, told the “Today” programme that he knew a lot about what Members of Parliament did in their constituencies, but admitted to ignorance about what they did in this great House of Commons. That is after three years in the position, which he holds for only five years. In other words, after 66% of his time in post, he still admits that he is ignorant. He said that the only thing he knew about what Members of Parliament did was that they attended, as he put it, “a zoo” on a Wednesday. Later that day, I asked my right hon. Friend the Leader of the House whether he would organise a programme of education for Sir Ian Kennedy. He assured me that Sir Ian had always shown a willingness and desire to learn more about the work of the House, and obviously put him in a strong position to be able to show leadership to the new members of the board.

Pursuant to that, I wrote to Sir Ian on the following day, 23 November, setting out in detail everything that I had done in this House on Thursday 22 November, including asking a question about him. That covered the time between about 8.30 am and after 10 o’clock at night, when I returned to my constituency home. In the letter, which I said I was quite prepared to have treated as an open letter, I invited him to come along and shadow me for a day in the House so that I could show him exactly what we do here because he is so ignorant of it. I had assumed that by now, in the knowledge that we were having this debate, which my right hon. Friend flagged up when he responded to my business question, the chairman of IPSA would have responded to me, but he has not yet done so. I therefore wonder whether he really is interested in finding out what we do here. I hope that other members of the board will have a greater appetite for learning about it before they feel able to comment on our pay, allowances and pensions.

[Mr Stewart Jackson (Peterborough) (Con)]

On the subject of pay and conditions, and the transparency and probity that IPSA is responsible for upholding in this place, does my hon. Friend deprecate, as I do, the fact that despite a very strong lead from the Chief Secretary to the Treasury and the Government, IPSA set its face against that policy in paying its interim chief executive, through a tax-avoiding personal service company, the sum of £39,000?

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I said that this is a very narrow motion, and that is certainly way outside its scope.

[Mr Jackson]

On a point of order, Mr Deputy Speaker. The comments that I made relate specifically to the duties and responsibilities of board members, which are to protect the probity, honesty and transparency of this place, and I would respectfully submit that that is in order.

[Mr Deputy Speaker]

I am grateful to you for challenging the order of the Chair. I said that it was outside the scope of the motion, and it is.

[Mr Chope]

May I invite my right hon. Friend the Leader of the House to address the issue of whether there is going to be an induction programme for the new members of the board? As a modernising House, we have induction programmes for new Members of Parliament and I think that they have been well received. I see that my right hon. Friend is nodding. Although I know that it is strictly outside the scope of the motion to say that the existing chairman should be invited to attend such an induction programme, perhaps he could be invited—even though it is three years late—so that those who sit on the independent board can be informed about our work.

[Sir Bob Russell]

Earlier the hon. Gentleman rightly drew attention to the importance of the word “allowances”. Does he agree that the new board members should address IPSA’s use of the phrase “business costs,” because Members of Parliament are not businesses?

[Mr Chope]

That is correct. Indeed, ironically that point was made to me, unsolicited, by a senior colleague in the Tea Room on Thursday 22 November. I sat down in the Tea Room at 7.15 pm after realising that I had not had any lunch that day, and the first thing that this colleague said to me was the point that the hon. Gentleman has just made. I have included that in my letter to Sir Ian.

I do not often do this, but I told the House that I was concerned about the quality of the existing board members when we debated their appointment some three years ago. Indeed, I tabled an amendment proposing that we should exclude one particular member from the board—the former Member of Parliament for Taunton—on the basis that she had only been a Member of this House between 1997 and 2001 and I was sceptical about whether she would be able to contribute fully. [Interruption.] The hon. Gentleman says that I was right to be sceptical, but I have to point out that on that occasion the Liberal Democrats used a procedural device to ensure that my amendment was not voted on and the main motion was then passed.

I continue to take an interest in this matter and hope that next time we debate the issues I will be able to report back on how Sir Ian’s day of induction with me went.

19:37

[Mr Lansley]

I am grateful to the shadow Leader of the House, the hon. Member for Wallasey (Ms Eagle), and to the other Members who have contributed to the debate.

I cannot encourage the hon. Member for Bassetlaw (John Mann) to believe that the IPSA board will provide the House with a proposal for a new scheme for appointments. The body was established under the Parliamentary Standards Act and is bound by it, and the nature of the appointment scheme is set out in that legislation.

My hon. Friend the Member for Christchurch (Mr Chope) made a number of points. I am sure that Sir Ian Kennedy will respond to him and I will invite Sir Ian to include in that response a reference to how the board intends to have an induction programme for its new members. That is, of course, a matter for the board—it is not a matter for me or, indeed, for the House—but I will invite him to respond on that point.

[Sir Bob Russell]

In his discussions, will the Leader of the House suggest that the website that gives details of board meetings should be kept more up to date? It notes that the last board meeting took place in July, but I assume that it has met in the past five to six months.

[Mr Lansley]

I will ask Sir Ian Kennedy to respond to that point, too. I confess that I do not know whether the board has met since July, but he will no doubt be able to better inform my hon. Friend.

I have known Sir Ian Kennedy over a number of years—less in the IPSA context than in his previous role as chair of the Healthcare Commission; I knew him in his capacity in that role—and think that on 22 November he probably understated his knowledge of Members of Parliament and what they do in this place. He probably regrets that, but I know from my conversations with him that he regards knowledge of the role of MPs and their activities and important work as important. He also believes it important not only for IPSA to recognise that fully in what it does, but for the public to recognise it as part of an understanding of how IPSA goes about its work and makes its decisions.

[Ms Angela Eagle]

Does the Leader of the House agree that Sir Ian has been taken aback by the lack of understanding among the public of the role of Members in this House? It may be that he misspoke on the radio and attributed to himself the understanding that he had picked up from the public consultation, which is that many members of the public know about Prime Minister’s questions, but not the detail of what else we do in this House. I expect that that is what he meant.

[Mr Lansley]

The hon. Lady makes a very good point. Sir Ian may well have been reflecting the public’s perception. They understand much more about what we do as constituency Members of Parliament and, frankly, they value it more. I know from conversations with Sir Ian that that is something that he, as well as we in this House, hopes to remedy. One of the substantial number of criteria in the person and role specification that was agreed between Mr Speaker and Ian Kennedy, which would have been reflected in the panel’s judgments, was a candidate’s understanding and awareness of the role of Members of Parliament.

[Mr Chope]

Is it not correct that in that radio interview, Sir Ian Kennedy had the opportunity to explain to the public who were listening what we do here? He could have told them about his understanding of what Members of Parliament do, but instead he chose to use a cheap jibe, pandering to public prejudice.

[Mr Lansley]

I understand what my hon. Friend says. Sir Ian must speak for himself as this is his responsibility. The shadow Leader of the House and I were just reflecting our own conversations with him. He would have wanted to reflect his desire for the public to know more about what we do here and his belief that IPSA should fully understand the nature of the work that we do. If he did not reflect that in his interview on the “Today” programme, he will no doubt have an opportunity to remedy that in future.

I am grateful to Members for the points that they have made in this debate. I hope, along with other Members, that the members nominated in the motion take forward the important work that IPSA has to do in the years ahead.

Question put and agreed to.

Business without Debate

Tuesday 4th December 2012 Commons Chamber

Delegated Legislation

Tuesday 4th December 2012 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Value Added Tax

That the Value Added Tax (Place of Supply of Services) (Transport of Goods) Order 2012 (S.I., 2012, No. 2787), dated 6 November 2012, a copy of which was laid before this House on 7 November, be approved.—(Nicky Morgan.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Animals

That the draft Animals (Scientific Procedures) Act 1986 Amendment Regulations 2012, which were laid before this House on 29 October, be approved.—(Nicky Morgan.)

Question agreed to.

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

European Globalisation Adjustment Fund

That this House takes note of European Union Documents No. 15440/11 and Addenda 1 to 3, relating to a draft Regulation of the European Parliament and the Council on the European Globalisation Adjustment Fund (2014–2020), and No. 13483/12, a Report from the Commission to the European Parliament on the activities of the European Globalisation Adjustment Fund in 2011; agrees with the activities of the European Globalisation Adjustment Fund in 2011; agrees with the Government that there is no evidence to support an extension of the European Globalisation Fund into the next Multiannual Financial Framework; and supports the Government’s view that, if a new European Globalisation Fund is to be included in the 2014–2020 Budget, it should not be financed through appropriations but should operate under a separately agreed budget, and should be thoroughly evaluated on a more frequent basis.—(Nicky Morgan.)

Question agreed to.

Mindfulness-based Therapy

Tuesday 4th December 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Nicky Morgan.)

19:43

[Chris Ruane (Vale of Clwyd) (Lab)]

I wish to make a speech about mindfulness and unemployment. I have given up a lot to be here tonight, according to my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty). I could have gone to the Irish ambassador’s Christmas party. That is how important my speech is. [Interruption.] I think that my hon. Friend is going there now.

The World Health Organisation states that by 2030 mental health will be the biggest cause of burden of all health conditions, including heart conditions and cancer. The term “burden” is not an emotive or pejorative term, but a scientific one that is measured in years of life lost due to early death or severe disability brought on by illness, in this case depression.

We need not wait until 2030 to find out whether that will be the case; the indicators are already there. Some of those indicators have been revealed in the answers to parliamentary questions that I have tabled. For instance, the number of prescriptions issued for antidepressants has gone from 9 million to 46 million over the past 10 years. That is a 500% increase. In a follow-up question, I asked what assessment Ministers had made of the treatment of such people. The answer was that no assessment had been made. Some 10% of children are obese at age five, and by age 10 that figure is 20%. What is happening to those young people over that period?

The response given last week to a parliamentary question stated that 32% of young people between 16 and 24 suffer with a psychiatric disorder that could range from a mild condition such as anxiety or stress through to bipolar disorder and schizophrenia. Evidence from other sources points to how endemic such problems are across the western world: 50% of the population in every US state is overweight or obese, rising to 75% in some states. The total value of illegal drugs worldwide is £400 billion. That is a huge sum, most of which is spent by people escaping their own reality, as Freddie Mercury might have said.

Some 25% of UK citizens will suffer mental illness. What can be causing those shifts in well-being? There are many potential causes and theories. Some trace it back to the 1980s and the release of rampant individualism that led to a rise in consumerism and materialism. Some, such as the psychiatrist and journalist Oliver James, say that the rise of advertising in the post-war period has promoted consumerism, and that our individual wants can never be satiated while advertising continues.

Others such as Robert Putnam, the author of “Bowling Alone”, maintain that mental illness is caused by societal breakdown and people retreating to their home, the television, or spending three hours a day commuting or computing. Professor Richard Wilkinson traces it back to inequality. Food additives, information overload, job insecurity, fear of crime or terrorism, geographical mobility or family breakdown could also contribute to that decrease in well-being.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this important issue before the House. Youth unemployment is as high as 30% in parts of the United Kingdom, and it is also high in Northern Ireland. In certain parts of the Province, where we have idle hands we have other problems. Does the hon. Gentleman agree that something must be done to reduce youth unemployment, and that the issue he raises might be a way of doing that?

[Chris Ruane]

I agree entirely with the hon. Gentleman. Giving young people antidepressants is not the cure. We need a range of tools and I believe that mindfulness will be key. He is right to say that the devil makes work for idle hands. I have given the statistics and we need young people to be in work and positively contributing to society, rather than being sidetracked into criminality or—dare I say it?—to terrorism in Northern Ireland.

The exact causes of the problem may not be known, but people now feel that they are far from themselves and are on a hedonic treadmill. They are working for consumer durables for themselves and their children, to impress neighbours who perhaps they do not even like. The incidence of mental health problems among the general public is worrying, but among the long-term unemployed it is much higher.

Recent scientific research has measured the impact of long-term unemployment on mental illness, and shows it has physical effects on the brain. Research also shows that those who experience a bout of long-term unemployment never fully recover. It usually takes two or three years to recover from the death of a close one, but long-term unemployment does permanent psychological and physical damage to the individual, their family and community.

The damage that long-term unemployment does to young people just starting their career is particularly harsh. A few minutes ago I gave the percentage of young people who experience mental health problems—the exact figure is 32.3% of 16 to 26-year-olds who tested positive during screening for one or more psychiatric condition. There are 1 million long-term unemployed young people in that age bracket, and their life chances have been diminished from the outset.

For many politicians on both sides of the House, the unemployed are just numbers or percentages with which to bash each other over the head. The true impact on the individual, their family, community and society is not fully appreciated by many Members. The unemployed are portrayed in the media as feckless or wastrels, and the disabled have been particularly marked out. I do not include the Minister or the hon. Member for West Worcestershire (Harriett Baldwin), who are present in the debate, but some Conservative Members have used terminology with which I would not agree, and which has led to an increase in hate crimes against the disabled over the past year. Only one category of the five hate crimes based on gender, race, religion, disability or sexual orientation has increased—that against the disabled.

The language and tone of some politicians, amplified in the media, are responsible for that. It is no wonder that in constituencies such as Merthyr Tydfil and Rhymney, where 85 people are chasing each job, there is a lack of sympathy for the unemployed. There is no modern Yosser Hughes to portray the slow disintegration of an individual within his family, community and finally himself. The negative reinforcements of such labelling and alienating behaviour serve only to make those affected by unemployment and mental illness more difficult to place in work.

The current preferred treatment for depression is antidepressants. As I have said, I was informed in a recent parliamentary answer that the number of prescriptions issued rose from 9 million to 46 million. The increase in the use of antidepressants occurred in the past 10 years, but in 2004 the National Institute for Health and Clinical Excellence said that mindfulness was a better way to treat repeat-episode depression. It is a proven and scientifically accepted way of improving mental illness, but it has not been taken up. When I have tried to find out whether mindfulness has been taken up by general practitioners and hospitals, the answer has always been that the information is not collected centrally. I believe that it needs to be collected centrally.

How can mindfulness help with unemployment? It can prevent people from becoming unemployed, limit the effects of unemployment, and help people to get back to work. What is mindfulness? Mindfulness is an integrative mind-body based approach that helps people to change how they think and feel about their experiences, especially stressful experiences. It involves paying attention to our thoughts and feelings so that we become more aware of them, less enmeshed in them, and better able to manage them. It uses breathing to slow the mind and the body down—it uses breath as an anchor to help us to live in the present moment.

The DUP—

[Jim Shannon]

We are to blame for everything.

[Chris Ruane]

I apologise to the hon. Gentleman. The Democratic Unionist party may have co-funded the pilots in Northern Ireland, but the DWP—the Department for Work and Pensions, which is what I meant to say —has co-funded pilots on the use of mindfulness in helping people to get back to work. A three-year pilot in Durham finished in 2010. The pilot was jointly funded by the DWP and Durham county council, and there was an element of European funding. It dealt with the most difficult cases—people who were unemployed for between one and 15 years. The average length of unemployment was three years. Depression, and loss of self-confidence and self-worth, had already set in. The catchment area was the Derwentside-Consett area, which had experienced mass unemployment in the ’80s and ’90s.

I spoke today to Gary Heads, the organiser of the project. He told me that not only were clients trained in mindfulness, but so were jobcentre staff. A traditional mindfulness course usually lasts eight weeks. This one lasted for four weeks, consisting of a two and a half hour taught course each week, with 45 minutes of homework a day. The cost was minimal—£300 for each person on the course—but the benefits were maximum. Of the 300 clients who attended, 47% found employment within six months. The 53% who did not find work were placed on a traditional full mindfulness course. Ninety per cent. of those who started the course finished it. Pre-screening ensured that the drop-out rate was minimal and efficiencies were maintained. All who attended were, as I have said, from the difficult-to-reach categories.

The report on the pilot will be finished early next year. Will the Minister assess it? If it can be rolled out immediately, I urge him to do so. If it requires further refinement, I urge him to do it. Gary Heads particularly praised the head of the employment team, Bernadette Topham, who gave support to the project and was pleased with the results. The scheme came to an end after three years because—I was informed—the local authority pulled the funding.

Mindfulness-based interventions can and do work. I mentioned steel and coal communities. The new steel and coal communities will have high numbers of public sector workers. In my constituency, 46% of workers work in the public sector. In the neighbouring constituency of Clwyd West, it is 45%. We need to prepare for the mass lay-offs that will occur in such constituencies throughout the country. Mindfulness-based interventions have been used by Google, Apple, the American military since 2009, and American prisons, emergency services, schools and hospitals for the past 40 years. We need to make an assessment of what has worked over there and whether it will work over here.

Mindfulness-based therapy has been rigorously tested in the laboratory, using MRI and electrical scanners. Electrical activities in different parts of the brain have been monitored in the laboratory. Its efficacy in treating a whole range of mental and physical conditions, including bipolar disorder, generalised anxiety disorder, attention deficit hyperactivity disorder and psoriasis, has been tested and proved. It also helps the immune system and the healing process.

Mindfulness has proven to be beneficial in the workplace, with participants more engaged in their work. With a greater ability to concentrate, workers become more compassionate, both to themselves and their co-workers. When it is used in prisons, prisoners become less aggressive and hostile, and have fewer mood disturbances. It has helped those who suffer from long-term pain, lessening the use of painkillers and their damaging side-effects.

Mindfulness is not just for those who suffer with mental health issues, or who work in high stress occupations— its applications go far beyond that. It is being used in education. In primary schools in my constituency, it is used to train five-year-olds to be more mindful, to live in the present moment and to concentrate. Its effect on personal relationships within families and marriages has also been recorded.

Felicia Huppert, the mother of the hon. Member for Cambridge (Dr Huppert), is one of the foremost well-being researchers. She maintains that the bell curve of well-being can be shifted for the whole nation. The biggest gainers will be those below the curve. I pay tribute to the Prime Minister for his work on well-being, which was a bold, innovative and forward-thinking step. This could help to deliver the targets on well-being in the years to come.

It has been estimated that sickness related to mental health costs the economy £12 billion in lost productivity, because of sick leave, and in lost taxes and increased benefits. Surely, if there are successful pilots, such as the two I have outlined, they should be taken up across the country. They would cost a fraction of the £12 billion being lost. The savings to the Exchequer could be massive, public and private sector companies could be more efficient and workers less stressed, more resilient and happier in their workplace.

One of the biggest barriers to the take-up of mindfulness is that GPs do not know about it. Surveys have been conducted by the Mental Health Foundation. More than two-thirds of GPs say that they rarely or never refer their patients with recurrent depression to mindfulness-based practices, and 5% say that they do so very often. GPs do not know about it. Politicians do not know about it. I have asked dozens of questions—perhaps hundreds—on mindfulness and often the response comes back that information is not collected centrally. I urge the Minister to do all he can.

Another reason why mindfulness has not been taken up is that there is no effective political lobby for it. The pharmaceutical industry worldwide spends £19 billion lobbying GPs and politicians to tell them that their latest drug is fantastic—stuff it down children’s throats. That is what happened with GlaxoSmithKline, which received a £2.9 billion fine in America in July. It is a powerful lobby that dismisses any alternative therapies. We need to be open. We need to meet mindfulness practitioners and academics. We should be spreading best practice in our prisons, armed forces, emergency services, the NHS and in the DWP.

In conclusion, I have a number of requests for the Minister. Will he ask the private sector providers of the Work programme if they will engage with the mindfulness experts, practitioners and academics across the UK? In particular, I highlight the work of Mark Williams, at Oxford university, and Rebecca Crane and her team, at Bangor university, north Wales. Will he meet Health Ministers to see whether the Department of Health can play its full and proper role in promoting mindfulness? Will his civil servants in the Department for Work and Pensions assess best practice within the pilots they have sponsored so far, and will they spread this best practice?

Will the Minister visit Durham to see the legacy of the pilot scheme that finished in 2010? Will he visit the real city strategy, in my town, which is using mindfulness and other psychological interventions to help people stay in work, through the fit for work programme, and to reintegrate the unemployed, some of whom are in very difficult circumstances? We have recovering drug addicts and alcoholics working on a local farm. We have disconnected, alienated young people working with animals, including through the coastal hawks project. We have a Jamie Oliver-type restaurant training young people and helping them gain full employment. So there is best practice out there, and I am asking the Minister to go out and visit those projects.

Will the Minister personally meet mindfulness experts and practitioners across the UK? We have many fine academics who have given years, if not a lifetime, of work to the development of mindfulness. They have a strong story to tell, and they have the scientific proof to back up what they are saying. Will he use mindfulness in his own Department? I have put questions to every Department about sickness levels. They have gone up massively. This is a powerful tool that could help Ministers reduce sickness in their Departments. Lastly, will he keep an open mind about, and be mindful of, the issue of mindfulness?

20:01

[The Minister of State, Department for Work and Pensions (Mr Mark Hoban)]

I congratulate the hon. Member for Vale of Clwyd (Chris Ruane) on securing this debate. He commented on the effectiveness of the lobbying by pharmaceutical companies, but I think he has done a rather effective job himself in lobbying for mindfulness. He said that he was missing the Irish ambassador’s party tonight. In my research for the debate, I discovered that mindfulness was of growing interest in Ireland, so I expect that the Irish ambassador will be mindful of his explanation for not being there tonight.

The Department recognises the role that a wide range of interventions can play in supporting people to move into work. Mindfulness therapy is a psychological approach to well-being that people report as helpful in the workplace. The principles behind mindfulness therapy are extremely interesting and, by many accounts, can be helpful in alleviating distress. As I understand it, mindfulness encourages people to focus on their present experiences in the here and now, without making judgments about the experiences. It is rooted in Buddhism, but has been westernised through medicine and psychology.

Mindfulness can be delivered in a wide range of ways—the hon. Gentleman referred to the Durham pilot, which I will return to later. People can be taught it through meditation and other techniques, in group sessions delivered every week for eight weeks, with follow-up sessions over the course of the next year. Some advocates believe it has the potential to be used in a range of circumstances, such as for stress at work, for personal problems, and for managing chronic pain, substance abuse and unemployment.

As with all medical and therapeutic interventions, however, the National Institute for Health and Clinical Excellence should be the key deciding body for reviewing the evidence for which interventions should be used and when. Mindfulness is one of several therapy services approved by NICE, which has indicated its benefits in preventing the relapse of depression. In particular, NICE proposes the use of mindfulness for people who are currently well but who have experienced three or more previous episodes of depression. The value of mindfulness as approved by NICE, therefore, is as a useful health intervention to prevent relapse among people who have experienced depression.

As the hon. Gentleman made clear, mindfulness therapy is an emerging and important field. We will watch with interest the outcome of the randomised controlled trials that are under way—not only in preventing relapse, but for treatment of long-term conditions. As he said, a number of organisations are involved in research into mindfulness. Bangor university and the Oxford Mindfulness Centre are examples. In answer to one of his many questions, I can say we will remain open-minded about mindfulness-based therapy; the challenge is to demonstrate how it will work.

The hon. Gentleman referred to the programme in County Durham, in Derwentside. My understanding is that it is a pilot that the Department for Work and Pensions oversaw. He is right that we need to look at the evaluation of it. The point I would make to him—we make this point in connection with all evaluations of pilots that the Department undertakes—is that we tend to benchmark pilots against what would happen in the absence of intervention. We will look at how the rate at which people sign off benefit having gone through the mindfulness pilot compares with the rate of people coming off benefit in other areas, so that we can judge its effectiveness and report back.

Let me respond to the detailed questions that the hon. Gentleman asked. He asked about the Work programme. It is designed so that it is for providers to determine which approaches are best at helping to get people back into sustainable employment, and they clearly need to understand which approaches and therapies are most effective. In order to embed mindfulness, the centres in Bangor or Oxford might want to work with some providers to see how mindfulness could be used more widely.

[Chris Ruane]

That is an excellent suggestion, but all I am asking of the Minister is that he write to those private sector providers to tip them the wink and say, “There are established British centres of excellence; please could you make an assessment of them?” because I do not think they even know about mindfulness therapy.

[Mr Hoban]

The model was set up so that providers have the initiative to make innovations and that it should not be Ministers telling them what to do. There is a role that the centres can play. Perhaps the hon. Gentleman might engage with the two Work programme providers in Wales—Working Links and Rehab JobFit—to see whether they might want to work with Bangor university on this issue.

I know from talking to the Minister of State at the Department of Health just this afternoon that the Department is aware of the issues around mindfulness therapy—the fact that the hon. Gentleman asked about it at Health questions last week has ensured that it is certainly on the ministerial radar.

The hon. Gentleman asked about the evaluation of best practice. Let us see what it says, what lessons should be drawn from it and, if it is successful, how it might be scaled up for use. He suggested that I should visit Durham.

[Chris Ruane]

It’s a long way.

[Mr Hoban]

It is not a long way and it is not difficult to visit. I was in Durham last month and I will be there later this month, as my family happen to live there, so I might visit Jobcentre Plus to understand just how that evaluation worked and what the evidence is.

I am delighted to be invited to Rhyl—it would not be my first visit. I will bear it in mind, because one of the issues we face is ensuring that we find new ways to help and support people with a range of mental health conditions, and there may be some value to be seen in the pilot there.

The hon. Gentleman encouraged me to meet mindfulness therapy practitioners. I have many strengths, but an understanding of psychological therapy is not one of them; but I will ensure that contact is made with either Bangor university or the Oxford centre, and that officials from my Department engage with them in order to understand it.

We take mental health conditions seriously. We need to ensure that support is put in place through Jobcentre Plus to help people to get into work; that, too, is something that we take seriously. Throughout the Jobcentre Plus network, work psychologists and mental health and well-being partnership managers are available to support advisers and to work with their counterparts and providers in the mental health service. That support is there for Jobcentre Plus advisers. All jobcentre staff with a claimant-facing role go through mandatory training modules to help them to support claimants with mental health problems and to refer them to specialist support if appropriate.

Last week, my noble Friend Lord Freud launched the mental well-being and employment toolkit for employment advisers. It has been produced and designed by Work programme and specialist mental health and employment providers. It is a free-to-use product that will help advisers to use employment discussions to identify mental health and well-being needs and to support people to access appropriate therapy services. One of the challenges is to identify those needs and to effect the appropriate referral. Debates such as these are important, because they raise the profile of these issues and ensure that they are on people’s radar screens.

The hon. Gentleman will know from his contacts in the Jobcentre Plus office in his constituency that each Jobcentre Plus has a disability employment adviser. They work with claimants facing complex employment situations resulting from a disability or health condition. Notwithstanding the debate on mindfulness, those resources exist within Jobcentre Plus to support claimants with such conditions. Those advisers can also act as an advocate with prospective employers on behalf of the customer, and they aim to identify work solutions that will minimise or overcome any difficulties related to an individual’s disability in the workplace.

I thank the hon. Gentleman for highlighting this issue. It is something that we need to look at carefully. We need to find every possible way to help people to get back into the labour market and to support them in getting there. I hope that, as people develop their understanding of mindfulness therapy, it might become a tool that could have a wider application.

Question put and agreed to.

20:12

House adjourned.

Petition

Tuesday 4th December 2012 Petitions

Tuesday 4 December 2012

The Right to Silence

Tuesday 4th December 2012 Petitions

The Petition of Mr Martin Burke of Elizabeth Regina Love in Manchester,

Declares that if a constituent visits their Member of Parliament at the House of Commons by appointment, and that in the meantime the Department of Work and pensions arranges a meeting at a Jobcentre which the constituent is required to but does not attend, and the constituent does not give a full explanation, then their benefits will be stopped (at least 2 instances).

Further declares that benefits are stopped with no regard to the means to buy food.

Further declares that Civil Servants are fully aware of the health consequences and that it threatens people’s lives and are acting to cause harm.

Further declares that as they understand the consequences it is done with the intent to cause harm, injury that may kill.

Further declares that those listed in Early Day Motion 454 Fatalities in Afghanistan (No. 11) and countless others in previous conflicts including the Second World War and the First World War gave their lives so that people would not be treated this way. Declares that this officer is asking that it be stopped.

Further declares that the following are participant members of the Department of Work and Pensions (DWP): Phil Allen, Mike Baker, Sarah Britton, Jim Crook, Stuart Erskine, John Finn, Ros Flatters, Lynn Gandy, Heather Hayes, Richard Heaton, Steve Hopwood, Mark Inman, Mary Lengden, Leigh Lewis, Phil Lowthian, Wendy Mayer, John Milligan, Paul Mooney, Sarah Morgan, Sarah Ryan, Adam Sharples, Sue Owen, Darra Singh, Gurbux Singh, Mike Smith, Nicola [Surname not given], Dorothy Stafford, Wendy Stockton, Jackie Wall, and at least 3 others names not given.

Further declares that questioning by Civil Servants in job centres is conducted under conditions of deliberate stress; the use of shouting, with members of the public unknown to the interviewee sat just behind; numerous interviews at irregular intervals over a long period of time; prolongation of the duration of meetings (“as long as it takes”).

Further declares that other small stresses are designed to have a cumulative effect: staff entering personal space; uncomfortable chairs; unable to sit under the desk fully; sitting with the back to a busy room looking either at the interviewer directly or the wall; conversation interruptions; the use of two interviewers and different interviewers; forced to sit close next to and face to face opposite strangers in the waiting areas; deliberately keeping people waiting; disclosure of personal information in public; the giving of wrong and misleading information; unreasonableness (“I ask the questions”); telephone calls to ‘Decision Makers’; deliberate delay in replying to correspondence.

Further declares that these are under the general threat of loss of benefit when there is little money for food, nor money for heating in winter, and that these actions are designed to condition a person into signing one-sided contracts.

Further declares that the life-threatening health consequences of stress are known.

Further declares that the interviewees do not consent to this treatment.

Further declares that civil servants who do this are skilled and experienced, trained and managed, enthusiastic, enjoy what they do and work as a team.

Notes that the restriction of access to and the denial of food was a tactic used in the Malayan counterinsurgency.

Further notes that for adults to use starvation as a weapon against children is a criminal offence.

Declares that the Petitioner is fortunate that he can read and write.

The Petitioner notes that the House of Commons asks that requests made in a Petition to the House be addressed to the ‘Government’, however a distinction has to be drawn between elected Members of the House of Commons and civil servants.

The Petitioner asks the House of Commons to make a law so that when a constituent has any business with their elected Member of Parliament they are given explicitly the right to silence without punishment when questioned by civil servants;

Further asks that the mistreatment voters are being subjected to by civil servants described above, and more, be stopped;

Further asks that members of the House of Commons ensure that the people, who include their constituents, are always fed properly.

The Petitioners therefore request that the House of Commons consider the matter of the Right to Silence and that were the questions put the House consent to what is asked in this Mr. Burke’s 19th petition first posted to the House on 18 October 2012, and formalised on 29 November 2012.

And the Petitioners remain, etc.—[Presented by Sir Gerald Kaufman.]

[P001145]

Westminster Hall

Tuesday 4th December 2012 Westminster Hall

Tuesday 4 December 2012

[Martin Caton in the Chair]

Ford UK (Duty of Care to Visteon Pensioners)

Tuesday 4th December 2012 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Syms.)

00:00

[Mike Freer (Finchley and Golders Green) (Con)]

I have not spoken under your chairmanship before, Mr Caton, so I am looking forward to today’s debate. I would like to thank my colleagues; as you can see, quite a number have turned up in support of this important debate on an issue facing the Visteon pensioners that has been going on for some time.

In understanding the situation, it is important to appreciate what Visteon was and what happened to the short-changed Visteon pensioners. Visteon was the global automotive component operation of the Ford Motor Company. Most of us will have heard of Ford, but few will have heard of Visteon. In June 2000, Visteon was spun off from Ford as part of its efforts to reduce supply chain costs. Importantly, the separation agreement provided, as part of the spin-off, that those spun off would benefit from mirrored terms and conditions and “lifetime protection”. Further to that being offered to former Ford Visteon employees, employees were advised that the Ford European works council agreement—the FEWC—guarantees

“that Visteon employees transferring their past service benefits to the Visteon Fund will receive the same benefits as at Ford, both now and in the future for all their pensionable service.”

That important point was written into the agreement. Beyond that, employees were encouraged to join the Visteon scheme and transfer their pension with statements such as

“Your accrued pension rights will be protected”,

that it was in employees’ best interests to transfer, and that pension benefits are guaranteed.

It is important to remember that Visteon was not a wholly arm’s length company after the spin-off. It remained dependent on Ford for 90% of its business, and the employees who transferred from Ford to Visteon received no new contracts. The company operated out of buildings and facilities that retained the Ford brand, and personnel cards carried by Visteon employees remained branded “Ford”. When employees qualified for a long-service dinner, the invitation had a Ford letterhead, and when employees turned up for their long-service award, the award also had the Ford emblem.

Clearly, Ford knew that it had to reduce its operating costs, which in itself is not a crime, but perhaps what it went on to do is bordering on one. There is a clear suspicion that Visteon was being set up to fail, and that pension liabilities were being deliberately detached from the main company.

[Mr Lee Scott (Ilford North) (Con)]

Does my hon. Friend agree that whatever may happen in coming months, Ford should just do the right thing and honour everything that it said, as he has described? It should be responsible to its former employees.

[Mike Freer]

My hon. Friend makes a powerful point. Anyone who has gone through the documents that the Visteon pensioners have been able to secure will see that there is a clear audit trail showing that Ford knew exactly what it was doing. It gave guarantees that it is now seeking to renege on.

[Mr Charles Walker (Broxbourne) (Con)]

Is it not the case that in our pursuit of this matter, along with my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe), Ford has sent some very reasonable people to meet us, but it continues to behave in a very unreasonable way?

[Mike Freer]

My hon. Friend makes another good point. We have seen over the years that when companies are seeking to renege on their pension responsibilities, they seek to delay through the courts. I suspect that many companies hope that the pensioners will die before the case is heard, and I agree that it is time that Ford met its responsibilities.

I return to the issue of Visteon being set up to fail. The Visteon UK pension plan was created 12 months after the spin-off from Ford, with a transfer value of just £230 million. That transfer value left an immediate deficit of £49 million. That deficit was not communicated to the employees. It looks as though Ford was simply shunting off its liabilities and cleaning up its main balance sheet. It could be argued that a viable spin-off company could have traded its way out, and that it could have made employee and employer contributions to rectify the deficit. Could Visteon have traded its pension fund out of trouble? Possibly—I am not an actuary, so I cannot comment.

[Mr John Baron (Basildon and Billericay) (Con)]

I congratulate my hon. Friend on securing the debate. Ford certainly needs to answer key questions, and this will be the subject of a court case. However, we have invited other players in this sad affair, such as the Visteon management and the trustees at the time—key players when it came to the transfer—to come and meet us as a group, and they have refused. Does my hon. Friend agree that that should be considered as a negative on their part?

[Mike Freer]

My hon. Friend makes a good point. I do not see why the former management and trustees should not come and talk to us and explain why they believed that the actions they took were correct. If they feel those actions were right, they should come and defend them. I also correct him, because although I thank him for his congratulations on securing the debate, the true congratulations should go to our hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe), who has been diligent and persistent in pursuing this case on behalf of Visteon pensioners. We should give credit where credit is due in this House.

To return to whether Visteon could be a going concern and therefore trade its way out of pension deficit, in the month before Visteon was spun off, documents submitted to the Securities and Exchange Commission identified significant risks, but those risks were not communicated to the employees. Ford said that it was committed to ensuring Visteon’s viability by using Visteon to supply its products. Fair enough, but Ford then implemented a unilateral price reduction and started sourcing products from newer and cheaper alternative providers.

The European works agreement, apparently, was supposed to have transferred all the benefits, but it also tied Visteon into the UK wages and benefits that the employees were entitled to. Although we can argue that the benefits of the pension scheme have not been transferred, Visteon was, of course, saddled with the legacy labour and overhead costs, and, as I have mentioned, Ford then unilaterally dropped the prices it was willing to pay. The cost base of the spin-off remained high, but Visteon’s income was cut at a stroke by Ford.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate the hon. Gentleman on securing the debate, and I also want to put on record my congratulations on the work done by the hon. Members for South Basildon and East Thurrock (Stephen Metcalfe) and for Swansea West (Geraint Davies) in leading the all-party group on this subject. Is it not the fact that suspicions are deepened by Visteon suffering an operating loss for every year that it existed? It never made a profit and its total committed debts by the time it ceased to operate were $955 million.

[Mike Freer]

The hon. Gentleman makes a good point. A company being transferred away from its parent as a loss maker is, in itself, not the issue, but it is whether the management, on both sides of the spin-off, genuinely believed that the business recovery plan was viable. I shall go on to refer to a comment made by the then chief executive of Visteon about the viability of the business post spin-off. The comment suggests that they knew exactly what they were doing, and that this was simply an exercise of dumping a liability while cleaning up the main Ford balance sheet.

[Dr Hywel Francis (Aberavon) (Lab)]

I congratulate the hon. Gentleman on securing the debate. One key point that was made to me by trade unions at the time, 10 years ago, was that there was no serious engagement with the unions and the work force in new product development. The company was continually reminded of the need to do so, but refused.

[Mike Freer]

The hon. Gentleman makes a very good point, but it is worse than just that there was no engagement. All the evidence suggests that Ford Motor Company was engaged in underhand sourcing of new products from other suppliers at cheaper rates. Indeed, those new suppliers were asked—nay, forced—to sign confidentiality agreements. Therefore, although Ford knew that Visteon was not in a position to develop new products, it was actively sourcing new products from other, cheaper suppliers without telling Visteon or certainly without telling the work force of Visteon. I think that that is duplicitous. Visteon was immediately at a competitive disadvantage compared with other suppliers, not least in relation to securing new business from Ford. Of course, as it was a spin-off, one hope would have been that it would secure new business, but having inherited the overhead of the Ford system, it was unable to do so. As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) pointed out, Visteon’s trading losses were close to $1 billion before it went into administration in March 2009. It made a loss every single year.

The key issue is this: did Ford know what it was doing? This is where I want to refer to a comment made by Tim Leuliette, the chief executive of Visteon Corporation. He was interviewed by the Detroit Free Press in November 2012. He was asked:

“Did…Visteon…have a chance”

when it was spun off? He said quite clearly:

“No…The labor cost issues, and the burden and the overhead was…so out of line with reality that it was almost comical. It just wasn’t going to work. And it didn’t work.”

If the chief executive of Visteon knew that its business plan could not recover the company, I doubt that Ford did not know that as well.

[Mr Charles Walker]

Is this not an example of Ford, a four-letter company, behaving in a four-letter way, and is it not a disgrace?

[Mike Freer]

My hon. Friend is tempting me into unparliamentary language. I will resist the temptation, but I of course do share the sentiment behind his intervention.

I think that the chief executive summed the position up in one or two sentences. I cannot believe that Ford Motor Company and the management of Visteon did not know exactly what they were doing. It was simply a dumping-of-liabilities exercise.

In April 2009, matters got worse. The Visteon UK pension fund required support from the Pension Protection Fund. Some Visteon pensioners have already seen their pensions reduced by 45%. In February 2012, the protection fund took on the responsibility for paying members of the scheme. As I have already said, it seems that Ford was simply cleaning house—shunting off a loss-making division and its pension liabilities. The new business was not viable, and it knew that the pension fund was in deficit. The full facts and the full risks were hidden from the employees. What was worse in my view was that false promises were made to encourage employees to transfer their pensions.

I used to work for one of the high street banks, in the regulated side of the bank. In fact, I sold pensions. If I had made to my customers the comments that Ford Motor Company made, I would not only have been struck off as a regulated person by the Financial Services Authority, I suspect that I would have been prosecuted for mis-selling.

[Rebecca Harris (Castle Point) (Con)]

Does my hon. Friend agree that this is the crux of the matter—that the employees were persuaded that their pensions would be secure not by some strange private equity financiers or some faceless spivs, but by their long-term employers, their trusted and respected employers, Ford? Does he agree that the moral responsibility for this therefore remains with Ford?

[Mike Freer]

My hon. Friend hits the nail on the head. Let me refer to an extract from the Ford personnel communication of April 2000. It clearly states:

“Your accrued pension rights will be protected.”

Minutes of a Ford pension meeting with union representatives clearly state that it is in the interests of the employees to transfer—that the pension benefits will be the same now as in the future. It says that in black and white. I could not have got away with that as a regulated person working for a high street bank and I do not see why Ford should get away with it, either. Ford’s sleight of hand has left pensioners without the pension to which they were entitled. It looks suspiciously like they deliberately misled their employees if not mis-sold the pension transfer.

Mr Chavda is my constituent. I see him on a regular basis when I visit Homebase in my constituency, where he is now working to top up his pension. He wrote to me and said that

“it is Ford that should be liable for the losses many people are suffering as a result of the company transfer. I worked for many years for Ford and I feel cheated that after contributing in the pension scheme for many years…I am now receiving less than the amount I am entitled to.”

Mr Chavda is not alone. Ford should keep its promises and meet its responsibilities. Today’s debate is about asking Ford to do the right thing. I am sure that my hon. Friends in this place will support me.

09:45

[Geraint Davies (Swansea West) (Lab/Co-op)]

I, too, congratulate the hon. Member for Finchley and Golders Green (Mike Freer) on securing the debate. I know that you, Mr Caton, have a great knowledge and awareness of this business because some of your constituents have been directly affected. Against the backcloth of news reports about global companies having to take responsibility for tax, we are here to talk specifically about Ford and its responsibilities to its former workers and employees, whose pension funds have been asset-stripped by what is basically sleight of hand.

As you will know, Mr Caton, the background in a nutshell is that Ford set up Visteon in 2000, seemingly as part of a strategy to reduce input costs and increase profits. By creating an arm’s length company that it had control of in terms of the prices that it was giving that company, it was then able to set up a pension fund that in the first instance was underfunded by some £49 million. It controlled and pressed down the prices paid to Visteon, with the net outcome that Visteon made losses in each of the 10 years of its existence, in the order of $100 million a year. The net outcome of that was that the pension fund was further suppressed, and pensioners and workers who spent decades working for Ford in good faith now find themselves short-changed.

I am glad to be accompanied by hon. Members from both sides of the House in calling on Ford to do the right thing, as part of a wider debate to bring global companies to account where they employ people and make profits, so that they provide decent products and are also decent to their work force.

[Dr Francis]

On the point that there is broad cross-party support in relation to this issue, will my hon. Friend join me in congratulating the all-party group that was set up several years ago to ensure justice for Visteon pensioners and in congratulating our hon. Friend the Member for Swansea East (Mrs James) on the sterling work that she undertook in the early stages? I also thank him for the work that he has done, because although the Visteon plant is located in my constituency, the vast majority of the workers or former employees are located in Swansea. I have constituents from Baglan, Briton Ferry, Skewen and Cwmafan, but the vast majority are in his constituency and hers.

[Geraint Davies]

I am glad to have had that intervention. It is very important to remember that this issue has been bubbling for 10 years. My hon. Friend the Member for Swansea East (Mrs James) has done an enormous amount of work, and obviously my hon. Friend the Member for Aberavon (Dr Francis), who has just intervened, had the original factory in his backyard. As this situation has gone on so long, Ford may be under the misapprehension that the issue will go away. It has been mentioned that some of the pensioners may in fact die and nobody will take much notice of it. However, what we see here, on the foundation of the work that has been done in the past, is the coming together of a new all-party group. I pay my respects to the previous all-party group for keeping the issue moving, but we now have a new sense of energy.

The significance of this debate, of course, is that it will put it not just on the UK airwaves but on the US airwaves that Ford is not just a whiter-than-white company. It needs to take responsibility for its employees around the world, not least the British cousins of the US workers, who have worked so hard for Ford throughout their lives in good faith and now feel that they have been shoddily treated. We all know that the matter will be carefully argued in court by very rich lawyers, but what we are saying here, and what the Ford directorship in the US needs to understand, is that a cross-party group of parliamentarians in Britain will focus on it and keep it on the agenda, and ultimately that will have an impact on the brand values that Ford relies on for its profitability. We are saying not only that this is a moral obligation, but that Ford must financially do the right thing; otherwise, it will pay the price one way or another.

[James Duddridge (Rochford and Southend East) (Con)]

The hon. Gentleman almost anticipates the point I was going to make. Does he agree that this is not only an historical issue, but about the future of Ford Motor Company? Who in their right mind would work for an organisation that has treated its employees so dishonourably? It is about not only Visteon pensioners, but the future of Ford, the nature of its corporate and social responsibility and its future relationship with employees and customers.

[Geraint Davies]

That is precisely the point that needs to be made. There is great empathy with Ford in Britain. Everyone has heard of Henry Ford and thinks of the motor car as coming from Ford. As the story comes out and is amplified by more groups, people will think, “Why should I choose a Ford car over a Nissan or a Honda, who are investing hundreds of millions of pounds in new production in Britain this year?” We have a loyalty to the people who work in Britain, as well as a wish to buy the best product. If 3,000 pensions are affected, it is our responsibility to stand up and let the people we represent know what we are doing and why we are doing it. They can make judgments about which cars they choose to buy.

The original £49 million gap in the pension fund in 2000 was alongside a significant surplus in the main Ford pension fund. We should obviously ask why; it seems an unacceptable start. Since then, the gap has grown to something like £350 million. As the hon. Member for Finchley and Golders Green said, Ford had almost a monopoly over the supply of parts coming out of Visteon, so it was in a position to drive down prices unilaterally. There was no proper market. I have a Visteon internal e-mail from December 2000, which states:

“Ford have reduced PATS prices twice this year…9.2% as part of the EWC agreement…and then reduced prices again by 10.5%. This was never agreed.”

In that one year, prices reduced by 20%. If one company is supplying a company that controls the prices, it is not surprising that costs can be transferred. In one year, 2005-06, Visteon Europe lost £700 million and Ford Europe made a £700 million profit. Who makes a profit and who makes a loss is clearly determined by Ford. It had a direct knock-on effect on the value of the pension fund, which is now £350 million in the red.

Visteon had to buy inputs from Ford. It bought materials from the Ford foundry at Leamington, for example, which it could have sourced more cheaply elsewhere, to make parts that it then sold back to Ford at a price that Ford dictated. Clearly, this was all part of a strategy for Ford to manage down its costs and gradually outsource from Visteon, to places such as Korea, in a way that did not invoke any business discontinuity that would have cost it profits. It was carefully managed, but the people who really suffered were obviously the Visteon workers.

Meanwhile, on the Visteon trustee pension directorate, a separate pension fund was set up—the Visteon engineering scheme for cherry-picked Ford personnel. One of the people we invited to speak to us, who has not as yet agreed, is Mr Phil Woodward, a company-nominated Visteon pension trustee director. He was on the trustee board, where he had a duty of care to the Visteon pensioners, and transferred his pension to the new fund, taking money out of the Visteon fund. All the transfers and the voluntary redundancies would again deflate the Visteon pension fund. At that time, he was also involved in the closure of plants in Bridgend and Belfast. There certainly seems to be a conflict of interest there.

I shall not keep hon. Members much longer, as I know many others want to speak. The simple point is that there will ultimately be a decision in court, but we are saying that, from the evidence we have received—we are happy to receive other evidence from Mr Woodward or representatives of Visteon, who have not come to us either—we believe that there is a duty of care to our constituents who have been sold down the river. We will not let this rest until we get justice for the pensioners.

09:55

[Mr John Whittingdale (Maldon) (Con)]

It is a pleasure to serve under your chairmanship, Mr Caton. I know that you would probably rather be in the body of the Chamber, since you, too, have many constituents affected by this very sad affair. I congratulate my hon. Friend the Member for Finchley and Golders Green (Mike Freer) on his success in securing the debate—a number of us entered the ballot, but he was the one lucky enough to be selected. We have an opportunity for the many Members who represent people who have suffered as a result of what has occurred to speak. As others have done, I would like to single out my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe), who has led the campaign so well and ensured that it remains in the public eye. I must first apologise to my hon. Friends and other Members. I have to chair a Select Committee at 10.15 am, so I will be brief. I am grateful to be called early. I will not repeat the facts that were set out so ably by my hon. Friend the Member for Finchley and Golders Green and the hon. Member for Swansea West (Geraint Davies).

The saga is fairly clear, but it is always important to bear in mind the real distress caused to individuals. I shall mention two. Mr McDonald of Danbury in my constituency was employed by Ford for 33 years and then spent four years working for Visteon. He believed the assurances given to him about the pay, conditions and pension entitlements, which would mirror those that he had enjoyed during his time at Ford, and he therefore agreed for his pension to be transferred. Another of my constituents, Mr Sharpe of Heybridge, was employed by Ford for 27 years and by Visteon for three months. Both those individuals have seen their pension reduced by 50%. They believed that the Pension Protection Fund would offer some protection, which I hope the Minister will say a little about in his reply. The PPF suggested that it would guarantee that such people would receive 90% of their pensions, but that has proved not to be the case, as a result of how the rules work and the cap that has been applied.

[Sir Bob Russell (Colchester) (LD)]

My hon. Friend is an experienced parliamentarian. Does he agree that a turnout such as the one today indicates that the issue is not restricted only to Visteon plants? Visteon pensioners are spread far and wide. As someone who has witnessed many parliamentary debates, does he agree that the story that has unfolded is not so much “Ford” as “fraud”?

[Mr Whittingdale]

I agree with the hon. Gentleman; like him, I have attended debates in Westminster Hall where there have often been only one or two Members plus a Minister and the Whip on duty. The fact that so many Members turned out this morning demonstrates, first, the wide area from which Visteon employees have come, and, secondly, the strength of the feeling among many Members that Visteon pensioners have been treated badly and that justice must be done.

I shall quickly turn to another aspect of the case that I hope the Minister will talk about. The PPF has not protected my constituents in the way that they hoped it would—of course, the Pensions Regulator was not there at the time. We have met representatives of the Pensions Regulator, and I think it would be fair to say that it dropped heavy hints that if the powers that are available now had been available at the time, the transfer would have been looked at extremely closely, because, as has been mentioned, the sum transferred into the Visteon pension fund left it in deficit from the start.

As my hon. Friend the Member for Finchley and Golders Green said, not only was the pension fund in deficit, but the arrangement between Ford and Visteon meant that Visteon was almost bound to fail. It never made a profit. The pension fund became steadily further in deficit. Visteon was unviable from the start and it was almost inevitable that sooner or later it would go into administration.

Court cases are pending, so we must await their outcome, but I think that all of us feel that whether those cases prove that Ford has a continuing legal liability to its former employees is not, in a sense, the main thing. We all feel strongly that Ford has a strong moral obligation. It is a blue-chip company with a worldwide reputation. It is trusted, but how it has behaved to its former employees tarnishes that reputation. As has been said, that will reflect on how people view it, unless it does the right thing and gives justice to the people who gave it such devoted service for so long. The issue is not going away. We will continue to campaign until Ford meets its moral obligations.

[Several hon. Members]

rose—

[Martin Caton (in the Chair)]

Order. We have progressed quite far in the debate, but I remind Members that cases have been set down for trial and we must be careful not to invade territory that might prejudice those cases. No one has been out of order so far, and I am sure that no one will be, but will speakers please bear that in mind?

09:59

[Nia Griffith (Llanelli) (Lab)]

Thank you, Mr Caton.

We need to remember the utter devastation that the goings-on at Ford and Visteon visited on some of our constituents. Having worked all their life and put by their money, they do not expect to be treated in such a way that their pension is 50% down on what they had hoped. In the days when workers could choose which factory to work in, some might have chosen Ford specifically because it was a reputable company, with a decent salary and a decent pension contribution scheme, only to be told a few years later that the figures did not add up and that they were not going to get what they thought.

Workers were told that they had no option but to transfer their pension. They were told that it was not legally possible for Visteon UK employees to remain in the Ford pension scheme post-spin-off. They either had their pension frozen until they were 65 or they transferred it, being told that it would continue to grow as per the existing terms and conditions. There has therefore been a terrible betrayal. Again and again in the documentation, we read sentences such as:

“Your accrued pension rights will be protected”.

Workers were told by Ford that their “pension benefits are guaranteed”. That was also stated in an e-mail, in which the answers had been approved by the director of personnel for Ford Britain. A letter dated August 2000 from Brian Smith, the human resources manager, clearly stated:

“For employees transferred to Visteon from Ford on 1 May 2000, the new Visteon Scheme will provide exactly the same benefits as the Ford Fund, now and in the future”.

[Jonathan Edwards]

Is the hon. Lady aware of a question-and-answer document circulated particularly to employees in the Swansea plant? It included the question:

“If I stay with Visteon will my pension be secure?”

The answer was:

“Visteon has committed to mirror the terms and conditions of Ford. This means that…your pension”

will “be secure”. Is that not a case of deliberate misinformation or, even worse, deception?

[Nia Griffith]

Indeed. We often hear the word “mis-selling” used in relation to financial products, but that is far too kind a word, which suggests some kind of mistake. I call it a complete rip-off, a complete betrayal and an absolute disgrace in relation to what people were told and what the reality turned out to be. Clearly, somebody knew what was going on.

[Sir Peter Bottomley (Worthing West) (Con)]

Is the hon. Lady saying—if she is, I agree—that the people in Ford knew that the Visteon pension scheme was not as soundly based as the Ford one? Does she think that the main board in the United States is aware of this history in detail?

[Nia Griffith]

I am coming to that point. In fact, it was the Ford actuarial team that decided the amount of the transfer. The initial £49 million deficit in Visteon’s pension funding was clearly determined by Ford.

Can anyone imagine that there were not already thoughts, in some big boardroom in Ford, about how it could get rid of its liabilities—that nobody had in mind the thought that its biggest problem was the pension deficit and how to fund it for the future, and wondered what it could do to get rid of that? Can anyone tell me that they really believe that Ford had not already thought of hiving off the bits in the supply chain for which it could get cheaper prices, thinking that it could use its 90% purchasing power over Visteon UK to force down prices, before it embarked on the separation plan? It seems clear to me that Ford was determined to drive down prices even further than what it had agreed in the separation plan.

I agree with the hon. Gentleman that there was a very determined plan from the beginning. To me, it seems that there was a cunning plan: Ford wanted to maximise profits and to drive down costs on the backs of the workers in Visteon UK plants. Once it had managed to hive off certain sectors and to form Visteon, we heard that Ford was starting to drive down prices to ones that were significantly lower than those in the original separation agreement.

We also found that Ford tried to source components elsewhere. There were the dreaded confidentiality agreements: “Don’t tell Visteon that you’re making the bits that we get from them now, and that you’ll stockpile them so that we have them ready for when we get rid of Visteon altogether.” Do not tell me that somebody was not already thinking about that right back before 2000. If we look at the whole thing from beginning to end, there was a distinct plan of maximising profits for Ford and trying to get rid of the parts of the company providing components that it could find more cheaply elsewhere.

For Ford to do that on the backs of workers who worked loyally for it for 20 or 30 years is absolutely despicable and totally morally reprehensible. I fully concur with my hon. Friend the Member for Swansea West (Geraint Davies), who said that people have to make ethical choices about from whom they buy products. People need to know how Ford has treated the Visteon workers.

[Geraint Davies]

People should also know that the lot of Visteon workers in the UK is far worse than those in Germany or the United States. That suggests that there has been a carefully choreographed judgment about where Ford can get away with ripping off workers. The view was that it could do it in the UK—covertly lining up alternative suppliers, and telling them not to tell Visteon that that was done to knock Visteon out—and the whole thing really stinks.

[Nia Griffith]

Indeed. My hon. Friend is absolutely right. With Visteon workers elsewhere not being treated in the same way, we must question what went on. It seems to me that there was a massive cover-up and a real attempt to drive down prices in a way that, as I have said, was completely morally reprehensible.

09:59

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

It is a pleasure to serve under your chairmanship, Mr Caton. Thank you for calling me in this important debate. I add my congratulations to my hon. Friend the Member for Finchley and Golders Green (Mike Freer) on securing the debate. It was a joint effort, and he was the successful candidate. He opened the debate very professionally, laying out the landscape so that we can fully understand the impact of the closure of Visteon.

I thank colleagues from across the House who have supported me on the issue. My involvement goes back to 2009—before I was elected—when I heard about the closure of a business on the other side of the constituency boundary. Over the past three and a half years, I have become more deeply involved, and I have received support from many colleagues. The fundamental reason for that is that we all share the same concerns on behalf of our constituents.

When the business collapsed, there were obviously redundancies, and there were also calls for compensation and holiday pay—in due course, some of those were met—but at that point the full ramifications were not fully understood. It was not until just before the election in 2010 that I began to understand that those ramifications went much wider than people losing their jobs. Very early on in my newly elected role, a gentleman came to one of my surgeries and asked for help. He told me that Ford had failed him. He said that he was a former worker of Visteon and that his pension has been dramatically cut. He went on to tell me about other people who had had their pensions cut by up to 45%. The more I looked into the matter, the more I came to realise that Ford had a responsibility and a duty of care to and for its former employees, which is what we are here to debate today. That is why I have pursued this issue over the past two and a half years.

In our attempts to get justice for our constituents, we have held meetings with Ford and former Visteon employees, tabled an early-day motion and met Ministers, whom I am grateful to for giving us their time. I have asked questions on the Floor of the House and we have asked questions outside of this place. I have met the administrators, KPMG, and the Pension Protection Fund. I met a representative from the relatively new Visteon Engineering Services, which was one of the companies that spun off from Visteon before it collapsed, and which has been very evasive about coming to talk to us as a group. We have recently established an all-party parliamentary group, of which I am chairman. Through that organisation, we have started to hold evidence sessions to try to gather more detailed information. Most recently, we have, through our joint efforts, managed to secure this important debate.

After all those discussions with the various organisations, I keep coming back to the fact that Ford had the greatest responsibility for its former employees.

[Rebecca Harris]

Does my hon. Friend agree that the degree to which the affected pensioners, with absolute unanimity, blame Ford for the situation is quite astonishing? I have not had one constituent say that they are disappointed with the management of Visteon. As they stand outside the Ford dealership on Saturday mornings, they unanimously hold Ford responsible.

[Stephen Metcalfe]

Indeed. The reason for that is that while there may be issues of mismanagement within Visteon, many of the individuals whom we represent spent a lifetime working for Ford. They felt part of the Ford family, and they were transferred out of that business into a new business. They felt that they had safeguards, but when it came to it those safeguards were not worth the paper they were written on. That is why they hold Ford responsible.

[Mike Gapes (Ilford South) (Lab/Co-op)]

I apologise for being late for this debate, but I am pleased that I am able to hear the hon. Gentleman point to his own role in establishing the all-party parliamentary group, which he has done such a lot to promote and encourage, and I congratulate him on that. As someone who has had constituents who worked at Ford over decades, I know that the points he has just made are absolutely right, and we need to pursue the matter until we get satisfaction.

[Stephen Metcalfe]

I thank the hon. Gentleman for his words. We are aware, and we have also been warned by you, Mr Caton, that the details of this case are the subject of legal action. The details of whether Ford is legally responsible for its former employees will be tested in court, and that is right and proper, so I do not want to talk about that.

However, I do want to discuss the reasons why Ford has a moral responsibility for this issue. May I state for the record that this is not personal? I have great respect for the individuals at Ford—for Joe Greenwell, who is the chairman of Ford of Britain and for Christophe Clark, head of Government affairs. I have always found them to be open, accessible and willing to engage with the group and come and talk to us, and I recognise that this issue is outside of their control; it is not in their hands. They are neither directly or personally responsible for the case. In return, I want them to understand that I am standing up for my constituents and trying to get justice for them and that this is not a personal attack on them or on Ford per se. None the less, I, like many others, believe that Ford has an obligation towards its former employees.

I must also pay tribute to the Visteon pensioners action group, which has been utterly tenacious in its pursuit of justice and completely committed to its cause. Without its dedication, this issue would have slipped off the agenda a long time ago, leaving thousands of pensioners with no hope of recompense.

As I have said, Ford has a moral obligation to its former employees, many of whom have spent a lifetime of work at the company. I became aware of the issue just after midday on 31 March 2009 when what we now know to be a very troubled company finally met its end—Visteon, a firm many will never have heard of, was placed unceremoniously into administration. When the administrators arrived, they turned off the machines, sacked the staff, turned out the lights and locked the doors, and that was that.

Many would say that Visteon was just another victim of a worldwide economic crisis and that as an automotive parts manufacturer, the collapse in car sales made its position untenable. Although those are contributing factors, the whole story is somewhat more complex. Sadly, in the wake of the collapse, there were not just hundreds of unemployed workers at every level of the business but thousands of present and future Visteon pensioners who had been seriously disadvantaged. Moreover, there are many hundreds, if not thousands, of Visteon pensioners, who have worked for Visteon, who do not yet know that they have been disadvantaged and may not find that out until they come to retire. Although VPAG and various other groups tried to get in touch with the beneficiaries of the fund, not all of them have responded, which is a great shame.

What has all this to do with Ford? Visteon was not just another business that failed to adapt to the modern world, but part of a large American corporation. Interestingly, Visteon Corporation went into chapter 11 shortly after Visteon UK collapsed. We all know that Visteon was Ford’s global parts manufacturer. It was a multi-billion dollar business, supplying everything from brake drums to radiators. It had started off as part of Ford, but soon became a separate trading arm before eventually being spun off. Why was it spun off? It is true that there seemed to be a trend in the late 1990s and early 2000s to spin off businesses and to separate out the manufacture of parts from the main business, but what was the reason behind it? The answer to that is relatively simple and the crux of why Ford has a responsibility to its employees. Ford wanted out. I have this nagging feeling that someone somewhere within Ford decided that they wanted to get out of the parts manufacturing business; it was too expensive, too labour-intensive and Ford knew that it could get the parts cheaper elsewhere. That is why Visteon was born.

We heard the evidence from my hon. Friend the Member for Finchley and Golders Green when he quoted Tim D. Leuliette, the new chief executive of Visteon Corporation—it is now out of chapter 11 and is being restructured—who, when asked whether Visteon ever had a chance, said, “No”. He told us about the labour costs, the burden, the overheads and how it was a joke. He then said:

“It was sort of like when you’ve got an uncle you know has got a problem but no one in the family wants to talk about it.”

That is quite important, because Ford always talks of itself as a family. In 2011, it was Ford’s 100th anniversary in the UK, and Bill Ford came over to the UK and made a speech at the Science museum. There were a couple of telling remarks in his speech. He said:

“I have always thought of Ford employees, dealers, suppliers and partners as members of our extended family. My visit here has confirmed that belief—it has felt like a homecoming.”

Further on, he said:

“Ford of Britain has a proud heritage…The United Kingdom quickly became the most important market for our cars outside of the United States.”

There is no doubt that here in the UK, Ford has played an important role. If this is how Ford treats its family, I would be sad to think that it would treat other people in its family in the same way.

[Sir Alan Haselhurst (Saffron Walden) (Con)]

I acknowledge that my hon. Friend probably has as deep an attachment to this issue as any other colleague, and many hon. Members have spoken with great knowledge about the issue today. Does he detect any way in which we can achieve anything in the court of Parliament if a favourable answer is not found in the courts of law?

[Stephen Metcalfe]

I thank my right hon. Friend for his intervention, and yes, that is really why we are having this debate. Ultimately we all believe that, whatever the outcome of the court case, Ford has a moral obligation and that if it does not meet that moral obligation we will continue to highlight the fact that it has failed its former employees. One of those former employees worked for Ford for 30 years before working for Visteon for only three months, but they have now suffered a significant loss in pension.

As I have said, the courts will test the legality, but the moral case stands for itself. Ford wanted out of this expensive business, and that is why it spun off Visteon. Ford talks about being a “family”, and the reason why its former employees feel so aggrieved is that, because they felt part of that “family”, they trusted their employer, Ford. Ford is a blue-chip firm with a history going back to before the first world war, and its employees were told that their pension was secure. The employees took that at face value. Of course, perhaps in hindsight they should have sought a little more clarity and explored what that promise meant, but they were allowed to take away the general impression that their rights were protected and that they were still part of the Ford “family”.

If those employees had looked a little more deeply and if they had considered the nightmare scenario of the business collapsing and the pension fund being underfunded, perhaps things might have turned out differently; perhaps they would not have transferred and perhaps it would have been more difficult for Visteon to spin off. But they did not do those things. They took Ford at its word and Visteon was floated off in a vessel that I believe was already holed below the waterline even though it was trying to make its way in the world.

[Geraint Davies]

It is bad enough that Ford basically agreed terms of reference—it agreed wages and conditions, and pensions for a group of workers—but then hived them off and looked, as it were, to the future for lower costs. However, does the hon. Gentleman agree that the pension costs are actually historical costs that should be honoured, irrespective of what happens in the future? Those pension costs are a part of the contract of employment in the past that should be signed and sealed. The workers thought those pension costs were signed and sealed, but now they find that they have been ripped off.

[Stephen Metcalfe]

I agree with the hon. Gentleman. People were left with the impression that they had protection and that a pension was their right, whatever happened. They were also left with the impression that once they retired, at that point their pension was secured for them. Little did they know that it could be cut at some later date from a business that they might have been detached from for the best part of a decade, and suddenly they would turn round one day and find that, because of something they had virtually no involvement with, they are now seriously disadvantaged.

[Mr David Burrowes (Enfield, Southgate) (Con)]

Notwithstanding the point about the courts determining a contractual issue, is it not important that Parliament has united around concern about mis-selling of interest rate deals? This is a similar scandal, in terms of not only presenting a product but actively encouraging employees to take it up. Parliament has expressed a similar scale of concern about such products.

[Stephen Metcalfe]

I agree with my hon. Friend entirely. That aspect of the case will be tested in court, to see what promises were made and how they were communicated to the work force. What I am championing in Westminster Hall today, with other colleagues, is the case that Ford must meet its moral obligations to its former employees. However that is achieved, I believe that Ford has a moral obligation.

We have heard about other allegations of unilateral price changes, which of course Ford denies; of the pension fund being underfunded, which could be explained as a technical issue involving different valuations; and of Ford moving work away prior to the collapse of Visteon to ensure that its supply chain was not interrupted, and it is interesting to note that Ford never lost a day’s production because of the collapse of Visteon.

However, I will return to my main point one more time before I finish. I suspect that Ford did not want the hassle, the expense or the reputational damage of shutting down its expensive British parts manufacturers or other expensive plants around the world, so it spun them off knowing that ultimately it would be able to source the parts cheaper elsewhere and knowing that Visteon UK probably had no long-term future. I believe that that was known at the time that Visteon UK was spun off.

[Sir Peter Bottomley]

I referred earlier to the main board of Ford United States. My reckoning is that five of the present board members were directors from before 2000: Edsel B. Ford II; William Clay Ford Junior; Irvine O. Hockaday; Ellen Marram; and John Thornton. Homer Neal was also possibly a director from before 2000, which would make six current directors who were in that position. Could they be asked what they knew, if they still have the relevant papers and whether they were ignorant of what was going on in a major supplier in this country?

[Stephen Metcalfe]

Yes. That is a very interesting point and one that, as a group, we should pursue. We have been communicating with Ford UK and Ford Europe, but we should take this matter all the way to the main board of Ford in America.

It is interesting to note that the arrangements in the US are different from the arrangements here. The former employees of Visteon in the US have not been disadvantaged in the same way as the former employees of Visteon in the UK, and if this issue was on the doorstep of Ford’s head office and the 3,000 Visteon employees had been so disadvantaged closer to home, we might have had a different outcome.

[Geraint Davies]

The hon. Gentleman knows that the all-party group in support of Visteon pensioners has no power to require people to appear in front of it, but of course Select Committees can summon people. Does he agree that it would be helpful if the Minister perhaps signalled that that was something that he would encourage so that there was redress and people had to be accountable?

[Stephen Metcalfe]

Yes. I have written, and I know that other colleagues from across the House have written, to the Chairmen of various Select Committees, asking them to look at this issue, either on its own or as part of a wider inquiry into pension transfers. We can renew that call now; summoning people before a Select Committee would be a very positive step.

As I have said, I believe that people within Ford knew at the time that Visteon was spun off that there was no long-term future for Visteon. I do not want to damage my relationship with Ford; I have great respect for the company. I want it to succeed, and it has a great and noble history in this country. But even the best employers or organisations occasionally get things wrong, and on this occasion that is what has happened—Ford has got it wrong. It needs to stand up and meet its obligations. If it does so, I believe that people in this House and outside it will view Ford as being all the better for having done so.

That is why I am championing the cause of the Visteon pensioners, and why I am standing up for my constituents. I will continue to do that, and I will continue to fight until I get justice for them.

10:27

[James Duddridge (Rochford and Southend East) (Con)]

Thank you, Mr Caton, for calling me to speak. It is an honour to serve under your chairmanship.

I congratulate my hon. Friend the Member for Finchley and Golders Green (Mike Freer) on securing this debate and on bringing to it his expertise, which was developed not only in his casework but in his time at Barclays bank, which is a period of time that I am very familiar with. I also thank my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) for all the work that he has done on this issue. This debate demonstrates how, as a House, we can operate together, and how we can operate together regionally, with our friends in Wales working alongside our colleagues in Essex. I am also reminded of an Adjournment debate that took place back in 2009, when my hon. Friend’s predecessor, who is now Baroness Smith of Basildon, spoke very ably. Her father was actually a Visteon pensioner and I suspect that she maintains an interest in this matter.

Like other hon. Members, I have had several constituents raise this issue with me: more than five of them have done so formally; and I am sure that many more are concerned about it. I am particularly concerned about those people with deferred rights within the pension who perhaps have not looked closely at this issue, who are still of working age and who have little idea of how their Ford and Visteon pension has diminished over time.

The debate title rather summarises things; this is not a general debate on Visteon pensions, but a debate that is specifically about the duty of care of Ford UK to Visteon pensioners. As I understand it, a duty of care has the sole purpose of ensuring that a person, or in this case a company, adheres to a standard of reasonable care while performing any acts that could potentially impinge on, or detrimentally impact, others. On that basis, I do not believe that Ford has carried out its duty of care well. There are two main issues Ford needs to address: why were employees actively encouraged to transfer their pensions in the statements my hon. Friend the Member for Finchley and Golders Green mentioned, and to what degree were those involved aware of the risk factors involved in establishing the group?

There has been a lot of discussion of the legal responsibilities, and reference has been made to the court case. The moral responsibilities have also been mentioned, initially by my hon. Friend the Member for Maldon (Mr Whittingdale), and subsequently by a number of other hon. Members. However, there is also a reputational issue, because one of the most valuable things an international conglomerate has is its reputation, and Ford’s is being damaged daily because it has not dealt with this matter.

My hon. Friend the Member for Worthing West (Sir Peter Bottomley) mentioned the current board, and I had not appreciated how many of its members were around at the time. That raises questions about the board’s competence, and I very much hope that the matter is tabled at the next board meeting and that board members look not only at their financial, legal and moral obligations, but specifically at the real damage they are doing to Ford’s reputation.

A few years ago, I considered buying a Ford—I had not thought through the ethics of that in relation to my constituents. I would certainly not consider buying one now, and I would feel somewhat seedy driving around in one, given that that organisation does not treat its employees properly. It is hypocritical for a member of the Ford family to talk of a family when those he describes as its members have been so poorly treated—that is not acceptable. We need to be temperate in our language in the House of Commons, but I was sympathetic when my hon. Friend the Member for Broxbourne (Mr Walker) described Ford as a four-letter company behaving in a four-letter way. I am not sure quite which word he was referring to, given that I am a very naive and sheltered young man, but I am sure he will educate me later outside the Chamber.

The idea of bringing the employees and the trustees from Visteon and Ford into the House of Commons is excellent, and I urge the Minister to indicate to the Department for Work and Pensions and the Work and Pensions Committee that he would welcome an inquiry into Ford’s responsibility in relation to Visteon, because that could turn up the temperature. It would be fair to say that although the people from Ford who have come along to the meetings—not all of which I have been able to attend—have been very good, there is no point talking a good game and then not delivering. It is perfectly legitimate, therefore, for us to set out to damage the reputation of Ford until the company does the right thing.

[Stephen Mosley (City of Chester) (Con)]

We have been aware of this case for several years, and Ford has had plenty of opportunity to put things right on its own. Does my hon. Friend agree that it is now time for Parliament to take action, whether by taking up his suggestion or by taking up any other suggestion the Minister might come up with?

[James Duddridge]

Absolutely. As with many cases that go on for a long time, it is only when we review them for meetings and for debates such as this that we realise quite how long they have gone on for. It has been an unacceptable period, and it is quite chilling when hon. Members say that the company is perhaps waiting for the bulk of those affected to die so that when it does settle, it will be cheaper. That is truly disgusting.

10:33

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I pay tribute to the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), who has led the campaign for justice for the Visteon pensioners; my hon. Friend the Member for Swansea West (Geraint Davies), as the co-chair of the all-party group; the hon. Member for Finchley and Golders Green (Mike Freer), who secured the debate; and the other Members who have contributed to what, so far, has been a helpful debate in terms of keeping this injustice at the forefront of the public’s mind.

I am looking forward to hearing from the Minister about what the Government can do to help Visteon pensioners achieve justice. How will the Government put in place a system that ensures that such things never happen again? How will they ensure, if indeed they can, that there is justice for Visteon pensioners? Do they believe that Ford has a moral responsibility to staff who were spun off into Visteon, many of whom are here today? Does the Minister believe Ford has a duty of care to Visteon pensioners?

Hon. Members have clearly set out the case, which goes to the heart of corporate social responsibility, a term we often hear used in the limited sense of the things that companies do to show that they are good citizens. However, nothing is more fundamental to being a good citizen and a good employer than exercising a duty of care towards one’s employees.

What we have heard today is pretty shocking. Hon. Members on both sides have made it clear that Ford set out to spin out into Visteon the members of its work force involved with motor parts and that it really set the company up to fail—certainly not to succeed. My hon. Friend the Member for Llanelli (Nia Griffith) talked of a terrible betrayal and a complete rip-off, and, importantly, of the Ford actuarial calculation, which left the pension fund with a 17.5% deficit at the outset.

The hon. Member for Finchley and Golders Green referred repeatedly, as did other hon. Members, to the guarantee regarding pensions. “Lifetime protection” was one of the terms used—accrued pension rights were protected. How can it be, then, that several years later Visteon pensioners are getting much less than 100% of the pension they paid into their whole working lives? No wonder they feel cheated. In cases such as this, that feeling of injustice and betrayal is very strong, because a pension is a promise and a contract between employees, who pay into it, and employers, who also make their contribution. The feeling in this case—this is clear from the strength of feeling today—is that that contract has been broken, and that the Visteon pensioners have been betrayed.

What has come across clearly is that that is particularly shocking, given Ford’s stature. Ford is not some two-bit, small-scale employer; it is a recognised company and is considered a blue-chip, global brand. It has a strong reputation in the UK historically, and it has played a big role in UK manufacturing and the UK economy more widely. It has been a huge figure in the past 100 years of British economic history. For it to be involved in what appears to be such a clear case of injustice is deplorable. I say again, therefore, that I am keen to hear from the Minister what role the Government can play in bringing justice to the Visteon pensioners.

I pay tribute to the role the unions have played in keeping this issue at forefront of the public mind. At the heart of this issue is the question of whether there was a deliberate dumping exercise. My hon. Friend the Member for Llanelli and other Members have been pretty clear that Ford wanted to get rid of its pension scheme liabilities and that that was a major aspect of spinning Visteon out.

I am very proud that the previous Government put in place the Pension Protection Fund. I was not a Member of Parliament then, but it has become clear to me since taking up my shadow pensions role that the PPF is an important institution. However, there is a danger that the creation of the PPF leads employers to take the view that it will sort out their problems and pick up the bill; there is a danger of the socialisation of losses while profits remain privatised—in this case at the top of the Ford Motor Company. We must consider that issue more broadly.

Also, the issue is not just the burden that the taxpayer picks up for the PPF, potentially. The PPF charges a levy on other employers to cover payments that it must make to pensioners. Other employers will pick up the bill, in the form of a larger levy every year, if a company such as Ford is involved in what has been seen today in the House as a clear case of the dumping of liabilities. Alongside the sheer injustice of the treatment of Visteon pensioners is the broader public policy issue of the rights and responsibilities of employers with respect to their work force and wider society.

I again thank and pay tribute to hon. Members who have led the campaign and secured the debate, and I look forward to hearing from the Minister what the Government can do to ensure justice for Visteon pensioners.

10:41

[The Minister of State, Department for Work and Pensions (Steve Webb)]

It is a pleasure to take part in this debate, and I congratulate the hon. Member for Finchley and Golders Green (Mike Freer) on securing it. It is clear that hon. Members from throughout the House were keen for the subject to be debated. This occasion is Parliament at its best, with hon. Members from all parts of the country and both sides of the House standing up for their constituents, who have clearly had a raw deal. That is what we are sent here to do, and I congratulate all hon. Members who have taken part, and the all-party group on Visteon pensioners, which I have been aware of, together with the Visteon pension action group. The action group’s members have been known to stand outside pension conferences, but the first time I attended one fortunately no one knew who I was, so I got in okay. I met members in July and they told me their personal stories and explained some of the detail of the case, some of which we have heard today.

I am constrained in what I can say with a court case pending. I understand that next week, on 12 December, a judge will rule on whether a group litigation order can be made, and I should not say anything to prejudice the continuing proceedings to the detriment of those bringing the claims; but as a personal observation I think any reasonable person who has heard our proceedings today would feel that the Ford Motor Company has some serious questions to answer.

I want to comment on two relevant organisations for which I have ministerial responsibility—the Pensions Regulator and the Pension Protection Fund—and their role in relation to the Visteon pensioners. As the House will know, the powers of the Pensions Regulator came into force in 2004. One of the problems in the present case is that the spinning-off of Visteon happened in 2000. Several hon. Members have said in the debate that, after meetings, they inferred what the regulator might have done had it been in existence at that time, but unfortunately the regulator’s powers cannot be applied retrospectively. Although the Pensions Regulator does indeed have powers to take action where employers have acted to avoid supporting a pension scheme—whether UK or overseas-based—the salient events in the Visteon case happened before the regulator was established.

When Visteon went to the wall in 2009 the regulator immediately launched a thorough and meticulous investigation, taking about two years, to see whether anything could be done. The possibility of using anti-avoidance powers against Visteon group entities and/or Ford was examined. Those are, specifically, financial support directions and contribution notices. However, the key question was whether the legal tests in the Pensions Act 2004 with respect to securing additional funds and financial support for the scheme were met. Unfortunately they were not, principally because the key material actions took place before the regulator had its powers, and also because of the way Visteon was set up independently—in a technical, legal sense—of Ford. I have heard the descriptions in the debate of how close the relationship was in practice, but clearly Visteon was set up so as to be sufficiently arm’s length from Ford to make it difficult or impossible for the regulator’s powers to be used. It is right and proper that the regulator considered the matter long and hard and was not constrained by the fact that the parent company was not UK-based, but in the end there appeared not to be a legal power to enable it to take action.

What, then, is the position of the Visteon pensioners on becoming part of the Pension Protection Fund? I understand that when the scheme was wound up the deficit was £355 million—obviously that had grown substantially over the years—and that as at February 2012 there were just over 1,500 pensioner members of the Visteon scheme in the PPF and just over 1,000 deferred members. The hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), who I know has taken a leading role in the matter, mentioned the issues that had arisen about contacting some deferred scheme members. The Department operates a pensions tracing service to try to track people down. We cover our costs for doing it, but if we can assist we shall be happy to do that.

What will Visteon scheme members get out of the Pension Protection Fund? I want to make a slight correction to the impression that might have been given that someone in the PPF can lose half their pension. The vast majority of people in the PPF will not experience anything like that, although I shall say a bit in a moment about those who potentially would lose half their pension. I want to give some figures that I am not sure have previously been in the public domain: as at March 2011, of the pensioners who are not getting 100% of the pension they would have got, about 530 get between 90% and 100%; 665 get between 80% and 90%; 30 get between 70% and 80%; 15 get between 60% and 70%; and fewer than 10 get less than 60%.

Frankly, it is wrong, and a problem, if anyone does not get their pension. I do not diminish that fact. However, I stress that the Pension Protection Fund is a significant source of provision for those whose companies have gone into liquidation. The headline figures that the fund provides are 100% and 90%. In principle someone would get 100% as a pensioner, and 90% as a deferred member; but that is 100% of a fairly standardised set of entitlements. Rather than mirror the exact scheme rules, which would be incredibly complicated because of the number of pension schemes going into the PPF, the fund has a standard set of pension scheme rules. One, in particular, which is probably to the detriment of some Visteon pensioners, is to pay indexation on a statutory basis—that is in respect of service after 1997. Where a pension scheme had indexation for pre-1997 service it is not indexed under the PPF. That is how even people who are “100%” or “90%” pensioners can find over time that they get less indexation than they would have, and their pension progressively becomes somewhat less than it would have been.

At the meeting that I had with Visteon pensioners in my office, in July, we discussed the issue of people whose pension falls far short of what it would have been. As I said, as at March 2011, 55 people were getting less than 80%. Our latest estimate is that about 75 people are affected by the cap in the Pension Protection Fund. I know that that is a matter of concern to the action group. The Pension Protection Fund cap was introduced under the previous Government. The view was taken that the scheme was essentially an insurance scheme and there should be a cap, just as with a bank account—the figure used to be £50,000 but it may be higher now—so that the bulk of what people had would be covered by compensation, but there was a limit and very large amounts would not be covered.

Parliament took the view that there should be such a cap so that the largest pensions would not be paid in full. I think that the thinking at the time was partly to do with what was called moral hazard. The idea was that people at the top of the company would not have an incentive to take it to the wall and then go to the PPF and find that their very large pensions were covered anyway. It was a sort of anti-moral hazard provision. However, there are of course two sorts of people who would get large pensions from the PPF. One sort is what one might loosely call fat cats: people who had very high earnings but not necessarily long service. They might be people who knew that the company was going to the wall—not in the case before us today, necessarily, but in general—so some moral hazard provision might make sense.

The other sort of people, however—this is relevant to the Visteon workers—have a relatively large pension because they worked for the company all their life. The hon. Member for South Basildon and East Thurrock mentioned someone who had worked for Ford for 30 years, and then a few months for Visteon, who suddenly found their pension substantially cut.

A number of hon. Members have come to see me about the Pension Protection Fund cap, in relation to Visteon and other cases. It is the early-retired workers, or the people who have not reached scheme pension age but are drawing their pensions, for whom the cap bites, and the bite comes not just from the cap itself but from the actuarial reduction in it. People have described it as a double cap, and because of the further complication with lump sums, Visteon pensioners have even called it a triple cap.

Over the two and a half years that I have been in my current role, I have become increasingly concerned that the cap for those who have not reached scheme pension age acts in a penal way, and not on the people it was intended to affect—the fat cats who might have had a moral hazard issue—but on long-serving workers. Although we might think about capping those who had only a short time in the scheme and earned a huge pension because they had had the rest of their life to have built up other pension rights, it is much harder to justify a cap for people who have worked all their life for one firm, made their financial plans on the basis of the pension and have nowhere to top it up from. For some people who have taken early retirement, it is not simply the fact that they have planned on that basis. Instead, they are receiving the pension when the cap comes in and the pension in payment falls substantially. That can have a knock-on effect on survivors’ rights, with someone thinking that they have provided for a widow in the event of their death only to find that the survivor’s pension is reduced as well, which can come as a jolt.

I have asked my officials to look at options for reforming the PPF cap, and one possibility is for the cap to vary with length of service. For example, there would be a floor cap and then one that increased according to how long the person had been in the scheme. I think that that would be a fairer system, and we are evaluating how it would work in practice.

One issue, as the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) said, is that any increase to PPF benefits is paid for by someone, through the levies on the other schemes that still have defined-benefit liabilities. We cannot simply jack up PPF benefits without considering the impact, but because we are talking about relatively small numbers of people I suspect that the impact on the levy would be relatively modest. I flagged this up to the Visteon pensioners when we met in July, and they might well feel that now it is December we ought to have sorted it out, but I can assure them that we have done a good deal of work. I hope that we can come forward with a legislative solution, subject to parliamentary time being available, which would help us to ensure that the cap did not penalise some of the workers who have lost out most through the whole Visteon experience.

It was mentioned that the Select Committee might be invited to investigate the issue. Although it is not the role of the Government to tell the Select Committee what to do—it is probably the other way around—we would certainly welcome any further investigation. I suggest that the all-party group continue its efforts to persuade the Select Committee to do that, and I will certainly make available our Department’s resources, and ensure that the Pension Protection Fund, the Pensions Regulator and my officials work closely with the Select Committee, should it decide to conduct such an investigation.

[Dr Francis]

The Minister would then welcome the Welsh Affairs Committee also having such an inquiry.

[Steve Webb]

Absolutely. This is like trying to grasp something that we cannot quite grasp; we are all trying to see how we can produce a fairer outcome for the Visteon pensioners. We would be happy to engage constructively with any parliamentary process that could assist with that, so I am grateful to the hon. Gentleman for that suggestion.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East raised the interesting question: does the existence of the Pension Protection Fund mean that corporate Britain is tempted, shall we say, to shovel off its pension fund liabilities and hope that someone else will pay for them? Clearly, the anti-avoidance powers of the Pensions Regulator are crucial in that regard. The Pensions Regulator did not exist when the Ford Visteon transaction took place, but it exists now, and central to its remit is protecting the Pension Protection Fund and, indirectly, the levy payers of British industry. The regulator can, and does, therefore, initiate action to require firms that have allowed their deficit to get out of control to put money in and put up collateral against the pension fund.

There is a balancing act to be struck. I hear what the hon. Gentleman says, and clearly we do not want people shovelling off their liabilities on to everyone else, but if the Pensions Regulator goes in too heavily and presses companies, particularly at a difficult time in the economic cycle, to pump more money into the pension fund, which perhaps then precipitates problems for the firm, we get criticised from the other side. It is a delicate balancing act, but what is good about the new regime is that it is scheme-specific. Whereas when the Ford-Visteon transaction took place there was a reactive regulatory regime in place—the Occupational Pensions Regulatory Authority—which reacted to whistleblowers but did not go out proactively, the Pensions Regulator does go out to look at schemes, and acts on a case-by-case and a risk-assessed basis. We can only speculate about what it would have done had it existed in 2000, but in similar cases now the regulator would consider whether a deficit would be properly funded, and if a parent company had tried to pass a liability on to a spin-off company, it would want to take action.

[Geraint Davies]

Is the Minister saying that if a global company created an arm’s length company that supplied itself, set it up with an underfunded pension fund and then unilaterally reduced the prices and therefore squeezed the pension fund still more, the Government could, under current regulations, act to stop that and to prevent the kind of injustice we have heard about today from happening in the future?

[Steve Webb]

I am grateful for the hon. Gentleman’s intervention. He has played an active role in the campaign. If a new pension fund is set up under trust, the trustees have a responsibility to look after the interests of the members. The scheme would have to be valued, and if there was a deficit a recovery plan would have to be agreed between the trustees and the new employer. The role of the Pensions Regulator at that point would be to sign off the recovery plan, on the grounds that it was a realistic basis on which the scheme could go forward. That could happen if, for example, a promise by the employer to make certain contributions over a period of time, or the actuarial assumptions, were considered realistic.

However, if a scheme were set up with a large deficit and the recovery plan was not credible, the Pensions Regulator could look at the parent company and require it to put up an asset as collateral or make a direct financial contribution to the scheme. Sometimes the regulator does that by passing a directions or issuing a notice, but often, as with good regulation, a mere threat is enough to get a firm to comply. Judging the effectiveness of the regulator by the number of times it uses its big stick is missing the point, because the point of the body is to spot things before they go wrong and get in there first, with enforcement as a last resort rather than as something immediately jumped to. In this sort of case, the regulator has far more power than it had back in 2000, under the previous regime.

This has been a broad debate, and for understandable reasons I have focused on the position of the pensioners. I hope that I have explained why the Pensions Regulator, while doing what it can, could not use its powers. We are, however, looking at whether the role of the Pension Protection Fund could be improved, so that the Visteon pensioners who have ended up in the fund through no fault of their own—principally those who have been capped—can get a fairer deal. That is something we will return to in the House.

Immigration (Romania and Bulgaria)

Tuesday 4th December 2012 Westminster Hall

11:00

[Mr Philip Hollobone (Kettering) (Con)]

It is a great pleasure to serve under your chairmanship, Mr Caton. May I, through you, thank Mr Speaker for granting me the opportunity this morning to raise the important matter of immigration from Romania and Bulgaria?

My job is humbly to stand up and speak out on behalf of my constituents in Kettering, and one of their biggest concerns is the level of immigration into the United Kingdom. A large part of the inward migration flows are from the European Union, over which, seemingly, we now have virtually no control whatsoever. The numbers are getting completely out of hand, and my constituents will be horrified to learn that, from December 2013, yet another hole will be opened in Britain’s border controls with the prospect of unlimited immigration from two new accession countries to the European Union—Romania and Bulgaria, the so-called A2.

Over the past number of years, as more countries have come into the expanding European Union, more people have come to our country. The UK Statistics Authority estimates that in the second quarter of 2012 there were 1.4 million EU citizens working in the United Kingdom, with 107,000 unemployed and almost half a million economically inactive; those EU citizens have some 400,000 children. About half of that number come from the so-called A8 countries, which are eight of the 10 countries that became members of the EU in May 2004—Cyprus and Malta, and the eight central and eastern European accession countries. A derogation was included in the accession treaty to allow existing member states, of which the UK was one, to restrict those nationals’ right to work. That allowed existing EU member states to impose transitional restrictions on the free movement rights of workers from those new countries.

The transitional restrictions could have lasted for up to five years, or up to seven years in the case of “serious disturbance” to the old member state’s labour market. Disgracefully, the previous Labour Government did not apply transitional restrictions to A8 workers upon their joining the EU in 2004.

Of those countries, the biggest was Poland with a population of 38.5 million. The Czech Republic had a population of 10.5 million; Hungary, almost 10 million; Slovakia, 5.5 million; Lithuania, 3 million; Latvia, 2 million; Slovenia, 2 million; and Estonia, 1.3 million. The combined population was almost 73 million people. At the time of those countries’ accession to the EU, there were 94,000 A8 nationals living in the United Kingdom; as of the second quarter of 2012, that total is 1,079,000.

In 2003, under the previous Labour Government, the Home Office estimated that the enlargement of the European Union in May 2004 would lead to an additional 5,000 to 13,000 net immigrants every year from those 10 acceding countries. Well, that disgracefully inadequate estimate has been replaced by the fact that well over 1 million people are now resident in the United Kingdom from the 2004 accession countries.

Romania and Bulgaria, the so-called A2, acceded to the EU in 2007. Once again, the treaty allowed for transitional restrictions for up to seven years. This time, thank goodness, the UK did apply transitional restrictions on the free movement rights of Bulgarian and Romanian workers, with the result that such workers normally need authorisation before they start work. Thank heaven for small mercies. The problem is that those seven years are almost up—they end on 31 December 2013.

When Romania and Bulgaria acceded to the European Union in 2007, 29,000 Romanians and Bulgarians were resident in the United Kingdom. As of the first quarter of 2012, that total has risen to 155,000 despite the transitional controls. Her Majesty’s Government are not prepared to estimate how many people will come in after December 2013. How do I know that? Because I asked the Home Department a written parliamentary question on how many immigrants are expected to arrive in the UK

“from Romania and Bulgaria in the first year after transitional immigration controls are lifted.”

The answer was:

“The Government do not routinely produce forecasts or estimates of future levels of migration from individual countries. The difficulty in producing a reliable forecast of likely levels of migration, which would need to take account of a variety of factors, is in this instance accentuated by the fact that the United Kingdom is not the only member state that will be required to lift existing labour market restrictions on Bulgarian and Romanian nationals on 31 December 2013.”—[Official Report, 27 November 2012; Vol. 554, c. 184W.]

[Mr Stewart Jackson (Peterborough) (Con)]

I congratulate my hon. Friend on securing this important debate.

Does my hon. Friend find it frankly disingenuous, even reprehensible, for the Home Secretary to complain about the likely effects of such changes when she has not introduced measures either to measure those effects or to consider whether we can vary the free movement directive? As my hon. Friend may know, I moved a ten-minute rule Bill in the House on 31 October to introduce a de facto workers’ registration scheme mark 2, as the Spanish have.

[Mr Hollobone]

I am delighted by my hon. Friend’s intervention, and I commend him on the work he does for his constituents in Peterborough and on the courage he displayed in taking up the issue of immigration in the House. I was honoured and delighted to support his ten-minute rule Bill of 31 October that would have changed the freedom of movement that EU nationals currently enjoy in our country. For understandable reasons, he speaks for the British people on such issues.

I absolutely agree with my hon. Friend that we should do what the Spanish Government are doing. Faced with calamitous levels of unemployment, the Spanish have begun to interpret the free movement directive much more robustly. All EU citizens and family members in Spain have to register with the authorities if they wish to reside there for more than three months. Through that process, the Spanish authorities can check whether the requirements of the directive regarding residence after that period have been fulfilled. The Spanish authorities also require notification of any change of address or marital status. That is the absolute minimum that Her Majesty’s Government should be doing in this country, with the arrival of tens of thousands more Romanians and Bulgarians after December 2013.

It is a disgrace that the Home Office will not estimate the expected number of immigrants from Romania and Bulgaria. Opening up our borders to all and sundry is bad enough, but it adds insult to injury not even to give the British people an estimate of how many incomers we can expect.

In the UK there are now almost 1.1 million eastern Europeans from the A8 accession countries, which have a combined population of 72.8 million. That is a rate of some 1.5%. If we apply that same rate to the entry of Romania, with 21 million, and Bulgaria, with 7 million, the 155,000 presently resident in the UK would climb to some 425,000. That means that we can expect three times more Romanians and Bulgarians than are currently resident in this country, an increase of some one third of a million over present levels, possibly within two years.

[Martin Vickers (Cleethorpes) (Con)]

I, too, congratulate my hon. Friend on securing the debate. My constituency, according to the statistics, has a low level of immigrants compared with other areas of the UK, but the issue remains key on the doorstep among voters. My constituents would be horrified at the figures he announced. Does he agree that the social cohesion of the country is under threat, and one of the first duties of the Government is to maintain that cohesion?

[Mr Hollobone]

As always, my hon. Friend speaks for Cleethorpes. His constituents will be delighted at his intervention, because he rightly highlights the importance of the issue to him and to them.

In truth, host member states are permitted to require EU citizens and their family members to register with the authorities, and to impose proportionate and non-discriminatory sanctions on those who fail to do so. The UK Government fail to do that. Member states are also permitted to restrict rights of entry on grounds of public policy, public security or public health. The UK Government, however, have failed ever to test those conditions or the specific issue of proportionality that is implicit in the directive in respect of the deportation of persistent and prolific criminals who are EU citizens.

Through my humble experience as a special constable with the British Transport police on London’s underground network, I know that some eight out of 10 shoplifters arrested by the police are from eastern Europe. Can they be sent back to their country of origin for breaking our laws? No, they cannot. Well, actually, they could be—if the UK Government had the guts to enforce that measure, but they cannot be at the moment because the Home Office is not introducing the sanctions that it could.

London is the largest city in western Europe, with 7.5 million residents, compared with 3.5 million in Berlin, 3.25 million in Madrid, 2.5 million in Rome and 2 million in Paris. As one of the most cosmopolitan cities in the world and with English as its native language, of course London is a magnet for millions of people throughout the European Union, but the British people will not put up with the situation much longer. A local government Minister has said:

“The fact is, 43 per cent of the new households which want a home, is accounted for by immigration”,

so we will see swathes of our countryside built over to accommodate the millions of new arrivals from the European Union, over whom we seemingly have little control.

Is “enough is enough” enough? My constituents want the Home Office to impose the restrictions that it can on new entrants from Romania and Bulgaria. If our constituents were given the right to vote on whether we should stay a member of the European Union, they would now vote to leave, because Britain would be better off out of the European Union and we would have control over our borders once again.

11:03

[Mark Field (Cities of London and Westminster) (Con)]

I thank my old friend, my hon. Friend the Member for Kettering (Mr Hollobone), for allowing me to say a few words and for his heartfelt speech, which I am sure will be one of many on the issue in the months and years ahead.

I want to say a few words about some of the trends noticeable in my central London constituency since the accession of Romania and Bulgaria to the European Union in 2007. In spite of the current freedom-of-movement restrictions, which are due to be lifted at the end of 2013, the most obvious example has been the profound problem of organised begging centred on Marble Arch in the run-up to the 2012 Olympics.

In such matters, central London is almost a canary in a mine for future problems throughout the country. Difficulties in my constituency with particular migratory waves are magnified by the presence of Victoria coach station, through which many eastern and central European migrants arrive in Britain for the first time. Some 10 million to 12 million passengers use that facility each and every year. Significant amounts of contraband and controlled materials are brought into the UK via that route, and it has become an attractive destination for transient individuals, contributing to a large rough-sleeping population.

Last November, Westminster city council, the Met and the Romanian embassy launched Operation Chefornak to tackle antisocial behaviour and begging in Westminster, much of which, I fear, can be linked to Romanian migrants; 698 offences of begging and 922 instances of rough sleeping were recorded, and the council helped to arrange 169 repatriations, 138 of which were to Romania. That comes at colossal cost and requires enormous additional police time. The council has been proactive in raising awareness and highlighting what is not only a local but an increasingly national problem, which I fear will be even bigger after the beginning of 2014, with real consequences for the reputation of the UK.

Unfortunately, as my hon. Friend said, real limitations remain on what can be done to tackle effectively the problems caused by people congregating in a particular area if they are not committing criminal or antisocial behaviour. Many of the target-hardening options, in particular around Marble Arch, have been considered and discounted on the basis of cost, practicality or effectiveness. Given that Romanians are not subject to border controls, it is difficult to stem the source of the problem.

From our experience in the centre of London, therefore, I remain unconvinced that the Home Office has robust enough plans in place to tackle the problems that are likely to flow from the lifting of movement restrictions on Bulgarians and Romanians in particular, as my hon. Friend pointed out. I share his concerns, and those of my hon. Friends the Members for Cleethorpes (Martin Vickers), for Peterborough (Mr Jackson) and for Rochester and Strood (Mark Reckless), and we seek assurances from the Minister in that regard, in particular on how local authorities can be properly compensated for the financial cost to local taxpayers of national immigration decisions.

11:16

[The Minister for Immigration (Mr Mark Harper)]

I congratulate my hon. Friend the Member for Kettering (Mr Hollobone) on securing the debate and on making his points in his usual robust fashion. I am pleased to be serving under your chairmanship, Mr Caton. I will try to address the concerns of my hon. Friend and those of my hon. Friends the Members for Peterborough (Mr Jackson) and for Cleethorpes (Martin Vickers), and of my hon. Friend the Member for Cities of London and Westminster (Mark Field), who raised a local issue—we will see how “canary in a mine” it is for the future.

To give some context, the Government’s overall position on immigration is clear. We want to bring down the unsustainable levels of immigration—net migration—that we have seen, and we are taking a range of measures. The Office for National Statistics figures published last week show that the net migration figures, including EU citizens, have actually fallen by a quarter, from 242,000 to 183,000 in the year ending in March. It is also worth remembering, as my hon. Friend the Member for Kettering accurately set out, some of the misjudgments made by the previous Government, who did not introduce transitional controls so, in effect, the United Kingdom bore the entire burden of the adjustment process.

On the latest figures, about a third of the people coming to the United Kingdom are from the EU, but 55% are from outside the EU, where our policy changes are bearing down, and about 14% are British citizens returning home. The bulk of our net migration, therefore, is from outside the EU and not from our EU neighbours. It is worth saying that to put the matter in context.

[Mark Field]

My hon. Friend the Member for Kettering (Mr Hollobone) referred to the reluctance of the Home Office to come up with any statistics in that regard. Is it fair to say that that is simply a case of once bitten, twice shy, and is due to a concern that such statistics might be superseded by events, as they were in 2003 and 2004 in relation to the A8 nations? Alternatively, does the Home Office have an idea in mind, but does not want to go public with it? If the latter is the case, will the Minister indicate the effect on local communities of the overall numbers expected to arrive from 2014?

[Mr Harper]

I assure my hon. Friend that the reason is simply that it is genuinely a difficult exercise. The difference this time is that we had transitional controls, as have a number of other European Union countries. We are not the only country that will have to remove our transitional controls at the end of next year. A number of other countries, including Germany, for example, will be doing that. It is difficult to assess where the Romanian and Bulgarian citizens who wish to move to another EU member state to exercise one of their treaty rights will choose to move.

The history is relevant, because there is no point in the Government effectively making up a number that is based on poor data or making a set of assumptions, which are effectively guesses, and bandying around a number that proves inaccurate. That is not sensible. It is more mature and open to say, “It is a difficult exercise and there are a range of factors,” then people can make a judgment about whether the Government are being frank. That is more sensible than picking a number out of the air, which appears to be what happened beforehand, that is used as a defensive mechanism for a period until it is shown to be untrue. That is not a mature way of treating the matter.

[Mark Reckless (Rochester and Strood) (Con)]

Will my hon. Friend the Minister give way?

[Mr Harper]

Briefly, but I want to deal with points raised by my hon. Friend the Member for Kettering.

[Mark Reckless]

We learned recently that my hon. Friend the Minister is making excellent progress reducing immigration from hundreds of thousands to tens of thousands a year, but is he not concerned that the potential entry of Romanians and Bulgarians into the country might set back the progress and make it significantly harder to achieve the target by 2015?

[Mr Harper]

My hon. Friend raises a valid concern, but the evidence is that net migration from the EU has been fairly consistent. However, we keep that matter under review. If he will allow me to answer my hon. Friend the Member for Kettering, he will see that some steps we are taking may alleviate some of his concerns.

My hon. Friend knows that the Government have adopted this policy change, but we will always implement transitional controls in respect of accession countries. We have already set out plans enabling primary legislation in respect of the accession of Croatia to the EU. I will take through the House regulations coming from that legislation, which will put in place those transitional controls. We have learned from the past. My hon. Friend mentioned that the previous Government learned from their experience and made more sensible decisions.

If people from EU member countries, including Romania and Bulgaria, want to stay in the United Kingdom beyond three months once there are no transitional controls, they have to be exercising treaty rights and be here as workers, students, or as self-employed or self-sufficient people. My hon. Friend mentioned the Government being robust about enforcing that. I will say a little bit more about that in a moment.

My right hon. Friend the Home Secretary, whom my hon. Friend mentioned in terms not as complementary as ones that I would use about her, has been working with our colleagues in the European Union to crack down on fraud and abuse of free movement rights. That concern is shared by a number of EU member states; it is not just a concern of the British Government. At the Justice and Home Affairs Council in April, a road map of actions was agreed, specifically to tackle human trafficking, sham marriages and, importantly, document fraud. If we can tackle document fraud, that will help strengthen our ability to deal with those entering the UK illicitly.

[Mr Stewart Jackson]

Will my hon. Friend the Minister give way?

[Mr Harper]

If my hon. Friend will forgive me, I may take an intervention from him shortly, but I want to make some progress, given that this debate was called by my hon. Friend the Member for Kettering. I do not want to leave lots of his points unanswered.

There is more work to do with our EU partners and we will continue working with like-minded member states to move this agenda forward in the European Union.

My hon. Friend knows that the Foreign Secretary has set out plans for the balance of competences review. The Home Office will lead a piece of work next year, considering the free movement of people across the EU, including the scope and consequences of that, as part of that balance of competences review. I am sure that all my hon. Friends in the Chamber, not just my hon. Friend, will take part in that balance of competences review and ensure that their views are well known to me and the Government.

My hon. Friend set out clearly what happened when the A8 states joined the EU, so I do not need to repeat that. As he correctly said, before Bulgaria and Romania joined the EU on 1 January, the previous Government, learning from the past, decided to impose transitional controls. Such controls can be applied for a maximum of seven years and can only be maintained beyond five where there is, to use the words in the treaties,

“serious disturbance of the labour market or the threat thereof.”

We did that, listening to the advice and careful evidence taken by the independent Migration Advisory Committee. We have extended those controls to the full length permitted under the treaties.

Under the current regulations, Bulgarian and Romanian nationals have to retain authorisation from the UK Border Agency before they take employment in the UK and they must also get authorisation to take lower-skilled employment in the agriculture and food processing sectors, under the seasonal agriculture workers scheme and the sectors- based scheme. The numbers given permission to work under those arrangements have not increased over the period in which they have been enforced. Excluding SAWS, the number of Bulgarian and Romanian nationals issued with accession worker cards was 2,618 in 2011, 2,776 in 2008 and 2,097 in 2007. That has been fairly consistent.

[Mr Jackson]

My hon. Friend the Minister knows that I have a great deal of respect for him. He brings his skills to every portfolio. He has an even more difficult job now than in his previous role as the Deputy Prime Minister’s human shield. However, he is somewhat missing the point. Yes, of course, we are concerned about criminal records checks, for example, but those of us who are expressing concern about this issue are focusing on the sheer weight of numbers and the impact on the economy and the labour market. That is the key issue. Hon. Members’ greatest concerns are about the numbers, which have not been properly thought through.

[Mr Harper]

My hon. Friend mentioned his ten-minute rule Bill, as did my hon. Friend the Member for Kettering. I was in the main Chamber when he presented that thoroughly and carefully. We are considering that. I look forward to meeting him next week to talk about that and, no doubt, other issues connected to it.

To paraphrase my hon. Friend, the point is to use all the tools at our disposal. First, to put matters in context, Bulgaria and Romania may be different from the A8 countries. For example, 1.7 million of the 2.2 million Romanians who live in another EU member state have chosen to live in just two member states: Italy and Spain, notwithstanding all their economic difficulties. People can draw from that what they want; I am not making a forecast off the back of it

All hon. Members want to know that the Government want to use all the powers at our disposal. They may not be aware—this is a relatively new initiative—that we have set up a ministerial Cabinet committee, which the Prime Minister has asked me to chair, that will look at the rules on legal and illegal migrants’ access to public services and benefits, across the piece, working with colleagues across Departments. The committee will consider the pull factors, which are particularly important for EU nationals, where we do not have the same controls for those coming from outside the EU. We are at the beginning of that process, but I hope the fact that we have set it up and that it is being chaired by the Immigration Minister shows that we take these matters seriously, and I hope that that provides at least a little bit of comfort to hon. Friends.

My hon. Friend the Member for Cities of London and Westminster mentioned the operation that we have been carrying out with UKBA, working with the police, local authorities and other partners to identify EU nationals who are rough sleeping and not exercising a treaty right and, therefore, do not have the right to be in the UK. We look at enabling them to return home and, if they do not do so voluntarily, we will consider using our powers to administratively remove them.

My hon. Friend can rest assured that, where we have the power to act, we will look at using that power. We will look at the pull factors that entice people to come to the UK and ensure that things are being applied fairly, so that we are not unwarrantedly popular among our EU partners. Of course, I am sure we will return to this issue again over the coming months. I am happy to engage in debate with hon. Friends and to meet them and discuss any of their concerns. I will meet my hon. Friend the Member for Peterborough shortly. I hope that I have at least addressed some of the issues.

11:29

Sitting suspended.

Gangs and Youth Violence (2011 Riots)

Tuesday 4th December 2012 Westminster Hall

[Mr Gary Streeter in the Chair]

14:30

[Ms Karen Buck (Westminster North) (Lab)]

I am extremely grateful to have the opportunity of the debate today, which I secured for two reasons. First, given that the riots of 2011 were so dramatic and one of the most momentous events in modern British history, justifying the recall of Parliament, it strikes me as somewhat extraordinary that we have not found an opportunity in the 15 months since to discuss them, their aftermath and what actions can and should be taken to ensure that such violence is not repeated. The Government gangs strategy was released in November last year, so we are at its anniversary, and the Government have reviewed progress, but we have not had an opportunity to discuss the events, certainly in Government time. I find that extraordinary, and I am grateful for the attendance of hon. Friends who represent boroughs affected by the riots for the most part, or by serious gang and youth violence, to talk about some of the effects on their communities.

Secondly, for a related reason, I very much want the opportunity to stress to the Minister, in the hope of reassurance, that the modest amount of money that has been invested in tackling gangs and serious youth violence over the past year, whether through the Home Office or the Mayor’s office, should continue beyond March next year at its present level at least. I will refer to that as I move on in my contribution.

Gangs and serious youth violence have been a feature of our cities for far too long. They are distinct but overlapping phenomena with similar roots. As I am sure colleagues will mention in their contributions, certain elements of the 2011 riots were specific to the time and place in which they occurred but, in general, the factors driving the gang and serious youth violence of recent years, which exploded into the riots, have the same stem. If we are to understand what happened and, ideally, to prevent and bear down on such phenomena in future, we need to understand both of them.

Acres of debate have been generated in the media and academia since the 2011 riots, which is one reason why not having the opportunity to discuss such findings to any extent in Parliament has been unfortunate. So much of the media coverage, however, was extremely unhelpful to our understanding. A lot of the reporting was wrapped up in language that betrayed the worst stereotypes, with talk of “feral youth” or “the underclass”, and reinforced a powerful sense of “the other”, a modern enemy within in our society. That distracts us from understanding the causes of such behaviour.

I was struck by some of the media commentary on the trials and convictions of 18 young people involved in the death of Sofyen Belamouadden at Victoria station in 2010, which casts a different light on some of our analysis of the problem. I met the principal of the college concerned a fortnight ago to discuss some of the issues. Paul O’Shea, that inspirational principal of St Charles sixth-form college, which was attended by almost all those involved in the murder, described his experience thus:

“All but two of the 18 were four-A-level kids. We had nothing in our files to suggest they could behave like this. Their attendance rates were high, and one of the boys had that very morning been given two achievement certificates.”

The idea that we can happily stereotype all young people involved in gang or serious youth violence, or indeed in the riots, as members of a feral underclass is demolished by that very experience, which requires us to think more carefully. As the Centre for Social Justice report was labelled, it is “Time to Wake Up”.

We have to accept that such issues are complex and multifaceted, with emotional, cultural, economic and social causes. We have to grapple with ancient impulses. The behaviour of teenage boys in particular has caused grief to adults for 2,000 years, although now we have to deal with some of the new tools that create new means by which behaviour can be channelled through very rapid communication. As I describe it to myself, the space-time between impulse and action is completely eradicated, which has important implications. What happens through the use of the BlackBerry Messenger service, YouTube or social media has fundamentally changed not how behaviour is expressed but how it can be organised and how young people organise themselves.

[Heidi Alexander (Lewisham East) (Lab)]

My hon. Friend is talking about some of the new technology that can lead to the fast propagation of some of the behaviours associated with serious youth violence. Does she agree that the issue is not only about the speed with which such behaviour can be spread, but about the material online that can escalate and foment a situation, leading to greater problems of retaliation between different gangs or competing groups involved in serious youth violence?

[Ms Buck]

I absolutely agree. My hon. Friend has been a powerful advocate of our better understanding of social media and how they can interact with long-standing patterns of behaviour and yet change that behaviour, increasing the ability of groups to taunt and confront each other through the posting of gang videos. She is absolutely right.

From all the analyses from across the political spectrum, left and right, from politicians, the media, think-tanks and academia we have a whole range of different contributory factors. Family breakdown, unemployment, the absence of effective role models—in particular for young men—poor relationships between young people and the police, the role of social media, excessive consumerism and poverty have all been analysed and put into the mix. We have yet, however, to translate our understanding of all such different factors into a comprehensive strategy for responding to the violence that has plagued our streets generally and to ensure that there is no repetition of the terrible events of 2011. Are we doing enough to translate our understanding of the causes of such behaviour into a specific understanding of, for example, where flashpoints can occur, postcodes, the role of social media or how adult criminals are directing the behaviour of younger members of the gangs? Such adults are sometimes directing from inside prison or even from outside the country. Young people involved in gang behaviour often say that they are dealt with by the police—quite rightly—but adult serious criminal behaviour is often behind the drug dealing or other criminal activity underpinning some gang behaviour, and those adults are not gone after or challenged. Work is being done in all those respects but I can fairly say that it is patchy, inconsistent and simply not good enough to insure against a repetition of the events of 2011.

In London, the number of people who died on our streets as a result of gang and serious youth violence peaked in 2008. It would be extremely unwise, however, for any of us to feel that that might have been a high-water mark for gang and serious youth violence, because it clearly was not. Serious youth violence was surging in 2011, up to and after the riots, and that would have been a more important element of media commentary had the riots not, understandably, distracted so much of our attention. We are only just beginning to appreciate the role of serious sexual violence, and the way in which girls are being drawn into the gang structure and abused.

It is estimated that around 250 gangs are operating in London alone, and that around 88% are involved in violence. Some 18% of individuals in gangs are linked to drug supply, 20% to stabbings, 50% to shootings and 14% to rapes. The Minister may say that we are calling for additional public spending to respond to some of the challenges, but the reverse is true. I want less to be spent on the consequences of that serious criminal activity, and on holding young people in youth offending institutions and prisons. A place in a youth offending institution sometimes costs £60,000 of public money a year. If only a fraction of that could be invested in prevention strategies, we would make a contribution to tackling the deficit as well as criminal behaviour.

When gang violence leads, as it has done, to serious concern about flashpoints in Pimlico, Parliament should regard that as a wake-up call. I am pleased to see the hon. Member for Cities of London and Westminster (Mark Field) in his place, and he may make a contribution. That was a powerful wake-up call for people on Westminster city council because Pimlico is not the sort of place normally associated with the gang culture.

When a Westminster head teacher tells me that

“Hearing gun shots from my office yesterday really brought home to me how close we are to yet another tragedy”,

that should be a wake-up call. When a busy Oxford street store is the scene of a confrontation ending in a teenager’s murder, as happened last Christmas, we are reminded that gang violence cannot be swept out of sight and consigned to the usual suspect areas, such as Tottenham, Hackney and Lambeth. It can explode into everyone’s consciousness.

Given that background, we might have expected the problem to continue in summer 2012, perhaps with a repeat of the riots, and certainly a continuation of that surging youth violence that we saw throughout 2010 and 2011, but the picture is much more complicated. There has been a significant fall in serious youth violence locally in Westminster and across the Metropolitan police area with falls of nearly one third in knife injuries and 21% in gun-related incidents. The number of young people arrested has also fallen, gratifyingly, in recent times. But that makes my case more, not less pressing. If recent months are not to turn out to be an aberration, we must understand what contributory factors bore down on that youth violence, and how we can continue them.

We are definitely seeing the benefits of gang initiatives in my constituency and Met-wide, supported by some outstanding individuals and organisations which are delivering results with better information sharing, such as through the Gang Multi-Agency Partnership—the GMAP process, which monitors individual and gang activity—gang mediation and intensive family support.

I pay tribute to some of those involved in that work, because they do not receive sufficient recognition. They include Matt Watson, who runs Westminster’s gangs unit, and his team; the outgoing Commander Bray in Westminster, under whose watch a police gangs unit was set up and maintained despite all the other pressures on local policing; front-line gang workers, such as Twilight Bey and the Pathways to Progress team; Manni Ibrahim and the youth workers at clubs such as the Avenues, Paddington Boys, the Feathers and others, who have had to deal with the realities of gang violence on the front line; schools and colleges that have worked together; parent and family groups, such as the Tell It Like It Is campaign and Generation to Generation; and individuals who are doing creative work trying to tackle youth unemployment, such as Circle Sports.

It would be good to describe that as an infrastructure, but it would be unreasonable because, important as that work is, and invaluable as those individuals are, it is held together by gossamer threads. We simply do not know how much of the fall in serious youth crime in the last few months is due to the combination of statutory and community activity, and how much is due to other factors. That is an important challenge for Ministers. We may simply be seeing a lull in violence in the aftermath of the riots, when so many people were convicted and imprisoned and the shock waves went to communities in cities up and down the country.

The Centre for Social Justice report warned that the arrest strategy of recent months has weakened the leadership of some of the more responsible elders in gangs and created a greater risk of a more anarchic gang structure growing up in its wake. I do not know whether that will happen, but nor does anyone else, and that is part of the problem. What I do know is that we cannot afford to relax our grip for one moment. There is no evidence that the tide has turned, and in many respects, the underlying conditions for some of that behaviour are worsening because of factors such as the disproportionate cut suffered by the youth services as local government has been squeezed, and the pressure on family poverty and homelessness.

I was struck by a report that was published today by the Human City Institute. It says that social tenants have lost 10% of their purchasing power over the last couple of years—a total of £3 billion. Grainia Long of the Chartered Institute of Housing, who wrote the foreword to the report, said that it

“is very concerned that the combined effects of austerity and welfare reform run counter to the government’s fairness principle, and…that tenants are…disproportionately taking the strain of deficit reduction”.

That sort of upheaval and social stress cuts across some of the work that we are trying to do in tackling gang behaviour.

Long-term youth unemployment is at catastrophic levels, with unemployment of black and ethnic minority young men and women particularly worrying. The youth unemployment rate for black people has increased at almost twice the rate as that for white 16 to 24-year-olds since the start of the recession, and young black men are the worst affected.

[Mr David Lammy (Tottenham) (Lab)]

Does my hon. Friend recognise that, when considering that statistic, it is important that the House realises that the situation in Britain is now worse than in the United States of America? That is how bad it has become. Black and minority ethnic communities are also seeing women, who were traditionally employed in the public sector, losing their employment. That is devastating for families who find themselves in that circumstance.

[Ms Buck]

My hon. Friend, who has spoken eloquently and with great knowledge about the causes of social breakdown in his constituency, is absolutely right. It is shocking that black unemployment is higher than in America. We have often seen the consequences of that in America, and we know that such social polarisation and deprivation are undoubtedly two of the many causes of gang and serious youth violence. That cannot be ignored, because such behaviour does not occur in a vacuum, and the economy is a critical element.

This debate is not about poverty and unemployment, but any Minister who believes that we should not mention them in considering long-term strategies for tackling the sort of behaviour that has led to far too many young people being murdered and maimed on our streets, and hundreds of others being imprisoned, sometimes for life, with a devastating effect on their families, is missing the big picture.

Gang membership and serious youth violence reflect the experience of troubled families and powerful peer pressure on the streets, the hopelessness and alienation of exclusion, unemployment and powerlessness, the power of an alternative identity that gangs offer to young people without community or family protection, and much more besides. Mainstream services must bend to incorporate what we have learned about prevention and gang exit. There is much evidence from the work of the London School of Economics, from “Reading the Riots”, from the work of groups in the Transition to Adulthood Alliance, from Catch22, the Brathay Trust project and Working with Men, and from Harriet Sergeant’s powerful book, “Among the Hoods”.

There may not be a grand theory of everything to explain the riots and gang and serious youth violence, but we broadly know what to do. We need to prevent young people getting drawn into gangs, offer gang members a way out and ensure that enforcement works when all else fails. The question is whether we can ensure that we do that, and that we do enough of it.

Finally, Mr Speaker—[Interruption.] I apologise. In time, perhaps, Mr Streeter. The final point is that we have no certainty at the moment about the long-term funding for the anti-gang initiatives that we already have. According to my borough, the funding for 2013-14 will be less than it was for 2012-13, and we are anticipating cuts from the Mayor of London’s contribution in the region of 12% to 20%. The chief executive of Westminster council has advised me that it receives two grants from the Home Office for 2012-13, but the ending gang and youth violence fund, which represents a sizeable proportion of the council’s spend on tackling youth violence, is only for the current financial year. There has been no indication of further funding from the Home Office for 2013-14.

Having said that, the Home Office peer review of Westminster’s gang programme highlighted the importance of creating a period of stability in provision. I ask the Minister to reflect on how it is possible that on one hand, the Home Office requires local authorities to provide a period of stability in gang prevention and exit programmes, but on the other hand refuses to guarantee the funding or ensure that the Mayor of London maintains at least the current levels of contribution.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I thank my hon. Friend for giving way, and I apologise for missing some of her opening remarks. Does she accept that whereas gang crime in London was perhaps once seen as an inner-city issue, it now very much affects a number of London’s suburbs, including my borough? Notwithstanding the need to maintain funding levels for the existing series of gang projects in the main London boroughs that are hit by gang crime, it is also necessary to recognise that this is a London-wide problem, and that there are London-wide funding issues, as well as the requirement to maintain stability for the funding projects that she is outlining.

[Ms Buck]

I could not agree more. Many people were shocked about gang violence exploding into Pimlico, and the fact that it is creeping out into Harrow should also give us pause for thought, although I suspect that the Government’s complacency is such that they will reject that argument.

If we have learned anything, it is that, in theory at least, stop-go initiatives to prevent gang violence and deal with the stem causes of gangs, serious youth violence and the behaviour that leads to riots do not work. There must be consistency. Relationships must be built up and there has to be an infrastructure, which must be maintained. That will pay off, as we know. We only need to look at how much it cost to police and respond to the riots, and at the cost of detaining so many young people in youth offender institutions and prisons in the aftermath of that behaviour, to know that the investment will make sense economically, even before one starts to weigh up the importance to young people and their families.

I hope that the Minister will respond positively and give us a strong signal that we can at least be ensured of a continued delivery of investment from the Home Office and the Mayor’s office in programmes that keep young people off the streets and away from serious gang-related violence, for all our sakes.

14:53

[Mark Field (Cities of London and Westminster) (Con)]

I congratulate my constituency neighbour, the hon. Member for Westminster North (Ms Buck) on securing this important debate. Although I have some sympathy with her view that it is a shame that these issues are not being debated in the main Chamber, it seems that this is an appropriate place to debate matters that have a strong constituency aspect. I hope that the Minister will take on board the issues that she has raised.

I very much agree with the hon. Lady that there should be an absolute rejection of the culture of despair, which was part and parcel of the immediate response by the press and commentators to what happened— particularly, though not exclusively—on the streets of the capital city during August 2011. That issue of despair touches on a point made by the hon. Member for Harrow West (Mr Thomas), and today’s Evening Standard talks about Croydon no longer being a place that middle-class people wish to live in, which is having an impact on a number of big employers in the east Croydon area. Allianz is one such employer, but Allders department store has also closed down and Nestlé has moved out of Croydon to Crawley. There is a sense that the almost totemic aspect of the burning down of the long-standing department store in Croydon in August 2011 has had a very negative impact on Croydon as a place to live and work in. The idea of the culture of despair is to be questioned fundamentally.

The hon. Gentleman was right to say that this is not simply an issue for the inner cities, or for high-profile places such as perhaps Tottenham or parts of Hackney, which have traditionally been regarded as problem areas as far as gang culture is concerned. It is now permeating into what were once regarded as leafy suburbs—I appreciate that Harrow West does not necessarily comply with that stereotype, and the same can be said of Croydon.

I want to restrict my comments to something that is local to my constituency and say something about Westminster city council’s innovative approach to gangs and tackling youth violence, which has been touched on. The Your Choice programme was launched by the council alongside the Metropolitan police in the aftermath of the riots, starting as soon as November 2011. It was in response to an escalation in gang-related violence in the borough, and although there were lessons to be learnt from August 2011, it was part of a general process that had been happening for some years.

Your Choice is an evidence-based, multi-agency programme that involves the neighbourhood crime reduction service, the children and families services, the Metropolitan police, the probation service, and a range of other voluntary sector organisations, all trying to work together. The scheme tackles gang and youth violence through preventive measures such as early intervention in schools, gang outreach work and effective exit programmes, in order to ensure that a real difference is made to the young people who are in or at risk of joining gangs.

Fundamentally, it has two crucial aims. First and foremost, Westminster’s approach to gangs gives young people a real choice: they can engage and receive support, but if they do not, they must recognise that they face enforcement and sanctions. Secondly, the key to understanding the issue is that the local community must remain the absolute focus for the efforts, and the council provides a number of opportunities throughout the programme to capture community feedback and ensure that they are part of the solution.

To give a brief overview of how the programme operates, Your Choice currently works with more than 150 young people who are either actively involved in youth crime and gang activity, or are regarded as being at top risk of getting involved in gang violence. It has eight programmes that have been developed to tackle the complex and often multiple issues experienced by young people who are involved in or at risk of becoming involved in gangs. Those programmes include an outreach programme and an employment programme that gets young people into education, training or work. There is a gang-exit programme, as well as a school awareness programme and a housing scheme that quickly moves victims or perpetrators where gang violence has occurred. One scheme also focuses specifically on girls, helping to improve their self-esteem and prevent sexual exploitation. I know that that issue is very close to the hon. Lady’s heart and I will address it in more detail later. What is absolutely central to the idea of all the Your Choice programmes, as co-ordinated by Westminster city council, is the concept and notion of personal responsibility, choices and consequences.

There have been some local successes. It is important for all of us as Members of Parliament in London to note that, as well as rightly highlighting particular problems to the Home Office. Where there are successes, there are opportunities not only to praise local workers, but hopefully to find a route forward that can affect the capital and other parts of the country where gang culture is becoming sadly more prevalent. The Your Choice approach has been peer-reviewed by the Home Office and it has received commendation not only for its strategic vision and leadership, but for challenging the commissioning approach and its overall ambition.

The notable outcomes have been here on the ground. As recently as October this year, gang workers have been conducting mediation on a number of estates in the borough between parents and young people in order to try and reduce tension. The intensive outreach workers have been getting pretty good results with complex families who have never before engaged with council services.

Since the end of August, regular positive outcomes have been achieved with the Fresh Start employment scheme. I would not be naive enough to say that I did not have a lot of sympathy with what the hon. Lady said in her contribution. Of course, there is a massive problem with youth unemployment not just in this country, but in much of the western world. Broadly, the unemployment figures in this country are less negative than might have been assumed, given the broad state of an economy in which there is no growth, but there is a particular problem for under-25s. As I said, that applies not just in the UK, but in other parts of Europe, so we should not in any way suggest that a silver bullet has been produced by Westminster city council. None the less, its Fresh Start employment scheme has made some difference, even if not quite as much of a difference and not quite as quickly as we would all have hoped. One referral has secured an apprenticeship; another has obtained an interview; and two have secured permanent positions. All these men have been very difficult to engage in the past, but the council’s new approach has proven a success.

[Ms Buck]

I agree with everything that the hon. Gentleman is saying, and he may be coming on to this, but does he accept that the larger part of the funding that has gone into developing the Your Choice programme—and the positive outcomes that he has been talking about—is from the Home Office and the Mayor’s fund that I am so concerned about in terms of its continuation and reductions?

[Mark Field]

Yes, I do accept that. I am always wary of doing too much special pleading for my own constituents or even people in London more generally, but the hon. Lady is right to say that specific problems were identified and tackled. As she rightly points out, a relatively small amount of money spent now may have such positive outcomes in terms of reduced public expenditure for years to come that that small investment should be made. We all appreciate, however, that these are incredibly difficult financial times. I have always made it a self-denying ordinance that where there are Government plans to make cuts, I will not stand up against those, because it is an amazingly difficult financial situation that we have to deal with. As a country, we are still borrowing one in every five pounds that we spend. The deficit reduction programme is, I am afraid, very much in the early stages of its achievement. We have many years of that ahead. We must get our public finances in order, but equally there are some fundamental issues that hon. Members in this debate rightly want to address.

I want to touch on the future of what is proposed with the Your Choice programme specifically as it affects Westminster city council. From the new year onwards, the following issues will arise. First and foremost is the issue of sustainable funding. We all appreciate that so much of the work that has been done in the past 15 or 16 months has relied heavily on short-term, ring-fenced, specific aspects of funding that take a significant amount of officer resource to agree and manage. The council and others are working hard, as are the Metropolitan police, to enable local authorities to submit business cases that can attract funding over a three to four-year period, but I still think that Westminster council and other local authorities in the capital require Home Office funding and support as part of the upcoming financial settlement in order to make that a reality.

There is increasing consensus that the problem of youth violence, and violence more generally, must be seen through the lens of public health. With responsibility for this area passing to local authorities, there is more scope than ever to take that slightly longer term perspective, but the varying faces of health continue to be relatively minor players in the partnership to tackle elements of youth violence. Support from both national and regional NHS commissioning bodies is still required to enable that partnership to improve. The hope is that with the health reforms bedding down, we will see, in the months and years to come, the element of stability that we all seek.

On the Home Office peer reviews, the Ending Gang and Youth Violence team are in the process of completing their reviews of the 29 priority areas for tackling gang and youth violence and have identified some 500 improvement actions. Across the country, there are areas of best practice for particular issues. The continued support and leadership from the Home Office, as well as the resources where necessary, will be crucial to ensure that we have a long-term spreading of that expertise to raise standards across the country. We do not want to get lulled into complacency and have to reinvent the wheel the next time there are riots.

I want to touch on the issue of girls and gangs, which other hon. Members may want to touch on as well. We are only just beginning to understand the extent to which young women are affected by gang culture. This culture has been regarded very much as a male thing. People think of young men being in gangs, with all the violence that is part and parcel of that. However, there is no doubt that there has been a significant problem, which is only just being uncovered, with the victimisation of young teenage girls through sexual exploitation and violence such as that exposed in the recent Children’s Commissioner report. There is also the issue of girls acting more as perpetrators as a result of the power and control exerted by gangs. It is crucial that the Home Office funding over the next three years is used to employ young persons’ advocates. That is an important step towards addressing those concerns, but it has to be part of a wider safeguarding response, and local areas need support and guidance to embed the right approaches.

Let me make some comments about elements slightly closer to home, which were alluded to by the hon. Lady. We all appreciate that Westminster, right in the centre of London, is pioneering the approach that we are talking about, but there is growing concern among residents of the Churchill Gardens estate in the Pimlico area of my constituency about gang members, many of whom—not all—are coming from other boroughs to Westminster to engage in criminal activity and intimidation. A petition was delivered to me only yesterday by two especially dedicated local constituents, which demonstrates just how anxious residents on estates such as Churchill Gardens feel when a core group of offenders comes from outside to cause trouble.

It is perhaps a slightly depressing thought that often things need to happen in the constituency that I represent, or in that of the hon. Lady in order for many opinion formers to take a little more notice than they otherwise would. When things happen within the curtilage of the parliamentary buildings that we are sitting in, they inevitably get far more coverage in the national papers and perhaps more extensive coverage in papers such as the Evening Standard. That allows the profile of the issue to become more prevalent, but gang culture is clearly a major issue that we face not only here in central London, but in many of the suburbs and the other seats whose representatives will make contributions later in the debate.

I shall conclude by asking this of the Minister. I hope that he will feel that his Department has a role in disseminating and sharing information on best practice when there have been especially successful programmes, such as Your Choice, in order to prevent instances in which one borough’s difficult gang members are not being dealt with as effectively and therefore cause trouble in neighbouring areas and beyond.

I am sorry that I am the only Back Bench Member from the governing parties to be present at the debate. Obviously, other important debates and other important parliamentary business are going on today, but I hope that the Minister will recognise that gang and youth violence is a concern that is close to the hearts of all hon. Members representing inner-city seats or London seats generally. These are very important issues that are affecting many millions of the constituents whom we represent. Perhaps it is a different culture from the culture that is prevalent in the relatively leafy market towns of Somerset. I am not being in any way disrespectful to the area that the Minister represents. However, these problems affect and have an impact on the constituencies of all Members of Parliament who represent the inner cities and, in particular, the capital city. These are Members from all political parties. I hope that the Minister will be able to address some of the very real concerns that he will hear about in the course of this debate.

[Mr Gary Streeter (in the Chair)]

We have 30 minutes before the winding-up speeches begin and three speakers left, so this should work like clockwork.

15:09

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate my hon. Friend the Member for Westminster North (Ms Buck) on securing a debate on this important subject.

I am going to dive straight in by saying that despite media reports, overall crime levels in Hackney have dropped dramatically over the past six years. However, safety issues and the fear of crime remained the No. 1 priority in the council’s residents survey. Indeed, one reason why parents appeal school admissions is that young people are frightened of crossing postcode areas. Although fewer than 1% of Hackney residents have any involvement in gang crime, the fear effect therefore ripples out further. The Home Office had the mission in the past of reducing the fear of crime as well as actual crime, and I hope the Minister can comment on the progress that has been made on that, if it remains a target for the coalition Government.

My hon. Friend talked about riots and gangs overlapping; as she said, there are separate issues, but there are some similarities, and I will echo her comments in the time I have. However, I would like to mention one concern. I am a great defender of a free press, but one thing that those of us who are routinely active on doorsteps, in communities and in people’s homes get quite irritated about is the simplistic headlines generated by some of the media. Some of the journalism about the aftermath of the riots in Hackney was based on questionable and often unbalanced vox pops and on evidence gathering that was not true evidence gathering, which was not helpful. I suspect Hackney suffers from its improved transport links and its proximity to the headquarters of many national newspapers.

Let me give a feel for how inaccurate the coverage sometimes was. I turned up in Hackney town hall the day after the riots in August 2011. I was speaking to a French journalist, who interrupted our interview to stick her microphone out in the road, saying, “I just needed to get that police siren for good effect in my report.” That rather summed up the issue, especially as she also said, off-microphone, “This is a really nice area of town, isn’t it? It’s much nicer than Paris.” That is something I would echo for those Members who have not been to Hackney recently.

However, let me get back to some of the issues, causes and concerns. One really big concern that has been mentioned is unemployment. Unemployment among under-24s in Hackney is very high. We have a high percentage of young people, and about a third of Hackney residents—it is probably even more now, because these are old census data—are under 24. We had an increase of 30,000 or so in our population between censuses, which was made up largely of under-fives and people in their 20s and 30s. Some of those young people will be living in private accommodation, where 90% of people are employed, but only 40% of my constituents living in social housing are employed.

The issue of young black men is also of real concern; it feeds the negative stereotypes that are so often untrue, but there is a reality in Hackney. It is interesting that no schoolchildren were involved in the riots in August. There may be poverty in my constituency, but there is no poverty of ambition. We have seen hugely improved school results, so there is real reason for people to focus on what they can achieve in their own right, and that improvement in education is making a difference.

Another big concern—this touches on some of what is going on in our schools—is that, sadly too often, there is a lack of good influences and role models, particularly male role models. I will not repeat all the research, but an eight-year-old boy will typically look for a male role model. At that age, he looks away from his mother’s skirts, and he will latch on to whomever is around. On the Pembury estate—contrary to media reports, it was not the heart of the riots, but adjacent to where some of the worst activity took place—when older gang members have been put in prison, the youngsters, aged nine and 10, have sometimes begun to act the big man and to act as the leaders of their groups. The lack of male role models in schools, communities and, often, homes can therefore make a real difference.

That is a big issue for the Home Office to resolve, and I am not saying that it can resolve it, but we need to have a serious adult discussion nationally about what is happening, particularly in our primary schools. I always add up how many male teachers there are in primary schools, and, sadly, there are far too few. In under-five settings, too, there are generally far too few male role models. That is a real issue, which has a long-term effect, and I am sure my right hon. Friend the Member for Tottenham (Mr Lammy) will have something to say about that.

Let me touch on the operation of gang injunctions. They were introduced by the coalition Government, and the Minister has direct responsibility for this area of policy. There is a concern about them, compared with antisocial behaviour orders. Gang injunctions come into operation after a crime has been committed, and they link good, positive aspects with punishment, but lawyers for the convicted have been arguing against the positive elements—for example, that their clients should have to attend college—and they have been winning. I hope the Minister will continue to be vigilant about how the Crown Prosecution Service represents the Crown in such situations, to ensure that those positive elements are not removed. I hope he will be humble enough to recognise that if gang injunctions do not work as intended, they may need reform. I am not completely against them, but they need to work, and it takes a lot of time to put them in place. If they are not delivering the positive, diversionary element, they are not worth very much. I hope the Minister will comment on that; if not, I hope he will give me a detailed response in writing.

Has the Home Office given any consideration to Operation Ceasefire, which is based on work by sociologist David Kennedy from Harvard? He came up with the Boston strategy, or Operation Ceasefire, in 1995, and it has subsequently been copied, most notably in Glasgow. In its work on knife crime in June 2009, the Home Affairs Committee praised the Glasgow model for achieving results. I will not go into detail, but, in summary, this approach involves pulling known gang members—nominals—together and confronting them with the information the police hold about them and with the impact of their crimes, before offering them the opportunity to come forward for diversionary activity. The model has critics and supporters, but has the Home Office done a serious analysis of this option for dealing with gang nominals?

That brings me to the work being done locally in Hackney. On the policing side, some progress is being made against gangs, but the most important work is being done by the gangs integration unit, which is headed by the former borough police commander, Steve Bending, who is now no longer a serving officer. The unit brings together police, probation, youth work, housing and any other agency that needs to be involved to tackle and divert gang members. It targets the top 50 gang nominals at any one time and sends them letters saying, “We know who you are, and we know where you are. We will be watching you. If you wish to divert yourself from gang activity, to move house or to get involved in education, or if your family do, we will help you in any way we can.” The unit is also doing a strand of work on girls in gangs, which, as the hon. Member for Cities of London and Westminster (Mark Field) said, is a growing issue and a real concern in my constituency. The unit’s work is funded by the London borough of Hackney, where the mayor has done a good job, in difficult circumstances, of making sure that certain local priorities retain council funding.

I strongly echo the point so well made by my hon. Friend that we cannot have a stop-start approach. I am not asking for lots more money, but we need consistency of approach. Solving gang problems is not about having lots of new initiatives all the time. There are things that have been proved to work, and I am sure there are things we can learn that will work in different situations in the future. However, this is not about continually reinventing the wheel, as the hon. Gentleman said; it is about consistency of approach. I am sure the Home Office is fully aware that the cost to the taxpayer of not tackling these issues is probably higher than that of tackling them early, so this is important. Given the fear of crime that the few members of gangs can generate, this has to be a high priority for the Government.

I want briefly to mention some of the work being done by local landlords. The Peabody Trust, which is the housing association that runs the Pembury estate, has projects such as Threads, which helps young women on the fringes of gangs. It also has the local intervention fire education programme—LIFE—which is a five-day course for 13 to 17-year-olds on the estate. The evaluation is clear that the programme works and really diverts young people from antisocial behaviour. The trust has also introduced a 13-week parenting course, and parenting is an issue we have perhaps not touched on enough. It is challenging being a teenager’s parent at the best of times, but it is very difficult at the worst of times. It is easy to tell parents that they should control their children, but if they have a large teenager who has got in with the wrong crowd, that can sometimes be difficult.

We also have the Makeda Weaver project, supported by Shian Housing Association, which helps to rehouse gang members away from their area of activity. In the current climate, with such pressures on housing, some of which are caused by the coalition’s policies, such a scheme might be unpopular, but I would defend it to the hilt, because unless we get gang members away from their area of activity, there is no easy way of helping them to stay away from the company they keep there.

There are many organisations that do good work in Hackney. One is The Golden Company, which works with young people at risk of exclusion and often on the edge of gangs. They get engaged in a project that collects honey and other bee by-products, and they learn how to create small businesses and become young entrepreneurs. The company does some very good work.

In short, there are important local solutions, and one pan-London or national solution may not always work. We have good examples of how local solutions can work in Hackney. However, we can learn lessons, and some things can be applied more or less across the board. Pan-London support is crucial. There cannot be a rehousing programme from one borough: Hackney cannot have a rehousing programme on its own, and nor can Westminster. We need a proper way of working, agreed across London, or it will not deliver.

We need funding for diversion and intervention early on. The Peabody Trust is working with Hackney council to attend to parenting and intervention from toddler stage onwards. We need to consider a range of actions. I touched on parenting support, which is important, and so is support for young women; that is also happening in Hackney. It is all needed. I know that not everything that I have mentioned is within the purview of the Home Office, but I plead with the Minister to become a champion of the approach, across Whitehall.

I want to reiterate the point that it is not one-off funding and lots of new initiatives that we need. Let us stick with what works and keep funding it, so that we do not have a stop-start approach. As for those young people whose lives are ruined by gang membership, whose life chances are changed for ever and who are affecting their neighbourhoods, we need to get them out of that and into positive activity. Let us deal with the scourge of gang activity and gang violence once and for all.

15:20

[Mr David Lammy (Tottenham) (Lab)]

I am grateful for the opportunity to take part in the debate. I pay tribute to my hon. Friend the Member for Westminster North (Ms Buck) for her comprehensive remarks on the whole range of issues, and for returning, as she has done over many years, to the root causes: housing, welfare and some of the central challenges that exist across London.

I want to concentrate on diversionary activity, but will begin with some fundamental assertions. First, gangs are not new in British life. In the 19th century Dickens wrote well, in “Oliver Twist”, about gang life in London and how older men like Fagin could prey on groups of young men in the inner city and cultivate criminality among them. More recently there was violence involving mods and rockers. There are certain points in history when young men, masculinity and violence become issues—so what is new now? Why are we particularly concerned? I think it is because of the callousness towards human life, and how quickly it is taken—usually with knives—with so little regard for that life. The House needs to pause and think deliberately about how so many groups of young men can take life so lightly—and how they can take female life and the dignity of a woman’s disposition so lightly, displaying such terrible misogyny. The work of the Children’s Commissioner in recent weeks highlighted the way in which young women are often sexually exploited, which underlies that callousness about human life for which we should have concern.

Gang activity is but one small component of the story of the riots and it amounts, when we look at the arrest profile, to no more than 20% of the arrests that were made. We should not overstate the effect of gangs there; but in some areas those involved in gangs clearly orchestrated the violence. It may well be that those who were arrested initially were new to criminality and therefore were caught earlier. That is an important aspect of the matter; but, to underline the points that my hon. Friend the Member for Westminster North made, it is a matter for deep concern that we live in a country that is prepared to spend up to £2 million on an inquiry but does not want to get to the fundamental reasons for the riots and then act. I pay tribute to the work of the Riots Communities and Victims Panel but it was not a judicial inquiry. I am sure that hon. Members taking part in the debate today will want to revisit the issues, particularly on the anniversary of the riots, to consider what has happened since, but when we look for lessons it is not clear at all that there has been a coherent approach, save for the work on troubled families and some activity on gangs. What comes across in a debate such as this, from all the hon. Members who have spoken, is the comprehensive way in which the problem needs to be attacked, and the fact that such comprehensive action is lacking.

I applaud the efforts that have gone into a joined-up approach to gang activity in London. It is right to pay tribute to the work of the Metropolitan police, because there is a reduction in such activity across London. Young men are being imprisoned because of their gross antisocial behaviour. In Haringey there has been a 31% reduction in serious youth violence, a 31% reduction in gun crime, a reduction of just under 21% in knife crime and a 26.2% reduction in knife-enabled robbery. However, there is a lot of experience in the Chamber this afternoon and hon. Members know that when young people are put in jail they come out; that the same effort has not gone into the prison system; and that the recidivism rates for people getting out of Feltham are about 75%. They know that young people in their late teens or early twenties who are arrested have younger brothers and cousins who take over the turf, and that gang violence is quintessentially a turf war, a ridiculous parochialism about postcode. That means that the mainstay of violence in the London borough of Haringey is what happens between, broadly speaking, 12 gangs, although three dominate. Those three are NPK in Northumberland Park, Tottenham Man Dem, largely around the Broadwater Farm estate in Tottenham, and the Wood Green Mob. Just weeks after the riots, we had the most amazing knife crime incident, with multiple knifings outside the McDonald’s in Wood Green, for no reason other than a turf war. I am afraid that as arrests are made, new people move on to the turf.

It is right, building on what has happened in Glasgow, to approach the issue as one of public health and to be purposeful about diversionary activity; but that is where I have deep concerns about the understanding of what works, the comprehensive nature of what is taking place, and the money that is being dedicated to the purpose. Communities Against Guns, Gangs and Knives funding in the London borough of Haringey is £45,000. It is barely possible to buy a lock-up garage in Tottenham for that. Ending Gang and Youth Violence funding—that is for projects such as the Ben Kinsella knife crime exhibition that young people visit, and targeted mentoring work—is £199,000 in the London borough of Haringey. A one-bedroom flat cannot currently be bought in the borough for that money.

I must ask what the priority is. Austerity issues are rightly raised, but in that context we must at least consider what our priorities are. I want to reinforce the points that have been made about quality, cost and the sustaining of investment. We know what works in mentoring, and not enough of it, of a high enough standard, is going on comprehensively in our constituencies. We know, too, that there are particular problems in high-rise tower blocks in constituencies such as Lambeth, Haringey and Hackney across London. The issue is about getting down to a neighbourhood level. It is not about a feral underclass; it is about the workless poor and an endemic worklessness in too many such tower blocks—dysfunctional and not working. It is deeply problematic that only 110 young people in Tottenham have benefited from the Work programme long-term. It is not good enough and it cannot be good enough in the circumstances in which we find ourselves.

There are question marks over the work needed to ensure that young people do not follow in the footsteps of their brothers and cousins following arrest. As a society, we must underline the importance of men, and particularly fathers, in our communities. They cannot be forgotten. We must challenge the stereotypes coming out of the games industry and parts of the music industry in particular, where toleration of violence and misogyny is totally unacceptable. Not enough is being done to tackle it. I shall end my remarks there. Many of us could go on, but we hope that the subject is revisited in the main Chamber soon.

[Mr Gary Streeter (in the Chair)]

I remind Members that the wind-ups begin at 3.40 pm.

15:30

[Heidi Alexander (Lewisham East) (Lab)]

I am grateful for the opportunity to take part in the debate. I congratulate my hon. Friend the Member for Westminster North (Ms Buck) on securing it. I am sorry that I did not hear everyone’s contribution, as I had to leave to meet a group of young people from Haberdashers’ Aske’s Knights academy in my constituency who have been visiting the House of Commons today.

I want to speak today for two reasons: first, to underline the huge importance to my constituents of tackling gangs and serious youth violence; and, secondly, to urge the Government to take an holistic approach and put their money where their mouth is in tackling the problem. They need to think hard about how they use the resources that they have allocated to best effect.

In the past nine months, I have met the parents of three young men who were stabbed to death in my constituency or neighbouring constituencies. In March this year, Kwame Ofosu-Asare, a 17-year-old boy from Catford, was stabbed to death in Brixton. I will speak a little more about that incident in a few minutes. The second young man whose mum I met was Nathaniel Brown. In August this year, he was stabbed after a party in Downham and lost his life on the street there. The third young man whose father I met was Kevin Ssali. He was stabbed as he got off a bus in my constituency in Lee Green in September. There are no words that a Member of Parliament can use when sitting in the front room of a parent who has lost a son or daughter to brutal violence on our streets. Tackling such violence is one of our biggest challenges.

To underline the importance of tackling gangs and serious youth violence, I want to say something briefly about Kwame Ofosu-Asare, who was killed in Brixton. The court case into his murder started last week. The prosecutor, Crispin Aylett, told the court:

“Kwame was not a member of either gang”

involved in the incident in Brixton. He continued:

“He was killed for no reason other than his murderers had come upon him on an estate they considered to be enemy territory and at a time when they were looking to take revenge for the stabbing of one of their own only hours earlier.”

I never met Kwame, but everything I have heard about him suggests that he was a very fine young man with a very bright future ahead of him. His father has been understandably beside himself with grief. He has come to the House to ask what we will do to prevent such violence from happening again.

Such incidents are not isolated. When I visit community groups in my constituency, such as XLP, a youth project based in Lewisham, and Second Wave in the neighbouring constituency and meet young people, I am struck by the seriousness with which they talk about their safety. I feel safe on the streets of Lewisham. We can quote statistics about falling crime, but when young people are losing their lives, the streets do not feel safe to them or their parents, which is why it is imperative that the Government and everyone in the House come together to tackle the problem.

There are four parts to the process to think about. First, we need to think about how to prevent young people from getting involved in gangs and serious youth violence in the first place. Secondly, when they are involved and caught up in gangs, we need to give them a way out and the means to get out. Thirdly, we need to tackle the retaliative behaviour and escalation of violence. Fourthly, when young people and those involved in violence go to prison, we need to ensure that they have a means to find a different life for themselves and not get caught up in exactly the same behaviour that they were involved in before they went to prison.

On the first part of that process, there are fine examples of community-led projects, which, with a relatively small amount of money, have a proven track record of going into schools, talking to young people and being accessible to them. They look like and sound like the young people, and they listen to them. Such projects can make a huge difference in stopping those on the edges from getting caught up in gangs and serious youth violence. They can help young people to understand the consequences of their behaviour and that if they are hanging around with a dodgy group of friends, they can get caught up in joint enterprise charges. It is important that such work is done in our schools at a young age to tackle the issue.

[Mr Gary Streeter (in the Chair)]

Order. I am reluctant to interrupt, but there is a Division in the House, so I am afraid that the sitting is suspended for 15 minutes.

15:36

Sitting suspended for a Division in the House.

15:49

On resuming—

[Heidi Alexander]

I was talking about what needs to happen to stop young people getting involved in the gang culture in the first place. We must think very hard about what leads a young person—or even an older person—to think that they can resort to the level of violence that we see on our streets to resolve a difference. The Government cannot necessarily solve the problem; it is as much about parents, families and communities coming together and saying that the violence is unacceptable. The Mizen foundation, which was launched by the parents of Jimmy Mizen who was also murdered in my constituency, has recently introduced the valuable initiative, “Release the Peace” to stem the level of anger and violence that we see among some young people in our communities.

When young people are involved in gangs and caught up in youth violence, we need to find a way of giving them a route out. We need to enable young people to talk to someone in confidence when they arrive at accident and emergency with a stab wound. It is imperative that they can be open about what has happened, instead of closing up and not talking to anyone.

In Lewisham, the Trilogy Plus initiative, which is run by the police, has recruited previous gang members to become mentors and to work hand in hand with families of young people who are in gangs. The idea is to make it clear to young boys or young men what the consequences are of going out on the streets and doing certain things. They are told very clearly that the police will catch up with them. That sort of work on a real-time basis is critical.

We need to find a way to stem the escalation of violence. In my earlier intervention, I talked about online material that glamorises gang culture and that fuels and foments some of the animosity that exists between rival gangs. The problem will become more significant as time goes on. The Department for Culture, Media and Sport should talk to the Home Office about how, in future communications legislation, it might consider giving the courts more power, under very constrained circumstances, to take down such material because of the damage that it does on the streets in our communities.

As I have said, we need to provide a route out for people who have been in prison after being involved in serious youth violence. Nothing will do that better than finding a job. Instead of going back to the neighbourhoods in which they were living or hanging around with their old groups and friends, they need to be given a way out.

The situation is not straightforward. Some money has to be invested in the projects and initiatives that work. There is expertise in this area and the amount of money that is required is quite small. I implore the Government to do all they can to solve this horrendous problem that is afflicting our streets and communities.

15:55

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I am honoured to respond to this debate, which has been organised by my hon. Friend the Member for Westminster North (Ms Buck), both formally on behalf of the Opposition and as an MP who, like many of those who have spoken today, lives day to day with such issues. If there is one message that the Minister can take away from the debate it is that this is not just about public spending. For many of us, it is the life and death of our local communities, and it is our local young people whom we are concerned about. The contributions from my hon. Friends the Members for Harrow West (Mr Thomas), for Lewisham East (Heidi Alexander), and for Hackney South and Shoreditch (Meg Hillier) and from my right hon. Friend the Member for Tottenham (Mr Lammy) recognise very strongly the need and the genuine concern to get this matter right, not just over the next year or so but over the whole generation.

I welcome my hon. Friend the Member for Croydon North (Steve Reed), who has just been elected. He has a strong passion for this issue and, in his former life, made a tremendous difference to the local community in Lambeth.

I think I speak for everyone when I pay testament to the work of my hon. Friend the Member for Westminster North who has displayed a persistent commitment to this issue and to getting it right, too. She is unparalleled in her experience and knowledge of, and passion for, tackling youth violence and gang crime.

Like many Members in this debate today, I have cause to reflect on the young people whom we have lost to these crimes in my local community in Walthamstow—whether they be the young people who have been killed or the young people whose lives have been irrevocably changed by being a victim of youth violence. There were 155 incidents in my own borough last year, and a fatal stabbing after a party just this summer of a youth on the cusp of adulthood. That senseless loss of life has to stop. However, it is a question not just of addressing these issues when we are in a crisis situation—when we have riots on our streets—but of the day-to-day work that needs to go on to turn around the cultures and practices that all too often lead to such incidents.

I encourage the Minister to read the work of John Pitts so that he can better understand the nature of the gangs and of the young people whom we are dealing with in these instances. We should not see all young people, or even the reasons why they get involved in gangs, as the same. The Minister needs to understand why we are calling for a joined-up approach and why it is so important to invest not just in policing but in housing, social care and education. He should also look at the contribution that other parts of Government can make.

The Minister may well say that we have had some success in dealing with the issues over the past year and a half, and I agree with that, especially with the introduction of the Trident gang programme in my part of the country. We know just how much crime gangs are responsible for in our local communities—Members have mentioned many of them in this debate. We also know that gangs are responsible for about 14% of rapes, so when we talk about the gender effect of gang crime, it is about not just young girls being drawn into gangs but the consequences on our streets. We know that the Trident programme has made a difference. We have seen a 34% reduction in the numbers of young people being involved in gang crime, and the arrest of 1,500 gang members in London.

The question today is what happens next. The Minister should take away from this debate the fact that we are concerned, as indeed the Centre for Social Justice is, that our first step should be the engagement by the police with these young people, but that cannot be the only one. In particular, the concept that we can arrest our way out of this problem just does not hold true.

I read the report by the Centre for Social Justice and about the funding that is now going into gang intervention work, but I was concerned about the challenges that face some of the organisations involved. For example, some groups are being stopped from applying for funding because they are working with younger potential victims of gang crime. Many Members here today have flagged up the familial links in gangs. We see young people getting involved in the culture through their brothers, sisters, cousins or even next-door neighbours. Their close networks can lead them to be involved in gangs, and we need to stop that before it even starts.

The other problem is that the funding is guaranteed for only a short amount of time, and we all recognise that our problems cannot be resolved speedily. The most crucial aspect of the CSJ research shows that the relationship between the police and young people has got no better, and indeed in some circumstances it has got worse. If we want to turn around young people’s sense of their relationship with the public services—those people who are there to serve them and keep them safe—we need to do a lot more than we are doing at the moment.

That is about a number of factors. First, it is about building resilience. My hon. Friend the Member for Lewisham East spoke admirably about resilience and the ability to tackle life’s challenges without resorting to violence and without feeling the need to join a gang, and about finding a positive identity and positive future for yourself as a young person.

Secondly, it is about understanding where the flashpoints are. My hon. Friend the Member for Westminster North admirably set out where those points of crisis and tension are on our streets, and she spoke about trying to divert young people away from them.

Thirdly, it is about the longer term engagement that we have with young people. Containment of young people who are involved in gangs is simply not an effective strategy. We have to engage with them, and we have to dispel and disperse those kinds of behaviour.

Fourthly, we have to protect the victims. I am very mindful that 70% of young people in London do not feel safe on our streets. That means that they do not feel safe getting on a bus to go to college, let alone walking about their own capital city. We have to address these issues too, because they feed into a culture in which gang violence and youth violence are the norm, rather than something that we must all address.

We recognise that dealing with this issue involves a joined-up approach. I press the Minister to think very carefully about what he can do to bring pressure to bear to tackle some of the bureaucratic problems that many people within our local communities face in trying to address these issues, particularly in terms of housing. We have heard today about some of the challenges that many of our local authorities face in moving people. Moving people cannot be done purely on a borough-by-borough or neighbourhood-by-neighbourhood approach. It needs to go from the grass roots up, but it also needs national support.

We must also learn from the best in the voluntary sector. Many people here today have already mentioned some of the fantastic groups that they work with in their local communities. I have had cause to meet Barry Mizen, and he is an incredibly empowering and impressive man. I have also met representatives of organisations such as the Spirit of London and Bang FM in Harlesden, and I have met many local councillors, such as Councillor Zaffar Van Kalwala in Brent, who are trying to tackle some of these issues at a grass-roots level. Within my own community, there are the Active Change Foundation, Gangs Unite—

[Steve Reed (Croydon North) (Lab)]

Does my hon. Friend agree that empowering communities is a fundamental part of finding solutions to the problems that many of our poorer communities face with high levels of youth violence? Croydon North has an escalating problem of that kind, as youth violence spreads across London from the inner urban areas.

Next door to Croydon is Lambeth, which is of course the borough I was leading until yesterday morning, where a very different and innovative approach, which bears further scrutiny, is being used. It empowers communities to take action and take control of the problem for themselves. It is based on experiences such as the one on the Myatts Field estate, where a group of local parents, who were terrified when their young people started getting involved in gangs, began to take action for themselves with precious few financial or other resources. However, over a period of three years, they were able to get 80 of their young people out of gangs by running a range of activities for them. What the council is doing through a new youth services trust is to give local communities access to public resources to take action themselves. Is my hon. Friend’s view of empowerment models such as that one favourable?

[Stella Creasy]

My hon. Friend, who is newly elected to Parliament, has just shown why he will be a very powerful advocate for his local community, and he has also shown that he offers a huge amount of expertise on what works in tackling some of these problems.

My hon. Friend makes a very powerful case about empowerment and about working from the grass roots. As I was about to say, I absolutely agree with that approach but it needs resourcing. That is why this issue is about resources. When we consider that we spent £133 million in four days of policing the riots last year, the consequences to the public purse of not investing in those people who are working in the voluntary sector and our local communities who understand and can engage in these ways are huge. The Government have put £18 million in, but that is nothing compared with the 20% cut that we have seen in youth offending team and community safety partnership budgets, the very money that was funding the type of work that my hon. Friend and others here today have talked about.

Finally, I just want to put four questions to the Minister, which I feel he must address. First and foremost is the overriding question that all of us are asking: what happens to those who have been arrested and their families? What happens next? The strategy cannot simply be to deal with that issue on a year-by-year basis. The Government must come forward with a plan to deal with those generations who are affected, including the next generation and those people who are coming out of prison.

Secondly, where will the resources come from so that we can do that? We can all see the savings to the public purse from prevention. We need to see the Government being very clear about where the money will come from to make sure that those prevention programmes are made real.

Thirdly, my hon. Friend the Member for Hackney South and Shoreditch made a very important and powerful case about gang injunctions. Will the Minister commit to review the effectiveness of the proposals about gang injunctions and what they do on the ground, particularly to work on those positive diversionary activities to ensure that we take people out of gangs and into a positive future?

Finally, can the Minister tell us more about what he is doing to bring together other Ministers and other resources from other Departments? Those Departments include the Department for Communities and Local Government; the Department for Culture, Media and Sport, which my hon. Friend the Member for Lewisham East referred to; the Department of Health; the Department for Education; and the Ministry of Justice. Too much money in Government is spent on dealing with the consequences of the failure to address youth violence and gang violence. Can he tell us more about what he is doing to bring those resources together to ensure that we join up our plans, to protect our young people and ensure that the potential that they offer to our communities is not lost but realised?

16:05

[The Minister of State, Home Department (Mr Jeremy Browne)]

Thank you very much, Mr Streeter, for giving me the opportunity to conclude this afternoon’s debate. It is a pleasure to serve under your chairmanship.

I congratulate the hon. Member for Westminster North (Ms Buck) on securing this debate. I remember that about five or six years ago, when she was a Minister and I was a relatively new MP, she was very nice to me—well, she said that I was surprisingly sensible for a Liberal Democrat, which was qualified niceness but nevertheless nicer than I had expected. I will try to reciprocate that positive attitude during my concluding remarks.

I just want to give a little bit of context. I do not say this in any way because I take any of the issues that have been raised lightly, but listening to the debate, one might be forgiven for thinking that we are having it against a backdrop of escalating crime in London or across the country. I will respond in a moment to the substantive points that Members have made, but it is worth briefly putting the statistical context in front of the House.

That context is that recorded crime figures show a 14% reduction in homicides in the last year. That is very substantial. Offences involving knives and sharp instruments are down by 9% over the same period. Also, NHS data on hospital admissions for assault, which are a very good indicator of the level of violent crime, including unreported violent crime, show a 6% reduction in the 12 months to the end of March 2012. Members have been good enough to pay tribute to the work that has taken place with the Metropolitan Police Service and other agencies here in London.

Of course there are appalling incidents and we are not complacent. As a Government, we want to try to do everything that we can to reduce gang membership and gang violence, but it is worth noting that there have been successes. There are volunteers and charitable organisations across London and across the country as a whole who should feel proud of what they have achieved; we should recognise that their efforts are reaping some dividends; and we would like even more to happen in the future.

I will divide my comments into three sections: the first is about how we try to prevent gang membership and violence; the second is about how we try to intervene at the crucial point if we fail to prevent gang violence; and the third is about the sanctions that are used afterwards.

I obviously have only a few minutes left to speak, so let me split up the first section on how we try to prevent gang violence. In a way, prevention easily splits into a sort of adolescent stage and a pre-adolescent stage. Regarding the pre-adolescent stage, I hope that Members will join me in Westminster Hall tomorrow when we have a debate about early intervention. That is a very important area and Members will know about the troubled families initiative, in which the Prime Minister takes a personal interest. That initiative is trying to help the 120,000 most troubled families in the country. There is a very high statistical correlation between children being born in troubled circumstances and their going on to experience underachievement, as shown in their employment history, their crime record and their gang membership. There is a certain level of activity through which the Government can intervene in that area.

Members will also know about the Government’s commitment to the family-nurse partnership programme, in which we will double the number of places to at least 13,000 by 2015. So there is a body of early work, and the right hon. Member for Tottenham (Mr Lammy) again mentioned today the importance of even wider social initiatives, such as having more male teachers in primary schools and more role models for boys, and I agree with him on that.

We then get into the adolescent and predominantly male stage; we are talking mainly, although not exclusively, about young men. Members have referred to the Government’s initiative to reprioritise £10 million worth of funding to 29 areas, including areas here in London—every Member who has spoken in the debate, apart from me, represents a London constituency. At least half of that money, so at least £5 million, has been spent on grants that have been given to voluntary groups, and that is not the only funding that has been made available.

However, I should say that I do not think the Government’s commitment to tackling this issue is just measured by how much public spending is devoted to it. There are huge numbers of very good voluntary groups, such as cadets, scouts, sports clubs, church groups and others, that are run by people right across the country and that have a very big role to play in engaging young people and giving them meaningful activity that does not involve gang membership and violence. I therefore reject the notion that the Government’s commitment to the agenda is measured entirely by the amount of public money we spend.

Having said that, we are spending £3.75 million over two years on the communities against guns, gangs and knives programme, £4 million has been made available to voluntary and community organisations working directly in local communities, and—I was asked about this by the hon. Member for Cities of London and Westminster (Mark Field)—we are also providing £1.2 million over three years, starting this year, to improve services to girls at risk of being victims of gangs and sexual exploitation.

[Meg Hillier]

I have been in the Minister’s shoes, and I am a constituency MP with a strong interest in this matter. He has talked a lot about voluntary projects, but what the Home Office can do apart from providing some funds is rigorously to evaluate what works and to ensure that funding goes only to the projects that work. It should not be sprinkled so thinly that it has less impact than it ought to.

[Mr Browne]

We are keen to spend the money where it works most effectively. As has been pointed out, it is not just the Home Office that spends it; the Department for Work and Pensions has an innovation fund of £30 million, some of which is spent in this area, and there is another DWP project that helps prisoners on their release from prison. That matter was raised by a number of Members, including the right hon. Member for Tottenham.

The Ministry of Justice is leading some interesting pilot studies on payment by results, looking at how we can incentivise prisons more effectively to reduce the terrible reoffending rates, which the right hon. Gentleman mentioned. He also talked about work in young offenders institutions and adult prisons, and he specifically mentioned Feltham young offenders institution, which has joined together with the Islington youth offending team to deliver a specialist programme for gang members in custody. There is a lot of excellent work such as that, large parts of it directly supported, and in some cases funded, by central Government.

[Ms Buck]

I have been listening closely to what the hon. Gentleman has said, and he has not yet answered the question that I and my hon. Friend the Member for Walthamstow (Stella Creasy) put to him: will the ending gang and youth violence funding from the Home Office, which is delivering so much of the anti-gangs strategy at the moment and is due to expire in March 2013, be continued at least at its present level into 2013-14?

[Mr Browne]

Let me address that point, and the initiatives that we have carried out, in the remainder of my speech. It is relevant to the third part of what I hope to tell the House.

Let me address the funding first. I am not in a position this afternoon to give guarantees on funding for future financial years. The funding was never made available on the understanding that it would be available indefinitely. We want to plant seeds and allow trees to grow. There is a lot of voluntary activity of which we are very supportive, and community safety budgets are being de-ring-fenced and will be spent by police and crime commissioners or, in London, by the Mayor’s office. They might choose to spend more money in this area than has previously been the case, but we are not in a position to second-guess elected police and crime commissioners, including Labour ones, who might or might not spend more, depending on their priorities.

[Mark Field]

Although the Minister is absolutely right to make the case that none of the funding was to be indefinite, does he not accept that where a local authority, such as Westminster—I am sure this applies in other areas, from Hackney to Haringey and elsewhere—has successful programmes in place, it would be sensible to continue elements of the funding to ensure that we get the right outcomes?

[Mr Browne]

We are keen to ensure good value for money, and that is what the Government will try to achieve with the huge amounts of public money we are spending. I am pleased that crime levels are dropping dramatically, and we want them to continue to fall, which is why we are also bringing forward measures such as the ones introduced just yesterday that will allow for more severe penalties for knife possession. Such sentences were not available in a mandatory form under the previous Government. We have new initiatives on injunctions, which we believe are very positive, and I will take forward the point made by the hon. Member for Hackney South and Shoreditch (Meg Hillier) about the positive as well as the negative use of injunctions. We have a reasonable story to tell, and we want to make further progress in the years ahead.

Remploy Factories

Tuesday 4th December 2012 Westminster Hall

16:09

[Mr William Bain (Glasgow North East) (Lab)]

It is a pleasure to serve under your chairmanship once again, Mr Streeter, and to have secured this debate on behalf of Remploy workers and their families in my constituency and across the country.

Tomorrow is the day of judgment for the Chancellor’s failure to grow the economy, but today is the day of decision for this Minister, the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey). The honour of serving in the Government comes with responsibilities, and the hon. Lady and her colleagues must accept that it is not just the Chancellor’s fiscal and growth policies that are not working, but her Department’s strategy on long-term unemployment among the disabled, which has been worsened by the short-sighted and ruinous decisions to close 31 Remploy factories across the country this year. Now, 46 jobs in the Springburn Remploy factory in my constituency hang in the balance, and it is to those dedicated workers that the Minister must give hope, and clear answers, today.

The Minister will no doubt remind me that there have been Remploy factory closures before, under different Governments, but the economic, and particularly the employment, climate are now very different. This is the longest journey out of an economic slump for 140 years, with median wages in Scotland falling by 7.9% in the past two years. We need only look at the closed stores on our high streets to see the effects that the lack of demand is having on the spending power of local communities. If unemployment in general is far higher than it should be, nearly four years from the low point of the recession, how much worse is the picture for disabled people?

There are 63,000 more disabled people out of work than a year ago, and 554,000 of them out of work in total, which is a record high since figures were separately allocated for the disabled.

[Jim McGovern (Dundee West) (Lab)]

I congratulate my hon. Friend on securing this very important debate. I have visited the Remploy factory in my constituency so many times now that I am on first-name terms with almost all the members of the work force. They seem to be a happy work force. They are happy to stay where they are and do not wish to go elsewhere. Does my hon. Friend not agree that it seems a perverse Government policy to throw disabled people on to the dole, against their wishes, and then tell them that if they do not find alternative work they must work for nothing or have their benefits cut?

[Mr Bain]

Absolutely. My hon. Friend highlights precisely the complete lack of logic in the proposals, at this time when the disabled, young people and people in long-term unemployment are encountering the toughest employment conditions in decades.

[Mr Jim Cunningham (Coventry South) (Lab)]

We have Remploy in Coventry, and it is one of the most profitable organisations there are. It has contracts with Jaguar and Ford, and if a factory can get such contracts and drive hard bargains it is doing very well. The tragedy, which anyone who has met these people from Remploy knows, is that within days they were sacked, and some of them will never work again. The Coventry plant operates like a normal factory as, I am sure, do others. It is amazing. They have their own representation. What is being done is short-sighted and, more importantly, it shows the true face of this Government.

[Mr Bain]

Indeed, and the Government should be looking at the application of procurement rules, striving every sinew within the Cabinet Office, the Treasury, the Scotland Office, the Northern Ireland Executive and the Welsh Assembly Government to ensure that good industries such as these have the accessibility to public service contracts that would give them a good long-term future. That is one of the things that I will be asking for later.

The Minister, perhaps inadvertently, revealed the real picture when I last secured a debate on the topic in this Chamber: of the 1,021 disabled workers sacked by Remploy and this Government in their closure programme of this year, a mere 35 have found other work. Will she be able to update us on the most recent figures when she winds up?

[Gloria De Piero (Ashfield) (Lab)]

The issue cannot be divorced from the economic situation that we are in. In the areas where the factories are based, 17 people are chasing every job. Does my hon. Friend agree that this is precisely the wrong time to cut disabled workers adrift?

[Mr Bain]

I entirely agree with my hon. Friend.

Those 35 people are not in jobs of equivalent pay and skills to the ones they had with Remploy; they are the only 35 people who have got any work at all. Additionally, the Work programme is placing only 2.5% of long-term jobless people in my constituency, and less than 4% across the country, into sustained work.

To have any chance of producing a solution to the crisis, the Minister must recognise the true problem: the economy is too weak and long-term unemployment is soaring. Some 1,320 people in my constituency alone are long-term jobless. Vulnerable groups such as the young and the disabled are suffering the most. The OECD has shown that a disabled person is twice as likely to be unemployed as a non-disabled person. It is clear from the figures so far that the Minister’s plans for Remploy workers, and for the disabled as a whole, are not working.

The reality is that the longer someone is out of work, the lower their chances are of finding another job. So instead of doing nothing, the Minister should be redoubling her efforts to help disabled people in long-term unemployment get jobs now. It is unacceptable to plough on with a failed strategy that simply consigns sacked Remploy workers to near certain long-term unemployment, and crushing poverty, as a result.

In the spirit of constructive engagement, I offer the Minister a plan out of the hardship that the closure programme is inflicting on disabled workers across the country. First, given the ways in which I have shown it is increasingly hard for the disabled to find new work, the Minister should announce today a moratorium on any further factory closures in phases 1 and 2 to lift the threat from 18 other Remploy factories in communities such as Clydebank, Cowdenbeath, Dundee, Stirling and Leven, as well as in Springburn.

Secondly, I ask the Minister to convene an urgent working group, to report by the end of the year, composed of officials from her Department, the Scottish Government, Glasgow city council, Scottish Enterprise, trade unions and other representatives of the disability and local business communities to help locally elected politicians draw up plans to save the Springburn factory.

Thirdly, I ask the Minister to engage specifically with the Scottish Government to build on the commitments made by Minister Fergus Ewing in Holyrood last Thursday to introduce a proper strategy to support Remploy staff in Scotland and those who have already lost their jobs but not found new work, as the Welsh Assembly Government and the Northern Ireland Executive have already done.

Fourthly, the Minister should ask ministerial colleagues to review the application of public procurement rules, particularly the application of article 19, and to draw up plans for how supported employment workplaces can more effectively win Government contracts and secure their long-term futures. The Springburn factory makes high-quality wheelchairs for the NHS, but it has no long-term relationship with the NHS in Scotland or with Government agencies at UK level.

Finally, given the disastrous conduct of the tendering process in relation to the Springburn factory, the Minister should order an inquiry into what went wrong, why the process collapsed and how the hopes of workers were raised last month only to be so cruelly dashed by her letter of a few weeks ago. In particular, she needs to provide answers to questions being posed by workers at the factory and by one of Scotland’s major newspapers.

Last Wednesday, the Daily Record reported that Remploy Healthcare entered a deal with R Healthcare, otherwise known as R Link, in July 2011 to take over the “front end” of the business, including

“the sales, marketing and distribution of Remploy’s healthcare products.”

There are many people who believe that that contract may have endangered the probity of the tendering process for the sale of the Remploy Springburn factory. Workers at the factory believe that the contract, which was not made public at the time, sealed their fate as long ago as last year.

Will the Minister tell the Chamber why there has been such a lack of transparency on the existence of those contracts? How can she ensure that this tendering process and future tendering processes will operate on a level playing field for other potential buyers of the Springburn factory and any others? She will be aware of the concerns of Greentyre and other potential bidders—they felt excluded from the tendering process because of the link with R Healthcare. Why were the contracts kept secret only until the decision to close the factory was announced? Why has her Department refused my freedom of information requests on those contracts? The reply refusing the request was sent on the same morning as the confirmation that the factory would close. Does she really believe it reflects well on her Department that R Healthcare is planning to keep Remploy’s wheelchair order book, and to benefit from the business that will be released thereby, after dumping all the workers and closing the factory?

The Minister will remember from when we debated the issue previously that if the factory had been sold, the workers would have benefited from the protection of the TUPE regulations. If any workers are taken on by Haven, R Link’s subcontractor, they will not benefit from the protection of TUPE, which is the difference. If workers are fortunate enough to be re-engaged, they might be hired on markedly poorer terms and conditions. Such asset stripping should not be worthy of contracts issued under the aegis of her Department.

[Mr Jim Cunningham]

What my hon. Friend has revealed is nothing short of scandalous. Having said that, will he include the affected factories in Coventry and the rest of the UK in his proposals to the Minister?

[Mr Bain]

Absolutely. My hon. Friend is entirely right that, given the scale of the disaster being faced by people in the disabled community, the only answer is for there to be a moratorium so that this incompetent Government can produce a strategy for disabled employment that actually works.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House. Does he feel that perhaps this is the time for the Government to introduce a strategy that works alongside shops that need certain types of goods and alongside private enterprise so that the expertise of Remploy factories across the United Kingdom can be used for the good of the factories and the workers?

[Mr Bain]

I entirely agree with the hon. Gentleman. When I speak to workers in Remploy factories, it is clear that what they want is a level playing field, which comes down to public procurement rules and the proper interpretation and application of article 19 by the Government and other agencies. That would do a huge amount to secure a long-term future for factories that are able to stay open.

I specifically ask the Minister whether she sought advice from the Attorney-General on the propriety of the tendering process at the Springburn factory. Did she seek any advice about the possibility of a conflict of interest following the emergence of the contract between Remploy and R Healthcare, given that R Healthcare was the initial preferred bidder for the Springburn Remploy factory?

As with the Work programme, the pattern emerging with the Government is that public money is being handed over to private companies in outsourcing deals in which the private companies are the major beneficiaries. Are the internal audit procedures of the Minister’s Department satisfied that the contracts offer value for money to the taxpayer?

Surely with such a flawed process the only fair answer, so that Remploy employees in other factories under threat of closure can have confidence in the integrity of the tendering process, is for the entire closure programme to be halted so that an inquiry can be conducted by officials in the Minister’s Department. Is the Minister confident that the contract that has been revealed can withstand scrutiny if referred for investigation to the Public Accounts Committee? I have written to my right hon. Friend the Member for Barking (Margaret Hodge) about the matter this afternoon, seeking her advice on whether such a reference may be made.

I urge the Minister to think of the human cost of her actions or inaction today. I ask her to think what it would be like across the Christmas dinner tables of Springburn Remploy workers, with nothing to look forward to but near certain joblessness next year, and how much their families will suffer with them in the new year. How much more economic demand will be sucked out of my local community, and other local communities potentially affected by further factory closures, as people move from spending wages and paying taxes into the system to struggling on benefits with their spirits sapped?

I also urge the Minister to consider what will happen to Simon Yearling, a 35-year-old with Down’s syndrome, who has worked for 13 years in the Springburn Remploy factory. He is now under threat of the sack next year and, if he cannot find another job next year, could even be sent on an unpaid work placement on the threat of losing 70% of his disability benefits under the Government’s new rules on mandatory work placements introduced this week. Did his 68-year-old father not sum up the harm that this Government are doing to the fabric of our society when he said:

“If society can’t find some slot for the disabled, then society is in a poor way”?

Governments work in this country when they make decisions on the basis of evidence and compassion for those whom they serve. The evidence is in, and the results are clear: this Government’s plans for current and sacked disabled Remploy workers are failing badly. They need to change tack now, if we are to escape avoidable suffering and the biggest waste of all—the enforced idleness of productive, skilled and talented people in our society. The Minister has an opportunity to signal that change today and avert a terrible injustice to nearly 50 hard-working disabled people in my constituency. I hope she will take it.

16:32

[The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)]

It is a pleasure to serve under your chairmanship today, Mr Streeter. I thank the hon. Member for Glasgow North East (Mr Bain) for expressing his concerns passionately today. I hope that we have a constructive dialogue. I will bring him up to speed on everything that has been happening and that we have been doing on a daily basis. He and I have met and have spoken on many occasions, and I know how strongly he feels about the issue. I hope that he will give me credit for feeling as passionately and strongly as he does on the issue, and for working on it with my colleagues every day.

I shall start at the beginning—as they say, that is a good place to start—so that I can explain how and why the changes have come about. Obviously, amnesia has occurred among the Opposition about the closures, and the uncertain future, which have been going on for many years. In 2008, 29 factories were closed. A modernisation plan was put in place but failed, having set overly ambitious targets that were never achieved. As such, the factories became increasingly loss-making and their future became more precarious, which left all staff in a vulnerable position. The future must be about finding jobs for the employees and supporting them into mainstream employment. The issue is about sustainable jobs and a future with a job. That is precisely what we are trying to achieve.

The Government have committed themselves to protecting the budget of £320 million for specialist disability employment support. Governments of both parties have looked at the money going into Remploy factories and their future capability. One sixth of the entire budget has been going to Remploy factories, to 2,200 disabled people. Actually, there are 6.9 million people with disabilities of working age. We must look at what is best for all those people.

The hon. Gentleman gave incredibly negative figures, which I did not quite recognise. Remploy employment services, a different part of the organisation, has managed to find 50,000 jobs since 2010 for people with disabilities. In his constituency, 263 jobs were found in the past year. There are 44 disabled people in the Springburn factory, but we have to look at who we can help—and how best we can help them— among the 12,700 people with disabilities.

Without a shadow of a doubt, I understand how unsettling it must be for the people at Springburn, and that is why we have put in place a special £8 million package for personal help and support. It is the first time that has been done. No one tracked the staff in 2008, and no one put in a special package for them. There was no inadvertency when I mentioned the number of people from Remploy who had jobs. I answered accurately: the number was 35 people when we last met. I have been working on the matter daily, and I hope that the hon. Gentleman will be pleased to know that in the past few weeks, by changing on a daily basis, by looking at what has worked and by following best practice, we have quadrupled that to 129 people in employment. I am not saying that that is the best we can do, but by learning every day, we have considerably improved the number. Trust me—I will be following it up, and the number will get better.

[Mr Bain]

I do not doubt the Minister’s sincerity, but clearly, she must acknowledge that her plan is not working. The number of disabled people who are out of work is 63,000 higher now than it was a year ago. I welcome the fact that 11% of dismissed Remploy workers have now found some work, but what she has just announced does not scratch the surface of the jobs disasters for the disabled that she is presiding over. She must accept that.

[Esther McVey]

I do not accept that. I have explained clearly how many people we have found jobs for in the hon. Gentleman’s constituency in the past year and what we have done since then. Since the general election, 1 million new jobs have been created by the private sector. As I have said, the issue is about sustainable, long-term work.

I will give examples of what some Remploy staff have been doing. The numbers might be small, but they show that things are developing. Four former Remploy employees have set up their own co-operative business to undertake sewing machine working. They are now registered as a company and have been given advice and specialist training. They are opening their factory in Aberdeen. In Wigan, Red Rock Data Processing Services has started. It was set up by ex-Remploy managers, who have so far recruited two ex-staff in management positions. By Christmas, 16 people will be employed. In Oldham, four ex-employees have found work with Dekko Window Systems. People have also found work at Cornwall college in Camborne near Penzance, at Hayman Construction in Plymouth, and at Asda.

What we are seeing is what disability experts had envisaged: the issue is about mainstream work and having people work and fulfil their potential in every way. Where Remploy factories can remain viable, they will do. Where they can be bought out as co-operatives, they will be. Where we can have people working in mainstream work, we will support them as best we can.

[Jim McGovern]

The Minister has not yet covered procurement, but she has mentioned sewing machines. The Remploy factory in Dundee is based on textiles and fabrics and on manufacturing uniforms—

[Mr Gary Streeter (in the Chair)]

Order.

16:39

Sitting suspended for a Division in the House.

16:50

On resuming—

[Mr Gary Streeter (in the Chair)]

Order. Mr Jim McGovern is about to finish his intervention.

[Jim McGovern]

I did not realise that the Division bell had gone and I thought that I had said something out of order, so I am delighted to be called again.

The Minister was mentioning some of the functions in various factories. The Dundee factory is based mostly on textiles and the manufacturing of uniforms, and I hope that she will accept my invitation to see it at work. I have had discussions—

[Mr Gary Streeter (in the Chair)]

Order. There has been ample time for the intervention, if both parts are taken together, so I will allow just one more sentence.

[Jim McGovern]

I ask the Minister to make representations about uniforms to the Minister with responsibility for procurement, the hon. Member for Mid Worcestershire (Peter Luff), so that they can be produced in Dundee.

[Esther McVey]

I will indeed visit as many factories as I possibly can. I have been to several, and I have been up to Scotland recently—up in Edinburgh—so if I can and time permits, I will visit. Regarding procurement, I believe that a different Member now has that responsibility, but I will have a word with the relevant Minister.

Some right hon. and hon. Members have expressed concerns about the commercial process, but I am now satisfied that the Remploy commercial process has been open and transparent. It was published on 20 March on the Remploy website, which has communicated the outcome of the process at all stages and continues to do so. In the light of the assertions made by MPs, MSPs and the trade unions, I sought absolute assurances from the Remploy board that the commercial process for stage 1 was operated as published and that it allowed an equal opportunity for interested parties to submit a proposal for consideration. It is important to note that any assertions made—from all those who have made certain allegations—included no evidence of malpractice or wrongdoing as part of the commercial process.

The assurances provided by the Remploy board confirmed that: the commercial process was consistently delivered with equal opportunity for all interested parties, including in excess of five months for bids to be developed and submitted; the current preferred bid for Remploy Healthcare, excluding Springburn, remains the best value bid as a result of the commercial process; and the preferred bid will preserve the ongoing employment of 30 employees. The process was developed using expert advice on its design and structure, taking into account the need to ensure that employees and employee-led groups had an opportunity to take part actively and to develop robust bids. An independent panel was set up to provide independent assurance to the assessment process, because we recognised the need to ensure that proposals were robustly assessed. The panel played an active part in the assessment of bids at all stages of the commercial process.

To encourage employees and employee-led groups to take advantage of the opportunity, the Government made funding available, up to a maximum of £10,000, to be used for expert advice and support in developing proposals. The Government offered a time-limited, tapered wage subsidy, totalling £6,400, to successful bids for each eligible disabled member of staff as part of Remploy’s commercial process, again seeking to support the ongoing employment of as many Remploy disabled employees as possible. The offer of the wage incentive was a direct result of Remploy’s and the Department’s response to a number of proposals and of issues that were raised by bidders during the commercial process. To reflect such additional support, we extended the deadline for the submission of business plans, adding an extra three weeks to the time line.

Remploy’s preferred bidder for its Springburn factory put in bids for Springburn and for another of Remploy’s sites at Chesterfield. Unfortunately, Remploy has been advised by the preferred bidder that it no longer wishes to proceed with an offer for the Springburn site. There were no other viable bids for the factory, so it will now close. Remploy’s preferred bidder is, however, saving jobs at Chesterfield. The jobs saved might not be as many as people hoped for but, nevertheless, they are saving jobs. Without that bid, we are uncertain if there would have been a viable bid for Chesterfield. The design of Remploy’s commercial process has maximised the potential of the bids and proposals for the factories concerned but, clearly, that is not the end of the process. As with the factory in Wigan, where a new company has emerged, and in Aberdeen where a social enterprise has started, we are asking people to come forward with other bids and offers on how they would like to see the future of their Remploy factories, including Springburn.

I am grateful to hon. Members for raising the issues and for giving me the opportunity to set out what we are doing, how we are doing it and how best it can be done. I will continue to keep the House up to date with further developments for Springburn and other factories.

[Mr Bain]

For the record, can the Minister confirm whether she is happy to reopen the tendering process for the Springburn factory to allow other potential bidders to come forward? Given that, can she guarantee that no notices will be issued to workers before Christmas?

[Esther McVey]

The commercial process, which was robust and has been carried through, will not be reopened. As I explained, however, there is an opportunity now for people to come forward with their best and final offers, as with Aberdeen and Wigan. Equally, should Greentyre—as mentioned by the hon. Gentleman—wish to come forward, it may bid for the factory. That is what we are looking for and what we are doing with other factories.

The hon. Gentleman also mentioned article 19. Previous modernisation plans assumed a 130% increase in the Government procurement rules under article 19 but, in reality, that did not happen. Article 19 allows the use of sheltered employment to deliver services, but it has to be done in the context of value for money. If use of article 19 does not deliver value for money, it is not valid.

I hope that I have answered all the hon. Gentleman’s questions.

[Mr Jim Cunningham]

Will the Minister give way?

[Esther McVey]

We have a couple of minutes left, so I will take the intervention.

[Mr Cunningham]

Can the Minister publish the figures on people who have been made redundant from Remploy and found employment?

[Esther McVey]

I believe those figures are in the public domain. If they are not or if the hon. Gentleman needs clarity about them, I can provide them or break them down by factory.

If there are no more interventions or requests, I will come to a close. I know that the process will be long and that we are all passionate about the issue because we all want to see the best solution and conclusion possible but, as I have said in the past, all channels of communication are open. Not only do I meet with MPs, trade unions and MSPs, but I also work with ex-employees of Remploy.

Extra-statutory Concession A19

Tuesday 4th December 2012 Westminster Hall

16:59

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to serve under your chairmanship today, Mr Streeter. I can assure you that we are discussing a tax issue and not a road or an aeroplane, which is probably a relief to the Treasury Minister responding.

Several of my constituents who sought to make use of the A19 concession have expressed concerns after, in their view, being unreasonably denied. For the record, that is the concession whereby if a taxpayer has underpaid tax because the Revenue failed to use information that it was provided with in a timely way, it can agree not to collect that tax from the individual. That is particularly relevant when collecting that tax, which may cover several years, would cause hardship to the individual. The most severe cases I have seen are those involving pensioners who have been presented with a sizeable bill.

I want to raise three aspects this afternoon. The first is how HMRC currently applies concession A19 or, in many cases, does not apply it. Secondly, I wish to ask what an appropriate appeal or review process for those decisions might be. Thirdly, I will say a few brief words about HMRC’s consultation on changing the concession from next year.

The easiest way to illustrate my concern is to talk through the case of one of my constituents. I will not name him for confidentiality reasons, but he had a job working in a factory from 1997. In 2001, he started to receive an occupational pension from a previous job. Everything worked well, and his tax was collected accurately, his employer had a coding notice with his personal allowance, and his pension was taxed at the basic rate.

Everything worked fine for five years until June 2006 when, for reasons unbeknown to the Revenue and certainly to my constituent, it decided to change the tax code for the pension, effectively giving him a personal allowance on two sources of income. That went undetected until February 2011 when, following a reconciliation process, the Revenue sought to collect the tax from my constituent for the previous four tax years—a bill of £5,000.

The Revenue issued the demand to my constituent, and did not think to go after either his employer or the pension fund. I believe that the pay-as-you-earn regulations state that in the first instance the Revenue should go to the employer if it believes that it has misapplied the rules. It would be helpful if the Minister confirmed that that is his understanding of the process. It does not happen often, sadly.

My constituent eventually took advice from a local firm of accountants, which advised him that concession A19 might apply. However, the Revenue rejected that on a couple of occasions, and there is concern about the thoroughness of the review and the fairness of the summation of facts. It rejected the application because its only failing was that it had not reviewed forms P14 and P35 provided by the employer and the pension fund and realised that the personal allowance was being used twice. Its reason was that the purpose of the forms is not to inform the coding notice process, as required by the wording of statutory concession A19.

That logic is bizarre, because the best information that the Revenue receives to decide whether someone is paying the right tax is those two forms, which all employers must file within so many days after the year end, and I suspect that that is how the Revenue has reconciled people’s tax affairs manually in the past. I think it now uses the information electronically to make that reconciliation, so I struggle to see much logic in saying that the information about what an employee has earned in a year and what tax they have paid is not relevant to the coding process. That process is designed to find out what income and benefits someone has had in previous years, and to work out what tax they should pay in the next year and therefore what code they should have. The issue has been raised with the Minister by the Association of Taxation Technicians, the Chartered Institute of Taxation, and the Institute of Chartered Accountants in a letter that they sent him in August.

The Revenue’s other argument was that the taxpayer should have understood that the coding notices were wrong. That is even more bizarre, because it was arguing that my constituent had started his employment in 2005, not 1997, and that his employer had never told the Revenue that he was working for it, so it did not issue any coding notices. That was all complete rubbish, because he had been employed for much longer, and the employer had issued coding notices, which had been applied correctly.

It is strange that in its letter the Revenue said that my constituent should have been able to work out that he was receiving two personal allowances by comparing the one coding notice it thought he had with his payslip or P60. That was surprising. The Minister and I might just about be able to work out how our tax code has been arrived at, and to divide it by 10 and add a random letter at the end depending on whether we owe it money or not, but I suspect that when benefits are added the process is much harder, and it is not easy for an ordinary member of the public to work out what a coding notice means. The explanation of how various adjustments are calculated is not clear, and to expect someone to do that by working back from a tax code that they might spot on their payslip is somewhat unreasonable.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for highlighting this issue. As an elected representative, I have had to deal with several A19 concessions in the last few years. I have been successful with most of them, but the one thing that keeps coming through is that people are not aware of the concession. Does the he agree that HMRC should publicise it more?

A record is taken of telephone calls and registration in every case, and that should show that people have expressed concern over a period. That helps when someone applies for an A19 concession, and they may receive the concession and a reduction in payments. Some of the people I have dealt with owed £7,000 or more, which we got reduced.

[Nigel Mills]

I agree with most of what the hon. Gentleman says, and I will come to some of his points. My constituent was not as lucky as those he helped, because he had no idea that his tax affairs were wrong. He was receiving two sources of income, and tax was being taken from both, so he did not realise that a mistake had been made sometime during the process. One could argue that he should have realised that his income had increased slightly, but the impact was not hugely significant on a weekly or monthly basis. Such matters are complicated when personal allowances change every year, and recently they have rightly been changed by quite a lot every year. If someone’s income fluctuates because they are working overtime, they might not notice that their weekly pay is £25 different from what it would be if the tax was deducted correctly.

We must be careful about expecting people in this country who do not have to file tax returns, and who do not generally have dealings with the Revenue, to understand what the complicated bits of paper that come through their door mean. If we base a system on relying on people understanding, we must make sure that what they receive is clear and complete, so that they can work through the calculations and understand where they are wrong. That is not the case with the current coding notice.

My constituent’s advisers and I thought that his experience had met all the requirements for an A19 concession. It had continued for several years, and the fault was clearly not his but either his employer’s or, more likely, the Revenue’s because he had been in the same continuous employment for much longer than the Revenue seemed to realise. Even if HMRC thought it was the employer’s fault, it made no effort to make contact with that employer while it existed. Sadly, it ceased to exist in mid-2011, about six months after the issue came to light.

To the adviser, it looked as if the Revenue was just refusing to accept an A19 claim based on a new policy that it should resist more such claims. The purpose of the concession is to provide fairness in the system if something goes wrong for an innocent victim. Yes, they should have paid the tax and, yes, they have received money that they should not have had, but if that has gone on for several years there might be severe hardship if they were required to find that money several years later. I suspect that we all believe that that concession is right, and it is important that it is applied consistently and fairly, and that people understand when it should and should not be applied. I am not sure that that is the case now, and perhaps that is why the Revenue has considered redrafting the concession, although there is significant concern that the redrafting will not help the situation much, which I will come to.

If an individual goes to the Revenue and has their request turned down, they have almost nowhere to go. It does not count as a tax assessment in the Revenue’s view, so they cannot appeal through the normal tribunal system. The only option is to make a complaint and go to the adjudicator, but even that is not ideal, as the adjudicator is only allowed to make recommendations to the Revenue that are consistent with the law or its own internal policy. Unfortunately, I do not think that the Revenue has even published all its internal guidance, although I am aware that some freedom of information requests have been made for details of the grounds for refusing A19 claims. It is hard to think that there is much chance of success when someone’s only route can be turned down if it is inconsistent with guidance that they have not actually seen.

Does the Minister have any ideas on how we can end up with a proper independent review of some of these cases? R.E. Clark v. HMRC was a tax case in which Mr Clark tried to make a formal appeal based on the P800 assessment notice that he had received being some kind of informal assessment. Interestingly, at the first stage, the judge hearing the appeal refused to accept HMRC’s request to dismiss it out of hand. Probably luckily for Mr Clark—although it not so good for us—the case was settled out of court and we did not see how the tribunal would have taken it. This is an issue of fairness. The concession is a policy that we think should exist, and it is important that a clear, impartial review is available, so that when HMRC has perhaps not come to the right answer, a clear resolution can be found.

The final topic I want to raise in the time that I have left is the recent consultation, which was intended to make the issue clearer. In some ways, it is possible to become cynical after a few years of doing this; clarity appears to mean that a document goes from being two thirds of a side of paper long to more than three sides. Greater length may make things clearer but it can also add a lot more complexity, ending up with a lot of references that have to be chased around, and I am not sure that that makes things clearer.

The consultation raised a more fundamental concern, which was that the new words seem to restrict the application of A19 in future. It is not just a clarification but a restriction, and it seems to impose a duty on taxpayers to ensure that their tax code is correct and up to date, which implies a continuing duty for people throughout every tax year to ensure that nothing is changed, and that their car benefit has not gone up, or whatever else. That is an onerous position to put people in. We all hope that with real-time information and more regular reconciliations, we will not see the sort of situation that we saw in 2010, when several years were unreconciled. The ongoing reconciliation process has been throwing out errors, and we hope that in a year’s time, when things are done in real time, no more people will face the hardship of getting a multi-year tax demand. However, if we are going to have this thing in place, it needs to be clear and only impose realistic burdens on taxpayers. It is right that we all try to understand our tax affairs and check things that come to us, but where things are complicated and the mistake is the Revenue’s, not ours, we should allow the concession to be in place.

I hope that the Minister will help me and my constituent to understand whether there has been a change of policy by the Revenue in how it handles A19. Has an instruction been sent out centrally? An article in Taxation a few months ago seemed to allege that the instruction was almost, “Thou shalt not agree any of these and if any of you do, you will get some kind of action taken against you.” I suspect that that was a little exaggeration, but it was what the article suggested. It would be helpful if the Minister could give us some data on how many A19 applications have been made in recent tax years and how many have been accepted and rejected. I suspect that he may not have that information to hand, but if he could let me have it in writing, that would be helpful, as it would show whether there has been a trend in the last year or so for a lot fewer of them to be approved.

Finally, will the Minister confirm that what the Revenue should do in PAYE cases is go after the employer first when it is their mistake, and only then going after the taxpayer if they are somehow jointly at fault or if there is some reason why the employer cannot be pursued? Various answers would bring much greater clarity to the situation and help people who get caught in this sort of mess.

17:14

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure to serve under your chairmanship again, Mr Streeter, and I congratulate my hon. Friend the Member for Amber Valley (Nigel Mills) on securing the debate. Once again, he is bringing to the attention of the House his knowledge and expertise of the tax system and representing his constituents so well on a number of matters. He does so today with regard to the extra-statutory concession A19, and the debate has been helpful. I am grateful for the opportunity to respond, and I hope to be able to address his questions.

Before doing so, it is worth recognising that HMRC has made considerable progress in modernising the PAYE system and bringing the legacy issues for PAYE customers up to date. The national insurance and PAYE computer system—NPS—became operational in early 2010, enabling HRMC to bring all taxpayer records on to a single national database held under unique references. For the first time, HMRC has been able to bring together all sources of income for a customer under one reference. Although I know that there were considerable problems with the implementation of NPS, now that it is fully automated, it is a very cost-effective process that enables HMRC to reconcile nearly 60 million PAYE tax records very quickly.

In October 2010, HMRC’s late chief executive, Dame Lesley Strathie, made a commitment to the Public Accounts Committee, in response to an NAO recommendation, that HMRC would bring PAYE up to date for taxpayers by the end of 2012-13. It is on track to deliver on that commitment and it has already settled 17.9 million unreconciled customer records. As a consequence of those improvements, in the last two years, the number of unexpected tax repayments and demands issued by HMRC has been higher than usual, and in turn, that has led to an unprecedented number of customers contacting HMRC for help and advice. HMRC recognises that on occasions its customer service has fallen short of the standards that it wants to provide. HMRC has taken steps to improve its customer service over the past year—for example, by investing in its contact centres—and it is making customer information more accessible and easier to understand. It recognises, however, that there is more to do, and it is building on this year’s improvements to give all taxpayers the services that they rightly expect.

A significant proportion of the complaints that HMRC has received relate to HMRC’s implementation of ESC A19, and HMRC consulted on the operation of the concession over the summer. It has listened to the views of taxpayers and to comments in the media. Its current operational process was developed in response to the exceptional circumstances of 2010, when steps needed to be taken to ensure that the 166,000 requests that it received could be dealt with quickly. To respond to a question raised by my hon. Friend, from September 2010 to 31 March 2012, HMRC received 166,000 claims to the value of £185 million, and 41,766 of those requests were successful, at an estimated value of £53.7 million.

HMRC looked to deal with those matters as quickly as possible, creating a dedicated team and a streamlined process that included a more relaxed approach to the reasonable belief test during 2010 and 2011. It also raised the collection threshold to £300, and as I said in my statement to the House in January 2011, HMRC would not reconcile the tax affairs of 250,000 pensioners for whom we believe a request under the concession would have been successful. HMRC recognises that there is much more that it needs to do to improve its implementation of the concession for the future. There is work in progress to deliver process improvements and better guidance for officers dealing with requests, and particularly to improve the service for those customers who will always need help understanding and managing their tax affairs. That work is specifically aimed at reducing the number of customer requests that become formal complaints.

At this point, it may be helpful if I try to respond to some of my hon. Friend’s specific questions. He asked whether HMRC had published all the internal guidance on ESC A19. HMRC has published all guidance except where it considers that publication of the decision-making process that it uses to determine the reasonable belief test would prejudice its application. If HMRC published certain items, all cases would be phrased in a particular way to meet it. That would not be helpful, but that is the only reason why guidance would not be published.

HMRC has not changed its policy on ESC A19. HMRC has been looking to improve its consistency of decision making in these cases. Taxpayers have an appeal route to the Revenue adjudicator if they cannot agree the position directly with HMRC. Perhaps it is worth saying a word or two about that appeal route, which was raised by my hon. Friend. If a claim is refused, the taxpayer can request a second review. The taxpayer can make a formal complaint to HMRC. The taxpayer can then request a review of the formal complaint decision. The taxpayer can ask the adjudicator or ultimately even the parliamentary ombudsman to conduct a review. It is correct to say that there is no statutory right of appeal to the tribunal. That point has been tested with the tribunal, and that was the conclusion reached in that case.

Of course, HMRC has a responsibility to collect the tax correctly as prescribed by Parliament. ESC A19 is a concession that applies where HMRC has not acted in a timely or accurate way, but clearly there is not complete flexibility for HMRC to agree not to collect the tax that is due.

My hon. Friend asked whether, in some cases, the matter should be taken to the employer or pension provider first, rather than going to the taxpayer. HMRC has a process that allows it to approach both the employer and the taxpayer at the same time. In the majority of cases, a review under ESC A19 can be conducted quite quickly to establish the nature of the error. HMRC is happy to discuss individual cases with taxpayers if the taxpayer feels that it is their employer who has made the mistake.

[Nigel Mills]

Is it not the case that under, I think, PAYE regulation 72, the Revenue should go to the employer first? I think that it can then issue a notice to say that it can go after the taxpayer. In theory, the taxpayer should be sent a copy of that notice. I am not entirely sure that that is the process that is followed very often, but I think that it is the one set out in the regulations.

[Mr Gauke]

If I may, I shall come back to that specific point, because I want to deal with another issue raised by my hon. Friend, which was whether the P14 forms could be used for information and why that does not happen. I just point out that due to the volumes received each year—approximately 60 million—P14 forms are processed over several months. That is an automated process. There is currently no scope within the process that would enable HMRC to identify and amend a tax code for the current year on receipt of the previous year’s P14.

My hon. Friend asked about the ESC A19 consultation. The outcome of that consultation has yet to be decided. Obviously, he will be keen to know what it is. When that has been concluded, I will ensure that he is fully aware of it.

It is right to say that HMRC has delivered a real change in the operation of PAYE and brought its legacy issues up to date. That means that 85% of PAYE customers will have paid the right tax during the year. The remaining 15% will be due a refund or owe tax for a variety of reasons other than HMRC error. Furthermore, the vast majority of customers will be notified of their tax position well before the end of the tax year.

ESC A19 is designed to apply routinely when HMRC has failed to act on information received and also fails to notify the customer of their arrears for a full 12 months after the end of the tax year. This year, HMRC has received significantly fewer requests, and most of those were received immediately following the issue of the tax calculation. The vast majority were not eligible for the concession because there had been notification of the arrears within the 12-month deadline. The occasions on which taxpayers will need to make a request under ESC A19 in the future are significantly diminished. HMRC does not envisage the problems and complaints that arose from its implementation of the concession in the exceptional circumstances of the past two years arising to the same extent in the future.

However, my hon. Friend raises an important point about the difficulty that some taxpayers have when they simply have a tax code. That can make it difficult for them to assess exactly what the right amount of tax to be paid is and, if they are paying the wrong amount, what can be done about it. My hon. Friend will be pleased about the progress that we are making with tax statements. We are making much more information available to taxpayers, so that they can see what tax has been paid. The way I see that developing is that ultimately it should provide a much clearer route—much greater clarity to taxpayers—to ensure that the correct amount of tax has been collected.

Let me return to regulation 72, which my hon. Friend raised a moment or so ago. He is correct about the process. The NPS is fully automated and cost-effective and deals with 1.5 million underpayment cases per annum without recourse to this process—without going into regulation 72. These cases do not arise only because of employer error. Regulation 72 is really an anti-avoidance measure to prevent collusion between employer and employee. I hope that that provides some clarity to my hon. Friend.

It is important to distinguish between HMRC’s obligation to apologise and provide redress for customers who experience poor service and its collection and management discretions in effect to withdraw tax rightly due from the Consolidated Fund. HMRC has a statutory obligation to collect the right amount of tax from each taxpayer and to be fair to all taxpayers in that respect.

ESC A19 was intended to remedy the hardship and injustice of unexpected demands caused by the then Inland Revenue’s error and delay. Although HMRC’s tax commissioners can forgo tax in cases of financial hardship, its discretions to forgo tax that is rightly due are limited and are certainly restricted to the strict application of the conditions of the concession.

Compensation payments to remedy the cost and distress of poor service are ex gratia and are applied using the guidelines in the “Managing Public Money” rulebook. Those must not allow recipients to gain financial advantage as a result of poor customer service. It would be acting outside the parameters of the authority delegated to HMRC to provide redress that clearly linked someone’s tax liability with the amount of their compensation. To be fair, HMRC does have to operate a difficult balance.

We must recognise that the complaints and problems that we have heard about today, although serious and distressing for the individuals involved, have arisen in exceptional circumstances. HMRC has recognised and apologised for poor service and is taking steps to put things right for the future, particularly for pensioners and other vulnerable customers. It is working closely with professional organisations and charities to understand customer needs and improve services.

The need for customers to turn to ESC A19 for redress in response to an unexpected tax demand is diminishing. I would like to reassure my hon. Friend that HMRC will compensate customers for poor service, using its authority within “Managing Public Money” rules, and use its collection and management discretions to forgo tax where that is appropriate and necessary and where it has the power to do so.

Question put and agreed to.

17:29

Sitting adjourned.

Written Ministerial Statements

Tuesday 4th December 2012 Written Statements

Tuesday 4 December 2012

Serious Fraud Office

Tuesday 4th December 2012 Written Statements

[The Attorney-General (Mr Dominic Grieve)]

The director of the Serious Fraud Office (SFO), David Green CB QC, and I are today outlining details of redundancy payments agreed by the SFO under the leadership of the former director, Richard Alderman, who left office in April of this year.

The SFO’s 2011-12 annual accounts, published in October, included payments made to the outgoing chief executive, Phillippa Williamson, which the National Audit Office (NAO) had deemed to be irregular as the appropriate approvals had not been obtained. It has since come to light that a further, similar arrangement had been entered into by the former director and the current director and I have therefore agreed to publish details to Parliament of all redundancy payments made by the SFO since May 2010.

As an independent body, the director of the SFO is the accounting officer for that organisation and as such is directly accountable to Parliament for the money the SFO spends. Details of redundancy payments were not disclosed to superintending Ministers by the former director. On learning of these agreements, the current director sought legal advice on whether these arrangements may be reopened and money recovered. The advice he received is that the agreements, while entered into without the necessary approvals, are binding on the SFO.

As set out in the 2011-12 annual accounts, the cost to the SFO of chief executive Phillippa Williamson’s redundancy was between £450,000 and £475,000.

A further redundancy agreement was entered into by Richard Alderman and will take effect in December 2012 when Christian Bailes’s post as chief operating officer is made redundant. The current director has been obliged to seek and obtain the appropriate approval in relation to the exit payment. The cost to the SFO is likely to be in the range of £450,000 and £475,000 and will be noted in the 2012-13 annual accounts.

Richard Alderman received a payment into his pension scheme of £44,179.59 (under an early exit agreement) to enable his early retirement at the end of his four-year contract and the appointment of a new director.

In addition, a redundancy payment of between £25,000 to £50,000 to an individual, who operated at senior civil service level, for loss of office was agreed by Richard Alderman and took effect at the end of May 2012.

An individual received a payment of between £25,000 to £50,000 under a voluntary exit scheme which was accounted for in the 2011-12 accounts. Two smaller, non-redundancy exit payments for staff below the senior civil service have been made since May 2010 as disclosed in the 2011-12 accounts (note 7), including one payment

from the previous year (2010-11). These two payments were for termination of contracts. The total combined cost of these exits is under £31,000.

The NAO has the statutory right to inspect how the SFO spends its money and the current director is committed to working closely with them. The director has put in place controls to ensure that proper procedures are followed in the future.

The publication in November of the report on case work at the SFO by HM Crown Prosecution Service Inspectorate (HMCPSI) was an important step in building the effectiveness of the SFO and showed the benefits to both the SFO and the Government of independent external inspection. It is proposed that there should be a follow-up inspection early next year. The director and I believe that the arrangements should be put on a more formal basis. I am therefore proposing to place the office on the same footing as the CPS and have agreed with the director that I will seek to legislate for statutory inspection of the SFO by HMCPSI as soon as parliamentary time allows.

EU Competitiveness Council

Tuesday 4th December 2012 Written Statements

[The Minister for Universities and Science (Mr David Willetts)]

My noble Friend, the Minister of State for Trade and Investment (joint with Foreign and Commonwealth Office), Lord Green, has today made the following statement:

The EU Competitiveness Council will take place in Brussels on 10 and 11 December 2012. I shall represent the UK on internal market and industry issues on 10 December, and the Minister for Universities and Science, my right hon. Friend the Member for Havant (Mr Willetts) will represent the UK on research issues on 11 December.

The internal market and industry substantive agenda items on 10 December will be: a progress report on recognition of professional qualifications; a general approach on the public procurement package; an orientation debate/general approach on the union customs code (recast); a partial general approach establishing an action programme for customs in the European Union for the period 2014-20; a presidency report on the state of play of the accounting directive; a presidency report on the state of play and endorsement of the final package on the unitary patent and international agreement on the unified patent court; a policy debate on modernisation of state aid rules; a presentation by the Commission, adoption of a Council resolution and adoption of Council conclusions on customs policy (concerning the EU action plan on intellectual property rights, EU customs action plan to combat intellectual property rights infringements for the years 2013-16 and progress on the strategy for the evolution of the customs union respectively); adoption of Council conclusions on Single Market Act II; adoption of Council conclusions on industrial policy; and a discussion on CARS 2020—an action plan for a competitive and sustainable automotive industry in Europe.

Five AOB points will be discussed; a presentation by the Commission on the European semester/annual growth survey 2013; information from the presidency on resolution of consumer disputes; information from the presidency on a consumer programme 2014-20 and information from the Commission on the eighth consumer scoreboard.

The research substantive items on 11 December will be: a partial general approach on the specific programme for Horizon 2020, a progress report on the research and training programme of the European Atomic Energy Community (2014-18) complementing Horizon 2020, a partial general approach on a proposal for a decision of the European Parliament and of the Council on the Strategic Innovation Agenda for the European Institute of Innovation and Technology (EIT), adoption of Council conclusions on a reinforced European research area partnership for excellence and growth and discussion of a Commission communication on enhancing and focusing international co-operation in research and innovation.

Three AOB points may be discussed; the state of play on ITER, results of research-related presidency conferences and ministerial meetings and the forthcoming Irish presidency’s proposed work programme.

The Government’s objectives for the Council are to:

Support the public procurement package for the benefits it will bring through simplification and ensure that the general approach reflects UK priorities;

Endorse the final package on the unitary patent and international agreement on the unified patent court;

Contribute to the discussion on state aid rules;

Confirm agreement of conclusions on customs policy, Single Market Act II and industrial policy; contribute to the discussion on CARS 2020;

To agree PGAs on the Horizon 2020 specific programme and the EIT strategic innovation agenda;

To agree Council conclusions on the Commission communication “A Reinforced European Research Area Partnership for Excellence and Growth”; and

To contribute to discussions on the Commission communication on enhancing and focusing international co-operation in research and innovation.